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HomeMy WebLinkAbout2016-06-27 City Council Agenda PacketMATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. City Council REVISED June 27, 2016 Special Meeting Council Chambers 5:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 10 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Agenda Changes, Additions and Deletions City Manager Comments 5:00-5:10 PM Oral Communications 5:10-5:25 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 5:25-5:30 PM 1.Approval of Action Minutes for the June 13, 2016 Council Meeting Consent Calendar 5:30-5:35 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 2.Approval of a Contract Amendment With Cypress Security, Inc. (C16160138A) in the Amount of $884,552 for a Total Not-to-Exceed Amount of $1,323,992 and Extend the Term of the Agreement to December 31, 2016 1 2 June 27, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 3.Finance Committee Recommendation That Council Adopt a Resolution Adopting a Net Energy Metering Successor Rate E-EEC-1 (Export Electricity Compensation), Establishing the Net Energy Metering Transition Policy, and Amending Rule and Regulation 2 (Definitions and Abbreviations) and 29 (Net Energy Metering and Interconnection) 4.Approval of Budget Amendments in the General Fund’s Transportation Contingency Fund and in the Capital Fund in the Amount of $45,000 for Citywide Engineering and Traffic Speed Surveys 5.Approval and Authorization for the City Manager to Execute a Purchase Order With CSC Integrations in an Amount Not-to-Exceed $207,025 for an Intrusion Detection System (IDS) to Improve Safety Along the Caltrain Right of Way in the City of Palo Alto and Adoption of a Related Budget Amendment in Fiscal Year 2016 General Fund 6.Adoption of a Resolution Amending Utilities Rate Schedule E-15 (Electric Service Connections) and Rules and Regulations 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 15 18, 20, 23, and 24 (Adoption of Rules, Definitions and Abbreviations, Description of Utility Services, Application of Service, Service Contracts, Establishment and Reestablishment of Credit, Deposits, Access to Premises, Discontinuance, Termination and Restoration of Service, Meter Reading, Billing, Adjustments, and Payment of Bills, Metering, Utility Service Connections and Facilities on Customers’ Premises, Special Electric Utility Regulations, Special Wastewater Utility Regulations, andSpecial Refuse Service Regulations) 7.Utilities Advisory Commission Recommendation That the City Council Adopt a Resolution Amending the Net Surplus Electricity Compensation Rate (E-NSE-1) 8.Approval and Authorization for the City Manager or his Designee to Execute the Off-Taker Generation Percentage Protection Amendment to the City's Power Purchase Agreement (PPA) With Shiloh I Wind Project LLC (Shiloh PPA) and Delegation of Authority to the City Manager to Execute Documents Necessary to Administer the Shiloh PPA and the City's Five PPAs Associated With Landfill Gas to Energy Projects 9.Approval of and Authorization for the City Manager to Execute a Master License Agreement for use of City-Controlled Space on Utility Poles and Streetlight Poles and in Conduits With GTE Mobilnet of California Limited Partnership, DBA Verizon Wireless for a Combined Initial and Potential Extension Term of 20 Years 3 June 27, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 10.Approval of the Purchase of All Rights, Title, and Interest Held By Globe Wireless at Property Known as Baylands ITT Transmitter Site, Assessor Parcel Numbers: 008-05-001 And 008-05-004 From Globe Wireless Located at 2601 East Bayshore Road And Approve an Amendment to the Budget in the General Fund 11.Adoption of a Resolution Determining the Proposed Calculation of the Appropriations Limit for Fiscal Year 2017 12.Approval of a Construction Contract for the Lucie Stern Buildings Mechanical and Electrical Upgrades, Capital Improvements Program Project PE-14015, With Iron Construction, Inc. in the Amount of $2,239,781 and Approval of Amendment Number 2 to Contract Number C13148737 With Advance Design Consultants Inc. in the Amount of $349,512 for a Not-to-Exceed Amount of $670,267 for Construction Phase Services 13.Approval of Amendment Number 3 to Contract Number C14153012 With Metropolitan Planning Group to add $440,000 for a Total Not-to- Exceed Amount of $940,000 for Support of Planning Review of Architectural Review Applications 14.Approval of Amendment Number 5 to Contract Number S13149754 toadd $85,000 for a Total Amount Not-to-Exceed $421,000 and Amendment Number 3 to Contract Number S15155809 to add $45,000 for a Total Amount Not-to-Exceed $95,000 With Renne Sloan Holtzman Sakai LLP Public Law Group for Labor Negotiations Services and to Extend Both Contract Terms to June 30, 2017 15.Approval of a Contract With West Coast Arborists, Inc., in an Amount Not-to-Exceed $3,680,960 for Three Years for Tree Pruning and Removal Services on a Ten Year Maintenance Cycle 16.Adoption of a Resolution Adopting the 2017-2019 Management & Professional Compensation Plan Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 5:35-6:15 PM 21.Review of Recommendations From the Storm Drain Blue Ribbon Committee Regarding Future Storm Water Management Funding and Request for Council Direction on Whether to Proceed With a Proposition 218 Hearing and Property Owner Ballot-by-Mail to Approve Future Storm Water Management Rates (Continued From June 6, 2016) MEMO 4 June 27, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 6:15-7:15 PM 18.Approval of Memorandum of Understanding (MOU) Between the Santa Clara County Housing Authority, the County of Santa Clara and the City of Palo Alto to Provide up to $14.5 Million in City Affordable Housing Funds in Support of the Housing Authority’s Potential Acquisition of the Buena Vista Mobile Home Park for Deed Restricted Affordable Housing, From June 28, 2016 Through June 28, 2018; Authorize the City Manager to Implement MOU Subject to Council Conditions and Reporting 7:15-7:45 PM 19.CONTINUED PUBLIC HEARING: to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District; Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2017 on the Downtown Palo Alto Business Improvement District; and Possible Council Direction on Next Steps (Continued From June 6, 2016) 7:45-9:45 PM 17.Consideration of Ad Hoc Committee Report and Recommendations, Review of Polling, and Discussion and Direction on Potential 2016 Business Tax to Fund Transportation and Parking Improvements, Including Alternative Timing Options, Elements of Measure, Preliminary Revenue Estimates, and Potential Projects and Impacts Inter-Governmental Legislative Affairs Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. PUBLIC HEARING: 1601 California Avenue [15PLN-00500]: Request by The Board of Trustees of the Leland Stanford Junior University to Amend the Final Map for Tract Number 10281 Recorded January 2015 for the 1451-1601 California Avenue Development, Which Includes a Total of 180 Dwelling Units. Environmental Assessment: City of Palo Alto/Stanford Development Agreement and Lease Project Environmental Impact Report (State Clearinghouse No. 2003082103) Zoning District: Research Park and Alternative Standards Overlay Two (RP(AS2)) District (Continued to June 28, 2016) 20. 5 June 27, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Standing Committee Meetings Joint Recycled Water Committee June 28, 2016 Sp. City Council Meeting June 28, 2016 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Update on the Voluntary Summer Demand Response Program and Plans to Leverage Local Distributed Energy Resources City of Palo Alto Utilities Update for the Third Quarter of Fiscal Year 2016 State Gas Tax Audit and Response City of Palo Alto Sales Tax Digest Summary Fourth Quarter Sales (October - December 2015) Council Roster Public Letters to Council Set 1 Set 2 CITY OF PALO ALTO OFFICE OF THE CITY CLERK June 27, 2016 The Honorable City Council Attention: Finance Committee Palo Alto, California Approval of Action Minutes for the June 13, 2016 Council Meeting Staff is requesting Council review and approve the attached Action Minutes. ATTACHMENTS:  Attachment1.a: Attachment A: 06-13-16 DRAFT Action Minutes (DOC) Department Head: Beth Minor, City Clerk Page 2 CITY OF PALO ALTO CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 9 Regular Meeting June 13, 2016 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:03 P.M. Present: Burt, DuBois, Filseth, Holman, Kniss arrived at 6:30 P.M., Scharff, Schmid, Wolbach Absent: Berman Closed Session 1. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his Designees Pursuant to Merit System Rules and Regulations (James Keene, Molly Stump, Suzanne Mason, Rumi Portillo, Dania Torres Wong, Allyson Hauk) Employee Organizations: Palo Alto Fire Chiefs’ Association (FCA); Management, Professional and Confidential Employees; Utilities Management and Professional Association of Palo Alto (UMPAPA) Authority: Government Code Section 54957.6(a). MOTION: Vice Mayor Scharff moved, seconded by Council Member Wolbach to go into Closed Session. MOTION PASSED: 7-0 Berman, Kniss absent Council went into Closed Session at 6:05 P.M. Council returned from Closed Session at 7:17 P.M. Mayor Burt announced no reportable action. DRAFT ACTION MINUTES Page 2 of 9 City Council Meeting Draft Action Minutes: 6/13/16 Special Orders of the Day 2. Proclamation to Honor Paula Kirkeby for her Contributions to the Community. Agenda Changes, Additions and Deletions None. Minutes Approval 3. Approval of Action Minutes for the May 23 and 31, 2016 Council Meetings. MOTION: Council Member Kniss moved, seconded by Mayor Burt to approve the Action Minutes for the May 23 and 31, 2016 Council Meetings. MOTION PASSED: 8-0 Berman absent Consent Calendar MOTION: Council Member Wolbach moved, seconded by Council Member Schmid, third by Vice Mayor Scharff to pull Agenda Item Number 7- Approval and Authorization for the City Manager to Sign… to be heard as Agenda Item Number 10a. MOTION: Council Member Kniss moved, seconded by Vice Mayor Scharff to approve Agenda Item Numbers 4-6, and 8. 4. Authorize the City Manager to Execute an Agreement Between the City of Palo Alto and ENGEO Incorporated, for a Hydrologic and Hydraulic Study of Buckeye Creek in an Amount Not-to-Exceed $104,998. 5. Approve and Authorize the City Manager to Execute a Contract With Nova Partners, Inc., in an Amount Not-to-Exceed $4,200,471 to Perform Program Management Services in Support of Nine Infrastructure Plan Projects Including the Public Safety Building. 6. Adoption of Fiscal Year 2017 Investment Policy. DRAFT ACTION MINUTES Page 3 of 9 City Council Meeting Draft Action Minutes: 6/13/16 7. Approval and Authorization for the City Manager to Sign a Letter Commenting on the City of East Palo Alto's General Plan Update and Draft Environmental Impact Report. 8. Authorize the City Manager or his Designee to Execute an Amended Indemnity Agreement With the Santa Clara Stadium Authority to Allow Provision of Requested Law Enforcement Services to Levi’s Stadium. MOTION PASSED: 8-0 Berman absent Action Items 9. PUBLIC HEARING & PROPOSITION 218 HEARING: Ordinance 5386 Entitled, “Ordinance of the Council of the City of Palo Alto for Fiscal Year (FY) 2017, Including Adoption of Operating & Capital Budgets and Municipal Fee Schedule;” Resolution 9592 Entitled, “Resolution of the Council of the City of Palo Alto Adopting a Dark Fiber Rate Increase of 3.2 Percent and Amending Utility Rate Schedules EDF-1 & EDF-2;” Resolution 9593 Entitled, “Resolution of the Council of the City of Palo Alto Approving the FY 2017 Electric Financial Plan and Amending the Electric Utility Reserves Management Practices;” Resolution 9594 Entitled, “Resolution of the Council of the City of Palo Alto Adopting an Electric Rate Increase of 11 Percent and Amending Utility Rate Schedules E-1, E-2, E-2-G, E-4, E-4-G, E-4 TOU, E-7, E-7-G, E-7 TOU, E-14, & E-16 & Repealing Utility Rate Schedules E-18 & E-18-G;” Resolution 9595 Entitled, “Resolution of the Council of the City of Palo Alto Approving the FY 2017 Gas Utility Financial Plan;” Resolution 9596 Entitled, “Resolution of the Council of the City of Palo Alto Adopting a Gas Rate Increase of 8 Percent and Amending Utility Rate Schedules G-1, G-1-G, G-2, G-2-G, G-3, G-3-G, G-10, & G-10-G;” Resolution 9597 Entitled, “Resolution of the Council of the City of Palo Alto Adopting Refuse Rate Changes Including a 7 Percent Decrease and Up to a 9 Percent Increase and Amending Utility Rate Schedule R-1, and Consolidating Utility Rate Schedules R-2 & R-3 Into a new Utility Rate Schedule Designated R-C;” Resolution 9598 Entitled, “Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D-1 to Increase Storm Drain Rates 3.2 Percent per Month per Equivalent Residential Unit for FY 2017;” Resolution 9599 Entitled, “Resolution of the Council of the City of Palo Alto Approving the FY 2017 Wastewater Collection Utility Financial Plan;” Resolution 9600 Entitled, “Resolution of the Council of the City of Palo Alto Adopting a Wastewater Collection Fee Increase of 9 Percent & Amending Utility Rate Schedules S-1, S-6, and S-7;” Resolution 9601 Entitled, “Resolution of the Council of the DRAFT ACTION MINUTES Page 4 of 9 City Council Meeting Draft Action Minutes: 6/13/16 City of Palo Alto Approving the FY 2017 Water Utility Financial Plan;” Resolution 9602 Entitled, “Resolution of the Council of the City of Palo Alto Adopting a Water Rate Increase of 6 Percent and Amending Utility Rate Schedules W-1, W-2, W-3, W-4, & W-7;” Resolution 9603 Entitled, “Resolution of the Council of the City of Palo Alto Amending Salary Schedules for the Utilities Management Professional Association of Palo Alto (UMPAPA), the Service Employees International Union (SEIU), and the International Association of Fire Fighters (IAFF).” Public Hearing opened at 8:02 P.M. Public Hearing closed at 8:17 P.M. Council Member DuBois advised he will not participate in this Agenda Item as it related to Stanford University because he has a source of income from the University. Council Member DuBois left the meeting at 8:20 P.M. MOTON: Vice Mayor Scharff moved, seconded by Council Member Kniss to approve the Police, Fire, Office of Emergency Services and CIP Budgets affecting Stanford University. MOTION PASSED: 7-0 Berman absent, DuBois not participating Council Member DuBois returned to the meeting at 8:29 P.M. MOTION: Vice Mayor Scharff moved, seconded by Council Member Wolbach to adopt an Ordinance approving the Operating and Capital Budgets and Municipal Fee Schedule; and each of the related rate increases, utility financial plans, and salary schedule Resolutions with the following changes: A. An additional $50,000 for an Emerging Needs Fund for Human Services Resource Allocation Process (HSRAP); and B. An additional $750,000 set aside towards the unfunded pension liability (establishment of a Section 115 Trust Fund). INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to replace in the Motion Part A, “Human Services DRAFT ACTION MINUTES Page 5 of 9 City Council Meeting Draft Action Minutes: 6/13/16 Resource Allocation Process (HSRAP)” with “Human Services including Human Services Resource Allocation Process (HSRAP) grantees.” AMENDMENT: Council Member Holman moved, seconded by Council Member XX to add to the Motion, “include a change to allow for a 7 year tree pruning cycle.” AMENDMENT FAILED DUE TO THE LACK OF A SECOND AMENDMENT: Council Member DuBois moved, seconded by Council Member XX to replace Part B of the Motion with, “to refer to the Finance Committee options for use of excess Budget Stabilization Reserve (BSR) funds above 18.5 percent towards the Capital Infrastructure Fund and Section 115 Trust Fund.” AMENDMENT FAILED DUE TO THE LACK OF A SECOND AMENDMENT: Council Member Holman moved, seconded by Mayor Burt to add to the Motion, C. Refer to the Policy and Services Committee, to identify options for increasing HSRAP funding in Fiscal Year 2018; and potentially increase HSRAP funding to the $667,000 level which reflects a 2.5 percent cost of living increase annually from Fiscal Year 2002 levels; and D. Explore a low income fee program, specifically with regards to Community Services. AMENDMENT PART C RESTATED AND INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “refer to the Policy and Services Committee, whether or not to increase HSRAP funding in Fiscal Year 2018; and potentially increase HSRAP funding to the $667,000 level which reflects a 2.5 percent cost of living increase annually from Fiscal Year 2002 levels.” (New Part C) AMENDMENT PART D RESTATED AND INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “refer to the Policy and Services Committee to explore a low income fee program, specifically with regards to Community Services.” (New Part D) DRAFT ACTION MINUTES Page 6 of 9 City Council Meeting Draft Action Minutes: 6/13/16 INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “including actions included in the At Places Memorandum” after “Municipal Fee Schedule.” AMENDMENT: Council Member Filseth moved, seconded by Council Member Holman to add to the Motion, “move to 7 years for tree trimming and reduce the Office of Sustainability contingency to $125,000.” AMENDMENT FAILED: 4-4 Burt, Kniss, Schmid, Wolbach no, Berman absent MOTION RESTATED: Vice Mayor Scharff moved, seconded by Council Member Wolbach to adopt the Operating and Capital Budgets and Municipal Fee Schedule including actions included in the At Places Memorandum; and each of the related rate increases, utility financial plans, and salary schedule Resolutions with the following changes: A. An additional $50,000 for an Emerging Needs Funds for Human Services including Human Services Resource Allocation Process (HSRAP) grantees; and B. An additional $750,000 set aside towards the unfunded pension liability (establishment of a Section 115 Trust Fund); and C. Refer to the Policy and Services Committee, whether or not to increase HSRAP funding in Fiscal Year 2018; and potentially increase HSRAP funding to the $667,000 level which reflects a 2.5 percent cost of living increase annually from Fiscal Year 2002 levels; and D. Refer to the Policy and Services Committee to explore a low income fee program, specifically with regards to Community Services. MOTION AS AMENDED PASSED: 8-0 Berman absent 10. Approval of Funding Agreement With the Palo Alto Transportation Management Association (PATMA) and Silicon Valley Community Foundation in the Amount of $100,000 for Fiscal Year 2017 for Pilot Programs and Discussion of the PATMA Draft Strategic Plan. MOTION: Vice Mayor Scharff moved, seconded by Council Member Kniss to approve and authorize the City Manager or his designee to execute the DRAFT ACTION MINUTES Page 7 of 9 City Council Meeting Draft Action Minutes: 6/13/16 funding agreement between the City of Palo Alto, the Silicon Valley Community Foundation, and the Palo Alto Transportation Management Association (PATMA). INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “establish a Council Liaison to PATMA to be appointed by the Mayor.” (New Part A) AMENDMENT: Council Member Wolbach moved, seconded by Council Member XX to add to the Motion, “direct Staff and PATMA to explore outsourcing the operation of the Palo Alto Free Shuttle to PATMA.” AMENDMENT WITHDRAWN BY THE MAKER AMENDMENT: Council Member DuBois moved, seconded by Council Member XX to add to the Motion, “add to Agreement Item Number 6, ‘including mode percent change in Single Occupancy Vehicle (SOV) use’ after ‘quantitative measures.’” AMENDMENT RESTATED: Council Member DuBois moved, seconded by Council Member Schmid to add to the Motion, “direct Staff to include percent change in Single Occupancy Vehicle (SOV) use in future presentations to Council.” (New Part B) AMENDMENT AS AMENDED PASSED: 7-1 Wolbach no, Berman absent MOTION RESTATED: Vice Mayor Scharff moved, seconded by Council Member Kniss to approve and authorize the City Manager or his designee to execute the funding agreement between the City of Palo Alto, the Silicon Valley Community Foundation, and the Palo Alto Transportation Management Association (PATMA); and A. Establish a Council Liaison to PATMA to be appointed by the Mayor; and B. Direct Staff to include percent change in Single Occupancy Vehicle (SOV) use in future presentations to Council. MOTION AS AMENDED PASSED: 8-0 Berman absent Council Member Kniss left the meeting at 11:41 P.M. DRAFT ACTION MINUTES Page 8 of 9 City Council Meeting Draft Action Minutes: 6/13/16 10a. (Former Agenda Item Number 7) Approval and Authorization for the City Manager to Sign a Letter Commenting on the City of East Palo Alto's General Plan Update and Draft Environmental Impact Report. MOTION: Council Member Wolbach moved, seconded by Council Member XX to authorize the City Manager or his designee to sign a letter commenting on the City of East Palo Alto’s General Plan Update and Draft Environmental Impact Report (DEIR) including the following changes: A. Remove Paragraph 3 on page 4; and B. Remove all references to displacement; and C. Add that Palo Alto does not oppose nor seek delay of consideration of additional housing supply; and D. Add that Palo Alto recognizes that colocation of housing near jobs can have a positive effect on traffic. SUBSTITUTE MOTION: Mayor Burt moved, seconded by Vice Mayor Scharff to authorize the City Manager or his designee to sign a letter commenting on the City of East Palo Alto’s General Plan Update and DEIR, including the following changes: modify the letter to focus more on evaluation of impacts and alternatives including those related to the Newell Bridge; and avoid specific advocacy on amount of housing development and instead focus on impacts. MOTION FAILED DUE TO LACK OF SECOND INCORPORATED INTO THE SUBSTITUTE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add at the end of the Motion, “pro and con.” INCORPORATED INTO THE SUBSTITUTE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add at the end of the Motion, “and limit or remove assumptions regarding displacement.” SUBSTITUTE MOTION RESTATED: Mayor Burt moved, seconded by Vice Mayor Scharff to authorize the City Manager or his designee to sign a letter including the following changes: request the City Manager to modify the letter to focus more on evaluation of impacts and alternatives including DRAFT ACTION MINUTES Page 9 of 9 City Council Meeting Draft Action Minutes: 6/13/16 those related to the Newell Bridge; and avoid specific advocacy on amount of housing development and instead focus on impacts pro and con; and limit or remove assumptions regarding displacement. SUBSTITUE MOTION AS AMENDED PASSED: 7-0 Berman, Kniss absent Inter-Governmental Legislative Affairs None. Council Member Questions, Comments and Announcements Vice Mayor Scharff reported that the Cities Association of Santa Clara County voted to support a regional minimum wage. He announced his appointment to the Santa Clara County Airport Land Use Commission. Council Member Wolbach requested an update on the status of updates to the minimum wage in Palo Alto. He reported his attendance during a vigil at the Billy DeFrank LGBT Community Center in remembrance of those killed in Orlando Florida. Council Member DuBois reported his attendance along with Vice Mayor Scharff and Council Member Filseth at the airport community meeting on airplane noise. Approximately 100 people attended, including several members of the Federal Aviation Administration Select Committee on South Bay Airplane Noise (Committee). He announced that the next meeting of the Committee is scheduled for June 15. He reported the participation of Council Members Filseth, Holman, and himself at the Stanford University Commencement this past Sunday. Adjournment: The meeting was adjourned in support of the Orlando, Florida community at 12:10 A.M. City of Palo Alto (ID # 7067) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Approval of Contract Amendment with Cypress Security Title: Approval of a Contract Amendment With Cypress Security, Inc. (C16160138A) in the Amount of $884,552 for a Total Not-to-Exceed Amount of $1,323,992 and Extend the Term of the Agreement to December 31, 2016 From: City Manager Lead Department: Police Recommendation Staff recommends that Council authorize the City Manager, or his designee, to execute the attached contract amendment (Attachment A) with Cypress Security, Inc. (C16160138A) in the amount of $884,552 for a total not-to-exceed the amount of $1,323,992 and extend the term of the agreement to December 31, 2016. Background and Discussion Since 2009, the City of Palo Alto has used the services of contract security guards in response to teen fatalities that have occurred along the Caltrain corridor in Palo Alto. This program is commonly referred to as Track Watch. From November 2009 to October 2014, guards were stationed at both the Charleston and Meadow crossings from 6:15 p.m. to 1:15 a.m. (seven hours). This evening only level of service at two locations resulted in a monthly cost for rail security services of approximately $5,000 per month. To address additional teen fatality incidents, in October 2014, the City increased its rail security services to include the Churchill crossing and in November 2014 the City increased its rail security services to include the California Avenue Station. Most recently, in response to a teen suicide at the Alma crossing security services were added at this fifth location. This resulted in the City of Palo Alto having contract security guards at a total of five locations. Additionally, the City increased the original scope by hiring rail security guards to be present 24 hours per day to help further mitigate the risk of incidents involving both Caltrain and freight trains. The City initially utilized Val Security for contract security guard services. Previously, the City had issued Requests for Quotations (RFQs) for contract security guards which relied almost exclusively on cost as the award determinant. In an effort to increase the level of service the City was receiving from the contract, in July 2015, the City issued a formal RFP for contract security services for four locations along the Caltrain corridor in Palo Alto. Through that City of Palo Alto Page 2 process, the City received three proposals for these services. Staff reviewed, evaluated, and scored the proposals based on an established set of criteria and determined that Cypress was the most favorable proposer as reflected in their training and program management, data collection and digital record keeping, and experience in the field. Cypress began providing contract security guard services on December 1, 2015. In the Spring of 2016, in response to concerns about the quality of services provided by Cypress, the City worked with Cypress to restate our expectations and make several service enhancements which will enable them to be increasingly effective in the future, including installation of temporary toilet facilities at guard locations, increased coverage to include a fifth guard position at the Palo Alto Avenue crossing, and an additional sixth and seventh guard positions to serve as “rovers” to ensure continuous coverage during scheduled work breaks at all locations. In addition, Cypress guards will be using a GPS tracking technology so that the City can verify their physical location and proximity to their post in real-time. The City of Palo Alto has been working on several fronts related to what is called “means restriction” – limiting and reducing access to the tracks, as well as improving visibility along the rail line. Research has shown that “means restriction” is an important part of a comprehensive approach to suicide prevention. On our own initiative, the City has helped put in place several key “means restriction” elements: enhanced and taller fencing along the entire east side of the Cal Train rail corridor, clearing of brush/shrubs for better visibility, and the installation of a pilot intrusion detection camera technology at one location to monitor the grade crossing. This technology is designed to distinguish between humans and other objects down the corridor, along the right of way and at intersections. To ensure continuous monitoring at all locations and down the Cal Train corridor, City staff believes that such technology will be key to a sustainable Track Watch program, eventually replacing the guard program as currently provided. While means restriction is an important suicide prevention strategy it is only one of many efforts underway by the Palo Alto community. The City of Palo Alto’s ongoing commitment to the Project Safety Net Community Collaborative, which aims to build and strengthen the community network of support for youth and teens across all community sectors, and helps provide increased awareness and decreased stigma of mental health, strengthens connections between teens and caring adults and provides suicide prevention training in line with our long term strategy in suicide prevention. Track security services are not the panacea to this complex and challenging issue of suicide prevention that we face as a community. Investment in the health and wellbeing of Palo Alto’s youth and teens must be pervasive, well beyond track security services, inclusive of community, school, parent and student efforts across Palo Alto community. Finally, it is also important to understand that track security services with human guards is not fool proof, and will be subject to human error. Recognizing the inherent challenges with human guards and following the best practice of video intrusion detection for suicide prevention on rail City of Palo Alto Page 3 lines staff is experimenting with a pilot intrusion detection camera system as a possible alternative to human guards as long term strategy. Council has an accompanying staff report on this pilot, also on consent for this June 27th, 2016. Resource Impact The additional amount requested is $884,552 which includes six months of service for seven guards 24 hours per day, 7 days a week in FY 2017 and an additional $85,540 for services rendered in FY 2016 that were not in the original scope (rover patrol and fifth guard location), making the total not-to-exceed amount of the contract $1,323,992. The FY 2016 cost will be paid for out of FY 2016 funds. The Fiscal Year 2017 Proposed Operating Budget allocated $824,000 for Track Watch contract security services in the Police Department budget. Staff will need to evaluate additional funding options in FY 2017 to meet any funding for a contract for the second six months of FY 2017. Environmental Review This is not a project under the California Environmental Quality Act (CEQA). Attachments:  ATTACHMENT A - CYPRESS AMENDMENT 062116 (PDF) 1 Revision June 16, 2016 AMENDMENT NO. 1 TO CONTRACT NO. C16160138A BETWEEN THE CITY OF PALO ALTO AND CYPRESS SECURITY, LLC This Amendment No. 1 to Contract No. C16160138A (“Contract”) is entered into June 27, 2016, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CYPRESS SECURITY, LLC, a limited liability company, located at 1762 Technology Drive, San Jose, CA 95110, Telephone Number: (408) 946-4102 (“CONTRACTOR”). R E C I T A L S A. The Contract was entered into between the parties for the provision of access control and security services at five (5) at-grade railroad crossings. B. The parties wish to amend the Contract. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 3 “TERM” is hereby amended to read as follows: “TERM. The term of this Agreement is from December 1, 2015 to December 31, 2016 inclusive, subject to the provisions of Sections Q and V of the General Terms and Conditions.” SECTION 2. Section 5 “COMPENSATION FOR ORIGINAL TERM” is hereby amended to read as follows: “A sum calculated in accordance with the fee schedule set forth at Exhibit C, not to exceed a total maximum compensation amount of One Million, Three Hundred, Twenty-three Thousand, Nine Hundred and Ninety-two Dollars ($1,323,992).” SECTION 3. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a. Exhibit “A” entitled “SCOPE OF SERVICES” b. Exhibit “B” entitled “SCHEDULE OF PERFORMANCE” c. Exhibit “C” entitled “SCHEDULE OF FEES and RATE SCHEDULE” // // DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 2 Revision June 16, 2016 SECTION 4. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO City Manager or Designee APPROVED AS TO FORM: City Attorney or Designee CYPRESS SECURITY, LLC Attachments: EXHIBIT "A": SCOPE OF PROJECT & TIME SCHEDULE EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT "C": SCHEDULE OF FEES and RATE SCHEDULE DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB CEO 6/21/2016 Kes Narbutas 3 Revision June 16, 2016 EXHIBIT A SCOPE OF SERVICES The CONTRACTOR shall provide access control and enforce access control procedures to the site by monitoring pedestrian traffic through designated railroad crossings. Specifically: • Meadow Drive Caltrain Crossing • Charleston Road Caltrain Crossing • Churchill Avenue Caltrain Crossing • California Avenue Caltrain Platform • Alma Caltrain Crossing The CONTRACTOR shall provide standing officers to secure a section of railroad against trespassing to prevent endangerment of all parties involved. The CONTRACTOR shall provide security guards with uniforms (standardized polo type shirts and pants are acceptable) that identify the company and are to be unarmed. The guards shall be alert and standing outside of a vehicle observing the northbound and southbound railroad tracks at designated locations. A marked vehicle at each location would be preferable but not mandatory. The guards are allowed two 15-minute breaks and a half-hour lunch for each eight-hour shift. Also provided will be two “rover” guards to ensure continuous coverage at the five designated locations. The CONTRACTOR will establish and maintain a break/lunch schedule for each post and shift, and provide that to the City upon request. The CONTRACTOR agrees to designate a supervisor to be on duty seven (7) days a week, twenty- four (24) hours a day at the following contact numbers: San Jose QCM at 408-367-9893 or San Francisco QCM at 415-786-4983, to respond immediately to any City report or inquiry concerning the CONTRACTOR’s guards. Without limitation upon any of the rights or remedies of the City under this Agreement or under law arising from the conduct of the CONTRACTOR or its personnel or agents CITY and CONTRACTOR agree that the failure of any guard to be present during any part of a scheduled shift, except when relieved by a roving officer, shall be considered a breach of this Agreement, and CITY will suffer damages and incur other costs and expenses of a nature and amount that is difficult or impractical to determine. Accordingly, CITY and CONTRACTOR agree, as a method to fix the damages and not as a penalty, that in the event of any such failure to perform, the amount of damage which shall be sustained by CITY will be the sum of $50 for each and every hour or part of hour during which a shift is unfilled. CITY shall provide notice to CONTRACTOR of any unfilled shift or part of a shift. If within 10 days CONTRACTOR fails to pay damages to CITY, as specified in this paragraph, CONTRACTOR agrees that CITY may deduct and withhold the amount of the unpaid damages from any amounts due or that may become due to CONTRACTOR under this Agreement. If CONTRACTOR disputes CITY’s claim of damages, CITY shall provide reasonable documentation to support its claim. By executing this Amendment, CITY and CONTRACTOR acknowledge that the amount set forth in this paragraph has been agreed upon as the parties’ reasonable estimate of CITY’s damages. SPECIFIC SERVICES/REQUIREMENTS: The CONTRACTOR shall provide personnel who conduct themselves in a professional manner at all times while maintaining the highest levels of empathy and service. Personnel are expected to DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 4 Revision June 16, 2016 demonstrate the following abilities and characteristics: • High school diploma or equivalent • Ability to perform duties described in Scope of Services • Dependability • Sense of responsibility for the safety of children and others • Good verbal communications skills • Familiarity with traffic rules and regulations The City will evaluate both independently and collectively with the CONTRACTOR, whether assigned personnel are meeting the above standards. The City may mandate changes in personnel if it deems that these standards are not being met. Personnel will be expected to perform the following duties, practices, and procedures: 1. CROSSING ASSISTANCE DUTIES AND STANDARDS OF CONDUCT: The CONTRACTOR shall ensure that all Caltrain General Orders and site specific protocols are followed at all times. The CONTRACTOR hereby agrees that security personnel will also perform track (not street) crossing assistance functions during working hours. Such functions will include helping pedestrians and cyclists who need assistance to "cross-over" the tracks. The goal of the additional duties is to increase safety at the crossings while at the same time fostering positive interactions between the guards and members of our community. Security personnel are to perform these services in a manner which is helpful, positive, and designed to foster a feeling of goodwill. Security functions shall take priority over the crossing assistance functions at all times. Security personnel shall use their discretion, expertise, and judgment in deciding whether or not to perform crossing assistance functions at any given time. However, security personnel shall make a reasonable effort to try to provide some crossing assistance at "busy" pedestrian times (especially to those in need). Security personnel should be alert to and approach (if safe to do so) individuals who may be or appear to be in distress, lingering near rail crossings, engaging in any behavior contrary to personal safety, or engaging in any illegal activity and immediately report these incidents to Caltrain dispatch and Palo Alto Police Dispatch. In addition, security personnel are expected to identify potential safety, health, environmental, and/or fire hazards and immediately report these occurrences to appropriate parties. In addition, the CONTRACTOR shall ensure security personnel remain attentive and vigilant throughout the work shift including but not limited to, refraining from cell phone usage unless reporting an emergency or discussing an urgent issue with his or her supervisor. In addition, security personnel shall not provide interviews or statements to the media related to any aspect of the security operations without prior written consent from the City. The City does not require a supervisor or lead officer at each location. The CONTRACTOR will provide a 24-hour contact number where a Cypress supervisor can be reached to address absences or other issues occurring at the designated railroad crossings. However, in the event of an incident, the City would require a supervisor to evaluate the performance of the personnel and report on the findings (see below). A dedicated Account Manager to work with City Staff on operational issues, concerns and billing is highly DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 5 Revision June 16, 2016 preferable. 2. CROSSING GUARD EQUIPMENT TO BE PROVIDED BY CONTRACTOR: The CONTRACTOR shall provide a whistle to be used by personnel to be used to alert pedestrians to safety concerns. In addition, the vendor shall provide a safety/traffic vest to be worn by security personnel at all times while on duty. Guard equipment to include cell phone with GPS monitoring capability, Caltrain train schedule and flashlight. 3. USE OF BINOCULARS TO SCAN TRACKS: The CONTRACTOR will provide security personnel with binoculars with a magnification of approximately 7X50. Security personnel will use binoculars to assist them in scanning the crossing area as well as up and down the tracks. Security personnel will use their discretion in determining when to use binoculars. Night vision capabilities are highly preferable. 4. NAME TAGS: Name tags (or stitched fabric) are to be worn outside the clothing of security personnel. The name tags shall state the name of the security guard on duty and identify CONTRACTOR as the provider of the track watch service. The tag will be made of laminated or comparable material such that it will be suitable for wearing it in the rain. 5. OUTDOOR WEAR: Security personnel shall come equipped with clothing and footwear suited to the outdoor conditions in which they work. The CONTRACTOR shall make a good faith effort to make sure that all security personnel have appropriate outdoor wear for all seasons including: jackets designed to be worn in cold weather and rain; gloves; head wear (caps, hats); appropriate footwear; and sunscreen. All personnel equipment is considered a CONTRACTOR cost and should be included in the appropriate billing rates. 6. LOG OF SECURITY PERSONNEL ON DUTY AND DAILY ACTIVITY REPORTS: At least weekly, the CONTRACTOR will send the City of Palo Alto a proposed schedule of the guards on duty. This log will include the name of security personnel, the hours which they will be working and an emergency cell phone contact number for each guard. This schedule will be emailed to the City’s Contract Administrator. The City of Palo Alto understands that the staffing schedule submitted may be subject to change. The CONTRACTOR will make a good faith effort to update the log to reflect such changes. In addition, the CONTRACTOR shall ensure that personnel prepare daily activity reports that document all activity and provide these to the City at regular intervals to be agreed upon. 7. INCIDENT REPORTING: The CONTRACTOR will ensure that a report is generated for any contact at a designated location where activity that is suspicious in nature occurs. When there is an incident involving attempted suicide, injury, or death, the CONTRACTOR supervisor will attach a cover memorandum acknowledging the report and evaluating/critiquing the actions/observations/behavior of the guard. These reports should be summarized and reviewed by a supervisor and forwarded to the City as soon as possible after an incident. DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 6 Revision June 16, 2016 8. SECURITY PERSONNEL TRAINING: The CONTRACTOR agrees that it will schedule training sessions for personnel working this detail. Training will be held at mutually agreed upon times. The City anticipates a 4-6 hour training session prior to assignment. Additional training standards by the CONTRACTOR are highly preferable and should be discussed in the proposal. The City may request additional training for personnel as the contract progresses. 9. FLEXIBILITY OF SCHEDULING: The CONTRACTOR agrees, given reasonable notice, to make a good faith effort to make adjustments to the shift schedules of security personnel shifts and/or the locations where services are to be provided if requested to do so by the City. The purpose of this provision is to allow the City to make scheduling and/or location adjustments to meet the needs of the community without requiring the City of Palo Alto to contract for additional hours of service. DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 7 Revision June 16, 2016 EXHIBIT B SCHEDULE OF PERFORMANCE CONTRACTOR shall perform the Services according to the following schedule: • Meadow Drive Caltrain Crossing – 24 hours/7 days • Charleston Road Caltrain Crossing – 24 hours/7 days • Churchill Avenue Caltrain Crossing – 24 hours/7 days • California Avenue Caltrain Platform – 24 hours/7 days • Alma Caltrain Crossing – 24 hours/7 days • Two additional “rover” guards for continuous coverage at all locations. DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 8 Revision June 16, 2016 EXHIBIT C SCHEDULE OF FEES Compensation based upon fee schedule CITY shall pay CONTRACTOR according to the following rate schedule. The maximum amount of compensation to be paid to CONTRACTOR, including both payment for services and reimbursable expenses, shall not exceed One Million, Three Hundred, Twenty-three Thousand, Nine Hundred and Ninety-two Dollars ($1,323,992). Any services provided or hours worked for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to CITY. Month Coverage Cost July 2016 29 Regular Days 1 Holiday 24 Hour per Day Coverage 7 Locations $131,739.48 August 2016 31 Regular Days 0 Holidays 24 Hour per Day Coverage 7 Locations $133,883.16 September 2016 29 Regular Days 1 Holiday 24 Hour per Day Coverage 7 Locations $131,739.48 October 2016 31 Regular Days 0 Holidays 24 Hour per Day Coverage 7 Locations $133,883.16 November 2016 29 Regular Days 1 Holiday 24 Hour per Day Coverage 7 Locations $131,739.48 December 2016 30 Regular Days 1 Holiday 24 Hour per Day Coverage 7 Locations $136,026.84 Total Cost $799,011.60 DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB 9 Revision June 16, 2016 EXHIBIT C RATE SCHEDULE Regular Rate Holiday/OT Rate Track Watch Security Officer $25.08 $37.62 Roving Break Relief Officer $26.62 $39.93 Additional Vehicle (Monthly) $975.00/month DocuSign Envelope ID: EBCF2567-C8DB-4DDA-A859-0285BD071AAB City of Palo Alto (ID # 6991) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Net Energy Metering Successor Rate and Transition Policy Title: Finance Committee Recommendation that Council Adopt a Resolution Adopting a Net Energy Metering Successor Rate E-EEC-1 (Export Electricity Compensation), Establishing the Net Energy Metering Transition Policy, and Amending Rule and Regulation 2 (Definitions and Abbreviations) and 29 (Net Energy Metering and Interconnection) From: City Manager Lead Department: Utilities Recommendation Staff, the Utilities Advisory Commission (UAC), and the Finance Committee recommend that the City Council adopt a resolution (Attachment A) adopting a Net Energy Metering (NEM) Successor Rate, E-EEC-1 (“Export Electricity Compensation”, Attachment B); establishing the NEM Transition Policy; and, Amending Utilities Rule and Regulation 2 (“Definitions and Abbreviations”, Attachment C-1) and 29 (“Net Energy Metering and Interconnection”, Attachment C-2). Executive Summary Net energy metering (NEM) is a billing mechanism designed to promote the installation of renewable distributed generation by allowing customers to be compensated at the full retail rate for electricity generated by their on-site systems, such as solar photovoltaic (solar PV) systems. State law requires all electric utilities to offer NEM to customers with eligible renewable distributed generation up to a maximum cap, or “NEM cap”, which in Palo Alto is 9.5 megawatts (MW). Under the City’s current rates, NEM customers can reduce, or completely avoid, charges on their electric utility bill while still remaining interconnected with the electric grid and utilizing grid services. Utilities generally refer to the terms and conditions for on-site renewable generation installed after the NEM cap is reached as the “NEM successor rate” or “NEM successor program.” As of mid-February 2016, the City of Palo Alto Utilities (CPAU) was approximately 79% toward meeting the NEM cap, and could exceed it by the end of 2016. As Utilities across the state approach their respective NEM caps, NEM successor rates are a topic of much debate. To help guide staff efforts on the NEM successor rate development, City City of Palo Alto Page 2 Council adopted NEM Successor Program Design Guidelines in January 2016 (Staff Report 6437). Under the proposed NEM successor rate (Rate Schedule E-EEC-1, Export Electricity Compensation), customers would receive a credit at the E-EEC-1 buyback rate for all electricity sent to the grid (when instantaneous on-site generation is greater than instantaneous on-site consumption), and they would be billed at the prevailing retail rate for all electricity drawn from the grid (when instantaneous on-site consumption is greater than instantaneous on-site generation). The proposed value of the credit for energy sent to the grid is 7.485 cents per kilowatt-hour (kWh), which compensates the customer for the energy, avoided capacity charges, avoided transmission/ancillary service charges, avoided transmission and distribution system losses, and environmental attributes. The energy value takes into account that solar energy is often generated at times of the state’s peak system demand. If approved, the credit would take effect July 1, 2016, and would be updated annually along with the budget. Based on staff analysis, the proposal will support continued solar PV deployment while ensuring that the City’s electric rates are based on the cost of providing service, in compliance with state constitutional requirements amended by Proposition 26. In addition to the proposed NEM successor rate, staff also recommends adopting a transition policy for customers with systems installed within the NEM cap. Specifically, staff proposes adopting a 20-year transition period from the time of interconnection through which NEM customers remain eligible for net metering under the terms currently set forth in California Public Utilities Code 2827. In addition, staff proposes allowing NEM customers to expand their systems by up to 10% of the original system size while still remaining eligible for net metering after the NEM cap has been reached. The Finance Committee reviewed the proposal at its May 17, 2016, meeting and voted unanimously to recommend Council approve the proposed resolution. Discussion Staff carried out a thorough evaluation of a broad variety of NEM successor rate design options considering the NEM successor design guidelines as well as conceptual and practical considerations of each option. Under the proposed NEM successor rate, customers would receive a credit for all electricity sent to the grid (energy generated in excess of instantaneous usage), and they would be billed at the prevailing retail rate for all electricity they use from the grid (energy used in excess of instantaneous generation). To help promote regulatory certainty and transparency for existing NEM customers who have invested in solar PV systems and for solar developers operating in Palo Alto, staff proposes that existing NEM customers and all eligible customers within the NEM cap in CPAU service territory remain eligible for NEM through a 20- year transition period from the date of system interconnection. Staff also proposes allowing NEM customers to expand their systems by up to City of Palo Alto Page 3 10% of the original system size while still remaining eligible for net metering after the NEM cap has been reached. A full explanation of the proposal and alternatives is provided in the report provided for the Finance Committee’s May 17, 2016, meeting (Attachment D). Committee Review and Recommendation The UAC reviewed staff’s recommendation at its April 12, 2016, meeting and voted unanimously to support staff’s recommendation. The minutes to the UAC meeting are provided as Attachment E. The Finance Committee reviewed the recommendation at its May 17, 2016, meeting. The Finance Committee expressed support for the recommendation and voted unanimously (4-0) to recommend Council approve the recommendation. Action minutes from the May 17, 2016, Finance Committee meeting are provided as Attachment F. Resource Impact Staff has developed an implementation plan to be executed upon adoption of the NEM successor rate to help ensure that CPAU will be ready for customers who install eligible renewable energy systems after the NEM cap has been reached. Implementation of the proposed NEM successor rate requires modifications to current business systems and processes including installing bidirectional electric meters, programming of meter reading devices, training meter reading staff, modifying the format of electric Utilities bills, and revising electric usage billing calculations. Furthermore, all staff must be trained in these new systems and processes. At present, all modifications to systems and processes are planned to utilize existing staff and budget resources. The proposed NEM successor rate is based on the cost to serve, and the credit value would be updated annually to reflect the market value of solar energy, value of the RECs, avoided capacity charges, avoided charges for transmission and ancillary services, and avoided transmission and distribution system losses. Therefore, there would be no direct financial resource impact for eligible systems installed under staff’s proposed NEM successor program. Policy Impact Fulfilling Palo Alto’s NEM legislative requirements and adopting the proposed NEM successor program are consistent with the California Public Utilities Code and state constitutional requirements regarding cost-based rates. Furthermore, adopting a NEM successor rate will add greater market certainty for those interested in installing rooftop solar PV after the NEM cap has been reached. The proposed policy directly supports Strategy #2 of the Local Solar Plan, to “develop proper policies, incentives, price signals and rates to encourage solar installation”. Furthermore, staff analyses indicates the proposed NEM successor rate will support continued uptake of distributed renewable energy technologies in Palo Alto, which further supports the Carbon Neutral Plan, the Local Solar Plan, and the City’s broader environmental sustainability City of Palo Alto Page 4 goals, including those set out in the 2011 Utilities Strategic Plan and the 2007 Climate Protection Plan. Environmental Impact Council’s adoption of a resolution establishing a NEM Successor Rate is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. Council’s adoption of a NEM transition policy and amending Utility Rules and Regulations does not meet the California Environmental Quality Act’s (CEQA) definition of “project” under California Public Resources Code Sec. 21065, thus no environmental review is required. Attachments:  Attachment A: Resolution Adopting NEM Successor Rate and Rate E-EEC-1 Rule 2 and 29 and Transition Policy (PDF)  Attachment B: Proposed Utilities Rate E-EEC-1 (Export Electricity Compensation Rate) (PDF)  Attachment C-1: Proposed Utilities Rule and Regulation 2 in redline format (PDF)  Attachment C-2: Proposed Utilities Rule and Regulation 29 in redline format (PDF)  Attachment D: Finance Committee Staff Report 6863 - Net Energy Metering Successor Rate and Transition Policy (PDF)  Attachment E: Excerpted Final UAC Minutes of April 12, 2016 Special Meeting (PDF) Attachment A NOT YET APPROVED 160502 jb 6053741 1 Resolution No. _________ Resolution of the Council of the City of Palo Alto Adopting the Net Energy Metering Successor Rate, Utilities Rate Schedule E-EEC-1 (Export Electricity Compensation); Establishing the Net Energy Metering Transition Policy; and, Amending Rule and Regulation 2 (Definitions and Abbreviations) and Rule and Regulation 29 (Net Energy Metering and Interconnection) R E C I T A L S A. Net Energy Metering (NEM), is a billing arrangement that provides credit to customers for the full retail value of the electricity their system generates. B. State law, California Public Utilities Code Section 2827 et. seq., requires all electric utilities to offer NEM to eligible customers with distributed renewable generation up to a maximum cap. C. Palo Alto’s NEM Cap is 9.5 megawatts (MW) as adopted by Council Resolution 9557. The City’s NEM installations are currently approximately 79% of the proposed 9.5 MW NEM Cap and staff estimates that the City’ NEM Cap will be reached by the end of 2016. Once the NEM Cap is reached, NEM will be closed to new customers and the NEM Successor Rate will become available instead. D. Utilities refer to the terms and conditions for customer-sited, distributed renewable generation installed after the NEM cap has been reached as the NEM successor rate or program. Palo Alto’s NEM Successor Rate is defined by Utilities Rate Schedule E-EEC-1 (Export Electricity Compensation). The E-EEC-1 rate was developed in coordination with the City’s 2016 electric cost of service analysis and may be established by the City Council through its electric utility rate-making authority and processes. E. Formally adopting a cost-based NEM Successor Rate (Rate Schedule E-EEC-1) in Palo Alto will promote greater market certainty and transparency for customers and renewable energy installers operating within the community, and is consistent with both NEM legislative and regulatory obligations and the Council-adopted Local Solar Plan to promote distributed solar projects. F. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. Updates to Rule and Regulation 2 (Definitions and Abbreviations) and Rule and Regulation 29 (Net Energy Metering and Interconnection) are needed in order to implement the NEM Successor Rate and transition policy. The Council of the City of Palo Alto does hereby RESOLVE as follows: Attachment A NOT YET APPROVED 160502 jb 6053741 2 SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-EEC-1 (Export Electricity Compensation) is hereby adopted as attached and incorporated. a) Utility Rate Schedule E-EEC-1 shall become effective July 1, 2016. b) The electricity export compensation rate approved by this resolution is based on a detailed analysis of the value of energy exported to the electric grid, including the energy, avoided capacity charges, avoided transmission and ancillary service charges, avoided transmission and distribution system losses, and environmental attributes and was developed in coordination with the City’s 2016 electric cost of service analysis. SECTION 2. The City Council makes the following findings regarding the establishment of a Net Energy Metering transition policy: 1) A Net Energy Metering transition policy which establishes a 20 year transition period and eligible facility expansion rules will promote regulatory certainty and transparency for the City’s existing NEM and NEM Aggregation customers who have invested in solar PV systems, and for solar developers operating in Palo Alto. 2) Setting the transition period at 20 years from the time of eligible facility interconnection matches the transition period adopted by the California Public Utility Commission for investor-owned utilities, and is reasonably based on eligible systems’ expected useful life, module warranties, power purchase agreements, and third-party financing agreements. 3) Allowing eligible facility expansion up to a given threshold will permit existing NEM and NEM Aggregation customers and those installing eligible facilities within the City’s NEM cap to retain their current NEM or NEM Aggregation rate structure in the event that facility panels need replacement or minor expansion, and is broadly in- line with expansion policies in effect in other California utility service territories. SECTION 3. The City Council adopts the following NEM Transition Policy: A) Existing City of Palo Alto Utilities (CPAU) NEM and NEM Aggregation customers and CPAU NEM and NEM Aggregation customers who install eligible renewable electrical generation facilities within the City’s NEM Cap (Resolution 9557) shall remain eligible for Net Energy Metering under the terms and conditions set forth in California Public Utilities Code Section 2827 (effective as of the date of this Resolution’s adoption) for a 20-year transition period from the time of initial facility interconnection, and B) Existing CPAU NEM and NEM Aggregation customers and CPAU NEM and NEM Aggregation customers who install eligible renewable electrical generation facilities within the City’s NEM Cap may expand their eligible renewable electrical generation facilities by up to 10% of the Initial Interconnection Capacity while still remaining eligible for Net Energy Metering, even after the NEM cap has been reached. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule and Regulation 2 (Definitions and Abbreviations) is hereby amended as attached and incorporated. Utility Rule and Regulation 2, as amended, shall become effective July 1, 2016. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule and Regulation 29 (Net Energy Metering and Interconnection) is hereby amended as attached and incorporated. Utility Rule and Regulation 2, as amended, shall become effective July 1, 2016. Attachment A NOT YET APPROVED 160502 jb 6053741 3 SECTION 6. The adoption of Section 1 of resolution changing electric rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. The adoption of Sections 3, 4 and 5 of this resolution establishing a transition policy and amending Utility Rules and Regulations does not meet the California Environmental Quality Act’s definition of a “project” under Public Resources Code Section 21065, thus no environmental review is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services Attachment B EXPORT ELECTRICITY COMPENSATION UTILITY RATE SCHEDULE E-EEC-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2016 Sheet No.E-EEC-1 A. APPLICABILITY: This schedule applies in conjunction with the otherwise applicable rate schedules for each customer class. This schedule may not apply in conjunction with any time-of-use rate schedule. This schedule applies to Customer-Generators as defined in Rule and Regulation 2 who are either not eligible for Net Energy Metering or who are eligible for Net Energy metering but elect to take service under this rate schedule. B. TERRITORY: Applies to locations within the service area of the City of Palo Alto. C. RATE: The following buyback rate shall apply to all energy exported to the grid. Per kWh Export electricity compensation rate $0.07485 D. SPECIAL CONDITIONS 1. Metering equipment: Electricity delivered by CPAU to the Customer-Generator or received by CPAU from the Customer-Generator shall be measured using a meter capable of registering the flow of electricity in two directions (aka “bidirectional meter”). The electrical power measurements will be used for billing the Customer-Generator. CPAU shall furnish, install and own the appropriate meter. 2. Billing: a. CPAU shall measure during the billing period, in kilowatt-hours, the energy delivered and received after the Customer-Generator serves its own instantaneous load. b. CPAU shall bill the Customer-Generator consumption charges for the energy delivered by CPAU to the Customer-Generator based on the Customer-Generator’s applicable rate schedule. c. In the event the energy generated exceeds the energy consumed and therefore is received by CPAU, the Customer will receive a credit for all energy received by CPAU at the buyback rate designated in section C above. 3. Generation facilities shall adhere to Rule and Regulation 27: Generating Facility Interconnections. {End} DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 1 A. ABBREVIATIONS AMR - Automated Meter Reading AER - Advance Engineering Request Btu - British Thermal Unit ccf - Hundred Cubic Feet CEC - California Energy Commission CPAU - City of Palo Alto Utilities CPUC - California Public Utilities Commission. ERU - Equivalent Residential Unit FERC - Federal Energy Regulatory Commission kVar - Kilovar kVarh - Kilovar-hours kW - Kilowatt kWh - Kilowatt-hour MW - Megawatt MMBtu - One million Btus. NEC - National Electric Code, Latest Version NEM - Net Energy Metering NEMA - Net Energy Metering Aggregation NEMIA - Net Energy Metering Interconnection Agreement NRTL - Nationally Recognized Testing Laboratory PAMC - Palo Alto Municipal Code PSIG - Per square inch gauge PST - Pacific Standard Time RWQCP - Regional Water Quality Control Plant UUT - Utilities Users Tax B. GENERAL DEFINITIONS Account The identification number in CPAU’s billing system for Utility Services. ATTACHMENT C-1 DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 2 Agency Any local, county, state or federal governmental body or quasi-governmental body, including, without limitation, the CPUC, the FERC and any joint powers agency, but excluding the City and any board, commission or council of the City. Aggregation Customer A Customer with a Renewable Electrical Generation Facility wishing to install an eligible Renewable Electrical Generation Facility that is sized to offset separately metered electric loads on adjacent or contiguous properties that are solely owned, leased, or rented by them, and who have signed the Net Energy Metering Interconnection Agreement for NEM Aggregation. Applicant An individual, corporation, partnership, Agency, or other legal entity or authorized agent of same, requesting CPAU to supply any or all of the following: 1. Electric Service 2. Water Service 3. Gas Service 4. Wastewater Collection 5. Refuse Service 6. Storm and Surface Water Drainage Service 7. Fiber Optics Service Or, an entity submitting an Application for Interconnection pursuant to Rule 27. Application (for Interconnection of Generating Facilities) An approved standard form (Load Sheet) submitted to CPAU for Interconnection of a Generating Facility. Beneficiary Account The Electric Service Meter(s) serviced by an Aggregation Customer’s Generating Facility, as listed on the Aggregation Customer’s NEMA-IA form. Bidweek Price Index The price reported in Natural Gas Intelligence “NGI’s Bidweek Survey”, California “PG&E Citygate” under the column “avg.” for the calendar month. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 3 Billing Period Also “service period” or “billing cycle”. The normal Billing Period for CPAU Customers is approximately 30 days, with variations occurring due to staff availability, holiday scheduling, field verification of Meter readings, or any other billing-related issues requiring additional investigation prior to issuance of the bill.. British Thermal Unit Also “Btu”. The standard sub-unit of measurement comprising a Therm of natural Gas. One (1) Therm equals 100,000 Btu. Business Day Any day, except a Saturday, Sunday, or any day observed as a legal holiday by the City. Certification Test A test pursuant to Rule 27 that verifies conformance of certain equipment with approved performance standards in order to be classified as Certified Equipment. Certification Tests are performed by NRTLs. Certification; Certified; Certificate The documented results of a successful Certification Test. Certified Equipment Equipment that has passed all required Certification Tests. Charge Any assessment, cost, fee, surcharge or levy for Utility Service other than a Tax, including metered and unmetered Utility Service, capacity, connections, construction, penalties, and mandated or required Customer financial obligations for Service. Charter The Charter of the City of Palo Alto. City Attorney The individual designated as the City Attorney of the City under Section 2.08.120 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the City Attorney. City’s Collector The Person(s) authorized under Section 5.20.040 of the Palo Alto Municipal Code to provide collection, DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 4 processing and disposal of solid waste, Compostable Materials and Recyclable Materials pursuant to one or more written contracts with the City. City Manager The individual designated as the City Manager of the City under Section 2.08.140 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the City Manager. City of Palo Alto, or City The government of the City of Palo Alto, a chartered City and a municipal corporation duly organized and validly existing under the Laws of the State of California, with a principal place of business located at 250 Hamilton Avenue, Palo Alto, County of Santa Clara. For the purposes of these Rules and Regulations, the term “City” may include services provided by both the City of Palo Alto Utilities Department and the City of Palo Alto Public Works Department. City of Palo Alto Public Works Department (Public Works) The City Department responsible for providing Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage Utility Services. Other Utility Services such as Water, Gas, Electric, Wastewater Collection, and Fiber Optics are provided by the City of Palo Alto Utilities Department. City of Palo Alto Utilities Department (CPAU) The City Department responsible for providing Water, Gas, Electric, Wastewater Collection and Fiber Optic Utility Services. Other Utility Services such as Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage are provided by the City of Palo Alto Public Works Department. Code The words "the Code" or "this Code" shall mean the Palo Alto Municipal Code. Commercial Service Commercial Utility Service is provided to businesses, non-profit organizations, public institutions, and industrial Customers. The term also applies to Utility Services through Master Meters serving multi- family Residential dwellings and common areas of multi-family facilities. Compostable Materials Organic materials designated by the City as acceptable for collection and processing. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 5 Container Any receptacle used for storage of solid waste, Recyclable Materials, Compostable Materials or other materials designated by the City to be collected by the City’s Collector. Examples of containers include carts, bins, compactors and drop boxes. Cubic Foot of Gas (cf) The quantity of Gas that, at a temperature of sixty (60) degrees Fahrenheit and a pressure of 14.73 pounds per square inch absolute, occupies one cubic foot. Curtailment The act of reducing or interrupting the delivery of natural Gas. Customer The Person, corporation, Agency, or entity that receives or is entitled to receive Utility Service(s) from the City of Palo Alto, or in whose name Service is rendered for a particular Account as evidenced by the signature on the Application, contract, or agreement for Service. In the absence of a signed instrument, a Customer shall be identified by the receipt of any payment of bills regularly issued in the name of the Person, corporation, or Agency regardless of the identity of the actual user of the Utility Service(s). Customer-Generator: An “eligible customer-generator,” as that term is defined by the California Public Utilities Code section 2827, as the same may be amended from time to time. Dark Fiber A Fiber Optic cable provided to end-users or resellers by CPAU without any of the light transmitters, receivers, or electronics required for telecommunications over the Fiber. Infrastructure for Fiber Optic activation is provided by the reseller or end-user. Dark Fiber Infrastructure Components of the CPAU Fiber Optic Distribution System required to provide Service to Customers (licensees), that are attached, owned, controlled or used by the City, located overhead or underground within the Public Right-of-Way, the Public Utility Easements and Leased Service Properties. Dedicated Distribution Transformer A Distribution Transformer that is dedicated to serving a single premise. Demand The highest rate of delivery of Electric energy, measured in Kilowatts (kW) or kilovolt amperes (kVA) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 6 occurring instantaneously or registered over a fixed time period (normally fifteen minutes unless otherwise specified within a monthly billing cycle). Demand Charge An electrical Charge or rate that is applied to a metered Demand reading expressed in Kilowatts to compute a Demand Charge component of a Customer’s Electric bill. Demarcation Point The Demarcation Point for a project shall be the Customer side of the panel onto which the CPAU Fiber terminates within the Customer Premises, unless otherwise specified in the Proposal for Dark Fiber Services. Distribution Services Includes, but is not limited to, Utility Service provided by the Distribution System and other Services such as billing, meter reading, administration, marketing, and Customer Services. Does not include Services directly related to the Interconnection of a Generating Facility as per Rule 27. Distribution System The infrastructure owned and operated by CPAU which is capable of transmitting electrical power, other than Interconnection Facilities, or transporting Water, Wastewater, or Gas within the City of Palo Alto. The Electric Distribution System transmits power from the City’s Interconnection with PG&E to CPAU’s Meter located on the Customer’s Premises. The Gas Distribution System transports Gas from PG&E receiving stations to CPAU’s Meter located on the Customer Premises. The Water Distribution System transports Water from the San Francisco Water Department receiving stations and CPAU wells to the meter located on the Customer Premises. The Wastewater Collection System transports sewage from the Customer’s Premises to the Water Quality Control Plant. Effluent Treated or untreated Wastewater flowing out of a Wastewater treatment facility, sewer, or industrial outfall. Electric, Electric Service Utility Service provided to residents and business owners in the City of Palo Alto consisting of generation, transmission, and distribution of electrical power for retail use. Electric Service is provided by the City of Palo Alto Utilities Department. Emergency An actual or imminent condition or situation, which jeopardizes CPAU’s Distribution System Integrity. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 7 Emergency Service Electric Service supplied to, or made available to, Load devices which are operated only in Emergency situations or in testing for same. Energy Services Energy commodity and any applicable ancillary Services used to generate and transport such commodity from its origin to the City’s Point of Receipt. May also mean the sale of value added Services associated or related to the Provision and/or usage of energy commodity. Equivalent Residential Unit (ERU) This is the basic unit for computing storm and surface water drainage fees. All single-family Residential properties are billed the number of ERU’s specified in the table contained in Utility Rate Schedule D-1, according to parcel size. All other properties have ERU's computed to the nearest 1/10 ERU using this formula: No. Of ERU = Impervious Area (sq. ft.) / 2,500 sq. ft. Fiber Optic, Fiber Optic Service A solid core of optical transmission material. Fiber Optic Service that is provided by the City of Palo Alto Utilities Department is referred to as Dark Fiber. Fiber Optic Backbone The high-density portion of the Dark Fiber Infrastructure installed and owned by the City. Force Majeure The occurrence of any event that has, had or may have an adverse effect on the design, construction, installation, management, operation, testing, use or enjoyment of the City’s Utility Services, which is beyond the reasonable control of the parties and which event includes, but is not limited to, an Act of God, an irresistible superhuman cause, an act of a superior governmental authority, an act of a public enemy, a labor dispute or strike or a boycott which could not be reasonably contemplated by the City or Customer affected thereby, a defect in manufactured equipment (including, but not limited to, the Dark Fibers), fire, floods, earthquakes, or any other similar cause. Function Some combination of hardware and software designed to provide specific features or capabilities. Its use, as in Protective Function, is intended to encompass a range of implementations from a single- purpose device to a section of software and specific pieces of hardware within a larger piece of equipment to a collection of devices and software. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 8 Gas Any combustible gas or vapor, or combustible mixture of gaseous constituents used to produce heat by burning. It shall include, but not be limited to, natural gas, gas manufactured from coal or oil, gas obtained from biomass or from landfill, or a mixture of any or all of the above. Gas, Gas Service Utility Service provided to residents and business owners in the City of Palo Alto consisting of procurement, transmission, and distribution of Gas for retail use. Gas Service is provided by the City of Palo Alto Utilities Department. Generating Facility All Generators, electrical wires, equipment, and other facilities owned or provided by Producer for the purpose of producing Electric power. This includes a solar or wind turbine Renewable Electrical Generation Facility that is the subject of a Net Energy Metering and Interconnection Agreement and Rule and Regulation 29. Generator A device converting mechanical, chemical or solar energy into electrical energy, including all of its protective and control Functions and structural appurtenances. One or more Generators comprise a Generating Facility. Gross Nameplate Rating; Gross Nameplate Capacity The total gross generating capacity of a Generator or Generating Facility as designated by the manufacturer(s) of the Generator(s). Initial Interconnection Capacity The maximum rated generating capacity of a Renewable Electrical Generation Facility eligible for Net Energy Metering prior to the Total Rated Generating Capacity exceeding the NEM Cap. Initial Review The review by CPAU, following receipt of an Application, to determine the following: (a) whether the Generating Facility qualifies for Simplified Interconnection; or (b) if the Generating Facility can be made to qualify for Interconnection with a Supplemental Review determining any additional requirements. Inspector The authorized Inspector, agent, or representative of CPAU. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 9 Interconnection; Interconnected The physical connection of a Generating Facility in accordance with the requirements of the City’s Utilities Rules and Regulations so that Parallel Operation with CPAU’s Distribution System can occur (has occurred). Interconnection Agreement An agreement between CPAU and the Producer providing for the Interconnection of a Generating Facility that gives certain rights and obligations to effect or end Interconnection. For the purposes of the City’s Utilities Rules and Regulations, the Net Energy Metering and Interconnection Agreement (for NEM and NEM Aggregation Customers), and the Power Purchase Agreements authorized by the City Council may be considered as Interconnection Agreements for purposes of defining such term. Interconnection Facilities The electrical wires, switches and related equipment that are required in addition to the facilities required to provide Electric Distribution Service to a Customer to allow Interconnection. Interconnection Facilities may be located on either side of the Point of Common Coupling as appropriate to their purpose and design. Interconnection Facilities may be integral to a Generating Facility or provided separately. Interconnection Study A study to establish the requirements for Interconnection of a Generating Facility with CPAU’s Distribution System. Internet Exchange Any Internet data center for telecommunications equipment and computer equipment for the purposes of enabling traffic exchange and providing commercial-grade data center services. Island; Islanding A condition on CPAU’s Electric Distribution System in which one or more Generating Facilities deliver power to Customers using a portion of CPAU’s Distribution System that is electrically isolated from the remainder of CPAU’s Distribution System. Junction A location on the Dark Fiber Infrastructure where equipment is installed for the purpose of connecting communication cables. Junction Site The area within the Transmission Pathway at which a Junction is located. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 10 Kilovar (kVar) A unit of reactive power equal to 1,000 reactive volt-amperes. Kilovar-hours (kVarh) The amount of reactive flow in one hour, at a constant rate of Kilovar. Kilowatt (kW) A unit of power equal to 1,000 watts. Kilowatt-hour (kWh) The amount of energy delivered in one hour, when delivery is at a constant rate of one Kilowatt; a standard unit of billing for electrical energy. Law Any administrative or judicial act, decision, bill, Certificate, Charter, Code, constitution, opinion, order, ordinance, policy, procedure, Rate, Regulation, resolution, Rule, Schedule, specification, statute, tariff, or other requirement of any district, local, municipal, county, joint powers, state, or federal Agency, or any other Agency having joint or several jurisdiction over the City of Palo Alto or City of Palo Alto Utilities or Public Works Customers, including, without limitation, any regulation or order of an official or quasi-official entity or body. Licensed Fibers One or more fibers comprising a part of the Dark Fiber Infrastructure that are dedicated to the exclusive use of the Customer under the Provisions of the Dark Fiber License Agreement, Proposal to Dark Fiber Services Agreement and the Utilities Rules and Regulations. Licensed Fibers Route A defined path of Licensed Fibers that is identified by specific End Points. Load(s) The Electric power Demand (kW) of the Customer at its Service Address within a measured period of time, normally 15 minutes, or the quantity of Gas required by a Customer at its Service Address, measured in MMBtu per Day. Main Wastewater Line Any Wastewater line not including a building connection (Service) sewer. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 11 Master-metering Where CPAU installs one Service and Meter to supply more than one residence, apartment dwelling unit, mobile home space, store, or office. Maximum Generation For a customer with a non-utility generator located on the customer’s side of the Point of Common Coupling, the Maximum Generation for that non-utility generator during any billing period is the maximum average generation in kilowatts taken during any 15-minute interval in that billing period provided that in case the generator output is intermittent or subject to violent fluctuations, the City may use a 5-minute interval. Meter The instrument owned and maintained by CPAU that is used for measuring either the Electricity, Gas or Water delivered to the Customer. Metering The measurement of electrical power flow in kW and/or energy in kWh, and, if necessary, reactive power in kVar at a point, and its display to CPAU as required by Rule 27. Metering Equipment All equipment, hardware, software including Meter cabinets, conduit, etc., that are necessary for Metering. Meter Read The recording of usage data from Metering Equipment. Minimum Charge The least amount for which Service will be rendered in accordance with the Rate Schedule. Momentary Parallel Operation The Interconnection of a Generating Facility to the Distribution System for one second (60 cycles) or less. Nationally Recognized Testing Laboratory (NRTL) A laboratory accredited to perform the Certification Testing requirements under Rule 27. Net Electricity Consumer A Customer-Generator whose Generating Facility produces less electricity than is supplied by CPAU DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 12 during a particular period, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(h)(2), as the same may be amended from time to time. Net Energy Metering Net Energy Metering means measuring the difference between the electricity supplied through CPAU’s Electric utility Distribution System and the electricity generated by the customer-generator’s facility and delivered to CPAU’s Electric utility Distribution System over a specified twelve-month period. Net Energy Metering Cap (NEM Cap) Five (5) percent of the historical system peak of 190 MW from 2006, or 9.5 MW, using the CEC’s Alternating Current (AC) capacity rating. Where the CEC AC rating is not available, CPAU will multiply the inverter AC nameplate rating by 0.86. Net Energy Metering Successor Program; Net Energy Metering Successor Rate The terms and conditions for Customer-Generators whose Renewable Electrical Generation Facilities are installed after the NEM cap has been reached, or Customers-Generators who are eligible for Net Energy Metering but elect to take service under the Net Energy Metering Successor Rate. The terms and conditions are defined by Utilities Rate Schedule E-EEC-1 (Export Electricity Compensation). Net Generation Metering Metering of the net electrical power of energy output in kW or energy in kWh, from a given Generating Facility. This may also be the measurement of the difference between the total electrical energy produced by a Generator and the electrical energy consumed by the auxiliary equipment necessary to operate the Generator. Net Nameplate Rating The Gross Nameplate Rating minus the consumption of electrical power of a Generator or Generating Facility as designated by the manufacturer(s) of the Generator(s). Net Surplus Customer-Generator A Customer-Generator who’s Generating Facility produces more electricity than is supplied by CPAU, during a particular period, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(h)(3), as the same may be amended from time to time. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 13 Net Surplus Electricity Compensation A per kilowatt hour rate offered by CPAU to the Net Surplus Customer-Generators (excluding Aggregation Customers) for net surplus electricity, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(b)(8), as the same may be amended from time to time. This rate is applicable only to Customer-Generators who are eligible for Net Energy Metering and are subject to Rule and Regulation 29. Non-Islanding Designed to detect and disconnect from an Unintended Island with matched Load and generation. Reliance solely on under/over voltage and frequency trip is not considered sufficient to qualify as Non- Islanding. Occupied Domestic Dwelling Any house, cottage, flat, or apartment unit having a kitchen, bath, and sleeping facilities, which is occupied by a Person or Persons. Parallel Operation The simultaneous operation of a Generator with power delivered or received by CPAU while Interconnected. For the purpose of this Rule, Parallel Operation includes only those Generating Facilities that are Interconnected with CPAU’s Distribution System for more than 60 cycles (one second). Performance Test, Performance Tested After the completion of any Fiber Interconnection work, the City will conduct a Performance Test of each Fiber constituting a part of the proposed leased fibers to determine its compliance with the Performance Specifications. Performance Specifications These specifications will include, but not be limited to, criteria relating to end-to-end optical time domain reflectometer data plots that identify the light optical transmission losses in each direction along the leased fibers whenever the testing is possible, measured in decibels at a wavelength of 1310 or 1550 nanometers for singlemode Fiber, as a Function of distance, measured in kilometers. Person Any individual, for profit corporation, nonprofit corporation, limited liability company, partnership, limited liability partnership, joint venture, business, family or testamentary trust, sole proprietorship, or other form of business association. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 14 PG&E Citygate The PG&E Citygate is the point at which PG&E’s backbone transmission system connects to PG&E’s local transmission system. Point of Common Coupling (PCC) The transfer point for electricity between the electrical conductors of CPAU and the electrical conductors of the Producer. Point of Common Coupling Metering Metering located at the Point of Common Coupling. This is the same Metering as Net Generation Metering for Generating Facilities with no host load. Point of Delivery (POD) Unless otherwise specified, the following definitions apply: For Electric, that location where the Service lateral conductors connect to the Customer’s Service entrance equipment; for overhead Services, the POD is at the weather-head connection; for under-ground Services, the POD is located at the terminals ahead of or at the Meter; for multiple Meter arrangements with connections in a gutter, the POD is at the Meter terminals (supply-side); for multiple Meter arrangements in a switchboard, the POD is typically at the connectors in the utility entrance section; for Natural Gas, the POD is the point(s) on the Distribution System where the City delivers natural Gas that it has transported to the Customer. Point of Interconnection The electrical transfer point between a Generating Facility and the Distribution System. This may or may not be coincident with the Point of Common Coupling. Point of Service (POS) Where CPAU connects the Electric Service lateral to its Distribution System. For Fiber Optics Service, this is where CPAU connects the Fiber Service to the backbone. This point is usually a box located in or near the street or sidewalk and can be in the Public Right-of-Way. This point is at a mutually agreed upon location established at the time of installation. Pole Line Overhead wires and overhead structures, including poles, towers, support wires, conductors, guys, studs, platforms, cross arms braces, transformers, insulators, cutouts, switches, communication circuits, appliances attachments, and appurtenances, located above ground and used or useful in supplying Electric, communication, or similar or associated Service. Power Factor DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 15 The percent of total power delivery (kVA) which does useful work. For billing purposes, average Power Factor is calculated from a trigonometric function of the ratio of reactive kilovolt-ampere-hours to the Kilowatt-hours consumed during the billing month. Power Factor is a ratio that reflects the reactive power used by a Customer. CPAU maintains an overall system Power Factor above 95% to reduce distribution system losses caused by low Power Factor. Power Factor Adjustment CPAU must install additional equipment to correct for Customers that maintain a low Power Factor, and may make a Power Factor Adjustment to a Customer’s bill to account for those costs and the additional energy costs and losses incurred by CPAU due to the Customer’s low Power Factor. Premises All structures, apparatus, or portion thereof occupied or operated by an individual(s), a family, or a business enterprise, and situated on an integral parcel of land undivided by a public street, highway, or railway. Primary Service CPAU Electric distribution Service provided to a Customer’s Premises at a voltage level equal to or greater than 1000 volts. Producer The entity that executes an Interconnection Agreement with CPAU. The Producer may or may not own or operate the Generating Facility, but is responsible for the rights and obligations related to the Interconnection Agreement. Proposal for Dark Fiber Services A project-specific Service agreement that acts as a supplemental document for the Dark Fiber License Agreement. This Service agreement shall include the proposed Interconnection fees, applicable Fiber licensing fees, term of the Service, and summary of licensed Fiber elements. Protective Function(s) The equipment, hardware and/or software in a Generating Facility (whether discrete or integrated with other Functions) whose purpose is to protect against Unsafe Operating Conditions. Provision Any agreement, circumstance, clause, condition, covenant, fact, objective, qualification, restriction, recital, reservation, representation, term, warranty, or other stipulation in a contract or in Law that defines or otherwise controls, establishes, or limits the performance required or permitted by any party. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 16 Prudent Utility Practices The methods, protocols, and procedures that are currently used or employed by utilities to design, engineer, select, construct, operate and maintain facilities in a dependable, reliable, safe, efficient and economic manner. Public Right-of-Way The areas owned, occupied or used by the City for the purposes of furnishing retail and/or wholesale Electricity, Gas, Water, Wastewater, Storm and Surface Water Drainage, Refuse Service or communications commodity and/or distribution Service, and the means of public transportation, to the general public, including but not limited to, the public alleys, avenues, boulevards, courts, curbs, gutters, lanes, places, roads, sidewalks, sidewalk planter areas, streets, and ways. Public Utility Easements The areas occupied or used by the City for the purpose of providing Utility Service to the general public, and all related Services offered by the City’s Utilities Department and/or Public Works Department, the rights of which were acquired by easements appurtenant or in gross, or are other interests or estates in real property, or are the highest use permitted to be granted by the nature of the City’s interest in and to the affected real property. This term incorporates all public Service easements for Utility Services that have been recorded by the City with the Recorder of the County of Santa Clara, California. Public Works Department See City of Palo Alto Public Works Department. Rate Schedule One or more Council-adopted documents setting forth the Charges and conditions for a particular class or type of Utility Service. A Rate Schedule includes wording such as Schedule number, title, class of Service, applicability, territory, rates, conditions, and references to Rules. Recyclable Materials Materials designated by the City as acceptable for recycling collection and processing. Refuse Service Refuse Service includes weekly collection, processing and disposal of materials properly deposited in the City Collector’s provided Containers for solid waste, as well as weekly collection and processing of Recyclable Materials, weekly collection and processing of Compostable Materials, ongoing maintenance of the closed Palo Alto Landfill, zero waste programs, street sweeping service, the household hazardous waste program, and the annual Clean Up Day. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 17 Renewable Electrical Generation Facility A Generation Facility eligible for NEM under California Public Utilities Code section 2827 et seq. as the same may be amended from time to time. Reserved Capacity For a customer with one or more non-utility generators located on the customer’s side of the Point of Common Coupling, the Reserved Capacity for each billing period is the lesser of 1) the sum of the Maximum Generation for that period for all non-utility generation sources; or 2) the maximum average customer demand in kilowatts taken during any 15-minute interval in the billing period provided that in case the load is intermittent or subject to violent fluctuations, the City may use a 5-minute interval. Residential Service Utility Service provided to separately metered single family or multi-family, domestic dwelling. Rules and Regulations See Utilities Rules and Regulations Scheduling Coordinator An entity providing the coordination of power schedules and nominations to effect transportation and distribution of Gas, Electric power and energy. Secondary Service CPAU Electric distribution Service provided to a Customer’s Premises at a voltage level less than 1000 volts. Service(s) Utility Services offered by the City of Palo Alto include Electric, Fiber Optics, Gas, Water, Wastewater Collection services provided by the Utilities Department (CPAU); and Refuse Service, Wastewater Treatment, and Storm and Surface Water Drainage Services provided by the Public Works Department. Service Address The official physical address of the building or facility assigned by CPAU’s Planning Department, at which Customer receives Utility Services. Service Charge A fixed monthly Charge applicable on certain Rate Schedules that does not vary with consumption. The Charge is intended to recover a portion of certain fixed costs. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 18 Service Drop The overhead Electric Service conductors from the last pole or other aerial support to and including the splices, if any, connecting to the service entrance conductors at the building or other structure. Or, in the case of Fiber Optic Drops, the overhead Fiber Optics cable from the last pole or other aerial support to the building or other structure to and including the termination box. Services or Service Lines Facilities of CPAU, excluding transformers and Meters, between CPAU’s infrastructure and the Point of Delivery to the Customer. Service Territory The geographic boundaries within the City of Palo Alto limits served by the physical Distribution System of the CPAU. Short Circuit (Current) Contribution Ratio (SCCR) The ratio of the Generating Facility’s short circuit contribution to the short circuit contribution provided through CPAU’s Distribution System for a three-phase fault at the high voltage side of the distribution transformer connecting the Generating Facility to CPAU’s system. Simplified Interconnection An Interconnection conforming to the minimum requirements as determined under Rule 27, Section I. Single Line Diagram; Single Line Drawing A schematic drawing, showing the major Electric switchgear, Protective Function devices, wires, Generators, transformers and other devices, providing sufficient detail to communicate to a qualified engineer the essential design and safety of the system being considered. Special Facilities See CPAU’s Rule and Regulation 20 governing Special Facilities. Splice A point where two separate sections of Fiber are physically connected. Standard Refuse Container A Standard Refuse Container shall have the meaning described in the Palo Alto Municipal Code. A Standard Container shall also include a wheeled container with a capacity of not to exceed 32 gallons. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 19 Standby Service Back-up Energy Services provided by CPAU. Storm and Surface Water Drainage Utility Service provided to residents and business owners in the City of Palo Alto. Storm and Surface Water Drainage Service is provided by the City of Palo Alto Public Works Department. Supplemental Review A process wherein CPAU further reviews an Application that fails one or more of the Initial Review Process screens. The Supplemental Review may result in one of the following: (a) approval of Interconnection; (b) approval of Interconnection with additional requirements; or (c) cost and schedule for an Interconnection Study. System Integrity The condition under which a Distribution System is deemed safe and can reliably perform its intended Functions in accordance with the safety and reliability rules of CPAU. Tax Any assessment, Charge, imposition, license, or levy (including any Utility Users Tax) and imposed by any Agency, including the City. Telemetering The electrical or electronic transmittal of Metering data in real-time to CPAU. Temporary Service Service requested for limited period of time or of indeterminate duration such as, but not limited to, Service to provide power for construction, seasonal sales lots (Christmas trees), carnivals, rock crushers or paving plants. Temporary Service does not include Emergency, breakdown, or Standby Service. Therm A Therm is a unit of heat energy equal to 100,000 British Thermal Units (Btu). It is approximately the energy equivalent of burning 100 cubic feet (often referred to as 1 ccf) of natural Gas. Since Meters measure volume and not energy content, a Therm factor is used to convert the volume of Gas used to its heat equivalent, and thus calculate the actual energy use. The Therm factor is usually in the units therms/ccf. It will vary with the mix of hydrocarbons in the natural Gas. Natural Gas with a higher than average concentration of ethane, propane or butane will have a higher Therm factor. Impurities, such as carbon dioxide or nitrogen lower the Therm factor. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 20 Total Rated Generating Capacity Total Rated Generating Capacity will be calculated as the sum of the rated generating capacity of all installed Renewable Electrical Generation Facilities participating in NEM or NEM Aggregation. The rated generating capacity for each individual Renewable Electrical Generation Facility participating in NEM or NEM Aggregation will be calculated as follows: 1. For Solar: For each Renewable Electrical Generation Facility that is a solar photovoltaic generating facility, CPAU will use the CEC’s Alternating Current (AC) rating; or where the CEC AC rating is not available, CPAU will multiply the inverter AC nameplate rating by 0.86; and 2. For Non-Solar: For all other Renewable Electrical Generation Facilities, CPAU will use the AC nameplate rating of the generating facility. Transfer Trip A Protective Function that trips a Generating Facility remotely by means of an automated communications link controlled by CPAU. Transmission Pathway Those areas of the Public Right-of-Way, the Public Utility Easements and the Leased Service Properties in which the Dark Fiber Infrastructure is located. Trap Any approved equipment or appliance for sealing an outlet from a house-connection sewer to prevent the escape of sewer Gas from a main line through a building connection (service) sewer. Underground Utility District An area in the City within which poles, overhead electric or telecommunication wires, and associated overhead structures are prohibited or as otherwise defined in Section 12.04.050 of the PAMC. Unintended Island The creation of an Island, usually following a loss of a portion of CPAU’s Distribution System, without the approval of CPAU. Unsafe Operating Conditions Conditions that, if left uncorrected, could result in harm to personnel, damage to equipment, loss of System Integrity or operation outside pre-established parameters required by the Interconnection DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 21 Agreement. Utilities Department See City of Palo Alto Utilities Department. Utilities Director The individual designated as the Director of Utilities Department under Section 2.08.200 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the director of utilities. Utility(ies) Rules and Regulations, Rules and Regulations The compendium of Utilities Rules and Regulations prepared by the City’s Utilities and Public Works Departments and adopted by ordinance or resolution of the Council pursuant to Chapter 12.20 of the Palo Alto Municipal Code, as amended from time to time. Utility(ies) Service(s), Service(s) Electric, Fiber optics, Water, Gas, Wastewater collection services provided by the City of Palo Alto Utilities Department (CPAU) and Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage services provided by the City of Palo Alto Public Works Department. Utilities User Tax (UUT) City of Palo Alto Tax imposed on Utility Charges to a Water, Gas, and/or Electric Service user. This may include Charges made for Electricity, Gas, and Water and Charges for Service including Customer Charges, Service Charges, Standby Charges, Charges for Temporary Services, Demand Charges, and annual and monthly Charges, as described in Chapter 2.35 of the Palo Alto Municipal Code. Wastewater Utility Service provided to residents and business owners in the City of Palo Alto. Wastewater Utility Services include collection and treatment of Wastewater. Wastewater Collection Service is provided by the City of Palo Alto Utilities Department, and Wastewater Treatment Service is provided by the City of Palo Alto Public Works Department. Water Utility Service provided to residents and business owners in the City of Palo Alto for retail use. Water Service is provided by the City of Palo Alto Utilities Department. Water Column (WC) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 22 Pressure unit based on the difference in inches between the heights of water columns as measured in a manometer. 6” WC = 0.217 psi; 7” WC = 0.25 psi. (END) NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 1 A. APPLICABILITY This Rule and Regulation is applicable to any City of Palo Alto Utilities (“CPAU”) Customer that is an eligible Customer-Generator under the California Public Utilities Code that desireseligible to participate in Net Energy Metering (“NEM”) or Net Energy Metering Aggregation (“NEM Aggregation”) with via the use of a Renewable Electrical Generation Facility, not to exceed 1 MW, located on the Customer’s owned, leased, or rented premises within CPAU service territory to that will operate in parallel with the CPAU distribution system, so long as there is availability remaining within the NEM Cap, as defined in Rule 2. B. SCOPE Notwithstanding the requirements and charges set forth in this Rule 29, CPAU reserves the right to impose any requirements set forth in Rule 27 that are additional to or more stringent than those set forth in this Rule 29, including those related to billing and charges, on NEM and NEM Aggregation Customers to the maximum extent permitted by state law (Cal. Pub. Util. Code § 2827 et seq., as the same may be amended from time to time). C. CUSTOMER ELIGIBILITY 1.General Requirements. In order to be eligible to participate in NEM or NEM Aggregation, a Customer must: a.Be a Customer-Generator, pursuant to the definition set forth in Rule and Regulation 2. b.Construct, design, install, interconnect, operate and maintain a Renewable Electrical Generation Facility (or combination of such facilities) that is: i.On the Customer-Generator’s owned, leased or rented Premises, ii.Of a total capacity of not more than one (1) MW (or 1,000 kW), iii. Intended primarily to offset part or all of the Customer-Generator’s own Electric Service requirements, and ATTACHMENT C-2 NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 2 iv. Is not used to sell to any third person, or otherwise provide Electric Service to any real estate parcel, premise, or location other than those that are the subject of the Customer-Generator’s Interconnection Agreement (IA). c. Complete and provide CPAU with all required agreements, supporting documents, and any payments related to interconnection. 2. NEM Cap. Customers remain eligible for NEM and NEM Aggregation until such time as the Total Rated Generating Capacity used by NEM and NEM Aggregation Customers combined reaches CPAU’s NEM Cap. NEM is available on a first-come, first-served basis. Once the NEM Cap has been reached, NEM Service and Interconnection will be closed to new customers. a. After the NEM Cap has been reached, Customer-Generators may increase the system capacity by a maximum of 10% of the Initial Interconnection Capacity. Customer-Generators that expand their system beyond this limit are no longer eligible for NEM and will be transitioned to the Net Energy Metering Successor Rate. 3. Additional Requirements for NEM Aggregation. In addition to those eligibility requirements set forth in Section 1(a) of this Rule and Regulation 29, a CPAU Customer is only eligible to participate in NEM Aggregation where: a. The Customer-Generator elects to aggregate Electric Service of the meters located on the property where the Renewable Electrical Generation Facility is located across properties that are adjacent or contiguous with that property; and b. All properties across which the Customer-Generator elects to aggregate are solely owned, leased, or rented by the eligible Customer. 4. NEM Transition Period. Customer-Generators within the NEM Cap remain subject to the requirements and charges set forth in this Rule 29 through a period of twenty (20) years from the original date of Iinterconnection of the eligible Renewable Energy Generating Facility. NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 3 D. BILLING FOR NEM 1. General Rules a. Twelve Month True Up Period i. At the end of each twelve-month period following: aa. The date of Interconnection of the Renewable Electrical Generation Facility, or bb. For a Customer with a date of Interconnection of the Generating Facility commencing prior to February 1, 2010, the day after CPAU’s receipt of the Customer’s net surplus electricity election form, ii. CPAU will determine whether the Customer-Generator is a Net Electricity Consumer or a Net Surplus Customer-Generator during that period. b. CPAU will bill the Customer-Generator for the electricity used during that twelve- month period, whether the Customer-Generator is considered a Net Electricity Consumer or a Net Surplus Customer-Generator. c. CPAU shall provide the Customer-Generator with net electricity consumption information with each monthly bill; that information shall include either the current monetary balance owed to CPAU or the current amount of excess electricity produced since the last twelve-month period. d. If the Customer-Generator terminates the contractual relationship with CPAU, then CPAU shall reconcile the Customer-Generator’s consumption and production of electricity during any part of the twelve-month period following the last annual settlement and reconciliation, using the procedures as outlined in this Rule. e. For a Customer-Generator who has submitted an affirmative election, CPAU will provide either Net Surplus Electricity Compensation in accordance with Electric Utility Rate Schedule E-NSE-1, for any net surplus electricity generated during the NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 4 prior twelve-month settlement period, or bill credits resulting from net surplus electricity generation to be applied against electricity-related charges subsequently incurred by the Customer-Generator. f. If the Customer-Generator fails to make an affirmative election to receive Service pursuant to Net Surplus Electricity Compensation, then CPAU shall retain any excess electricity (expressed in Kilowatt-hours) generated during the prior twelve-month settlement period, and it shall not be obligated to pay Net Surplus Electricity Compensation, nor shall it be obligated to allow the application of net surplus electricity credits to be used against Energy charges subsequently incurred by the Customer-Generator. g. CPAU will allow a Customer to change the election option once each twelve-month settlement period provided that the Customer provides notice to CPAU one month prior to the beginning of new settlement period. 2. Monthly Billing a. Medium and large commercial Customer-Generators will be required to pay any balances due to CPAU on a monthly basis. b. Except as annual billing is provided for in this Rule 29, residential and small commercial Customer-Generators will default to owing balances due on a monthly basis, but may request annual billing as allowed for in California Public Utilities Code sections 2827 (g) and (h)(2)(c). c. Standby service charges for backup or maintenance electric service will be waived, provided that the Customer-Generator qualifies for participation in net energy metering at the Service Address. d. For a Net Surplus Customer-Generator in a given month, any credits created will be carried forward to future months, to be used for future electric charges, until the end of the Customer-Generators Twelve Month True-Up Period. 3. Annual Billing NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 5 a. Customers may request annual billing as allowed for in California Public Utilities Code sections 2827 (g) and (h)(2)(c).. b. Bill payment will not be considered delinquent, unless the Customer-Generator does not pay a final billing statement within twenty (20) days of the date of issuance of that final billing statement. c. For annually billed residential or small commercial Customer-Generators, the net balance of money owed to CPAU will be carried forward until the end of the twelve- month period. d. To accommodate annual billing, a Customer’s Electricity Service may be transferred to a separate Utility Account so as not to interrupt monthly billing for other recurring, non-electric Utility Services. 4. Additional Billing Rules Applicable to NEM Aggregation Customers a. For each monthly billing period, the amount of electricity generated from the Aggregation Customer’s Generating Facility during that billing period will be accounted for on a per kWh basis. b. The Aggregation Customer’s electricityenergy consumption will be totaled for each Beneficiary Account that is listed to receive kwh energy credits from the Generating Facility per the Customer’s Interconnection Agreement. c. Each Beneficiary Account will be allotted a portion of the Generating Facilities energy equal to that Beneficiary Account’s relative share of Aggregation Customer’s total usage for the billing period. d. The total amount of energy produced by a Generating Facility will be allotted in each billing period. e. The billing for Beneficiary Accounts will be the same as NEM customers, as outlined in Section D.2(a) above, with the restriction that no Beneficiary Account is eligible for Net Surplus Electricity Compensation in accordance with Electric Utility Rate Schedule E-NSE-1, but may only carry forward energy credits. NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 6 E. APPLICATION AND INTERCONNECTION PROCESS 1. Application Process CPAU shall process a request for the establishment of NEM Service and Interconnection from the Customer-Generator within the time period not exceeding that for Customers requesting new Electric Service; provided, however, that such time period will not exceed thirty (30) days from the date of (1) receipt of a completed Application form for Net Energy Metering Service and Interconnection from the Customer-Generator, (2) Electric inspection clearance from CPAU in accordance with California Public Utilities Code 2827(c)(2), and (3) building inspection clearance from the City of Palo Alto Building Inspection Division. If CPAU is unable to process the request within the thirty-day period or other applicable period, then CPAU shall notify the Customer-Generator of the reason for its inability to process the request and the expected completion date. 2. Interconnection Process The Customer-Generator will be required to sign either an Interconnection Agreement, as applicable, or an agreement containing substantially the terms and conditions of the above referenced agreements and agree to be subject to applicable Utility Rates and Charges and Utility Rules and Regulations in order to be eligible for NEM Service provided by CPAU. CPAU will make available all necessary forms and contracts for NEM Service for download from the Internet. F. GENERATING FACILITY DESIGN AND OPERATING REQUIREMENTS 1. Safety Standards The facility will meet all applicable federal, state and local safety and performance standards, including those established by the National Electrical Code (NEC), the Institute of Electrical and Electronic Engineers, and accredited testing laboratories such as Underwriters Laboratories (UL) and, as applicable, the rules of the California Public Utilities Commission regarding safety and reliability. The Customer-Generator whose facility meets those standards and rules will not be required to install additional controls, perform or pay for additional tests, or purchase additional liability insurance. NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 7 2. Design Standards In addition to the requirements more generally set forth in section D.1, Customer-Generator will: a. Conform to the applicable National Electric Code (NEC) Standards [NEC 690] and applicable building codes. b. Have a dedicated circuit from the inverter to the Service panel with a circuit breaker or fuse [NEC 690-64(b)(1)]. c. Have an overcurrent device at the Service panel will be marked to indicate solar power source [NEC 690-64(b)(4)]. d. Establish the following minimum specifications for Parallel Operation with CPAU’s Electric utility Distribution System. e. Install a visible break, lockable AC disconnect switch in the dedicated circuit to the inverter. This switch will be located where it is easily accessible by CPAU personnel and will be equipped with a CPAU padlock [CPAU Rule and Regulation 27]. f. Use an inverter that is UL 1741-appoved and have the following specifications for Parallel Operation with CPAU’s Electric utility Distribution System: i. Inverter output will automatically disconnect from CPAU’s utility source upon the loss of CPAU’s utility voltage and will not be reconnected until at least five (5) minutes after normal utility voltage and frequency have been restored [UL 1741]. ii. Inverter will automatically disconnect from CPAU’s utility source within 120 cycles (2 seconds) if CPAU’s utility voltage isles than 106 volts or greater than 132 volts on a 120-volt base [UL 1741]. iii. Inverter will automatically disconnect from CPAU’s utility source within 10 cycles (0.17 seconds) if CPAU’s utility frequency fluctuations is less than 59.3 hertz or greater than 60.5 hertz [UL 1741] cycle. iv. Inverter output will comply with IEEE 519 standards for harmonic NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 8 distortion [CPAU Rule and Regulation 27]. G. METERING 1. NEM may be accomplished by using a single Meter capable of registering the flow of electricity in two different directions. If the Customer-Generator’s existing Meter is not capable of measuring the flow of electricity in two directions, then the Customer-Generator shall be responsible for all expenses involved in purchasing and installing a Meter that is able to measure electricity flow in two directions. 2. In lieu of one Meter, an additional Meter to monitor the flow of electricity in each direction may be installed with the consent of the Customer-Generator, at the expense of CPAU. The additional Meter shall be used only to provide the information necessary to accurately bill or credit the Customer-Generator and/or to collect solar or wind Electric generating system performance information for research purposes. 3. Customer-Generator grants to CPAU, its officers, employees, agents and representatives the non-exclusive right of ingress and egress on, over and across the Premises upon reasonable prior notice for the purpose of inspecting and approving the installation and operation of the Facility and authenticating the accuracy of the Mmeter(s), or in the event of an emergency or in regard to a disconnection of the Facility, without notice, if in CPAU’s Director of Utilities’ sole judgment, a condition hazardous to life or property exists, and immediate action is necessary to protect life or property from damage or interference directly caused by the Equipment or as a result of the lack of properly operating protective devices. H. GENERAL REQUIREMENTS 1. Customer-Generator will obtain and maintain the required governmental authorizations, permits, and any policy or policies of insurance, including, without limitation, commercial general liability, property, and professional liability insurance, as may be required by applicable laws, subject only to subsection c below. 2. CPAU will not be obligated to accept or pay for, and it may require Customer-Generator to interrupt or reduce, the delivery of available energy generated by the Facility under the following: (a) whenever CPAU in its sole judgment determines that the interruption or reduction is necessary in order for CPAU to construct, install, maintain, repair, replace, NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 9 remove, investigate, or inspect any part of CPAU’s electric utility distribution system; or (b) if CPAU determines that the interruption or reduction is necessary on account of an emergency, voluntary or involuntary outage, event of Fforce Mmajeure, or compliance with prudent electrical practices. 3. Notwithstanding any other provision of this Agreement, if CPAU determines that either (a) the operation of the Facility may threaten or endanger the health, safety or welfare of CPAU’s personnel or CPAU’s or its personnel’s property, or (b) the continued operation of the Facility may endanger the operational integrity of CPAU’s electric utility distribution system, CPAU will have the right to temporarily or permanently disconnect the Facility from CPAU’s Eelectric Uutility dDistribution Ssystem upon the delivery of reasonable notice to Customer-Generator; provided, however, CPAU may act without giving prior notice to Customer-Generator, if CPAU determines that it is impracticable to provide the notice. The Facility will remain disconnected until such time as CPAU’s Director of Utilities is reasonably satisfied that the conditions referred to in this subsection have been corrected or sufficiently addressed. 4. Customer-Generator will (a) maintain the Facility, which interconnects with CPAU’s electric utility distribution system, in a safe and prudent manner and in conformance with all applicable laws, rules and regulations, including, without limitation, the requirements of this Section 3H, and (b) obtain any governmental approvals, authorizations and permits required for the construction and operation of the Facility. 5. Customer-Generator will reimburse CPAU for any and all losses, damages, claims, penalties, or liability that CPAU may incur or sustain as a result of Customer-Generator’s failure to obtain and maintain any and all governmental approvals, authorizations and permits that may be required for the construction, installation, operation, repair and maintenance of the Facility. City of Palo Alto (ID # 6863) Finance Committee Staff Report Report Type: Action Items Meeting Date: 5/17/2016 City of Palo Alto Page 1 Summary Title: Net Energy Metering Successor Rate and Transition Policy Title: Utilities Advisory Commission Recommendation That the Finance Committee Recommend the City Council Adopt a Resolution Adopting a Net Energy Metering Successor Rate E-EEC-1 (Export Electricity Compensation), Establishing the Net Energy Metering Transition Policy, and Amending Rule and Regulation 2 (Definitions and Abbreviations) and 29 (Net Energy Metering and Interconnection) From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) recommend that the Finance Committee recommend that the City Council: Adopt a resolution (Attachment A) Adopting a Net Energy Metering (NEM) Successor Rate, E- EEC-1 (“Export Electricity Compensation”, Attachment B); Establishing the NEM Transition Policy; and, Amending Utilities Rule and Regulation 2 (“Definitions and Abbreviations”, Attachment C-1) and 29 (“Net Energy Metering and Interconnection”, Attachment C-2). Executive Summary Net energy metering (NEM) is a billing mechanism designed to promote the installation of renewable distributed generation by allowing customers to be compensated at the full retail rate for electricity generated by their on-site systems, such as solar photovoltaic (solar PV) systems. State law requires all electric utilities to offer NEM to customers with eligible renewable distributed generation up to a maximum cap, or “NEM cap”, which in Palo Alto is 9.5 megawatts (MW). Under the City’s current rates, NEM customers can reduce, or completely avoid, charges on their electric utility bill while still remaining interconnected with the electric grid and utilizing grid services. Utilities generally refer to the terms and conditions for on-site renewable generation installed after the NEM cap is reached as the “NEM successor rate” or “NEM successor program.” As of mid-February 2016, the City of Palo Alto Utilities (CPAU) was approximately 79% toward meeting the NEM cap, and could exceed it by the end of 2016. ATTACHMENT D City of Palo Alto Page 2 As Utilities across the state approach their respective NEM caps, NEM successor rates are a topic of much debate. To help guide staff efforts on the NEM successor rate development, City Council adopted NEM Successor Program Design Guidelines in January 2016. Under the proposed NEM successor rate (Rate Schedule E-EEC-1, Export Electricity Compensation), customers would receive a credit at the E-EEC-1 buyback rate for all electricity sent to the grid (when instantaneous on-site generation is greater than instantaneous on-site consumption), and they would be billed at the prevailing retail rate for all electricity drawn from the grid (when instantaneous on-site consumption is greater than instantaneous on-site generation). The proposed value of the credit for energy sent to the grid is 7.485 cents per kilowatt-hour (kWh), which compensates the customer for the energy, avoided capacity charges, avoided transmission/ancillary service charges, avoided transmission and distribution system losses, and environmental attributes. The energy value takes into account that solar energy is often generated at times of the state’s peak system demand. If approved, the credit would take effect July 1, 2016, and would be updated annually along with the budget. Based on staff analysis, the proposal will support continued solar PV deployment while ensuring that the City’s electric rates are based on the cost of providing service, in compliance with state constitutional requirements amended by Proposition 26. In addition to the proposed NEM successor rate, staff also recommends adopting a transition policy for customers with systems installed within the NEM cap. Specifically, staff proposes adopting a 20-year transition period from the time of interconnection through which NEM customers remain eligible for net metering under the terms currently set forth in California Public Utilities Code 2827. In addition, staff proposes allowing NEM customers to expand their systems by up to 10% of the original system size while still remaining eligible for net metering after the NEM cap has been reached. The UAC reviewed the proposed NEM successor program, rate and transition policy at its April 12, 2016 meeting. The UAC voted unanimously to approve the staff proposal. Background Net energy metering was established in California in 1996 as a mechanism to support distributed energy generation such as solar PV (sometimes referred to as “customer-sited” or “behind-the-meter” generation). In 1999, Palo Alto began a solar PV demonstration program, through which the first net metered systems were installed in the City. At the time, the total system price was over $10 per watt. Solar PV system costs have dropped by 70% compared to the late 1990s. The California Public Utilities Code section on NEM requires all electric utilities to offer NEM to eligible customers with renewable distributed generation, up to a cap. In October 2015 Council formally adopted a NEM cap for Palo Alto of 9.5 MW (Staff Report 6139). As of mid-February 2016, the City is approximately 79% toward meeting its NEM cap, as shown in Figure 1. To date, City of Palo Alto Page 3 all local solar PV installations in Palo Alto utilize NEM, and all net energy metered systems are solar PV systems. Figure 1: Summary of NEM Participation (1999 through mid-February 2016) All NEM customers are subject to terms and conditions outlined in the California Public Utilities Code Section 2827, including the ability to receive credit for eligible on-site customer generation at the retail rate, to have the credits roll over month-to-month over a 12-month period, and the option to cash-out any net surplus generation that exists at the end of the 12- month period. NEM customers remain subject to Council-approved changes to their otherwise applicable electric rate schedules, including rate design changes and potential minimum or fixed charges. Assembly Bill 327 (AB 327) directed the California Public Utilities Commission (CPUC) to develop a standard NEM successor tariff for the state’s investor-owned utilities (IOUs) no later than December 31, 20151. For the IOUs, the NEM successor tariff is to take effect either after an IOU has reached its NEM cap or July 1, 2017, whichever occurs first. On January 28, 2016, in a split 3-2 decision, the CPUC approved a NEM successor tariff for IOUs that leaves NEM largely intact. The primary differences from the IOU’s original NEM structure are that IOU customers under the NEM successor rate are required 1) to pay an interconnection fee estimated to be $75- 1 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB327 City of Palo Alto Page 4 $150, 2) to be subject to certain non-bypassable charges on all energy delivered to the customer by the utility estimated to be 2-3 cents per kWh, and 3) to take service under a time- of-use rate if interconnecting from January 1, 2018, onward. The CPUC decision also establishes a 2019 review of the NEM successor tariff. Publicly-owned utilities (POUs) in California, whose rates are not regulated by the CPUC, are working with their respective governing bodies and stakeholders to formulate their own NEM successor rates, to take effect after their respective NEM caps have been reached. To staff’s knowledge, only two California POUs have adopted NEM successor rates: the City of Lompoc and Turlock Irrigation District (TID). In contrast to the CPUC-adopted NEM successor tariff for the IOUs, the POU-adopted NEM successor rates significantly modify the existing NEM program. More detailed information of the adopted NEM successor rates at California POUs is included in the Discussion section below. Local Solar Plan On April 22, 2014, the City Council adopted the Local Solar Plan (Staff Report 4608, Resolution 9402), which set the overarching goal of meeting 4% of the City’s total energy needs from local solar by 2023, corresponding to achieving 23 MW of solar PV installed in the City. Included within the Local Solar Plan is a strategy to develop proper policies, incentives, price signals and rates to encourage solar installation, including the exploration of cost-based rate structures that encourage the development of new solar systems in Palo Alto. Electric Cost of Service Analysis (COSA) CPAU carried out an electric cost of service analysis (COSA) in Winter 2015/2016. The primary goal of the COSA was to review the allocation of costs to customer classes and the electric rate design to ensure customers are charged according to the cost to serve them. The COSA also included a review of the rate design issues created by increasing numbers of local solar installations and the impact of rate designs on the economics of local solar for current and future customers. The NEM successor rate development was carried out in close coordination with the electric COSA. The proposed electric rate adjustments to be effective July 1, 2016 are described in the FY 2017 Financial Plan which is presented in an April 2016 UAC report. NEM Successor Program Design Guidelines & Stakeholder Feedback In order to guide research and development efforts, staff developed a set of design guidelines for the NEM successor rate, called the “NEM Successor Program Design Guidelines”. After receiving recommendations from the UAC and the Finance Committee, City Council formally adopted the NEM Successor Program Design Guidelines in January 2016 (Staff Report 6437). Through the stakeholder review process of the design guidelines, CPAU also received extensive feedback from the solar industry and advocates. The Energy Freedom Coalition of America (EFCA), a SolarCity-funded national advocacy group promoting public awareness and the benefits of solar and alternative energy, provided extensive feedback on NEM and the proposed design guidelines in letters to the UAC, Finance Committee, and City Council City of Palo Alto Page 5 preceding each step of the review process. The letter EFCA submitted to City Council is included as Attachment F. Discussion Energy Flows in a Typical Residential PV System When a customer installs a solar PV system, the energy produced by the system first serves the customer load and is netted on-site. When the customer’s energy demand is greater than what is being generated by the solar system at that point in time, then the customer draws additional power from the grid to meet their energy needs. When the customer is using less energy than the solar PV system is generating, the excess energy is exported to the grid. This energy is referred to by a variety of terms including “energy sent to the grid,” “energy exports,” “surplus energy,” and “excess energy.” Figure 2 is an illustration of a daily load of a residential customer with a solar PV system that specifies the energy sent to the grid and the energy delivered by the utility. City of Palo Alto Page 6 Figure 2: (Top) Illustration of a residential solar customer’s load, solar production, and net load (Bottom) Illustration of the energy that is delivered by the utility to the customer and the energy that is sent to the grid NEM Successor Proposal Staff carried out a thorough evaluation of a broad variety of NEM successor rate design options considering the NEM successor design guidelines as well as conceptual and practical considerations of each option. Under the proposed NEM successor rate, customers would receive a credit for all electricity sent to the grid (energy generated in excess of instantaneous usage), and they would be billed at the prevailing retail rate for all electricity they use from the grid (energy used in excess of instantaneous generation). Large commercial customers, or customers with small PV systems relative to their overall load, may rarely or potentially never City of Palo Alto Page 7 export energy to the grid. Residential customers, or customers with systems sized to meet a large fraction of their load, typically export energy on a daily basis during hours of peak solar production. Figure 3 shows all three categories of energy, including the solar energy netted on-site (solar generation used directly on-site). Figure 3: Illustration of three categories of energy: solar energy netted on-site, energy sent to the grid, and energy delivered by the utility to the customer Under the staff proposal, over the course of a billing period, the sum of all energy delivered by the utility to the customer would be charged at the prevailing retail rate. For example, if the solar customer is a residential customer, the energy delivered by the utility in the billing period would be subject to the E-1 rate. In addition to the utility charges, the customer would also be credited for all energy sent to the grid. The sum of all energy exports would be credited at the credit rate of 7.485 cents per kWh. If in a given billing period, the total credits applied to the customer’s utility bill for exported energy exceed the total charges applied for the energy delivered to the customer, the surplus credit will automatically apply to the customer’s bill. Please see Attachment E for an illustration of an example bill for a residential customer who installs a solar system subject to the proposed NEM successor rate. All NEM successor customers would be subject to the E-EEC-1 rate schedule, their prevailing retail rate (e.g. E-1 for residential customers), and Rule and Regulation 27 “Generation Facility Interconnections”. By contrast, all customers eligible for NEM who have systems installed City of Palo Alto Page 8 within the NEM cap would be subject to their prevailing retail rate, Rule and Regulation 27 “Generation Facility Interconnections”, and Rule and Regulation 29 “Net Energy Metering and Interconnection”. Rule and Regulation 29 would not apply to NEM successor customers. Value of the Credit Rate The value of the credit for energy sent to the grid is 7.485 cents per kWh. As shown in Figure 4, this value compensates the customer for the energy, avoided capacity charges, avoided transmission and ancillary service (AS) charges, avoided transmission and distribution (T&D) system losses, and renewable energy credits (RECs), or environmental attributes. The energy component to the overall credit rate is calculated by taking wholesale monthly round-the-clock market price indicatives for northern California, and weighting them based on the typical generation profile of rooftop solar PV systems in Palo Alto and the hourly profile of market prices in northern California. In this way, the valuation methodology accounts for the fact that solar energy is often generated at times of peak system demand. Avoided transmission and AS charges are calculated based on the actual charges that the City pays to the California Independent System Operator (CAISO) for these services. And, the value of the environmental benefits is based on market price indicatives for the value of a “Bucket 1” REC. The 7.485 cents per kWh credit would take effect July 1, 2016, and would be updated annually and approved along with the budget. City of Palo Alto Page 9 Figure 4: Value of credit rate Metering The proposed NEM successor rate structure requires a bidirectional meter. A bidirectional meter is a meter with two registers to measure energy flowing in each direction: the first register measures all energy drawn from the grid, while the second register measures all energy sent to the grid. For example, if a customer has a solar system and that system is generating energy that exceeds the instantaneous needs of the customer, energy is sent to the grid and measured on the second register of the bidirectional meter. For all other times when the energy generated by the solar system is not sufficient to meet the customer’s needs, then energy is drawn from the grid and measured on the primary register. Under the proposed NEM successor rate structure, at the end of the billing period, the sum of the energy drawn from the grid measured on the primary register is billed at the applicable retail rate. The sum of the energy sent back to the grid measured on the second register is credited to the customer’s account according to the credit rate. The usage that is directly served with simultaneous solar generation, the “solar energy netted on-site” shown in Figure 3, is not measured by the meter and, therefore, effectively avoids the full bundled retail rate. At present, the default meter type is a single-register meter. Therefore, a bidirectional meter must be installed at a customer premise upon the installation of a solar PV system to City of Palo Alto Page 10 implement the proposed NEM successor rate. These meters would be provided at no cost to the customer as part of CPAU’s long-term meter replacement plan. Environmental Attributes As described above, the credit rate for energy sent to the grid is calculated based on the value of the energy, avoided capacity costs, avoided transmission and ancillary services costs, avoided transmission and distribution system losses, and environmental attributes, or RECs. Thus, all of the exported energy and its environmental benefits would be bought by CPAU as a bundled product. Under this proposal, the customer therefore could not claim the environmental benefits of any of the energy that is sent to the grid. However, the customer would nonetheless still be able to claim they are “going solar” for all of the energy that is netted on-site, as shown in Figure 3. An alternative is for CPAU to value the energy sent to the grid at a rate that does not include the environmental benefits—effectively stripping the REC from the energy—and paying the customer only for “brown” energy, so that customers can claim the environmental attributes for all energy produced from their systems. The staff proposal is to set the credit rate for exports to include the value of the environmental attributes because it improves the customer economics, and the customer would still be able to claim the RECs for all energy netted on-site. Interconnection Fees Public Utilities Code Section 2827 prohibits electric utilities from charging existing eligible customer generators for interconnection costs incurred by the utility. For systems installed after the NEM cap is reached, customers will be subject to an interconnection charge set at the level to recover the utility’s cost of connecting them to the local distribution system. Staff is currently updating Utility Rate Schedule E-15 “Electric Service Connection Fees”2, which contain charges for generation interconnection. The current estimate for the interconnection fee that would apply to a NEM successor customer is a one-time charge of between $100-200. Staff plans to take Schedule E-15 forward for Council review in Fall 2016. Addressing the NEM Successor Program Design Guidelines in Relation to the Staff Proposal The development of the proposed NEM successor rate and potential alternatives was the result of a comprehensive evaluation guided by the Council-adopted design guidelines and the stakeholder feedback received through that process. Attachment D discusses each of the design guidelines in relation to the staff NEM successor program proposal. Comparison to NEM Successor Rates Adopted in California and Across the Country Table 1 provides a high-level summary of the NEM successor rates that have been adopted in California and other states across the country. The most relevant comparison agencies to CPAU are the listed California POUs. 2 The current version can be found here: http://www.cityofpaloalto.org/civicax/filebank/documents/8083. City of Palo Alto Page 11 Table 1: High-level Summary of Adopted NEM Successor Rates Utility/Regulatory Body Description of Adopted NEM Successor Rate Decision Date CPAU*, Staff Proposal All energy delivered by the utility charged at applicable retail rate, and all energy sent to the grid credited at short-term avoided cost export rate. Under review Turlock Irrigation District* Mandatory time-of-use rate that incorporates time-dependent demand and energy charges and standard fixed customer charge. Dec. 2014 City of Lompoc* Reverted to self-generation rate developed in the 1990s, which charges customers for distribution system costs for all energy generated and consumed on-site. Energy delivered to the customer charged at the applicable retail rate. All energy sent to the grid credited to customer at a wholesale rate. June 2014 Hawaiian PUC All energy delivered by the utility to the customer charged at applicable retail rate with a minimum monthly bill of $25, and all energy sent to the grid credited at a fixed, island-dependent export rate. Customer forfeits any surplus credit at the end of a monthly billing cycle. HPUC also approved another rate option that is available exclusively to customers with solar plus storage systems that do not export to the grid. Oct. 2015 California PUC Continuation of full retail rate compensation. NEM successor customers subject to interconnection charges (est. $75-$150) and certain non-bypassable charges on all energy delivered to the customer (est. 2-3 ¢/kWh). Mandatory time-of-use rate in 2018. Planned NEM successor tariff review in 2019. Jan. 2016 Nevada PUC All energy delivered by the utility charged at applicable retail rate, and all energy sent to the grid credited at a fixed energy rate. Feb. 2016 Modesto Irrigation District* TBD Planned: Summer 2016 * Subject to Proposition 26 Implications of Proposal on Solar Adoption in Palo Alto Staff’s analysis indicates that the proposed NEM successor rate will continue to promote solar adoption due to the following factors: the proposed NEM successor rate continues retail rate City of Palo Alto Page 12 compensation for a significant fraction of the energy generated, solar PV system costs continue to decline year-over-year, the federal investment tax credit for 30% of the total system costs was extended until 2020, and customers can load-shift to enhance the economics of their on- site system if desired. Under this NEM successor proposal, staff expects to still achieve the Council-adopted Local Solar Plan goal of achieving 4% of the City’s energy needs from local solar by 2023. Customer Economics The customer economics of a solar PV system adopted under the proposed NEM successor rate are dependent on a number of factors including: 1) the fraction of energy exported to the grid versus used immediately on-site, 2) the total solar PV system costs, 3) available federal incentives, and 4) other tax implications. Each of these factors is discussed in greater detail below. 1. Fraction of energy exported to the grid vs. used on-site Customers that rarely export energy to the grid would have similar customer economics to systems installed within the NEM cap. On the other hand, if the fraction of energy sent to the grid is significant, it may impact the customer economics. Based on an analysis of CPAU’s NEM solar customers, existing large commercial customers with solar systems rarely export. Therefore, the staff proposal is effectively a continuation of NEM. Given CPAU lacks full advanced meter deployment, residential solar customer data is more limited. The 2013 CPUC- commissioned study of NEM in the IOU service territories indicated that on average 49% of energy from residential systems is exported to the grid from their NEM customers3. Given the higher export fraction for residential customers based on typical load patterns, other economic factors discussed below may become more significant. Furthermore, under the proposed NEM successor rate, customers may decide to load-shift to consume energy concurrently with the solar generation, for instance by installing a behind-the-meter storage system or utilizing programmable or controllable loads. Load-shifting could reduce the fraction of energy exported to the grid and therefore increase the economic return of their solar system. 2. Solar PV system costs As shown in Figure 5, the total solar PV system price has declined substantially in the past decades. As discussed in the report referenced in the figure caption, in the early years, the system price decline is attributed primarily to falling solar PV module costs. Since 2012, given the relatively constant price of solar modules, the recent declines are due to reductions in other total system cost components, including, system design, installation, permitting, interconnection, and marketing and customer acquisition. Industry experts indicate there is opportunity for further cost reductions and forecast continued price declines in the coming three to five years. 3 Draft Net Energy Metering Cost-Effectiveness Evaluation, E3 (2013). (See https://ethree.com/documents/CSI/CPUC_NEM_Draft_Report_9-26-13.pdf accessed February 26, 2016) City of Palo Alto Page 13 Figure 5: Installed prices for residential and non-residential solar systems in the U.S.4 3. Federal incentives for solar Significant federal incentives remain available for both commercial and residential projects. In mid-December 2015, the federal investment tax credit (ITC), which was set to drop from 30% to 10% for commercial systems and to 0% for residential systems at the end of 2016, was extended at the full 30% through the end of 2019, and will be phased downward year-by-year to 10% for commercial projects and 0% for household-owned residential projects in 2022. Commercially-owned projects also receive accelerated depreciation treatment, which, when combined with the 30% ITC, is estimated to make up over 40% of the total system costs5. 4. Other tax implications In addition to the ITC, the tax implications for customer-cited generation installed under the NEM successor rate structure may differ from a system installed within the NEM cap, and may therefore impact the customer economics. Any solar customer under the NEM successor rate who within a given calendar year receives over $600 in payments from CPAU for energy sent to the grid will receive a 1099 tax form. This is equivalent to how CPAU handles compensation paid to customers who elect to cash out their net surplus electricity after a 12-month period. Customers are encouraged to consult their tax advisor or legal counsel regarding tax implications for any distributed energy system, including those installed within the NEM cap or after the NEM cap has been reached. Proposed Transition Policy for Customers within the NEM Cap Transition Period In March 2014, the CPUC ruled that for the IOUs, existing NEM customers and all those who install eligible systems within each IOU’s respective NEM cap are eligible for full retail rate 4 Source of Figure 5 is Tracking the Sun, an annual solar PV cost tracking report produced by the Department of Energy’s Lawrence Berkeley National Laboratory. (See http://newscenter.lbl.gov/2015/08/12/solar-prices-fell- 2015/ accessed February 26, 2016) 5 Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives and Rebates, S. Borenstein (2015). (See https://ei.haas.berkeley.edu/research/papers/WP259.pdf accessed February 29, 2016) City of Palo Alto Page 14 compensation through a 20-year transition period from the date of interconnection. The length of the transition period was determined in part based on an assessment of expected useful life, as indicated by module warranties, power purchase agreements, and third-party financing agreements. To staff’s knowledge, no California POU has adopted a specified time frame that NEM customers remain eligible for NEM. To help promote regulatory certainty and transparency for existing NEM customers who have invested in solar PV systems and for solar developers operating in Palo Alto, staff proposes that existing NEM customers and all eligible customers within the NEM cap in CPAU service territory remain eligible for NEM through a 20- year transition period from the date of system interconnection, matching the transition period adopted by the CPUC for the IOUs. System Expansions Some customers who install systems within the NEM cap may wish to expand their systems after the NEM cap has been reached. The circumstances under which the system could be expanded and remain eligible for NEM are covered by the NEM transition policy. Staff proposes that if the existing NEM system is modified or repaired after the NEM cap is reached, the customer will remain eligible for NEM as long as the system does not increase by more than 10% of the original system size. If the system modification or expansion results in an increase of over 10% of the original system size, the customer would be required to transition to the NEM successor program for the entire system capacity. Allowing system expansion up to a given threshold is broadly in-line with system expansion policies established in the California IOU service territories and Turlock Irrigation District, as shown in Table 2. Adopting this policy would allow a customer to expand their system by a few panels or to replace panels that failed prematurely with higher efficiency panels while still remaining eligible for NEM under the original program terms. Table 2: Existing policies of California utilities for system expansions after the NEM cap has been reached. Utility Description of System Expansion Policy CPAU, Staff Proposal Customers remain eligible for NEM for system expansions within 10% of the original system size. Larger system expansions require the entire system capacity to be transitioned to the NEM successor rate. Turlock Irrigation District Residential customers whose original system size is less than 10 kW may increase their system up to 11 kW total. Residential customers with an original system size of 10 kW or greater and non-residential customers may increase their system by a maximum of 10%. For expansions beyond these thresholds, the customer must transition the entire system capacity to the NEM successor rate. City of Lompoc No existing policy for system expansions. Pacific Gas & Customers may increase the system size up to 10% of the original system size or 1 kW, whichever is greater, and remain eligible for NEM. Customers who wish to City of Palo Alto Page 15 Utility Description of System Expansion Policy Electric expand their systems more may either 1) Meter the added capacity separately under the NEM successor tariff, or 2) elect for the entire system to take service under the NEM successor tariff. San Diego Gas & Electric Customers may increase the system size up to 10% of the original system size and remain eligible for NEM. Customers who wish to expand their systems beyond 10% may either 1) meter the added capacity separately under the NEM successor tariff, or 2) elect for the entire system to take service under the NEM successor tariff. Southern California Edison Customers may increase the system size up to 10% of the original system size or 1 kW, whichever is greater, and remain eligible for NEM. Customers who wish to expand their systems more may either 1) Meter the added capacity separately under the NEM successor tariff, or 2) elect for the entire system to take service under the NEM successor tariff. Commission Review and Recommendation The UAC reviewed staff’s proposal at its April 12, 2016 meeting. Commissioners voiced their support for the staff proposal which discontinues NEM in its present form, in light of concerns such as cost-shifting and the lack of a need to subsidize solar PV given the continued federal incentives and decline in solar system costs in recent years. Commissioners requested clarification on how the credit rate of 7.485 ¢/kWh is calculated, how often it would be updated, and what components are included in the valuation methodology. Staff emphasized that the proposed NEM successor rate is an electric rate, and like all other electric rates is subject to Proposition 26 requirements that rates must be based on the cost to serve. Staff also addressed commissioner questions regarding the differences between the CLEAN feed-in tariff price of 16.5 ¢/kWh and the proposed NEM successor buy-back rate of 7.485 ¢/kWh. The UAC ultimately voted unanimously (5-0) to recommend that Council approve the proposed NEM successor rate and transition policy (Commissioners Ballantine, Cook, Danaher and Schwartz and Chair Foster voting yes, and Commissioners Eglash and Hall absent). The draft minutes from the UAC’s April 12, 2016 meeting are provided as Attachment G. Next Steps The tentative timeline for the review and approval of NEM-related policies and rates is shown below. City of Palo Alto Page 16 Tentative Timeline for Review and Approval of NEM-Related Policies and Rates Description UAC Finance Committee Council Proposed NEM Successor Rate and Transition Policy April 2016 May 2016 June 2016 Update to Net Metering Net Surplus Electricity Compensation Rate (E-NSE-1) June 2016 -- July 2016 Resource Impact Staff has developed an implementation plan to be executed upon adoption of the NEM successor rate to help ensure that CPAU will be ready for customers who install eligible renewable energy systems after the NEM cap has been reached. Implementation of the proposed NEM successor rate requires modifications to current business systems and processes including installing bidirectional electric meters, programming of meter reading devices, training meter reading staff, modifying the format of electric Utilities bills, and revising electric usage billing calculations. Furthermore, all staff must be trained in these new systems and processes. At present, all modifications to systems and processes are planned to utilize existing staff and budget resources. The proposed NEM successor rate is based on the cost to serve, and the credit value would be updated annually to reflect the market value of solar energy, value of the RECs, avoided capacity charges, avoided charges for transmission and ancillary services, and avoided transmission and distribution system losses. Therefore, there would be no direct financial resource impact for eligible systems installed under staff’s proposed NEM successor program. Policy Impact Fulfilling Palo Alto’s NEM legislative requirements and adopting the proposed NEM successor program are consistent with the California Public Utilities Code and state constitutional requirements regarding cost-based rates. Furthermore, adopting a NEM successor rate will add greater market certainty for those interested in installing rooftop solar PV after the NEM cap has been reached. The proposed policy directly supports Strategy #2 of the Local Solar Plan, to “develop proper policies, incentives, price signals and rates to encourage solar installation”. Furthermore, staff analyses indicates the proposed NEM successor rate will support continued uptake of distributed renewable energy technologies in Palo Alto, which further supports the Carbon Neutral Plan, the Local Solar Plan, and the City’s broader environmental sustainability goals, including those set out in the 2011 Utilities Strategic Plan and the 2007 Climate Protection Plan. Environmental Impact The Finance Committee’s review of staff’s proposed NEM successor program and transition policy does not meet the California Environmental Quality Act’s (CEQA) definition of “project” under California Public Resources Code Sec. 21065, thus no environmental review is required. City of Palo Alto Page 17 Attachments:  Attachment A: Resolution to Adopt NEM Successor and Transition Policy (PDF)  Attachment B: Proposed Net Energy Metering Successor Rate Schedule E-EEC-1 (DOCX)  Attachment C-1: Proposed Rule and Reg 2 - redlined (DOCX)  Attachment C-2: Proposed Rule and Reg 29 - redlined (DOC)  Attachment D: Implementation of Council-Adopted NEM Successor Program Design Guidelines (DOCX)  Attachment E: Bill Illustration for Residential Customer with Solar PV System under the Proposed NEM Successor Rate (DOCX)  Attachment F: Energy Freedom Coalition of America Comments to Palo Alto City Council (PDF)  Attachment G: Excerpted Draft UAC Minutes of Apr 12 2016 Meeting (DOCX) Attachment A NOT YET APPROVED 160502 jb 6053741 1 Resolution No. _________ Resolution of the Council of the City of Palo Alto Adopting the Net Energy Metering Successor Rate, Utilities Rate Schedule E-EEC-1 (Export Electricity Compensation); Establishing the Net Energy Metering Transition Policy; and, Amending Rule and Regulation 2 (Definitions and Abbreviations) and Rule and Regulation 29 (Net Energy Metering and Interconnection) R E C I T A L S A. Net Energy Metering (NEM), is a billing arrangement that provides credit to customers for the full retail value of the electricity their system generates. B. State law, California Public Utilities Code Section 2827 et. seq., requires all electric utilities to offer NEM to eligible customers with distributed renewable generation up to a maximum cap. C. Palo Alto’s NEM Cap is 9.5 megawatts (MW) as adopted by Council Resolution 9557. The City’s NEM installations are currently approximately 79% of the proposed 9.5 MW NEM Cap and staff estimates that the City’ NEM Cap will be reached by the end of 2016. Once the NEM Cap is reached, NEM will be closed to new customers and the NEM Successor Rate will become available instead. D. Utilities refer to the terms and conditions for customer-sited, distributed renewable generation installed after the NEM cap has been reached as the NEM successor rate or program. Palo Alto’s NEM Successor Rate is defined by Utilities Rate Schedule E-EEC-1 (Export Electricity Compensation). The E-EEC-1 rate was developed in coordination with the City’s 2016 electric cost of service analysis and may be established by the City Council through its electric utility rate-making authority and processes. E. Formally adopting a cost-based NEM Successor Rate (Rate Schedule E-EEC-1) in Palo Alto will promote greater market certainty and transparency for customers and renewable energy installers operating within the community, and is consistent with both NEM legislative and regulatory obligations and the Council-adopted Local Solar Plan to promote distributed solar projects. F. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. Updates to Rule and Regulation 2 (Definitions and Abbreviations) and Rule and Regulation 29 (Net Energy Metering and Interconnection) are needed in order to implement the NEM Successor Rate and transition policy. The Council of the City of Palo Alto does hereby RESOLVE as follows: Attachment A NOT YET APPROVED 160502 jb 6053741 2 SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-EEC-1 (Export Electricity Compensation) is hereby adopted as attached and incorporated. a) Utility Rate Schedule E-EEC-1 shall become effective July 1, 2016. b) The electricity export compensation rate approved by this resolution is based on a detailed analysis of the value of energy exported to the electric grid, including the energy, avoided capacity charges, avoided transmission and ancillary service charges, avoided transmission and distribution system losses, and environmental attributes and was developed in coordination with the City’s 2016 electric cost of service analysis. SECTION 2. The City Council makes the following findings regarding the establishment of a Net Energy Metering transition policy: 1) A Net Energy Metering transition policy which establishes a 20 year transition period and eligible facility expansion rules will promote regulatory certainty and transparency for the City’s existing NEM and NEM Aggregation customers who have invested in solar PV systems, and for solar developers operating in Palo Alto. 2) Setting the transition period at 20 years from the time of eligible facility interconnection matches the transition period adopted by the California Public Utility Commission for investor-owned utilities, and is reasonably based on eligible systems’ expected useful life, module warranties, power purchase agreements, and third-party financing agreements. 3) Allowing eligible facility expansion up to a given threshold will permit existing NEM and NEM Aggregation customers and those installing eligible facilities within the City’s NEM cap to retain their current NEM or NEM Aggregation rate structure in the event that facility panels need replacement or minor expansion, and is broadly in- line with expansion policies in effect in other California utility service territories. SECTION 3. The City Council adopts the following NEM Transition Policy: A) Existing City of Palo Alto Utilities (CPAU) NEM and NEM Aggregation customers and CPAU NEM and NEM Aggregation customers who install eligible renewable electrical generation facilities within the City’s NEM Cap (Resolution 9557) shall remain eligible for Net Energy Metering under the terms and conditions set forth in California Public Utilities Code Section 2827 (effective as of the date of this Resolution’s adoption) for a 20-year transition period from the time of initial facility interconnection, and B) Existing CPAU NEM and NEM Aggregation customers and CPAU NEM and NEM Aggregation customers who install eligible renewable electrical generation facilities within the City’s NEM Cap may expand their eligible renewable electrical generation facilities by up to 10% of the Initial Interconnection Capacity while still remaining eligible for Net Energy Metering, even after the NEM cap has been reached. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule and Regulation 2 (Definitions and Abbreviations) is hereby amended as attached and incorporated. Utility Rule and Regulation 2, as amended, shall become effective July 1, 2016. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule and Regulation 29 (Net Energy Metering and Interconnection) is hereby amended as attached and incorporated. Utility Rule and Regulation 2, as amended, shall become effective July 1, 2016. Attachment A NOT YET APPROVED 160502 jb 6053741 3 SECTION 6. The adoption of Section 1 of resolution changing electric rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. The adoption of Sections 3, 4 and 5 of this resolution establishing a transition policy and amending Utility Rules and Regulations does not meet the California Environmental Quality Act’s definition of a “project” under Public Resources Code Section 21065, thus no environmental review is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services Attachment B EXPORT ELECTRICITY COMPENSATION UTILITY RATE SCHEDULE E-EEC-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2016 Sheet No.E-EEC-1 A. APPLICABILITY: This Rate Schedule sets for the Net Energy Metering Successor Rate and applies in conjunction with the otherwise applicable Rate Schedules for each Customer class. This schedule applies to Customer-Generators who are either not eligible for Net Energy Metering or who are eligible for Net Energy Metering but elect to take service under the City’s Net Energy Metering Successor Rate. This Rate Schedule may not apply in conjunction with any time-of-use Rate Schedule. B. TERRITORY: Applies to locations within the service area of the City of Palo Alto. C. RATE: The following buyback rate shall apply to all energy exported to the grid. Per kWh Export electricity compensation rate $0.07485 D. SPECIAL CONDITIONS 1. Metering equipment: Electricity delivered by CPAU to the Customer-Generator or received by CPAU from the Customer-Generator shall be measured using a meter capable of registering the flow of electricity in two directions (aka “bidirectional meter”). The electrical power measurements will be used for billing the Customer-Generator. CPAU shall furnish, install and own the appropriate meter. 2. Billing: a. CPAU shall measure during the billing period, in kilowatt-hours, the energy delivered and received after the Customer-Generator serves its own instantaneous load. b. CPAU shall bill the Customer-Generator consumption charges for the energy delivered by CPAU to the Customer-Generator based on the Customer-Generator’s applicable rate schedule. c. In the event the energy generated exceeds the energy consumed and therefore is received by CPAU, the Customer will receive a credit for all energy received by CPAU at the buyback rate designated in section C above. 3. Generation facilities shall adhere to Rule and Regulation 27: Generating Facility Interconnections. {End} DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 1 A. ABBREVIATIONS AMR - Automated Meter Reading AER - Advance Engineering Request Btu - British Thermal Unit ccf - Hundred Cubic Feet CEC - California Energy Commission CPAU - City of Palo Alto Utilities CPUC - California Public Utilities Commission. ERU - Equivalent Residential Unit FERC - Federal Energy Regulatory Commission kVar - Kilovar kVarh - Kilovar-hours kW - Kilowatt kWh - Kilowatt-hour MW - Megawatt MMBtu - One million Btus. NEC - National Electric Code, Latest Version NEM - Net Energy Metering NEMA - Net Energy Metering Aggregation NEMIA - Net Energy Metering Interconnection Agreement NRTL - Nationally Recognized Testing Laboratory PAMC - Palo Alto Municipal Code PSIG - Per square inch gauge PST - Pacific Standard Time RWQCP - Regional Water Quality Control Plant UUT - Utilities Users Tax B. GENERAL DEFINITIONS Account The identification number in CPAU’s billing system for Utility Services. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 2 Agency Any local, county, state or federal governmental body or quasi-governmental body, including, without limitation, the CPUC, the FERC and any joint powers agency, but excluding the City and any board, commission or council of the City. Aggregation Customer A Customer with a Renewable Electrical Generation Facility wishing to install an eligible Renewable Electrical Generation Facility that is sized to offset separately metered electric loads on adjacent or contiguous properties that are solely owned, leased, or rented by them, and who have signed the Net Energy Metering Interconnection Agreement for NEM Aggregation. Applicant An individual, corporation, partnership, Agency, or other legal entity or authorized agent of same, requesting CPAU to supply any or all of the following: 1. Electric Service 2. Water Service 3. Gas Service 4. Wastewater Collection 5. Refuse Service 6. Storm and Surface Water Drainage Service 7. Fiber Optics Service Or, an entity submitting an Application for Interconnection pursuant to Rule 27. Application (for Interconnection of Generating Facilities) An approved standard form (Load Sheet) submitted to CPAU for Interconnection of a Generating Facility. Beneficiary Account The Electric Service Meter(s) serviced by an Aggregation Customer’s Generating Facility, as listed on the Aggregation Customer’s NEMA-IA form. Bidweek Price Index The price reported in Natural Gas Intelligence “NGI’s Bidweek Survey”, California “PG&E Citygate” under the column “avg.” for the calendar month. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 3 Billing Period Also “service period” or “billing cycle”. The normal Billing Period for CPAU Customers is approximately 30 days, with variations occurring due to staff availability, holiday scheduling, field verification of Meter readings, or any other billing-related issues requiring additional investigation prior to issuance of the bill.. British Thermal Unit Also “Btu”. The standard sub-unit of measurement comprising a Therm of natural Gas. One (1) Therm equals 100,000 Btu. Business Day Any day, except a Saturday, Sunday, or any day observed as a legal holiday by the City. Certification Test A test pursuant to Rule 27 that verifies conformance of certain equipment with approved performance standards in order to be classified as Certified Equipment. Certification Tests are performed by NRTLs. Certification; Certified; Certificate The documented results of a successful Certification Test. Certified Equipment Equipment that has passed all required Certification Tests. Charge Any assessment, cost, fee, surcharge or levy for Utility Service other than a Tax, including metered and unmetered Utility Service, capacity, connections, construction, penalties, and mandated or required Customer financial obligations for Service. Charter The Charter of the City of Palo Alto. City Attorney The individual designated as the City Attorney of the City under Section 2.08.120 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the City Attorney. City’s Collector The Person(s) authorized under Section 5.20.040 of the Palo Alto Municipal Code to provide collection, DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 4 processing and disposal of solid waste, Compostable Materials and Recyclable Materials pursuant to one or more written contracts with the City. City Manager The individual designated as the City Manager of the City under Section 2.08.140 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the City Manager. City of Palo Alto, or City The government of the City of Palo Alto, a chartered City and a municipal corporation duly organized and validly existing under the Laws of the State of California, with a principal place of business located at 250 Hamilton Avenue, Palo Alto, County of Santa Clara. For the purposes of these Rules and Regulations, the term “City” may include services provided by both the City of Palo Alto Utilities Department and the City of Palo Alto Public Works Department. City of Palo Alto Public Works Department (Public Works) The City Department responsible for providing Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage Utility Services. Other Utility Services such as Water, Gas, Electric, Wastewater Collection, and Fiber Optics are provided by the City of Palo Alto Utilities Department. City of Palo Alto Utilities Department (CPAU) The City Department responsible for providing Water, Gas, Electric, Wastewater Collection and Fiber Optic Utility Services. Other Utility Services such as Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage are provided by the City of Palo Alto Public Works Department. Code The words "the Code" or "this Code" shall mean the Palo Alto Municipal Code. Commercial Service Commercial Utility Service is provided to businesses, non-profit organizations, public institutions, and industrial Customers. The term also applies to Utility Services through Master Meters serving multi- family Residential dwellings and common areas of multi-family facilities. Compostable Materials Organic materials designated by the City as acceptable for collection and processing. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 5 Container Any receptacle used for storage of solid waste, Recyclable Materials, Compostable Materials or other materials designated by the City to be collected by the City’s Collector. Examples of containers include carts, bins, compactors and drop boxes. Cubic Foot of Gas (cf) The quantity of Gas that, at a temperature of sixty (60) degrees Fahrenheit and a pressure of 14.73 pounds per square inch absolute, occupies one cubic foot. Curtailment The act of reducing or interrupting the delivery of natural Gas. Customer The Person, corporation, Agency, or entity that receives or is entitled to receive Utility Service(s) from the City of Palo Alto, or in whose name Service is rendered for a particular Account as evidenced by the signature on the Application, contract, or agreement for Service. In the absence of a signed instrument, a Customer shall be identified by the receipt of any payment of bills regularly issued in the name of the Person, corporation, or Agency regardless of the identity of the actual user of the Utility Service(s). Customer-Generator: An “eligible customer-generator,” as that term is defined by the California Public Utilities Code section 2827, as the same may be amended from time to time. Dark Fiber A Fiber Optic cable provided to end-users or resellers by CPAU without any of the light transmitters, receivers, or electronics required for telecommunications over the Fiber. Infrastructure for Fiber Optic activation is provided by the reseller or end-user. Dark Fiber Infrastructure Components of the CPAU Fiber Optic Distribution System required to provide Service to Customers (licensees), that are attached, owned, controlled or used by the City, located overhead or underground within the Public Right-of-Way, the Public Utility Easements and Leased Service Properties. Dedicated Distribution Transformer A Distribution Transformer that is dedicated to serving a single premise. Demand The highest rate of delivery of Electric energy, measured in Kilowatts (kW) or kilovolt amperes (kVA) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 6 occurring instantaneously or registered over a fixed time period (normally fifteen minutes unless otherwise specified within a monthly billing cycle). Demand Charge An electrical Charge or rate that is applied to a metered Demand reading expressed in Kilowatts to compute a Demand Charge component of a Customer’s Electric bill. Demarcation Point The Demarcation Point for a project shall be the Customer side of the panel onto which the CPAU Fiber terminates within the Customer Premises, unless otherwise specified in the Proposal for Dark Fiber Services. Distribution Services Includes, but is not limited to, Utility Service provided by the Distribution System and other Services such as billing, meter reading, administration, marketing, and Customer Services. Does not include Services directly related to the Interconnection of a Generating Facility as per Rule 27. Distribution System The infrastructure owned and operated by CPAU which is capable of transmitting electrical power, other than Interconnection Facilities, or transporting Water, Wastewater, or Gas within the City of Palo Alto. The Electric Distribution System transmits power from the City’s Interconnection with PG&E to CPAU’s Meter located on the Customer’s Premises. The Gas Distribution System transports Gas from PG&E receiving stations to CPAU’s Meter located on the Customer Premises. The Water Distribution System transports Water from the San Francisco Water Department receiving stations and CPAU wells to the meter located on the Customer Premises. The Wastewater Collection System transports sewage from the Customer’s Premises to the Water Quality Control Plant. Effluent Treated or untreated Wastewater flowing out of a Wastewater treatment facility, sewer, or industrial outfall. Electric, Electric Service Utility Service provided to residents and business owners in the City of Palo Alto consisting of generation, transmission, and distribution of electrical power for retail use. Electric Service is provided by the City of Palo Alto Utilities Department. Emergency An actual or imminent condition or situation, which jeopardizes CPAU’s Distribution System Integrity. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 7 Emergency Service Electric Service supplied to, or made available to, Load devices which are operated only in Emergency situations or in testing for same. Energy Services Energy commodity and any applicable ancillary Services used to generate and transport such commodity from its origin to the City’s Point of Receipt. May also mean the sale of value added Services associated or related to the Provision and/or usage of energy commodity. Equivalent Residential Unit (ERU) This is the basic unit for computing storm and surface water drainage fees. All single-family Residential properties are billed the number of ERU’s specified in the table contained in Utility Rate Schedule D-1, according to parcel size. All other properties have ERU's computed to the nearest 1/10 ERU using this formula: No. Of ERU = Impervious Area (sq. ft.) / 2,500 sq. ft. Fiber Optic, Fiber Optic Service A solid core of optical transmission material. Fiber Optic Service that is provided by the City of Palo Alto Utilities Department is referred to as Dark Fiber. Fiber Optic Backbone The high-density portion of the Dark Fiber Infrastructure installed and owned by the City. Force Majeure The occurrence of any event that has, had or may have an adverse effect on the design, construction, installation, management, operation, testing, use or enjoyment of the City’s Utility Services, which is beyond the reasonable control of the parties and which event includes, but is not limited to, an Act of God, an irresistible superhuman cause, an act of a superior governmental authority, an act of a public enemy, a labor dispute or strike or a boycott which could not be reasonably contemplated by the City or Customer affected thereby, a defect in manufactured equipment (including, but not limited to, the Dark Fibers), fire, floods, earthquakes, or any other similar cause. Function Some combination of hardware and software designed to provide specific features or capabilities. Its use, as in Protective Function, is intended to encompass a range of implementations from a single- purpose device to a section of software and specific pieces of hardware within a larger piece of equipment to a collection of devices and software. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 8 Gas Any combustible gas or vapor, or combustible mixture of gaseous constituents used to produce heat by burning. It shall include, but not be limited to, natural gas, gas manufactured from coal or oil, gas obtained from biomass or from landfill, or a mixture of any or all of the above. Gas, Gas Service Utility Service provided to residents and business owners in the City of Palo Alto consisting of procurement, transmission, and distribution of Gas for retail use. Gas Service is provided by the City of Palo Alto Utilities Department. Generating Facility All Generators, electrical wires, equipment, and other facilities owned or provided by Producer for the purpose of producing Electric power. This includes a solar or wind turbine Renewable Electrical Generation Facility that is the subject of a Net Energy Metering and Interconnection Agreement and Rule and Regulation 29. Generator A device converting mechanical, chemical or solar energy into electrical energy, including all of its protective and control Functions and structural appurtenances. One or more Generators comprise a Generating Facility. Gross Nameplate Rating; Gross Nameplate Capacity The total gross generating capacity of a Generator or Generating Facility as designated by the manufacturer(s) of the Generator(s). Initial Interconnection Capacity The maximum rated generating capacity of a Renewable Electrical Generation Facility eligible for Net Energy Metering prior to the City’s Total Rated Generating Capacity exceeding the NEM Cap. Initial Review The review by CPAU, following receipt of an Application, to determine the following: (a) whether the Generating Facility qualifies for Simplified Interconnection; or (b) if the Generating Facility can be made to qualify for Interconnection with a Supplemental Review determining any additional requirements. Inspector The authorized Inspector, agent, or representative of CPAU. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 9 Interconnection; Interconnected The physical connection of a Generating Facility in accordance with the requirements of the City’s Utilities Rules and Regulations so that Parallel Operation with CPAU’s Distribution System can occur (has occurred). Interconnection Agreement An agreement between CPAU and the Producer providing for the Interconnection of a Generating Facility that gives certain rights and obligations to effect or end Interconnection. For the purposes of the City’s Utilities Rules and Regulations, the Net Energy Metering and Interconnection Agreement (for NEM and NEM Aggregation Customers), and the Power Purchase Agreements authorized by the City Council may be considered as Interconnection Agreements for purposes of defining such term. Interconnection Facilities The electrical wires, switches and related equipment that are required in addition to the facilities required to provide Electric Distribution Service to a Customer to allow Interconnection. Interconnection Facilities may be located on either side of the Point of Common Coupling as appropriate to their purpose and design. Interconnection Facilities may be integral to a Generating Facility or provided separately. Interconnection Study A study to establish the requirements for Interconnection of a Generating Facility with CPAU’s Distribution System. Internet Exchange Any Internet data center for telecommunications equipment and computer equipment for the purposes of enabling traffic exchange and providing commercial-grade data center services. Island; Islanding A condition on CPAU’s Electric Distribution System in which one or more Generating Facilities deliver power to Customers using a portion of CPAU’s Distribution System that is electrically isolated from the remainder of CPAU’s Distribution System. Junction A location on the Dark Fiber Infrastructure where equipment is installed for the purpose of connecting communication cables. Junction Site The area within the Transmission Pathway at which a Junction is located. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 10 Kilovar (kVar) A unit of reactive power equal to 1,000 reactive volt-amperes. Kilovar-hours (kVarh) The amount of reactive flow in one hour, at a constant rate of Kilovar. Kilowatt (kW) A unit of power equal to 1,000 watts. Kilowatt-hour (kWh) The amount of energy delivered in one hour, when delivery is at a constant rate of one Kilowatt; a standard unit of billing for electrical energy. Law Any administrative or judicial act, decision, bill, Certificate, Charter, Code, constitution, opinion, order, ordinance, policy, procedure, Rate, Regulation, resolution, Rule, Schedule, specification, statute, tariff, or other requirement of any district, local, municipal, county, joint powers, state, or federal Agency, or any other Agency having joint or several jurisdiction over the City of Palo Alto or City of Palo Alto Utilities or Public Works Customers, including, without limitation, any regulation or order of an official or quasi-official entity or body. Licensed Fibers One or more fibers comprising a part of the Dark Fiber Infrastructure that are dedicated to the exclusive use of the Customer under the Provisions of the Dark Fiber License Agreement, Proposal to Dark Fiber Services Agreement and the Utilities Rules and Regulations. Licensed Fibers Route A defined path of Licensed Fibers that is identified by specific End Points. Load(s) The Electric power Demand (kW) of the Customer at its Service Address within a measured period of time, normally 15 minutes, or the quantity of Gas required by a Customer at its Service Address, measured in MMBtu per Day. Main Wastewater Line Any Wastewater line not including a building connection (Service) sewer. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 11 Master-metering Where CPAU installs one Service and Meter to supply more than one residence, apartment dwelling unit, mobile home space, store, or office. Maximum Generation For a customer with a non-utility generator located on the customer’s side of the Point of Common Coupling, the Maximum Generation for that non-utility generator during any billing period is the maximum average generation in kilowatts taken during any 15-minute interval in that billing period provided that in case the generator output is intermittent or subject to violent fluctuations, the City may use a 5-minute interval. Meter The instrument owned and maintained by CPAU that is used for measuring either the Electricity, Gas or Water delivered to the Customer. Metering The measurement of electrical power flow in kW and/or energy in kWh, and, if necessary, reactive power in kVar at a point, and its display to CPAU as required by Rule 27. Metering Equipment All equipment, hardware, software including Meter cabinets, conduit, etc., that are necessary for Metering. Meter Read The recording of usage data from Metering Equipment. Minimum Charge The least amount for which Service will be rendered in accordance with the Rate Schedule. Momentary Parallel Operation The Interconnection of a Generating Facility to the Distribution System for one second (60 cycles) or less. Nationally Recognized Testing Laboratory (NRTL) A laboratory accredited to perform the Certification Testing requirements under Rule 27. Net Electricity Consumer A Customer-Generator whose Generating Facility produces less electricity than is supplied by CPAU DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 12 during a particular period, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(h)(2), as the same may be amended from time to time. Net Energy Metering Net Energy Metering means measuring the difference between the electricity supplied through CPAU’s Electric utility Distribution System and the electricity generated by the customer-generator’s facility and delivered to CPAU’s Electric utility Distribution System over a specified twelve-month period. This definition does not apply to Customers subject to the Net Energy Metering Successor Rate. Net Energy Metering Cap (NEM Cap) Five (5) percent of the historical system peak of 190 MW from 2006, or 9.5 MW, using the CEC’s Alternating Current (AC) capacity rating. Where the CEC AC rating is not available, CPAU will multiply the inverter AC nameplate rating by 0.86. Net Energy Metering Successor Program, or Net Energy Metering Successor Rate The terms and conditions for Customer-Generators whose Renewable Electrical Generation Facilities are installed after the Council-adopted NEM Cap has been reached, or Customers-Generators who are eligible for Net Energy Metering but elect to take service under the Net Energy Metering Successor Rate. NEM Successor Rate terms and conditions are defined by Utilities Rate Schedule E-EEC-1 (Export Electricity Compensation). Net Generation Metering Metering of the net electrical power of energy output in kW or energy in kWh, from a given Generating Facility. This may also be the measurement of the difference between the total electrical energy produced by a Generator and the electrical energy consumed by the auxiliary equipment necessary to operate the Generator. Net Nameplate Rating The Gross Nameplate Rating minus the consumption of electrical power of a Generator or Generating Facility as designated by the manufacturer(s) of the Generator(s). Net Surplus Customer-Generator A Customer-Generator who’s Generating Facility produces more electricity than is supplied by CPAU, during a particular period, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(h)(3), as the same may be amended from time to time. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 13 Net Surplus Electricity Compensation A per kilowatt hour rate offered by CPAU to the Net Surplus Customer-Generators (excluding Aggregation Customers) for net surplus electricity, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(b)(8), as the same may be amended from time to time. The Net Surplus Electricity Compensation Rate is applicable only to Customer-Generators who are eligible for Net Energy Metering and are subject to Rule and Regulation 29; this Rate does not apply to Customer-Generators taking service under the NEM Successor Rate. Non-Islanding Designed to detect and disconnect from an Unintended Island with matched Load and generation. Reliance solely on under/over voltage and frequency trip is not considered sufficient to qualify as Non- Islanding. Occupied Domestic Dwelling Any house, cottage, flat, or apartment unit having a kitchen, bath, and sleeping facilities, which is occupied by a Person or Persons. Parallel Operation The simultaneous operation of a Generator with power delivered or received by CPAU while Interconnected. For the purpose of this Rule, Parallel Operation includes only those Generating Facilities that are Interconnected with CPAU’s Distribution System for more than 60 cycles (one second). Performance Test, Performance Tested After the completion of any Fiber Interconnection work, the City will conduct a Performance Test of each Fiber constituting a part of the proposed leased fibers to determine its compliance with the Performance Specifications. Performance Specifications These specifications will include, but not be limited to, criteria relating to end-to-end optical time domain reflectometer data plots that identify the light optical transmission losses in each direction along the leased fibers whenever the testing is possible, measured in decibels at a wavelength of 1310 or 1550 nanometers for singlemode Fiber, as a Function of distance, measured in kilometers. Person Any individual, for profit corporation, nonprofit corporation, limited liability company, partnership, limited liability partnership, joint venture, business, family or testamentary trust, sole proprietorship, or DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 14 other form of business association. PG&E Citygate The PG&E Citygate is the point at which PG&E’s backbone transmission system connects to PG&E’s local transmission system. Point of Common Coupling (PCC) The transfer point for electricity between the electrical conductors of CPAU and the electrical conductors of the Producer. Point of Common Coupling Metering Metering located at the Point of Common Coupling. This is the same Metering as Net Generation Metering for Generating Facilities with no host load. Point of Delivery (POD) Unless otherwise specified, the following definitions apply: For Electric, that location where the Service lateral conductors connect to the Customer’s Service entrance equipment; for overhead Services, the POD is at the weather-head connection; for under-ground Services, the POD is located at the terminals ahead of or at the Meter; for multiple Meter arrangements with connections in a gutter, the POD is at the Meter terminals (supply-side); for multiple Meter arrangements in a switchboard, the POD is typically at the connectors in the utility entrance section; for Natural Gas, the POD is the point(s) on the Distribution System where the City delivers natural Gas that it has transported to the Customer. Point of Interconnection The electrical transfer point between a Generating Facility and the Distribution System. This may or may not be coincident with the Point of Common Coupling. Point of Service (POS) Where CPAU connects the Electric Service lateral to its Distribution System. For Fiber Optics Service, this is where CPAU connects the Fiber Service to the backbone. This point is usually a box located in or near the street or sidewalk and can be in the Public Right-of-Way. This point is at a mutually agreed upon location established at the time of installation. Pole Line Overhead wires and overhead structures, including poles, towers, support wires, conductors, guys, studs, platforms, cross arms braces, transformers, insulators, cutouts, switches, communication circuits, appliances attachments, and appurtenances, located above ground and used or useful in supplying Electric, communication, or similar or associated Service. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 15 Power Factor The percent of total power delivery (kVA) which does useful work. For billing purposes, average Power Factor is calculated from a trigonometric function of the ratio of reactive kilovolt-ampere-hours to the Kilowatt-hours consumed during the billing month. Power Factor is a ratio that reflects the reactive power used by a Customer. CPAU maintains an overall system Power Factor above 95% to reduce distribution system losses caused by low Power Factor. Power Factor Adjustment CPAU must install additional equipment to correct for Customers that maintain a low Power Factor, and may make a Power Factor Adjustment to a Customer’s bill to account for those costs and the additional energy costs and losses incurred by CPAU due to the Customer’s low Power Factor. Premises All structures, apparatus, or portion thereof occupied or operated by an individual(s), a family, or a business enterprise, and situated on an integral parcel of land undivided by a public street, highway, or railway. Primary Service CPAU Electric distribution Service provided to a Customer’s Premises at a voltage level equal to or greater than 1000 volts. Producer The entity that executes an Interconnection Agreement with CPAU. The Producer may or may not own or operate the Generating Facility, but is responsible for the rights and obligations related to the Interconnection Agreement. Proposal for Dark Fiber Services A project-specific Service agreement that acts as a supplemental document for the Dark Fiber License Agreement. This Service agreement shall include the proposed Interconnection fees, applicable Fiber licensing fees, term of the Service, and summary of licensed Fiber elements. Protective Function(s) The equipment, hardware and/or software in a Generating Facility (whether discrete or integrated with other Functions) whose purpose is to protect against Unsafe Operating Conditions. Provision Any agreement, circumstance, clause, condition, covenant, fact, objective, qualification, restriction, DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 16 recital, reservation, representation, term, warranty, or other stipulation in a contract or in Law that defines or otherwise controls, establishes, or limits the performance required or permitted by any party. Prudent Utility Practices The methods, protocols, and procedures that are currently used or employed by utilities to design, engineer, select, construct, operate and maintain facilities in a dependable, reliable, safe, efficient and economic manner. Public Right-of-Way The areas owned, occupied or used by the City for the purposes of furnishing retail and/or wholesale Electricity, Gas, Water, Wastewater, Storm and Surface Water Drainage, Refuse Service or communications commodity and/or distribution Service, and the means of public transportation, to the general public, including but not limited to, the public alleys, avenues, boulevards, courts, curbs, gutters, lanes, places, roads, sidewalks, sidewalk planter areas, streets, and ways. Public Utility Easements The areas occupied or used by the City for the purpose of providing Utility Service to the general public, and all related Services offered by the City’s Utilities Department and/or Public Works Department, the rights of which were acquired by easements appurtenant or in gross, or are other interests or estates in real property, or are the highest use permitted to be granted by the nature of the City’s interest in and to the affected real property. This term incorporates all public Service easements for Utility Services that have been recorded by the City with the Recorder of the County of Santa Clara, California. Public Works Department See City of Palo Alto Public Works Department. Rate Schedule One or more Council-adopted documents setting forth the Charges and conditions for a particular class or type of Utility Service. A Rate Schedule includes wording such as Schedule number, title, class of Service, applicability, territory, rates, conditions, and references to Rules. Recyclable Materials Materials designated by the City as acceptable for recycling collection and processing. Refuse Service Refuse Service includes weekly collection, processing and disposal of materials properly deposited in the City Collector’s provided Containers for solid waste, as well as weekly collection and processing of Recyclable Materials, weekly collection and processing of Compostable Materials, ongoing maintenance DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 17 of the closed Palo Alto Landfill, zero waste programs, street sweeping service, the household hazardous waste program, and the annual Clean Up Day. Renewable Electrical Generation Facility A Generation Facility eligible for NEM under California Public Utilities Code section 2827 et seq. as the same may be amended from time to time. Reserved Capacity For a customer with one or more non-utility generators located on the customer’s side of the Point of Common Coupling, the Reserved Capacity for each billing period is the lesser of 1) the sum of the Maximum Generation for that period for all non-utility generation sources; or 2) the maximum average customer demand in kilowatts taken during any 15-minute interval in the billing period provided that in case the load is intermittent or subject to violent fluctuations, the City may use a 5-minute interval. Residential Service Utility Service provided to separately metered single family or multi-family, domestic dwelling. Rules and Regulations See Utilities Rules and Regulations Scheduling Coordinator An entity providing the coordination of power schedules and nominations to effect transportation and distribution of Gas, Electric power and energy. Secondary Service CPAU Electric distribution Service provided to a Customer’s Premises at a voltage level less than 1000 volts. Service(s) Utility Services offered by the City of Palo Alto include Electric, Fiber Optics, Gas, Water, Wastewater Collection services provided by the Utilities Department (CPAU); and Refuse Service, Wastewater Treatment, and Storm and Surface Water Drainage Services provided by the Public Works Department. Service Address The official physical address of the building or facility assigned by CPAU’s Planning Department, at which Customer receives Utility Services. Service Charge DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 18 A fixed monthly Charge applicable on certain Rate Schedules that does not vary with consumption. The Charge is intended to recover a portion of certain fixed costs. Service Drop The overhead Electric Service conductors from the last pole or other aerial support to and including the splices, if any, connecting to the service entrance conductors at the building or other structure. Or, in the case of Fiber Optic Drops, the overhead Fiber Optics cable from the last pole or other aerial support to the building or other structure to and including the termination box. Services or Service Lines Facilities of CPAU, excluding transformers and Meters, between CPAU’s infrastructure and the Point of Delivery to the Customer. Service Territory The geographic boundaries within the City of Palo Alto limits served by the physical Distribution System of the CPAU. Short Circuit (Current) Contribution Ratio (SCCR) The ratio of the Generating Facility’s short circuit contribution to the short circuit contribution provided through CPAU’s Distribution System for a three-phase fault at the high voltage side of the distribution transformer connecting the Generating Facility to CPAU’s system. Simplified Interconnection An Interconnection conforming to the minimum requirements as determined under Rule 27, Section I. Single Line Diagram; Single Line Drawing A schematic drawing, showing the major Electric switchgear, Protective Function devices, wires, Generators, transformers and other devices, providing sufficient detail to communicate to a qualified engineer the essential design and safety of the system being considered. Special Facilities See CPAU’s Rule and Regulation 20 governing Special Facilities. Splice A point where two separate sections of Fiber are physically connected. Standard Refuse Container A Standard Refuse Container shall have the meaning described in the Palo Alto Municipal Code. A DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 19 Standard Container shall also include a wheeled container with a capacity of not to exceed 32 gallons. Standby Service Back-up Energy Services provided by CPAU. Storm and Surface Water Drainage Utility Service provided to residents and business owners in the City of Palo Alto. Storm and Surface Water Drainage Service is provided by the City of Palo Alto Public Works Department. Supplemental Review A process wherein CPAU further reviews an Application that fails one or more of the Initial Review Process screens. The Supplemental Review may result in one of the following: (a) approval of Interconnection; (b) approval of Interconnection with additional requirements; or (c) cost and schedule for an Interconnection Study. System Integrity The condition under which a Distribution System is deemed safe and can reliably perform its intended Functions in accordance with the safety and reliability rules of CPAU. Tax Any assessment, Charge, imposition, license, or levy (including any Utility Users Tax) and imposed by any Agency, including the City. Telemetering The electrical or electronic transmittal of Metering data in real-time to CPAU. Temporary Service Service requested for limited period of time or of indeterminate duration such as, but not limited to, Service to provide power for construction, seasonal sales lots (Christmas trees), carnivals, rock crushers or paving plants. Temporary Service does not include Emergency, breakdown, or Standby Service. Therm A Therm is a unit of heat energy equal to 100,000 British Thermal Units (Btu). It is approximately the energy equivalent of burning 100 cubic feet (often referred to as 1 ccf) of natural Gas. Since Meters measure volume and not energy content, a Therm factor is used to convert the volume of Gas used to its heat equivalent, and thus calculate the actual energy use. The Therm factor is usually in the units therms/ccf. It will vary with the mix of hydrocarbons in the natural Gas. Natural Gas with a higher than DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 20 average concentration of ethane, propane or butane will have a higher Therm factor. Impurities, such as carbon dioxide or nitrogen lower the Therm factor. Total Rated Generating Capacity Total Rated Generating Capacity will be calculated as the sum of the rated generating capacity of all installed Renewable Electrical Generation Facilities participating in NEM or NEM Aggregation. The rated generating capacity for each individual Renewable Electrical Generation Facility participating in NEM or NEM Aggregation will be calculated as follows: 1. For Solar: For each Renewable Electrical Generation Facility that is a solar photovoltaic generating facility, CPAU will use the CEC’s Alternating Current (AC) rating; or where the CEC AC rating is not available, CPAU will multiply the inverter AC nameplate rating by 0.86; and 2. For Non-Solar: For all other Renewable Electrical Generation Facilities, CPAU will use the AC nameplate rating of the generating facility. Transfer Trip A Protective Function that trips a Generating Facility remotely by means of an automated communications link controlled by CPAU. Transmission Pathway Those areas of the Public Right-of-Way, the Public Utility Easements and the Leased Service Properties in which the Dark Fiber Infrastructure is located. Trap Any approved equipment or appliance for sealing an outlet from a house-connection sewer to prevent the escape of sewer Gas from a main line through a building connection (service) sewer. Underground Utility District An area in the City within which poles, overhead electric or telecommunication wires, and associated overhead structures are prohibited or as otherwise defined in Section 12.04.050 of the PAMC. Unintended Island The creation of an Island, usually following a loss of a portion of CPAU’s Distribution System, without the approval of CPAU. Unsafe Operating Conditions DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 21 Conditions that, if left uncorrected, could result in harm to personnel, damage to equipment, loss of System Integrity or operation outside pre-established parameters required by the Interconnection Agreement. Utilities Department See City of Palo Alto Utilities Department. Utilities Director The individual designated as the Director of Utilities Department under Section 2.08.200 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the director of utilities. Utility(ies) Rules and Regulations, Rules and Regulations The compendium of Utilities Rules and Regulations prepared by the City’s Utilities and Public Works Departments and adopted by ordinance or resolution of the Council pursuant to Chapter 12.20 of the Palo Alto Municipal Code, as amended from time to time. Utility(ies) Service(s), Service(s) Electric, Fiber optics, Water, Gas, Wastewater collection services provided by the City of Palo Alto Utilities Department (CPAU) and Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage services provided by the City of Palo Alto Public Works Department. Utilities User Tax (UUT) City of Palo Alto Tax imposed on Utility Charges to a Water, Gas, and/or Electric Service user. This may include Charges made for Electricity, Gas, and Water and Charges for Service including Customer Charges, Service Charges, Standby Charges, Charges for Temporary Services, Demand Charges, and annual and monthly Charges, as described in Chapter 2.35 of the Palo Alto Municipal Code. Wastewater Utility Service provided to residents and business owners in the City of Palo Alto. Wastewater Utility Services include collection and treatment of Wastewater. Wastewater Collection Service is provided by the City of Palo Alto Utilities Department, and Wastewater Treatment Service is provided by the City of Palo Alto Public Works Department. Water Utility Service provided to residents and business owners in the City of Palo Alto for retail use. Water Service is provided by the City of Palo Alto Utilities Department. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No 22 Water Column (WC) Pressure unit based on the difference in inches between the heights of water columns as measured in a manometer. 6” WC = 0.217 psi; 7” WC = 0.25 psi. (END) NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 1 A. APPLICABILITY This Rule and Regulation is applicable to any City of Palo Alto Utilities (“CPAU”) Customer that is an eligible Customer-Generator under the California Public Utilities Code that desireseligible to participate in Net Energy Metering (“NEM”) or Net Energy Metering Aggregation (“NEM Aggregation”) with via the use of a Renewable Electrical Generation Facility, not to exceed 1 MW, located on the Customer’s owned, leased, or rented premises within CPAU service territory to that will operate in parallel with the CPAU distribution system, so long as there is availability remaining within the NEM Cap, as defined in Rule 2. This Rule and Regulation does not apply to Customer- Generators who participate in the City’s Net Energy Metering Successor Program. B. SCOPE Notwithstanding the requirements and charges set forth in this Rule 29, CPAU reserves the right to impose any requirements set forth in Rule 27 that are additional to or more stringent than those set forth in this Rule 29, including those related to billing and charges, on NEM and NEM Aggregation Customers to the maximum extent permitted by state law (Cal. Pub. Util. Code § 2827 et seq., as the same may be amended from time to time). C. CUSTOMER ELIGIBILITY 1. General Requirements. In order to be eligible to participate in NEM or NEM Aggregation, a Customer must: a. Be a Customer-Generator, pursuant to the definition set forth in Rule and Regulation 2. b. Construct, design, install, interconnect, operate and maintain a Renewable Electrical Generation Facility (or combination of such facilities) that is: i. On the Customer-Generator’s owned, leased or rented Premises, ii. Of a total capacity of not more than one (1) MW (or 1,000 kW), iii. Intended primarily to offset part or all of the Customer-Generator’s own Electric Service requirements, and NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 2 iv. Is not used to sell to any third person, or otherwise provide Electric Service to any real estate parcel, premise, or location other than those that are the subject of the Customer-Generator’s Interconnection Agreement (IA). c. Complete and provide CPAU with all required agreements, supporting documents, and any payments related to interconnection. 2. NEM Cap. a) Eligibility for NEM and NEM Aggregation. NEM and NEM Aggregation is available on a first-come, first served basis. Customers shall remain eligible for NEM and NEM Aggregation until such time as the Total Rated Generating Capacity used by NEM and NEM Aggregation Customers combined reaches CPAU’s NEM Cap. NEM is available on a first-come, first-served basis. Once the NEM Cap has been reached, NEM Service and Interconnection this Rule and Regulation will be closed to new cCustomers. Customer-Generators installed after the NEM Cap has been reached will be subject to the Net Energy Metering Successor Rate. a)b) System Expansions. Customer-Generators eligible for NEM or NEM Aggregation may increase the system capacity of their Renewable Electrical Generation Facilities by a maximum of 10% of the Initial Interconnectino Capacity after the NEM Cap has been reached. Customers whose system modifications or expansions exceed this limit will no longer be eligible for NEM or NEM Aggregation, and will be subject to the Net Energy Metering Successor Rate. 3. Additional Requirements for NEM Aggregation. In addition to those eligibility requirements set forth in Section 1(a) of this Rule and Regulation 29, a CPAU Customer is only eligible to participate in NEM Aggregation where: a. The Customer-Generator elects to aggregate Electric Service of the meters located on the property where the Renewable Electrical Generation Facility is located NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 3 across properties that are adjacent or contiguous with that property; and b. All properties across which the Customer-Generator elects to aggregate are solely owned, leased, or rented by the eligible Customer. 4. NEM Transition Period. Customers eligible for NEM or NEM Aggregation remain subject to the requirements and charges set forth in this Rule 29 through a period of twenty (20) years from the original date of Interconnection of the eligible Renewable Energy Generating Facility. D. BILLING FOR NEM 1. General Rules a. Twelve Month True Up Period i. At the end of each twelve-month period following: aa. The date of Interconnection of the Renewable Electrical Generation Facility, or bb. For a Customer with a date of Interconnection of the Generating Facility commencing prior to February 1, 2010, the day after CPAU’s receipt of the Customer’s net surplus electricity election form, ii. CPAU will determine whether the Customer-Generator is a Net Electricity Consumer or a Net Surplus Customer-Generator during that period. b. CPAU will bill the Customer-Generator for the electricity used during that twelve- month period, whether the Customer-Generator is considered a Net Electricity Consumer or a Net Surplus Customer-Generator. c. CPAU shall provide the Customer-Generator with net electricity consumption information with each monthly bill; that information shall include either the current monetary balance owed to CPAU or the current amount of excess electricity NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 4 produced since the last twelve-month period. d. If the Customer-Generator terminates the contractual relationship with CPAU, then CPAU shall reconcile the Customer-Generator’s consumption and production of electricity during any part of the twelve-month period following the last annual settlement and reconciliation, using the procedures as outlined in this Rule. e. For a Customer-Generator who has submitted an affirmative election, CPAU will provide either Net Surplus Electricity Compensation in accordance with Electric Utility Rate Schedule E-NSE-1, for any net surplus electricity generated during the prior twelve-month settlement period, or bill credits resulting from net surplus electricity generation to be applied against electricity-related charges subsequently incurred by the Customer-Generator. f. If the Customer-Generator fails to make an affirmative election to receive Service pursuant to Net Surplus Electricity Compensation, then CPAU shall retain any excess electricity (expressed in Kilowatt-hours) generated during the prior twelve-month settlement period, and it shall not be obligated to pay Net Surplus Electricity Compensation, nor shall it be obligated to allow the application of net surplus electricity credits to be used against Energy charges subsequently incurred by the Customer-Generator. g. CPAU will allow a Customer to change the election option once each twelve-month settlement period provided that the Customer provides notice to CPAU one month prior to the beginning of new settlement period. 2. Monthly Billing a. Medium and large commercial Customer-Generators will be required to pay any balances due to CPAU on a monthly basis. b. Except as annual billing is provided for in this Rule 29, residential and small commercial Customer-Generators will default to owing balances due on a monthly basis, but may request annual billing as allowed for in California Public Utilities Code sections 2827 (g) and (h)(2)(c). NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 5 c. Standby service charges for backup or maintenance electric service will be waived, provided that the Customer-Generator qualifies for participation in net energy metering at the Service Address. d. For a Net Surplus Customer-Generator in a given month, any credits created will be carried forward to future months, to be used for future electric charges, until the end of the Customer-Generators Twelve Month True-Up Period. 3. Annual Billing a. Customers may request annual billing as allowed for in California Public Utilities Code sections 2827 (g) and (h)(2)(c).. b. Bill payment will not be considered delinquent, unless the Customer-Generator does not pay a final billing statement within twenty (20) days of the date of issuance of that final billing statement. c. For annually billed residential or small commercial Customer-Generators, the net balance of money owed to CPAU will be carried forward until the end of the twelve- month period. d. To accommodate annual billing, a Customer’s Electricity Service may be transferred to a separate Utility Account so as not to interrupt monthly billing for other recurring, non-electric Utility Services. 4. Additional Billing Rules Applicable to NEM Aggregation Customers a. For each monthly billing period, the amount of electricity generated from the Aggregation Customer’s Generating Facility during that billing period will be accounted for on a per kWh basis. b. The Aggregation Customer’s electricityenergy consumption will be totaled for each Beneficiary Account that is listed to receive kwh energy credits from the Generating Facility per the Customer’s Interconnection Agreement. c. Each Beneficiary Account will be allotted a portion of the Generating Facilities NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 6 energy equal to that Beneficiary Account’s relative share of Aggregation Customer’s total usage for the billing period. d. The total amount of energy produced by a Generating Facility will be allotted in each billing period. e. The billing for Beneficiary Accounts will be the same as NEM customers, as outlined in Section D.2(a) above, with the restriction that no Beneficiary Account is eligible for Net Surplus Electricity Compensation in accordance with Electric Utility Rate Schedule E-NSE-1, but may only carry forward energy credits. E. APPLICATION AND INTERCONNECTION PROCESS 1. Application Process CPAU shall process a request for the establishment of NEM and Interconnection from the Customer-Generator within the time period not exceeding that for Customers requesting new Electric Service; provided, however, that such time period will not exceed thirty (30) days from the date of (1) receipt of a completed Application form for Net Energy Metering Service and Interconnection from the Customer-Generator, (2) Electric inspection clearance from CPAU in accordance with California Public Utilities Code 2827(c)(2), and (3) building inspection clearance from the City of Palo Alto Building Inspection Division. If CPAU is unable to process the request within the thirty-day period or other applicable period, then CPAU shall notify the Customer-Generator of the reason for its inability to process the request and the expected completion date. 2. Interconnection Process The Customer-Generator will be required to sign either an Interconnection Agreement, as applicable, or an agreement containing substantially the terms and conditions of the above referenced agreements and agree to be subject to applicable Utility Rates and Charges and Utility Rules and Regulations in order to be eligible for NEM Service provided by CPAU. CPAU will make available all necessary forms and contracts for NEM Service for download from the Internet. F. GENERATING FACILITY DESIGN AND OPERATING REQUIREMENTS NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 7 1. Safety Standards The facility will meet all applicable federal, state and local safety and performance standards, including those established by the National Electrical Code (NEC), the Institute of Electrical and Electronic Engineers, and accredited testing laboratories such as Underwriters Laboratories (UL) and, as applicable, the rules of the California Public Utilities Commission regarding safety and reliability. The Customer-Generator whose facility meets those standards and rules will not be required to install additional controls, perform or pay for additional tests, or purchase additional liability insurance. 2. Design Standards In addition to the requirements more generally set forth in section D.1, Customer-Generator will: a. Conform to the applicable National Electric Code (NEC) Standards [NEC 690] and applicable building codes. b. Have a dedicated circuit from the inverter to the Service panel with a circuit breaker or fuse [NEC 690-64(b)(1)]. c. Have an overcurrent device at the Service panel will be marked to indicate solar power source [NEC 690-64(b)(4)]. d. Establish the following minimum specifications for Parallel Operation with CPAU’s Electric utility Distribution System. e. Install a visible break, lockable AC disconnect switch in the dedicated circuit to the inverter. This switch will be located where it is easily accessible by CPAU personnel and will be equipped with a CPAU padlock [CPAU Rule and Regulation 27]. f. Use an inverter that is UL 1741-appoved and have the following specifications for Parallel Operation with CPAU’s Electric utility Distribution System: i. Inverter output will automatically disconnect from CPAU’s utility source upon the loss of CPAU’s utility voltage and will not be reconnected until at least five (5) minutes after normal utility voltage and frequency have been NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 8 restored [UL 1741]. ii. Inverter will automatically disconnect from CPAU’s utility source within 120 cycles (2 seconds) if CPAU’s utility voltage isles than 106 volts or greater than 132 volts on a 120-volt base [UL 1741]. iii. Inverter will automatically disconnect from CPAU’s utility source within 10 cycles (0.17 seconds) if CPAU’s utility frequency fluctuations is less than 59.3 hertz or greater than 60.5 hertz [UL 1741] cycle. iv. Inverter output will comply with IEEE 519 standards for harmonic distortion [CPAU Rule and Regulation 27]. G. METERING 1. NEM may be accomplished by using a single Meter capable of registering the flow of electricity in two different directions. If the Customer-Generator’s existing Meter is not capable of measuring the flow of electricity in two directions, then the Customer-Generator shall be responsible for all expenses involved in purchasing and installing a Meter that is able to measure electricity flow in two directions. 2. In lieu of one Meter, an additional Meter to monitor the flow of electricity in each direction may be installed with the consent of the Customer-Generator, at the expense of CPAU. The additional Meter shall be used only to provide the information necessary to accurately bill or credit the Customer-Generator and/or to collect solar or wind Electric generating system performance information for research purposes. 3. Customer-Generator grants to CPAU, its officers, employees, agents and representatives the non-exclusive right of ingress and egress on, over and across the Premises upon reasonable prior notice for the purpose of inspecting and approving the installation and operation of the Facility and authenticating the accuracy of the Mmeter(s), or in the event of an emergency or in regard to a disconnection of the Facility, without notice, if in CPAU’s Director of Utilities’ sole judgment, a condition hazardous to life or property exists, and immediate action is necessary to protect life or property from damage or interference directly caused by the Equipment or as a result of the lack of properly operating protective devices. H. GENERAL REQUIREMENTS NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 9 1. Customer-Generator will obtain and maintain the required governmental authorizations, permits, and any policy or policies of insurance, including, without limitation, commercial general liability, property, and professional liability insurance, as may be required by applicable laws, subject only to subsection c below. 2. CPAU will not be obligated to accept or pay for, and it may require Customer-Generator to interrupt or reduce, the delivery of available energy generated by the Facility under the following: (a) whenever CPAU in its sole judgment determines that the interruption or reduction is necessary in order for CPAU to construct, install, maintain, repair, replace, remove, investigate, or inspect any part of CPAU’s electric utility distribution system; or (b) if CPAU determines that the interruption or reduction is necessary on account of an emergency, voluntary or involuntary outage, event of Fforce Mmajeure, or compliance with prudent electrical practices. 3. Notwithstanding any other provision of this Agreement, if CPAU determines that either (a) the operation of the Facility may threaten or endanger the health, safety or welfare of CPAU’s personnel or CPAU’s or its personnel’s property, or (b) the continued operation of the Facility may endanger the operational integrity of CPAU’s electric utility distribution system, CPAU will have the right to temporarily or permanently disconnect the Facility from CPAU’s Eelectric Uutility Ddistribution Ssystem upon the delivery of reasonable notice to Customer-Generator; provided, however, CPAU may act without giving prior notice to Customer-Generator, if CPAU determines that it is impracticable to provide the notice. The Facility will remain disconnected until such time as CPAU’s Director of Utilities is reasonably satisfied that the conditions referred to in this subsection have been corrected or sufficiently addressed. 4. Customer-Generator will (a) maintain the Facility, which interconnects with CPAU’s electric utility distribution system, in a safe and prudent manner and in conformance with all applicable laws, rules and regulations, including, without limitation, the requirements of this Section 3H, and (b) obtain any governmental approvals, authorizations and permits required for the construction and operation of the Facility. 5. Customer-Generator will reimburse CPAU for any and all losses, damages, claims, penalties, or liability that CPAU may incur or sustain as a result of Customer-Generator’s failure to obtain and maintain any and all governmental approvals, authorizations and NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-201610-26-2015 Sheet No. 10 permits that may be required for the construction, installation, operation, repair and maintenance of the Facility. Attachment E Page 1 of 3 Implementation of Council-Adopted Net Energy Metering (NEM) Successor Program Design Guidelines Guideline 1. Rates must be based on the cost to serve customers. This is the overriding principle for the NEM Successor Program development; all other design considerations are subsidiary to this basic premise. Based on the assessment completed by the City’s electric cost of service study consultant and staff, the proposed NEM successor rate is based on the cost to serve. Guideline 2. Consider and evaluate program options that compensate customers fairly and equitably for local renewable energy production. The combination of tiered, electric rate structures and NEM make solar installations on high- energy consuming households considerably more cost-effective compared to low- or average- energy consuming households. This combination hinders solar adoption by households that have average or low electricity consumption achieved through conservation and energy efficiency measures. The proposed NEM successor rate, which provides a flat rate based on the utility’s avoided cost for any energy exported to the grid, provides equitable and fair compensation to customers. Any energy generated that is used immediately on-site would effectively receive retail rate compensation for avoided energy purchases, similar to how a customer would be compensated for implementing an energy efficiency measure. Guideline 3. Consider and evaluate compensating solar participants at a rate equivalent to the value of solar to Palo Alto via “value of solar tariff”. A “value of solar tariff” is a rate design in which customers are compensated at a specified rate for all generation produced from their on-site systems. On-site consumption is metered separately and charged in full at the applicable retail rate for that customer class. It is often referred to as a “buy-all, sell-all” rate option, where no energy is netted on-site as is the case with the staff proposal. The compensation rate for the on-site generation would be based on the value of local solar energy generation calculated using avoided cost models that are utilized in all of the City’s resource acquisition and financial planning. An advantage of the value of solar tariff design is that it utilizes a standardized and transparent framework for valuing distributed generation that would be updated regularly. Staff ultimately did not propose a “value of solar tariff” option for two reasons. First, the customer may feel unsatisfied that generation from a solar PV system is not counted on a kilowatt-hour basis toward reducing on-site consumption, as is the case with an energy efficiency measure. Second, this option would require installing a second meter at the customer premise to measure all generation from the on-site system, adding cost and requiring significant changes to current processes and systems to implement. Attachment E Page 2 of 3 Guideline 4. Consider and evaluate the impact on the concurrent adoption of on-site generation and other demand-side technologies. Many of the same motivations that drive the adoption of solar PV may also drive customers to adopt other advanced energy technologies, such as electric vehicles (EVs), energy storage, smart thermostats, and building energy management systems. Staff evaluated the impact of the concurrent adoption of a solar PV system under the proposed NEM successor rate and other demand-side technologies. The NEM successor rate proposal provides an economic incentive for customers to load-shift to use energy from a solar PV system as it is being generated, prior to being exported to the grid. Customers could load-shift manually by changing behavior patterns, but more likely will utilize programmable and controllable loads, such as one or more of those listed above. Regarding energy storage in particular, currently the market for storage systems for residential customers in Palo Alto is extremely limited. CPAU has offered a pilot time-of-use rate1 to approximately 120 residential customers through the CustomerConnect advanced metering pilot program. However, the price differential between summer peak usage compared to summer off-peak usage is 7.64 cents per kWh, which is not sufficiently high to make behind- the-meter energy storage cost-effective based on current storage cost estimates, excluding any other potential benefits beyond energy arbitrage (charging the battery when the retail rate is lower and discharging to meet energy needs when the retail rate is higher). The proposed NEM successor rate would provide 9.416 cents per kWh differential that could be captured by energy arbitrage, which is the difference between the value of exported energy and the highest residential rate tier, thus increasing the value stream to prospective storage systems and expanding the storage market beyond the CustomerConnect pilot participants. Staff plans to bring forward an updated energy storage assessment for review in 2017, which will evaluate a variety of use cases, including residential and non-residential applications. Furthermore, staff is currently evaluating responses to a competitive solicitation called “Solutions to Leverage the Value of Distributed Energy Resources within the City of Palo Alto”, some of which could utilize behind-the-meter storage, in addition to other advanced energy technologies discussed above. Guideline 5. Consider and evaluate the likely impact on the rate of solar adoption and implications for meeting the Local Solar Plan goal. The overarching Local Solar Plan goal is to meet 4% of the City’s load from local solar by 2023, which translates to achieving 23 MW of installed local solar PV capacity. As discussed in the 2015 update on the Local Solar Plan (Staff Report 6649), the Local Solar Plan goal could be achieved with current and planned programs, existing incentives, and realistic forecasts for falling solar system prices. The analysis supported that the City could meet the goal without expanding rebates or NEM incentives beyond the 9.5 MW cap. Since that time, the 30% federal ITC was extended through the end of 2019, which provides substantial unexpected support for solar deployment. Palo Alto’s progress toward meeting the Local Solar Plan goal will be reevaluated on an ongoing basis as new policies and programs come forward for review. 1 http://www.cityofpaloalto.org/civicax/filebank/documents/32678 Attachment E Page 3 of 3 Guideline 6. Consider the ease of marketing and communicating the program to customers. Utilities customers are increasingly seeking more detailed information regarding their energy usage and costs, which makes communications and marketing considerations a primary concern in the development of rates and programs. During the research and development of a NEM successor rate, staff evaluated all rate options based on a number of criteria, including specifically the ease of marketing and communication. Utilities communications and marketing staff have assessed the proposed NEM successor rate and did not identify any significant communications-related barriers for the proposed program. Furthermore, at this point in time, staff does not anticipate needing additional resources for NEM successor program marketing and outreach efforts. Guideline 7. Assess technology constraints of program implementation. The seventh design guideline was to assess all technology constraints for implementing the proposed NEM successor rates and alternatives, along with associated staff and budget resource impacts. Staff evaluated a broad variety of NEM successor rate options and identified compatibility of each to CPAU’s existing systems and processes, such as the customer information and billing system and metering infrastructure. A mandatory time-of-use rate is not recommended because of the substantial resource impact of manually implementing such a rate prior to having full advanced metering infrastructure (AMI) deployment and a billing system capable of automatically processing the bills. AMI is identified as a long-term rate design issue for the electric COSA, and evaluation of time-of-use and other rate structures that AMI enables will be evaluated during Phase Two of the Electric COSA work plan. The NEM successor program will be revisited at that time in coordination with the COSA. Guideline 8. Consider and evaluate the impact on non-solar customers. The proposed NEM successor rate is based on the cost to serve, and the credit value would be updated annually to reflect the market value of solar energy, value of the RECs, avoided capacity charges, avoided transmission and distribution system losses, and avoided charges for transmission and ancillary services. Therefore, there would be no direct financial resource impact for eligible systems installed under the NEM successor. Attachment E Page 1 of 2 Bill Illustration for Residential Customer with Solar PV System under the Proposed Net Energy Metering (NEM) Successor Rate Table 1 below estimates the potential electric utility bill of a residential customer installing a solar photovoltaic (solar PV) system under the proposed Net Energy Metering (NEM) successor rate with a solar system sized to meet 50% of the customer’s energy usage on site. Each column is labelled as follows. 1. Total Energy Consumption (kWh): This column shows the customer’s total energy consumption on a monthly basis. This customer uses 12,184 kWh over the entire year, which is approximately two times the average residential consumption. 2. Solar Energy Production (kWh): This column shows the total energy generated from the customer’s solar PV system. This simplified example assumes that the customer sized the solar PV system to meet 50% of the total annual energy consumption shown in column 1. 3. Solar Energy Netted On-site (kWh): Under the proposed NEM successor rate, a customer’s solar PV generation will first meet simultaneous on-site energy needs, and then any excess energy generation is sent to the grid. This column shows the amount of energy that is netted on-site to meet instantaneous customer needs, which was estimated from analyzing hourly load data from the CustomerConnect advanced metering pilot and hourly generation data from the National Renewable Energy Laboratory’s PVWatts Calculator1. 4. Solar Energy Sent to the Grid (kWh): This column shows the amount of energy sent to the grid, summed over hours of the day when solar PV production exceeds on-site load. 5. Energy Delivered to Customer (kWh): This column shows the amount of energy delivered by the utility to the customer. This includes energy delivered at night and during times of the day when the customer’s on-site energy needs exceed the on-site solar PV generation. 6. Bill Charges for Energy Delivered: This column shows monthly bill charges to the customer after applying the proposed residential retail rate in the accompanying UAC report to the energy quantity shown in column 5. 7. Bill Credit for Energy Sent to the Grid: This column shows the monthly bill credits to the customer after applying the credit rate (7.485 ¢/kWh) to the energy quantity in column 4. 8. Monthly Bill with Solar: This column shows the customer’s monthly utility bill with their solar PV system under the NEM successor rate, after taking column 6 and subtracting column 7. During summer months, for some customers the credit for exported energy may exceed charges applied to the energy delivered to the customer, resulting in net credit. 9. Monthly Bill without Solar: This column shows what the customer’s monthly utility bill would have been without a solar PV system. The calculation takes the consumption in column 1 and applies the proposed residential retail rate. 10. Monthly Bill with Solar under NEM: This column shows what the monthly utility bill would be for a solar PV system installed within the NEM cap. The calculation takes the difference between total consumption and generation and applies the proposed residential retail rate. 1 http://pvwatts.nrel.gov/ Attachment E Page 2 of 2 Table 1: Bill Illustration of a Residential Customer with a Solar PV System under the Proposed NEM Successor Rate Month 1. Total Energy Consumption (kWh) 2. Solar Energy Production (kWh) 3. Energy Netted On-site (kWh) 4. Solar Energy Sent to the Grid (kWh) 5. Energy Delivered to Customer (kWh) 6. Bill Charges for Energy Delivered 7. Bill Credit for Energy Sent to the Grid* 8. Monthly Bill with Solar 9. Monthly Bill Without Solar 10. Monthly Bill with Solar Under NEM Jan. 1,400 327 244 84 1,156 $175 ($6) $169 $217 $161 Feb. 1,204 314 250 64 954 $143 ($5) $138 $184 $132 Mar. 1,061 519 309 210 752 $107 ($16) $91 $160 $72 Apr. 918 610 311 299 607 $83 ($22) $61 $136 $34 May 885 704 341 363 543 $72 ($27) $45 $130 $20 June 882 659 352 307 530 $70 ($23) $47 $130 $25 July 929 711 377 334 552 $73 ($25) $48 $138 $24 Aug. 894 582 312 270 582 $78 ($20) $58 $132 $34 Sept. 930 551 301 250 629 $87 ($19) $68 $138 $45 Oct. 943 467 266 201 677 $94 ($15) $79 $140 $60 Nov. 954 348 191 157 764 $110 ($12) $98 $142 $83 Dec. 1,184 299 198 101 985 $147 ($8) $139 $180 $130 Total: 12,184 6,092 3,452 2,640 8,732 $1,240 ($198) $1,042 $1,825 $820 *All credits shown in parentheses. Table 2: Annual Bill Comparison of Residential Customer with a Solar PV System Annual Bill Comparison for Customer Illustration Annual Bill with Solar under Proposed NEM Successor Rate (column 8) $1,042 Annual Bill with Solar under NEM (column 10) $820 Annual Bill Difference Between NEM and NEM Successor $222 Annual Bill without Solar (column 9) $1,825 December 30, 2015 City of Palo Alto, City Council 250 Hamilton Ave. Palo Alto, CA 94301 Re: Item #5, Finance Committee Recommendation that the City Council Approve Design Guidelines for the Net Energy Metering Successor Program – OPPOSE UNLESS AMENDED Dear Members of the City Council, Energy Freedom Coalition of America ("EFCA") is a national advocacy group that seeks to promote both the public awareness of the benefits of solar and alternative energy, as well as the use of rooftop and other customer-owned and third-party owned distributed solar electrical generation, for residential and commercial applications. EFCA applauds the City of Palo Alto Utilities’ (CPAU) effort to undertake a thorough and thoughtful process in developing a solar program that will continue to promote rooftop solar adoption for Palo Alto’s residents. However, the guidelines as currently written are incomplete and should not be approved. Before the City Council approves the proposed guidelines, we recommend adding a new guideline and expanding several of the current guidelines. New Guideline We strongly recommend that a new guideline be added, for a total of 7 guidelines. New Guideline: Evaluate the benefits and costs of continuing the NEM program without modification after the cap has been reached. CPAU has the authority to continue its NEM program after the cap has been reached, and should strongly consider this option. NEM is a simple, effective, and reliable payment mechanism that fairly compensates solar customers for the value their systems provide to the grid. NEM has been crucial to the widespread adoption of solar in California, and now exists in 44 states. In California, NEM has leveraged more than $10 billion in private investment, reduced electricity demand, and helped support more than 54,000 in-state jobs. Rooftop solar is vital to continue growing the clean energy economy, both locally and across the state, and to meeting the state’s ambitious clean energy goals. Continuing NEM will provide market certainty and predictability, and will help local homeowners, schools, and businesses to save on their electric bills while reducing greenhouse gas emissions. Moreover, NEM requires only a single meter, provides a form of compensation that is not subject to federal income tax, and gives customers the satisfaction of offsetting their own usage with renewable power. If changes to the current NEM program are considered, CPAU should examine changes that “phase-in” gradually over time. One of the most successful programs in the country for promoting rooftop solar at a reasonable cost was the California Solar Initiative, which was structured as a 10-year program with incentives that stepped down gradually and predictably as the solar market grew in size. This program design worked well because the long-term nature of the program sent a signal to investors that the incentive regime would not change abruptly, while the gradual step-down of incentives aligned the incentive structure with the long-term solar cost trajectory. When designing any successor NEM tariff, CPAU should consider one that creates long-term stability and predictability for the market, rather than one that could be reviewed and changed on an ad hoc basis. Modifications to Existing Guidelines In addition to the new guideline listed above, we recommend several modifications to the existing guidelines. Current Guideline 1: Evaluate program options that compensate customers fairly and equitably for local renewable energy production. Proposed Guideline 1: Evaluate program options that compensate customers fairly and equitably for local renewable energy production. Consider environmental benefits, short-term and long-term system cost savings from behind-the-meter, and consistency with the objectives of AB 327. Behind-the-meter solar provides several benefits to the grid which results in reduced costs for all ratepayers. In the short-term, when a generation resource is located behind a customer’s meter, it is avoiding line losses when compared to more remote generation that is delivered across transmission and distribution facilities. In the long-term, distributed generation may enable a utility to avoid or defer large-scale capital transmission and distribution projects and associated maintenance and upgrades. CPAU’s NEM successor program should adequately take into account these avoided costs when assessing any perceived “cost-shift” between solar and non-solar customers. Should CPAU choose not to continue its current NEM program after the cap has been reached, the successor program should be aligned with the goals and requirements outlined in Assembly Bill 327 (AB 327). While AB 327 has directed the CPUC to adopt a successor program to NEM by 2016, the new program must ensure that (1) the total benefits of the new tariff must be equal to the total costs; and (2) customer-sited renewable distributed generation continues to grow sustainably. All NEM successor programs considered by CPAU should be consistent with these requirements. There are a number of changes that could be made to the existing NEM program, such as minimum bills for NEM customers that could address ratepayer equity issues while maintaining a viable NEM program that continues progress toward CPAU’s energy and climate goals. Current Guideline 2: Consider compensating solar participants at a rate equivalent to the value of solar to Palo Alto via “value of solar tariff.” Proposed Guideline 2: Consider compensating solar participants at a rate equivalent to the value of solar to Palo Alto via “value of solar tariff”. Thoroughly review both the positive and negative attributes of a “value of solar tariff”. A “value of solar tariff” (VOST) is a rate design in which customers are compensated at a specified rate based on the value of local solar energy generation for all generation produced from their on-site systems. Unlike NEM, a VOST does not allow a customer to consume their on-site generation before selling to the utility. While a VOST appears to be straight forward and transparent, it has many negative attributes. One primary issue is that a VOST creates a hidden tax for ratepayers, as the income paid to the solar customer by the utility for solar electricity may be subject to income tax, and in some cases may even make customers ineligible for the federal investment tax credit on their solar systems. The fact that VOSTs may be regularly updated also poses an issue, as this wavering rate guarantees regular market uncertainty that can be harmful to solar customers. Customers in states like Texas and Minnesota where VOSTs have been introduced have quickly seen the value compensated to them for their solar decline. While a VOST may appear to provide a fair market value to distributed generation, its many negative attributes make it a confusing and potentially harmful alternative to NEM. CPAU should carefully examine these issues before considering a VOST as a fair alternative to NEM. Current Guideline 5: Consider the ease of marketing and communicating the program to customers. Proposed Guideline 5: Consider the ease of marketing and communicating the program to new and existing customers. Prioritize a program design that is easy to understand, and does not harm existing NEM customers. NEM is a simple, easy to understand, and trusted program that has been in effect in California for almost two decades, making it the most established state incentive for solar and other distributed generation technologies. CPAU should carefully consider the significant customer outreach and education that will be necessary to minimize confusion and harm to behind-the-meter solar adoption should the NEM successor program differ significantly from the current NEM program. CPAU should ensure that any NEM successor tariff does not harm existing NEM customers. When customers make the substantial investment to buy a rooftop solar system, they typically assume that their electric rate and NEM compensation mechanism will not change for the life of the solar system. Requiring existing NEM customers to transition onto a new tariff will change the return on investment for those customers in a way most likely did not expect. The CPUC has approved a NEM transition period that allows current NEM customers to continue on their current NEM tariff for 20 years after their install date. The CPAU should carefully consider the impact on existing NEM customers when developing a successor tariff and should provide guidance on a transition plan. Palo Alto has long been a leader in innovative rate and program designs, and we hope this post-NEM program continues that trend. Thank you for taking comments on this important issue. We look forward to working with you as this process continues. Regards, Julia Jazynka Associate Energy Freedom Coalition of America, LLC EXCERPTED DRAFT MINUTES OF THE APRIL 12, 2016 UTILITIES ADVISORY COMMISSION SPECIAL MEETING ITEM 2. ACTION: Staff Request that the Utilities Advisory Commission Recommend that City Council approve the Proposed Net Energy Metering Successor Rate E-EEC-1 and Net Energy Metering Grandfathering Policy Resource Planner Aimee Bailey summarized the written report. Bailey stated that a State requirement requires net energy metering (NEM) until a cap is reached. She explained that NEM is like “rolling the meter backward” by providing full retail rate compensation for distributed generation, which in Palo Alto are rooftop solar photovoltaic (PV) systems. Palo Alto’s NEM cap is 9.5 MW and when it is reached, a successor program is needed. Bailey discussed the 8 NEM Successor Program design guidelines that were reviewed by the UAC in November 2015 and approved by Council in January 2016. She noted that the NEM successor rate must be consistent with the cost of service and must be compliant with Proposition 26. Bailey mentioned that the City’s installed NEM capacity was 7.5 MW as of mid- February and that the City may reach its NEM cap by the end of 2016. However, if a few large systems were installed by commercial customers, the cap could be reached quickly and, therefore, a successor program needs to be in place to provide certainty for customers contemplating installing solar PV. Bailey noted that there is a proposed bill in the State legislature (Assembly Bill 2339) that may require the NEM cap to be calculated differently—and could double the City’s NEM cap, but it is still in the legislative review process and may be amended. If and when the bill is signed into law, Palo Alto would comply. Bailey presented the proposed rate: a two-part rate that charged the retail rate for any energy delivered to the customer and a credit applied for any energy delivered to the grid. The credit rate is based on the short-term value of solar and would change every year as that value changes. For FY 2017, the proposed credit rate is 7.485 cents per kilowatt-hour (₵/kWh). Bailey showed an illustration of a customer with a solar PV system to show when energy usage is greater than PV generation and when PV generation is greater than usage. She showed an illustration of a PV customer’s bill with the current NEM program compared to the proposed NEM successor program. Bailey described the components of the proposed credit rate for FY 2017 of 7.485 ₵/kWh: 3.02 ₵/kWh for avoided energy cost + 1.45 ₵/kWh for the environmental attribute + 0.58 ₵/kWh for capacity + 2.00 ₵/kWh for avoided transmission costs and ancillary service value + 0.44 ₵/kWh for avoided transmission and distribution system losses. Commissioner Ballantine said that smart inverters, if installed or required in the future, could increase the value of the ancillary services used in the credit rate calculation. He remarked that he hoped that an expanded discussion on this topic may be better suited for the upcoming UAC meeting in June when the rolling calendar shows the subject of storage and microgrids on the agenda. He asked how the City will encourage people to stabilize the grid using advanced inverters. Bailey confirmed that the proposed credit rate did not include any additional value stream that advanced inverters could provide. She said that the City is very interested in this subject and released a request for proposal for encouraging distributing energy resources. Commissioner Schwartz noted that Arizona Public Service has a good program for managing inverters that the City could potentially learn from. Commissioner Danaher asked why the energy value is only 3.02 ₵/kWh since solar generation is in the middle of the day. He asked what the City’s energy costs are and how the value was developed. Bailey explained that the energy value is based on the shape of solar energy production so that it is higher than energy generation that occurs on a “flat” 24/7 basis. She said it was a short-term value based on the forward prices for mid-day energy for FY 2017 and is consistent with all assumptions used to manage the City’s electric portfolio. Commissioner Danaher asked if the value included the Renewable Energy Certificates (RECs). Bailey explained that the RECs are included and are currently valued at 1.45 ₵/kWh. Bailey said that the energy value was for the solar generation profile and, therefore, takes into account the timing of the energy generated at peak demand. Vice Chair Cook asked how this value compared to the avoided cost of local solar used in the Palo Alto CLEAN (feed-in tariff) program. Assistant Director Jane Ratchye explained that one of the fundamental differences between the proposed credit value for the NEM successor program compared to the avoided cost of solar for the CLEAN program is that the NEM successor value is based on a short-term avoided cost (for FY 2017) while the CLEAN program is based on a long-term levelized cost over a 20- or 25-year period. Commissioner Schwartz asked if the City can use the excess capacity generated by PV systems in excess of the customer’s usage. Bailey noted that many customers do not export any energy, but use most or all energy generated on site. She added that solar generation does assist the City in lowering its peak demand, which reduces its costs for capacity needs and that the proposed credit rate includes that value of local solar. She said that this value will be re- evaluated every year, which is part of the reason that the credit rate will be adjusted annually to ensure that local solar generation is fairly compensated at full value. Bailey noted that NEM will require a bidirectional meter that would be required to measure separately the energy delivered to the customer as well as the energy received from the customer. She said that the meter would be paid for by the utility (all ratepayers) as meter replacement is part of the long-term plan. However, the customer would pay an interconnection fee under the Electric Service Connection Fee schedule (Rate Schedule E-15) that is currently being revisited (estimated to be a one-time fee of $100-$200). She added that the City would likely be required to issue 1099s for exported energy if its value exceeded $600 annually. Bailey noted that customer economics for solar PV depend on many factors including the fraction of energy used on site versus the amount exported, solar PV costs, federal incentives, and other tax implications. She said that if all solar energy is used no-site and none is exported to the grid, the proposed NEM successor program is effectively identical to the current NEM program and customer economics do not change. Bailey said that this is the case for most commercial customers who use all the energy they generate on site. Customers who shift energy usage to times when their PV system is generating would improve the economics of their system. Commissioner Schwartz asked about the impact of storage on customer load and whether there is some optimization that could occur. Bailey said that staff is evaluating that impact in its evaluation of storage and other distributed energy resources (DERs). She pointed out that this was discussed in Attachment B of the report, which addresses each of the Council-approved NEM successor program design guidelines. Bailey mentioned that the proposed rate encourages storage and other DERs, especially in light of the impact of renewables on the grid and the “duck curve” issues. Commissioner Ballantine said that if the maximum amount of roof space in the City was used for solar PV generation to effectively power Palo Alto, but the one “bad day” occurred with a power outage, the lack of smart inverters would result in a drop of all the load in Palo Alto. He encouraged the City to find ways to encourage smart inverters and the local use of storage to avoid that potential problem. Bailey described the proposed grandfathering program that would enable NEM customers to remain on NEM for 20 years from the time of interconnection and to expand their systems by up to 10% of the original system capacity after the NEM cap is reached. Public Comment Tom Kabat said that NEM rules were very valuable to get PV off the ground and the industry did respond to these incentives resulting in a dramatic lowering of costs. Now the industry has expanded and costs have come down to between 6 and 9 cents per kWh over the life of the system. He said that the City’s “game changing” carbon neutral policy makes the investment in local solar less valuable since the new resources added to the electric portfolio are low-priced solar located outside the City. He said that the staff estimate of the value of local solar is fair and is not overpaying as in the Palo Alto CLEAN program. The staff proposal is fair to current PV customers (by grandfathering them in for the life of their investments), to future PV customer (by fairly valuing their generation and requiring them to pay the normal cost for energy delivered to them), and to their shaded neighbors and other non-PV customers (since they don’t have to pay higher rates to support PV customers). The program also encourages energy storage (to take on the duck curve problem), and is a policy to encourage electrification, which is the way to reduce carbon emissions since the City’s electric portfolio is already carbon neutral. Gina Goodhill Rosen, a representative of Solar City, supports the NEM grandfathering proposal, but strongly opposes the successor program as she says it undervalues the solar generation produced. Without a comprehensive, rigorous analysis of both the costs and benefits of NEM, the consideration of the proposal should be delayed. NEM fairly compensates solar customers, has been working well and is part of the reason the solar industry has been so successful. Solar has brought many jobs and millions of dollars of investment to the state and city. The proposal does not fairly compensate PV customers for the benefits they provide to the grid and compensates them at a significantly lower rate than the Palo Alto CLEAN program does. This mixed message is confusing to customers and implicitly recognizes that there are benefits of local solar that are not being recognized in this proposed NEM successor program. This proposal does not support the City’s and state’s climate goals and is in stark contrast to the California Public Utilities Commission’s (CPUC’s) decision to continue NEM for the investor- owned utilities (IOUs) who serve the large majority of the state’s residents and businesses. Legislation (AB 2339) may expand the NEM cap for municipal utilities or the City could independently choose to expand its own cap. She said that the City should delay action on the NEM successor program until the legislation has been enacted. Chair Foster asked Ms. Rosen to expand upon the CPUC decision with respect to the IOUs. MS Rosen said that the CPUC adopted basically a continuance of NEM for the IOUs after a year-long stakeholder review process. Chair Foster for staff’s comment about the CPUC decision to continue NEM. Bailey said that the City is not subject to CPUC regulations and the IOUs are not subject to Proposition 26. Bailey reiterated that the credit rate proposed is a cost-justified rate that was developed in concert with the Electric Cost of Service Analysis (COSA) and that it is compliant with Proposition 26, which is the overriding consideration for the development of this rate. Chair Foster asked for staff’s comments on the disparity between the proposed credit rate of 7.485 ₵/kWh and the Palo Alto CLEAN price of 16.5 ₵/kWh. Ratchye mentioned that the Palo Alto CLEAN rate is available to all customers, including residential customers, so customers are free to participate in the Palo Alto CLEAN program and get the16.5 ₵/kWh rate for all the energy generated by their PV system. Bailey explained the differences between the CLEAN program price and the NEM successor credit rate. For one, the CLEAN price is fixed for a 20- or 25-year period, but the NEM successor rate would change every year as the avoided cost changes (up or down) over time. Also, the energy component of the rate is calculated using market rate forecasts for what the City would buy energy from the market for the next year for an energy production profile of solar energy generation. The energy avoided cost for the CLEAN price was calculated by taking the average of the best ten proposed prices received in the most recent Request for Proposals (RFP) for long-term renewable Power Purchase Agreements. Chair Foster asked if there is any choice on this, or is the City stuck by the Proposition 26 requirement. Deputy Senior Assistant City Attorney Jessica Mullan said that there are always choices, but the legal requirement is to have rates that are cost justified such as the proposed rate. Any other proposal would require the consultant to determine that it was cost justified. Commissioner Ballantine asked whether the Palo Alto CLEAN price is compliant with Proposition 26. Ratchye explained that the CLEAN price is for resources procured for the whole portfolio so that the cost is shared by all customers, but that customer rates need to comply with the cost-based requirement of Proposition 26. Commissioner Schwartz noted that Solar City has a different business model than the City. She said that the City is also tasked with keeping rates and costs low for the ratepayers. She said that as you look at the evolving industry and that the City has done much to encourage solar, but this is a place where the City can control costs to residents and not unduly burden those with lower energy usage or those who cannot install solar on their homes. She said that his is one place where we can minimize costs to residents and not unduly burden the people who have shade trees and won’t put solar on their house or if their usage and bills are too low and the staff recommendation does that and she supports it. Commissioner Schwartz said she was called by someone selling solar installer today who asked if her bill was under $75 and she said yes, then they hung up on her. Commissioner Danaher said he supports continuing NEM as suggested by Ms. Rosen in Mountain View or other places, but in Palo Alto, we have large contracts for solar energy that are a less expensive way to provide solar to the City. He only reluctantly supports the CLEAN program price since he wants to get renewable energy at the lowest possible cost. He supports the staff proposal, especially until there are smart inverters that could provide an actual extra local benefit for local solar. Vice Chair Cook supports continuing NEM, which he said is what this proposal does. He said that as the technology gets less expensive over time, the same incentive is not required. He said that continuing the program at a lower cost makes sense. ACTION: Commissioner Schwartz moved to recommend that the UAC recommend Council approve staff’s proposal and Vice Chair Cook seconded the motion. The motion carried unanimously (5- 0) with Chair Foster, Vice Chair Cook, Commissioners Ballantine, Danaher, and Schwartz voting yes and Commissioners Eglash and Hall absent. EXCERPTED FINAL MINUTES OF THE APRIL 12, 2016 UTILITIES ADVISORY COMMISSION SPECIAL MEETING ITEM 2. ACTION: Staff Request that the Utilities Advisory Commission Recommend that City Council approve the Proposed Net Energy Metering Successor Rate E-EEC-1 and Net Energy Metering Grandfathering Policy Resource Planner Aimee Bailey summarized the written report. Bailey stated that a State requirement requires net energy metering (NEM) until a cap is reached. She explained that NEM is like “rolling the meter backward” by providing full retail rate compensation for distributed generation, which in Palo Alto are rooftop solar photovoltaic (PV) systems. Palo Alto’s NEM cap is 9.5 MW and when it is reached, a successor program is needed. Bailey discussed the 8 NEM Successor Program design guidelines that were reviewed by the UAC in November 2015 and approved by Council in January 2016. She noted that the NEM successor rate must be consistent with the cost of service and must be compliant with Proposition 26. Bailey mentioned that the City’s installed NEM capacity was 7.5 MW as of mid- February and that the City may reach its NEM cap by the end of 2016. However, if a few large systems were installed by commercial customers, the cap could be reached quickly and, therefore, a successor program needs to be in place to provide certainty for customers contemplating installing solar PV. Bailey noted that there is a proposed bill in the State legislature (Assembly Bill 2339) that may require the NEM cap to be calculated differently—and could double the City’s NEM cap, but it is still in the legislative review process and may be amended. If and when the bill is signed into law, Palo Alto would comply. Bailey presented the proposed rate: a two-part rate that charged the retail rate for any energy delivered to the customer and a credit applied for any energy delivered to the grid. The credit rate is based on the short-term value of solar and would change every year as that value changes. For FY 2017, the proposed credit rate is 7.485 cents per kilowatt-hour (₵/kWh). Bailey showed an illustration of a customer with a solar PV system to show when energy usage is greater than PV generation and when PV generation is greater than usage. She showed an illustration of a PV customer’s bill with the current NEM program compared to the proposed NEM successor program. Bailey described the components of the proposed credit rate for FY 2017 of 7.485 ₵/kWh: 3.02 ₵/kWh for avoided energy cost + 1.45 ₵/kWh for the environmental attribute + 0.58 ₵/kWh for ATTACHMENT E capacity + 2.00 ₵/kWh for avoided transmission costs and ancillary service value + 0.44 ₵/kWh for avoided transmission and distribution system losses. Commissioner Ballantine said that smart inverters, if installed or required in the future, could increase the value of the ancillary services used in the credit rate calculation. He remarked that he hoped that an expanded discussion on this topic may be better suited for the upcoming UAC meeting in June when the rolling calendar shows the subject of storage and microgrids on the agenda. He asked how the City will encourage people to stabilize the grid using advanced inverters. Bailey confirmed that the proposed credit rate did not include any additional value stream that advanced inverters could provide. She said that the City is very interested in this subject and released a request for proposal for encouraging distributing energy resources. Commissioner Schwartz noted that Arizona Public Service has a good program for managing inverters that the City could potentially learn from. Commissioner Danaher asked why the energy value is only 3.02 ₵/kWh since solar generation is in the middle of the day. He asked what the City’s energy costs are and how the value was developed. Bailey explained that the energy value is based on the shape of solar energy production so that it is higher than energy generation that occurs on a “flat” 24/7 basis. She said it was a short-term value based on the forward prices for mid-day energy for FY 2017 and is consistent with all assumptions used to manage the City’s electric portfolio. Commissioner Danaher asked if the value included the Renewable Energy Certificates (RECs). Bailey explained that the RECs are included and are currently valued at 1.45 ₵/kWh. Bailey said that the energy value was for the solar generation profile and, therefore, takes into account the timing of the energy generated at peak demand. Vice Chair Cook asked how this value compared to the avoided cost of local solar used in the Palo Alto CLEAN (feed-in tariff) program. Assistant Director Jane Ratchye explained that one of the fundamental differences between the proposed credit value for the NEM successor program compared to the avoided cost of solar for the CLEAN program is that the NEM successor value is based on a short-term avoided cost (for FY 2017) while the CLEAN program is based on a long-term levelized cost over a 20- or 25-year period. Commissioner Schwartz asked if the City can use the excess capacity generated by PV systems in excess of the customer’s usage. Bailey noted that many customers do not export any energy, but use most or all energy generated on site. She added that solar generation does assist the City in lowering its peak demand, which reduces its costs for capacity needs and that the proposed credit rate includes that value of local solar. She said that this value will be re- evaluated every year, which is part of the reason that the credit rate will be adjusted annually to ensure that local solar generation is fairly compensated at full value. Bailey noted that NEM will require a bidirectional meter that would be required to measure separately the energy delivered to the customer as well as the energy received from the customer. She said that the meter would be paid for by the utility (all ratepayers) as meter replacement is part of the long-term plan. However, the customer would pay an interconnection fee under the Electric Service Connection Fee schedule (Rate Schedule E-15) that is currently being revisited (estimated to be a one-time fee of $100-$200). She added that the City would likely be required to issue 1099s for exported energy if its value exceeded $600 annually. Bailey noted that customer economics for solar PV depend on many factors including the fraction of energy used on site versus the amount exported, solar PV costs, federal incentives, and other tax implications. She said that if all solar energy is used no-site and none is exported to the grid, the proposed NEM successor program is effectively identical to the current NEM program and customer economics do not change. Bailey said that this is the case for most commercial customers who use all the energy they generate on site. Customers who shift energy usage to times when their PV system is generating would improve the economics of their system. Commissioner Schwartz asked about the impact of storage on customer load and whether there is some optimization that could occur. Bailey said that staff is evaluating that impact in its evaluation of storage and other distributed energy resources (DERs). She pointed out that this was discussed in Attachment B of the report, which addresses each of the Council-approved NEM successor program design guidelines. Bailey mentioned that the proposed rate encourages storage and other DERs, especially in light of the impact of renewables on the grid and the “duck curve” issues. Commissioner Ballantine said that if the maximum amount of roof space in the City was used for solar PV generation to effectively power Palo Alto, but the one “bad day” occurred with a power outage, the lack of smart inverters would result in a drop of all the load in Palo Alto. He encouraged the City to find ways to encourage smart inverters and the local use of storage to avoid that potential problem. Bailey described the proposed grandfathering program that would enable NEM customers to remain on NEM for 20 years from the time of interconnection and to expand their systems by up to 10% of the original system capacity after the NEM cap is reached. Public Comment Tom Kabat said that NEM rules were very valuable to get PV off the ground and the industry did respond to these incentives resulting in a dramatic lowering of costs. Now the industry has expanded and costs have come down to between 6 and 9 cents per kWh over the life of the system. He said that the City’s “game changing” carbon neutral policy makes the investment in local solar less valuable since the new resources added to the electric portfolio are low-priced solar located outside the City. He said that the staff estimate of the value of local solar is fair and is not overpaying as in the Palo Alto CLEAN program. The staff proposal is fair to current PV customers (by grandfathering them in for the life of their investments), to future PV customer (by fairly valuing their generation and requiring them to pay the normal cost for energy delivered to them), and to their shaded neighbors and other non-PV customers (since they don’t have to pay higher rates to support PV customers). The program also encourages energy storage (to take on the duck curve problem), and is a policy to encourage electrification, which is the way to reduce carbon emissions since the City’s electric portfolio is already carbon neutral. Gina Goodhill Rosen, a representative of Solar City, supports the NEM grandfathering proposal, but strongly opposes the successor program as she says it undervalues the solar generation produced. Without a comprehensive, rigorous analysis of both the costs and benefits of NEM, the consideration of the proposal should be delayed. NEM fairly compensates solar customers, has been working well and is part of the reason the solar industry has been so successful. Solar has brought many jobs and millions of dollars of investment to the state and city. The proposal does not fairly compensate PV customers for the benefits they provide to the grid and compensates them at a significantly lower rate than the Palo Alto CLEAN program does. This mixed message is confusing to customers and implicitly recognizes that there are benefits of local solar that are not being recognized in this proposed NEM successor program. This proposal does not support the City’s and state’s climate goals and is in stark contrast to the California Public Utilities Commission’s (CPUC’s) decision to continue NEM for the investor- owned utilities (IOUs) who serve the large majority of the state’s residents and businesses. Legislation (AB 2339) may expand the NEM cap for municipal utilities or the City could independently choose to expand its own cap. She said that the City should delay action on the NEM successor program until the legislation has been enacted. Chair Foster asked Ms. Rosen to expand upon the CPUC decision with respect to the IOUs. MS Rosen said that the CPUC adopted basically a continuance of NEM for the IOUs after a year-long stakeholder review process. Chair Foster for staff’s comment about the CPUC decision to continue NEM. Bailey said that the City is not subject to CPUC regulations and the IOUs are not subject to Proposition 26. Bailey reiterated that the credit rate proposed is a cost-justified rate that was developed in concert with the Electric Cost of Service Analysis (COSA) and that it is compliant with Proposition 26, which is the overriding consideration for the development of this rate. Chair Foster asked for staff’s comments on the disparity between the proposed credit rate of 7.485 ₵/kWh and the Palo Alto CLEAN price of 16.5 ₵/kWh. Ratchye mentioned that the Palo Alto CLEAN rate is available to all customers, including residential customers, so customers are free to participate in the Palo Alto CLEAN program and get the16.5 ₵/kWh rate for all the energy generated by their PV system. Bailey explained the differences between the CLEAN program price and the NEM successor credit rate. For one, the CLEAN price is fixed for a 20- or 25-year period, but the NEM successor rate would change every year as the avoided cost changes (up or down) over time. Also, the energy component of the rate is calculated using market rate forecasts for what the City would buy energy from the market for the next year for an energy production profile of solar energy generation. The energy avoided cost for the CLEAN price was calculated by taking the average of the best ten proposed prices received in the most recent Request for Proposals (RFP) for long-term renewable Power Purchase Agreements. Chair Foster asked if there is any choice on this, or is the City stuck by the Proposition 26 requirement. Deputy Senior Assistant City Attorney Jessica Mullan said that there are always choices, but the legal requirement is to have rates that are cost justified such as the proposed rate. Any other proposal would require the consultant to determine that it was cost justified. Commissioner Ballantine asked whether the Palo Alto CLEAN price is compliant with Proposition 26. Ratchye explained that the CLEAN price is for resources procured for the whole portfolio so that the cost is shared by all customers, but that customer rates need to comply with the cost-based requirement of Proposition 26. Commissioner Schwartz noted that Solar City has a different business model than the City. She said that the City is also tasked with keeping rates and costs low for the ratepayers. She said that as you look at the evolving industry and that the City has done much to encourage solar, but this is a place where the City can control costs to residents and not unduly burden those with lower energy usage or those who cannot install solar on their homes. She said that his is one place where we can minimize costs to residents and not unduly burden the people who have shade trees and won’t put solar on their house or if their usage and bills are too low and the staff recommendation does that and she supports it. Commissioner Schwartz said she was called by someone selling solar installer today who asked if her bill was under $75 and she said yes, then they hung up on her. Commissioner Danaher said he supports continuing NEM as suggested by Ms. Rosen in Mountain View or other places, but in Palo Alto, we have large contracts for solar energy that are a less expensive way to provide solar to the City. He only reluctantly supports the CLEAN program price since he wants to get renewable energy at the lowest possible cost. He supports the staff proposal, especially until there are smart inverters that could provide an actual extra local benefit for local solar. Vice Chair Cook supports continuing NEM, which he said is what this proposal does. He said that as the technology gets less expensive over time, the same incentive is not required. He said that continuing the program at a lower cost makes sense. ACTION: Commissioner Schwartz moved to recommend that the UAC recommend Council approve staff’s proposal and Vice Chair Cook seconded the motion. The motion carried unanimously (5- 0) with Chair Foster, Vice Chair Cook, Commissioners Ballantine, Danaher, and Schwartz voting yes and Commissioners Eglash and Hall absent. City of Palo Alto (ID # 6965) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Approval of Transfer of Transportation Contingency Funds Title: Approval of Budget Amendments in the General Fund’s Transportation Contingency Fund and in the Capital Fund in the Amount of $45,000 for Citywide Engineering and Traffic Speed Surveys From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council amend the Fiscal Year 2016 Budget Appropriation Ordinance for: a. the General Fund by: i. Increasing the transfer to the Capital Improvement Fund in the amount of $45,000; and ii. Decreasing the Transportation Contingency in the amount of $45,000. b. The Capital Improvement Fund by: i. Increasing the transfer from the General Fund by $45,000; and ii. Increasing the appropriation to Safe Routes to Schools Project (PL-00026) by $45,000. Background The contract for Citywide Engineering and Traffic Speed Surveys provides for preparation of Engineering & Traffic Speed Surveys for arterials, residential arterials and collector streets and identifying an appropriate target speed for each of the streets surveyed, in accordance with the requirements of the California Vehicle Code and the California Manual of Uniform Traffic Control Devices. The City has several expired Engineering & Traffic Speed Surveys and the proposed contract would allow regrouping the Speed Zone Segments based on adjacent land use and roadway geometry. Target speed would be identified based on factors such as residential density, bicycle safety, roadside conditions, adjacent land use, and potential conflicts with pedestrians, bicyclists, and residential or business districts. City of Palo Alto Page 2 Discussion The City executed Contract C16163201 with Stantec for $79,299. A budget appropriation is needed because a portion of the contract will be funded from the Transportation Contingency, and will be moved from the General Fund into the Safe Routes to Schools Project in the CIP. Timeline Staff anticipates kicking off this project in Summer 2016 and expects to begin data collection in Fall 2016. Resource Impact Funding for this contract will come from two sources. Staff requests approval of a Budget Amendment to appropriate $45,000 to the Safe Routes to Schools Project (CIP PL-00026) from the Transportation Contingency to fund a portion of this contract. The remaining balance of $34,299 will be absorbed by the Police Department FY 2016 budgeted funds. Policy Implications The City’s Comprehensive Plan recommends that Traffic Safety be among the City’s top priorities. This project is consistent with Comprehensive Plan “Goal T-4: An Efficient Roadway Network for All Users and Goal T-6: A High Level of Safety for Motorists, Pedestrians, and Bicyclists on Palo Alto Streets. Environmental Review Approval of this Budget Amendment is exempt under the California Environmental Quality Act. City of Palo Alto (ID # 6946) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Purchase Order for Intrusion Detection System Title: Approval and Authorization of the City Manager to Execute a Purchase Order with CSC Integrations in an Amount Not-to-Exceed $207,025 for an Intrusion Detection System (IDS) to Improve Safety along the Caltrain Right of Way in the City of Palo Alto and Adoption of a Related Budget Amendment in the General Fund From: City Manager Lead Department: Office of Emergency Services RECOMMENDATION Staff recommends that the City Council: 1. Approve a sole source purchase order with CSC Integrations for $207,025 for the purchase of an Intrusion Detection System consistent with Project Safety Net’s means restriction strategy for suicide prevention; and 2. Amend the Fiscal Year 2016 Budget Appropriation Ordinance for the General Fund by: a. Increasing the Police Department appropriation by $207,025; and b. Decreasing the General Fund Budget Stabilization Reserve by $207,025 BACKGROUND AND DISCUSSION Since 2009, the City has retained contracted, private security guards to staff the Track Watch program at various locations on the Caltrain right-of-way. In response to a second teen suicide cluster that began in 2014, the City is now contracting with a security firm to provide Track Watch guard coverage at five intersection locations, as well as a roving supervisor, 24 hours a day. The current cost is approximately $800,000 per year, which the City has been solely funding. In addition to the ongoing expense, there are numerous limitations to human guards stationed along the tracks. It is very difficult, for example, for a guard to see very far down the rail corridor, particularly at night, and the logistics of stationing guard coverage over three, eight hour shifts at five locations on an around-the-clock basis has been challenging. According to a report by the Mineta Transportation Institute on preventing suicides on commuter and metro City of Palo Alto Page 2 rail systems, a best practice is the installation of camera intrusion detection systems to be installed along rail corridors. The City of Palo Alto and Caltrain were approached by a vendor, CSC Integrations of Santa Clara, CA, offering a free trial of a new technology called the Suicide and Accident Intervention System (SAAIS). Unlike a traditional Intrusion Detection System (IDS), the SAAIS developed by CSC Integrations utilizes automated algorithms (i.e. analytics) to evaluate images and sensor data to generate alarms and warnings. Further, the SAAIS includes thermal night vision cameras, microwave and infrared "virtual trip wires," and other sensors designed to automatically alert authorities when unsafe conditions are present. The system could potentially make the distinction between a human or other object on the tracks. The company's technology is experimental, having rarely been utilized in a rail right-of-way deployment previously. In June 2015, the City and the Peninsula Corridor Joint Powers Board (JPB) (a.k.a. Caltrain) agreed to partner with CSC Integrations to evaluate the SAAIS. This was presented to the City Council as part of the approval of the Memorandum of Understanding between the City of Palo Alto and the JPB in late August 2015 (CMR #6043). The SAAIS build-out involved designing, obtaining permits, complying with Caltrain and other regulations, and installing equipment on Caltrain's right-of-way and at City Hall. Performing work in this Caltrain corridor area required extensive coordination among the involved agencies and departments. The installation and configuration is nearly complete. Once the system is mutually agreed by the company and the City to be functioning and stable, a formal 60-day test and evaluation period will commence. The test installation is only at the East Meadow crossing, but covers approximately 1000' in both North and South directions through a combination of 1) color video cameras, 2) thermal cameras, and 3) sensors. The input from such cameras and sensors is processed by algorithms known as video analytics, a form of artificial intelligence designed to minimize the need for human monitoring of such data. However, because the SAAIS is experimental, the City will be separately paying CSC Integrations to provide human monitoring of the video feed during the 60-day evaluation period. The active monitoring will occur between 6pm and 2am, but CSC and City staff will be separately testing the system at various times as well. . While experimental, the City wishes to commence a one-time sole source purchase of the system immediately to evaluate its effectiveness as a long term solution for monitoring the rail corridor. The City is hopeful that this technology will ultimately provide a much more effective method of monitoring the tracks with enhanced line-of-site capabilities and eventual fixed costs. The City would utilize the cameras and sensors in the future as part of an expanded IDS on the entire Caltrain right-of-way segment in the City. In addition, based on staff’s research, there are no other existing technologies that would meet the City’s requirements. City of Palo Alto Page 3 Next Steps: The deployment of an Intrusion Detection System (with or without full automation) could eventually subsume the use of contracted, private security guards on the right-of-way. However, regardless of the success of the IDS pilot, there will need to be some overlap to ensure that Track Watch guards remain at the crossings until we have fully evaluated the effectiveness and implemented an IDS system. The City intends to issue Request for Proposals (RFPs) for:  an engineering study to provide guidance to the City as to how to expand IDS coverage for the entire right-of-way in the City  a project manager (contractor) to manage the eventual build out of such an expanded system and/or a general contractor to do so as part of a new contract to acquire and install the equipment  a contractor to monitor the system (remove video and sensor monitoring), as is commonly done with alarm systems Staff intends to return to Council when the engineering study is completed by the consultant to explore options. The ongoing maintenance of the SAAIS installation may be rolled into a larger deployment or remain stand-alone, depending on cost and efficiency factors. RESOURCE IMPACT Adoption of the proposed amendment to the Fiscal Year 2016 Budget Appropriation Ordinance will appropriate $207,025 to the Police Department and decrease the General Fund Budget Stabilization Reserve by $207,025. POLICY IMPLICATIONS Approval of this purchase is consistent with current City policies and regulations regarding homeland security and emergency management. The development of new City guidance and protocols regarding Video Management Systems (VMS) and surveillance (CMR #6876) will be considered as this project is implemented and maintained. ENVIRONMENTAL REVIEW This staff report does not represent a project under the California Environmental Quality Act (CEQA). Attachments:  ATTACHMENT A - CSC QUOTE May202016 (PDF) 830 Stewart Drive Suite 218 Sunnyvale, CA 94085 United States (408) 412-8792 jason@cscintegrations.com www.cscintegrations.com ADDRESS City of Palo Alto 275 Forest Avenue Palo Alto, California 94301 SHIP TO City of Palo Alto 275 Forest Avenue Palo Alto, California 94301 ESTIMATE #DATE EXPIRATION DATE 20140001029 05/20/2016 08/31/2016 SHIP VIA TRACKING NO.P.O. NUMBER SALES REP Not Applicable Not Applicable 2016131001 J. Jenkins ACTIVITY QTY RATE AMOUNT SAAIS VMS - Pelco SM5200-04-US SAAIS VMS - Enterprise Video Management System, 4TB, US Power The SM5200 is a network appliance that serves as the system management component of the Endura system. The SM5200 manages the discovery and registration of all Endura components and cameras on the network. 1 8,210.00 8,210.00T SAAIS - NSM PELCO NSM5200-06-US SAAIS - NSM PELCO NSM5200-06-US, 6TB The combination of high performance, scalable hardware design and advanced software capabilities enables the NSM5200 to meet the unique storage needs of physical security and video surveillance applications. 1 13,791.67 13,791.67T SAAIS - WORKSTATION PELCO W55080 US SAAIS - WORKSTATION PELCO W55080 US The Endura Workstation WS5080 is a high-end personal computer running Windows Vista® Business edition that is optimized for the WS5000 advanced system management software. The Endura workstation can simultaneously decode and display up to 16 HD, full frame-rate video streams. The Endura workstation includes the WS5200 software package. 3 5,327.73 15,983.19T ACTIVITY QTY RATE AMOUNT SAAIS - PMCL524BL SAAIS - PMCL524BL, 24 Inch 1080P Industrial LED M Full High Definition 1920 x 1080 Resolution, 3D Digital Comb Filter with Deinterlacing for High Quality Video, High Contrast Ratio, Lightweight Design, Built for 24/7 Applications, VGA, DVI, S-Video, BNC, and HDMI, Deinterlace Motion, Picture-in- Picture (PIP), On-Screen, Anti-Glare Panel Surface, 3-Year Warranty 2 1,588.24 3,176.48T SAAIS - PMCL-WM SAAIS - PMCL-WM, VESA Wall Mount, 50lbs Max The Pelco PMCL-WM is a two-piece wall mount for use with Pelco PMCL 200/300/400/500 series LCD monitors or with any VESA compliant monitor. The PMCL-WM is designed for simple sturdy wall mounting and does not offer tilt or swivel adjustments. The bracket comes in two pieces, one attaching to the wall and the other one to the monitor. The monitor slides into the V-shaped piece on the wall and is then secured to the wall piece via set screws. 1 460.51 460.51T SAAIS - ME319-1EP SAAIS - ME319-1EP, Sarix Enhanced Range Environmental Pendant Mount 2 1,045.00 2,090.00T SAAIS - WMVE-SR SAAIS - WMVE-SR, Wall Mount Vandal Resistant for Sarix SER IE, IM-V, IM-E The light gray WMVE-SR Vandal Wall Mount features side impact resistance, and feedthrough cabling. It is compatible with Sarix Vandal and Environmental Mini Domes - IM-V/E Series and Sarix Environmental Domes - IE Series. The wall mount can be used along with PA101 pole mount adapters. 2 52.50 105.00T SAAIS - PA101 SAAIS - PA101, Pole Mount Adapter for EM1400 and EM2400 Mounts 2 59.95 119.90T SAAIS - 56230-EG1 SAAIS - 56230-EG1, SP ENH 1080P 30X ENV PND GRY CLR 2 3,415.95 6,831.90T SAAIS - SWM-GY SAAIS - SWM-GY Mount I/O for Spectra and DFS Pendant Dome Housings, Gray in Color 2 59.95 119.90T SAAIS - SWM-PA-GY SAAIS - SWM-PA-GY, Mount Pole Adapter for SWM Series Pendant Mount 2 29.95 59.90T SAAIS - SP01-002 SAAIS - SP01-002 Spectra III Anti-Vibration Mount 4 223.99 895.96T SAAIS - TI650 SAAIS - TI650 Sarix TI Thermal Camera, 640x480 Res, 50mm Lens 2 13,157.95 26,315.90T SAAIS - WCS1-4 SAAIS - WCS1-4, Power Supply Outdoor 24/26/28 VAC TAPS at 100VA / 4 AMPS 2 343.36 686.72T SAAIS - Pelco - UDI5000-MTRX Endura UDI5000-MTRX Universal Device Interface 2 1,663.00 3,326.00T ACTIVITY QTY RATE AMOUNT SAAIS - Pelco - CM9760-ALM Matrix Alarm Interface Up to 64 Inputs 2 890.00 1,780.00T Tripp Lite SU3000 UPS Tripp Lite SmartOnLine SU3000 RTXLCD2U - UPS ( rack- mountable ) - AC 100/110/115/120/127 V, 2700 Watt - 3000 VA - RS-232, USB - 9 output connector(s) - 2U - 19" 1 2,930.409 2,930.41T SAAIS - Tripp Lite - N252-012 12- Port 1U Rack-Mount Cat6/Cat5 110 Patch Panel 568B, RJ45 Ethernet 3 50.00 150.00T SAAIS - Siklu EH-600T V-Band Wireless Back Haul w/Outdoor Install Kit 1 7,000.00 7,000.00T SAAIS - Schneider Electric - APC Smart-UPS SMT750RM2U 2 539.00 1,078.00T SAAIS - Optex AX-TW200 6'6" Double Sided, Free Standing Photoelectric Beam Tower (Includes Thermostat, Tamper, and 1 TW-SAX kit 6 759.00 4,554.00T SAAIS - Optex AX-TWEB Wall Mount Bracket for AX-TW200 Double Sided Photoelectric Beam Tower 6 115.00 690.00T SAAIS - Optex SL-350QFRI 350 ft. Outdoor, iSeries Battery-Powered Wireless 4-Channel Quad Photoelectric Detector. Batteries and Inovonics EN 1941 Transmitter Included, 8 1,592.00 12,736.00T SAAIS - Optex AX-100TFRI The iSeries Wireless AX-100TFRi Indoor/Outdoor Photobeam Detector with Inovonics EN 1941 Transmitter from Opted is a 100' battery-powered photo beam detector that features a built- in Inovonics EN 1941 transmitter, which makes it ready-to- install, wireless solution for perimeter protection. The AX- 100TFRi also includes 4 lithium D cell batteries with a lifespan of up to 5 years. 2 945.00 1,890.00T SAAIS - Optex EN-4232MR 32 Zone Inovonics Multi-Condition Receiver w/Relay Outputs for Optex iSeries Detectors 1 769.00 769.00T SAAIS - Optex AX-TW100 3'3" Double Sided, Free Standing Photoelectric Beam Tower 2 379.00 758.00T SAAIS - Optex AX-200TFRi 200 ft. Outdoors, iSeries Battery-Powered, 4-Channel Photoelectric Detector. Batteries and Inovonics EN1941 Transmitter included 2 1,000.00 2,000.00T SAAIS - Avaya - VSP 4850GTS Virtual Services Platform 4850GTS-PWR+ 1 5,824.99 5,824.99T SAAIS - Avaya ERS3510GT 3510GT-PWR+ 8-Port Gigabit Ethernet Switch 2 1,000.00 2,000.00T SAAIS - TP-Link - MC210CS Gigabit Media Converter 1000 Mbps RJ45 to 1000M single-mode SC, fiber up to 15Km, chassis mountable 2 100.00 200.00T SAAIS - TP-Link - TL--R600VPN Safestream Gigabit Broadband VPN Router 1 85.00 85.00T SAAIS - Safetran - Model 332L Energy standard controller cabinet 2 5,174.00 10,348.00T ACTIVITY QTY RATE AMOUNT SAAIS - Econlite Fiber Cabinet 334L Fiber Cabinet 2 3,000.00 6,000.00T SAAIS - Tesco - 26-100 Electric Service Pedastool 2 3,000.00 6,000.00T Infrastructure/Additional Materials 1 1,700.00 1,700.00T Special Equipment 1 2,000.00 2,000.00T Labor Labor 1 41,000.00 41,000.00 Level 2 Advanced Analytics Advanced Detection Analytics for SAAIS (Cost: $4500.00) DISCOUNTED, NO COST TO CLIENT FOR THIS QUOTE 1 0.00 0.00 The prices reflected in this estimate are good for 90 days from the date of issuance. SUBTOTAL 193,666.43 TAX (8.75%) 13,358.31 TOTAL $207,024.74 Accepted By Accepted Date City of Palo Alto (ID # 6977) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Miscellaneous Utility Rules and Rate Changes Title: Adoption of a Resolution Amending Utilities Rate Schedule E-15 (Electric Service Connections) and Rules and Regulations 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 15 18, 20, 23, and 24 (Adoption of Rules, Definitions and Abbreviations, Description of Utility Services, Application of Service, Service Contracts, Establishment and Reestablishment of Credit, Deposits, Access to Premises, Discontinuance, Termination and Restoration of Service, Meter Reading, Billing, Adjustments, and Payment of Bills, Metering, Utility Service Connections and Facilities on Customers’ Premises, Special Electric Utility Regulations, Special Wastewater Utility Regulations, and Special Refuse Service Regulations) From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council adopt a resolution amending Utilities Rules and Regulations 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 15, 18, 20, 23, and 24, and Utilities Rate Schedule E-15, as attached. Executive Summary Utilities Rate Schedules and Utilities Rules and Regulations are updated as needed to ensure current procedures are in place to continue Utilities operations. The recommended changes to the various Rules and Regulations add new provisions, remove outdated sections or schedules, update language for clarity, and reflect changes to business practices and procedures. The recommended changes to Electric Service Connection Fees (Rate Schedule E-15) reflect current labor and material costs since this fee schedule was last updated in 2012. Discussion There are twenty-nine Utilities Rules and Regulations (Rules) which set forth the conditions under which the City provides utility services from both the Utilities Department (electric, natural gas, water, wastewater, fiber optic) and the Public Works Department (refuse, storm drain). The Rules are updated on as-needed basis to reflect current standards and business practices. City of Palo Alto Page 2 Rate Schedule E-15 (Electric Service Connection Fees) Staff develops predetermined estimates of labor hours and material requirements to perform the work to connect the simpler types of service connections, i.e. projects which do not require a full estimate. These labor and material estimates are the basis of the connection fees paid by customers for new or upgraded electric service connections to recover the cost of making the electrical connections. The recommended amendments to this rate schedule updates the labor and material costs required for customer connection to the electric distribution system from 2012 (the last time this schedule was updated) to 2016. The following table illustrates the additional revenue that would be collected annually based on the average number of customer connections per year from 2012 - 2015. Service Connection Fee # of Applic ations Current Fees Current Revenue Proposed Fees Propose d Revenue Change in Revenue Temp OH Res 200A 90 $840 $75,390 $970 $87,058 $11,668 Temp UG Res 200A 28 $840 $23,310 $970 $26,918 $3,608 OH Res 200A 66 $620 $40,920 $840 $55,440 $14,520 UG Res 200A 25 $450 $11,250 $850 $21,250 $10,000 UG Res 200A - Rear Easement 9 $940 $8,460 $1,900 $17,100 $8,640 OH MF-Comm < 200A 1 $900 $900 $1,180 $1,180 $280 UG MF-Comm < 200A 4 $720 $3,060 $1,160 $4,930 $1,870 Temp OH Comm < 200A 2 $840 $1,890 $970 $2,183 $293 Temp UG Comm < 200A 4 $675 $2,531 $970 $3,638 $1,106 Grand Total $167,711 $219,69 5 $51,984 200A – 200 Amps – refers to service panel rating Res – Residential Comm – Commercial Temp – Temporary service OH – Overhead UG – Underground MF – Multifamily Utilities Rules and Regulations (1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 15, 18, 20, 23, and 24) Utilities Rule and Regulation 1 (Adoption of Rules) Rule and Regulation 1 covers the adoption of and penalties for violation of Utilities Rules and Regulations. The proposed change incorporates the location of new Utilities Lobby Office on the ground floor as a customer point-of-contact. Adds “applicant” and “account” to the list of entities covered under the Utilities Rules and Regulations and clarifies the process and procedures for imposition of fines will be consistent with section 1.12 of the Palo Alto Municipal Code City of Palo Alto Page 3 Utilities Rule and Regulation 2 (Definitions and Abbreviations) Rule and Regulation 2 describes commonly used industry acronyms and the definitions of various terms. Some terms were not previously defined in the section and the rule is being revised to include these terms, including proposed amendments to add the definitions for sewer cleanout, upper sewer lateral, and lower sewer lateral among other additions and modifications. Utilities Rule and Regulation 3 (Description of Utility Services) The recommended amendments include:  Allowing single phase residential panels up to 600 Amps, rather than currently mandated three-phase service, with Electric Engineering Manager’s approval.  Clarifying Refuse standard services and exceptions to standard services, specifies Refuse-handling equipment requirements and the requirements for onsite-storage between pick-up dates. Utilities Rule and Regulation 4 (Application for Service) The recommended amendments specify when monthly unmetered charges (charges independent of metered consumption) for refuse, storm drain, and wastewater services are included on a customer bill (when two of three metered services (electric, natural gas and water) are actively being billed). Clarifies landlord and tenant rules for cost allocation of utility services when tenants are sub-metered or master-metered. Utilities Rule and Regulation 5 (Service Contracts) The recommended amendment updates the list of special Services that may require contracts. Utilities Rule and Regulation 6 (Establishment and Reestablishment of Credit) The recommended amendment removes previous non-cash commercial deposit options (Certificate of Deposits, Surety Bonds) due to changes in City financial policies. Utilities Rule and Regulation 7 (Deposits) The recommended amendments clarify the requirements for deposits, amounts of deposits and terms for the return of deposits. Aligns the requirements for deposits to the creditworthiness ratings in Rule and Regulation 6, “Establishment and Reestablishment of Credit.” Utilities Rule and Regulation 8 (Access to Premises) The recommended amendment stipulates that Meters shall be installed on the exterior of buildings at ground level for ease of access by Utilities staff and improved customer building security. Exceptions to this Rule would be approved by the Utilities Director or his/her designee. Utilities Rule and Regulation 9 (Discontinuance, Termination, and Restoration of Service) The recommended amendments provide consistent definition and consistent terminology for discontinuance (account closure) and termination (non-payment) of utility service. City of Palo Alto Page 4 Utilities Rule and Regulation 10 (Meter Reading) The recommended amendment clarifies the duration of the billing period and that billing adjustments for Estimated Meter Readings will include both usage and cost. Utilities Rule and Regulation 11 (Billing Adjustments and Payment of Bills) These recommended amendments to Rule 11 clarify (1) that the City can recover for all damages incurred by the City in cases of utility theft, both in terms of unbilled charges and the costs to the City associated with investigating and remedying such situations; and (2) the procedure for notifying customers about City’s intent to impose charges in connection with theft and for customers to dispute utility such charges. Utilities Rule and Regulation 15 (Metering) The recommended amendment updates the meter test accuracy limits per City of Palo Alto Utilities standards. Utilities Rule and Regulation 20 (Special Electric Utility Regulations) The recommended amendment deletes the current distance requirement from multiple electric service drops to the same building. Staff could not identify a current need for this particular restriction. Utilities Rule and Regulation 23 (Special Wastewater Utility Regulations) The recommended amendments clarify the responsibilities of the City and the customer for wastewater infrastructure, including sewer laterals, the wastewater main, sewer cleanouts and pipes that branch off the sewer laterals. Amendment of the sewer lateral upgrade requirement is proposed for new construction or remodel projects. Currently, customers are required to upgrade their portion of the sewer lateral to current standard size and/or material when the existing material is non-plastic and when the construction/remodel cost is greater than $100,000 for residential projects and $300,000 for commercial projects. The amendment increases the residential requirement threshold from $100,000 to $200,000. The current requirement threshold stays the same for commercial projects. In addition, the Utilities Operations has developed a standard evaluation method to assess the condition of the sewer lateral when a customer remodels an existing building or constructs a new one. Instead of mandating a lateral upgrade in every remodel or new construction situation, under the proposed changes to Rule 23, Utilities Operations will inspect the existing lower sewer lateral as part of the permit application review process and determine whether the lateral meets the standard criteria to be upgraded. Minimizing lateral replacement to situations where the existing lateral is in need of repair or replacement will save customers money, reduce street digging and allow Utilities Operations to focus on system-wide maintenance work. Staff proposes to apply the new rule retroactively to all projects that are City of Palo Alto Page 5 currently in the queue to be replaced. This will reduce the backlog of sewer laterals scheduled to be replaced under the current Rule 23 requirements. Utilities Rule and Regulation 24 (Special Refuse Service Regulations) The proposed changes to the refuse service regulations reflect the recent modifications to Chapter 5.20 of the Municipal Code, which includes the Recycling and Composting Ordinance (Staff Report #6475) adopted on January 25, 2016. Modifications also have been made to refuse suspension service. Resource Impact Approval of changes to Utilities Rules and Regulation 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 15, 18, 20, 23, and 24 will not result in a significant change in net operating revenues or expenses. Approval of changes to Utility Rate Schedule E-15 will recover the City’s costs by approximately $52,000. Policy Implications These recommendations do not represent a change in current city policies. Environmental Review The adoption of a resolution amending Utility Rate Schedule E-15 (Electric Service Connections ) is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). The adoption of the resolution amending Utility Rules and Regulations does not meet the definition of a “project” under Public Resources Code 21065, thus no CEQA review of this action is required. Attachments:  Resolution for staff report 6977 (PDF)  Index of Rate Schedules, Rules and Regulations as of 6-27-2016 Redlined (PDF)  E-15 effective 6-27-2016- Redlined (PDF)  Rule 01 Adoption of Rules- Redlined (PDF)  Rule 02 Definitions and Abbreviations- Redlined (PDF)  Rule 03 Description of Utility Services- Redlined (PDF)  Rule 04 Application of Service- Redlined (PDF)  Rule 05 Service Contracts- Redlined (PDF)  Rule 06 Establishment and Reestablishment of Credit- Redlined (PDF)  Rule 07 Deposits- Redlined (PDF)  Rule 08 Access to Premises- Redlined (PDF)  Rule 09 Discontinuance, Termination, and Restoration of Service taa- Redlined (PDF)  Rule 10 Meter Reading- Redlined (PDF)  Rule 11 Billing, Adjustments and Payment of Bills- Redlined (PDF)  Rule 15 Metering- Redlined (PDF)  Rule 20 Special Electric Utility Regulations- Redlined (PDF)  Rule 23 Special Wastewater Utility Regulations- Redlined (PDF) City of Palo Alto Page 6  Rule 24 Special Refuse Service Regulations- Redlined (PDF) Attachment NOT YET APPROVED 1 Resolution No. Resolution of the Council of the City of Palo Alto Amending Utilities Rate Schedule E-15 (Electric Service Connections) And Approving Amendments To Utilities Rule and Regulation 1 (Adoption of Rules), Utilities Rule and Regulation 2 (Definitions and Abbreviations), Utilities Rule and Regulation 3 (Description of Utility Services), Utilities Rule And Regulation 4 (Application for Service), Utilities Rule And Regulation 5 (Service Contracts), Utilities Rule And Regulation 6 (Establish and Reestablishment of Credit), Utilities Rule and Regulation 7 (Deposits), Utilities Rule and Regulation 8 (Access to Premises), Utilities Rule and Regulation 9 (Discontinuance, Termination, and Restoration of Service), Utilities Rule and Regulation 10 (Meter Reading), Rule and Regulation 11 (Billing, Adjustments and Payment of Bills), Rule and Regulation 15 (Metering), Utilities Rule and Regulation 18 (Utility Service Connections and Facilities on Customers’ Premises), Utilities Rule and Regulation 20 (Special Electric Utility Regulations), Utilities Rule and Regulation 23 (Special Wastewater Utility Regulations), Utilities Rule and Regulation 24 (Special Refuse Service Regulations) RECITALS A. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-15 (Electric Service Connections) is hereby amended as attached and incorporated. Utility Rate Schedule E-15, as amended, shall become effective June 27, 2016. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 1 (Adoption of Rules) is hereby amended as attached and incorporated. Utility Rule and Regulation 1, as amended, shall become effective June 27, 2016. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule and Regulation 2 (Definitions and Abbreviations) is hereby amended as attached and incorporated. Utility Rule and Regulation 2, as amended, shall become effective June 27, 2016. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule and Regulation 3 (Description of Utility Services) is hereby amended as attached and incorporated. Utility Rule and Regulation 3, as amended, shall become effective June 27, 2016. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 4 (Application for Service) is hereby amended as attached and incorporated. Utility Rule and Regulation 4, as amended, shall become effective June 27, 2016. SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 5 (Service Contracts) is hereby amended as attached and incorporated. Utility A Attachment NOT YET APPROVED 2 Rule and Regulation 5, as amended, shall become effective June 27, 2016. SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 6 (Establishment and Reestablishment of Credit) is hereby amended as attached and incorporated. Utility Rule and Regulation 6, as amended, shall become effective June 27, 2016. SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 7 (Deposits) is hereby amended as attached and incorporated. Utility Rule and Regulation 7, as amended, shall become effective June 27, 2016. SECTION 9. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 8 (Access to Premises) is hereby amended as attached and incorporated. Utility Rule and Regulation 8, as amended, shall become effective June 27, 2016. SECTION 10. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 9 (Discontinuance, Termination, and Restoration of Service) is hereby amended as attached and incorporated. Utility Rule and Regulation 9, as amended, shall become effective June 27, 2016. SECTION 11. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 10 (Meter Reading) is hereby amended as attached and incorporated. Utility Rule and Regulation 10, as amended, shall become effective June 27, 2016. SECTION 12. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) is hereby amended as attached and incorporated. Utility Rule and Regulation 11, as amended, shall become effective June 27, 2016. SECTION 13. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 15 (Metering) is hereby amended as attached and incorporated. Utility Rule and Regulation 15 as amended, shall become effective June 27, 2016. SECTION 14. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 18 (Utility Service Connections and Facilities on Customers’ Premises) is hereby amended as attached and incorporated. Utility Rule and Regulation 18, as amended, shall become effective June 27, 2016. SECTION 15. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 20 (Special Electric Utility Regulations) is hereby amended as attached and incorporated. Utility Rule and Regulation 20, as amended, shall become effective June 27, 2016. SECTION 16. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 23 (Special Wastewater Utility Regulations) is hereby amended as attached and incorporated. Utility Rule and Regulation 23, as amended, shall become effective June 27, 2016. SECTION 17. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 24 (Special Refuse Service Regulations) is hereby amended as attached and incorporated. Utility Rule and Regulation 24, as amended, shall become effective June 27, 2016. Attachment NOT YET APPROVED 3 SECTION 18. The City Council finds as follows: a. Revenue derived from the implementation of Utility Rate Schedule E-15 (Electric Service Connections) amended by this resolution does not exceed the funds required to provide electric service. b. Revenue derived from the implementation of Utility Rate Schedule E-15 (Electric Service Connections) amended by this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. c. The fees and charges adopted by the implementation of Utility Rate Schedule E-15 (Electric Service Connections) amended by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. SECTION 19. The adoption of Section 1 of this resolution amending Utility Rate Schedule E-15 (Electric Service Connections ) and changing electric rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. The adoption of the remainder of this resolution amending Utility Rules and Regulations does not meet the definition of a “project” under Public Resources Code 21065, thus no CEQA review of this action is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Senior Deputy City Attorney City Manager Director of Utilities Attachment NOT YET APPROVED 4 Director of Administrative Services CITY OF PALO ALTO UTILITIES Index of Existing Rate Schedules, Rules and Regulations DATE OF LAST NUMBER REVISION OF SHEETS CITY OF PALO ALTO UTILITIES RATE SCHEDULES: ELECTRIC: E-1 Residential Electric Service ................................................. July 1, 2009 1 E-1 G Residential Green Power Electric Service ........................... July 1, 2009 2 E-2 Small Commercial Electric Service ..................................... July 1, 2009 2 E-2 G Small Commercial Green Power Electric Service ............... July 1, 2009 2 E-3 Customer-Owned Generation .............................................. July 1, 2007 3 E-4 Medium Commercial Electric Service ................................ July 1, 2009 3 E-4 TOU Medium Commercial Electric Time of Use Service ........... July 1, 2009 4 E-4 G Medium Commercial Green Power Electric Service........... July 1, 2009 4 E-7 Large Commercial Electric Service ..................................... July 1, 2009 3 E-7 TOU Large Commercial Electric Time of Use Service ................ July 1, 2009 4 E-7 G Large Commercial Green Power Electric Service ............... July 1, 2009 4 E-14 Street Lights ......................................................................... July 1, 2009 4 E-15 Electric Service Connection Fees ........................................ June 207, 2016August 8, 20086 E-16 Unmetered Electric Services ............................................... July 1, 2009 3 E-18 Municipal Electric Service .................................................. July 1, 2009 2 E-18 G Municipal Green Power Electric Service ............................ July 1, 2009 3 E-NSE Net Metering Net Surplus Electricity Compensation .......... January 1, 2011 1 FIBER OPTIC: EDF-1 Dark Fiber Licensing Services ............................................. July 1, 2013 2 EDF-2 Dark Fiber Connection Fees ................................................ July 1, 2013 1 EDF-3 Dark Fiber Licensing Services ............................................. Sept. 18, 2006 1 EFTH-T Fiber to the Home Trial Participation Fee ........................... May 6, 2002 1 WATER: W-1 General Residential Water Service ...................................... July 1, 2013 2 W-2 Water Service From Fire Hydrants ...................................... July 1, 2013 1 CITY OF PALO ALTO UTILITIES Index of Existing Rate Schedules, Rules and Regulations DATE OF LAST NUMBER REVISION OF SHEETS CITY OF PALO ALTO UTILITIES W-3 Fire Service Connections ..................................................... July 1, 2013 2 W-4 General Non-Residential Water Service .............................. July 1, 2013 2 W-5 Water Service Connection Fees ........................................... July 6, 2009 5 W-7 Irrigation Water Service ...................................................... July 1, 2013 2 RECYCLED WATER: RW-1 Recycled Water Service .......................................................November 1, 2008 1 GAS: G-1 Residential Gas Service ....................................................... July 1, 2012 2 G-2 Commercial Gas Service ..................................................... July 1, 2012 2 G-3 Large Commercial Gas Service ........................................... July 1, 2012 2 G-4 Large Commercial Gas Transportation Service................... July 1, 2012 2 G-5 Gas Service Connection Fees .............................................. August 8, 2008 4 G-8 Gas for Electric Generation Service ....................................November 1, 2008 3 G-10 Compressed Natural Gas Service ........................................ July 1, 2012 2 G-11 Large Commercial Fixed-Term Commodity Gas Service ... July 1, 2012 2 G-12 Large Commercial Custom Commodity Gas Service.......... July 1, 2012 2 WASTEWATER: S-1 Residential Wastewater Collection & Disposal................... July 1, 2012 1 S-2 Commercial Wastewater Collection & Disposal ................. July 1, 2012 1 S-3 Industrial Waste Laboratory & Analysis Charges ............... July 1, 2002 1 S-4 Hauled Liquid Waste Charges ............................................. July 1, 2002 1 S-5 Sewer Service Connection Fees .......................................... July 6, 2009 3 S-6 Restaurant Wastewater Collection & Disposal ................... July 1, 2012 1 S-7 Commercial Wastewater Collection & Disposal – Industrial Discharger ........................................................ July 1, 2012 1 REFUSE: CITY OF PALO ALTO UTILITIES Index of Existing Rate Schedules, Rules and Regulations DATE OF LAST NUMBER REVISION OF SHEETS CITY OF PALO ALTO UTILITIES R-1 Domestic Refuse Collection ................................................ July 1, 2012 3 R-2 Commercial Refuse Collection ............................................ October 1, 2011 3 R-3 Commercial Refuse Collection ............................................ October 1, 2011 6 STORM AND SURFACE WATER DRAINAGE: D-1 General Storm and Surface Water Drainage ....................... July 1, 2013 1 MISCELLANEOUS: C-1 Utility Service Calls ............................................................. March13, 2013 1 C-2 Customer Deposits ............................................................... July 1, 1992 1 C-3 Service to City Employees ................................................... July 1, 1983 1 C-4 Residential Rate Assistance Program .................................. July 1, 2009 2 RULES AND REGULATIONS: Rule 1 Adoption of Rules ................................................................ June 2071, 20106 1 Rule 2 Definitions and Abbreviations .............................................June 207, 2016February 5, 2013 2651 Rule 3 Description of Utility Services ............................................ June 207, 2016May 13, 2013145 Rule 4 Application for Service ........................................................ June 270, 2016July 1, 2012 45 Rule 5 Service Contracts ................................................................. May 13, 2013June 27, 2016 1 Rule 6 Establishment and Reestablishment of Credit ..................... June 207, 2016July 1, 2012 2 Rule 7 Deposits ............................................................................... June 270, 2016July 1, 2012 21 Rule 8 Access to Premises .............................................................. June 207, 2016June 1, 2010 2 Rule 9 Discontinuancenection, Termination and Restoration of Service June 207, 2016June 1, 2010 4 Rule 10 Meter Reading ..................................................................... June 270, 2016June 1, 2010 2 Rule 11 Billing, Adjustments, and Payment of Bills ........................ July 1, 2012June 27, 2016 67 Rule 13 Shortage of Supply and Interruption of Utility Services ..... June 1, 2010 3 Rule 15 Metering............................................................................... June 27, 2016June 1, 2010 4 Rule 16 Line Extensions ................................................................... June 1, 2010 4 CITY OF PALO ALTO UTILITIES Index of Existing Rate Schedules, Rules and Regulations DATE OF LAST NUMBER REVISION OF SHEETS CITY OF PALO ALTO UTILITIES Rule 17 Conversion of Electric and Communication Facilities to Underground .................................................................... June 1, 2010 5 Rule 18 Utility Service Connections and Facilities on Customer’s Premises ........................................................... June 270, 2016May 13, 2013 3 Rule 20 Special Electric Utility Regulations..................................... June 207, 2016May 13, 2013 8 Rule 21 Special Water Utility Regulations .......................................October 18, 2010 12 Rule 22 Special Gas Utility Regulations ........................................... June 1, 2010 2 Rule 23 Special Wastewater Utility Regulations .............................. June 270, 2016July 1, 2012 130 Rule 24 Special Refuse and Recycling Regulations ......................... June 207, 2016June 1, 2010 5 Rule 25 Special Storm and Surface Water Drainage Utility Regulations ............................................................... June 1, 2010 7 Rule 26 Special Fiber Optic Utility Regulations ............................... July 1, 2012 4 Rule 27 Generating Facility Interconnections ................................... July 1, 2012 21 Rule 29 Net Energy Metering Service and Interconnection .............. March 8, 2011 6 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-1 Supersedes Sheet No E-15-1 dated 8-8-2008 A. APPLICABILITY: This schedule applies to all connections, expansions, and upgrades to the City's electric distribution systemElectric Distribution System except those that serve street lighting or traffic signals. B. TERRITORY: All territory within the incorporated limits of the City and land owned or leased by the City. B.C. ADVANCE ENGINEERING FEES Advance engineering fees Engineering Fees must be paid to start the engineering process and are non- refundable. The engineering feesAdvance Engineering Fees will be credited against the estimated job cost prior to the collection of construction fees. Advance engineering feesEngineering Fees will not be collected for service Service connections Connections that do not require a job estimate. C.D. ESTIMATED CONSTRUCTION AND SERVICE CONNECTION FEES All estimated on-site, off-site distribution systemDistribution System, and service connectionService Connection fees must be paid prior to the scheduling of any construction or connections to the City's electrical distribution system.Electrical Distribution System. E. SUMMARY OF FEES: The following schedule of common fees is for summary purposes. Section Sections C and F herein describesdescribe in detail the specific feefees and conditions in detailunder which they are required. 1. UNDERGROUND SYSTEMS: Service Connections Which Do Not Require an Estimate Service Connection Fees (1) Residential ...................................................................................................... $450 (1) Residential ..................................................................................................... $850 (2) Residential: Rear Easement ............................................................................. ........... $940 $1,900 (3) Multi-Family/Commercial/Industrial 200A or less, Single Phase or Less..................$720 $1,160 (4) Multi-Family/Commercial/Industrial Greater Than 200A .................................... ......... ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-1 Supersedes Sheet No E-15-2 dated 8-8-2008 By Estimate ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-2 Supersedes Sheet No E-15-2 dated 8-8-2008 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-2 Supersedes Sheet No E-15-3 dated 8-8-2008 Service Connections That Require Estimates Advance Engineering Fees (1) Residential .................................................................................................... $300 (1) Residential .................................................................................................... $800 (2) Multi-Family/Commercial/Industrial 200A or Less........................................ ........ $600 $1800 (3) Multi-Family/Commercial/Industrial Greater Than 200A ................. .... By Estimate On-Site Distribution System Fees (1) Residential ................................ .................................................................................................... N/A (2) Multi-Family/Commercial/Industrial ……………… .......................... ……………… By Estimate Off-Site Distribution System Fees (1) Residential .................................... ......................................................................................... By Estimate (2) Multi-Family/Commercial/Industrial .................................................... ............................ By Estimate 2. OVERHEAD SYSTEMS: All service connectionService Connection fees are based on a maximum 100-foot service length. If additional service length is required there may be additional fees. Service Connection Fees (1) Residential .................................................................................................... $620 (1) Residential 200 A or Less ............................................................................. $840 (2) Residential Mid-span 200A or Less ............................................................. $1,930 (1)(3) Multi- Family/Commercial/Industrial 200A or Less ………………………… $900 ...... $1,180 (2)(4) .....................................................................................................................M ulti-Family/Commercial/Industrial Greater Than 200A ................. All Others By Estimate 3. TEMPORARY SERVICES: Temporary service charges 200A maximum, 250 V maximum, 3-wire services 100' in length are shown in the following table. Fees for services requiring greater voltageVoltage or capacity will be ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-2 Supersedes Sheet No E-15-4 dated 8-8-2008 determined by estimate. Overhead Service Connection Fees (1) Residential .................................................................................................... $840 (1) Residential .................................................................................................... $970 (2) Multi-Family/Commercial/Industrial 200A or Less ............................................... $840 $970 (3) Multi-Family/Commercial/Industrial Greater Than 200A ................. .. .. By Estimate Underground Service Connection Fees (1) Residential .................................................................................................... $675 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-3 Supersedes Sheet No E-15-3 dated 8-8-2008 (1) Residential .................................................................................................... $970 (2) Multi-Family/Commercial/Industrial 200A or Less …………………………..$675 $970 (3) Multi-Family/Commercial/Industrial Greater Than 200A ................. .. ..................... By Estimate F. FEES: 1. UNDERGROUND SYSTEMS Connection fees for new or replacement services to the underground electrical system consist of one or more of the following: Service Connection Fee, On-site Distribution System Fee and/or Off-site Distribution System Fee. (A) Service Connection Fees: Where the City connects any Customer to the electrical distribution systemDistribution System, a service connectionService Connection fee shall be charged. A one-time waiver of this fee is granted for services connected during the construction of an underground conversion district. (1) Residential - Single Family These fees apply to development in which electric metering will be on a single-family basis. ( These fees apply to a development in which Electric Metering will be on a) single-family basis. (a) For a 250 voltVolt maximum, 200 ampere maximumAmp or less service ............................... $450 ............................................................................ $850 (b) For any connection requiring greater capacity the fee shall be the estimate of the installation cost or $450 whichever is greater. (c) For a 250 volt maximum, 200 ampere max service from a rear easement $940 (b) For any connection requiring greater capacity the fee shall be the estimate of the installation cost or $720,850 whichever is greater. (c) For a 250 Volt maximum, 200 Amp max service from a rear easement ...... $1,900 (d) For any rear easement connection requiring greater capacity the fee shall be the estimate of the installation cost or $1,900, whichever is greater. (2) Commercial/Industrial ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-3 Supersedes Sheet No E-15-4 dated 8-8-2008 These fees apply to commercial, industrial, multi-family residential services. (a) For a 250 voltVolt maximum, 200 ampere maximumAmp or less service ............................... $720 ................................................................................ $1,160 (b) For any connection requiring greater capacity, the fee shall be the estimate of the installation costs or $7201,160, whichever is greater. (3) Where the City installs, or will install, electric metersElectric Meters in a new development (single family, multi-family, or commercial/industrial inclusive) consisting of 30 (thirty) units or more, the ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-4 Supersedes Sheet No E-15-4 dated 8-8-2008 connection fee shall include the estimate of the cost to furnish all electric meters with AMR- ERTs. (B) On-site Distribution System Fees: Where the City installs or will install the underground conductors (primary or secondary), switches or transformers in and on facilities provided by the developer within the boundaries of a sub-division or other development, an on-site distribution system fee shall be charged. The fee shall be the estimate of the installation costs. (C) Off-Site Distribution System Fees: Where the City installs or will install an electric distribution system, system extension, or system reinforcement outside the boundaries of a sub-division or other development to be served, an off-site distribution system fee shall apply. The fee shall be the estimate of the installation costs. 2. OVERHEAD SYSTEMS Connection fees shall apply for all new services or for service upgrades exceeding 200 amperesAmps. Overhead services that do not require the addition of poles to the system will be the standard service for residential areas not in Underground Districts. Underground Service will be required for all new industrial, commercial, and multi-family residential construction. No new construction that will require new poles to be added to the system shall be permitted except with the approval of the ElectricalElectric Engineering Manager and only after a finding that an underground service is not feasible. Replacement of existing overhead services with new overhead services will be allowed so long as the new service does not exceed the size of the existing service or, 200 Amperes for single-family residential or 400 amperesAmps for all otherothers, whichever is greater. Replacement of 250 voltVolt, 200 ampereAmp maximum, 3-wire overhead residential service drops to existing structures will be done by the City at no cost to the customer providing such a replacement does not require relocation of the connection at the pole or mid-span, does not require relocation at the house by more than 10 feet, and does not exceed 100 feet in length. (A) Overhead Service Connection Replacement Fees: ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-5 Supersedes Sheet No E-15-5 dated 8-8-2008 (1) Residential – Single Family These fees apply to development in which electric metering will be on a single-family basis. These fees apply to development in which electric metering will be on a single-family basis. (a) For a 250 Volt maximum, 200 ampereAmp or less, 3 and 4 wire services, 100 feet in length Maximum services.......................................................$620maximum services ..................................................................................................... $840 (b) For a 250 Volt maximum, 200 Amp or less, 3 and 4 wire services, 100 feet in length maximum services, mid-span connection .................... $1,930 (c) For all others the fee shall be the estimate of the installation cost or $840, whichever is greater. (2) Commercial/ Industrial These fees apply to commercial, industrial, multi-family residential services. (a) For a 250 Volt maximum, 200 ampereAmp or less, 3 and 4 wire services, 100 feet in length maximum service ......................... .................................................... ................................................................................................................................... $900 ................................................................................................................. $1,180 (b) For all others the fee shall be the estimate of the installation cost or $1,180, whichever is greater. (3) Replacement of Overhead Services of greater voltageVoltage, other than described above when done for the customer benefit, or when required due to damage by customer, shall be the estimate of the installation costs. 3. TEMPORARY SERVICE A fee shall be charged to connect temporary service.Temporary Service. The Customer shall furnish all equipment up to the designated point-of-service. This pointPoint-of-serviceService will ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-5 Supersedes Sheet No E-15-6 dated 8-8-2008 usually be the weatherhead for overhead temporary servicesServices in overhead distribution areas or the secondary connection box for underground temporary servicesServices in underground distribution system areas. The City will not supply overhead temporary servicesTemporary Services in underground service areas or underground temporary services in overhead distribution system areas. The City will supply: overhead conductors and meterMeter for overhead temporary servicesTemporary Services; and meterMeter only for underground temporary services.Temporary Services. The City will connect both overhead and underground servicesServices to the City's electrical distribution system.Distribution System. Any additional off-site facilities or work required shall be provided and removed by the utilityUtility at the customer'sCustomer's expense. (A) Overhead Temporary Service Fees: (1) For a 250 voltVolt, 200 ampereAmp, 3 wire service, 100 feet in length maximum service ................................................................ ..... $840 $970 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-6 Supersedes Sheet No. E-15-6 dated 8-8-2008 (2) The fees for a temporary serviceTemporary Service of greater length and capacity or voltageVoltage shall be the estimate of the installation and removal costs or $840970, whichever is greater. (B) Underground Temporary Service Fees: (1) For a 250 voltVolt, 200 ampereAmp, 3-wire maximum service, If a service box is available at the property .................................................... ...... $675 ........................................................ $970 (2) If a serviceService box is not available at the property, the chargesCharges to provide a serviceService box will be at the customer’sCustomer’s expense. (3) The fees for a temporary serviceTemporary Service of greater length and capacity or voltageVoltage shall be the estimate of the installation orand removal costs or $675970, whichever is greater. 4. GENERATOR INTERCONNECTION A fee shall be charged for evaluation of generator interconnection applicationsGenerator Interconnection Applications performed pursuant to Rule and Regulation 27. An Initial Review for Simplified Interconnection will be performed. No fee is charged for this initial review. If it is determined that a Supplemental Review will be required, an Advance Engineering Fee will be charged. The Advance Engineering Fee will be applied to any InterconnectionDetailed Study fees or Interconnection fees. (A) Advance Engineering Fees: (1) All net energy metering projects..................................................................................$0 (1) Net Energy Metering projects (this does not include projects with a size less than or equal to 10 kW taking Service under the Net Energy Metering Successor Program) ................................................................................................................. $0 (1)(2) ..........................................................................................................................A ll Projects not subject to net metering covered under section 4(A.)(1), which are greater than 10 kW and less than 100 kW or less in capacity.......................$600 $675 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-6 Supersedes Sheet No. E-15-7 dated 8-8-2008 (2) All Projects not subject to net metering,covered under section 4(A)(1), which are greater than or (2)(3) .......................................................................................................................... equal to 100 kW butand less than 500 kW in capacity...............................................$4,000 ................................................... $4,500 (3)(4) ..........................................................................................................................A ll Projects not subject to net metering,covered under section 4(A)(1), which are 500 kW or greater in capacity ....................$7 ................................................... $8,500 Interconnection(B) Detailed Study: (1) All net energy metering projects..................................................................................$0 Formatted: Right: 0.5" CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-7 Supersedes Sheet No. E-15- dated 8-8-2008 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-12 6-27-2016 Supersedes Sheet No. E-15-8 dated 8-8-08 7-1-12 Sheet No.E-15-8 (1) (2)Net Energy Metering projects (this does not include projects with a size less than or equal to 10 kW taking Service under the Net Energy Metering Successor Program)All Net Energy Metering projects $0 (1)(2) .......................................................................................................................... A ll Projects not subject to net meteringNet Energy Meteringcovered under section 4(B.)(1) shall be responsible for the actual costs of the interconnection studyDetailed Study, as determined by CPAU. (C) Interconnection Fees: (1) All net energy metering projects..................................................................................$0 (1) (2)All projects eligible for Net Energy Metering projects (this does not include projects taking Service under the Net Energy Metering Successor Program) $0 (2) All projects less than or equal to 10 kW not eligible for Net Energy Meteringunder section 4(C.)(1) ............................................................................ $123 (1)(3) .......................................................................................................................... A ll Projects not subject to net meteringunder section 4.(C.)(1) or 4(.C.)(2) shall be responsible for the actual costs of design and installation of interconnection equipment. 5. PALO ALTO CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM A monthly fee shall be charged for meterMeter maintenance and administrative services for generatorsGenerators participating in the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program. (1) (1) ... Metering and administrative fee ...........................................................................$ $34.73 G. NOTES: 1. These fees apply to all vacant land except where the fees are recorded as previously paid. CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2012 Sheet No.E-15-7 Supersedes Sheet No. E-15- dated 8-8-2008 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-12 6-27-2016 Supersedes Sheet No. E-15-9 dated 8-8-08 7-1-12 Sheet No.E-15-9 2. The Customer is responsible for the installation of all equipment from the facility to the designated pointPoint-of-service.Service. For underground systems, this includes conduit and conductors. For overhead systems, because the pointPoint-of-serviceService is the weatherhead or point of attachment to the facility, this includes the mast or riser and all conductors therein. 3. When the City replaces a serviceService, the Customer is obligated to accept a shutdown of serviceUtility Service during regular working hours. The time of the shutdown shall be agreed upon as mutually acceptable. When, for the convenience of the Customer, the shutdown is during other than regular working hours, it shall be done entirely at the Customer's expense. The Customer shall pay the entire cost of the overtime labor, not the incremental cost. 4. The City can generally provide service availability from 30 to 45 days after all fees are paid except when long lead-time equipment or materials are required. Consult the City for estimated lead-times. 5. The City cannot be held liable for delays in serviceService connection caused by conditions beyond its control, including, but not limited to, delays in the arrival of equipment such as transformers, switches and cable. {End} ADOPTION OF RULES RULE AND REGULATION 1 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-1-2010 6-27-2016 Original Sheet No. 1 A. ADOPTION OF RULES These Rules and Regulations, and any amendments thereto, are approved and adopted by resolution of the City of Palo Alto City Council and copies are available to the general public at the Utilities Customer Service Center, Second Ground Floor, 250 Hamilton Avenue, Palo Alto, CA 93401. B. CONFLICT In case of an apparent inconsistency or conflict between a Provision of any Rate Schedule or Rule and Regulation, the Provision of the Rate Schedule shall apply. In the event a conflict occurs between the interpretation of one Rule and Regulation with another Rule and Regulation, contract, or Rate Schedule, the responsible Director of Utilities or the Director of Public Works, with concurrence of the City Attorney, shall provide the correct interpretation. C. PENALTY FOR VIOLATION OF UTILITIES RULES AND REGULATIONS Every individual Aapplicant, Ccustomer or Aaccount supplied Utility Services by the City shall be considered as having expressed consent to be bound by the Utilities Rules and Regulations. It is unlawful for any individual aApplicant, cCustomer or aAccount to disobey, violate or fail to observe any Rule and Regulation or to violate the terms and conditions applicable to Utility Service under agreements entered into with CPAU pursuant to these Rules and Regulations. It is unlawful for aan aApplicant, Ccustomer or Aaccount to knowingly provide incorrect, inaccurate, false, or misleading information of any kind to the City in connection with an Application for (1) Utility Service (Rule and Regulation , (2) Fiber Optic Licensing Agreements, (3) Special Facilities Agreements, (4) or with regard toservices provided through the Utilities distribution systems, (5) when responding to any request for information related to Enterprise services made by the City, or (6) when responding to any other request for information made by the City under these Rules and Regulations. Any Applicant, Customer or Account violating any Utility Rule and Regulation shall be guilty of a misdemeanor and subject to a fine of not more than one thousand dollars ($1000) or by imprisonment in the county jail for a period not exceeding six months, or both fine and imprisonment. Fines under this section will be imposed in accordance with process set forth in section 1.12 of the Palo Alto Municipal Code, where the Utilities Director will serve as the “Enforcement Official”, and his/her designee will serve as the “Code Enforcement Officer” for purposes of such enforcement of this section under section 1.12 of the Palo Alto Municipal Code. (END) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 1 A. ABBREVIATIONS AMI - Advanced Metering Infrastructure AMR - Automated Meter Reading AER - Advance Engineering Request APGA - American Public Gas Association ARB - Air Resources Board (California) AWWA - American Water Works Association Btu - British Thermal Unit ccf - Hundred Cubic Feet (water) CEC - California Energy Commission CNG - Compressed Natural Gas CPAU - City of Palo Alto Utilities CPI - Consumer Price Index CPUC - California Public Utilities Commission DFLA - Dark Fiber (Optic) Licensing Agreement DOE - Department of Energy (Federal) DOT - Department of Transportation (Federal) DSM - Demand-side Management ERU - Equivalent Residential Unit FERC - Federal Energy Regulatory Commission kVar - Kilovar kVarh - Kilovar-hours kW - Kilowatt kWh - Kilowatt-hour MW - Megawatt MMBtu - One million Btu. NCPA - Northern California Power Agency NEC - National Electric Code, Latest Version NEM - Net Energy Metering NEMA - Net Energy Metering Aggregation NEMIA - Net Energy Metering Interconnection Agreement NRTL - Nationally Recognized Testing Laboratory PAMC - Palo Alto Municipal Code PSIG - Per square inch gauge RAP - Rate Assistance Program DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 2 PPA - Power Purchase Agreement PST - Pacific Standard Time RTP - Real-time Pricing RWQCP - Regional Water Quality Control Plant TOU - Time of Use WAPA - Western Area Power Administration UUT - Utilities Users Tax B. GENERAL DEFINITIONS Account The identification number in CPAU’s billing system for Utility Services. Advance Engineering Fee A non-refundable fee paid at the start of an engineering review process. The Advance Engineering Fees will be credited against the estimated job cost prior to collection of construction fees. Agency Any local, county, state or federal governmental body or quasi-governmental body, including, without limitation, the CPUC, the FERC and any joint powers agency, but excluding the City and any board, commission or council of the City. Aggregation Customer A Customer with a Renewable Electrical Generation Facility wishing to install an eligible Renewable Electrical Generation Facility that is sized to offset separately metered electric loads on adjacent or contiguous properties that are solely owned, leased, or rented by them, and who have signed the Net Energy Metering Interconnection Agreement for NEM Aggregation. Affected System An electric system, other than CPAU’s distribution or transmission system, that may be affected by the proposed Interconnection. Affected System Operator The entity that operates an Affected System. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 3 Applicant An individual, corporation, partnership, Agency, or other legal entity or authorized agent of same, requesting CPAU to supply any or all of the following: 1. Electric Service 2. Water Service 3. Gas Service 4. Wastewater Collection 5. Refuse Service 6. Storm and Surface Water Drainage Service 7. Fiber Optics Service Or, an entity submitting an Application for Interconnection pursuant to Rule 27. Application (for Interconnection of Generating Facilities) An approved standard form (Load Sheet) submitted to CPAU for Interconnection of a Generating Facility. Beneficiary Account The Electric Service Meter(s) serviced by an Aggregation Customer’s Generating Facility, as listed on the Aggregation Customer’s NEMA-IA form. Bidweek Price Index The price reported in Natural Gas Intelligence “NGI’s Bidweek Survey”, California “PG&E Citygate” under the column “avg.” for the calendar month. Billing Period Also “service period” or “billing cycle”. The normal Billing Period for CPAU Customers is approximately 30 days, with variations occurring due to staff availability, holiday scheduling, field verification of Meter readings, or any other billing-related issues requiring additional investigation prior to issuance of the bill. British Thermal Unit Also “Btu”. The standard sub-unit of measurement comprising a Therm of natural Gas. One (1) Therm equals 100,000 Btu. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 4 Business Day Any day, except a Saturday, Sunday, or any day observed as a legal holiday by the City. Business Partner A Utilities customer having multiple service locations in the City of Palo Alto. Certification Test A test pursuant to Rule 27 that verifies conformance of certain equipment with approved performance standards in order to be classified as Certified Equipment. Certification Tests are performed by NRTLs. Certification; Certified; Certificate The documented results of a successful Certification Test. Certified Equipment Equipment that has passed all required Certification Tests. Charge Any assessment, cost, fee, surcharge or levy for Utility Service other than a Tax, including metered and unmetered Utility Service, capacity, connections, construction, penalties, and mandated or required Customer financial obligations for Service. Charter The Charter of the City of Palo Alto. City Attorney The individual designated as the City Attorney of the City under Section 2.08.120 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the City Attorney. City’s Collector The Person(s) authorized under Section 5.20.040 of the Palo Alto Municipal Code to provide collection, processing and disposal of Refuse including Ssolid Wwaste, Compostable Materials and Recyclable Materials pursuant to one or more written contracts with the City. City Manager The individual designated as the City Manager of the City under Section 2.08.140 of Chapter 2.08 of DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 5 Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the City Manager. City of Palo Alto, or City The government of the City of Palo Alto, a chartered City and a municipal corporation duly organized and validly existing under the Laws of the State of California, with a principal place of business located at 250 Hamilton Avenue, Palo Alto, County of Santa Clara. For the purposes of these Rules and Regulations, the term “City” may include services provided by both the City of Palo Alto Utilities Department and the City of Palo Alto Public Works Department. City of Palo Alto Public Works Department (Public Works) The City Department responsible for providing Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage Services. Other Utility Services such as Water, Gas, Electric, Wastewater Collection, and Fiber Optics are provided by the City of Palo Alto Utilities Department. City of Palo Alto Utilities Department (CPAU) The City Department responsible for providing Water, Gas, Electric, Wastewater Collection and Fiber Optic Utility Services. Other Utility Services such as Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage are provided by the City of Palo Alto Public Works Department. Code The words "the Code" or "this Code" shall mean the Palo Alto Municipal Code. Commercial Service Commercial Utility Service is provided to businesses, non-profit organizations, public institutions, and industrial Customers. The term also applies to Utility Services through Master Meters serving multi- family Residential dwellings and common areas of multi-family facilities. Compostable Materials Organic materials designated by the City as acceptable for collection and processing, including, without limitation, yard trimmings, food scraps, soiled paper and compostable plastics, but excluding animal manure, sewage sludge, and human biological infectious wastes. Container Any bin, box, cart, compactor, drop box, roll-off box, or receptacle used for storage of Ssolid wWaste, Recyclable Materials, Compostable Materials or other materials designated by the City to be collected DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 6 by the City’s Collector. Cubic Foot of Gas (cf) The quantity of Gas that, at a temperature of sixty (60) degrees Fahrenheit and a pressure of 14.73 pounds per square inch absolute, occupies one cubic foot. Curtailment The act of reducing or interrupting the delivery of natural Gas. Customer The Person, corporation, Agency, or entity that receives or is entitled to receive Utility Service(s) from the City of Palo Alto, or in whose name Service is rendered for a particular Account as evidenced by the signature on the Application, contract, or agreement for Service. In the absence of a signed instrument, a Customer shall be identified by the receipt of any payment of bills regularly issued in the name of the Person, corporation, or Agency regardless of the identity of the actual user of the Utility Service(s). Customer-Generator: An “eligible customer-generator,” as that term is defined by the California Public Utilities Code section 2827, as the same may be amended from time to time. Dark Fiber A Fiber Optic cable provided to end-users or resellers by CPAU without any of the light transmitters, receivers, or electronics required for telecommunications over the Fiber. Infrastructure for Fiber Optic activation is provided by the reseller or end-user. Dark Fiber Infrastructure Components of the CPAU Fiber Optic Distribution System required to provide Service to Customers (licensees), that are attached, owned, controlled or used by the City, located overhead or underground within the Public Right-of-Way, the Public Utility Easements and Leased Service Properties. Dark Fiber (Optic) Licensing Agreement The mandatory contractual agreement between the City and the customer specifying the terms, conditions and pricing to access the City of Palo Alto’s Dark Fiber (Optic) Ring. Dedicated Distribution Transformer A Distribution Transformer that is dedicated to serving a single premise. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 7 Demand The highest rate of delivery of Electric energy, measured in Kilowatts (kW) or kilovolt amperes (kVA) occurring instantaneously or registered over a fixed time period (normally fifteen minutes unless otherwise specified within a monthly billing cycle). Demand Charge An electrical Charge or rate that is applied to a metered Demand reading expressed in Kilowatts to compute a Demand Charge component of a Customer’s Electric bill. Demarcation Point The Demarcation Point for a project shall be the Customer side of the panel onto which the CPAU Fiber terminates within the Customer Premises, unless otherwise specified in the Proposal for Dark Fiber Services. Deposit A fixed amount (residential customers), or an estimated amount based upon usage (commercial customers, except Fiber Optic), to be paid to the Utilities Department upon submission of an Application for Service. Deposits from customers with good payment history will be retained for 36 months and returned to the customer. Customers with inconsistent payment history will have deposits retained or re- submitted until Utility Service on the account is permanently discontinued. Detailed Study An engineering study consisting of an Interconnection System Impact Study and Interconnection Facilities Study for the purpose of identifying Interconnection Facilities, Distribution Upgrades and Reliability Network Upgrades. Disconnect Notice A written notice from CPAU to the customer indicating the date that Utility Service will be terminated or discontinued unless payment is tendered to mitigate an outstanding balance or until a customer’s operating condition is brought into compliance with CPAU regulations and requirements. Discontinuance of Service The closing of a Utilities account. Considered to be a permanent cessation of service unlike temporary termination of service for non-payment. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 8 Distribution Services Includes, but is not limited to, Utility Service provided by the Distribution System and other Services such as billing, meter reading, administration, marketing, and Customer Services. Does not include Services directly related to the Interconnection of a Generating Facility as per Rule 27. Distribution System The infrastructure owned and operated by CPAU which is capable of transmitting electrical power, other than Interconnection Facilities, or transporting Water, Wastewater, or Gas within the City of Palo Alto. The Electric Distribution System transmits power from the City’s Interconnection with PG&E to CPAU’s Meter located on the Customer’s Premises. The Gas Distribution System transports Gas from PG&E receiving stations to CPAU’s Meter located on the Customer Premises. The Water Distribution System transports Water from the San Francisco Water Department receiving stations and CPAU wells to the meter located on the Customer Premises. The Wastewater Collection System transports sewage from the Customer’s Premises to the Water Quality Control Plant. Effluent Treated or untreated Wastewater flowing out of a Wastewater treatment facility, sewer, or industrial outfall. Electric, Electric Service Utility Service provided to residents and business owners in the City of Palo Alto consisting of generation, transmission, and distribution of electrical power for retail use. Electric Service is provided by the City of Palo Alto Utilities Department. Enterprise Funds, Enterprise Services A budgetary identification for individual Utilities services. Each individual Utility (electric, natural gas, water, wastewater, storm drain, fiber optic, refuse) has its own operating and capital budgets, staffing, contracts, financial obligations, cash reserves, etc. combined into specific Enterprise Funds. Emergency An actual or imminent condition or situation, which jeopardizes CPAU’s Distribution System Integrity. Emergency Service Electric Service supplied to, or made available to, Load devices which are operated only in Emergency situations or in testing for same. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 9 Energy Services Energy commodity and any applicable ancillary Services used to generate and transport such commodity from its origin to the City’s Point of Receipt. May also mean the sale of value added Services associated or related to the Provision and/or usage of energy commodity. Equivalent Residential Unit (ERU) This is the basic unit for computing storm and surface water drainage fees. All single-family Residential properties are billed the number of ERU’s specified in the table contained in Utility Rate Schedule D-1, according to parcel size. All other properties have ERU's computed to the nearest 1/10 ERU using this formula: No. Of ERU = Impervious Area (sq. ft.) / 2,500 sq. ft. Final Bill The last bill that is issued upon permanent discontinuance of service. This bill will combine ending financial debits and credits, close the account, and terminate all further customer and Utility financial obligations. Fiber Optic, Fiber Optic Service A solid core of optical transmission material. Fiber Optic Service that is provided by the City of Palo Alto Utilities Department is referred to as Dark Fiber. Fiber Optic Backbone The high-density portion of the Dark Fiber Infrastructure installed and owned by the City. Force Majeure The occurrence of any event that has, had or may have an adverse effect on the design, construction, installation, management, operation, testing, use or enjoyment of the City’s Utility Services, which is beyond the reasonable control of the parties and which event includes, but is not limited to, an Act of God, an irresistible superhuman cause, an act of a superior governmental authority, an act of a public enemy, a labor dispute or strike or a boycott which could not be reasonably contemplated by the City or Customer affected thereby, a defect in manufactured equipment (including, but not limited to, the Dark Fibers), fire, floods, earthquakes, or any other similar cause. Function Some combination of hardware and software designed to provide specific features or capabilities. Its use, as in Protective Function, is intended to encompass a range of implementations from a single- purpose device to a section of software and specific pieces of hardware within a larger piece of DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 10 equipment to a collection of devices and software. Gas Any combustible gas or vapor, or combustible mixture of gaseous constituents used to produce heat by burning. It shall include, but not be limited to, natural gas, gas manufactured from coal or oil, gas obtained from biomass or from landfill, or a mixture of any or all of the above. Gas, Gas Service Utility Service provided to residents and business owners in the City of Palo Alto consisting of procurement, transmission, and distribution of Gas for retail use. Gas Service is provided by the City of Palo Alto Utilities Department. Generating Facility All Generators, electrical wires, equipment, and other facilities owned or provided by Producer for the purpose of producing Electric power. This includes a solar or wind turbine Renewable Electrical Generation Facility that is the subject of a Net Energy Metering and Interconnection Agreement and Rule and Regulation 29. Generator A device converting mechanical, chemical or solar energy into electrical energy, including all of its protective and control Functions and structural appurtenances. One or more Generators comprise a Generating Facility. Gross Nameplate Rating; Gross Nameplate Capacity The total gross generating capacity of a Generator or Generating Facility as designated by the manufacturer(s) of the Generator(s). Initial Review The review by CPAU, following receipt of an Application, to determine the following: (a) whether the Generating Facility qualifies for Simplified Interconnection; or (b) if the Generating Facility can be made to qualify for Interconnection with a Supplemental Review determining any additional requirements. Inspector The authorized Inspector, agent, or representative of CPAU. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 11 Interconnection; Interconnected The physical connection of a Generating Facility in accordance with the requirements of the City’s Utilities Rules and Regulations so that Parallel Operation with CPAU’s Distribution System can occur (has occurred). Interconnection Agreement An agreement between CPAU and the Producer providing for the Interconnection of a Generating Facility that gives certain rights and obligations to effect or end Interconnection. For the purposes of the City’s Utilities Rules and Regulations, the Net Energy Metering and Interconnection Agreement (for NEM and NEM Aggregation Customers), and the Power Purchase Agreements authorized by the City Council may be considered as Interconnection Agreements for purposes of defining such term. Interconnection Facilities The electrical wires, switches and related equipment that are required in addition to the facilities required to provide Electric Distribution Service to a Customer to allow Interconnection. Interconnection Facilities may be located on either side of the Point of Common Coupling as appropriate to their purpose and design. Interconnection Facilities may be integral to a Generating Facility or provided separately. Interconnection Facilities Study A study to establish the requirements for Interconnection of a Generating Facility with CPAU’s Distribution System. A study conducted by CPAU for an Interconnection Customer under the Detailed Study process to determine a list of facilities (including CPAU’s Interconnection Facilities, Distribution Upgrades, and Reliability Network Upgrades as identified in the Interconnection System Impact Study), the cost of those facilities, and the time required to interconnect the Generating Facility with CPAU’s distribution or transmission System. Interconnection Request An Applicant’s request to interconnect a new Generating Facility, or to increase the capacity of, or make a Material Modification to the operating characteristics of, an existing Generating Facility that is interconnected with CPAU’s Distribution or Transmission System. Interconnection Study A study to establish the requirements for Interconnection of a Generating Facility with CPAU’s Distribution System. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 12 Interconnection System Impact Study An engineering study conducted by CPAU for an Interconnection Customer under the Independent Study Process that evaluates the impact of the proposed interconnection on the safety and reliability of CPAU’s distribution and/or transmission system and, if applicable, an Affected System. Internet Exchange Any Internet data center for telecommunications equipment and computer equipment for the purposes of enabling traffic exchange and providing commercial-grade data center services. Island; Islanding A condition on CPAU’s Electric Distribution System in which one or more Generating Facilities deliver power to Customers using a portion of CPAU’s Distribution System that is electrically isolated from the remainder of CPAU’s Distribution System. Junction A location on the Dark Fiber Infrastructure where equipment is installed for the purpose of connecting communication cables. Junction Site The area within the Transmission Pathway at which a Junction is located. Kilovar (kVar) A unit of reactive power equal to 1,000 reactive volt-amperes. Kilovar-hours (kVarh) The amount of reactive flow in one hour, at a constant rate of Kilovar. Kilowatt (kW) A unit of power equal to 1,000 watts. Kilowatt-hour (kWh) The amount of energy delivered in one hour, when delivery is at a constant rate of one Kilowatt; a standard unit of billing for electrical energy. Law DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 13 Any administrative or judicial act, decision, bill, Certificate, Charter, Code, constitution, opinion, order, ordinance, policy, procedure, Rate, Regulation, resolution, Rule, Schedule, specification, statute, tariff, or other requirement of any district, local, municipal, county, joint powers, state, or federal Agency, or any other Agency having joint or several jurisdiction over the City of Palo Alto or City of Palo Alto Utilities or Public Works Customers, including, without limitation, any regulation or order of an official or quasi-official entity or body. Licensed Fibers One or more fibers comprising a part of the Dark Fiber Infrastructure that are dedicated to the exclusive use of the Customer under the Provisions of the Dark Fiber License Agreement, Proposal to Dark Fiber Services Agreement and the Utilities Rules and Regulations. Licensed Fibers Route A defined path of Licensed Fibers that is identified by specific End Points. Load(s) The Electric power Demand (kW) of the Customer at its Service Address within a measured period of time, normally 15 minutes, or the quantity of Gas required by a Customer at its Service Address, measured in MMBtu per Day. Lower Sewer Lateral The portion of the wastewater pipe from the Wastewater Main to the City Sewer Cleanout or to the property line if there is no City Sewer Cleanout. Master-metering Where CPAU installs one Service and Meter to supply more than one residence, apartment dwelling unit, mobile home space, store, or office. Maximum Generation For a customer with a non-utility generator located on the customer’s side of the Point of Common Coupling, the Maximum Generation for that non-utility generator during any billing period is the maximum average generation in kilowatts taken during any 15-minute interval in that billing period provided that in case the generator output is intermittent or subject to violent fluctuations, the City may use a 5-minute interval. Meter DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 14 The instrument owned and maintained by CPAU that is used for measuring either the Electricity, Gas or Water delivered to the Customer. Metering The measurement of electrical power flow in kW and/or energy in kWh, and, if necessary, reactive power in kVar at a point, and its display to CPAU as required by Rule 27. Metering Equipment All equipment, hardware, software including Meter cabinets, conduit, etc., that are necessary for Metering. Meter Read The recording of usage data from Metering Equipment. Minimum Charge The least amount for which Service will be rendered in accordance with the Rate Schedule. Momentary Parallel Operation The Interconnection of a Generating Facility to the Distribution System for one second (60 cycles) or less. Nationally Recognized Testing Laboratory (NRTL) A laboratory accredited to perform the Certification Testing requirements under Rule 27. Net Electricity Consumer A Customer-Generator whose Generating Facility produces less electricity than is supplied by CPAU during a particular period, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(h)(2), as the same may be amended from time to time. Net Energy Metering Net Energy Metering means measuring the difference between the electricity supplied through CPAU’s Electric utility Distribution System and the electricity generated by the customer-generator’s facility and delivered to CPAU’s Electric utility Distribution System over a specified twelve-month period. Net Energy Metering Cap (NEM Cap) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 15 Five (5) percent of the historical system peak of 190 MW from 2006, or 9.5 MW, using the CEC’s Alternating Current (AC) capacity rating. Where the CEC AC rating is not available, CPAU will multiply the inverter AC nameplate rating by 0.86. Net Generation Metering Metering of the net electrical power of energy output in kW or energy in kWh, from a given Generating Facility. This may also be the measurement of the difference between the total electrical energy produced by a Generator and the electrical energy consumed by the auxiliary equipment necessary to operate the Generator. Net Nameplate Rating The Gross Nameplate Rating minus the consumption of electrical power of a Generator or Generating Facility as designated by the manufacturer(s) of the Generator(s). Net Surplus Customer-Generator A Customer-Generator who’s Generating Facility produces more electricity than is supplied by CPAU, during a particular period, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(h)(3), as the same may be amended from time to time. Net Surplus Electricity Compensation A per kilowatthour rate offered by CPAU to the Net Surplus Customer-Generators (excluding Aggregation Customers) for net surplus electricity, as such definition may otherwise be modified or supplemented by any definition in California Public Utilities Code section 2827(b)(8), as the same may be amended from time to time. Non-Islanding Designed to detect and disconnect from an Unintended Island with matched Load and generation. Reliance solely on under/over voltage and frequency trip is not considered sufficient to qualify as Non- Islanding. Occupied Domestic Dwelling Any house, cottage, flat, or apartment unit having a kitchen, bath, and sleeping facilities, which is occupied by a Person or Persons. Parallel Operation DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 16 The simultaneous operation of a Generator with power delivered or received by CPAU while Interconnected. For the purpose of this Rule, Parallel Operation includes only those Generating Facilities that are Interconnected with CPAU’s Distribution System for more than 60 cycles (one second). Performance Test, Performance Tested After the completion of any Fiber Interconnection work, the City will conduct a Performance Test of each Fiber constituting a part of the proposed leased fibers to determine its compliance with the Performance Specifications. Performance Specifications These specifications will include, but not be limited to, criteria relating to end-to-end optical time domain reflectometer data plots that identify the light optical transmission losses in each direction along the leased fibers whenever the testing is possible, measured in decibels at a wavelength of 1310 or 1550 nanometers for singlemode Fiber, as a Function of distance, measured in kilometers. Person Any individual, for profit corporation, nonprofit corporation, limited liability company, partnership, limited liability partnership, joint venture, business, family or testamentary trust, sole proprietorship, or other form of business association. PG&E Citygate The PG&E Citygate is the point at which PG&E’s backbone transmission system connects to PG&E’s local transmission system. Point of Common Coupling (PCC) The transfer point for electricity between the electrical conductors of CPAU and the electrical conductors of the Producer. Point of Common Coupling Metering Metering located at the Point of Common Coupling. This is the same Metering as Net Generation Metering for Generating Facilities with no host load. Point of Delivery (POD) Unless otherwise specified, the following definitions apply: For Electric, that location where the Service lateral conductors connect to the Customer’s Service entrance equipment; for overhead Services, the DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 17 POD is at the weather-head connection; for under-ground Services, the POD is located at the terminals ahead of or at the Meter; for multiple Meter arrangements with connections in a gutter, the POD is at the Meter terminals (supply-side); for multiple Meter arrangements in a switchboard, the POD is typically at the connectors in the utility entrance section; for Natural Gas, the POD is the point(s) on the Distribution System where the City delivers natural Gas that it has transported to the Customer. Point of Interconnection The electrical transfer point between a Generating Facility and the Distribution System. This may or may not be coincident with the Point of Common Coupling. Point of Service (POS) Where CPAU connects the Electric Service lateral to its Distribution System. For Fiber Optics Service, this is where CPAU connects the Fiber Service to the backbone. This point is usually a box located in or near the street or sidewalk and can be in the Public Right-of-Way. This point is at a mutually agreed upon location established at the time of installation. Pole Line Overhead wires and overhead structures, including poles, towers, support wires, conductors, guys, studs, platforms, cross arms braces, transformers, insulators, cutouts, switches, communication circuits, appliances attachments, and appurtenances, located above ground and used or useful in supplying Electric, communication, or similar or associated Service. Power Factor The percent of total power delivery (kVA) which does useful work. For billing purposes, average Power Factor is calculated from a trigonometric function of the ratio of reactive kilovolt-ampere-hours to the Kilowatt-hours consumed during the billing month. Power Factor is a ratio that reflects the reactive power used by a Customer. CPAU maintains an overall system Power Factor above 95% to reduce distribution system losses caused by low Power Factor. Power Factor Adjustment CPAU must install additional equipment to correct for Customers that maintain a low Power Factor, and may make a Power Factor Adjustment to a Customer’s bill to account for those costs and the additional energy costs and losses incurred by CPAU due to the Customer’s low Power Factor. Premises All structures, apparatus, or portion thereof occupied or operated by an individual(s), a family, or a DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 18 business enterprise, and situated on an integral parcel of land undivided by a public street, highway, or railway. Primary Service CPAU Electric distribution Service provided to a Customer’s Premises at a voltage level equal to or greater than 1000 volts. Producer The entity that executes an Interconnection Agreement with CPAU. The Producer may or may not own or operate the Generating Facility, but is responsible for the rights and obligations related to the Interconnection Agreement. Proposal for Dark Fiber Services A project-specific Service agreement that acts as a supplemental document for the Dark Fiber License Agreement. This Service agreement shall include the proposed Interconnection fees, applicable Fiber licensing fees, term of the Service, and summary of licensed Fiber elements. Protective Function(s) The equipment, hardware and/or software in a Generating Facility (whether discrete or integrated with other Functions) whose purpose is to protect against Unsafe Operating Conditions. Provision Any agreement, circumstance, clause, condition, covenant, fact, objective, qualification, restriction, recital, reservation, representation, term, warranty, or other stipulation in a contract or in Law that defines or otherwise controls, establishes, or limits the performance required or permitted by any party. Prudent Utility Practices The methods, protocols, and procedures that are currently used or employed by utilities to design, engineer, select, construct, operate and maintain facilities in a dependable, reliable, safe, efficient and economic manner. Public Right-of-Way The areas owned, occupied or used by the City for the purposes of furnishing retail and/or wholesale Electricity, Gas, Water, Wastewater, Storm and Surface Water Drainage, Refuse Service or communications commodity and/or distribution Service, and the means of public transportation, to the general public, including but not limited to, the public alleys, avenues, boulevards, courts, curbs, gutters, DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 19 lanes, places, roads, sidewalks, sidewalk planter areas, streets, and ways. Public Utility Easements The areas occupied or used by the City for the purpose of providing Utility Service to the general public, and all related Services offered by the City’s Utilities Department and/or Public Works Department, the rights of which were acquired by easements appurtenant or in gross, or are other interests or estates in real property, or are the highest use permitted to be granted by the nature of the City’s interest in and to the affected real property. This term incorporates all public Service easements for Utility Services that have been recorded by the City with the Recorder of the County of Santa Clara, California. Public Works Department See City of Palo Alto Public Works Department. Rate Schedule One or more Council-adopted documents setting forth the Charges and conditions for a particular class or type of Utility Service. A Rate Schedule includes wording such as Schedule number, title, class of Service, applicability, territory, rates, conditions, and references to Rules. Recyclable Materials Materials designated by the City as suitable for collection and transport to a material recovery facility for processing into a recycled content product, including, but not limited to newspaper, paper, cans, corrugated cardboard, glass and certain types of plastic, and metals. Refuse Service Refuse Service includes weekly collection, processing and disposal of Solid Waste, weekly collection and processing of Recyclable Materials, weekly collection and processing of Compostable Materials and construction and demolition waste, street sweeping service, the household hazardous waste program, and the annual Clean Up Day. Reliability Network Upgrades The transmission facilities at or beyond the point where CPAU’s distribution system interconnects to the CAISO Controlled Grid, necessary to interconnect one or more Generating Facility(ies) safely and reliably to the CAISO Controlled Grid, as defined in the CAISO Tariff. Renewable Electrical Generation Facility A Generation Facility eligible for NEM under California Public Utilities Code section 2827 et seq. as DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 20 the same may be amended from time to time. Reserved Capacity For a customer with one or more non-utility generators located on the customer’s side of the Point of Common Coupling, the Reserved Capacity for each billing period is the lesser of 1) the sum of the Maximum Generation for that period for all non-utility generation sources; or 2) the maximum average customer demand in kilowatts taken during any 15-minute interval in the billing period provided that in case the load is intermittent or subject to violent fluctuations, the City may use a 5-minute interval. Residential Service Utility Service provided to separately metered single family or multi-family, domestic dwelling. Rules and Regulations See Utilities Rules and Regulations Scheduling Coordinator An entity providing the coordination of power schedules and nominations to effect transportation and distribution of Gas, Electric power and energy. Secondary Service CPAU Electric distribution Service provided to a Customer’s Premises at a voltage level less than 1000 volts. Service(s) Utility Services offered by the City of Palo Alto include Electric, Fiber Optics, Gas, Water, Wastewater Collection services provided by the Utilities Department (CPAU); and Refuse Service, Wastewater Treatment, and Storm and Surface Water Drainage Services provided by the Public Works Department. Service Address The official physical address of the building or facility assigned by CPAU’s Planning Department, at which Customer receives Utility Services. Service Charge A fixed monthly Charge applicable on certain Rate Schedules that does not vary with consumption. The Charge is intended to recover a portion of certain fixed costs. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 21 Service Drop The overhead Electric Service conductors from the last pole or other aerial support to and including the splices, if any, connecting to the service entrance conductors at the building or other structure. Or, in the case of Fiber Optic Drops, the overhead Fiber Optics cable from the last pole or other aerial support to the building or other structure to and including the termination box. Services or Service Lines Facilities of CPAU, excluding transformers and Meters, between CPAU’s infrastructure and the Point of Delivery to the Customer. Service Territory The geographic boundaries within the City of Palo Alto limits served by the physical Distribution System of the CPAU. Sewer Cleanout A point of access where the sewer lateral can be serviced. Short Circuit (Current) Contribution Ratio (SCCR) The ratio of the Generating Facility’s short circuit contribution to the short circuit contribution provided through CPAU’s Distribution System for a three-phase fault at the high voltage side of the distribution transformer connecting the Generating Facility to CPAU’s system. Simplified Interconnection An Interconnection conforming to the minimum requirements as determined under Rule 27. Single Line Diagram; Single Line Drawing A schematic drawing, showing the major Electric switchgear, Protective Function devices, wires, Generators, transformers and other devices, providing sufficient detail to communicate to a qualified engineer the essential design and safety of the system being considered. Smart Inverter A Generating Facility’s inverter that performs functions that, when activated, can autonomously contribute to grid support during excursions from normal operating voltage and frequency system conditions by providing: dynamic reactive/real power support, voltage and frequency ride-through, ramp rate controls, communication systems with ability to accept external commands and other functions. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 22 Solid Waste Solid Waste means solid and semisolid wastes, generated in or upon, related to the occupancy of, remaining in or emanating from residential premises or commercial premises, including garbage, trash, rubbish, ashes, industrial wastes, manure, animal carcasses, solid or semisolid wastes, and other solid and semisolid wastes. Solid Waste shall not include liquid wastes or sewage, abandoned vehicles, hazardous waste, recyclable materials or compostable materials. Special Facilities See CPAU’s Rule and Regulation 20 governing Special Facilities. Special Facilities are facilities requested by an Applicant in addition to or in substitution for standard facilities which CPAU would normally provide. Splice A point where two separate sections of Fiber are physically connected. Standard Refuse Container A Standard Refuse Container shall have the meaning described in the Palo Alto Municipal Code. A Standard Container shall also include a wheeled container with a capacity of not to exceed 32 gallons. Standby Service Back-up Energy Services provided by CPAU. State Energy Surcharge The California State Board of Equalization administers the Energy Resources Surcharge Law, as authorized under the Revenue and Taxation Code (section 40016). The surcharge is imposed upon the consumption in California of electrical energy purchased from an electric utility on and after January 1, 1975. Every electric utility in California making energy sales to consumers must collect and remit to the state the amount of surcharge applicable to its consumers. Information on the surcharge and current surcharge rate can be found at the California Board of Equalization’s web site. Storm and Surface Water Drainage Utility Service provided to residents and business owners in the City of Palo Alto. Storm and Surface Water Drainage Service is provided by the City of Palo Alto Public Works Department. DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 23 Submetering Utility submetering is the implementation of a system that allows a landlord, property management firm, condominium association, homeowners association, or other multi-tenant property to bill master- metered tenants for utility usage. Supplemental Review A process wherein CPAU further reviews an Application that fails one or more of the Initial Review Process screens. The Supplemental Review may result in one of the following: (a) approval of Interconnection; (b) approval of Interconnection with additional requirements; or (c) cost and schedule for an Interconnection Study. System Integrity The condition under which a Distribution System is deemed safe and can reliably perform its intended Functions in accordance with the safety and reliability rules of CPAU. Tax Any assessment, Charge, imposition, license, or levy (including any Utility Users Tax) and imposed by any Agency, including the City. Telemetering The electrical or electronic transmittal of Metering data in real--time to CPAU. Temporary Service Service requested for limited period of time or of indeterminate duration such as, but not limited to, Service to provide power for construction, seasonal sales lots (Christmas trees), carnivals, rock crushers or paving plants. Temporary Service does not include Emergency, breakdown, or Standby Service. Termination of Service When one or more Utilities services are interrupted for non-payment. Assumed to be a temporary situation unless service is permanently discontinued and the Account is closed. Therm A Therm is a unit of heat energy equal to 100,000 British Thermal UnitsA Therm is a unit of heat energy equal to 100,000 British Thermal Units (Btu). It is approximately the energy equivalent of burning 100 cubic feet (often referred to as 1 ccf) of natural Gas.cubic feet (often referred to as 1 ccf) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 24 of natural Gas. Since Meters measure volume and not energy content, a Therm factor is used to convert the volume of Gas used to its heat equivalent, and thus calculate the actual energy use. The Therm factor is usually in the units therms/ccf. It will vary with the mix of hydrocarbons in the natural Gas. Natural Gasnatural Gas. Natural Gas with a higher than average concentration of ethane, propane or butaneethane, propane or butane will have a higher Therm factor. Impurities, such as carbon dioxidecarbon dioxide or nitrogen lower the Therm factor. Field Code Changed DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 25 Total Rated Generating Capacity Total Rated Generating Capacity will be calculated as the sum of the rated generating capacity of all installed Renewable Electrical Generation Facilities participating in NEM or NEM Aggregation. The rated generating capacity for each individual Renewable Electrical Generation Facility participating in NEM or NEM Aggregation will be calculated as follows: 1. For Solar: For each Renewable Electrical Generation Facility that is a solar photovoltaic generating facility, CPAU will use the CEC’s Alternating Current (AC) rating; or where the CEC AC rating is not available, CPAU will multiply the inverter AC nameplate rating by 0.86; and 2. For Non-Solar: For all other Renewable Electrical Generation Facilities, CPAU will use the AC nameplate rating of the generating facility. Transfer Trip A Protective Function that trips a Generating Facility remotely by means of an automated communications link controlled by CPAU. Transmission Pathway Those areas of the Public Right-of-Way, the Public Utility Easements and the Leased Service Properties in which the Dark Fiber Infrastructure is located. Transmission System Transmission facilities owned by CPAU that have been placed under the CAISO’s operation control and are part of the CAISO Controlled Grid, as defined in the CAISO Tariff. Trap Any approved equipment or appliance for sealing an outlet from a house-connection sewer to prevent the escape of sewer Gas from a main line through a building connection (service) sewer. Underground Utility District An area in the City within which poles, overhead electric or telecommunication wires, and associated overhead structures are prohibited or as otherwise defined in Section 12.04.050 of the PAMC. Unintended Island The creation of an Island, usually following a loss of a portion of CPAU’s Distribution System, without DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 26 the approval of CPAU. Unsafe Operating Conditions Conditions that, if left uncorrected, could result in harm to personnel, damage to equipment, loss of System Integrity or operation outside pre--established parameters required by the Interconnection Agreement. Upper Sewer Lateral The portion of the wastewater pipe from the building or structure to the City Sewer Cleanout or Lower Sewer Lateral. Utilities Department See City of Palo Alto Utilities Department. Utilities Director The individual designated as the Director of Utilities Department under Section 2.08.200 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the director of utilities. Utility(ies) Rules and Regulations, Rules and Regulations The compendium of Utilities Rules and Regulations prepared by the City’s Utilities and Public Works Departments and adopted by ordinance or resolution of the Council pursuant to Chapter 12.20 of the Palo Alto Municipal Code, as amended from time to time. Utility(ies) Service(s), Service(s) Electric, Fiber optics, Water, Gas, Wastewater collection services provided by the City of Palo Alto Utilities Department (CPAU) and Refuse Service, Wastewater Treatment and Storm and Surface Water Drainage services provided by the City of Palo Alto Public Works Department. Utilities UserUtility Service Application (Application) A general CPAU Application form documenting an Applicant’s request for Electric, Water, Gas and Wastewater Service. The Application documents the applicant’s contact information, billing information and basic electric, water, gas and wastewater loading data necessary to approve, design and install sufficient facilities based on load and usage information provided by the Applicant. Utility Users Tax (UUT) DEFINITIONS AND ABBREVIATIONS RULE AND REGULATION 2 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 10-26-15 6-27-2016 Sheet No 27 City of Palo Alto Tax imposed on Utility Charges to a Water, Gas, and/or Electric Service user. This may include Charges made for Electricity, Gas, and Water and Charges for Service including Customer Charges, Service Charges, Standby Charges, Charges for Temporary Services, Demand Charges, and annual and monthly Charges, as described in Chapter 2.35 of the Palo Alto Municipal Code. Wastewater Utility Service provided to residents and business owners in the City of Palo Alto. Wastewater Utility Services include collection and treatment of Wastewater. Wastewater Collection Service is provided by the City of Palo Alto Utilities Department, and Wastewater Treatment Service is provided by the City of Palo Alto Public Works Department. Wastewater Main Collector pipes for numerous sewer laterals from an area or neighborhood. Wastewater Mains convey the wastewater to larger trunk sewer lines or to a water quality treatment plant. Water Utility Service provided to residents and business owners in the City of Palo Alto for retail use. Water Service is provided by the City of Palo Alto Utilities Department. Water Column (WC) Pressure unit based on the difference in inches between the heights of water columns as measured in a manometer. 6” WC = 0.217 psi; 7” WC = 0.25 psi. (END) DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 1 A. GENERAL Rule and Regulation 3 describes Services that are offered within the jurisdictional boundaries of the City of Palo Alto. For Rules specific to each type of Service, please refer to the following Rules and Regulations: Rule and Regulation 20 – Special Electric Utility Regulations Rule and Regulation 21 – Special Water Utility Regulations Rule and Regulation 22 – Special Gas Utility Regulations Rule and Regulation 23 – Special Wastewater Utility Regulations Rule and Regulation 24 – Special Refuse Service Regulations Rule and Regulation 25 – Special Storm and Surface Water Drainage Utility Regulations Rule and Regulation 26 – Special Fiber Optics Utility Regulations B. ELECTRIC SERVICE 1. BASIS OF SERVICE a. Unless otherwise provided in a Rate Schedule or contract, CPAU’s Electric rates are based upon the furnishing of Electric Service to Customer Premises at a single Point of Delivery at a single voltage and phase classification. Unless specified otherwise, each Point of Delivery shall be metered and billed separately under the appropriate Rate Schedule. Any additional Service supplied to the same Customer at other Points of Delivery or at a different voltage or phase classification shall be separately metered and billed. b. The type of distribution Service (voltage, Secondary, Primary) available at any particular location may be determined by inquiry to a CPAU Engineering representative. c. If the Customer, for his or her convenience, requests Secondary or Primary Services at an alternate Point of Delivery other than the normal Point of Delivery as determined by CPAU, the Customer is responsible for all cost of providing Secondary or Primary Services at such alternate location. d. CPAU assumes no duty or liability for inspecting, validating or approving the safe operating condition of the Customer’s Service, appliances, or equipment downstream of the Utility Meter. DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 2 e. See Rule and Regulation 20. "Special Electric Utility Regulations" regarding special Service requirements. 2. LOCATION OF POINT OF SERVICE a. SECONDARY SERVICE 1. OVERHEAD SERVICE AT SECONDARY VOLTAGES The Point of Service for Overhead Service at secondary voltages will normally be located at a power pole on the perimeter of the parcel to be served, which is, in CPAU’s judgment, most conveniently located and in compliance with CPAU standards and specifications and applicable building and electrical codes. 2. UNDERGROUND SERVICE AT SECONDARY VOLTAGE The Point of Service for Underground Service at secondary voltages will normally be located at the Secondary connectors of the transformer serving the Customer’s Load, or in the Secondary hand hole, if available. b. PRIMARY SERVICE The Point of Service for Primary Service will normally be at the point near the property line of the premises to be served which is, in CPAU’s judgment, most conveniently located with respect to CPAU’s transmission or distribution facilities. c. EXCEPTIONS If several buildings are occupied and used by one Customer in a single business or other activity, CPAU may, at its discretion, furnish Service for the entire group of buildings through one Service connection at one Point of Service. 3. EQUIPMENT REQUIREMENTS All new equipment in underground areas required to provide electric service to a Customer shall be pad-mounted. In addition, any three-Phase electric service connection DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 3 and any electric service connection rated at 400 Amps or greater which is located either in an underground or overhead area must be served from a pad-mounted transformer. The Utilities Director, or his/her designee, may authorize: 1) an exception to the above provisions when, in his/her opinion, a pad-mounted equipment installation in any particular instance would not be feasible or practical or 2) installation of electric service equipment in locations with limited access by utility equipment. Such installations will be considered “Special Facilities” as defined in Rule and Regulation 20, and the Applicant will be responsible for the costs described in that rule and outlined in the Service Contract as described in Rule and Regulation 5. If the Applicant wants a Point of Delivery other than at the location determined by CPAU, CPAU will work with the Applicant to assist in the selection of the alternate Point of Delivery location for the electric service equipment within the boundaries of the Applicant’s property. When the Applicant chooses a Point of Delivery location other than the location which has been determined by CPAU, the Applicant must acknowledge that such an alternate Point of Delivery location will cause CPAU personnel to incur delays when performing repairs or service restoration during emergencies. In addition to being responsible to pay for the initial cost of installation of such electric service equipment in an alternate location, the Applicant shall also be responsible to pay for any future additional labor, equipment, and material costs incurred by CPAU necessary to facilitate replacement, removal, or relocation of any electric service equipment which has been installed in an alternate Point of Delivery location at the Applicant’s request. Any installation intended to assist in “screening” of electric service equipment by landscaping or structures must be constructed in a manner which meets all of CPAU’s clearance standards. The plans for such screening must be approved by the City of Palo Alto and CPAU prior to beginning work on the screening installation. The Applicant shall provide a Public Utility Easement in recordable form for installation of such facilities within the boundaries of the property. All pad-mounted equipment will be subject to CPAU’s aesthetic guidelines. 4. EMERGENCY AND STANDBY SERVICES CPAU may provide back up Emergency, and other Standby Service to Customers as Special Facilities. See Rule and Regulation 20 "Special Electric Utility Regulations" regarding special Service requirements. DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 4 5. SERVICE DELIVERY VOLTAGE The following are the standard Service voltages normally available. Not all standard Service voltages are available at each Point of Delivery. These Service voltages are available in locations that already have this Service voltage and have sufficient capacity, as determined by CPAU, to serve the new Load. Any equipment installed on 120/240, 3 wire or 240/120, 4-wire Services shall have the capability of converting to a 120/208, 3 wire or 208 Y/120, 4-Wire Service. a. DISTRIBUTION OF VOLTAGE Alternating-current Service will be regularly supplied at a nominal frequency of approximately 60-Hertz (cycles per second). Single-Phase Three-Phase Three-Phase Secondary Secondary Primary 120/240, 3 -wire 240/120, 4-wire* 12,470, 3-wire 120/208, 3-wire 240, 3-wire* 208 Y/120, 4-wire 480 Y/277, 4-wire *Only available in special conditions as determined by the Electric Engineering Manager. b. All voltages referred to in this Rule and appearing in some Rate Schedules are nominal Service voltages at the Point of Delivery. CPAU’s facilities are designed and operated to provide sustained Service voltage at the Point of Delivery, but the voltage at a particular Point of Delivery will vary within satisfactory operating range limits. c. In areas where a certain standard Secondary voltage is being delivered to one or more Customers, CPAU may require an Applicant for new Service in such areas to receive the same standard voltage supplied to existing Customers. d. CPAU may change the voltage at which Service is delivered, including converting existing 4160 volt Primary Service to 12,470 volt Service. If CPAU notifies the DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 5 Customer that a Service voltage change is necessary, the Customer will be required to provide Service equipment capable of accepting the new voltage and meeting other CPAU requirements. Costs to provide suitable Customer’s Service entrance equipment and any other associated equipment to receive Service at the new voltage shall be borne by the Customer. 6. VOLTAGE AND FREQUENCY CONTROL a. Under normal Load conditions, CPAU’s distribution circuits will be operated so as to maintain Service voltage levels to Customers within plus or minus 5 percent of the nominal Service voltage at the Point of Delivery. Subject to the limitations above, CPAU will maintain the voltage balance between phases as close as practicable to 2.5% maximum deviation from the average voltage between the three phases. b. Voltages may be outside the limits specified above when the variations: 1. arise from Service interruptions; 2. arise from temporary separation of parts of the system from the main system; 3. are minor momentary fluctuations and transient voltage excursions of short duration which may occur in the normal operation of CPAU system; 4. are beyond CPAU’s control. c. Due to conditions beyond the control of CPAU, the Customer, or both, there will be infrequent and limited periods when voltages will occur outside of the nominal Service voltage ranges. Utilization equipment may not operate satisfactorily under these conditions, and protective devices in the equipment may operate to protect the equipment. d. Where the operation of the Customer’s equipment requires stable voltage regulation or other stringent voltage control beyond that supplied by CPAU in the normal operation of its system, the Customer, at its own expense, is responsible for installing, owning, operating, and maintaining any special or auxiliary equipment on the Load side of the Service delivery point as deemed necessary by the Customer. e. The Customer shall be responsible for designing and operating its Service DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 6 facilities between the Point of Delivery and the utilization equipment to maintain proper utilization voltage at the line terminals of the utilization equipment. f. The Customer shall not impose a Load on CPAU’s system that will cause the voltage limits in this section to be exceeded for an adjacent Service delivery point. g. When there is reasonable indication of a problem, CPAU shall test for excessive fluctuations at its own expense. Voltage checks requested by the Customer more than once in any twelve month period shall be paid by the Customer, unless CPAU determines that excessive voltage fluctuation exists. h. CPAU may institute measures to prevent the continuous operation of equipment detrimental to Service to other Customers or may discontinue Electric Service to the offending Customer. (See Rule and Regulation 20, Special Electric Utility Regulations). i. Customers are responsible for protecting their connected Loads, audio, video, and electronic equipment, including computers, from sudden voltage or frequency fluctuations outside nominal Service and frequency ranges. Such protection may include, but is not limited to, surge protectors. 7. GENERAL LOAD LIMITATIONS a. SINGLE-PHASE SERVICE 1. Single-phase Service normally will be 3-wire, 120/240 volts (or 3-wire, 120/208 volts at certain locations as now or hereafter established by CPAU) where the size of any single motor does not exceed 7-1/2 horsepower (10 horsepower at the option of CPAU). For any single-phase Service, the maximum Service size shall be 400 ampere, unless approved by the Utilities Director or his/her designee. If the Load exceeds the capability of a 400 ampere single phase Service the Service shall be three- phase. 2. In locations where CPAU maintains a 120/208 volt secondary system, 3- wire single-phase Service normally shall be limited to that which can be supplied by a main switch or Service entrance rating of 200 amperes. Single-phase Loads in these locations in excess of that which can be DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 7 supplied by a 200 ampere main switch or Service entrance rating normally will be supplied with a 208Y/120 volt, three-phase, 4-wire Service. b. THREE-PHASE SERVICE (480 VOLTS OR LESS) Minimum Load Maximum Demand Normal Voltage Requirements Load Permitted 240/120 5 hp, 3-phase connected 400 Amperes 240 5 hp, 3-phase connected 400 Amperes 208Y/120 Demand Load 75 kVA 500 kVA 480Y/277 Demand Load 112 kVA 2,500 kVA (See Note 1) Note 1. Applicants or existing Customers with a planned or existing single or multiple building development having a maximum Demand in excess of 2500 kVA, as determined by CPAU, will be required to take delivery at the available primary voltage and are required to provide their own primary switchgear and transformer(s). Determination of maximum Demand and Service voltage will be made by CPAU and the decision of the Electric Engineering Manager will be final. 1. Where three-phase Service is supplied, CPAU reserves the right to use single-phase transformers, connected open-delta or closed-delta, or three- phase transformers. 2. Three-phase Service will be supplied on request for installations aggregating less than the minimum listed above, but not less than 3 horsepower (hp), three-phase Service, where existing transformer capacity is available. If three-phase Service is not readily available, or for Service to Loads less than 3 hp, Service shall be provided in accordance with CPAU’s applicable Rule 20 on Special Power Service requirements. 3. Residential customers requesting three-phase service shall be responsible for all labor and material costs required to provide service, including the cost of the transformer. These installations are not considered “Special Facilities” as described in Rule and Regulation 20. 4. An Applicant or existing Customer requiring Service with a maximum Demand in excess of 1000 kVA, as determined by CPAU, shall be served by a padmount transformer. No submersible or vault-installed DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 8 transformers in excess of 1000 kVA will be installed by CPAU. Where an existing underground Service must be upgraded beyond 1000 kVA, the Customer shall be required to provide adequate space for installation of the padmount transformer. In the event the Customer is unable to provide adequate space for the padmount transformer, then the Customer shall make arrangements at his or her expense to receive Service at primary voltage. c. THREE-PHASE SERVICE (OVER 2,000 VOLTS) The following three-phase primary voltage may be available as an isolated Service for a single Applicant; and where that Applicant’s Demand Load justifies such voltage. The determination will be made by CPAU. Minimum Demand Maximum Demand Normal Voltage Bank Installed Load Permitted 4,160 500 kVA 3,600 kVA 12,470 1,000 kVA 11,000 kVA Note: 4,160 volt Services will not be furnished for new Services. 8. TEMPORARY SERVICE Temporary Service is Electric Service which, in CPAU’s opinion, is of an indefinite duration at the same location, or for operations of a speculative character or of questionable permanency, or any other Service which is estimated to last less than one year. CPAU will furnish Temporary Service if the furnishing of such Service will not create undue hardship for CPAU, or its Customers, and the following conditions are met: a. The Applicant for such Temporary Service shall apply for Service on an Application form provided by CPAU Engineering and shall pay to CPAU in advance the cost of installing and removing any facilities necessary in connection with the furnishing of such Service by CPAU. b. Each Applicant for Temporary Service shall prepay a Temporary Service Fee in accordance with Electric Service Connection Fees Rate Schedule E-15. c. Nothing in this Rule and Regulation shall be construed as limiting or in any way affecting the right of CPAU to collect from the Customer an additional sum of DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 9 money by reason of the Temporary Service furnished or to be furnished or removed hereunder. d. If the Temporary Service connection time exceeds one-year, the Applicant shall apply for an extension of the Temporary Service. The Director of Utilities or his/her designee will determine if the Service should be reclassified as a permanent Service. 9. SERVICE DOWNSTREAM OF METER CPAU assumes no duty or liability for inspecting, validating or approving the safe operating condition of the Customer’s Service, appliances, or equipment downstream of the Utility Meter. C. FIBER OPTIC SERVICE Fiber Optic Service includes the custom construction and licensing of single mode Fiber routes between points within the City of Palo Alto. It is the Customer’s responsibility to establish all electronic devices and networks required to pass data over their licensed CPAU Dark Fiber routes. 1. LICENSING SERVICES All Dark Fiber routes are licensed in accordance with the currently approved Dark Fiber Rate Schedules, and in compliance with the Utilities Rules and Regulations. See Rule and Regulation 26, “Special Fiber Optic Utility Regulation,” regarding special Service requirements. All CPAU fibers terminate within the jurisdictional boundaries of the City of Palo Alto. 2. OTHER SERVICES CPAU offers custom Dark Fiber construction and ancillary Services such as Fiber Optic cable splicing, engineering feasibility studies, and when specifically requested by the Customer, multimode Fiber cable installations. 3. QUALITY Dark Fiber routes in the City of Palo Alto comprised of single mode Fiber comply with DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 10 generally accepted industrial standards and specifications. All construction is done using industry accepted techniques and procedures. All constructed routes are Performance Tested to assure the industry quality standards are met. D. WATER SERVICE 1. SOURCE OF SUPPLY CPAU’s primary source of Water is the Hetch Hetchy aqueduct system, managed by the San Francisco Public Utilities Commission (SFPUC). CPAU wells also provide Emergency supply. See Rule and Regulation 21, “Special Water Utility Regulation” regarding special Service requirements. 2. QUALITY Hardness generally varies between 1 and 4 grains per gallon depending on the source. An analysis of the mineral content of the Water is available upon request from CPAU Engineering. 3. PRESSURE Water pressure varies from 30 to 125 pounds per square inch. CPAU maintains an average of 50 pounds per square inch, with the maximum and minimum pressures being experienced at the lower and higher elevations of the Distribution System. CPAU assumes no responsibility for loss or damage due to lack of Water pressure but agrees to furnish such pressures as are available in its general Distribution System. If low Water pressure occurs due to additional on-site development, it shall be the responsibility of the property owner to replace the existing Water Service with a new Water Service designed for the current site. All costs of the required new Service upgrade shall be borne by the property owner. 4. TREATMENT CPAU currently does not treat Water supplied by the SFPUC. The pH of the Water supplied is adjusted by the SFPUC to reduce its corrosive action. 5. SERVICE DOWNSTREAM OF METER CPAU assumes no duty or liability for inspecting, validating or approving the safe operating condition of the Customer’s Service, appliances, or equipment downstream of DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 11 the Utility Meter. E. GAS 1. TYPES OF SERVICES CPAU provides Gas supply, transportation, and Distribution Services. 2. KIND AND HEATING VALUE CPAU purchases Gas from several/various Gas suppliers. The heating value of Gas supplied varies. The average monthly heating value in British Thermal Units (Btu)-dry basis per cubic foot of the Gas served may vary within the limits of 750 to 1150 Btu. This average heating value is converted to a Therm factor for use as one of the factors used in calculating a composite multiplier for billing purposes. The Therm factor will be based upon the heat factor used by CPAU’s supplier of Gas for the preceding month. Gas is supplied by CPAU either at standard “low pressure” or at “medium pressure”. Low pressure Service is available at all points where Gas is supplied. Where available from existing high pressure mains, at the option of CPAU, high pressure Service may be supplied. However, CPAU reserves the right to lower the pressure or to discontinue the delivery of Gas at high pressure. The standard pressure for low pressure is seven inches of Water Column (WC), which is approximately 1/4 pound per square inch (psi) above atmospheric pressure. In limited circumstances, increased pressure may be provided for domestic use at 14” Water Column. This increased pressure will only be provided for domestic use if the houseline size required is greater than 2” diameter, or CPAU determines, based upon satisfactory information from the manufacturer, provided by the Customer, that an appliance to be located in the residence requires increased pressure at the inlet that cannot be obtained by resizing or relocating the houseline. Increased pressure may be provided for commercial uses only if the use of the houseline size required is greater than 4” diameter, or evidence as described above establishes that equipment on the site requires increased pressure at the inlet that cannot be obtained by resizing or relocating the houseline. For commercial uses, the available pressures are 7” WC, 14” WC (approximately 1/2 psi), 1 psi, 2 psi and 5 psi. All increased pressure above 7”WC requires review and approval of the Engineering Manager, a plumbing permit and testing of the existing Gas piping with a building DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 12 Inspector present in accordance with the latest adopted version of the California Plumbing Code See Rule and Regulation 22, “Special Gas Utility Regulations” regarding special Service requirements. 3. DETERMINATION OF THERMS TO BE BILLED The unit of measure for billing is the Therm. Gas Meters measure volume of Gas in ccf at ambient temperature and pressure conditions. Therms are derived from the metered data by subtracting the Meter reading for the previous reading cycle from the current reading. The difference (uncorrected ccf) is multiplied by the pressure factor required to convert the measured consumption volume to a standard volume (at standard temperature and pressure conditions). This standard volume, in pressure-corrected ccf, is then multiplied by the Therm factor (a variable determined by periodic analysis of CPAU’s Gas supply) to produce the final number of Therms billed. The composite correction factor (the product of the Therm factor and the pressure correction factor) is shown on bills under the heading “multiplier.” 4. SERVICE DOWNSTREAM OF METER CPAU assumes no duty or liability for inspecting, validating or approving the safe operating condition of the Customer’s Service, appliances, or equipment downstream of the Utility Meter. F. WASTEWATER COLLECTION AND TREATMENT 1. COLLECTION CPAU operates and maintains a Wastewater Collection System separate from the storm and surface Water Collection System. A connection to the Wastewater Collection System is required for all water users where wastewater service is available. For the disposal of Wastewater from basements and floors below ground level, it will be necessary for the Customer to provide pumps or ejectors for satisfactory drainage, as approved by the Water-Gas-Wastewater Engineering Manager. If the elevation of the basement floor is above the rim elevation of the next upstream manhole, Applicant shall provide a survey by a licensed Civil Engineer indicating the elevations of the basement floor and the rim elevation of the next upstream manhole. Submission of this survey and DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 13 approval by the Engineering Manager is required for exemption from the pump/ejector requirement. 2. REGULATION Chapter 16.09 of the Municipal Code regulates the discharge into the Wastewater Collection System of substances other than domestic Wastewater. See Rule and Regulation 23, “Special Wastewater Utility Regulations” regarding special Service requirements. 3. TREATMENT The collection system transports the Wastewater to the Palo Alto Regional Water Quality Control Plant for treatment. At this tertiary treatment plant, the City of Palo Alto processes the Wastewater from Mountain View, Los Altos, Los Alto Hills, Stanford University, and East Palo Alto Sanitary District, as well as its own. The treatment is performed in accordance with the National Pollution Discharge Elimination Permit issued by the San Francisco Bay Area Regional Water Quality Control Board before the treated water is discharged into the San Francisco Bay Estuary. 4. LIMITATION OF SERVICE CPAU reserves the right to limit the size of connection and the quantity of wastes disposed and to prohibit the use of the sewer for disposal of toxic or hazardous wastes detrimental to the Wastewater system or treatment plant. G. REFUSE SERVICE 1. REGULATION All Refuse Services are governed by Chapter 5.20 of the Palo Alto Municipal Code, regulations promulgated by the City Manager pursuant to Chapter 5.20, these Rules and Regulations and the contract between the City and the City’s Collector. See Rule and Regulation 24, “Special Refuse Service Regulations” regarding special service requirements. 2. REFUSE COLLECTION Refuse Service is provided to all Customers by Tthe City’s Collector. provides collection of solid waste, Compostable materials and Recyclable Materials. Customers shall subscribe and pay for Refuse Service and for a number of containers to hold all Solid Waste created, produced or accumulated at or on their Premises during a one-week DESCRIPTION OF UTILITY SERVICES RULE AND REGULATION 3 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 14 period, unless a different frequency for a collection schedule has been approved or directed by Public Works. Each Customer shall receive collection Services on a City specified day of each week and Customers must use the City Collector’s provided Containers for service. Customers wanting to supply their own container must check with the City Collector to ensure compatibility with the collection vehicles. The automatic standard service for Ssolid Wwaste Service Charge level is one Standard Container 32- gallon container for Residential Customers Service and two one Standard Containers 64- gallon container for Commercial Customers Service. All customers may change service levels to meet their refuse needs as specified above. The minimum Service for Residential Premises is one twenty gallon wheeled cart provided by the City’s Collector. Solid Wwaste in excess of the Service Charge level subscribed by the Customer will be removed by the City’s Collector for an additional Charge upon Customer request or notification. Customers exceeding their subscribed Service level repeatedly are required to subscribe to additional collection Services at the City-established rates. H. STORM AND SURFACE WATER DRAINAGE 1. RESPONSIBILITY AND PURPOSE The City of Palo Alto Public Works Department is responsible for all Drainage Facilities in the street and public right of way that collect storm and surface Water and convey it to the major channels and creeks within the jurisdictional boundaries of the City of Palo Alto. Examples include curbs and gutters, catch basins, pipelines, culverts, street, channels and pumping stations. The purpose of the Storm and Surface Water control facilities is to improve the quality of control, or protect life or property from any storm, flood or surplus waters. See Rule and Regulation 25, “Special Storm and Surface Water Drainage Regulations,” regarding special Service requirements. 2. STORM DRAINAGE FEE A Storm Drainage fee shall be payable to the City monthly by the owner or occupier of each and every developed parcel in accordance with Rule and Regulation 25. (END) APPLICATION FOR SERVICE RULE AND REGULATION 4 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 1 A. APPLICATION FOR SERVICE 1. These Rules for Application offor Service apply to all Utility Services. Electric, Fiber Optics, Water, Gas and Wastewater Collection Utility Services are provided by the City of Palo Alto Utilities Department (CPAU), and Refuse & Recycling, and Storm & Surface Water Drainage Services are provided by the City of Palo Alto Public Works Department. Application for all Services is handled through CPAU. Unmetered Services: Utility services for Refuse & Recycling, Storm & Surface Water Drainage and Wastewater Collection are unmetered services. TheseThe monthly Customer costs for these Utility Services arewill be applied to existing utility accountsAccounts when two of the three metered services includingfor Electric, Gas andor Water Service are set up and established.being currently billed (Account not suspended). 2. An Applicant’s request for Service does not bind the City to serve except under reasonable conditions, nor does it bind the Customer to take Service for a longer period than the minimum requirements of the applicable Service. 3. CPAU will require each prospective Customer to provide any information that may be reasonably needed to furnish Service or, administer the Account, and to allow collection action in the event of payment default. This information may include, but is not limited to, the following: For Residential Customers: a. Legal name(s) of Applicant. b. Name of a spouse, domestic partner or other Person(s) identified as a responsible party for the Account by the Applicant and authorized to access and manage the Applicant’s Utilities Account. Without the addition of an authorized responsible party, access and management of the Utilities Account will be restricted to the Applicant/Customer. c. A Customer’s surviving spouse, domestic partner or estate executor can be added to the Account upon furnishing proof of the Customer’s death or incapacity. A surviving sibling or other family member will be required to apply for a new Utility Account. APPLICATION FOR SERVICE RULE AND REGULATION 4 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 2 For Commercial Customers: d. Legal business name. e. Responsible party for Utilities bill payment. f. Address of Premises to be served. For all Customers: g. Effective date of Service. h. Physical address to which bills or other communications are to be mailed or delivered. i. Whether Premises have been previously served. If the Applicant requires Service upgrades, and/or new meter installs, Utility Services will be installed between 30 and 45 days following receipt of full payment. Fiber Optic installations will be completed between six to eight weeks following the receipt of full payment. j. Whether Applicant is the property owner, agent or tenant of Premises to be served. k. Purpose for which Service is to be used for North American Industry Classification System reporting purposes. l. Rate Schedule desired if an optional rate is available. m. Identifiers, unique to the Applicant or Customer, are required to establish credit with CPAU to manage the security of the Account, maintain communication with the Customer, and allow for collection action in the event of payment default. These include: 1. Social Security Number 2. California Drivers License Number 3. Current Passport Number 4. Employer Name 5. Business Telephone 6. Primary Contact Telephone Number 7. Alternate Contact Telephone Number 8. Email Address (if Customer requests electronic communication) Customer refusal to provide a required identifier will terminate the Application for Service process. 4. Applicants for Commercial Service at more than one location shall be required to furnish information and establish credit for each location in accordance with section A.3 and Rule APPLICATION FOR SERVICE RULE AND REGULATION 4 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 3 and Regulation 6 (Establishment and Re-establishment of Credit). 5. The Applicant and additional responsible parties on the same Application for Service or established Account shall be jointly and severally liable for Utility Services supplied. Only one bill will be rendered for such joint Service. 6. A tenant who opens an Account for a metered Service serving more than one dwelling will be required to provide a letter in writing to CPAU that he or she understands that the Meter(s) serves additional dwellings and that he or she is willing to accept responsibility for all Charges on said Meter(s). Otherwise, the Account shall be in the name of the owner or property manager. B. CHANGE IN CUSTOMER’S EQUIPMENT OR OPERATION 1. Customers shall give CPAU written notice of any material changes in the size, character, or extent of Utilities equipment or operations for which the City is supplying Utility Service before making any such change. 2. Notwithstanding any Rule and Regulation herein to the contrary, no change or alteration of any Utility Service, agreement, connection, or facility, including any installation or reinstatement thereof, shall be made or permitted by CPAU where the purpose or effect would be to serve, facilitate or make possible a use or occupancy of a structure or other condition which is or would be in violation of the Zoning Ordinance, the Building Code or any ordinance of the City of Palo Alto. C. SERVICE WITHOUT PROPER APPLICATION Anyone using Utility Services, without having first complied with the requirements for Service, will be held liable from the date of the first Service as determined by the City. Failure to pay accumulated Charges may result in discontinuance of Service without further notice. D. RIGHTS OF WAY The City shall not be required to connect with, or render Service to, an Applicant unless and until the Applicant has obtained or been granted all necessary Utility operating rights, including rights-of-way, APPLICATION FOR SERVICE RULE AND REGULATION 4 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 4 easements, and permits. E. RESALE PROHIBITED 1. Customer shall use Services only for the purposes specified at the time of application for Service. Utility Services shall not be resold to another entity except as provided in this Rule. 2. Premises that are receiving Service in conflict with this Rule as of the effective date of this Rule may continue to receive Service under such conditions if so authorized in writing by the City. 3. Sub-metering of individual units shall be considered sufficient evidence that as resale of Utilities are being resold,Services that is prohibited by this section, with the exception of ProvisionSubmetering and Master-Metering which are permitted where conducted in accordance with Section F.1. “SUBMETERING”. AND MASTER-METERING” of this Rule. F. SUBMETERING AND MASTER-METERING 1. Property owners/managers may billallocate the cost of providingSubmetering and Master- Metering Utility Services to individual tenants. Such Submetering and Master-Metering must be conducted in accordance with the requirements of section 739.5 of California Public Utilities Code and section 798.40 of the California Civil Code. Under no circumstances can the total costs of the Utility Services allocated to tenants exceed the costs of the Utility Services billed to the property owner by the City. The property owners/managers may allocate the cost for a third-party billing service to individual tenants, to the extent that the total costs allocated, and the individual costs assessed under Submetering and Master-Metering do not exceed the cost of third party billing services to the property owner/manager.. A property owner must disclose all information used to determine a tenant’s Utilities bill to the tenant upon request, including current utility costs, copies of pastprior utility bills., Submetering and/or Master-Metering records, and third-party tenant billing invoices. Resolution of Submetering or Master-Metering Utility bill disputes between property owners and tenants can be mediated through the City of Palo Alto, Community Services Department, Human Services Division’s Palo Alto Mediation Program’s Mandatory Response Program. APPLICATION FOR SERVICE RULE AND REGULATION 4 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 5 2. Those who license Fiber Optic Services may use Fiber Optics to serve themselves or third parties; however, compliance with all Rules and Regulations, and payment of all fees is the responsibility of the license holder. (END) SERVICE CONTRACTS RULE AND REGULATION 5 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-1-2014 65-2013-20163 Original Sheet No 1 A. TYPES OF SERVICE CONTRACTS For all Utility Services provided, the City may require a written agreement for new or existing Customers. Contracts may apply to standard, custom, or special Service offerings. The following is an illustrative list of special Services that may be the subject(s) of a contract. Additional Services may require contracts not listed here, at the discretion of the Director of Utilities. 1. Line Extensions 2. Temporary Service 3. Special Facilities 4. Utility Service to special districts and institutions 5. Work performed for other agencies at their expense 6. Transporting Gas to Customers on behalf of Gas Service Providers (GSP) 76. Transmission service 87. Special Metering and/or Billing Services 879. Special Energy Services 9810. Long-term Service agreements greater than 3 years 10911. Loans and leases to finance efficiency improvements at a Customer’s site 110.2 Loans and leases to improve power quality or reliability at a Customers’ site 1213. Standby Service 1324. Purchase, lease, installation, connection or maintenance of on-site or distributed generation 1435. All Fiber Optic Services 1546. Reserve Electric Capacity B. CONTRACT APPLICATION PROCEDURES 1. Customers shall complete and execute applicable form(s) or letter(s), as necessary. 2. Depending on the type of Service contract and at the request of CPAU, Customers shall request consideration for a special contractual agreement in writing to the Director of Utilities and/or the Director of Public Works specifying their objectives, including the desired terms and conditions of the contract. 3. Customers shall pay all applicable fees and deposits in accordance with the terms of the contract. 4. Customers shall comply with the City’s insurance requirements. C. CONTRACT PRICING GUIDELINES For Electricity and Gas contracts, only the commodity portion of the rate will be established by contract under custom commodity rates and fixed-term commodity rates. All other Rate Formatted: Normal, Tab stops: 0.63",Decimal aligned SERVICE CONTRACTS RULE AND REGULATION 5 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-1-2014 65-2013-20163 Original Sheet No 2 Schedule components and other non-bypassable Charges may be changed by Council action at any time. (END) ESTABLISHMENT AND REESTABLISHMENT OF CREDIT RULE AND REGULATION 6 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 1 A. ESTABLISHMENT OF CREDIT FOR RESIDENTIAL SERVICE The Applicant’s credit with CPAU shall be established upon CPAU verification of either of the following: sufficient cash deposit a) a Deposit as required by Rule and Regulation 7 (Deposits); or, two or fewer 10 Day Past Due notices within the prior 12 months of service, b) if the Applicant has been a Customer of CPAU for a minimum of within the prior 24 months. B. ESTABLISHMENT OF CREDIT FOR COMMERCIAL SERVICE The Applicant’s credit will be established upon CPAU verification of either of the following: sufficient cash deposita Deposit as required by Rule and Regulation 7 (Deposits); or, a) a Certificate of Deposit drawn on a local bank or savings and loan association, or a surety bond of equal or greater value than the cash deposit. C. REESTABLISHMENT OF CREDIT 1. An Applicant who has been a Utilities Customer and whose service has been discontinued for any reason, including failure to pay Utility bills, may be required to reestablish credit before service is resumed, by making a cash deposit and by paying all outstanding past due bills. Applicants for residential service may not be denied service for failure to pay outstanding past due bills for commercial classes of service. 2. A Customer whose utility service is terminated for non-payment will be required to pay reconnection fees (Utility Rate Schedule C-1), all outstanding past due bills, and provide a new cash deposit (Rule and Regulation 7, Deposits) prior to the reestablishment of Service. 3. A Customer may be required to reestablish credit in accordance with this section if the conditions of service or basis on which credit was originally established have, in the opinion of CPAU, materially changed. 4. If a Customer files for bankruptcy protection under Chapter 7, Chapter 11, or Chapter 13, the Customer shall be required to re-establish credit. ESTABLISHMENT AND REESTABLISHMENT OF CREDIT RULE AND REGULATION 6 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 2 D. CUSTOMER CREDIT RATING SYSTEM 1. CPAU Creditworthiness Ratings are based on the Customer or responsible party’s payment history. Adequate Creditworthiness is a requirement for service for the Applicant or responsible party of the Account. The creditworthiness of an Applicant or responsible party is established by the Applicant’s or Customer’s CPAU payment history and determines when a security deposit is required to maintain the Account in good standing. New Applicants begin service with an “Excellent” Creditworthiness rating. Failure to pay in full or late payments automatically results in erosion of Creditworthiness ratings. Similarly, continued good payment history over time improves the rating. Creditworthiness ratings are established and maintained by the City of Palo Alto for internal use only and are not reported to external credit reporting agencies. CREDITWORTHINESS RATING Credit Worthiness Status Maximum Points Allowed Excellent 0 - 23 Good 24 - 43 Average 44 - 75 Below Average 76 - 999 2. Creditworthiness status is updated in the CPAU billing system manually or automatically for different business transactions including: a payment returned for insufficient funds, issuance of a payment delinquency notice (10 Day Past Due, 48-Hour Disconnection) or when an uncollected account balance is written-off as Bad Debt. 3. Creditworthiness points are adjusted or eliminated by the City of Palo Alto if erroneous Charges for a past-due notice or returned payment are corrected by CPAU. (END) Formatted: Font: Bold DEPOSITS RULE AND REGULATION 7 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 1 Formatted: Header A deposit is required for a new A. DEPOSIT INFORMATION 1. A single Deposit per individual Account, covering all billed metered and monthly Utilities Services except Dark Fiber Licensing Agreements, is required for every new residential or commercial Application for Service. For commercial customers, the addition of a new service address to an already existing business partner is not Reconnection following termination or discontinuation of service will be considered a new Application for Service and shall not require an additional deposit. A deposit is also required for reconnection after termination purpose of Service. this Rule. 2. Credit references from another electric, natural gas or water utility cannot be used to waive the City of Palo Alto deposit requirement. 3. Deposits are creditedwill be added to Accountsthe first Utilities bill and, with the other services on the bill, payable, by cash, check, credit, or debit card. 4. Deposits will be returned to the account holder after 36 continuous months of “Excellent” creditworthiness ratings (Rule and Regulation 6, “Establishment and Reestablishment of Credit”), or upon termination of Service, or after 36 months of good payment historypermanent discontinuance of service, whichever comes first. A. AMOUNT OF DEPOSIT B RESIDENTIAL DEPOSITS 1. The amount of deposit required for a Residential Accountresidential account shall be set forth in Customer DepositsUtilities Rate Schedule C-2, Customer Deposits, with each separate Account number requiring a considered to be a separate Application for Service that therefore require a separate depositDeposit. 2. In the event of termination of service for non-payment, if a customer deposit is currently being held by CPAU, then that deposit will not be returned after 36 months of service, but will be held until that customer’s permanent discontinuance of service and issuance of the Final Bill. 3. In the event of termination of service for non-payment, if a customer deposit is NOT currently being held by CPAU, then a deposit equivalent to the initial deposit at the initiation of service DEPOSITS RULE AND REGULATION 7 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 2 Formatted: Header will be required and: a) will be applied to the account prior to reconnection, b) will not be returned after another 36 months of service, and c) will be held until the permanent discontinuance of service from CPAU and applied to the Final Bill. 4. Deposit requirements may be waived at the City’s discretion on established residential accounts for Changes of Party or additional names on the account due to death, establishment of trusts, legal conservatorships, or other incapacity of the original customer or account holder-of-record. C. COMMERCIAL DEPOSITS 1. The amount of deposit required for a Commercial Account shall be determined based on estimated Utility Services Charges for a commercial account shall be equivalent to an estimate of the Applicant’s initial three-month periodUtilities bill combining all metered and monthly services. Deposits2. For commercial customers, the addition of a new service address to an already existing Business Partner is not considered a new Application for Service and shall not require an additional deposit. Deposit requirements for Commercial Accounts may be increased if the Customer’s usage substantially differs from when Service was first established. 1. Deposits can be in the form of a Certificate of Deposit at a local financial institution or cash. RETURN OF D. DEPOSIT REFUNDS 1. Upon permanent discontinuance of Service, CPAU will refund or credit apply any remainingUtilities-held deposit balance in excess of unpaid CPAU Charges.balances to the Final Bill. Deposits greater than the Final Bill will be refunded to the customer at their forwarding address. 2. CPAU, at its option, may refund a Customer’s deposit by draftcheck or by applying the deposit to the unpaid balance onor as a credit to the Customer’s Account. 3. If an existing Customer establishes additional Service at a new location, CPAU, at its option, DEPOSITS RULE AND REGULATION 7 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2012 6-27-2016 Sheet No 3 Formatted: Header may apply an existing deposit for the new Account toward the deposit obligation for the new Account. 4. CPAU will not pay interest on Customerreturned or applied customer deposits. (END) Formatted: Font color: Black ACCESS TO PREMISES RULE AND REGULATION 8 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No. 1 Meter Access to Customer Premises, including access to the Meters required to serve CPAU Customers, is a condition of taking Service from CPAU. CPAU, its agents, and employees shall have the right of ingress to or egress from the Customer’s Premises as reasonably required for meterMeter reading, performance of necessary maintenance, repairing, inspectingrepair, inspection, testing, installation, removal or replacement of itsCPAU property and, including the exercise of any and all rights secured to it by Law. 1. Meters shall be installed on the exterior of the building at ground level, unless otherwise authorized in writing by the Utilities Director or his/her designee. 2. If any such equipment is located within a locked area or enclosed, CPAU must be furnished access. The Customer must supply CPAU with a key to any gate/door or remove any obstacle toprovide CPAU personnel free access to the Meter by CPAU personnel.. In the event the Customer is not the owner of the Premises occupied, the Customer shall obtain all such permissions and resources from the Premises owner. 3. CPAU, its agents, and employees will make reasonable efforts to maintain Customer security while on the Customer’s Premises. 4. Water, Gas, and Electric Meters are the property of CPAU, and CPAU may take suchany legal action as is necessary to gain access to the Premises and Meters for the any reasonable CPAU business purpose of , including, but not limited to, the terminating Service or disconnecting service, retrieving suchor repairing Meters. Where Customer’s denial of5. If the Customer has effectively denied CPAU access has prevented inspection ofto the Meter, CPAU may terminate or discontinue Service after written notice to the Customer. 6. If CPAU is unable to read the Customer’s Water, Electric, and/or Gas Meter due to conditions imposed by the Customer or created on the Premises, CPAU may, at its option, estimate the Customer’s Meter Read for up to three months. If CPAU or its representative (Meter Reader or Utility Field Service Worker) is denied access to ACCESS TO PREMISES RULE AND REGULATION 8 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No. 2 its Meter(s) for greater than three months, 7. If Meter access has not been possible for the three consecutive months CPAU will notify the Customer by registered mail. If the Customer does not acknowledge receipt of the registered mail within two weeks of receipt of such notice, indicating how and when Meter access will be provided, CPAU will initiate discontinuance or termination of Service. Such acknowledgment by the Customer shall be in writing or by calling the CPAU telephone number provided to the Customer in the registered notice. 8. If CPAU, its agents, and employees are denied access to its Meter(s) for greater than three consecutive months within a twelve-month period, CPAU may require the Customer to move the Meter(s) to a location on the Premises that shall be accessible to CPAU personnel for purposes of furnishing or maintaining Utilities.Utility Service. The cost to relocate the Meter(s) for Utilities access shall be borne by the Customer. 1. CPAU will notify the Customer by registered mail that Meter access has not been possible for the prior three months. If the Customer does not acknowledge receipt of the registered mail within a two week period, and indicate an intention to provide access, then, a notice of disconnection will be sent to the Customer. Such acknowledgment by the Customer shall be in writing or by calling the CPAU telephone number provided to the Customer in the registered notification mail. 9. Failure to relocate such Meters within 90 days of receipt of notice from CPAU of the requirement to relocate the meter(s) will result in discontinuance termination of Service. Service discontinuedterminated under this provision will not be restored until the Meter relocation has been completed and has successfully passed such inspections as may be required by both CPAU and theCity’s Planning Department’s Regulationsand Community Environment Department. (END) DISCONNECTIONDISCONTINUANCE, TERMINATION AND RESTORATION OF SERVICE RULE AND REGULATION 9 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No 1 A. CUSTOMER-INITIATED TERMINATION DISCONTINUANCE OF UTILITY SERVICE 1. A Customer requesting discontinuance termination of Utilityies Service(s) shall notify the CPAU Customer Service Office at least three working days before the Service termination discontinuance date. Receipt of such notice is sufficient to terminate discontinue the obligation of CPAU to render Service after the effective date of such change, and will also terminate discontinue the Customer’s responsibility for bills for Service supplied to the Premises which are consumed beyond after that date. A Customer vacating a Premise to move to another Premise served by CPAU, but wishing Service to continue beyond the date vacated, shall provide an effective date of termination discontinuance to the CPAU Office or Call Center Customer Service Center at the time of the request for establishment of Service for the new Premise. The Customer is responsible for all Service supplied until the effective date of the termination discontinuance and shall provide a forwarding address for final billing purposes. 2. A Customer may designate a third party to receive notice of termination, or discontinuance of service or other matters affecting the pProvision of Service. CPAU will not affect termination terminate or discontinuance of Service until five Business Days after Provision of written or electronic notice to the third party. B. CPAU-INITIATED TERMINATION OR DISCONTINUANCE OF SERVICE CPAU may terminate or discontinue Utility Service when an existing Customer, through action or inaction, has not complied with Utility Service requirements as stated in these Rules and Regulations, or applicable Law. CPAU will terminate or discontinue Utility Service as a last resort. Actions that warrant termination or discontinuance of Service include, but are not limited to, the following: 1. Use of Utility Services without having first complied with the requirements for Service. Customers will be liable for deposits, fees and payment for Services from the date of initial Service as determined by CPAU, up to the maximum period allowed by Law. 2. Customer vacating of Premises without notification to CPAU. DISCONNECTIONDISCONTINUANCE, TERMINATION AND RESTORATION OF SERVICE RULE AND REGULATION 9 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No 2 3. Tampering with CPAU equipment or property. Customer shall be liable for willful tampering, modification, or damage to Utilities equipment, plant, cables or property, including Metering devices. 4. Nonpayment of bills or any proper Charges from special fees, licensing agreements, or loans, or, returned check(s) due to insufficient funds in Customer’s bank account; failure to establish credit, provide adequate credit information, or failure to maintain minimum credit requiring additional Customer funds to increase provide required deposits. C. PROCEDURES FOR CPAU-INITIATED DISCONTINUANCE TERMINATION OF SERVICE 1. Prior to discontinuancetermination for non-payment, CPAU shall provide two notices to the Customer: a. 10 Day Disconnect Notice: The first “Disconnect Notice” will allow a minimum of 10 days from the date it is issued for the Customer to pay the overdue amount and avoid termination of Service. b. 48 Hour Disconnect Notice: If payment is not received within the - 10 day period, a second Disconnect Notice will be delivered to the Customer’s Premises and notify the Customer that payment must be received within 48 hours or Utilities Services will be terminated. If payment is not received within the 48 hour period, Utilities Services may be discontinued terminated without further notice. The forty-eight (48) hour notice of termination of Service Disconnect Notice will include: the name and address of the Customer whose Account is delinquent, the amount of the delinquency and required payment amount to bring the Account to a zero balance; the Customer procedure to pay the Account balance or to make arrangements for payment with CPAU to avoid termination; the date payment or arrangements for payment is required in order to avoid termination; and, the procedure for the Customer to obtain information on the availability of financial assistance including local, state, or federal sources. DISCONNECTIONDISCONTINUANCE, TERMINATION AND RESTORATION OF SERVICE RULE AND REGULATION 9 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No 3 (1) The name and address of the customer whose account is delinquent. (2) The amount of the delinquency. (3) The date by which payment or arrangements for payment is required in order to avoid termination. (4) The procedure by which the customer may initiate a complaint or request an investigation concerning service or charges, except that, if the bill for service contains a description of that procedure, the notice pursuant to subdivision (a) is not required to contain that information. (5) The procedure by which the customer may request amortization of the unpaid charges. (6) The procedure for the customer to obtain information on the availability of financial assistance, including private, local, state, or federal sources, if applicable. (7) The telephone number of a representative of the public utility who can provide additional information or institute arrangements for payment. 2. A Customer’s Utility Service will not be discontinued for nonpayment of bills until the amount of any deposit made to establish credit has been fully absorbed by past due and current Charges. See Rule 7 “Deposits”, for the deposit requirements necessary to restore Utility Service that has been terminated by CPAU for non-payment of bills. 3. To avoid termination of Utility Service, aA Customer’s outstanding Account balance may be transferred to another Account in the same class of Service in that Customer’s name at another location served by CPAU. 4. In order toTo avoid termination of Utility Service, CPAU may, at its option, extend payment arrangements for the unpaid Account balance to accommodate a Customer’s financial situation. If the Customer fails to meet the terms of the payment arrangement, the outstanding balance will become immediately due and payable, and subject to termination after expiration of a 48 hour “Disconnect Notice”. 5. Customers having Utility Service terminated for non-payment will have their Accounts Formatted: Indent: Left: 0", First line: 0" Formatted: Indent: First line: 0" DISCONNECTIONDISCONTINUANCE, TERMINATION AND RESTORATION OF SERVICE RULE AND REGULATION 9 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No 4 referred to a collection Agency when past-due balances exceed 180 calendar days. 6. Residential Electric, Water, and Gas Utility Services will not be terminated for nonpayment of a bill on any Friday, Saturday, Sunday, legal holiday or at any time during which the Utilities Customer Service Office or Call Center is closed. 7. Utility Service will not be terminated for nonpayment of a bill issued to correct Charges previously incorrectly billed, unless and until the correct bill becomes past due. 8. Any A Utility Service will not be terminated for nonpayment of a disputed bill during investigation or review by CPAU. The non-disputed portion of the Utility bill will remain due and payable. CPAU findings and resolution of a disputed bill will be communicated to the Ccustomer within thirty calendar days of the Ccustomer’s notification ofto CPAU of the disputed bill. 9. Qualified Utilities customers customers in need of assistance with bill payment for their Utility Service due to a reduction in household income as a result of a member of the household being called to active duty status in the military may apply for shut off and payment protections for a period of 180 days, pursuant to the State of California Military and Veterans Code, Sections 827, as amended. and 828 . CPAU, at its option, may extend these protections for an additional 180 days. D. PRIOR NOTICE EXCUSED IN CERTAIN SITUATIONS CPAU may immediately discontinue Utility Services, without notice, for any of the following reasons: 1. Theft of Utility Service. 2. Willful waste of Water. 3. Unsafe wiring or equipment on Customer Premises or wiring or equipment that fails to meet CPAU standards or applicable codes and regulations. CPAU reserves the right to inspect if there isCPAU staff reasonably reason to believes that unsafe conditions exist. If the DISCONNECTIONDISCONTINUANCE, TERMINATION AND RESTORATION OF SERVICE RULE AND REGULATION 9 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No 5 Customer finds Utility Service installation to be defective, the Customer must notify CPAU immediately. 4. Denial of CPAU agents or employees’ reasonable access to Premises or for the installation, inspection, maintenance, repairing, testing, or removal of CPAU equipment or facilities located upon such Premises. 54. Use of Customer equipment that imposes an electrical Load adversely affecting CPAU’s Distribution System operation, Service capacity, or Service to its other Customers. Any Customer that operates Electric equipment including, but not limited to, pumps, welders, furnaces, compressors or other equipment where the use of Electricity is intermittent, and causes significant voltage fluctuations or electromagnetic interference to other Customers, must reasonably limit such impacts or interference upon request by CPAU. The Customer may be required to permanently mitigate any ongoing disruption to the Electric Distribution System to a level established by CPAU as acceptable, or avoid the use of such equipment. Failure to comply with such mitigation and/or limitation requests may result in immediate discontinuance of Utility Service. 65. Placement, construction, or maintenance of any structure, vegetation, debris, or other object upon the Customer’s Premises that, in CPAU’s judgment, impairs the ability to accurately read Meters, restricts access to Meter enclosures, or endangers the safe and reliable operation or maintenance of CPAU overhead or underground Electrical, Fiber Optic, Water, Gas and Wastewater facilities. F. RESTORATION OF SERVICE 1. CPAU will restore Service when the financial cause for termination or discontinuance has been rectified and payment has been made of all proper Charges due, including any additional deposits or reconnection Charges. 2. CPAU will restore Service when it determines that the physical cause for termination or discontinuance has been rectified, and safe operating conditions have been restored, and the engineering and operations requirements for Service have been met, including compliance . complying with CPAU Rules and Regulations. DISCONNECTIONDISCONTINUANCE, TERMINATION AND RESTORATION OF SERVICE RULE AND REGULATION 9 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 06-1-2010 6-27-2016 Sheet No 6 (END) METER READING RULE AND REGULATION 10 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-1-2010 6-27-16 Sheet No. 1 CPAU will attempt to read Water, Gas, and Electric Meters at regular intervals with each Billing Period being approximately 27-33 days. A. BILLING PERIOD 1. CPAU will attempt to read Water, Gas, and Electric Meters at consistent intervals ranging from 27-33 days for each Billing Period. 2. Under normal conditions, bills will be based upon actual Meter readings. In the event of Under abnormal conditions, such as, but not limited to Meter malfunction, lack of access to the Meter, or CPAU staffing limitations, the bill for a Billing Period may be based upon estimated Meter readings taken from the historical record of consumption at the Premises. To correct any inaccuracies arising from the use of an estimated Meter reading, CPAU will make reasonable efforts, but does not guarantee, that it will obtain a Meter reading for the following Billing Period based on an actual Meter reading. 3. CPAU may estimate bills for unmetered Utility Service, for Utility Service from Meters which have been tampered with, or where access has been denied or impeded by the Customer, by the best available means, which may include, but are not limited to: estimation by comparison to prior Billing Period for the same Premise and equivalent Billing Period for the prior year. Such bills shall be due and payable by the Customer. 4. When the estimated Meter reading is higher than the actual Meter reading, an adjustmentadjustments for consumption and cost will be made to the Customer’s next regularly scheduled bill. B. MULTIPLE METERS FOR SAME SERVICE For the purpose of calculating Charges, each Meter on the Customer’s Premises will be considered separately, and the readings of two or more Meters will not be combined, except as follows: 1. Where combinations of Meter Readings are specifically provided for in Rate Schedules or via contract with the Customer; 2. Where CPAU’s operating convenience or necessity shall requirerequires the installation of two Formatted: Normal, Justified, Allow hangingpunctuation METER READING RULE AND REGULATION 10 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-1-2010 6-27-16 Sheet No. 2 or more Meters on the Customer’s Premises; or,. METER READING RULE AND REGULATION 10 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-1-2010 6-27-16 Sheet No. 3 1. Unless aggregation of Accounts or Meters is authorized by Rate Schedule, contract, or a Rule and Regulation. METER READING RULE AND REGULATION 10 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-1-10 6-27-2016 Sheet No. 4 C. “CUSTOMER READS OWN METER” PROGRAM The “Customer Reads Own Meter” program allows Customers to be responsible for the reading of CPAU Meters located on their property. The Customer sends the Meter readings to CPAU for entry into CPAU’s computer billing system. It is the Customer’s responsibility to furnish the readings to CPAU in accordance with the Meter reading schedule that CPAU will provide upon the Customer’s entry into the program. Customer continuance onparticipation in this program is at the sole discretion of CPAU. 1. If a Customer reading is not received by CPAU in time for billing, an estimated read(s) will be made by CPAU, to facilitate billing.. Failure by the Customer to consistently provide Meter readings shall result in termination of participation in the “Customer Reads Own Meter” program. 2. In the event the Customer fails to provide readings for two consecutive months, CPAU willmay require the Customer to provide access to the Meters, or relocate them, at the Customer’s expense, to an accessible location on the property, in accordance with such CPAU Rules and Regulations, procedures, and standards that apply to relocation of Service. 3. On an annual basis, CPAU will read the Meters for verification. For such purposes, Meter access by CPAU personnel at reasonable hours must be provided by the Customer. In the event access is denied, Rule 9 shall apply. D. METER READING ERRORS Under certain circumstances, CPAU will adjust a Customer’s bill for reasons of accuracy. (See applicable CPAU Rule 11 for a discussion ofregarding billing adjustments related to error or malfunction and back billing a Customer for billing errors..) 1. Meter reading errors may be brought to the attention of CPAU by the Customer or identified by a computer generated report as part of the billing review process. 2. When a Meter reading error has been identified, the Customer will be notified of the error. Adjustments will be based on the applicable Rule and Regulation.correction within 30 calendar days. METER READING RULE AND REGULATION 10 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-1-10 6-27-2016 Sheet No. 5 (END) Formatted: Normal, Justified, Right: 0",Space Before: 0 pt, Allow hanging punctuation BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 1 A. BILLING UNITS All metered billing units used for billing purposes shall be determined to the nearest whole unit. Such units may include, kW, kWh, kVA, kVar, hp, Therms, and/or ccf. B. PAYMENT OF BILLS CPAU issues bills to its Customers on a regular interval. Bills shall be deemed received upon physical or electronic delivery to Customer, or three calendar days following the deposit of the bill in the United States Mail to the Customer’s billing address. Bills for CPAU Services are due and payable 20 calendar days following issuance of the bill statement. Bills unpaid after the 20 day period are considered delinquent (“past due”). If a Customer’s payment is not received by CPAU after 25 days of bill issuance, the outstanding balance will be assessed a late payment Charge. For the convenience of Customers there are a number of ways to pay CPAU bills: 1. By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo Alto, CA 94303-0897. 2. By enrolling in the Utilities Bank Draft Program. Payments will be drafted from a Customer’s designated checking or saving account and automatically applied to the Customer’s Utility Account for each current Billing Period. 3. By paying in Person at the Civic Center, Revenue Collections, 1st Floor, 250 Hamilton Avenue, Palo Alto between the hours of 8:00 a.m. and 4:30 p.m. The City offices are closed on alternate Fridays. Customers should call 650-329-2317 to ensure the office is open. Credit card payments are accepted at Revenue Collections. Customers should call to see which credit cards are accepted. Customers can pay delinquent bills with a credit card by phone by calling the Utility Customer Service Center during business hours. 4. By depositing the payment in the walk-up Night Depository Box in the front of the City Hall building on the Civic Center Plaza, or at the drive-up Night Depository Box in the Civic Center Garage, on “A” Level. 5. By paying online through the “My Utilities Account” application, accessible from the Utilities’ website. Payment through the “My Utilities Account” may be made by credit card or by bank draft. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 2 6. By enrolling at a financial institution or service company that can provide electronic payments to CPAU on behalf of the Customer. 7. By Property Managers completing a “Revert to Owner (RTO) Agreement” in order to maintain utility service to units during the interim period between tenants. C. BUDGET BILLING PAYMENT PROGRAM The Budget Billing Payment Program establishes equalized monthly payments and is available to all Residential Customers who qualify as set forth below: 1. Customers may join the Budget Billing Payment Program at any time providing the Customer Account balance is zero and the Customer has not been previously removed from the Budget Billing Program for non-payment. 2. A Customer electing to utilize the program shall agree to make monthly payments based on CPAU’s forward estimate of the Customers’ Charges for the subsequent twelve-month period. 3. CPAU does not guarantee that the total actual Charges will not exceed, or be less than, its original estimate. Customers should review their Account on an ongoing basis and request changes to the budget billing amount in response to changes in their household usage. CPAU may require that Customers pay a revised monthly amount as a condition to continuing participation in the plan, if CPAU determines that substantial changes in Customer usage patterns or consumption has occurred. 4. CPAU will perform an annual true-up on Customer Budget Billing Accounts every twelve months. This will result in either a Customer credit for CPAU over-collection or an outstanding balance due from the Customer for under-collection by CPAU during the prior twelve months. D. DISCONTINUANCE OF BUDGET BILLING The Customer’s Budget Billing Payment Program shall remain in effect, subject to review of the monthly payment amount, and shall terminate when: 1. The Customer notifies CPAU to terminate participation in the Budget Billing Program; 2. CPAU notifies the Customer of the termination of its Budget Billing Payment Program: BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 3 3. The Customer no longer takes Service at the Premises; or 4. The Customer owes an amount of two or more monthly payments. However, if the Customer eliminates the delinquency, removal from the program will not occur. Upon termination of either Utility Service or participation in the Budget Billing Payment Program, any amount owed by the Customer for actual Charges shall immediately become due and payable or any amount due to the Customer shall be refunded or credited. E. INSUFFICIENT FUNDS FOR PAYMENT 1. A Service Charge will be made and collected by the City of Palo Alto for each check returned by a bank to CPAU for the reason of insufficient funds in accordance with Rate Schedule C-1. 2. Unsuccessful Bank Drafts due to insufficient funds will be subject to late payment fees in accordance with Rate Schedule C-1. F. PRORATION OF BILLS 1. Bills for Utility Services will be prepared for each Billing Period in accordance with the applicable Rate Schedules or CPAU contract applicable to the Premises served. 2. Proration is intended to produce a uniform average unit cost for the commodity regardless of the number of days in the Service period. Services will be prorated if the number of actual Service days differs from the number of days in the applicable Billing Period. Electric Demand (kW) and Electric Power Factor Charges will not be prorated. Proration will not occur for those Rate Schedules that contain Meter fees, connection fees, deposits, and other miscellaneous fees. 3. If Rate Schedules change during the Billing Period, Charges will be prorated on the basis of the number of days covered by the previous Rate Schedule and the number of days covered by the new Rate Schedule. G. DELINQUENT BILLS AND LATE PAYMENT CHARGES 1. Utilities Charges incurred in the applicable Billing Period are due and payable by the “Due Date” indicated on the front of the bill statement. Bills unpaid by the due date are delinquent and a late payment Charge will be added to the outstanding balance as specified in Rate Schedule C-1. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 4 2. Residential and commercial Accounts having unpaid balances older than 180 days shall be subject to collection action by the City. Collection action may result in notifications to credit reporting agencies. 3. Late payment Charges may be suspended by CPAU if the Customer is withholding full or partial payment pending final resolution of disputed bill. The late payment Charge may be waived by CPAU based upon the ultimate resolution of a disputed Charge. 4. Full or partial payments towards outstanding balances will be applied to the oldest outstanding Charges. Failure to pay outstanding balances will result in late fees and termination of Service for non-payment. 5. In the event that a Customer donating to the ProjectPLEDGE Program has a delinquent bill, the late Charge percentage will not be applied to the amount of the Customer’s pledge. However, the Customer’s participation in ProjectPLEDGE will be discontinued after three consecutive Billing Periods in which the Customer has not included their pledge amount in the bill. 6. Customers whose Utility bills include payments of principal and/or interest on loans from CPAU which are secured by deeds of trust on real property shall be charged a late payment Charge when any current Utility bill includes an unpaid installment on such loan from a prior bill. Nothing in this Rule and Regulation shall be construed to alter in any way the duty of the Customer to pay any installment on a loan from CPAU when due, or to alter the rights of CPAU to enforce the payment of such installments. H. DISPUTED BILLS If bill accuracy is questioned or disputed by the Customer, Customers shall request an explanation from CPAU within the current Billing Period or as soon as reasonably possible. After reviewing the disputed bill, CPAU will: 1. Issue a corrected bill to the Customer or reflect the correction on the bill in a subsequent Billing Period. 2. Determine if an amortization period (“payment arrangement”) for the Charge-in-question shall be provided by CPAU. If a payment arrangement is offered by CPAU and agreed to by the Customer, Utility Services will not be discontinued for nonpayment while the Customer complies with the payment arrangement for the “past due” balance , and subsequent Utilities bills are paid on time during the payment arrangement period. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 5 3. Advise the Customer that the bill is correct as presented. The Customer may choose, at the Customer’s option, to have the Meter removed for testing under the Provisions of Rule 15 “Metering” and payment of the applicable fee found in Rate Schedule C-1 “Exchange Meter for Accuracy Test”. I. METERED SERVICE BILLING ERRORS AND ADJUSTMENTS Where a Customer has been undercharged or overcharged for metered Service, the date and cause of which can be reliably established where a customer has been undercharged or overcharged, the retroactive billing adjustment (back bill or refund) shall not exceed three years. 1. When, as a result of either a CPAU or a Customer-initiated accuracy test, an Electric or Gas Meter is found to register more than two percent (2%) fast or a Water Meter is found to register more than one and a half percent (1.5%) fast, CPAU will refund the Customer the overcharge based upon the corrected Meter readings for the period the Meter was in use, or three years, whichever is less. Any applicable late payment will be waived. 2. When, as a result of a test, a Customer’s Electric or Gas Meter is found not to register or to register more than two percent (2%) slow, or a Water Meter is found not to register or to register more than one and half percent (1.5%) slow, CPAU may bill the Customer for the undercharge base on an average bill. The bill will be computed based on an estimate of the Customer’s consumption during a prior month in the same season or on the consumption in the same period of the prior three years. 3. When, a billing or consumption problem has been investigated and verified, Utilities will attempt to notify the Customer within 30 workingbusiness days, or a reasonable amount of time depending on the complexity of the error. J. UNMETERED SERVICE BILLING ERRORS AND ADJUSTMENTS Where a Customer has been undercharged or overcharged for unmetered Service, the date and cause of which can be reliably established where a customer has been undercharged or overcharged, the retroactive billing adjustment (back bill or refund) shall not exceed three years. K. THEFT OF SERVICE Where there is evidence that meter tampering or theft of Utility Service has occurred, CPAU will BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 6 retroactively bill, and collect any underpayment or nonpayment of Charges as well as any labor or material costs related to investigating the theft and making any required corrections. The applicable period to assess Charges shall commence from the date it can be reasonably established the theft began to the date in which the underpayment was discovered and initially established. The labor and material costs related to investigating the theft will be calculated in accordance with Utility Rate Schedule C-1 and/or any other applicable Utility Rate schedules. All underpayments or non-payments shall become immediately due and payable. Customers committing theft of Utility Service may also be subject to legal action pursuant to Rule 1, California Penal Code sections 487,496, 498, 591, 592, 593 and California Civil Code sections 1882 through 1882.6. Customers billed for theft of service can dispute the charges by following the process described in Rule and Regulation 11.H. If that process does not resolve the matter, customers billed for theft of service may, within thirty (30) calendar days, request (by telephone, in writing, or in person) an administrative hearing. If a hearing is requested, the city manager or his designee shall schedule a date and time for said hearing as soon as possible after the request is filed, but no later than ten (10) business days after the filing of such request for hearing. At the hearing, the customer billed for theft of service may offer evidence in person or in the form of a written statement, setting forth the reasons why the customer believes the determination of theft is incorrect. Utilities personnel shall also be allowed to offer whatever evidence they may have as to why they have established the customer engaged in utilities theft. The city manager or his designee shall make a determination as to whether the customer is liable for the charges for theft of service. L. WATER OR GAS LEAK CREDITS It is the Customer’s responsibility to maintain their lines and equipment in a reasonable condition such that leaks do not occur. CPAU shall not make billing adjustments for Water, Gas or Wastewater Charges resulting from leakage in a line on the Customer Premises beyond the CPAU Meter, unless CPAU determines that City staff were solely responsible for such leakage. M. REFUSE BILLING ERRORS, DISPUTES AND ADJUSTMENTS 1. Adjustments to the Refuse Service bill shall be requested to the City’s Collector. Customers with adjustments unresolved by the City’s Collector, may dispute their claim with the City’s Public Works Department, Environmental Services – Zero Waste section.Refuse. Billing adjustments will be resolved by following the City’s Rules and Regulations, Chapter 5.20 of the Palo Alto Municipal Code and specific regulations promulgated by the City Manager pursuant to the authority established in Chapter 5.20. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No 7 2. When an error in billing has occurred, the date and cause of which can be reliably established where a Customer has been undercharged or overcharged, the retroactive billing adjustment shall not exceed three years. When an account discrepancy is identified, the City’s Collector and/or the Public Works Department staff reviews the account history for a period not to exceed 3 years and either generates a credit or a charge to the Customer. Residential, small BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No 8 Commercial Customers, or non-profit Customers that have been undercharged may be back billed for a shorter time period as appropriate, or not back billed if the Customer is not at fault. 1. Customers requesting Refuse Services to be suspended shall obtain from the City’s Public Works Department a form requesting Refuse Service suspension. See Rule and Regulation 24, “Special Refuse Services Regulations” regarding requirements for Refuse Service suspension. 3. (END) Formatted: Indent: Left: 0", First line: 0" METERING RULE AND REGULATION 15 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-20146-27-2016 Sheet No. 1 A. OWNERSHIP OF AND RESPONSIBILITY FOR METERING EQUIPMENT CPAU shall furnish, own and maintain all Gas Regulators and all Meters for measuring Electric, Water, and Gas usage by the Customer. In addition, CPA shall furnish, own and maintain all equipment including: instrument transformers, phase shifting transformers, test switches, and connecting circuitry necessary for measuring Electricity used by the Customer. CPAU may, at its option, meter delivery to Primary Service Customers at Secondary Service voltage, and apply an adjustment factor to compensate. An accurate record will be kept by CPAU, or its designated Meter data management agent, of all Meter readings, and such record will be the basis for determination of any bill rendered for Service. CPAU reserves the right to estimate Meter readings, should any Meter fail to register correctly the amount of commodity used by the Customer. B. METER INSTALLATIONS 1. LOCATION a. All Meters shall be installed by CPAU in a convenient location upon the Applicant’s Premises, and so placed to be at all times accessible for inspection, reading and testing. Meter location must be approved by CPAU; placement of Meters above the ground-floor level is generally not permitted. b. The Customer shall, at the Customers’ own expense, provide a new and approved location for the Meter or Meters in order to comply with CPAU Rules and Regulations, and whenever the existing Meter or Meters become inaccessible for inspection, reading, or testing 2. MULTIPLE-OCCUPANCY BUILDINGS In buildings in which separate Meters are required for each unit to measure separately the Electric Service, Gas or Water supplied to each Customer, Meters for each Service will be located at one central point, per the CPAU standards or as otherwise specified by CPAU. Each Meter position shall be clearly marked by the building owner to indicate the particular location supplied by it. If more than one Gas Meter is required to serve a multiple-occupancy building, a Public METERING RULE AND REGULATION 15 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-20146-27-2016 Sheet No. 2 Utility Easement shall be required for the Gas Service Line and Gas Meters 3. SEALING OF METERS All CPAU Meters will be sealed by CPAU and no such seal shall be tampered with or broken except by an authorized representative of CPAU. If a Meter is tampered with, bypassed or otherwise compromised by the Customer, CPAU may discontinue and remove the Service in addition to charging for the estimated amount of Utilities used, and pursue all available civil and criminal remedies. If Service is removed, Customer will be responsible for the expense of removal and installation of new Service before the new Service is re-installed and activated. 4. ELECTRIC DEMAND METERS Generally, Demand Meters will not be installed on Loads with an estimated maximum Demand less than six (6) or eight (8) kW or eight (8) horsepower (hp). Demands of such lesser loads will be determined by a Load check. 5. ADDITIONAL METERING CPAU may, at its discretion and at its cost, install additional Metering for system quality control purposes. 6. CAPACITY OF METERS CPAU will set Water and Gas Meters to match the Customer’s Demand as stated on the Customers Utility Application/load sheet. CPAU may install Meters with a capacity in excess of what is needed to supply the stated demand if the Customer pays all applicable fees associated with the larger Meter. It is the Customer’s responsibility to submit an accurate Utility application/load sheet for Meter and Service capacity sizing. C. METER TESTS 1. Any Customer may secure a test of the accuracy of the Meter serving the Customer’s Premises. Prior to the test, the Customer will be required to make a deposit with CPAU as specified in CPAU Rate Schedule C-1. The deposit will be returned to the Customer METERING RULE AND REGULATION 15 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-20146-27-2016 Sheet No. 3 if, under normal operation conditions; the Electric or Gas Meter is found by test to register more than two percent (2%) faster, or the Water Meter is found by test to register more than one and a half percent (1.5%) faster under conditions of normal operation. Otherwise, the deposit will be retained by CPAU to offset a portion of the cost of making such test. 2. The Customer has the right to require that the test be made in their presence, or a representative’s presence at the Meter shop. A written report giving the result of the test will be supplied to the Customer upon request within ten (10) days of the test. 3. Meters will be tested before their installation, except that in the case of newly purchased single phase Electric Meters, the manufacturer’s test may be used as the installation test when CPAU’s random test indicates satisfactory test conditions for a particular manufacturer and a particular shipment. No Electric orf Gas Meter will be placed in Service or allowed to remain in Service if it is found to have an error in registration in excess of two percent (2%) under conditions of normal operation conditions. No Water Meter will be placed in Service or allowed to remain in Service if it is found to have an error in registration in excess of one and a half percent (1.5%) under conditions of normal operation. D. MASTER METERING Separate Premises, even though owned by the same Customer, will not be supplied Water, Gas, and/or Electric through the same Meter (i.e. master Meter), except as provided herein. 1. RESIDENTIAL Customers for which Water, Gas, and Electric Master-metering was installed prior to December 31, 1982, may continue to obtain Service at a single Point of Delivery through a single Metering installation for two or more single-family dwelling units in the same building or for two or more multi-family dwelling buildings, provided such buildings are adjacent to each other on an integral parcel of land undivided by a public highway, street, or railway. Requests for Master-metered multi-family Residential Service subsequent to December 31, 1982, will be evaluated and approved if central space conditioning is acceptable to CPAU. Developments with such central systems may continue to qualify for Master-metering. 2. NONRESIDENTIAL METERING RULE AND REGULATION 15 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-20146-27-2016 Sheet No. 4 CPAU need not serve Premises directly, but will provide Master-metered Gas Service, where any of the following conditions are met: a. The building will contain central heating, air conditioning, or central domestic hot Water and can be shown (using methods of calculation acceptable to CPAU) to be more energy efficient and at a more favorable cost-benefit ratio than would be the case if individual Metering were installed. b. The building is designed to be subdivided or modified after construction to meet changing space needs of a number of tenants. 3. SEPARATE METERING IMPRACTICAL Where, in the sole opinion of CPAU, it is impractical for CPAU to meter individually each Premise or space, CPAU may meter only those Premises or spaces that it is practical to meter, if any. 4. ESTABLISHING EXCEPTION The owner of the building shall bear the burden of proof satisfactory to CPAU in establishing an exception for any of the above reasons. E. TOTALIZING METERING Totalizing though a single Electric Meter of the Electricity delivered by two or more separate Services will be considered if a Customer is served at primary voltage, has an estimated or actual Load in excess of 3,000 kVa, and all Services serve a contiguous site. Any exception to this provision must be explicitly addressed by a Rate Schedule or Customer Contract (Rule 5). (END) SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-2016 Sheet No. 1 A. GENERAL In addition to the general requirements outlined in Rule and Regulation 18 for Utility Service Connections and Facilities on Customers’ Premises, the following is required: B. ELECTRIC SERVICE CONNECTION REQUIREMENTS 1. FACILITIES ON CUSTOMER PREMISES a. The Customer is responsible for installing and maintaining all substructures on the Customer’s Premises for CPAU to provide Electric Service. This will be at the Customer’s expense and in accordance with the requirements, standards, and specifications of CPAU. This substructure shall be owned and maintained by the Customer for exclusive use by CPAU. The Customer shall be responsible for repairing or replacing the substructure for any reason, including deterioration to the extent that the existing conductors/cables cannot be removed. b. The Customer is required to provide all substructure between the Customer’s Service entrance equipment and the nearest available Point of Service connection, as determined by CPAU. This Point of Service is typically a splice box located near the street and may be in the Public Right-of-Way. In the case of rear easements, this point is typically at a splice box or at the base of a pole riser. c. Upon approval by CPAU of the substructure installed on the Customer’s Premises, CPAU will install Primary Electric Service conductors and a transformer, if needed. The Applicant/Customer is responsible for the cost of installation in accordance with the applicable sections of CPAU’s Electric Service Connection Fees (Rate Schedule E-15). CPAU will determine the type and size of the conductors to be installed by CPAU. d. CPAU will assume ownership and responsibility for maintenance of the underground Electric Service lateral conductors, as defined in the National Electric Code Article 100, installed by the Customer if the Service meets CPAU specifications and it has been approved and accepted by the Electrical Engineering Manager or his or her designee. Where bus duct or extra flexible cable is required and used, CPAU’s maintenance responsibility for conductors ends at the transformer secondary SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-2016 Sheet No. 2 terminals. The bus duct or extra flexible cable is considered to be the Service entrance conductor for which CPAU assumes no responsibility. 2. MISCELLANEOUS SERVICE EQUIPMENT a. CUSTOMER’S EQUIPMENT 1. All service switches, fuses, Meter sockets, Meter and instrument transformer housing and similar devices, irrespective of voltage, required in connection with serviceService and Meter installation on the Customer’s Premises shall be furnished, installed, owned and maintained by the Customer in accordance with CPAU requirements. 2. The “service disconnect” is defined by the National Electric Code. 3. Applicant will provide a suitable means for CPAU to place its seal on covers of service enclosures / troughs and instrument transformer enclosures which protect un-metered live circuits installed by the Applicant. Such seals shall be broken only by authorized CPAU representatives. Detailed information will be furnished by CPAU on request. b. CPAU’S EQUIPMENT 1. CPAU will furnish and install the necessary instrument transformers, test facilities and Meters. C. SERVICE CONFIGURATIONS 1. OVERHEAD OR UNDERGROUND a. The standard service Service to single family Residential homes in existing overhead areas shall be overhead. The Director of Utilities or his/her designee can require an underground Service for single family Residential Service in areas where system design requires underground Service, or would otherwise require the addition of poles to the system. b. All new Electric Utility Services to Commercial/ Industrial SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-2016 Sheet No. 3 Customers and new subdivisions shall be provided by underground facilities on the Customer’s Premises. The on-site underground Electric Utility lines shall be provided by the Customer at their expense and shall meet CPAU specifications. 2. NUMBER OF SERVICES PER BUILDING Only one Electric Service line is allowed for a building or other Premises, except for commercial properties where: a. Two or more Electric Service Drops or laterals may be extended to a single building provided they enter the building at least 150 feet apart (measured in a straight line) and provided all wiring, other than metering conductors, supplied for each Service has no common raceway, connection, or service area with wiring supplied by any other such Service. Approval by the Utilities Director, or his/her designee, is required and Special Facilities fees may apply. b. Two or more sets of Electric Service entrance conductors may be extended to a single switch gear for the purpose of providing additional capacity or for backup protection. Special Facilities and/or reserve capacity fees may apply. 3. SERVICES FOR TWO OR MORE COMMERCIAL BUILDINGS ON ONE PARCEL Only one Electric Service line is allowed on a parcel with multiple commercial buildings except where the Applicant requests CPAU to install multiple Service Lines, and CPAU agrees to make such an installation. The additional costs, as estimated by CPAU, shall be borne by the Applicant, including such continuing ownership costs as may be applicable. See Special Facilities section below. 4. NUMBER OF ELECTRIC SERVICE PERISCOPES PER SERVICE DROP Not more than two service periscopes may be served from a single overhead Service Drop. Overhead service connections will not be installed where the Applicants main switchboard is larger than 400 amp. D. PROTECTIVE DEVICES SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-2016 Sheet No. 4 1. 1. The Applicant is responsible for furnishing, installing, inspecting and keeping in good and safe condition at Customer’s own risk and expense, all appropriate protective devices of any kind or character, which may be required to properly protect the Applicant’s facility. CPAU shall not be responsible for any loss or damage occasioned or caused by the negligence, or wrongful act of the Applicant or any of the agents, employees or licensees of the property owner in omitting, installing, maintaining, using, operating or interfering with any such protective devices. 2. The Applicant is responsible for installing and maintaining approved protective devices as may be necessary to coordinate properly with CPAU’s protective devices to avoid exposing other Customers to unnecessary Service interruptions. 3. Applicants who request Primary voltage Service shall install, at a minimum, circuit breakers with over-current and ground fault relays. Applicants must submit their planned protection scheme to the City for approval prior to installing any equipment. 4. The Applicant is responsible for equipping three-phase motor installations with appropriate protective devices, or using motors with inherent protective features, to completely disconnect each motor from its power supply. Particular consideration must be given to the following: a. Protection in each set of phase conductors to prevent damage due to overheating in the event of overload. b. Protection to prevent automatic restarting of motors or motor-driven machinery which has been subject to a service interruption and, because of the nature of the machinery itself or the product it handles, cannot safely resume operation automatically. c. Open-phase protection to prevent damage in the event of loss of voltage on one phase. d. Reverse-phase protection where appropriate to prevent uncontrolled reversal of motor rotation in the event of accidental phase reversal. Appropriate installations include, but are not limited to, motors driving elevators, hoists, tramways, cranes, pumps, and conveyors. SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-2016 Sheet No. 5 SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-16 Sheet No. 6 5. The Applicant is responsible for installing and maintaining service equipment rated for the available short-circuit current at the Point-of-Delivery. This value varies from one location to another, and can change over time. The Customer shall consult CPAU for the short-circuit current at each Point-of-Delivery. 6. Any non-CPAU-owned Emergency standby generation equipment shall be installed by the Applicant with suitable protective devices to prevent Parallel Operation with CPAU’s system. The design must be fail-safe, such as with the use of a double-throw switch to disconnect all conductors. Any exception must include a written agreement or service contract with CPAU permitting such parallel operation. 7. Unprotected Service entrance conductors within a building must terminate at a disconnect switch immediately after entering the building. Installation must comply with the National Electrical Code section 230-70 concerning the location of the disconnect switch and section 230-6 for the definition of conductors considered outside a building. E. INTERFERENCE WITH SERVICE 1. GENERAL CPAU reserves the right to refuse to serve new Loads or refuse to continue to supply existing Loads of a size or character that may be detrimental to CPAU’s operation or to the Service of its Customers. Any Customer who operates or plans to operate any equipment such as, but not limited to pumps, welders, saw mill apparatus, furnaces, compressors or other equipment where the use of Electricity is intermittent, causes intolerable voltage fluctuations, or may otherwise cause intolerable Service interference, must reasonably limit such interference or restrict the use of such equipment upon request by CPAU. The Customer is required to provide and pay for whatever corrective measures are necessary to limit the interference to a level established by CPAU as reasonable, or avoid the use of such equipment, whether or not the equipment has previously caused interference. 2. HARMFUL WAVEFORM Customers shall not operate equipment that superimposes a current of any frequency or waveform onto CPAU’s system, or draws current from CPAU’s system of a harmful waveform, which causes interference with CPAU’s operations, or the service to other SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-16 Sheet No. 7 Customers, or inductive interference to communication facilities. Examples of harmful waveform include, but are not limited to: a. Current drawn with high harmonic currents causing transformer or conductor overheating, even if root-mean-square (RMS) loading is within normal limits. b. Current drawn causing voltage distortion adversely affecting CPAU or other CPAU Customers. c. Harmonic currents which exceed the harmonic current distortion limits set in the most recent IEEE Standard 519. In most cases, this equates to a maximum limit of 4% harmonic current on any individual odd harmonic or 5% total harmonic current. 3. CUSTOMER’S RESPONSIBILITY Any Customer causing service interference to others must take timely corrective action. Otherwise, CPAU, without liability and after giving five (5) days written notice to Customer, will take corrective action. Corrective action could include discontinuing Electric Service until a suitable permanent and operational solution is provided by the Customer, at Customer’s expense. 4. MOTOR STARTING CURRENT LIMITATIONS a. The starting of motors shall be controlled by the Customer as necessary to avoid causing voltage fluctuations that will be detrimental to the operation of CPAU’s distribution or transmission system, or to the Service of any of CPAU Customers. b. If motor starting causes or is expected to cause detrimental Service to others, a suitable means must be employed, at the Customer’s expense, to limit voltage fluctuations to a tolerable level. F. PHASE BALANCING It is the Customer’s responsibility to maintain a balanced Load, as nearly as practical, between supplied circuit phases. In no case shall the Load on one side of a three-wire single-phase service be greater than twice that on the other. In no case shall the Load on any one phase of a polyphase service be greater than twice that of any other. SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-16 Sheet No. 8 G. POWER FACTOR CORRECTION The Customer is required to provide, at Customer’s own expense, Power Factor correction equipment. This equipment must be sized to improve the average Power Factor to at least the level set forth in the applicable Rate Schedule with respect to avoiding a Power Factor penalty. H. SERVICE DISCONNECT AND METER TEST DEVICES 1. All service disconnects and similar devices, irrespective of voltage, required by Law in connection with a Service and Meter installation on Customer’s Premises must be furnished, installed and maintained by the Customer. A “Service-disconnecting means”, as defined in the NEC, must be installed adjacent to the meter(s). Metering equipment must be located on the exterior of the building, unless approved by the Electric Engineering Manager. 2. When instrument transformers are required by CPAU as part of the Meter installation, CPAU will install a Meter test bypass block on a mounting plate that must be furnished by the Customer. When instrument transformers are not required by CPAU, the Customer is responsible for providing the Meter test bypass block. Meter test bypass blocks furnished by the Customer must be approved by CPAU in conjunction with Applicant’s plan submittal. I. SPECIAL POWER SERVICE REQUIREMENTS 1. GENERAL Where a Customer requires voltage control with less variance than what is specified in Rule and Regulation 3, the Customer must reimburse CPAU for its cost to provide any special or additional equipment to meet the Customer’s special needs. 2. NONSTANDARD OR EXCESSIVE CUSTOMER REQUIREMENTS a. In order to prevent damage to CPAU’s equipment and impairment of its service, the Customer shall give CPAU notice before making any additions to the connected Load so that CPAU, at its option, may provide such facilities as may be necessary for SPECIAL ELECTRIC UTILITY REGULATIONS RULE AND REGULATION 20 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 5-13-2013 6-27-16 Sheet No. 9 furnishing the increased service. b. If a Customer’s Load is of sufficient magnitude that it exceeds the capacity of CPAU’s Distribution System, the Customer may be required to shift peak loading to off-peak periods and/or receive service from CPAU’s 60 kilovolt sub-transmission system. J. SPECIAL FACILITIES 1. Special Facilities are facilities requested by an Applicant in addition to or in substitution for standard facilities which CPAU would normally provide. Standard facilities are for delivery of Service at one point, through one Meter, at one voltage class under its Rate Schedules. 2. CPAU normally installs only those standard facilities which it deems are necessary to provide regular service in accordance with the Rate Schedules. Where the Applicant requests CPAU to install Special Facilities and CPAU agrees to make such an installation, the additional costs thereof, as estimated by CPAU, shall be borne by the Applicant, including such continuing ownership costs as may be applicable. These costs will be calculated by CPAU based on the net present value, and shall be paid by the Applicant in advance of installation unless alternative payment arrangements are approved by the Director of Utilities. 3. Unless otherwise provided by CPAU’s Rate Schedules, Special Facilities will be installed, owned and maintained by CPAU as an accommodation to the Applicant only if acceptable for operation by CPAU and the reliability of service to CPAU’s other Customers is not impaired. 4. Installation of Special Facilities will require a contract between the Applicant and the City of Palo Alto. (END) CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 1 Formatted: Header A. GENERAL In addition to the general requirements outlined in Rule and Regulation 18 for Utility Service Connections and Facilities on Customers’ Premises, the following is required: B. HAULED LIQUID WASTE The discharge of hauled liquid wastes is regulated by the Palo Alto Municipal Code 16.09.110. The following Rules and Regulations are to implement this Provision. 1. PURPOSE To provide a means of treating certain waste prohibited from entering the Wastewater system, City of Palo Alto Public Works Department operates a Hauled Liquid Waste Treatment Site at the Regional Water Quality Control Plant (RWQCP). Certain wastes may be hauled to this site for treatment and disposal. 2. WASTES ACCEPTABLE FOR TREATMENT a. Hauled septic tank wastes b. Portable toilet pumpings c. Grease Trap wastes 3. HOURS OF OPERATION Hours of operation for the Liquid Waste Hauler’s Treatment Site shall be as established by the Manager, Water Quality Control. 4. WASTE IDENTIFICATION The hauler must provide a liter sample, taken in the presence of a waste treatment plant operator, of the contents of each tank to be discharged. The nature and source of the waste will be verified before the truck is permitted to unload. If laboratory analysis indicates that the material is not as represented (septic tank waste or toilet piping from a domestic source) the hauler’s permit may be revoked. 5. HAULING OPERATIONS CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 2 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 a. To discharge at the Regional Water Quality Control Plant, a hauler must: i. Obtain a Trucker’s Discharge Permit from the Manager, Water Quality Control; ii. File with City of Palo Alto Public Works Department a Certification of insurance and a hold harmless clause: iii. Post a bond or cash deposit with City of Palo Alto Public Works Department’s appropriate division. b. The Trucker’s Discharge Permit shall be issued for twelve-month periods and is revocable for the violation of any of these Rules. The fee for Trucker’s Discharge Permits shall be as stated in City of Palo Alto Public Works Department Rate Schedule S-4. c. Insurance policies in force with limits of liability shall not be less than those specified below as follows: Coverage for Which Limits of Insurance is Afforded Liability Worker’s Compensation & Compensation Employer’s Liability Statutory Bodily Injury Liability $1,000,000 each Person except automobile including $1,000,000 each occurrence the following coverages: Coverage for Which Limits of Insurance is Afforded Liability Protective, Completed Operations, Board Form Contractual and Personal Injury CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 3 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 Property Damage Liability $1,000,000 each occurrence except automobile including the following coverages: Protective, Completed Operations, Board Form Contractual and Personal Injury Property Damage Liability $1,000,000 each occurrence except automobile including the following coverages: Protective Completed Operations and Board Form Contractual Bodily Injury & Property Damage $1,000,000 each Person Liability Automobile $1,000,000 each occurrence d. The hauler must agree to save and hold harmless City of Palo Alto Public Works Department, its officers, agents, and employees from any liability of any nature whatsoever caused in whole or in part, by the negligence of the hauler, or his agents, or employees, arising out of such operation. 6. BILLING Waste Haulers will be billed directly for grease, septic tank and portable toilet wastes. 7. REFUSAL OF WASTES City of Palo Alto Public Works Department reserves the right to reject any Loadload of hauled waste under the following conditions: a. If the waste is not properly identified b. If there is not sufficient storage capacity at the plant for the Loadload c. For reasons of public health or safety at the discretion of the Manager, Water Quality Control Plant. d. If the Loadload contains waste materials not authorized by these Regulations. C. MAINTENANCE OF AND RESPONSIBILITY FOR THE WASTEWATER COLLECTION SYSTEM CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 4 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 Depending on whether the City’s Wastewater mainMain is located in the public right Public Right- of way-Way or in an easementa Public Utility Easement, the Customer may be solely responsible for the inspection, maintenance and, repair, and upgrade of a portion of the lateralLateral or the entire lateral. (Lateral. Diagram A lateral is Standard Sewer Lateral Configuration within the pipe connecting a building’s plumbing system to the City's Wastewater main.)Public Right-of-Way 1. CITY WASTEWATER MAIN IN THE PUBLIC RIGHT-OF-WAY a. If the City’s Wastewater mainResponsibility for Sewer Lateral when City-owned Sewer Cleanout is located in the public right of way, the CustomerPresent (Diagram B): The City is responsible for the upper portion of the lateral,Lower Sewer Lateral from the home or structure downWastewater Main up to and including the connection to the City’s Wastewater cleanoutfirst City Sewer Cleanout, as shown on Diagram AB below. The Upper Sewer Lateral shall be the Customer’s sole responsibility. In cases where there is no cleanout at the property line, in the planting strip, or in the sidewalk, but there is cleanout on private property greaterThe City is also responsible for the City Sewer Cleanout. The City’s Sewer Cleanout’s standard location is inside the CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 5 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 planting strip, per WGW Utility Standards. If the City’s Sewer Cleanout cannot feasibly be placed in the planting strip, the City may permit an existing Sewer Cleanout to be located along the Lateral within the Public Right-of-Way, or within 5 feet behind the property line on private property, to be deemed the City’s Sewer Cleanout. Diagram B Sewer Lateral Responsibility When City-owned Cleanout is Present b. Responsibility for Sewer lateral Lateral When City Sewer Cleanout is Not Present (Diagram BC): If there is no Sewer Cleanout or the Sewer Cleanout is more than five (5) feet frombehind the property line on private property, the City is responsible for only the portion ofLower Sewer Lateral within the lateral locatedPublic Right-of-Way from the Wastewater Main to the property line, and the City is not responsible for the Sewer Cleanout on the private property, as shown on Diagram C below. CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 6 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 The Upper Sewer Lateral, including any sewer pipe connected to the Upper Sewer Lateral, on private property between the property line and the City’s Wastewater main.Customer’s building or structure is the Customer’s sole responsibility. If a cleanout does not exist, the City will If there is no City Sewer Cleanout on the Premises being served, the City may elect to install a new cleanoutSewer Cleanout in one of the following locations, at the City’s discretion: the planting strip, sidewalk, back of (standard location per WGW Utility Standards), sidewalk, o r atbehind the same distance assidewalk. Once the water meter box setback distance on private property. IfCity’s Sewer Cleanout is installed, the existing cleanout is located on private property, it shallCity will be located within five (5) feet ofresponsible for the property line.Lower Sewer Lateral between the Wastewater Main and the new Sewer Cleanout. If the Customer (or the Owner, if the Customer is not the owner of the property) refuses to permit the City to install a cleanoutS e w e r C leanout, then the Customer (or the Owner, if the Customer is not the owner of the propertyas applicable) shall be immediately and solely responsible for the lateral runningentire Sewer Lateral from the City’s Wastewater mainMain to the homeCustomer’s building or other structure on the Premises being served. CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 7 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 Diagram A:C Sewer Lateral When City Sewer Cleanout is Not Present c. Responsibility for Sewer Lateral That Branches Off the Lower Lateral (Diagram D): CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 8 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 If the Customer’s Sewer Lateral branches off the Lower Sewer Lateral via a tee or wye connection, the branched-off Lateral between the tee or wye connection and the building or structure on the Premises being served shall be the Customer’s sole responsibility for upper wastewater lateral, as shown in Diagram D. Diagram D Sewer Lateral Branching Off City Lateral 2. CITY WASTEWATER MAIN IN AN EASEMENT CityCity’s Wastewater mainsMains located in easementsPublic Utility Easements are often, but not always, located at the rear of the property rather than under the public street or public rightPublic Right-of-way surfaceWay. If the City’s Wastewater mainMain is located within an easement, a Public Utility Easement, CPAU is onl y responsible for the inspection, maintenance and, repair, and upgrade of the Wastewater mainMain located therein. The Customer is responsible for the connection point of the Lateral to the Wastewater Main and inspecting, maintaining and, repairing, and upgrading the Wastewater lateral,entire Lateral including but not limited to: clearing any stoppages and any clean-up related to lateralLateral backups. Diagram BE below illustrates the CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 9 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 Customer’s sphere of responsibility when the Wastewater Main is in a Public Utility Easement. CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 10 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 Diagram B – E Customer’s sphere of responsibilityResponsibility for the lateral where the wastewater main is within an easement.Entire Lateral When Wastewater Main is Within an Easement CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 11 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 3. CUSTOMER RESPONSIBILITY REGARDLESS OF LOCATION OF CITY WASTEWATER MAIN These rules apply without regard to the location of the City’s Wastewater mainMain. a. If maintenance or repair of the City’s Wastewater mainMain or Lateral is required as a result of a Customer’s violation of the Municipal Code and/or these Regulations or other applicable Law, the Customer is responsible for completing any necessary maintenance and repair at the Customer’s sole expense. All lateral replacements and repairs shall be constructed pursuant to the City’s current WastewaterWGW Utility Standards and shall require City inspection and approval. The Customer shall replace non-plastic Wastewater laterals whenever b. Whenever the Customer is building a new structure or constructing additions or remodels that have on Premises to be served or currently served by CPAU, the Customer shall be responsible for the cost of replacing the Lower Sewer Lateral from the Wastewater Main up to and including the City’s Sewer Cleanout, if either of the below conditions apply: CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 12-29-2014 Sheet No 12 SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 i. The Lower Sewer Lateral must be realigned and reconnected to the Wastewater Main at a permit valuationnew location. ii. The project’s construction and/or remodel cost, as shown on the Customer’s City building permit application, is greater than one hundred thousand dollars ($100$200,000) for residential projects and three hundred thousand dollars ($or $300,000) for commercial projects, as stated on the City building permit application. Reconnection to a City Wastewater lateral will only be allowed on and the existing plastic pipe laterals meetingLower Sewer Lateral has been determined to be in poor condition by Utilities Operations based on standard criteria established by the Utilities Department. The inspection and evaluation of the existing Lower Sewer Lateral will be performed by Utilities Operations as part of the City permit application review process. a. All construction must meet current WGW Utility Standards. All laterals constructed of non-standard pipe materials must be replaced, per the WGW Utility Standards, from the main up to and including the cleanout at the property line at the fees listed in Related Fees will be based on Utilities Rate Schedule S-5, or for inspection/construction work performed by the City. Any work performed by the Customer’s contractor and any inspection costs incurred by the City, shall be at the Customer’s sole expense. b. The inspection, maintenance and repair of private Wastewater mains and laterals shall be the responsibility of the Customers (or the property owners, if the Customers are not the property owners) up to and including the connection point between the private Wastewater mains and laterals and the City’s Wastewater mains or manholes. However, the City will conduct at its cost (without cost to the Customers or the property owners) and assume temporary responsibility for the inspection and maintenance or repair, if required, of the private Wastewater mains and laterals if the City determines, in its sole discretion, that an unsafe condition exists with respect to such private Wastewater mains and laterals and CPAU has created such unsafe condition. CPAU’s temporary responsibility and obligation to inspect and maintain or repair, if required, any private Wastewater main and lateral will continue until CPAU has restored the private Wastewater main and lateral, which are initially determined to be in an unsafe condition, to a safe condition, and the City has taken such other reasonably necessary actions regarding any other Utility facilities that may have contributed, directly or indirectly, to the existence of the unsafe condition. Once the unsafe condition has been corrected, the Customer and/or property owner shall again be solely responsible for the private Wastewater mains and laterals. b.c. Customers shall grant the City and CPAU personnel access to the entire Wastewater Lateral serving the Customer’s Premises as needed for the City to implement the City’s Cross Connection Control Program. The City’s Cross Connection Control Program-related access may include City inspection, maintenance or repair of the SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27-2016 12-29-2014 Sheet No 13 Lateral as determined by the City in its sole discretion. The Customer will be responsible for the on-site Wastewater Collection System in accordance with the Municipal Code, including: i. Preventing storm water, roof or yard drainage, basement, foundation or under- drainage from being discharged into the Wastewater Collection System, unless a permit is granted by Regional Water Quality Control Plant. In addition, any plumbing or piping that is connected or could be connected that would allow the future discharge of storm Water or ground Water into the Wastewater Collection System is prohibited. ii. Maintaining the condition of the on-site Wastewater Collection System so that it is water tight and does not allow the infiltration of groundwater. iii. Keeping the clean-out box at ground level and visible. If after a 30 day notice from CPAU the Customer has not made the clean-out box accessible, CPAU may remedy the inaccessibility by performing the work and charging the Customer the actual cost incurred. iv. Installing, maintaining, and ensuring proper usage of Grease Control Devices in accordance with the Sewer Use Ordinance (Section16.09.103 of the Municipal Code). If the source of grease contamination in the Wastewater Collection System can be linked to a particular Customer, the Customer may be held responsible for cleaning the Wastewater System, including any associated costs or damages incurred by the City. v. Limiting the Water inflow rate to the Wastewater Collection System during fire system testing to 30 GPM. Higher flushing rates must be diverted to a detention tank to limit the flow rate to 30 GPM. vi. Limiting Wastewater ejector pumps usage so that the following conditions are met: The pump(s) output capacity may not exceed 100 GPM. The Wastewater lateral must change to a 4” gravity flow lateral at least 20’ from the City-owned clean out. The velocity in the 4” gravity flow lateral must not exceed 3 feet per second. The tank and float shall be set up such that the pump run time does not exceed 20 seconds or 33 gallons pumped during each cycle. SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27-2016 12-29-2014 Sheet No 14 vii. Installing an approved backwater valve per the latest adopted version of the California Plumbing Code 710.0 when the fixtures or drains connected to the Wastewater system are less than one foot above the next upstream Wastewater main manhole cover. The upstream Wastewater main manhole rim elevation shall be shown on the plans. 4. NOTIFICATION TO CPAU If a Wastewater stoppage occurs, the Customer shall notify CPAU. CPAU will then determine whether the stoppage has occurred in the portion of the system maintained by CPAU or the Customer (or the Property Owner, if the Customer is not the owner of the property). CPAU will clear the stoppage that has occurred in the portion of the system maintained by CPAU. D. SAMPLING OF INDUSTRIAL DISCHARGES IN EXCESS OF 25,000 GALLONS PER DAY In order to properly apportion costs of operation and maintenance of the RWQCP to industrial or commercial users who, as determined by the Environmental Compliance Division of the RWQCP, are dischargers of chemicals or effluent of a content and/or quality as to require special monitoring and charges, it is essential to determine both the quantity and quality of Wastewater produced by each user so identified. The following is adopted as a fair and equitable method of developing the necessary criteria: 1. FLOW The quantity Charge shall be based upon the metered Water served to the industrial or commercial user being billed under Section D of this Rule. Exceptions will be made for the following: a. For Customers with one or more cooling towers, the volume of evaporated Water associated with cooling (inflow less outflow) may be used to offset flow calculations for Wastewater billing. To be eligible for such offsets, the Customer must comply with the following items: i. Inflow Water data SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27-2016 12-29-2014 Sheet No 15 (a) Customer must have inflow Water Meter(s) on all cooling tower inlet(s); (b) Meter(s) must be annually certified by County Department of Weights and Measures; (c) Proof of Certification(s) must be submitted to Utilities along with annual Meter Reads; ii. Outflow Water data (a) Five (5) cycles of concentration will be assumed for outflow calculations; (b) Customers whose cycles of concentration are greater than five (5) and who want to have this reflected in their calculations must have outflow Meter(s) installed; (c) Outflow Meter(s), if installed and used for purposes of calculation, must be annually certified by County Department of Weights and Measures; (d) Proof of Certification(s) must be submitted to Utilities along with annual Meter Reads; iii. Data acquisition and submittal (a) Customer is responsible for reading and recording each inflow Meter(s) flow (and each outflow Meter, if applicable) on a monthly basis; (b) Meter Reads should be performed at approximately the same time each month; (c) The following data, at a minimum, must be recorded at each reading: i. Date of read ii. Inflow read(s) for each inflow Meter iii. Outflow read(s) for each outflow Meter (if applicable) (d) The City of Palo Alto reserves the right to periodically review Customer's Meter(s) for accuracy; iv. Participation rules and restrictions (a) Customer must have six (6) months of data in the first year to be eligible for participation; (b) Customer must annually submit twelve (12) months of data thereafter; (c) Inflow data (and outflow data, if applicable) must be submitted to the Utilities Customer Service Division annually by May for consideration in calculations for July (the start of the City's fiscal year); b. In cases where the user has extensive landscape irrigation and summer monthly consumption exceeds the average monthly consumption of January, February, and SPECIAL WASTEWATER UTILITY REGULATIONS RULE AND REGULATION 23 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27-2016 12-29-2014 Sheet No 16 March by more than 50 percent (50%), the average of the January, February, and March consumption shall be used for calculating wastewater discharge for the remaining months of the year. c. If an outflow Meter has been installed, such metered outflow will be used to determine flow in lieu of recorded water meter consumption. 2. CHEMICAL OXYGEN DEMAND, SUSPENDED SOLIDS, AMMONIA a. Measurements of the concentration of these constituents shall be taken from 24- hour composite samples collected periodically for each discharger being billed under Section D of this Rule. i. The constituent concentrations found in these samples and previous samples shall be averaged to provide the basis for establishing the Wastewater Treatment Charge to be levied to the discharger being sampled. ii. All samples shall be analyzed at the laboratory of the RWQCP. Treatment Charges will be based upon the quantity and concentration found in the waste stream monitored. b. If an establishment’s piping configuration, or other physical considerations, render representative Effluent sampling prohibitively complex or infeasible, then CPAU shall set the establishment’s level of sewage effluent constituents for billing purposes at the average effluent levels of industries in CPAU, or where feasible, at the average effluent constituent levels of similar establishments. c. Sampling results are intended to provide an estimate of the quality of Effluent discharge by the facility. Sampling results can vary significantly depending on the facility processes operating on the day of sampling. If the annual sampling results in combination with the flow data indicate a revised annual bill to the Customer, the amount of the increase or decrease shall not exceed 25 percent. The 25 percent limitation is independent of any change in rates or Charges to Rate Schedule S-2. (END) Formatted: Font: Times New Roman, 12 pt SPECIAL REFUSE SERVICE REGULATIONS RULE AND REGULATION 24 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No. 1 A. SPECIAL REFUSE In addition to this Rule and Regulation 24, Refuse Services are governed by Chapter 5.20 of the Palo Alto Municipal Code, which requires all Customers to subscribe to recycling, compost and solid waste services and to correctly sort materials into each designated container. Refuse Service includes weekly collection, processing and disposal of materials properly deposited in the City Collector’s provided containers for solid waste, as well asSolid Waste, weekly collection and processing of Recyclable Materials, weekly collection and processing of Compostable Materials (yard trimmings, food scraps, and food soiled paper), ongoing maintenance of the closed Palo Alto Landfill, zero waste programs, street sweeping service, the household hazardous waste program, and the annual Clean Up Day. Refuse Services are provided to all Customers by the City’s Collector. 1. GENERAL a. The City shall authorize, permit, regulate and control the collection and disposal of all solid wasteSolid Waste within the City limits. b. Minimum collection service for solid wasteSolid Waste is once a week. Each Customer shall receive Refuse Service collection Services on a City specified day of each week. a. The automatic solid waste service level is one Standard Container for Residential Customers and two Standard Containers for Commercial Customers unless an alternate level is requested. Containers to be serviced by the City’s Collector c. Containers must not be packed so tightly that contents do not empty freely. Contents of wheeled containers shall not exceed athe weight of 200 poundslimit specified on the container. d. Customers must supply a safe and accessible pathway for all collection. The City’s Collector does not enter buildings or residential garages to empty solid waste, compostablecompost or recyclingrecycle containers. e. Customers must have all Containers ready and on the street for collection by 6:00 a.m. on collection day. f. Any occupied domestic dwelling which is receiving any two active utility servicesUtility Services, such as Gas and Electric Service, shall be charged at least a Minimum Charge for Refuse Services. If unusual circumstances exist such that no solid wasteSolid Waste, Compostable Materials or Recyclable Materials are generated at the Premises, the Customer may apply for an exemption from this Rulerequirement. SPECIAL REFUSE SERVICE REGULATIONS RULE AND REGULATION 24 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No. 2 Customers with non-occupied Premises for a minimum of three months needingwho need to have Refuse Services temporarily suspended shall obtain from the City’s Public Works Department a Refuse Service suspension form. The suspension will be authorized for up to one year. Upon approval of the Refuse Service suspension, the City’s Collector will remove all Containers from the Customer’s Premises. Upon reoccupation of the Premises, it is the obligation of the Customer to reestablish Refuse Service to the address by contacting the City’s Utilities and City’s Collector. The Refuse Service bill shall be adjusted accordingly upon approval from the City. g. Residential Customers on extended absences from their Premises for a minimum of one month or more (i.e., long vacation), but less than three months may have their Refuse Services temporarily reduced by the City’s Collector to the lowest service levels available. The City’s Collector shall provide wheeled Containers for solid wasteSolid Waste, Recyclable Materials, and Compostable Materials collection. Standard service for solid waste collection is one 32-gallon black cart, for Recyclable Materials it is one 64-gallon blue cart, and for Compostable Materials it is one 96-gallon green cart. Such Containers remain the property of the City and shall not be removed by Customers vacating Premises. If Containers are removed, the outgoing Customer may be Chargedcharged a fee to replace the Container based on either a published fee or actual replacement cost. h. Containers shall remain on private property and not in the Public Right-of-Way except as is necessary to accommodate the scheduled collection. Containers are permitted in the Public Right-of-Way only during the day preceding the day of scheduled collection and terminating the day following such collection. i. Bulky goods scheduled for collection by the City’s Collector are permitted in the Public Right-of-Way only during the day preceding the day of the scheduled collection and terminating the day following such collection. Bulky goods meansmean discarded furniture, mattresses, and household appliances. j. All Containers should have lids closed, and be placed on the street with the front of the Containers facing the street withand have a minimum of 2 feet between Containers and from any parked vehicle or structure. Formatted: List Paragraph, Space Before: 0 pt, Allow hanging punctuation SPECIAL REFUSE SERVICE REGULATIONS RULE AND REGULATION 24 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No. 3 2. RESIDENTIAL a. The standard collection location for all Containers is on the street at curbside. Back/side yard solid wasteSolid Waste collection is available only to Customers with existing subscription service and existing associated monthly service fee at City established rates. b. Residential Customers may exchange City Collector provided Containers for a different size or a damaged container at no cost once per calendar year. Additional Container exchanges will be subject to a Charge per each exchange. c. The automatic default service level for Residential Customers is one 32-gallon black container for Solid Waste, one 64-gallon blue container for Recyclable Materials, and one 96-gallon green container for Compostable Materials. Minican/20-gallon, 32-gallon, 64-gallon, and 96-gallon carts are available. d. Residential Customers may receive up to three containers for the collection of Recyclable Materials and three containers for Compostable Materials. Additional wheeled containers may be rented or purchased at City established rates. e. Temporary Containers for the rare occurrence of excess Compostable Materials may be used by residents and may include 30-gallon paper bags, cardboard boxes, or yard/plant trimming bundles (no larger than 2’ x 4’). Each bundle or container used for the extra collection may not exceed 40 pounds, and will not be returned to the Customer. f. Physical limitation collection service is available to eligible Residential Customers. On- premise (back/side yard) collection services for Solid Waste, Recyclable Materials, Compostable Materials and household hazardous waste collection is available at no additional Charge to Customers who are physically limited and unable to move the Containers to the street for collection. Program requires completion and approval of the City’s Collector application form and may be updated annually. 3. COMMERCIAL a. The automatic default service level for Commercial Customers is one 64-gallon SPECIAL REFUSE SERVICE REGULATIONS RULE AND REGULATION 24 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No. 4 container for Solid Waste, one 96-gallon blue container for Recyclable Materials, and one 32-gallon green container for Compostable Materials. a.b. Service location of Containers shall be determinedapproved by the Public Works Director or his/her designee. Commercial Service Customers may choose from a variety of service levels and frequency of collection. Containers in multiple sizes and collection frequencies are also available and provided by the City’s Collector. Containers may be pulled out to the street level by the City’s Collector at an additional charge. c. Commercial Service Customers may receive up to five (5) wheeled containers for the collection of solid wasteSolid Waste instead of a bin if space constrains exist. All Containers for solid wasteSolid Waste and Compostable Materials are subject to a rental fee at City established rates. b.d. Commercial Service Customers may also receive up to five (5) wheeled containers for the collection of Recyclable Materials at no charge. The sixth wheeled container for Recyclable Materials will be subject to a rental fee at City established rates. c.e. Commercial Service Customers with space constraints that are willingmay have to share collection Containers with other adjacent Commercial Service Customers may do so and pay for a percentage of the service Refuse Service provided. Customers with shared service will be responsible for paying for the same percentage of extra Fees if additional collection or services are needed or assessed. B. COLLECTION AND OWNERSHIP OF MATERIALS 1. RECYCLABLE MATERIALS a. Recyclable Materials from Residential Customers placed for collection in Containers provided by City’s Collector shall become the property of the City’s Collector at the time of container placement on the street or other designated location for collection. The City’s Collector shall be an authorized City contractor under PAMC Section 5.20.040 pursuant to written contract with the City, and shall have exclusive right to collect such Recyclable Materials. b. Commercial Service Customers shall place Recyclable Materials in bins, boxes, or SPECIAL REFUSE SERVICE REGULATIONS RULE AND REGULATION 24 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 6-27- 20167-1-2015 Sheet No. 5 containers provided by the City’s Collector. Such materials become the property of the City’s Collector. The City’s Collector shall have the exclusive right to collect Recyclable Materials from such bins, boxes, or containers. Commercial Service Customers can b. Commercial Customers may donate, sell, or pay to have Recyclable Materials collected by any recycler provided such materials are separated by a single material type. Glass, paper, plastics, and metal cans may be commingled for collection. Additional requirements related to exclusions to the City or its Collector having the exclusive right to Recyclable Materials are provided in PAMC Chapter 5.20. 2. COMPOSTABLE MATERIALS a. Residents may receive up to three (3) wheeled containers for Compostable Materials at no cost. Additional wheeled containers may be rented or purchased at City established rates. b. Temporary Containers for the rare occurrence of excess Compostable Materials may be used by the residents and may include 30 gallon Kraft paper bags, cardboard boxes, or yard/plant trimming bundles (no larger than 2’ x 4’). The containers and bundles used for the extra collection may not exceed 40 pounds will not be returned to the Customer. Formatted: Normal, Indent: Left: 1", Hanging: 0.5", Right: 0", Line spacing: single, Numbered + Level: 1 + Numbering Style: a, b,c, … + Start at: 1 + Alignment: Left + Aligned at: 1" + Tab after: 1.25" + Indent at: 1.25",Allow hanging punctuation, Tab stops: -1", Left + Not at 1.25" + 1.6" Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: Not Expanded by / Condensed by Formatted: List Paragraph, Space Before: 0pt, Allow hanging punctuation SPECIAL REFUSE SERVICE REGULATIONS RULE AND REGULATION 24 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 7-1-2015 6-27-2016 Sheet No. 6 Formatted: Header, Right C. SCAVENGING OF SOLID WASTE AND/OR RECYCLABLE MATERIALS IS PROHIBITED 1. No Person shall scavenge in any City-operated location or facility nor disturb nor remove any material therein, without permission from the Director of Public Works. 2. No Person shall scavenge from or deposit solid wasteSolid Waste, Recyclable Materials, or Compostable Materials in any Container on the Premises of a Residential or Commercial Customer without the permission of the owner of the Premise. B. SPECIAL PROGRAMS 1. PHYSICAL LIMITATION PROGRAM COLLECTION On-premise (back/side yard) collection for solid waste, recyclable Materials, Compostable Materials and household hazardous waste collection is available at no additional Charge for residents who are physically limited. Program requires completion and approval of the City’s Collector form. (END) City of Palo Alto (ID # 7026) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Net Surplus Electricity Compensation Rate Title: Utilities Advisory Commission Recommendation that the City Council Adopt a Resolution Amending the Net Surplus Electricity Compensation Rate (E-NSE-1) From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) recommend that the City Council adopt a resolution (Attachment A) amending the Net Surplus Electricity Compensation Rate Schedule (E-NSE). Executive Summary Electric utilities must offer Net Energy Metering (NEM) to eligible customers under specific conditions set by state law. One such requirement is that electric utilities establish a Net Surplus Electricity Compensation Rate Schedule to compensate eligible customer-generators for electricity produced in excess of on-site load at the end of each twelve-month period. In December 2010, the City adopted the Net Surplus Electricity Compensation Rate Schedule (E- NSE) rate effective January 1, 2011, to compensate eligible customers for their net surplus electricity at a value of 5.841 cents per kilowatt-hour (kWh), and the rate has remained unchanged since. Staff proposes to update the valuation methodology supporting the E-NSE rate to reflect the City’s avoided cost of local solar from the prior calendar year, updated annually. Using this methodology and 2015 data, the proposed E-NSE rate is 7.21 cents per kilowatt-hour effective July 1, 2016. Staff expects the total cost of energy purchases under the proposed 7.21 cents/kWh rate will be $15,000 to $20,000 a year at full NEM program capacity of 9.5 MW, or $5,000 more per year compared to the current E-NSE rate. The proposed E-NSE rate is a cost-justified rate that meets statutory requirements set out in State law and applies only to NEM customers. Background Assembly Bill (AB) 920 (2009) modified the California Public Utilities Code’s terms and conditions for Net Energy Metering (PUC Section 2827, et. seq.). AB 920 required the City City of Palo Alto Page 2 Council to establish a Net Surplus Electricity Compensation Rate Schedule effective January 1, 2011, to compensate eligible customer-generators for electricity produced in excess of on-site load at the end of each twelve-month period. The Net Metering Net Surplus Electricity Compensation rate (Utility Rate Schedule E-NSE-1) was adopted by Council in December 2010 (Resolution 9124). Eligible customer-generators may choose to receive their Net Surplus Energy compensation as a monetary bill credit or as cash. Settlement periods are twelve months and are deemed to start when the utility receives the customer’s completed and signed election form. If the customer fails to make an election, electric utilities are not obligated to offer compensation or carry forward the net-surplus electricity; PUC Section 2827(h)(3) requires the City to claim the surplus as its own. State law (PUC Section 2827(h)(6)) also requires that the net surplus electricity purchased by the electric utility counts toward the electric utility’s renewables portfolio standard (RPS) annual procurement targets. In December 2010, the City adopted the E-NSE rate to compensate eligible customers for their net surplus electricity at a value of 5.841 cents/kWh, which is based on the average cost of the City’s renewable portfolio standard (RPS)-eligible supply contracts in FY2010. This value includes the value of the electricity and renewable attributes, and excludes the value of avoided costs for transmission and losses. The valuation methodology was chosen because of its simplicity and because it does not shift costs between eligible customer-generators and other bundled service customers, in compliance with PUC 2827(h)(5). As of April 30, 2016, the City has 885 eligible NEM customers with a total generating capacity of 7.6 MW. Total net surplus generation over the past four calendar years is shown in Table 1. The aggregate amount of net surplus generation is minimal compared to the City’s total energy purchases1, and predominantly from the residential customer class. The number of net surplus generators is small compared to the overall number of solar customers. Customers may end up producing electricity beyond their on-site needs because of a variety of reasons, including: 1) the customer sized the solar system larger than the current load in anticipation of adopting an electric vehicle, but has not done so yet, 2) the customer decreased load significantly after adopting a solar installation, due to energy efficiency measures or reduced family size, or 3) the solar system was mistakenly sized to be larger than the customer’s on-site needs. 1 Net Surplus compensation paid to customers in 2015 totaled $10,605.09, or less than 0.02% of total electricity purchases. City of Palo Alto Page 3 Table 1: Historical annual net surplus generation by customer class Customer Class Annual Net Surplus Generation (kWh) 2012 2013 2014 2015 Residential 211,445 238,192 349,857 391,025 Small Commercial 168 212 1,946 4,680 Medium Commercial 0 3 3 0 Total 211,613 238,407 351,806 395,705 Discussion Public Utilities Code Section 2827 describes the terms and conditions of net energy metering, including the requirements for the net surplus electricity compensation rate. Pertinent sections of the PUC Section 2827 are copied below. PUC section 2827 (h) (5) (A): The net surplus electricity compensation valuation shall be established so as to provide the net surplus customer-generator just and reasonable compensation for the value of net surplus electricity, while leaving other ratepayers unaffected. The ratemaking authority shall determine whether the compensation will include, where appropriate justification exists, either or both of the following components: (i) The value of the electricity itself. (ii) The value of the renewable attributes of the electricity. PUC section 2827 (h) (5) (B): In establishing the rate pursuant to subparagraph (A), the ratemaking authority shall ensure that the rate does not result in a shifting of costs between solar customer- generators and other bundled service customers. Staff proposal Staff proposes increasing the net surplus electricity compensation rate to 7.21 cents per kWh, shown in Figure 1, which is calculated based on a historical short-term avoided cost of local solar for calendar year 2015. The value would take effect July 1, 2016, and would be updated annually. The value of 7.21 cents per kWh was determined utilizing historical data and takes into account the value of the energy and congestion, avoided capacity charges, avoided transmission and ancillary service (AS) charges, avoided transmission and distribution (T&D) system losses, and renewable energy credits (RECs), or environmental attributes. The energy component to the overall credit rate is calculated by taking historical wholesale monthly round- the-clock market price data for northern California, and weighting them based on the typical generation profile of rooftop solar PV systems in Palo Alto and the hourly profile of market prices in northern California. In this way, the valuation methodology accounts for the fact that solar energy is often generated at times of peak system demand. Avoided transmission and AS charges are calculated based on the actual charges that the City pays to the California Independent System Operator (CAISO) for these services. The value of the environmental City of Palo Alto Page 4 benefits is based on historical market price indicatives for the value of a “Bucket 1” REC. The valuation methodology is consistent with the 2016 electric cost of service analysis (COSA). Figure 1: Value of net metering net surplus electricity rate (E-NSE) The proposal uses an updated valuation methodology for two primary reasons. First, the proposal is consistent with the valuation model used to calculate the proposed NEM successor credit rate for energy exports (proposed Utility Rate Schedule E-EEC), which is also a short-term avoided supply cost of local solar. The only difference in the application of the valuation methodology is that the NEM successor credit rate is a forward-looking value that uses input data for the upcoming fiscal year (FY 2017) and the NEM net surplus electricity compensation rate is a backward-looking value that uses input data from the prior calendar year (CY 2015)2. Second, the prior valuation methodology adopted in 2010 utilized RPS-eligible renewable energy costs, which are all long-term energy contracts, many of which span multiple decades. The proposed valuation methodology is a short-term avoided cost based on market purchases, which is more consistent with how CPAU balances small amounts of energy (such as that from net surplus electricity generators) when managing the electric supply portfolio. 2 Net surplus compensation is for generation in excess over the past 12-month period so it uses data from the past year. The NEM successor credit rate (E-EEC) is for energy that will be generated in the future, which is why it uses forecasts for the input data for the next fiscal year. City of Palo Alto Page 5 Alternatives There are alternative valuation methodologies that could be used to calculate the net surplus electricity compensation rate that also fulfill statutory requirements. Using the same valuation methodology as that adopted in 2010 (average cost of RPS-eligible renewable energy supply excluding transmission), the value of the rate would be 6.835 per kWh for FY 2017 (based on FY 2016 costs). Staff does not recommend this alternative because it does not take into account a variety of avoided costs of local generation and it is inconsistent with the proposed valuation methodology to calculate the NEM successor rate for electricity exports. A second alternative would be to adopt the same value as the proposed NEM successor credit rate for energy exports (proposed Utility Rate Schedule E-EEC), which is 7.485 cents per kWh. Staff also does not recommend this methodology since, although the underlying valuation model is the same, the E-EEC rate is forward-looking and based on input data for FY 2017, whereas net surplus compensation is by definition backward-looking and based on input data from CY 2015. Committee Review and Recommendation The UAC reviewed the recommendation at its June 1, 2016 meeting. After hearing that the rate affected only a few customers whose annual on-site generation exceeds their annual usage, that the methodology change was made to be consistent with the methodology for the NEM successor program and that the rate was increasing from 5.841 cents/kWh to 7.21 cents/kWh, the UAC supported the proposal. The UAC voted unanimously (6-0 with Chair Cook, and Commissioners Ballantine, Forssell, Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent) to recommend that Council amend the surplus electricity compensation rate as proposed. The excerpted draft minutes of the UAC’s June 1, 2016 meeting are provided as Attachment C. Resource Impact Staff anticipates the resource impact of updating the cost-based net surplus electricity compensation E-NSE rate from 5.841 cents/kWh to 7.21 cents/kWh for eligible customers will be negligible. Based on the historical levels of net surplus electricity and trends in customer elections discussed above, staff expects the total cost to be approximately $15,000 to $20,000 a year at full NEM program capacity of 9.5 MW. The rate change will result in an additional $5,000 per year cost to the electric fund. Policy Implications This recommendation does not represent a change to current City policies. The proposed revisions do not have any policy implications. Environmental Review Council’s adoption of the proposed net surplus electricity compensation rate is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates City of Palo Alto Page 6 these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. Attachments:  Attachment A: Resolution Adopting Electric Rate E-NSE (PDF)  Attachment B: Net Surplus Energy Compensation Rate Schedule E-NSE-1 effective 07-01- 2016 in redline format (PDF)  Attachment C: Excerpted Draft UAC Minutes of June 1, 2016 Meeting (PDF) Attachment A NOT YET APPROVED 160531 jb 6053781 Resolution No. ______ Resolution of the Council of the City of Palo Alto Amending Electric Rate Schedule E-NSE-1 (Net Metering Net Surplus Electric Compensation). R E C I T A L S A. Net Energy Metering (NEM), is a billing arrangement that provides credit to customers for the full retail value of the electricity their system generates. B. State law, California Public Utilities Code Section 2827 et. seq., requires all electric utilities to offer NEM to eligible customers and to establish a Net Surplus Electricity Compensation Rate to compensate eligible customer-generators for electricity produced in excess of on-site load at the end of each twelve month period. C. In December 2010, the Council adopted the City’s first E-NSE rate to compensate eligible customer-generators for their net surplus electricity at a value of 5.841 cents/kWh (Resolution 9124), based on the average cost of the City’s renewable portfolio standard-eligible contracts in FY 2010. D. Staff has developed, in conjunction with the FY 2016 electric cost of service analysis, an updated E-NSE-1 compensation rate to reflect the City’s avoided cost of local solar for calendar year 2015. The updated E-NSE-1 compensation rate is based on historical data, taking into account the value of the energy and congestion costs, avoided capacity charges, avoided transmission and ancillary service charges, avoided transmission and distribution system loses and renewable energy credits. E. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-NSE-1 (Net Metering Net Surplus Electric Compensation) is hereby amended to read as attached and incorporated. a) Utility Rate Schedule E-NSE-1, as amended, shall become effective July 1, 2016. b) The Net Metering Net Surplus Electric Compensation rate adopted by this resolution is based on a detailed analysis of historical data, the value of energy and congestion costs, avoided capacity charges, avoided transmission and ancillary service charges, avoided transmission and distribution system loses and renewable energy credits, and was developed in coordination with the City’s 2016 electric cost of service analysis. Attachment A NOT YET APPROVED 160531 jb 6053781 SECTION 2. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 3. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. SECTION 4. The Council finds that the adoption of this resolution changing electric rates is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services NET METERING NET SURPLUS ELECTRICITY COMPENSATION UTILITY RATE SCHEDULE E-NSE-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-1-20112016 Sheet No.E-NSE-1 A. APPLICABILITY: This schedule applies to eligible residential and small commercial net meteringNet Energy Metering Customers who, at the end of an annual settlement period, as defined bydescribed in Rule 29, are net surplus customer-generatorsNet Surplus Customer-Generators of electricity and who elect to receive monetary compensation as such preference is indicated on the net surplus electricity election form. This schedule only applies to Customers who participate in Net Energy Metering, and does not apply to Customers that take service under the City’s Net Energy Metering Successor Rate, as each of these terms are defined in Rule and Regulation 2. B. TERRITORY: Applies to locations within the service area ofThis rate schedule applies anywhere the City of Palo Alto provides electric service. C. RATES: Per kWh Net energy compensationSurplus Electricity Compensation rate $0.058410721 D. SPECIAL CONDITIONS 1.Net surplus compensation eligibility will be determined as specified in Rule 29. The determination of a Customer’s net surplus electricity measured in kWh will be based on a twelve-month settlement period. The twelve-month settlement period starts on the date of Interconnection of the facility, or for Customers with dates of Interconnection of their facilities prior to February 1, 2010, on the day after CPAU’s receipt of the Customer’s net surplus electricity election form.Net Surplus Electricity Compensation Rate eligibility shall be determined as specified in Rule 29. Net surplus electricity, as specified in Rule 29, if applicable, will be multiplied by the above compensation rate to determine the Customer’s annual net surplus electricity compensation stated in dollars. This compensation will be provided to the Customer as a credit applied to the Customer’s Utility account. 2.If the Customer does not provide CPAU with an election form selecting a compensation option, the Customer will be deemed to not make an election as required by law, and no compensation will be provided to the Customer for net surplus electricity. 3.In the event a Customer terminates Service prior to the natural expiration of the twelve-month period, the net surplus electricity status will be evaluated at that time. Compensation, if applicable, will be provided in accordance with D.2 above. 4.2.For all otherAdditional terms, conditions and definitions please refer to Rule 29,govern Net Energy Metering Service and Interconnection, as described in Rule 29. {End} ATTACHMENT B EXCERPTED DRAFT MINUTES OF THE JUNE 1, 2016 UTILITIES ADVISORY COMMISSION MEETING ITEM 4. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Amend the Net Surplus Electricity Compensation Rate (E-NSE-1) Chair Cook asked that the staff presentation on the item be kept to a minimum as he understands that this item is administrative in nature and has a very small dollar impact on the utility. Assistant Director Jane Ratchye confirmed that this rate affects a very small group of customers and that the annual impact is quite small. She said that basically the proposal is to increase the rate for surplus generation to use the same methodology that is used for the Net Energy Metering (NEM) successor rate and only impacts those customers who generate more energy on-site than they use on-site over a 12-month period. For most NEM customers are not affected by the change since they usually generate less energy than they use over a 12-month period. Acting Rates Manager Eric Keniston stated that the proposal is to increase the Net Surplus Electricity Compensation Rate (E-NSE-1) from 5.841 cents per kilowatt-hour (kWh) to 7.21 cents/kWh for the amount of energy that is generated that is surplus to a customers’’ needs over a 12-month period. The methodology is changed from the current rate, which is based on the cost of renewable supplies, to be consistent with the NEM successor rate, except that it looks back 12 months using actual costs, while the NEM successor rate looks forward 12 months using projected costs. Commissioner Johnston asked how this program is different from the Palo Alto CLEAN program. Ratchye explained that the CLEAN program pays for 100% of the solar generation at the established price for the contract term, but that for customers with net energy metering, the majority of the generation is used onsite to meet the customer’s energy usage and this rate is only for buying the generation that exceeds the customer’s usage over a 12-month period. Chair Cook said that has a PV system on his roof and does not have surplus energy generation, but may in the future and asked the City Attorney if there would be a personal conflict of interest since he could be a beneficiary of this rate. Deputy Assistant City Attorney Jessica Mullan recommended that any potential conflict of interest be discussed in advance of the meeting. She said that the considerations include whether the actions would have an impact on a commissioner’s personal finances and whether that impact would be foreseeable and material and whether you would be impacted differently from any member of the public. ATTACHMENT C ACTION: Commissioner Schwartz made a motion that the UAC recommend that Council amend the Net Surplus Electricity Compensation Rate Schedule (E-NSE-1) as proposed. Commissioner Ballantine seconded the motion. The motion passed unanimously (6-0) with Chair Cook, and Commissioners Ballantine, Forssell, Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent. City of Palo Alto (ID # 7033) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Shiloh I Wind Off-Taker Generation Percentage Protection Amendment Title: Approval and Authorization for the City Manager or his Designee to Execute the Off-Taker Generation Percentage Protection Amendment to the City's Power Purchase Agreement (PPA) With Shiloh I Wind Project LLC (Shiloh PPA) and Delegation of Authority to the City Manager to Execute Documents Necessary to Administer the Shiloh PPA and the City's Five PPAs Associated with Landfill Gas to Energy Projects From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council: 1. Approve the Purchaser’s Off-Taker Generation Percentage Protection Amendment (Amendment) (Attachment A) to the Power Purchase Agreement (PPA) with Shiloh I Wind Project LLC (Seller) concerning the Shiloh I Wind Project (Project); 2. Delegate to the City Manager or his designee the authority to execute on behalf of the City the Amendment, and any other documents necessary to administer the PPA that are consistent with the Palo Alto Municipal Code and City Council approved policies; and 3. Delegate to the City Manager or his designee the authority to execute on behalf of the City any documents necessary to administer the PPAs with Ameresco Santa Cruz Energy LLC, Ameresco Half Moon Bay LLC, Ameresco Keller Canyon LLC, Ameresco Johnson Canyon LLC, and Ameresco San Joaquin LLC that are consistent with the Palo Alto Municipal Code and City Council approved policies. City of Palo Alto Page 2 Executive Summary In October 2005, Council approved the PPA with Seller (a wholly owned subsidiary of Iberdrola Renewables, LLC, formerly known as PPM Energy, Inc.) to obtain a portion of the electric output of a 150 megawatt (MW) wind energy generating facility in Solano County over a 15 year and 7 month term. The Project began delivering energy to Palo Alto in June 2006. Under the PPA, the amount of renewable energy that is delivered to Palo Alto is equal to 16.66% of the Project’s total metered output, which represents 25 MW. Several other entities have rights under long-term PPAs to receive the remaining 83.34% of the Project’s output. In 2014, the California Independent System Operator (CAISO) introduced a new market construct which allows it to curtail intermittent resources such as the Project. Off-takers of the Project are therefore now capable of submitting economic bids to the CAISO in order to curtail some or all of their share of the Project’s output. An off-taker might choose to curtail in situations where the Locational Marginal Price (LMP) for that power falls below a certain threshold. For example, if the price was negative for a period of time (which has happened), then rather than getting compensated for the generation, the off-taker would have to pay for the generation. If and when one of the other Project off-takers curtails some or all of its share of the Project, the total output of the Project is reduced. Under the current PPA language, since Palo Alto’s share is based on a percentage of the Project’s total output, curtailment by another Project off- taker reduces the amount of energy that Palo Alto actually receives. The proposed Amendment is intended to keep Palo Alto’s share of metered output whole by providing that if another off- taker economically dispatches, Palo Alto’s share of output is calculated as if there had been no such curtailment in order to maintain Palo Alto’s 16.66% share. The proposed Amendment thereby protects the amount of energy delivered to Palo Alto and ensures it is not affected by the decision of another Project off-taker to curtail its portion of the Project’s output. Staff therefore recommends that the Council approve the proposed Amendment to the PPA, which is necessary to protect the City’s share of the Project output if curtailment by another off-taker occurs, and will result in no resource impact on the City. This is identical to the modification made in 2015 to the High Winds Energy Center PPA (Staff Report 5939). Staff also recommends delegating authority to the City Manager to execute routine contract amendments and administrative documents, such as this one, for the Project as well as for the City’s five long-term PPAs with landfill-gas-to-energy (LFGTE) projects. Background In October 2002 the Council approved the City’s first Renewable Portfolio Standard (RPS), setting goals of meeting 10% of the City’s load through renewable energy purchases by 2008, and 20% by 2015. (The RPS target was later increased to 33% by 2015, and the City is also subject to the statewide requirement to achieve a 50% RPS level by 2030.) In its efforts to achieve those targets, the City executed the Shiloh I Wind Project PPA—its fifth renewable City of Palo Alto Page 3 energy PPA, and its second PPA with Iberdrola Renewables—in October 2005 (CMR 386:05, Resolution 8559). The Shiloh I Wind Project is a 150 MW facility located in Solano County, and the City’s contracted share of the Project is 25 MW, which equals 16.66% of the total resource. The City began receiving energy deliveries from the Project on June 1, 2006, and the contract term is set to run through December 2021. On average, the Project provides enough energy to the City to meet about 7% of its total annual load. Discussion In May 2014, the CAISO launched a new Fifteen Minute Market (FMM) for bidding and scheduling generation resources in order to comply with the Federal Energy Regulatory Commission’s (FERC) Order 764. The purpose of this intra-hour scheduling market was to facilitate the integration of intermittent resources such as wind and solar. Prior to this point, CAISO had operated on an hourly scheduling market system, which was a distinct disadvantage to intermittent resources, whose actual generation patterns frequently varied significantly from the amount of generation that was forecasted on an hour-ahead basis. Proposed PPA Amendment Under the FMM, the CAISO has begun to implement economic dispatch capability for intermittent resources with multiple off-takers, such as the Project. Typically these individual off-takers each simply receive their pro rata share of whatever output the project generates in a given time interval. However, with the new CAISO economic dispatch capability, any of the Project off-takers will have the ability to direct the Seller to shut down all, or a portion of, its share of the Project. (It might do so in a situation where the Project’s LMP for a certain period became negative—meaning that the off-taker would essentially be paying the CAISO to take the energy that its share of the Project was generating, rather than being compensated by the CAISO for that output.) At this time, some of the other Project off-takers have the ability to economically dispatch their shares of the Project while the City does not have this capability. However, staff is working with the Seller to provide the City with this capability in the coming months. Because the PPA currently defines the share of the Project’s energy generation that the City is entitled to as a percentage of total Project output (16.66%), if another off-taker reduces the Project’s output by curtailing its portion, the City would receive less than its intended share of the output. For example, if one off-taker has rights to a 50 MW share of the 150 MW Project and chooses to curtail all of that capacity, the Project would effectively become a 100 MW resource. Under the current PPA language, the City would receive 16.66% of that amount, or 16.66 MW, rather than the full 25 MW share that Palo Alto was to receive under the PPA but for the curtailment. In order to address this situation, the City and the Seller desire to modify the PPA only with respect to this one issue. The proposed language modifies the definition of the term “Metered City of Palo Alto Page 4 Output” such that if another off-taker economically dispatches its share of the Project for any period of time, the City’s “Metered Output” is calculated by the Seller as though there had been no such curtailment instruction, in order to maintain Palo Alto’s intended 16.66% share (25 MW) of the Project output. The proposed Amendment thereby protects the amount of generation to which Palo Alto is entitled under the PPA. The proposed Amendment language is also nearly identical to the language approved by Council in August 2015 to protect the City’s share of the output of the High Winds Energy Center. Delegation of Authority At this time, the City has 13 executed PPAs in place for renewable energy facilities (two wind resources, five LFGTE resources, and six solar resources). For seven of those PPAs, the City Council has delegated to the City Manager (or his designee) the authority to execute amendments and any other documents necessary to administer the PPAs that are consistent with the Palo Alto Municipal Code and City Council approved policies. This delegation of authority saves a significant amount of staff time, enabling staff to more efficiently manage these contracts by handling routine contractual matters (such as this amendment) on an administrative basis. Staff therefore recommends extending this delegation of authority to the remaining PPAs (the Shiloh PPA and the five LFGTE PPAs) that have not yet been granted it by the City Council. Resource Impact Approving the recommendation is not expected to result in any resource impact to the City. Declining to approve the recommendation could result in the City receiving less renewable energy from the Project, resulting in additional replacement energy having to be procured from the market in order for the City to satisfy its load and RPS requirements. Policy Implications Approval of the Consent and the proposed Amendment is in conformance with the City’s Long- term Electric Acquisition Plan (LEAP), specifically the City’s RPS strategy, which entails reducing the carbon intensity of the electric portfolio through the acquisition of renewable energy supplies while ensuring that the retail rate impact for renewable purchases does not exceed 0.5 ¢/kWh on average (Staff Report 2710). The recommended action is also consistent with the Utilities Strategic Plan objective of reducing costs. Environmental Review Approval of the Consent and the Amendment does not meet the definition of a project under the California Environmental Quality Act (CEQA), pursuant to Public Resources Code Section 21065. Attachments:  Attachment A: Amendment No 2 to Palo Alto Shiloh PPA (PDF) SECOND AMENDMENT TO LONG-TERM POWER PURCHASE AGREEMENT FOR OFF-TAKER GENERATION PERCENTAGE PROTECTION FOR THE SHILOH WIND PROJECT This SECOND AMENDMENT TO LONG-TERM POWER PURCHASE AGREEMENT FOR OFF-TAKER GENERATION PERCENTAGE PROTECTION FOR THE SHILOH WIND PROJECT (this “Second Amendment”) is entered into this __ day of June, 2016, by and between Shiloh I Wind Project LLC (“Seller”) and The City of Palo Alto (“Purchaser”) and amends that certain Long-Term Power Purchase Agreement (Shiloh Wind Project) dated October 11, 2005, as amended by that certain Amendment No. 1 to Long-Term Power Purchase Agreement dated September 14, 2009, between them (the “PPA”; initially capitalized terms used and not defined herein are defined in the PPA) concerning the Shiloh Wind Energy Center (the “Project”), with reference to the following: RECITALS: 1. Purchaser is one of several off-takers from the Project; and 2. The PPA provides that Seller shall sell and Purchaser shall purchase as Purchaser’s Metered Output a fixed percentage of Metered Output; and 3. The PPA provides that “Metered Output is intended to represent the quantity of electrical energy generated by the Project on an ‘as delivered’ basis”; and 4. The California Independent System Operator (“CAISO”) has implemented economic dispatch capability for resources, such as the Project; and 5. The Parties wish to avoid any impact to Purchaser’s Metered Output due to economic dispatch by a different off-taker; and NOW, THEREFORE, in consideration of the mutual covenants herein contained, the PPA is amended as follows: 1.Section 1 Definitions. The definition of “Purchaser’s Metered Output” shall be deleted in its entirety and replaced with the following: “Purchaser’s Metered Output” shall mean Purchaser’s MW Share multiplied by the Metered Output. 2.Section 1 Definitions. The definition of “Other Off-Taker” shall be added as follows: “Other Off-Taker” shall mean any Person other than Purchaser with a contract to purchase energy from the Project. ATTACHMENT A 3. Section 1 Definitions. The definition of “Other Off-Taker Economic Dispatch” shall be added as follows: “Other Off-Taker Economic Dispatch” means a change to Metered Output due to an economic dispatch instruction by an Other Off-Taker(s). 4. Section 1 Definitions. The definition of “Purchaser’s MW Share” shall be added as follows: “Purchaser’s MW Share” means 16.66%; provided, that if there is an Other Off-Taker Economic Dispatch for any period of time, then Purchaser’s MW Share shall mean the ratio, calculated to the thousandths of a MW (i.e., rounded to three decimal places), of (i) 25 MW, to (ii) the 150 MW minus Other Off-Taker(s)’ curtailed capacity (in MW). 5. Section 4.8 Partial Curtailment Allocation. Section 4.8 shall be changed by removing “16.66%” and replacing it with “Purchaser’s MW Share.” 6. All other provisions of the PPA are reaffirmed and not amended hereby. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written. SHILOH I WIND PROJECT LLC CITY OF PALO ALTO By: By: Name:_______________________________ Name:____________________________ Title: Title: _____________________ Date of Signature: Date of Signature: Approved as to form: By: By: Name:_______________________________ Name:____________________________ Title: Title: _____________________ Date of Signature: City of Palo Alto (ID # 7053) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Amend Master License Agreement & Exhibits with GTE Mobilnet Title: Approval of and Authorization for the City Manager to Execute a Master License Agreement for Use of City-Controlled Space on Utility Poles and Streetlight Poles and In Conduits with GTE Mobilnet of California Limited Partnership, DBA Verizon Wireless for a Combined Initial and Potential Extension Term of 20 Years From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council: 1. Approve a Master License Agreement (“MLA”) with GTE Mobilnet of California Limited Partnership, dba Verizon Wireless (“Verizon”) for a combined initial term and potential extension term of 20 years to allow Verizon to access and use City-controlled spaces on utility poles, streetlight poles and in conduits for the purpose of providing communication services in Palo Alto; and 2. Delegate to the City Manager or his designee the authority to execute on behalf of the City any documents necessary to administer the MLA that are consistent with the Palo Alto Municipal Code and City Council approved policies, including execution of individual Supplements substantially in the form of Exhibit “B”, and non-substantive modifications to the MLA that may be required and approved by the City Attorney’s office. Note that this MLA, and approval thereof does not authorize any specific installation of facilities by Verizon. Instead, the MLA sets forth the general terms and conditions applicable to such future installations and establishes the process and requirements that the City and Verizon will follow, including filling out an application (Exhibit “G”), executing a Supplement memorializing specific facility requirements and terms (Exhibit “B”), and complying with Palo Alto Municipal Code requirements set forth in Title 12 (Public Works and Utilities) and Title 18 (Zoning), should Verizon elect to pursue an installation or modification of telecommunications equipment on City of Palo Alto Page 2 City utility poles, streetlight poles or in conduit. Background Generally, under federal law, and subject to certain conditions protecting the City’s public rights-of-way management and compensation authority and land use authority, the City cannot prohibit wireline and wireless communication facilities from gaining access to the public rights- of-way and utilities infrastructure located therein. Federal and California law encourages, if not requires, the City to allow wireline and wireless communication facilities to access and use the utilities infrastructure located in public rights-of-way. The City can, however, establish reasonable rates, terms and conditions of access to utilities infrastructure in the public rights- of-way, including adopting rules and regulations relating to time, place and manner of attachment to that infrastructure. The City developed a standard MLA to address the interest of wireless communication service providers and DAS operators in accessing and using City of Palo Alto-controlled spaces on utility poles and streetlight poles and in conduits for the purpose of installing wireless antennas and related infrastructure. On July 25, 2011, Council adopted Resolution No. 9193 approving the standard MLA and associated Exhibits, for third party access to and use of City-controlled spaces on utility poles and streetlight poles and in conduits for the purpose of providing wireless communications facilities in Palo Alto (City Council Staff Report ID # 1756 <http://www.cityofpaloalto.org/civicax/filebank/documents/28100>). In approving a standard MLA, Council authorized the City Manager to execute such standard agreements. The City and Verizon have agreed to the modifications to the City’s standard template as described in more detail in this report, which is why staff is returning to Council for approval. Since approval of the standard MLA in 2011, the City has executed standard MLA agreements with Extenet, NextG (now Crown Castle), and AT&T Mobility. Under an executed MLA, AT&T Mobility has deployed seventy five (75) DAS installations on City-controlled space on utility poles throughout the City, and Crown Castle is currently installing a small cell antenna network on City-owned streetlight poles at nineteen sites in the downtown area. Staff has been informed by Verizon Wireless representatives that it is possible the carrier will install approximately eighty (80) sites in Palo Alto in the next 3 to 5 years, all of which will be applied for, reviewed and processed in accordance with terms of this MLA and applicable sections of the Palo Alto Municipal Code. In addition to the MLA, wireless communication and other telecommunications facilities are subject to the requirements of the Palo Alto Municipal Code. For instance, Verizon must still apply for permits and comply with Title 12 and Title 18 of the Palo Alto Municipal Code. Discussion City of Palo Alto Page 3 As noted above, the MLA sets the essential terms and conditions governing the deployment of wireless antennas and enables current and new service providers to address coverage and capacity issues related to high-speed mobile broadband service in Palo Alto. Deployment is managed in a manner that allows the Utilities Department’s infrastructure to be used for advanced broadband communication purposes, without materially affecting the City’s provision of electric utility service to the community, and in a manner consistent with applicable City ordinances, rules and regulations. The City desired to update, streamline and clarify aspects of its standard MLA. Verizon also requested certain modifications to the City template to do the same, and to account for aspects of their business operations (e.g. Net Worth letter rather than traditional insurance provision, as approved by City’s Risk Manager). Collectively, these modifications were incorporated in the updated MLA staff recommends Council approve. Staff recommends that Council approve the MLA with Verizon, which includes the following updates and modifications: 1. Utility Poles, Streetlight Poles: Clarifies the language in the MLA with respect to access to and requirements for Utility Poles as distinguished from Streetlight Poles, the latter of which are not governed by the same federal and state regulatory regime because the City is acting in its proprietary capacity with Streetlight Poles. 2. Streamline, Clarify Exhibits. Under the MLA, telecommunications providers that desire to install or modify their facilities on utility poles, streetlight poles or in conduits must apply and secure approval from the City in order to do so. The updated MLA with Verizon streamlines and updates the Exhibits to the Agreement to (a) condense the total number of exhibits, (b) decrease the length of the exhibits, (c) better reflect the City’ current processes and fees, and (d) where mutually agreeable to the City and Verizon adjusts the process and format of the standard Exhibit templates to facilitate Verizon’s administrative review and processing. 3. Payment Nomenclature, Timing. Updates the payment nomenclature in the MLA and Exhibits to more closely reflect the City’s current business practice with respect to review and approval of attachments. 4. Termination by Verizon. Authorizes Verizon to terminate the MLA or Supplements thereunder at its discretion, provided that Verizon provides the City with adequate advance written notice, pays all costs due and payable at termination with no proration or refunds, and continues to comply with removal requirements set forth elsewhere in the agreement. 5. General Updates. Makes other changes throughout the MLA and Exhibits to remove outdated sections or schedules, updates language for clarity and reflects city’s current business practices and procedures more accurately. City of Palo Alto Page 4 Timeline Staff has been informed by Verizon Wireless representatives that it plans to install approximately eighty (80) sites in Palo Alto in the next 3 to 5 years. Resource Impact The MLA represents an increased work load for Utilities. As required by law, staff will review and administer the installation, inspection and billing associated with these wireless communication facilities as additional work priority. The annual License Fees for DAS attachments to be charged are contingent on the number of antennas that are attached by wireless communications service providers. Policy Implications These recommendations are consistent with the Telecommunications Policy adopted by the Council in 1997, to facilitate the competitive delivery of advanced telecommunications services in Palo Alto in an environmentally sound manner (Reference CMR: 369:97). Environmental Review The California Environmental Quality Act (“CEQA”) does not apply to the Council’s approval of legal documents such as the MLA and Exhibits, because approval of these documents does not constitute a “project” for purposes of CEQA review. In the case of a third party applying to undertake certain action under the MLA, whether or not CEQA applies will be determined by Staff on a case-by-case basis with respect to each application, based on location, supporting structure, and other factors. Attachments:  Attachment A: Master License Agreement with GTE Mobilnet DBA Verizon Wireless (PDF)  Attachment B: Verizon MLA Exhibits (PDF) Contract No. ____________ JM 07-001 Verizon MLA MASTER LICENSE AGREEMENT FOR USE OF CITY-CONTROLLED SPACE ON UTILITY POLES AND STREETLIGHT POLES AND IN CONDUITS BETWEEN THE CITY OF PALO ALTO AND GTE MOBILNET OF CALIFORNIA LIMITED PARTNERSHIP, DBA VERIZON WIRELESS ATTACHMENT A Contract No. ____________ TABLE OF CONTENTS JM 07-001 Verizon MLA i Section Description Page 1.0 DEFINITIONS ..................................................................................................3 2.0 TERMS AND TERMINATION .......................................................................7 3.0 GRANT AND SCOPE OF LICENSE ..............................................................8 4.0 OTHER RIGHTS AND OBLIGATIONS OF LICENSEE ..............................12 5.0 APPLICATION FOR ACCESS .......................................................................14 6.0 COSTS AND FEES ..........................................................................................17 7.0 CONSTRUCTION AND INSTALLATION OF THE LICENSEE FACILITIES .....................................................................................................19 8.0 MOVING THE LICENSEE FACILITIES .......................................................21 9.0 INSPECTION OF THE LICENSEE FACILITIES ..........................................21 10.0 UNAUTHORIZED ATTACHMENT OR OCCUPANCY ..............................22 11.0 INSTALLATION AND REPLACEMENT OF THE LICENSEE FACILITIES .....................................................................................................23 12.0 INDEMNITY; WAIVER; RISK OF LOSS ......................................................25 13.0 INSURANCE ....................................................................................................26 14.0 PERFORMANCE BOND; LETTER OF CREDIT ..........................................27 15.0 REPRESENTATIONS AND WARRANTIES.................................................28 16.0 DEFAULT; REMEDIES FOR DEFAULT ......................................................29 17.0 DISPUTE RESOLUTION ................................................................................30 18.0 NOTICES ..........................................................................................................31 19.0 MISCELLANEOUS PROVISIONS .................................................................32 Contract No. ____________ JM 07-001 Verizon MLA 1 MASTER LICENSE AGREEMENT FOR USE OF CITY-CONTROLLED SPACE ON UTILITY POLES, STREETLIGHT POLES AND IN CONDUITS BETWEEN THE CITY OF PALO ALTO AND GTE MOBILNET OF CALIFORNIA LIMITED PARTNERSHIP, DBA VERIZON WIRELESS THIS MASTER LICENSE AGREEMENT (the “Agreement”), dated as of ______________, _____ (the “Effective Date”), is entered into by and between the CITY OF PALO ALTO, a California chartered municipal corporation (the “City”), and GTE MOBILNET OF CALIFORNIA LIMITED PARTNERSHIP, DBA VERIZON WIRELESS (the “Licensee”) (individually, a “Party” and, collectively, the “Parties”), in reference to the following facts and circumstances: RECITALS 1. The City represents that it owns (or co-owns with Pacific Bell Telephone Company dba AT&T California or Pacific Gas and Electric Company, or both) or controls, operates and maintains certain Utility Poles and Streetlight Poles located within its jurisdictional boundary. The City also represents that it owns, controls, operates and maintains certain ducts and conduits located within its jurisdictional boundary. 2. The Licensee represents that it is either (a) a personal wireless service provider authorized, certificated or licensed by the FCC or other agency, (b) an operator of a distributed antenna system network authorized, certificated or licensed by the FCC, the CPUC or other agency, (c) a wireline provider of Telecommunications Service authorized, certificated or licensed by the CPUC, or (d) a provider of Multichannel Video Services which is franchised by the CPUC or other agency. 3. The Licensee represents that it is authorized to provide Communications Service, is otherwise qualified to do business in California, and has obtained all necessary authorizations, certifications or licenses from the FCC, the CPUC or other agency. A copy of the Licensee’s CPCN or WIRN, if applicable, is attached hereto as Exhibit “A.” 4. The Licensee desires access to and use of the City-controlled spaces on certain Poles and/or in certain Conduits in order to attach and/or install its wireline and/or wireless communications facilities and equipment for the purpose of providing Communications Service in Palo Alto as described in the applicable Supplement. The Licensee Facilities, which will be attached to certain Poles and/or installed in certain Conduits, will be identified in Exhibit “1” to each Supplement. 5. Subject to the terms and conditions of this Agreement and further subject to the City’s good faith determination that the Licensee Facilities will not unreasonably interfere with the City’s duty to serve its municipal utility customers (including, without limitation, its electric, natural gas, dark fiber optics and water utility Contract No. ____________ JM 07-001 Verizon MLA 2 customers) or will not adversely affect the City’s obligation to otherwise provide for and protect the public health, safety and general welfare, the City is willing to grant to the Licensee a non-exclusive license to attach and/or install the Licensee Facilities on certain Poles and/or in certain Conduits, subject to conditions and limitations that the City may impose from time to time as permitted at Law and in this Agreement. NOW, THEREFORE, in consideration of the Recitals and the following agreements, covenants, and obligations, the value and sufficiency of which are acknowledged, the Parties mutually agree: AGREEMENT 1.0 DEFINITIONS Except as the context otherwise requires, the capitalized terms used in this Agreement shall have the meanings noted in this Article 1.0. “Additional Costs and Fees” has the meaning set forth in Exhibit “C”. “Annual Costs and Fees” has the meaning set forth in Exhibit “C”. “Applicant” means any Person who requests the approval and authorization of the City to access, use and occupy any City-controlled space on Poles and/or in Conduits. “Application” means the application to access and use Poles and/or Conduits, as set forth in the Processing Request Application, Exhibit “G,” referred to in Section 5.1. The term does not extend to an application for a permit that is required by Title 12 or Title 18 of the Palo Alto Municipal Code, with which the Licensee shall comply. “Available” means, when used in the context of Conduit Occupancy or Pole Attachment, any usable space on a Pole or in a Conduit that is not otherwise occupied by the City, a joint owner of a Pole and/or an existing licensee at the time an Application is submitted and is available for use by the Licensee. “Business Day” means any Day, except a Saturday, Sunday, and any Day observed as a legal holiday by the City. “City Facilities” mean the Poles, Conduits and any other City and/or CPAU facilities that are exclusively controlled by the City. “City Manager” means the individual designated as the City Manager of the City by Palo Alto Municipal Code section 2.08.140, and any individual who is designated the representative of the City Manager. Contract No. ____________ JM 07-001 Verizon MLA 3 “Communications Service” means a Telecommunications Service, Multichannel Video Service, Information Service, or any other service involving the transport or transmission of information electronically by wire or radio. “Conduit” means any metal, plastic or like-material duct or pipe that is wholly- owned and/or exclusively controlled by the City. “Conduit Occupancy” means any attachment and/or installation in Conduit. “Costs and Fees” means the utility rates, fees and charges actually incurred by the City to perform the Preparatory Work and the Make-Ready Work at the Licensee’s request, including, without limitation, (a) the actual rates, fees and charges or other expenditures to be incurred or incurred by the City and/or any general contractor or subcontractor acting on behalf of the City to perform the Make-Ready Work, and (b) if the City’s employees perform the Make-Ready Work, the work performed at their labor rates. Costs and Fees also includes any fee, assessment, charge (other than Costs), imposition, or other levy (but excluding a franchise fee and any tax, including the telephone utility users tax, now or hereafter in effect), lawfully imposed by the City. “CPAU” means the City’s Department of Utilities, including, without limitation, the City’s electric utility, fiber optics utility, gas utility and water utility. “CPCN” means the certificate of public convenience and necessity, issued by the CPUC to the Licensee. “CPUC” means the California Public Utilities Commission or successor agency. “Day” means a calendar day, unless a Business Day is specified. “Director” means the Public Works Director, the Utilities Director, the Planning Director or any other Person who exercises the responsibilities of the director of any City department, identified in Chapter 2.08 of the Palo Alto Municipal Code. “Effective Date” has the meaning set forth in the Preamble to the Agreement. “FCC” means the Federal Communications Commission or successor agency. “Force Majeure” means an incident, event or cause, whether or not foreseeable, that is beyond the reasonable control of a Party, including, without limitation, an act of God, act of a superior governmental authority, earthquake, fire, flood, labor strike Contract No. ____________ JM 07-001 Verizon MLA 4 or sabotage, which has an adverse effect on the design, construction, installation, management, operation, testing, use or enjoyment of the Facilities. “Information Service” means “information service,” as defined in 47 U.S.C. §153(25). “Initial/One-Time Costs and Fees” has the meaning set forth in Exhibit “C”. “Law” means any applicable administrative or judicial act, decision, certificate, charter, code, constitution, opinion, order, ordinance, policy, procedure, rate, regulation, resolution, rule, schedule, specification, statute, tariff, or other requirement of the City, of any county, state or federal agency, or of any other agency having joint or separate jurisdiction over the Licensee or the City, or both, and their separate facilities, now or hereafter in effect during the term of this Agreement, including, without limitation, any regulation or order of an official entity or body. “Letter of Credit” means an irrevocable standby letter of credit issued by a U.S. bank or other financial institution, which has an issuer or other creditworthiness rating of at least “A” by Standard & Poors and an “A2” by Moody’s Investor Services. “Licensee Facilities” means, without limitation, aerial, surface or underground wires, amplifiers, antennas, boxes, cabinets, cables (including fiber optic and coaxial cables), circuits, conduits, conductors, converters, copper wires, decoders, demodulators, drop wires, ducts, electronics, encoders, equipment, generators, hubs, inner-ducts, lasers, manholes, microwave, modulators, multiplexers, networks, nodes, optical fibers, optical repeaters, patch panels, processors, receivers, splice boxes, switches, tap-offs, terminals, traps, vaults, wires, wire and wireless transmitters and receivers, and other similar equipment owned, leased, or controlled by the Licensee that is used for or is useful in the provision of Communications Service, in existence either as of the Effective Date or at any time during the term of this Agreement and located in or on the City Facilities. “Make-Ready Construction Work” means all construction-related work associated with Make-Ready Work “Make-Ready Construction Work Fees” means Costs and Fees associated with Make-Ready Construction Work as more particularly described in Exhibit “C.” “Make-Ready Engineering Work” means engineering-related work associated with Make-Ready Work. “Make-Ready Engineering Work Fees” means Costs and Fees associated with Make-Ready Engineering Work as more particularly described in Exhibit “C.” Contract No. ____________ JM 07-001 Verizon MLA 5 “Make-Ready Work” means changes to be made to City-owned or – controlled Poles, its own Pole Attachments, the existing Pole attachments of any joint owner(s) and any existing licensee, or the existing additional equipment associated with those attachments, that may be needed to accommodate a proposed additional pole attachment. It also includes Make-Ready Work relating to access to Conduits by the Licensee Facilities. “Make-Ready Work Fees” means Make-Ready Engineering Work Fees and Make-Ready Construction Work Fees, including as more particularly described in Exhibit “C” attached to this Agreement. “Multichannel Video Services” means “cable service” as defined in Chapter 2.10 of Title 2 of the Palo Alto Municipal Code and in 47 U.S.C. § 522(6), “video service” as defined in Cal. Pub. Util. Code § 5830(s), services provided over an open video system certificated by the FCC pursuant to 47 U.S.C. § 573 or a cable communications system, as defined in Chapter 2.10 of Title 2 of the Palo Alto Municipal Code, and any other form of delivery of multichannel video services to subscribers in Palo Alto over the Licensee Facilities located in the Public Rights-of-Way or Public Utilities Easements. “Payment Commencement Date” means the first day of the month following the City’s completion of a final electric service connection for the Licensee Facility under a Supplement. “Person” means any individual, for-profit corporation, nonprofit corporation, general partnership, limited partnership, limited liability company, limited liability partnership, joint venture, business trust, sole proprietorship, or other form of business association, but it does not include the City. “Pole” means (a) any Utility Pole, excluding towers, used to support mainly overhead distribution wires and cables, jointly or separately owned by the City, (b) any Streetlight Pole, wholly owned by the City, and (c) the anchors and guy strands/guy wires, which are located in the Public Rights-of-Way and the Public Utility Easements. The term does not include any Utility Pole that is wholly owned by a Person other than the City. “Pole Attachment” means any attachment to a Pole by the Licensee. “Preparatory Work” means, except as otherwise provided herein, work of a preliminary nature undertaken by City staff, including, without limitation, survey and field inspection work, review of engineering plans and specifications and other related work, that precede, and are required to establish, the Make-Ready Work in order to facilitate the attachment and/or installation of the Licensee Facilities in, on or about Poles and/or Conduits. “Preparatory Work Fees” has the meaning set forth in Exhibit “C” attached to this Agreement. The term does not extend to any fee associated with an Contract No. ____________ JM 07-001 Verizon MLA 6 application or permit that is required by Title 12 or Title 18 of the Palo Alto Municipal Code, which which Licensee shall comply. “Provision” means any agreement, circumstance, clause, condition, covenant, fact, objective, qualification, restriction, recital, reservation, representation, term, warranty, or other stipulation in this Agreement or an Exhibit or by Law that defines or otherwise controls, establishes, or limits the performance required or agreed by any Party hereto. All Provisions, whether covenants or conditions, shall be deemed to be both covenants and conditions. “Public Rights-of-Way” means the areas in, upon, above, along, across, under, and over the public alleys, boulevards, courts, lanes, places, roads, streets, and ways, including, without limitation, all Public Utility Easements, within the jurisdiction of the City. This term shall not include any real property, in whole or in part, owned by any Person or agency other than the City except as provided by Law or pursuant to an agreement between the City and any such Person or agency, nor shall it include any real property owned and/or controlled by the City that is not dedicated to utility or public transit use. “Public Utility Easement” means any privately owned land, in which the City holds an easement for public utility uses and purposes, without regard to whether any “public utility,” as defined in California Public Utilities Code section 216(a), has an easement for similar public utility uses and purposes. “Standard Drawings and Specifications” means the general terms and conditions, specifications, and requirements of the City which govern the design, construction, installation, and maintenance of any improvement to be located within the Public Rights-of-Way and Public Utility Easements. This document is authored by the City’s Department of Public Works, Engineering Division, and any reference to such document shall include additions, amendments, deletions, revisions, modifications, and updates to this document. This term shall include documents entitled “General Conditions” or words of similar import, now or hereafter existing, which directly pertain to all aspects of general construction work. “Streetlight Pole” means any pole that is used for streetlighting purposes, including, without limitation, those using concrete, steel or aluminum (or other metal) or, wood.. The term does not include Utility Poles; provided, however, that in the event a pole is used for both streetlighting purposes and for electrical distribution facilities, the pole shall be deemed to be a Utility Pole. “Supplement” means that document in substantially the form attached hereto as Exhibit “B” and incorporated by reference containing information related to Licensee Facilities attachments to Poles. A Supplement shall be effective on the Supplement Effective Date, and upon such execution, shall be deemed incorporated into this Agreement. Contract No. ____________ JM 07-001 Verizon MLA 7 “Supplement Effective Date” has the meaning set forth in the Preamble to the Supplement. “Telecommunications Service” means to the extent not inconsistent with federal law, the transmission of voice, video or data information in rendering audio, video or data service, which may be offered by the Licensee pursuant to its FCC, CPUC or other agency approval, authorization, certification or license. Multichannel Video Service shall not be considered a Telecommunications Service or an Information Service hereunder, except to the extent required by Law. “Utilities Rules and Regulations” means the City’s utilities rules and regulations, authorized by Chapter 12.20 of the Palo Alto Municipal Code. “Utility Pole” means any standard design wooden or metal pole that is used for electrical distribution facilities. The term does not include Streetlight Poles; provided, however, that in the event a pole is used for both streetlighting purposes and for electrical distribution facilities, the pole shall be deemed to be a Utility Pole. “WIRN” means the wireless identification registration number that the Licensee is required to obtain from the CPUC in order to offer intrastate wireless telecommunications services in California. “Work” means and includes both Preparatory Work and Make-Ready Work. 2.0 TERM AND TERMINATION 2.1 Term. 2.1.1 Initial and Extension Terms of Agreement. The initial term of this Agreement is ten (10) years (the “Initial Term”), commencing on the Effective Date, unless and until it is earlier terminated in accordance with this Agreement. This Agreement shall extend for an additional ten (10) years (the “Extension Term”), commencing on the expiration of the Initial Term, provided that: (i) Licensee shall give written notice in accordance with to section 18 of its intention to extend this Agreement no less than sixty (60) Days prior to the expiration of the Initial Term; (ii) the Licensee is in substantial compliance with the Provisions; (iii) there has not been any change in Law that may materially affect the Provisions or their enforceability; and (iv) neither the City nor Licensee have otherwise terminated this Agreement in accordance with the Provisions. 2.1.2 Renewal of Agreement. The Parties may in good faith negotiate the terms and conditions of a new master license agreement, which negotiations the Parties shall use reasonable effort to commence by no later than six (6) months before the expiration of the Extension Term; provided, however, the negotiations shall be Contract No. ____________ JM 07-001 Verizon MLA 8 based on the terms and conditions of the City’s standard master license agreement then in effect or in accordance with such other contract rates, terms and conditions or Law as may be adopted by the City. If the Parties fail to negotiate the renewal of a new master license agreement, then the Licensee shall be deemed to hold over and shall be otherwise liable to perform its obligations hereunder, including the payment of all Annual Costs and Fees or for any other Costs and Fees due and payable under this Agreement, in accordance with the terms and conditions of the standard master license agreement then in effect, unless there is no such standard master license agreement then in effect, in which event the terms and conditions of this Agreement shall continue to apply. (i) If a new master license agreement has not been executed by the Parties by the expiration of the Extension Term, and the Parties do not otherwise agree in writing to renew, then the Licensee, at the City’s option provided in writing no later than ninety (90) days prior to the expiration of the Extension Term, shall either: (a) sell the Licensee Facilities to the City at fair market value, if the Licensee desires to sell and the City desires to purchase the Licensee Facilities or any part thereof (and in such case the City shall accept the Licensee Facilities in its then existing “as is” condition); (b) at the Licensee’s sole cost and expense, remove the Licensee Facilities from the City Facilities if the City does not intend to purchase the Licensee Facilities; (c) without cost or charge to the City, abandon the Licensee Facilities on Poles and/or in Conduits, provided the City first approves, in writing, the proposed abandonment of the Licensee Facilities and the terms and conditions applicable to that abandonment, whereupon in the absence of any agreement by the Parties to the contrary, such facilities shall become the property of the City. The City’s failure to provide notice or exercise its options pursuant to this section shall not relieve Licensee of its obligation to remove Licensee Facilities pursuant to section 7.5 of this Agreement. 2.1.3 Term of Supplement. The term for each particular Supplement begins on the Supplement Effective Date, and ends upon the expiration of the Initial Term, or the Extension Term, if validly exercised, under this Agreement, unless such individual Supplement is earlier terminated, or this Agreement is extended pursuant to section 2.1.2, as provided for in this Agreement. 2.1.4 Changes in Law. The Parties acknowledge that the subject of wireline and wireless communications facilities in the context of Utility Pole attachments has been addressed and continues to be addressed by federal and California authorities. If, during the Initial Term or the Extension Term, a Law is adopted, amended or repealed and is made binding upon the City and is applicable to this Agreement, then the Parties shall agree to negotiate in good faith an amendment to this Agreement (or a new agreement, as the case may be) to the extent necessary to comply with such Law. If the Parties cannot mutually agree to an amendment to this Agreement (or a new agreement) within three (3) months after a Party receives the other Party’s request to negotiate an amendment to this Agreement (or a new Contract No. ____________ JM 07-001 Verizon MLA 9 agreement, as the case may be) pursuant to this section 2.4, then the Parties will agree to submit the dispute to mediation and non-binding arbitration under mutually acceptable terms and conditions.TERMINATION 2.2 Termination 2.2.1 By City. Except as otherwise provided herein, the City may terminate this Agreement, or at City’s election, any Supplement, for cause (as defined in subsection 2.2.1(i)) upon ten (10) Days’ prior written notice sent by the City to the Licensee; in that event, the City may exercise its legal rights and/or equitable remedies hereby reserved under this Agreement or by Law at any time, including, without limitation, the right to recover any uncollected Annual Costs and Fees that would be due and payable by the Licensee to the City if this Agreement had not been terminated during the Initial Term or the Extension Term, if any. (i) A termination for cause means: (a) the Licensee has failed to cure a material default of this Agreement within thirty (30) Days after it receives the City’s notice of default, or, if the default can be cured and such cure reasonably requires more than thirty (30) Days to achieve, fails to commence such cure within the specified period but, thereafter, diligently continues such cure until completion thereof; (b) the CPUC, the FCC or other agency exercising jurisdiction over the Licensee has, by final order or action that is no longer subject to appeal, terminated or otherwise revoked the Licensee’s approval, authorization, certification or license to operate the Licensee Facilities, to provide Communications Service, or to transact business referred to in Recital numbers 2 and 3; or (c) the Licensee’s authority to do business in California has expired or is rescinded or terminated by final order or action that is no longer subject to appeal. (ii) Upon the establishment of termination of the Agreement or any Supplement for cause, the right to attach to any Pole and/or to occupy any Conduit affected thereby, will immediately terminate after the City delivers thirty (30) Days’ prior written notice to the Licensee. In that event, the Licensee shall, within six (6) months of the effective date of termination of this Agreement, remove or cause the removal of the Licensee Facilities from the affected Poles and/or Conduits, or, if the Licensee fails to remove or cause such removal within such six-month period, the City may remove the same for the account of and at the sole cost and expense of the Licensee. The preceding sentence notwithstanding, the Parties by mutual agreement may exercise any option made available under subsection 2.2.1. 2.2.2 By Licensee. Except as otherwise provided herein, Licensee may terminate this Agreement or any individual Supplement hereunder, upon sixty (60) Days’ prior written notice sent by the City to the Licensee. Termination of the Agreement or any Supplement by Licensee pursuant to this section shall not relieve the Licensee of its obligation to pay any Initial/One-Time Costs and Fees, Annual Costs and Fees, Additional Costs and Fees, or for any other Costs and Fees due and payable Contract No. ____________ JM 07-001 Verizon MLA 10 under this Agreement as of the effective date of the termination to the City under the Agreement or applicable Supplement, including the uncollected Annual Costs and Fees that would be due and payable by the Licensee to the City as of the effective date of the termination if the Agreement or Supplement had not been terminated; provided, however, that Licensee shall not be entitled to a refund for any Costs and Fees already paid to City. Provisions of this Agreement related to removal of Licensee Facilities shall also apply. Upon termination of any Supplement, no further annual Costs and Fees shall be due. 3.0 GRANT AND SCOPE OF LICENSE 3.1 Grant of License. The City grants to the Licensee, and the Licensee accepts from the City, subject to the Provisions, a non-exclusive license to access and use certain Poles and/or Conduits and attach, install, operate, maintain, repair, remove, reattach, relocate and replace the Licensee Facilities in, on or about those certain Poles and/or Conduits described in the Supplement, provided, however, that Licensee may not place ground facilities, such as cabinets, in Public Utility Easements located on private property without separate written City consent or approval. The rights and obligations of the Licensee under this Agreement will be exercised at the Licensee’s sole cost and expense, unless otherwise agreed to by the Parties. The rights of Licensee under this Agreement are subject to conditions in this Agreement and to the conditions that the City may from time to time lawfully impose on the use of such Poles and/or Conduits This grant of license to access and use certain Poles and/or Conduits does not permit the Licensee to access and use other Poles and/or Conduits not specifically listed in the Supplement. 3.2 Scope of License. The grant of license to the Licensee is subject to: 3.2.1 the prior use and existing and continuing rights, consents and approvals of the City, including CPAU and other City departments, the joint owner(s) and any existing licensee of certain Poles and/or Conduits, 3.2.2 existing and future recorded and unrecorded deeds, easements, dedications, agreements, conditions, covenants, restrictions, encumbrances and claims of title which may affect any right, title and interest in and to the Public Rights-of-Way, Public Utility Easements, and any City-owned or -controlled facility located in the Public Rights-of-Way or Public Utility Easements; 3.2.3 any restrictions on permissible uses of City Public Utility Easements under applicable law, and 3.2.4 any restrictions that the City imposes on Poles, including, without limitation, limits on the height of certain Poles or attachments to certain Poles, provided the same do not conflict with any laws or decisions of the California Public Contract No. ____________ JM 07-001 Verizon MLA 11 Utilities Commission (CPUC). 3.3 Nothing in this Agreement shall be deemed to grant, convey, create, or vest in the Licensee a perpetual interest in land or the Public Rights-of-Way or Public Utility Easements, including, without limitation, any fee, leasehold interest, easement, or franchise rights. Neither the City, nor the joint owner(s) of certain Poles, nor any existing licensee shall be liable to the Licensee for the failure of the City, the joint owner(s) of certain Poles, and/or any existing licensee to secure the proper legal authority from a grantor of an easement affecting any Pole or Conduit. 3.3.1 The Licensee, as a condition precedent to its right to access, use, and attach and/or install the Licensee Facilities in, on or about any Pole or Conduit, shall obtain from the City other necessary approvals, authorizations, and/or permits to access and use the Public Rights-of-Way and the Public Utility Easements controlled by the City. 3.3.2 The Licensee’s right to access, use, and attach to and/or install in, on or about any Poles and/or Conduits is subject to the City’s prior right to use or remove from use at a future date any Pole or Conduit space occupied by, or requested to be occupied by, the Licensee in the reasonable exercise of its governmental or proprietary powers. The Licensee acknowledges and agrees that its right to attach and/or install is also subject to the prior rights of the joint owner(s) of certain Poles and/or any existing licensee. If the Licensee’s right under this subsection 3.2.3 is affected by such City action, then the City will use reasonable efforts to find one or more alternative locations for the Licensee to attach the Licensee Facilities in accordance with the facilities relocation procedure set forth in Section 7.2. 3.3.3 The City may for consideration of the public health, safety, or welfare, including, without limitation, safety, reliability, consistency with surrounding area, security or engineering, historic or environmental preservation, or other legally permitted land use reasons, terminate or otherwise modify the scope of the Licensee’s non-exclusive license granted pursuant to this Agreement, upon sixty (60) Days’ prior written notice to the Licensee. If the City exercises its rights under this subsection 3.2.4, then it will use reasonable efforts to find one or more alternative locations for the Licensee to attach the Licensee Facilities. 3.3.4 Except as authorized by Law or this Agreement, the Licensee in the performance and exercise of its rights and obligations, shall not obstruct or interfere in any manner with the Public Rights-of-Way, Public Utility Easements, private rights-of-way, sanitary sewers, sewer laterals, water mains, storm drains, gas mains, poles, aerial and underground electric and telephone wires, electroliers, Multichannel Video Service facilities, and other telecommunications, utility, and municipal property or facilities without the express written approval of the City and/or the other owner(s) of the affected property or properties. Contract No. ____________ JM 07-001 Verizon MLA 12 3.3.5 The City reserves to itself the right to attach, install, maintain, replace and enlarge the City Facilities and to operate the same from time to time in such manner as will best enable it to meet the needs of CPAU’s utility customers and fulfill its service requirements. Except as provided in subsection 12.1.1, the City shall not be liable to the Licensee or its customers for any interruption of service of the Licensee or for interference with the Licensee Facilities arising in any manner relating to the City’s, the joint owner(s)’or any existing licensee’s use of the City Facilities under this Agreement, or arising in any manner out of the condition or character of the City Facilities or their manner of operation. 3.3.6 Nothing in this Agreement shall be deemed to create an entitlement of Licensee access to any particular Pole or Conduit, except as set forth in the applicable Supplement. 3.4 Compliance with Laws. The Licensee shall comply with all Laws, including, without limitation, the CPUC’s General Orders (“GO”) that are applicable to the Licensee, in the exercise and performance of its rights and obligations under this Agreement. The preceding sentence notwithstanding, the Licensee shall furnish a copy of the notification letter required by GO 159A, Section IV.C.2 to the Planning Director, to the extent GO 159A applies to the Licensee. 3.4.1 The Licensee shall obtain the City’s review and approval of the proposed siting and design and the construction methods to be used with respect to the Licensee Facilities, as may be required by Law. The Licensee shall obtain architectural review of the Licensee Facilities by the City’s Planning Department staff and by the City’s Architectural Review Board, which review will be dependent on the characteristics of the Licensee’s proposed project, as may be required by Law. The Licensee acknowledges that additional review by any other City board or commission or the City Council may be required by Law. The reviews referred to in this subsection 3.3.1 shall be conducted in conformance with the City’s land use approval process, to the extent applicable to the Licensee Facilities. Notwithstanding anything to the contrary in this Agreement, but in compliance with all laws and any CPUC decision, the City reserves the right to prohibit and/or condition initial installations or modifications of Licensee Facilities on Poles, including, but not limited to, increases in height or width of Poles. 3.4.2 The City may require the Licensee to file one or more written reports with any of the Directors within the time(s) requested. The Licensee shall file with the Utilities Director a copy of the radio frequency propagation study of any Licensee Facilities within thirty (30) Days of the completion of the first authorized attachment and/or installation of the Licensee Facilities occurring during the Initial Term and the Extension Term, if any. Contract No. ____________ JM 07-001 Verizon MLA 13 3.4.3 The City may require the Licensee to obtain a conditional use permit, if the City determines that the Licensee Facilities are subject to the requirements of Title 18 of the Palo Alto Municipal Code or other Law. 3.5 Authorized Services. The Licensee shall use the Licensee Facilities for the sole purpose of providing Communications Service that is subject to any FCC, CPUC or other agency approval, authorization, certification, or license. If the Licensee is authorized to offer new and/or additional Communications Service not now approved, authorized, certified, or licensed under its current FCC, CPUC or other agency approval, authorization, certification, or license, then the Licensee shall furnish the City Manager and the City Attorney with a copy of its application(s) for any such additional approval, authorization, certification, or license and a copy of any additional authorization, certification, grant, license within thirty (30) Days of its filing and its issuance. 3.5.1 The Licensee shall not allow any other Person to control the Licensee Facilities, or any portion thereof, for compensation, whether in cash or cash equivalent, for any purpose not directly related to the Licensee’s provision of Communications Service or other services approved, authorized, certified or licensed by the FCC, CPUC or other agency, unless the Licensee first gives thirty (30) Days’ prior written notice to the City Manager and the City Attorney of such intended use. 3.5.2 The Licensee acknowledges and agrees that (a) this Agreement is not a “franchise” within the meaning of 47 U.S.C. § 522(9), California Government Code § 53066, or California Public Utilities Code § 5800 et seq., and (b) this Agreement does not authorize, certify, grant or license the Licensee to use the Public Rights-of-Way and the Public Utility Easements to provide Multichannel Video Services or any other comparable services to subscribers in Palo Alto. 3.6 Location of Licensee Facilities. The non-exclusive license granted hereby shall not extend to any Pole and/or Conduit to which the attachment and/or installation of the Licensee Facilities thereon or therein would result in a forfeiture of rights by the City or the imposition of additional obligations or liabilities upon the City, the joint owner(s) of certain Poles, and/or any existing licensee to occupy the Public Rights-of-Way or Public Utility Easements. 3.6.1 If the existence of the Licensee Facilities in, on or about such Poles and/or Conduits would result in a forfeiture of any rights of the City, the joint owner(s) of certain Poles and/or any existing licensee, then the Licensee, at its sole cost and expense, shall promptly remove the Licensee Facilities within ninety (90) Days after receipt of written notice from the City. If the Licensee Facilities are not timely removed, the City may at the Licensee’s sole cost and expense remove them or cause their removal after the expiration of the notice period without liability on the part of the City or any third party hired or directed by the City to remove the same or parts thereof. In that event, the Licensee shall pay the City, upon demand, for the City’s Contract No. ____________ JM 07-001 Verizon MLA 14 actual costs of removal and for all losses and damages that are incurred by the City by such undertaking. This obligation shall survive the early termination or expiration of this Agreement. 3.6.2 The Licensee shall relocate the Licensee Facilities within ninety (90) Days or other period of time established by Law after the Licensee’s receipt of written notice by the City that the Licensee must remove or relocate those facilities to another designated location within the City’s jurisdictional boundary pursuant to the City’s exercise of its police powers, including, without limitation, in accordance with the establishment of an underground utility district. 3.6.3 During the Initial Term and the Extension Term, if any, the Licensee may voluntarily remove any Licensee Facilities or part thereof from the City Facilities or part thereof on a permanent basis, provided that the Licensee first gives the City and any affected joint owner(s) of certain Poles and/or any existing licensee at least sixty (60) Days’ prior written notice of its intention to remove the Licensee Facilities. The voluntary removal of the Licensee Facilities prior to the expiration of the Initial Term or Extension Term, if any, shall not relieve the Licensee of its obligation to pay any Costs and Fees associated with the removal then due and payable to the City, including the uncollected Annual Costs and Fees that would be due and payable by the Licensee to the City if this Agreement had not been terminated. The Licensee shall obtain from the City any other approvals, authorizations, and permits required by Law prior to the commencement of such removal work. Upon removal, the Licensee may transfer the Licensee Facilities to the City, provided that the City first agrees, in writing, to accept title thereto, consistent with subsections 2.2.1(i) and (iii). Within six (6) months after the Licensee voluntarily abandons its License Facilities, or parts thereof, and fails to remove them upon the earlier of the date of voluntary abandonment or the date of early termination or expiration of this Agreement, the City shall arrange for the removal of the Licensee Facilities at the Licensee’s sole cost and expense if the City does not approve or otherwise accept the abandoned Licensee Facilities. Prior to the effective date of abandonment, the Licensee shall post security with the City to assure the City will recover the reasonable costs of removal of the Licensee Facilities; at the City’s election, the security may take the form of a Performance Bond, described in Article 14.0, or a Letter of Credit in the amount specified therein, as may be established by the City. 3.7 Disclaimer; Waiver. In no event shall either Party or its successors and assigns, elected officials, officers, employees, agents or representatives be liable for any lost profits, consequential, special, exemplary, indirect, punitive or incidental losses or damages, including loss of use, loss of goodwill, lost revenues, loss of profits or loss of contracts even if such Party has been advised of the possibility of such damages, and the Parties each waive such claims and releases each other and each of such Persons from any such liability. This Section 3.7 Contract No. ____________ JM 07-001 Verizon MLA 15 shall not apply to any Costs or Fees or any other cost or fee referred to herein that the Licensee owes to the City. 3.7.1 The Parties acknowledge that California Civil Code Section 1542 provides that: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” The Parties waive the provisions of Section 1542, or other similar provisions of Law, and intend that the waiver and release provided by this subsection shall be fully enforceable despite its reference to future or unknown claims. 4.0 OTHER RIGHTS AND OBLIGATIONS OF LICENSEE 4.1 General. During the Initial Term and the Extension Term, if any, the Licensee shall request, in writing, the City’s approvals and authorizations to add, attach, install, move, remove, repair, replace, modify, or otherwise alter or change the Licensee Facilities, except as may be otherwise provided in this Agreement. The Licensee shall file the applicable requests for approvals and authorizations with the appropriate Director(s). 4.1.1 Each Party will use due care, and shall ensure that no damage, beyond reasonable wear and tear, is caused to the other Party’s facilities or property, or the facilities or property of the joint owner(s) of certain Poles and Conduits and/or any other licensees using the Poles and/or Conduits, including, without limitation, the joint owner(s)’ or other licensee(s)’ fibers, wires, cables, poles and/or conduits lawfully located in, on or about the Poles or Conduits to which the License intends to attach and/or install the Licensee Facilities. Licensee shall use due care, and ensure that no damage, beyond reasonable wear and tear, is caused to the property of any property owner adjoining the Public Rights-of-Way or easements used by Licensee. Any damage or destruction which is caused by any Party or its agent or representative shall be reported within forty-eight (48) hours to the other Party, the joint owner(s) of certain Poles and Conduits, and/or other licensee(s) or property owner(s) who could be directly affected by such damage. The Party causing such damage shall reimburse the other Party and/or any other affected Person, upon demand, for any damage caused the Party or its employees, contractors, subcontractors, agents, and representatives. 4.2 Identification of Facilities. The Licensee shall identify its Licensee Facilities, including, without limitation, its fibers, wires and cables, and wireless facilities with appropriate durable, visible identification tags that describe the Licensee’s name, number, color, identification code, size, and manufacture of the Licensee Facilities, including the fibers, wires and cables and wireless facilities, the type of service, and any other criteria as may be established or agreed to by the Utilities Director. Such information may be provided to the Utilities Director in accordance with the requirements set forth in Exhibits “D,” “E,” and “F.” Contract No. ____________ JM 07-001 Verizon MLA 16 4.3 Notices to City, Joint Owners and Licensees. Excepting emergencies which may require the restoration of functionality of the Licensee Facilities within twenty-four (24) hours of loss of functionality, the Licensee shall give not less than ten (10) Business Days’ prior written notice to the Utilities Director, the joint owner(s) of certain Poles, and/or any existing licensee, whenever the Licensee will perform any approved or authorized Make-Ready Work in regard to the Licensee Facilities that will concurrently occupy any portion of the Poles and/or Conduits with the City, the joint owner(s) of certain Poles, and/or any existing licensee. Any Make-Ready Work required of the Licensee by the City shall be performed with due care by the Licensee or any Person acting on behalf of the Licensee, including its employees, agents, contractors, subcontractors and representatives. With respect to maintenance and repairs of the Licensee Facilities, the Licensee shall provide the City with reasonable prior notice in order that the City may determine whether to assign appropriate staff to be present during any such work. 4.4 Compliance with Technical Specifications. Subsection 3.3 notwithstanding, the Licensee Facilities shall be attached, installed, maintained, removed and repaired in accordance with the applicable requirements and specifications, including, without limitation, the Standard Drawings and Specifications, the specifications of the National Electrical Safety Code and National Electric Code and amendments thereto, and the applicable rules and regulations of the CPUC, the FCC and any other agency exercising jurisdiction over the Licensee. The Licensee may use the pathways inside the Streetlight Poles only if the attachment and installation work is conducted in accordance with the Standard Drawings and Specifications and the Utilities Rules and Regulations. Use of the Poles and Conduits shall be subject to any security plan now or hereafter approved by the City. 4.5 Repair of City Facilities, Public Rights-of-Way, Public Utility Easements and Private Property. The Licensee, at no liability, cost or expense to the City or the affected property owner, shall repair, replace, or restore, or shall cause the repair, replacement, or restoration, reasonable wear and tear excepted, of any damage to the City’s streets, sidewalks, underground facilities, Poles, Conduits, curbs, gutters and other City property, or any damage to any private property caused by or resulting from the performance of any Make-Ready Work by the Licensee, its employees, agents, contractor, subcontractors or representatives, or by the Licensee and others, if the Work is performed jointly by such parties. 4.6 Removal of Markings. The Licensee, at its sole cost and expense, shall remove all Underground Service Alert markings from the streets and sidewalks as may be required by Law or by the City. 4.7 Maintenance. The Licensee at its sole cost and expense, shall be responsible for all maintenance of the Licensee Facilities. 4.8 Notice to Affected Property Owners. Contract No. ____________ JM 07-001 Verizon MLA 17 4.8.1 Excepting emergencies which may require the restoration of functionality of the Licensee Facilities within twenty-four (24) hours of loss of functionality, Licensee shall give ten (10) Business Days’ prior written notice to private property owners near the site of the work whenever the Licensee will perform any approved or authorized Make-Ready Work in regard to the Licensee Facilities that will affect or is likely to affect the private property. The City may, in its reasonable discretion, waive the ten (10) Business Day advance notice requirement where City permits (including, without limitation, a Street Work or Encroachment Permit) issued for the same Make-Ready Work provide alternative notification requirements. With respect to maintenance and repairs of the Licensee Facilities, the Licensee shall provide affected private property owners or likely affected private property owners with reasonable prior notice. 4.8.2 Notwithstanding the foregoing, where installation, maintenance, or repair of Licensee Facilities has the potential to be complex, unusual, or have a significant effect on the City, other licensee(s) and/or private property owners, Licensee agrees to submit for City review and approval a coordination and public notification and outreach plan upon City request prior to commencement of any such work. 5.0 APPLICATION FOR ACCESS 5.1 Processing Request Application. The Licensee shall complete and file a Processing Request Application to request access to and use of Poles and/or Conduits (the “Application”) with CPAU and apply for and receive from the Public Works Director, Planning Director and/or the Utilities Director any other necessary authorizations and approvals. The form of the Application is attached hereto as Exhibit “G.” Upon receipt of approval of the Application and other authorizations and approvals and the payment of all required Costs and Fees, the Licensee shall coordinate with CPAU in making attachment to Utility Poles and/or occupancy of Conduits within the time period specified in Section 5.2, and with the City Manager or his/her designee in making attachment to Streetlight Poles within the time period specified in Section 5.3. Licensee acknowledges that its Applications, including all required attachments, must be submitted and complete in all respects in order for the City to deem the Application complete. To the extent not inconsistent with Law, the City reserves the right to reject any incomplete Application or any completed Application in accordance with this Agreement. 5.2 Access to Utility Poles and/or Conduit. The City, in acting upon an Application, will use reasonable efforts to process and accept or reject the Application for access to Utility Poles and/or Conduit, within the parameters and time periods set forth below: 5.2.1 Upon the City’s receipt of a complete Application, the City will invoice the Licensee for a non-refundable Preparatory Work Fee. Licensee will pay the Contract No. ____________ JM 07-001 Verizon MLA 18 Preparatory Work Fee within thirty (30) Days of receipt of the City’s invoice. 5.2.2 Within twenty (20) Days of the City’s receipt of the Preparatory Work Fee, the City will complete Preparatory Work for the Application to determine whether and where the Licensee Facilities are feasible and what Make-Ready Engineering Work will be required. 5.2.3 Within seven (7) Days of the City’s completion of the Preparatory Work, the City will notify the Licensee of the Make-Ready Engineering Work necessary for Licensee Facilities and invoice Licensee for a non-refundable Make-Ready Engineering Work Fee. 5.2.4 If Licensee elects to proceed with Licensee Facilities, within thirty (30) Days of receipt of City’s notice and invoice for Make-Ready Engineering Work Fees, Licensee will pay the Make-Ready Engineering Work Fee. Licensee’s payment of such Make-Ready Engineering Work Fees will serve as notification to City that Licensee intends to proceed with Make-Ready Engineering Work. 5.2.5 Within thirty (30) Days of City’s completion of the Make-Ready Engineering Work, the City will provide the Licensee with a description of the necessary Make-Ready Construction Work for the Licensee Facilities and the Make-Ready Construction Work Fees applicable to the Licensee Facilities. Preparatory Work Fees and Make-Ready Engineering Work Fees paid by Licensee will be credited against Make-Ready Construction Work Fees. 5.2.6 If the Parties mutually agree to proceed with Make-Ready Construction Work, the Parties will execute a Supplement, substantially in the form of Exhibit “B” to this Agreement. The Supplement will: (i) Set forth the non-refundable Make-Ready Construction Work Fee and due date therefore; provided, however, that the Make-Ready Construction Work Fee will be paid prior to the start of Make-Ready Construction Work; and (ii) Specify whether the Make-Ready Construction Work for Licensee Facilities, including the required replacement of any deteriorated Pole, will be performed by the City or the Licensee or its City-approved, qualified and licensed contractor. 5.2.7 The City will complete the Make-Ready Work for the Licensee Facilities, as needed, within one hundred five (105) Days of execution of the Supplement. 5.3 Access to Streetlight Poles. Attachments to Streetlight Poles will be made on a case-by-case basis. To the extent not inconsistent with Law, the City reserves the right to deny access to any particular Streetlight Pole in accordance with Contract No. ____________ JM 07-001 Verizon MLA 19 this Agreement. Any such denial shall be accompanied by a description of any modifications Licensee may make, or alternative locations Licensee may use, to obtain approval and an explanation of the reasons for the rejection of Licensee’s application. 5.4 Tolling. Notwithstanding Sections 5.2.1 through 5.2.7, and 5.3, the City may toll or stop the clock on any of the timelines mentioned in Sections 5.2.1, 5.2.2, 5.2.4 or 5.2.6 and 5.3 in the event of an emergency as determined by the City or for other good and sufficient cause. 5.4.1 The City will provide written notice to the Licensee of the City’s determination regarding the emergency or other good and sufficient cause. If the City is unable to complete any of the Work contemplated in Sections 5.2(A), (D) and/or (F) or 5.3 within the specified time periods, then the Licensee may request the City’s approval to undertake and complete such Work, provided that: (i) the Licensee gives to the City not less than 72 hours’ prior notice of its desire to complete such Work, (ii) the Licensee certifies, in writing, to the City that the Person(s) who will complete such Work on behalf of the Licensee is/are duly qualified and licensed to perform the Work in the electric utility space of the Pole and/or or Conduits, and (iii) the Person(s) is /are pre-authorized by the Utilities Director to complete such Work on behalf of the Licensee. As a condition precedent to the City’s obligation to approve any Person(s) who will perform such Work on behalf of the Licensee, the Licensee shall provide the name(s), copy of their license(s), and a statement of qualifications of the Person(s) designated to perform the Work on the Licensee’s behalf in the electric space on the Poles or in the Conduits at the time the Application is submitted. 5.4.2 Except as otherwise approved by the City, the Licensee shall limit the filing of an Application for Pole Attachment to not more than the number of Poles per Applications established by the City by Utility Rule and Regulation or, if no such requirement or specification exists, fifteen (15) poles per Application. 5.4.3 The City Manager or his/her designee may approve the modification of the limitations set forth in subsection 5.4.2, if the Licensee requests, in writing. The Licensee shall specify a desired priority of completion of the Work for each Application in the event that the Licensee submits multiple Applications to the City within a rolling thirty-Day period. 5.4.4 If the City Manager or his/her designee rejects or otherwise disapproves of the Application, then the City will provide the Licensee with a written detailed explanation of the basis of disapproval. Contract No. ____________ JM 07-001 Verizon MLA 20 5.5 Lapse of Application. Authorization or approval to the Licensee to attach to Poles and/or install in Conduits shall terminate without further notice to the Licensee as to any Poles or Conduits covered thereby, to which the Licensee has not attached or occupied within one hundred eighty (180) Days from the later of the Supplement Effective Date or the date of the City’s notice to the Licensee that such Pole(s) and/or Conduits are Available. The preceding sentence notwithstanding, the Licensee may re-submit the Application and, subject to subsection 7.5.2 hereof, the City will use reasonable efforts to expedite the City’s review and approval in accordance with the process set forth in Sections 5.2.1 through 5.2.4, or 5.3, as applicable, inclusive. 5.6 Multiple Applications for Same City Facilities. Applications received by the City regarding the same Pole or Conduit will be processed by the City on a first-come, first-served basis. First-come, first-served priority shall be determined according to the Applicant who is determined to have first submitted a complete Application. Whenever two or more Applications are filed with the City pertaining to the same Poles and/or Conduits, the City, within thirty (30) Days of receipt of the later filed Application, will notify all affected Applicants of the following: 5.6.1 one or more Applications have been received for some or all of the same Poles and/or Conduits; and 5.6.2 the name, email address and telephone number of each Applicant who has submitted such Application. 5.7 Cost Sharing Arrangements. In the event that one or more other Applicants may wish to share the costs of attachment and/or installation with the Licensee, unless otherwise agreed to by the Applicants, the Licensee, if it is the “first-in-time” Applicant, will endeavor in good faith to coordinate efforts relating to the sharing of all Make-Ready Work. Unless the Applicants otherwise agree, the Licensee, if it is the “first-in-time” Applicant, will endeavor to transmit to the City any mutually agreed to Make-Ready Work costs on behalf of the Applicants affected by such arrangement. The City shall bill the Licensee, if it is the “first-in-time” Applicant, for the entire cost of all Make-Ready Work necessary to accommodate the Applicants, including the Licensee. The City shall not be responsible, and it expressly disclaims any obligation or responsibility, for assisting the Licensee, if it is the “first-in-time” Applicant, in collecting the prorated costs of Make-Ready Work from any additional Applicant. 5.8 Performance of Work. 5.8.1 Prior to the commencement of the Make-Ready Work relating to CPAU facilities which the City may authorize the Licensee to perform, the Licensee shall post or shall cause the posting of notices of its proposed Make-Ready Work in Contract No. ____________ JM 07-001 Verizon MLA 21 accordance with the Public Works and the Utilities Departments’ rules and regulations. Absent such rules and regulations, the Licensee shall at least ten (10) Days before the commencement of its Make-Ready Work deliver or shall cause to be delivered a written schedule for each portion of Work to: (i) those residents and businesses whose properties abut and are within 300 feet of the proposed Work sites or such other distance as set forth in any City-issued approval or authorization; and (ii) other Persons whose facilities will be directly impacted by such Work. In addition, the Licensee shall be required to post “No Parking” notices at least seventy-two (72) hours prior to the commencement of each portion of the Work in the absence of any time period as set forth in the approvals or authorizations. 5.8.2 The Licensee upon the completion of its Make-Ready Work shall promptly furnish to the City accurate plans and record drawings or as-built drawings depicting, in detail, the locations and dimensions of the Licensee Facilities, including, without limitation, the Pole and/or Conduit numbers, if available, notwithstanding that such information may have been initially provided with the Application(s). These plans and drawings shall be incorporated in any form as may be reasonably specified by the City Manager. The Licensee shall furnish its plans and drawings to the City in an electronic storage medium (which utilize AutoCAD or Geographic Data Systems software or equivalent), containing the full set of plans and record drawings or as-built drawings, whenever such information may be required by the City Manager or any Director. 5.8.3 In the event that the City determines any Pole to which the Licensee seeks access for attachment purposes is inadequate to support the Licensee Facilities in accordance with Law, following the receipt of the Licensee’s load calculations as requested by the City, the City will inform the Licensee of any required changes and the estimated costs thereof in order for the City to consider making provision for adequate load-bearing Poles in accordance with the timelines set forth in Sections 5.2.1 through 5.2.6 or 5.3. If, after the receipt of the City’s information, the Licensee desires to proceed with the Pole Attachments by submitting to the City the Licensee’s acceptance of the City’s estimate of Work and payment, in advance, in accordance with the timelines set forth in Sections 5.2.1 through 5.2.6 or 5.3 to reimburse the City for the total estimated Pole modification or replacement costs and expenses, including, without limitation, the costs of installing new Poles, plus the expenses of replacing or transferring the City’s electric and/or fiber optics utility facilities from the old Poles to the new Poles, the City may, at its option, replace the Poles with suitable Poles. The Licensee will reimburse the joint owner(s) of certain Poles and/or any existing licensee for any expense incurred by each of them in relocating their facilities from the existing Poles to the new Poles. Upon the completion of Make-Ready Work, the City will prepare and submit a final billing for Contract No. ____________ JM 07-001 Verizon MLA 22 reimbursement by the Licensee to the City for the final Pole replacement costs, including, without limitation, the costs of the new Pole, the labor associated with the transfer or rearrangement of the facilities of the joint owner(s) of Poles and/or other license holders, the cost of removing the old Poles, and other matters itemized on the bill. In the alternative, the City may permit the Licensee to replace any Pole in accordance with terms and conditions mutually agreed to by the City, the joint owner(s) of certain Poles and any existing licensee thereof. 5.8.4 The City shall determine or otherwise specify the point of attachment on each Pole and/or the point of entry in each Conduit to be occupied by the Licensee Facilities after consultation with the Licensee. Information regarding the Licensee’s preferred point(s) of attachment or entry will be included on each Application. 5.8.5 The Licensee shall notify the City in the Application at least thirty (30) Days before the Licensee will add to, relocate, replace or otherwise modify the Licensee Facilities attached to a Pole or occupying a Conduit, where additional space or holding capacity shall be required on either a temporary or permanent basis. 6.0 COSTS AND FEES 6.1 Payment of Costs and Fees. In consideration of the City’s grant of a non-exclusive license to the Licensee under this Agreement, during the Initial Term and the Extension Term, if any, the Licensee shall pay to the City the Initial/One-Time Costs and Fees, the Annual Costs and Fees, and any Additional Costs and Fees, all of which are described with more particularity in Exhibit “C,” and will be set forth in a City invoice or the applicable Supplement. 6.1.1 Invoices. Unless an alternate process is specified in this Agreement, the City will prepare and deliver to the Licensee an invoice for all Costs and Fees for the privilege of accessing and using the City-controlled spaces on the Poles and/or in the Conduits, including for Initial/One-Time Costs and Fees, Annual Costs and Fees, Additional Costs and Fees, or for any other Costs and Fees due and payable under this Agreement. At a minimum, the City will invoice for Costs and Fees thirty (30) days in advance of the due date for such payments. (i) The amounts shall be due and payable on the date specified in such invoice, or where not specified on such invoice or elsewhere in this Agreement within thirty (30) Days of the invoice date. Any invoice that is not paid in a timely manner shall be assessed a late fee with respect to the overdue sum, which shall be due and payable with the invoice. (ii) The Licensee shall pay amounts not then in dispute. As to any amount subsequently determined to be due and payable, the Licensee shall promptly pay such amount and the applicable late fee with the invoice. Contract No. ____________ JM 07-001 Verizon MLA 23 6.1.2 Delivery of Payment. Unless otherwise specified, all payments shall be made payable by check, draft or other negotiable instrument to the “City of Palo Alto” and delivered to the address set forth in Article 18.0. 6.2 Failure to Pay. The Licensee’s failure to pay any Costs and Fees under this Agreement, including the Initial/One-Time Cost and Fees, the Annual Costs and Fees, and any Additional Costs and Fees, or any costs associated with termination or abandonment of Licensee Facilities as provided for in this Agreement when they shall become due, shall constitute a default by the Licensee under this Agreement; provided, however, the Licensee shall have the right to cure a monetary default in accordance with Article 16.0 and the right to dispute the amount of any Costs or Fees in accordance with Article 17.0. The Licensee’s obligation to pay Costs and Fees due to City, including the Annual Costs and Fees and any Additional Costs and Fees existing as of the effective date of early termination or expiration of this Agreement shall survive the expiration or earlier termination of this Agreement. 6.3 Timing of Payment. 6.3.1 Initial/One Time Costs and Fees. Payment for Initial/One Time Costs and Fees will be submitted as provided for in section 5 of this Agreement, Exhibit “G” and the applicable invoice and Supplement, a summary of which is provided below: (i) Preparatory Work Fee: Within thirty (30) Days of date of City invoice. (ii) Make-Ready Engineering Work Fee: Within thirty (30) Days of date of City invoice. (iii) Make-Ready Construction Work Fee: On the date set forth in the applicable Supplment; provided, however, that the Make-Ready Construction Work Fee will be paid prior to the start of Make-Ready Construction Work; 6.3.2 Annual Costs and Fees. (i) Year one: The Annual Costs and Fees for the first year shall be due and payable to the City within sixty (60) Days of the Payment Commencement Date specified in the applicable Supplement. For the first year, the Annual Costs and Fees shall be prorated, as of the Payment Commencement Date through December 31st of the first year. (ii) Subsequent years. Unless otherwise provided by the applicable Supplement or by Law or mutually agreed to by the Parties, the Annual Costs and Fees for subsequent years shall be payable thereafter annually, in advance, by the January 1st of each year (however, if the Payment Commencement Date is in November or Contract No. ____________ JM 07-001 Verizon MLA 24 December, Licensee shall have sixty (60) Days from the Payment Commencement Date to pay the 2nd years Annual Costs and Fees) so long as the Supplement remains in effect during the Initial Term and the Extension Term, if any. The City will invoice Licensee for Annual Costs and Fees in accordance with section 6.1.1. (iii) Except as expressly provided in the Supplements, the Annual Costs and Fees shall not be adjusted in the event that the Licensee removes or reduce the fibers, wires, cables or wireless facilities, or removes the wireless facilities attachments during any calendar year, whenever the adjustment or removal is effected and the Annual Costs and Fees have been paid. The City shall increase the sum total of all Annual Costs and Fees payable to the City, whenever the Licensee installs additional fibers, wires, cables or wireless facilities, in accordance with the adjustment formula specified in the Supplements or by Law. Such increased costs shall be documented in an amendment to the applicable Supplement. (iv) In addition to the Costs and Fees referred to in this section, the Licensee shall be obligated to pay the City for any uncollected Annual Costs and Fees which may be otherwise due and payable by the Licensee thru the current calendar year on account of its early termination without cause of this Agreement. 6.3.3 Additional Costs and Fees. Payment for Additional Costs and Fees (if any) will be submitted as provided for in accordance with applicable invoices, Supplements, the Provisions and Law. 7.0 CONSTRUCTION AND INSTALLATION OF THE LICENSEE FACILITIES 7.1 Make-Ready Work by City. The City shall perform its Make-Ready Work in regard to the City Facilities before the City or the Licensee can perform the Make-Ready Work in regard to the Licensee Facilities, unless the Parties otherwise agree. Nothing herein shall prohibit the City from authorizing the Licensee to perform the City’s Make-Ready Work in accordance with City requirements. The Licensee will pay the City’s Costs for the services rendered by the City and/or CPAU to the Licensee in accordance with this Article 7.0. 7.1.1 The City may install or add electrical switches in order to accommodate the Licensee Facilities within or above the electric utility space on the Poles at the Licensee’s sole cost and expense. 7.1.2 The City will trim and cut trees, shrubbery and other vegetation necessary for the proper operation of its utility infrastructure. 7.1.3 Whenever the City deems it necessary to remove or relocate the Licensee Facilities, or any part thereof, pursuant to the lawful exercise of its governmental or proprietary rights and powers, the City will issue timely notice to the Contract No. ____________ JM 07-001 Verizon MLA 25 Licensee to permit the Licensee to secure the necessary approvals or authorizations, before the removal or relocation may commence. 7.1.4 Within the periods of time reasonably established by the City, the Licensee, at its sole cost and expense, shall construct, install, maintain, remove and relocate the Licensee Facilities in the manner authorized by this Agreement or by Law and in a safe manner, as not to physically or electrically interfere with the City Facilities or the facilities of the joint owner(s) of certain Poles and/or any existing licensee. 7.2 Facilities Relocation. At the request of the City, acting in accordance with Law, including the provisions of Chapter 12.16 of the Palo Alto Municipal Code, the Licensee shall relocate the Licensee Facilities in aerial locations to underground locations in accordance with Law, including, without limitation, any Law which applies to any dominant or non-dominant telephone corporation, as such term is defined in Section 234 of the California Public Utilities Code. In such event and to the extent permitted by the City, the Licensee may elect to relocate the Licensee Facilities, which are wireless facilities, affected thereby to any other available Pole, including a Streetlight Pole, as practicable, subject to the Provisions. If there is not available any other Utility Pole or a Streetlight Pole, then the City will endeavor to accommodate the Licensee’s request to either relocate, at the Licensee’s sole cost and expense, the Licensee Facilities, which are wireless facilities, or part thereof, to the nearest available Utility Pole or a Streetlight Pole or to a new Utility Pole or a Streetlight Pole to the extent the City can accommodate the Licensee’s requirements, which will be located in the Public Rights-of-Way or Public Utility Easements outside of the underground utility district in question. 7.3 Work in Electric Utility Space. Notwithstanding any other Provision in this Agreement to the contrary, no approval or authorization issued to the Licensee, that would allow the attachment of the Licensee Facilities to any Pole, shall allow the Licensee to encroach upon, perform any work, or attach and/or install the Licensee Facilities to the electric utility space on any Pole or in any Conduit, unless it is expressly permitted, in writing, by the Utilities Director. Any attachment and/or installation within the City’s electric utility space on a Pole or in a Conduit shall be performed by the City, at the Licensee’s cost and expense, unless the Licensee is otherwise permitted, in writing, by the Utilities Director to perform such work in accordance with the timelines set forth in this Agreement and Sections 5.1(A) through (G). The terms and conditions under which the Licensee or the Person representing the Licensee may be permitted, in writing, to work within the electric utility space of a Pole and a Conduit are set forth in Exhibits “D” and “E,” respectively. The Licensee will be permitted to place one or more additional Licensee Facilities onto an existing cable or strand that constitutes a part of the City Facilities subject only to availability as determined by the City and in compliance with prevailing industry safety standards. Contract No. ____________ JM 07-001 Verizon MLA 26 7.3.1 In the event that a Pole must be replaced to accommodate the Licensee Facilities, to the extent that the Licensee is authorized to perform such work, the Licensee shall conform to the Pole replacement requirements of the City, as set forth in Exhibit “F.” 7.4 Coordination of Work. In the event of a service outage affecting both the City Facilities and the Licensee Facilities, subject to the City’s reasonable exercise of discretion, the Licensee shall be entitled to maintain and repair the Licensee Facilities concurrently with the City’s maintenance and repair of the City Facilities. The Parties agree to work cooperatively with each other while effecting the maintenance and repairs of their respective facilities. 7.5 Facilities Removal. The Licensee, at its sole cost and expense, will permanently remove the Licensee Facilities from any Pole and/or Conduit within ninety (90) Days of the expiration or termination of the respective Supplement or this Agreement, as applicable, unless the Parties otherwise agree, in writing. The Licensee shall be liable to the City for the payment of all Costs and Fees and any Additional Costs and Fees until all of the Licensee Facilities are permanently removed. This Provision shall survive the expiration or earlier termination of this Agreement. 7.5.1 No proration or refund of any Annual Cost or Fee will be due and payable by the City to the Licensee on account of such removal on a permanent basis; provided, however, the City will not charge any Annual Cost or Fee attributable to the Licensee Facilities for the first calendar year commencing after their proper removal. Should the Licensee thereafter wish to make attachments or placements to such Poles and/or occupancy of such Conduits, it shall apply for and obtain the required authorizations and approvals. 7.5.2 Whenever the Licensee Facilities are removed from the City Facilities, no reattachment to the same Pole or insertion in the same Conduit may be made until: (a) the Licensee has first complied with the Provisions as though no such Pole Attachment and/or Conduit Occupancy had previously been made; and (b) all undisputed Costs and Fees and Additional Costs and Fees due and payable to the City for such previous Pole Attachment and/or Conduit Occupancy have been paid in full. 7.6 Notices to City. The Licensee shall inform the City, in writing, of the dates on which the removal of the Licensee Facilities has been completed. The City reserves the right to inspect each new attachment and/or installation, as conditions may warrant, and the Licensee shall reimburse the City for the Costs of such inspections at the rate per worker-hour then in effect. The surveys and inspections, whether or not made, shall not operate to relieve the Licensee of any responsibility, obligation or liability assumed under this Agreement or imposed by Law. Nothing in this Agreement shall be construed to obligate the Licensee to pay for inspections by the City of the City Facilities, made in the ordinary course of business. Contract No. ____________ JM 07-001 Verizon MLA 27 8.0 MOVING THE LICENSEE FACILITIES 8.1 Temporary Removal of Facilities. The Licensee will move or transfer or cause the removal or transfer of the Licensee Facilities on a temporary, non-permanent basis, whenever the City will move or replace the City Facilities. Except as otherwise required by the City, within the time required by Law or, if no such Law exists, thirty (30) Days of receipt of written notification by the City, the Licensee shall move or transfer or cause the removal or transfer of the Licensee Facilities in a workmanlike manner in accordance with the Licensee’s specifications, if those specifications are timely furnished to and subsequently approved by the City, in advance, and, if not, then in accordance with Law and the Provisions. Such movement or transfer by or for the Licensee will be performed only in the common operating areas served by the Parties. If the Licensee Facilities are not moved or transferred within the required period of time, the City may remove or transfer or cause the removal or transfer of the Licensee Facilities on behalf of the Licensee at the Licensee’s sole cost and expense. The Licensee shall pay the City, upon demand, the City’s actual Costs of removal or transfer, and this obligation shall survive the termination or revocation hereof. 9.0 INSPECTION OF THE LICENSEE FACILITIES 9.1 Inspection by City. The City reserves the right to inspect the Licensee Facilities at the time of Pole Attachment and/or Conduit Occupancy and to thereafter make reasonable periodic inspections of any part of the Licensee Facilities that are attached to Poles or installed in Conduits. The frequency and extent of such inspections by the City shall be reasonably established by the City. The Licensee shall reimburse the City for the Costs of any inspections performed by the City that may be made necessary by the Licensee’s actions or as reasonably determined by the City. The obligation to pay shall survive the expiration or earlier termination of this Agreement. 9.1.1 The City shall provide the Licensee with not less than ten (10) Business Days’ prior written notice before conducting the periodic inspections. The preceding sentence notwithstanding, where, in the sole judgment of the City Manager, the public health, safety and welfare considerations warrant an immediate or prompt inspection, the City may conduct such inspection without furnishing any prior written notice to the Licensee. 9.1.2 The City’s conduct of periodic inspections, or the failure to so conduct, shall not operate to impose upon the City any liability of any kind whatsoever, nor relieve the Licensee of any responsibility, obligations or liability assigned to the Licensee by this Agreement or by Law. 10.0 UNAUTHORIZED ATTACHMENT OR OCCUPANCY Contract No. ____________ JM 07-001 Verizon MLA 28 10.1 Unauthorized Access. If, during the Initial Term or the Extension Term, if any, the City determines that the Licensee Facilities have been attached to or occupy the City Facilities, for which no Supplement was executed and no authorization or approval by the City was issued to the Licensee, the City may audit the Licensee’s records regarding such attachments and occupancies. Without prejudice to its legal rights or equitable remedies made available by this Agreement or by Law, the City may impose Costs and other financial requirements not otherwise prohibited by Law, which Costs for each unauthorized Pole Attachment or Conduit Occupancy will not exceed the lesser of an amount equal to five (5) times the Annual Costs and Fees referred to in Section 6.1, for the type of Licensee Facilities that are attached without authorization, or the sum of ten thousand dollars ($10,000) or such other sum established by Law. The failure to pay any such Costs shall be subject to the same Provisions set forth in Article 6.0 pertaining to unpaid amounts then due and payable to the City. 10.1.1 The Licensee shall submit, in writing, to the City within ten (10) Days after receipt of the City’s written notice of the unauthorized attachment or occupancy, a statement concerning the unauthorized action purportedly taken by the Licensee and shall promptly submit an Application pertaining to the unauthorized Pole Attachment or Conduit Occupancy. If the completed Application is not received by the City within the time period specified in the notice of unauthorized attachment or occupancy, the City may require the Licensee to remove its unauthorized attachment or occupancy within ten (10) Days of the date on which such Application shall be due, or the City may remove the Licensee Facilities or portion thereof without liability, and the cost and expense of such removal shall be borne by the Licensee. The obligation to pay shall survive the expiration or earlier termination of this Agreement. 10.2 No Implied Ratification. No action or inaction by the City with respect to the unauthorized use of any Pole or Conduit by the Licensee shall be deemed to be a ratification of the unauthorized use. 11.0 INSTALLATION AND REPLACEMENT OF THE LICENSEE FACILITIES 11.1 Lack of Access. Except as otherwise provided by Law, the City reserves the right to refuse to approve or authorize an Application, or access to particular Poles and/or Conduits in an Application, for any of the reasons set forth in Sections 3.2, 3.3 or 3.5, or whenever the City determines that the available City-controlled spaces on Poles or in Conduits are required for the reasons set forth in Section 3.2. The City Facilities, at the City’s discretion, may be rearranged or replaced to accommodate the Licensee Facilities, as practicable. If the City denies the Licensee access to and use of the City Facilities in question pursuant to this Section 11.1, the City will use reasonable efforts to identify one or more alternative locations at which the Licensee may attach and/or occupy the Licensee Facilities, including, without Contract No. ____________ JM 07-001 Verizon MLA 29 limitation, at the Licensee’s sole cost and expense the placement of a new Pole or Conduit. 11.2 Preparatory Work. The Licensee acknowledges that Preparatory Work, consisting of an engineering survey and other related review and analysis, by the City will be required to determine the load adequacy of the existing Poles and/or the capacity of the Conduits to accommodate the Licensee Facilities, unless the City authorizes, in writing, the Licensee to perform the engineering survey and related work. The City may require the Licensee to provide its preliminary load calculations. The City also will take into account all engineering and other safety- related considerations in determining the utilization of the existing available capacity of an anchor or ability to accommodate an extension, when such utilization does not result in a reduction of the holding capacity below the level normally required by the City for safety or other purposes. 11.2.1 Except as otherwise determined by the City, the field inspection portion of the Preparatory Work will be performed by the Licensee, at its sole cost and expense, as may be reasonably required by the City. The City, the joint owner(s) of certain Poles, or any existing licensee may participate in the field inspection at its own cost and expense. The administrative processing portion of the Preparatory Work’s work order, the coordination of the Work requirements, and the schedule with the joint owner(s) of certain Poles and/or any existing licensee will be performed by the Licensee, at its sole cost and expense, as may be reasonably required by the City. 11.2.2 Before the Licensee may perform any portion of the Preparatory Work and before the City will be required to review any Application, the Licensee shall submit the required Costs and Fees with the Application or at such other time as may be established by the City. If a nonrefundable deposit is required by the City in order for the Licensee to conduct the Preparatory Work, this deposit will be applied to the cost of the Preparatory Work and/or the total cost of the job to the extent of the City’s participation or to future payments that the Licensee shall owe to the City. Upon receipt of the Application and the deposit, the City will notify the Licensee, in writing, of the estimated charges that will apply, should the City’s participation be required. The Licensee’s failure to respond within the specified period will be a ground for canceling the applicable Application and forfeiting the non-refundable deposit. 11.3 Make-Ready Work. The City, acting by the Utilities Director, will perform the Make-Ready Work for the Licensee Facilities, unless the City authorizes the Licensee to perform such Work under terms and conditions established by the City. If the City performs the Make-Ready Work, the Licensee shall pay the City for the Costs of such Make-Ready Work, and shall also reimburse the City for any other Cost that the City may incur for transferring or rearranging the facilities of the joint owner(s) of certain Poles and/or any existing licensee that are attached to the City Facilities, or part thereof, and for any such Costs incurred by the City, the joint Contract No. ____________ JM 07-001 Verizon MLA 30 owner(s) of certain Poles, and/or any existing licensee, in transferring or rearranging their facilities to accommodate the Licensee’s requests. The Licensee shall not be entitled to any monies paid to the City for Pole Attachments and/or Conduit Occupancies by reason of the use by the City, the joint owner(s) of certain Poles and/or other licensee, of any additional capacity on such Pole or in such Conduit resulting from such replacement or rearrangement. The City may require the Licensee to obtain the services of a City-pre-approved, pre-authorized and pre-qualified contractor to perform the transfers, rearrangements and/or replacements of facilities. If the City authorizes the Licensee to do the Work, the City reserves the right to inspect such performance of Work. The performance of such Work shall not commence in the absence of the City’s inspectors, who will be made available on a timely basis. All materials, equipment and/or work methods and practices shall be approved by the City prior to the commencement of the Work. Notwithstanding Section 3.6, the Licensee shall be responsible for liability, losses and damages suffered by the City that may result from the Licensee’s failure to comply with the Provisions or otherwise resulting from the Licensee’s attachment, installation, operation, repair or maintenance of the Licensee Facilities. 11.4 Project Collaboration. Should the City in the exercise of its right to provide utility service to its customers, or to provide street lights or traffic lights, need to attach additional facilities to any Pole and/or Conduit to which Licensee is attached or has occupied, and wishes to avail itself of the holding capacity of an anchor being utilized by the Licensee, or needs to use the Conduits occupied by the Licensee, the Licensee will either rearrange the Licensee Facilities in, on or about the designated Pole(s) and/or Conduit(s), or if such rearrangement cannot be accomplished, transfer them to replacement Pole(s) and/or Conduit(s), as determined by the City, so that the additional facilities of the City shall be accommodated. The costs and expenses of such rearrangement and/or transfer will be borne by and at the sole expense of the Licensee. 11.5 City Obligations. Subject to Section 7.1, in performing Make-Ready Work to accommodate the Licensee Facilities, the City will use reasonable efforts to include such work in its normal work load schedule to the extent that its actions exercised in its governmental and propriety capacities are not adversely affected. 11.6 Cost Sharing. Except as otherwise provided herein, all Costs and capital investments subject to reimbursement shall be determined in accordance with the regular and customary methods of determining costs, expenses, and capital investments on the books and records of the City, the joint owner(s) of certain Poles and/or any existing licensees in their respective businesses. 11.6.1 The invoices for replacement, rearrangement, engineering, inspections, expenses and other charges levied or collected under this Agreement, Contract No. ____________ JM 07-001 Verizon MLA 31 other than rentals for Pole Attachment or Conduit Occupancy, shall be payable within forty-five (45) Days after the date of receipt of such invoices by the Licensee. 12.0 INDEMNITY; WAIVER; RISK OF LOSS 12.1 Indemnity. The Licensee shall indemnify, protect, defend and hold harmless the City, its council members, officers, employees, and agents, from and against claims, demands, losses, damages, liabilities, fines, charges, penalties, administrative and judicial proceedings and orders, judgments, remedial actions of any kind, including the costs of any “hazardous material” (as such term is defined in Section 17.04.040(e) of the Palo Alto Municipal Code, as amended), remedial actions of any kind and all other related costs and expenses incurred in connection therewith, including, without limitation, reasonable attorneys’ fees and costs of defense, to the extent caused directly, in whole or in part, by the negligence or willful misconduct of the Licensee, its directors, officers, employees, agents, contractors, subcontractors and representatives, or arising, in whole or in part, from the Licensee’s construction, installation, operation, maintenance or repair of the Licensee Facilities, but not to the extent arising out of the negligence or willful misconduct of the City. 12.1.1 The City shall be liable only for the costs of repair to the damaged Licensee Facilities arising from the City’s sole negligence or willful misconduct, and the City shall not be otherwise responsible for any damage, loss, or liability of any kind occurring by reason of anything done or omitted to be done by the City or by any third party, including, without limitation, damages, losses, or liability arising from the City’s approval of an Application. 12.2 Waiver. The waiver by a Party of any breach or default or violation of any Provision by the other Party shall not be deemed to be a waiver or a continuing waiver by that Party of any subsequent breach or default or violation of the same or any other Provision. 12.3 Risk of Loss. The Licensee shall assume all responsibility for, and shall promptly reimburse, in full, the City, the joint owner(s) of certain Poles, any existing licensee, and/or any adjoining property owner, for any of their losses and expenses associated with damages caused, directly or indirectly, by the Licensee, its employees, agents and/or contractors to the City Facilities, including, without limitation, any Poles and Conduits or damage caused by the presence of the Licensee Facilities. The Licensee shall provide immediate notification to the other Party upon the occurrence of any such damage. 12.4 Notice to City. The Licensee shall promptly advise the City of all known claims relating to damage of property or injury to or death of persons, arising or alleged to have arisen in any manner, directly or indirectly, from the erection, maintenance, repair, replacement, operation, presence, use or removal of the Licensee Facilities. The Licensee shall promptly notify the City, in writing, of any known suits Contract No. ____________ JM 07-001 Verizon MLA 32 or causes of action which involve the City and, upon request of the City, provide to the City’s insurer copies of all relevant accident reports and statements made to the Licensee or others. 13.0 INSURANCE 13.1 General. Unless the City’s insurance risk manager agrees, in writing, to accept the Licensee’s self-insurance in fulfillment of these insurance requirements, the Licensee shall obtain and maintain at all times during the Initial Term and the Extension Term, if any, commercial general liability insurance and commercial automotive liability insurance protecting the Licensee in an amount of two million dollars ($2,000,000) per occurrence (combined single limit), including death, bodily injury and property damage, and not less than two million dollars ($2,000,000) aggregate, for each personal injury or death liability, products-completed operations, and each accident. Such insurance, pursuant to ISO Form No. GC2010 or equivalent or other commercially reasonable form acceptable to the City’s insurance risk manager, shall include the City, its council members, officers, employees, and agents as an additional insured as respects liability arising out of the Licensee’s negligent performance of any Work that it performs or may be authorized to perform under this Agreement. Coverage shall be provided in accordance with the limits specified and the Provisions indicated herein. Claims-made policies are not acceptable. Such limits may be satisfied by a combination of primary and umbrella policies. Licensee will make best efforts to notify the City within 30 days of receipt of notice from its insurer regarding any cancellation or termination of any insurance policies. The Licensee shall be responsible for notifying the City of such change or cancellation. 13.2 Certificates. The Licensee shall file the required original certificate(s) of insurance with blanket additional insured endorsements with the City’s insurance risk manager, with a copy to the Utilities Director, subject to the City’s prior approval. The certificate(s) shall clearly state or provide: 13.2.1 Policy number; name of insurance company; name, address and telephone number of the agent or authorized representative; name and address of insured; project name and address; policy expiration date; and specific required coverage amounts; 13.2.2 With the certificate(s), the Licensee shall provide prior written notice of cancellation to the City that is unqualified as to the acceptance of liability for failure to notify the City; and 13.2.3 That the Licensee’s required insurance is primary as respects any other valid or collectible insurance that the City may possess, including any self-insured retentions the City may have, and any other insurance the City does possess shall be considered excess insurance only and shall not be required to contribute with this insurance. Contract No. ____________ JM 07-001 Verizon MLA 33 13.3 Notice. The certificate(s) of insurance with blanket additional insured endorsements and notices shall be mailed to: (a) City of Palo Alto, Utilities Department, P.O. Box 10250, Palo Alto, CA 94303, Attn.: Electrical Engineering Manager; and (b) City of Palo Alto, Public Works Department, P.O. Box 10250, Palo Alto, CA 94303, Attn.: Supervising Project Engineer. 13.4 Other Coverage. Unless the City permits the Licensee to self-insure, the Licensee shall obtain and maintain at all times during the Initial Term and the Extension Term, if any, statutory workers’ compensation and employer’s liability insurance or qualify as a self-insurer in an amount not less than one hundred thousand dollars ($100,000) or such other amounts as required by Law, and furnish the City with a certificate showing proof of such coverage. 13.5 Insurance Rating. Any insurance provider of the Licensee shall be admitted and authorized to do business in California and shall be rated at least A-:VII in Best’s Key Rating Guide. Insurance certificates issued by non-admitted insurance companies will not be acceptable to the City. 13.6 Deductibles. Prior to the execution of this Agreement, any self-insured retentions must be stated on the certificate(s) of insurance, which shall be sent to the City, and any deductibles shall be reported, in writing, to the City’s insurance risk manager. Notwithstanding the foregoing, the immediately preceding sentence shall not apply to Licensee so long as Licensee maintains a net worth of no less than $100 million, as currently evidenced by the net worth letter attached hereto as Exhibit “GH” and made a part hereof. “Cross liability”, “severability of interest” or “separation of insureds” clauses shall be made a part of the commercial general liability and commercial automobile liability policies. 14.0 PERFORMANCE BOND; LETTER OF CREDIT 14.1 Posting Security. The City may require the Licensee to procure and provide the City with a surety bond (the “Bond”), naming the City as the obligee in the amount of not less than one hundred percent of the estimated cost of the Work or one hundred fifty thousand dollars ($150,000), whichever sum is greater (or such other amount as may be required by Law), to guarantee and assure the faithful performance of the Licensee’s obligations under this Agreement. The City will notify the Licensee of the date by which such Bond shall be posted. The City shall have the right to draw against the Bond in the event of a default by the Licensee or in the event that the Licensee fails to meet and fully perform any of its obligations hereunder or in accordance with the City’s exercise of its rights upon the Licensee’s abandonment of the Licensee Facilities and failure to remove them as required by this Agreement. 14.2 Replenishing Bond. Within fifteen (15) Days of receipt of written notice from the City, the Licensee shall renew or replace such sums of money as shall bring the Bond current. A failure by the Licensee to bring current the Bond Contract No. ____________ JM 07-001 Verizon MLA 34 within the specified time and give the City notice thereof shall constitute a default under this Agreement. Any Bond may be canceled by the Licensee at the end of the applicable construction or installation project. The Licensee shall provide thirty (30) Days’ prior written notice of cancellation to the City. 14.3 Letter of Credit. The Licensee may provide the City with a Letter of Credit in the amount set forth in Section 14.1 and in accordance with other terms and conditions as may be agreed to by the City, if the City Manager agrees to accept the Letter of Credit in lieu of the Bond to secure the Licensee’s performance under this Agreement. 15.0 REPRESENTATIONS AND WARRANTIES 15.1 Representations and Warranties of the Parties. As of the Effective Date, each Party represents and warrants to the other Party that: 15.1.1 It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 15.1.2 The execution, delivery and performance of this Agreement and the Exhibits are within its powers, have been duly authorized by all necessary action and do not violate any of its governing documents, any contracts with any joint owners to which it is a party or any Law; 15.1.3 The Agreement and the Exhibits and any other document executed and/or delivered in accordance with this Agreement constitute its legally valid and binding obligation, enforceable against it in accordance with its covenants, terms, conditions and provisions; 15.1.4 It has not filed and it is not now contemplating the filing for bankruptcy protection or, to its knowledge, any action is threatened against it which would result in it being or becoming bankrupt; 15.1.5 There is not pending or, to its knowledge, threatened against it or any of its affiliates any legal or administrative proceedings that could materially adversely affect its ability to perform its obligations under this Agreement and the Exhibits; and 15.1.6 No “event of default” or potential “event of default” with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement and the Exhibits. 15.2 Representations and Warranties of the Licensee. The Licensee represents and warrants to the City that: Contract No. ____________ JM 07-001 Verizon MLA 35 15.2.1 The Licensee has all approvals, authorizations, certifications, licenses and franchises required by the CPUC, the FCC and/or any other agency to provide the Communications Service; 15.2.2 The Licensee is not aware of any facts or circumstances that would call into doubt the continuing validity of any such approvals, authorizations, certifications, licenses or franchises; 15.2.3 There is not pending or, to the Licensee’s knowledge, threatened against the Licensee or its parent corporation or any of its subsidiaries or affiliates, any legal or administrative proceedings that could materially adversely affect the validity of such licenses, authorizations or franchises; and 15.2.4 All Work to be performed by the Licensee pursuant to this Agreement will be: (i) performed in a good and workmanlike manner, consistent with any specifications and with any prevailing industry standards, applicable Laws, and the Provisions hereof, and (ii) will be free from defects. 16.0 DEFAULT; REMEDIES FOR DEFAULT 16.1 Event of Default. This Agreement may be terminated upon the occurrence of an “event of default” by a Party (the “Defaulting Party”). 16.1.1 An “event of default,” which will constitute a material breach of this Agreement if it is not cured in a timely manner as described below, means the occurrence of any of the following: (i) A representation or warranty made by a Party is false or misleading in any material respect when made; (ii) The failure to perform any material covenant, or obligation set forth in this Agreement, if such failure is not remedied within thirty (30) Days after written notice of default is given or, if such cure reasonably requires more than thirty (30) Days, fails to commence such cure within the specified period or, thereafter, fails to continue diligently such cure until completion thereof; (iii) A Party files a petition or otherwise commences or acquiesces in the commencement of a proceeding under any bankruptcy, insolvency, reorganization or similar Law, makes an assignment for the benefit of its creditors, has an administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or is generally unable to pay its debts as Contract No. ____________ JM 07-001 Verizon MLA 36 they fall due; (iv) Subject to the cure provisions set forth in this Agreement, including in section 6, the failure to make, when due, any undisputed payment required by this Agreement if such failure is not remedied within ten (10) Business Days after written notice of default is given; and (v) The revocation, expiration or denial of renewal, by final order or action that is no longer subject to appeal, of any license, authorization or franchise that is required by the FCC, the CPUC, and/or any other agency for the Licensee to provide Communications Service by means of the Licensee Facilities or to install or maintain or operate the Licensee Facilities in Palo Alto, if such expiration or denial prohibits the Licensee from operating the Licensee Facilities or providing Communications Service. 16.2 Remedies for Default. If an event of default occurs and is continuing with respect to the Defaulting Party, the other Party (the “Non-Defaulting Party”) will have an election of rights and remedies, in addition to all other legal rights and equitable remedies or as otherwise provided in this Agreement, to which the Non-Defaulting Party may resort cumulatively, or in the alternative: 16.2.1 The right to terminate this Agreement, or in City’s discretion, an applicable Supplement thereunder, by giving to the Defaulting Party thirty (30) Days’ prior written notice of termination, in which event this Agreement will terminate on the date set forth in the notice of termination; and 16.2.2 Any other right that is made available under applicable Laws. 16.3 Excusing Performance. A Party will be temporarily excused from the performance or further performance of any of its covenants or agreements hereunder, excepting only the obligation to pay Costs and Fees, and such Party’s nonperformance shall not be deemed an event of default under this Agreement for any period, to the extent, but only to the extent, that such Party is prevented, hindered or delayed for any period of time not in excess of thirty (30) Days from performing any of its covenants or agreements, in whole or in part, as a result of a Force Majeure event, including, without limitation, any denial of access to the City Facilities in order to engage in the Work. The Parties hereby agree to use reasonable efforts to remedy the effects caused by the occurrence of the Force Majeure event giving rise to a Party’s temporary nonperformance of its obligations, covenants or agreements under this Agreement. A Party will provide notice promptly to the other Party to the extent that Party relies on the provisions of this Section to temporarily excuse its failure to perform any of its covenants or agreements hereunder. 17.0 DISPUTE RESOLUTION Contract No. ____________ JM 07-001 Verizon MLA 37 17.1 Informal Process. If a dispute between the Parties arises in regard to this Agreement or any Exhibit (the “Dispute”), the following procedure will govern the resolution of the Dispute: 17.1.1 the Parties will nominate their respective representatives to be responsible for and exercise the appropriate authority to resolve all Disputes hereunder for the fourteen-day resolution period of time set forth below; and 17.1.2 if the Dispute remains unresolved within such fourteen-day period, before either Party may resort to the process described in Sections 17.3 and 17.4, either Party may refer the Dispute, in writing, for final settlement to a senior principal, vice-president or other officer of the Licensee and the City Manager, who will jointly convene within ten (10) Days of receipt of a referral request and use reasonable efforts to consider and resolve the Dispute. 17.1.3 The Parties will ensure that their respective representatives confer for a period of fourteen (14) days from the date of referral by either Party. If final resolution cannot be achieved, the Parties may resort to the procedures described in Sections 17.3 and 17.4 hereunder. 17.2 No Bar to Other Relief. Nothing contained in this Agreement will prevent or otherwise restrict either Party from pursuing its rights at law or in equity, including injunctive relief and specific performance, in the event of a default and a material breach by the other Party. 17.3 Mediation. In the event of a Dispute, either Party may, by notice to the other Party (the “Mediation Notice”), request that such Dispute be submitted to non-binding mediation in Palo Alto, California, with a mediator acceptable to the Parties. If such mediation does not result in a settlement of the Dispute within one hundred eighty (180) Days from the date of the Mediation Notice, either Party may request that such matter be submitted to non-binding arbitration in Palo Alto, California, under the rules of the American Arbitration Association. Action of any kind by either Party arising out of this Agreement must be commenced within one (1) year from the date the right, claim, demand or cause of action first arises. 17.4 Continuation of Rights. Notwithstanding anything to the contrary set forth herein, in no event will the City interrupt or suspend or terminate the Licensee’s rights granted under this Agreement or perform any action that prevents, impedes, or reduces in any way the Licensee’s rights to conduct its authorized, certificated or licensed services, unless: 17.4.1 the authority to do so is granted to the City by this Agreement or by Law or conferred by a court of competent jurisdiction; 17.4.2 this Agreement has been validly terminated in accordance with Contract No. ____________ JM 07-001 Verizon MLA 38 this Agreement; or 17.4.3 the Licensee has failed to pay the City any undisputed invoice that is past due in excess of thirty (30) Days after receiving a delinquency notice from the City. 17.5 Immediate Relief. Nothing in this Agreement shall be deemed or construed to prohibit a Party from obtaining judicial, regulatory or other relief necessary in order to preserve the status quo or prevent the loss or violation of that Party’s rights. 18.0 NOTICES All notices which shall or may be given pursuant to this Agreement shall be given, in writing, and shall be deemed validly given if delivered or sent by certified mail, return receipt request or by commercial courier, provided the commercial courier’s regular business is delivery service, and addressed, as follows: CITY: City of Palo Alto Department of Utilities P. O. Box 10250 Palo Alto, CA 94303 Attn.: Director of Utilities CITY: City of Palo Alto Department of Public Works P. O. Box 10250 Palo Alto, CA 94303 Attn.: Director of Public Works Copy to: City of Palo Alto P. O. Box 10250 Palo Alto, CA 94303 Attn.: City Clerk Copy to: City of Palo Alto P. O. Box 10250 Palo Alto, CA 94303 Attn.: City Attorney Any notice to be sent to the City Manager or City Attorney shall be sent to the same post office box referred to above. LICENSEE: GTE Mobilnet of California Limited Partnership, dba Verizon Wireless 180 Washington Valley Road Contract No. ____________ JM 07-001 Verizon MLA 39 Bedminster, New Jersey 07921 Attention: Network Real Estate 19.0 MISCELLANEOUS PROVISIONS 19.1 Amendments. This Agreement may not be amended except pursuant to a written instrument signed by the Parties. 19.2 Assignment. This Agreement is personal to only the Licensee and no other Person. The Licensee may not directly or indirectly assign, transfer or convey to another Person this license or any of the rights and obligations of the Licensee established by this Agreement. Any assignment or transfer of this Agreement or any Supplement shall be void, and the City may terminate this Agreement if the Licensee attempts to assign or transfer this Agreement without compliance hereof. The preceding sentences of this Section 19.2 notwithstanding, the Licensee may assign or transfer this Agreement to its parent corporation or any subsidiary corporation or affiliate or successor in interest, provided that such parent corporation, subsidiary corporation or affiliate or successor in interest first agrees, in writing, to be fully bound by this Agreement and the Exhibits and to assume all of the Licensee’s obligations and liabilities hereunder, whether arising before or after the date of such assignment or transfer. 19.3 Attorneys’ Fees. Each Party in any litigation, including mediation, regarding this Agreement will bear its own costs and expenses of suit, including, without limitation, reasonable attorneys’ fees. 19.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 19.5 Entire Agreement. This Agreement contains the entire understanding between the Parties with respect to the subject matter herein. There are no representations, warranties, agreements or understandings (whether oral or written) between the Parties relating to the subject matter hereof which are not fully expressed herein. 19.6 Exhibits. As of the Effective Date, all exhibits referred to in this Agreement and any addenda, attachments, Supplement(s) and schedules which may, from time to time, be referred to in any duly executed amendment to this Agreement are by such reference incorporated in this Agreement and shall be deemed a part hereof. Contract No. ____________ JM 07-001 Verizon MLA 40 19.7 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of California without regard to its conflicts of laws rules or principles. 19.8 Headings. The headings hereof are inserted for convenience of reference only, are not a part hereof and shall have no effect on the construction or interpretation hereof. 19.9 Independent Contractor. Each Party acts as an independent contractor and not as an employee of the other Party. Nothing in this Agreement shall be construed to establish a partnership, joint venture, group, pool, syndicate or agency relationship between the City and the Licensee. 19.10 Resolving Conflicting Provisions. To the extent the Provisions and any other authorizations and approvals required to be obtained by the Licensee from the City are in conflict, the Provisions of the Agreement, authorizations and approvals which impose(s) the higher or greater legal duty or obligation upon the Licensee shall take precedence. 19.11 Rules of Construction. Each Party and its counsel have reviewed this Agreement. Accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the construction and interpretation hereof. 19.12 Severability. If a court of competent jurisdiction finds or rules that a Provision of this Agreement or any amendment thereto is void or unenforceable, the unaffected Provisions of this Agreement and any amendments thereto will remain in full force and effect. 19.13 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the lawful successors and permitted assignees of the Parties. 19.14 Time of Action. For the purposes hereof, the time in which an act is to be performed shall be computed by excluding the first Day and including the last. If the time in which an act is to be performed falls on a Saturday, Sunday, or any Day observed as an official holiday by the City, the time for performance shall be extended to the following Business Day. 19.15 Venue. In the event that suit is brought by a Party, the Parties agree that trial of such action shall be vested exclusively in the state courts of California, County of Santa Clara, or, assuming jurisdiction is otherwise proper, in the United States District Court, Northern District of California, in the County of Santa Clara. Contract No. ____________ JM 07-001 Verizon MLA 41 19.16 Waiver of Lien Rights. The City waives any lien rights that it may have in the Licensee Facilities, which shall be deemed personal property for purposes of this Agreement regardless of whether or not the same is deemed real property, fixtures or attachments thereto, or personal property by Law. Subject to and as limited by the Provisions, the City grants the Licensee and the Licensee’s mortgagee the right to remove or cause the removal of the Licensee Facilities from time to time, whether before or after a default by the Licensee under this Agreement, in the discretion of the Licensee or the Licensee’s mortgagee. [Signature page follows] Contract No. ____________ JM 07-001 Verizon MLA 42 IN WITNESS WHEREOF, this Agreement shall be deemed duly executed by the Parties in Palo Alto, County of Santa Clara, State of California, as of the Effective Date. APPROVED AS TO FORM ___________________________________ Senior Deputy City Attorney CITY OF PALO ALTO ___________________________________ City Manager ATTEST: ___________________________________ Director of Utilities ___________________________________ Director of Public Works GTE Mobilnet of California Limited Partnership, dba Verizon Wireless By: Cellco Partnership Its: General Partner By: _______________________________ Name: Phillip French Title: Executive Director - Network Date: ______________________________ Contract No. ____________ EXHIBITS In accordance with Section 19.6 of the Master License Agreement between the City and the Licensee (the “Agreement”), Exhibits A through H, inclusive, any new exhibits hereinafter existing and any amendments thereto, are hereby incorporated in and made a part of the Agreement. ATTACHMENT B Contract No. ______________ JM 07-001Verizon MLA Exhibits A-1 Exhibit “A” Licensee Wireless Identification Registration Number: Wireless Identification Registration Number: U-3002-C Contract No. ______________ JM 07-001Verizon MLA Exhibits B-1 Exhibit “B” Form of Supplement This ____________Supplement (“Supplement No. ____”), made this _____ day of ____________, 20____ (“Supplement Effective Date”) between the City of Palo Alto, a California chartered municipal corporation (“City”) and GTE Mobilnet of California Limited Partnership, d/b/a Verizon Wireless, with its principal offices at c/o Verizon Wireless, 180 Washington Valley Road, Bedminster, New Jersey 07921 (“Licensee”),. This Supplement is governed by the provisions of the that certain Master License Agreement for Use of City Controlled Space on Utility Poles, Streetlight Poles and Conduits between the City and Licensee dated ______________, 2016 ("Agreement"), and this Supplement is incorporated into the Agreement. 1. Description and Location of Licensee Facilities. A description of the Licensee Facilities and locations of such Licensee Facilities is attached hereto as Exhibit “1”. Unless the City elects to accept alternative documentation, the Description and Location of Licensee Facilities in Exhibit “1” shall include City-approved versions of the attachments to the Processing Request Application (in substantially the form of Exhibit “G” to the Agreement) submitted by Licensee. 2. Term. The term of this Supplement shall be as set forth in Section 2.1.3 of the Agreement. 3. Fees and Costs. The Fees and Costs paid by Licensee and those that remain due and payable are outlined in Exhibit 2 attached to this Supplement. Exhibit 2 includes all Initial/One Time Costs and Fees, Annual Costs and Fees and Additional Costs and Fees associated with Licensee Facitlies identified pursuant to Section 1 of this Supplement. 4. [RESERVED for Supplement-Specific Provisions] [Signature page follows] Contract No. ______________ JM 07-001Verizon MLA Exhibits B-2 IN WITNESS THEREOF, the Parties hereto have caused this Supplement to be legally executed in duplicate as of the Supplement Effective Date. CITY: CITY OF PALO ALTO By: _____________________________ Name: _____________________________ Title: _____________________________ APPROVED AS TO FORM CITY ATTORNEY’S OFFICE BY: ____________________________________ Senior Deputy City Attorney LICENSEE: GTE Mobilnet of California Limited Partnership, D/B/A VERIZON WIRELESS, by Cellco Partnership, its general partner By: _____________________________ Name: _____________________________ Time: ______________________________ Exhibits: Exhibit “1” – Description and Location of Licensee Facilities Exhibit “2” – Description of Fees and Costs Contract No. ______________ JM 07-001Verizon MLA Exhibits B-3 Form of Exhibit “1” to Supplement No. ____ Description and Location of Licensee Facilities [to be Attached To City-spaces on Poles and/or Installed in City Conduits] Pursant to the terms of the Agreement, Licensee is authorized to install the Licensee Facilities described, at the locations in the documentation attached to this Exhibit 1. [Documentation required by section 1 of the Supplement to be attached] Contract No. ______________ JM 07-001Verizon MLA Exhibits B-4 Form of Exhibit “2” to Supplement No. ____ Costs and Fees INITIAL/ONE-TIME COSTS AND FEES CHARGE DESCRIPTION AMOUNT STATUS Preparatory Work Fee [to be specified by City] PAID Make-Ready Engineering Work Fee [to be specified by City] PAID Make-Ready Construction Work Fee (less credit for Preparatory Work Fee, Make-Ready Engineering Work Fee paid to City) [to be specified by City] Due 60 days following the Supplement Effective Date, and prior to start of any construction TOTAL: Initial/One Time Costs and Fees: ANNUAL COST AND FEES Payment Commencement Date: _______________________ CHARGE DESCRIPTION ANNUAL AMOUNT DUE DATE Wires Facilities Attachment Fee [to be specified by City] Due 60 days following the Payment Commencement Date in Year 1, January 1st each year thereafter. Wireless Facilities Attachment Fee [to be specified by City] Due 60 days following the Payment Commencement Date in Year 1, January 1st each year thereafter. Conduit Occupancy Fees [to be specified by City] Due 60 days following the Payment Commencement Date in Year 1, January 1st each year thereafter. Other Licensee Facility [to be specified by City] Due 60 days following the Payment Commencement Date in Year 1, January 1st each year thereafter. TOTAL: Annual Costs and Fees: Contract No. ______________ JM 07-001Verizon MLA Exhibits B-5 ADDITIONAL COSTS AND FEES (if applicable) CHARGE DESCRIPTION AMOUNT DUE DATE Other City Service Fees (if applicable) [to be specified by City] 60 days following the Payment Commencement Date Electric Service Charges (if applicable) [to be specified by City] 60 days following the Payment Commencement Date TOTAL: Additional Costs and Fees: Contract No. ______________ JM 07-001Verizon MLA Exhibits C-1 Exhibit “C” Fees and Costs A. INITIAL/ONE-TIME COSTS AND FEES. 1. The Licensee shall pay the City for its Costs and Fees of preparing the City Facilities (the City’s overhead and underground facilities) for each new or modified Pole Attachment or Conduit Occupancy as specified in this Exhibit “C”. 2. Initial/One-Time Costs and Fees include Preparatory Work Fees, Make-Ready Engineering Work Fees and Make-Ready Construction Work Fees and are a one-time charge for each Licensee Facility, as provided for below and in the City’s Rules and Regulations. (a) PREPARATORY WORK FEES. Licensee will pay City a non-refundable Preparatory Work Fee. The Preparatory Work Fee will depend on the specific nature of the Licensee Facilities, but may include, without limitation, the following: Charge: Processing Charge Description: The actual cost incurred for performing preliminary field investigation to review pole attachment or conduit usage submittal. Price: Total Cost (b) MAKE-READY WORK FEES. If Licensee elects to proceed with installation of Licensee Facilities, Licensee will pay City non-refundable Make-Ready Work Fees, which include the Make-Ready Engineering Work Fees and the Make-Ready Construction Work Fees set forth below. (i) MAKE-READY ENGINEERING WORK FEES. Make-Ready Work Engineering Fees depend on the specific nature of the Licensee Facilities, but may include, without limitation, Costs and Fess associated with engineering Make-Ready Work and the following: Charge: Engineering Charge Description: The actual costs incurred by the City for reviewing contact design, designing City modifications and updating operation records. Price: Total Cost (ii) MAKE-READY CONSTRUCTION WORK FEES. Should Licensee elect to move forward with design, installation and construction of Licensee Facilities after completion of Make-Ready Engineering Work, Licensee will pay City a Make-Ready Work Construction Fee. Preparatory Work Fees and Make-Ready Work Engineering Fees Contract No. ______________ JM 07-001Verizon MLA Exhibits C-2 that are paid in full to City will be credited against Make-Ready Work Construction Fees. Make-Ready Work Fees depend on the specific nature of the Licensee Facilities, but may include, without limitation, Costs and Fees associated with construction-related Make-Ready Work and the following: Charge: Cable Attachment Charges Description: The actual costs incurred by the City for making space available and other modifications necessary to accommodate each line attachment. Price: Total Cost Charge: Anchor Attachment Charges Description: The actual costs incurred by the City for making provisions for guying the structure at the communications level. Price: Total Cost Charge: Equipment Mounting Charges Description: The actual costs incurred by the City for making space available and other modifications necessary to accommodate equipment (amplifiers, nodes, battery backup) mounting. Price: Total Cost Charge: Electric Service Connection Charges Description: The costs incurred by the City for providing electric service connection to provide power to equipment attached to the pole shall be payable in accordance with Utility Rate Schedule E-15. Price: Total Cost Charge: Inspection Charge Description: The actual costs incurred by the City for providing inspection services upon completion of Make-Ready Work and the Licensee’s equipment – typically 3 hours per pole. Price: Total Cost B. ANNUAL FEES. The Fees applicable to Licensee Facilities attached to Poles or installed in conduit shall be as set forth in the City’s Utility Rate Schedule E-16, or, if such rate schedule is not applicable, any other applicable CPAU utility rate schedules. The City reserves the right to impose and collect different fees for the exclusive and nonexclusive occupation of the Conduits in accordance with Laws. C. ADDITIONAL COSTS AND FEES Contract No. ______________ JM 07-001Verizon MLA Exhibits C-3 1. Other City Service Fees. Where Licensee’s Facilities require City to render services beyond those identified in Sections A or B of this Exhibit C, the Fees for the City’s rendering of services in regard to the attachment or installation of the Licensee’s Facilities on Poles or in Conduits shall either be established in accordance with applicable CPAU utility rate schedules or be based on cost recovery by City. 2. Electric Service charges. The Fees, rates and charges for electric utility service consumed or used annually by the Licensee shall be as set forth in the City’s Utility Rate Schedule E-16 or, if such rate schedule is not applicable, other applicable CPAU utility rate schedules. D. ADDITONAL PAYMENT TERMS AND CONDITIONS 1. Late Payment fee. If the Licensee fails to pay the amounts of Costs and Fees due and payable within the time period required by this Agreement, then the License shall pay the greater of a late fee established by Law or the an amount equal to five percent (5%) of those amounts then due and payable. 2. Utility Rate Schedules. The utility rate schedules referred to in this Exhibit and any amendments hereto now or hereafter in effect shall be deemed incorporated herein by reference. The rates may be amended and adopted by the City in the ordinary course and scope of business. The Fees shall be subject to annual cost-of-living increases. The Fees upon commencement of the Extension Term shall be calculated in accordance with the utility rate, fees and charges applicable to Pole Attachments and Conduit Occupancy then in effect. Contract No. ______________ JM 07-001Verizon MLA Exhibits D-1 Exhibit “D” Terms and Conditions Regarding Use of Pole Spaces 1. The Licensee shall be responsible for performing its own engineering analysis, which shall be submitted with the Processing Request Application – Exhibit “G”, in order to enable the City to determine where on the Pole the Licensee Facilities will be attached in compliance with CPUC GO 95, Rule 94 clearance and construction requirements. CPAU in its Make-Ready Work inspection will evaluate the Pole for its ability to accommodate all of the existing and new attachments from a clearance- and pole-loading perspective. 2. Subject to the City’s express written consent, the Licensee shall perform all attachments and installations; only qualified contractors reasonably approved by the City will be allowed to work in the Electric Utility space subject to any monitoring by City staff. 3. As there may be Make-Ready Work that needs to be performed by other parties attached to the Pole, the Licensee shall make arrangements with those other parties to move/transfer their facilities. 4. The Licensee shall remove existing “out of service” communications cable/devices to facilitate the new attachments and installations. 5. The City will approve the Licensee’s Pole Attachment and Conduit Occupancy requests over two phases. The first phase will entail ensuring the Make-Ready Work is completed in accordance with CPAU specifications. The second phase will entail permitting the Licensee to attach the Licensee Facilities to the Poles and/or installation in the Conduits. The City’s personnel will perform a final inspection after all Work is completed. 6. The Licensee shall identify the Licensee Facilities newly installed or serviced at each contact point by means of a marking method mutually agreed to by the Parties. Such identification shall be visible from ground level. The Licensee shall provide the City with a 24/7 contact phone number to enable the City to promptly report any concerns regarding the Licensee Facilities. In the event that the City should report any such concerns to the Licensee, the Licensee shall promptly respond to such call(s) and perform the required repair or correct any adverse impact to the City’s electric utility operations caused by such Licensee Facilities at no cost to the City unless the same shall be caused by the City or a party under the City’s control. 7. The City reserves the right to operate and maintain its electric utility City Facilities in order to fulfill its utility service requirements to its electric utility ratepayers or dark fiber/communications customers. The City shall not be liable to the Licensee for any interruption to the Licensee’s service or for any interference with the operation of the Licensee Facilities arising in any manner from the use of the City Contract No. ______________ JM 07-001Verizon MLA Exhibits D-2 Facilities, including the electric utility overhead facilities, by the City in accordance with this Agreement, provided that the City shall give the Licensee fifteen (15) Days’ advance notice of any non-emergency work which affects the Licensee Facilities. 8. The Licensee Facilities shall not be installed, placed, or maintained on any of the City Facilities which carries voltage of 60,000 volts or greater between the conductors. 9. If, at any time, the City deems it necessary to intentionally increase its voltage to 60,000 volts between conductors, on the Poles jointly occupied under this Agreement, the City shall give the Licensee ninety (90) Days’ prior written notice, as provided herein, of its intention to increase those voltages. 10. In the event any City Facilities occupied by the Licensee under this Agreement are to be replaced, repaired or altered, the Licensee shall, at its own sole risk and expense (except in the case of rearrangements required by third parties or City-owned commercial communications facilities), upon reasonable notice from the City, relocate or replace its Licensee Facilities or transfer them to the replacement City Facilities, as available, or perform any other work in connection with those facilities that may be required by City. 11. In the event of an emergency or other event or condition that the City determines presents an imminent danger or threat to the public health, safety or welfare, the City may remove a Pole and shall in such case immediately notify the Licensee of the action taken. The City shall make commercially reasonable efforts to notify the Licensee of the removal of its Licensee Facilities, prior to the emergency removal of those facilities. 12. The Licensee shall use due care to avoid causing damage to the City Facilities, including its electric utility overhead facilities, and the Licensee shall assume responsibility for any loss arising from such damage caused by the Licensee. The Licensee shall make an immediate report of the occurrence of any such damage to the City and shall, on demand, reimburse the City for its total cost that are incurred in making any repairs. 13. The City shall have the right to inspect each new installation of the Licensee Facilities attached to or installed in the City Facilities and to make periodic inspections at the City’s discretion as conditions may warrant. Such inspections shall not relieve the Licensee of any responsibility, obligation or liability assumed under this Agreement. 14. The Licensee, at its sole risk and expense, shall install and maintain guys and anchors as required where the Licensee’s anchorage requirements are not coincident with the City’s or the City Facilities’ existing anchorage requirements. Contract No. ______________ JM 07-001Verizon MLA Exhibits D-3 15. Where the anchorage requirements of the City Facilities used by the Licensee and the City are coincident, the existing guys and anchors shall be used. 16. If the City, in accordance with accepted electric utility standards, determines that separate guys and/or anchors are necessary, the Licensee, at its sole risk and expense, shall install the new guys and/or anchors. 17. If the City, in accordance with accepted electric utility standards, determines at the time of installation of the Licensee Facilities that the existing guys and/or anchors need to be replaced on account of and due to the weight of the License Facilities to be installed, the City, at the Licensee’s sole cost and expense, shall install the new guys and/or anchors. 18. If the Licensee Facilities cause to displace or pull any reasonably serviceable Poles or anchors out of line, or damage any City Facilities or such other facilities, equipment or installations owned by the City or any other third party in any manner, the Licensee shall pay the cost of any replacements, repairs or restoration of such Poles, anchors, facilities, equipment or installations. Contract No. ______________ JM 07-001Verizon MLA Exhibits E-1 Exhibit “E” Terms and Conditions Regarding Use of City Conduit 1. The Licensee shall submit a Processing Request Application – Exhibit “G” to the City, which will perform a preliminary site investigation jointly with the Licensee to determine the feasibility of the Licensee’s occupancy or use of any available Conduits. 2. No Licensee Facilities, including any cables, shall be permitted to be installed in electric pull boxes, electric vaults or Conduit that contains the City’s electric or dark fiber cables. 3. The Licensee Facilities or other cables shall be identified with durable and clearly visible tag when they are installed in Conduits. 4. For all installations, inner-duct shall be used prior to installing the Licensee Facilities or other cables. When, in the opinion of the Utilities Director, it is necessary to facilitate maintenance or the additional use of the Conduit, the City will require the Licensee to also install a divide-a-duct prior to installing the inner-duct. 5. Any pull box replacement or enlargement will be made at the Licensee’s sole cost and expense. Contract No. ______________ JM 07-001Verizon MLA Exhibits F-1 Exhibit “F” Pole Replacement Requirements 1. All Poles identified by the City’s records as being deteriorated and scheduled or planned for replacement within the next twelve (12) months will be addressed as follows: • The City will advise the Applicant or the Licensee to seek another good Pole. • The Pole will be replaced by the City, but the City will not make any guarantee to complete the replacement to meet the Applicant’s or the Licensee’s desired schedule. 2. Whenever a Pole top extension will be used to mount the Licensee Facilities and whenever the Pole top is deteriorated, then the Pole shall be replaced at the Applicant’s sole cost and expense in order to accommodate the Licensee Facilities’ attachment or installation. Contract No. ______________ JM 07-001Verizon MLA Exhibits G-1 Exhibit “G” Form of Processing Request Application Licensee Facility No. ______ (for Pole Attachment/Conduit Usage) REQUEST SUBMITTED BY: FIELD INVESTIGATION CONTACT: Name: Name: Title: Title: Company: Company: Street Address: Street Address: City, State, Zip: City, State, Zip: Telephone Number: Cell Phone: Email Address: Email Address: Today’s Date: ____/____/____ Project Description: Attach the following: 1. A list of Poles within the City of Palo Alto with Pole number and/or nearest street address; 2. Size and Conduit Occupancy details; 3. Size and number of pull boxes; 4. A map showing the Pole/Conduit locations; 5. Pole loading calculations; 6. Typical Installation details of equipment to be attached on the Pole; 7. Completed Electric Service Request Application (one per wireless pole attachment location; application shall include all power and attachment requests); and 8. Other: Desired completion date: __/____/__ I am submitting this Processing Request Application with the full understanding of the following conditions, including the Costs and Fees applicable to Licensee Facilities described in Exhibit “C” attached to the Agreement: 1. Upon the City’s receipt of a complete Application, the City will invoice the Licensee for a non-refundable Preparatory Work Fee. Licensee will pay the Preparatory Work Fee within thirty (30) days of receipt of the City’s invoice. Contract No. ______________ JM 07-001Verizon MLA Exhibits G-2 2. Within twenty (20) days of the City’s receipt of the Preparatory Work Fee, the City will complete Preparatory Work for the Application to determine whether and where the Licensee Facilities are feasible and what Make-Ready Engineering Work will be required. 3. Within seven (7) Days of the City’s completion of the Preparatory Work, the City will notify the Licensee of the Make-Ready Engineering Work necessary for Licensee Facilities and invoice Licensee for a non-refundable Make-Ready Engineering Work Fee. 4. If Licensee elects to proceed with Licensee Facilities, within thirty (30) Days of receipt of City’s notice and invoice for Make-Ready Engineering Work Fees, Licensee will pay the Make-Ready Engineering Work Fee. Licensee’s payment of such Make-Ready Engineering Work Fees will serve as notification to City that Licensee intends to proceed with Make-Ready Engineering Work. 5. Within thirty (30) days of City’s completion of the Make-Ready Engineering Work, the City will provide the Licensee with a description of the necessary Make-Ready Construction Work for the Licensee Facilities and the Make-Ready Construction Work Fees applicable to the Licensee Facilities. Preparatory Work Fees and Make-Ready Engineering Work Fees paid by Licensee will be credited against Make-Ready Construction Work Fees. 6. If the Parties mutually agree to proceed with Make-Ready Construction Work, the Parties will execute a Supplement, substantially in the form of Exhibit “B” to this Agreement. The Supplement will: a. Set forth the non-refundable Make-Ready Construction Work Fee and due date therefore; provided, however, that the Make-Ready Construction Work Fee will be paid prior to the start of Make-Ready Construction Work; and b. Specify whether the Make-Ready Construction Work for Licensee Facilities, including the required replacement of any deteriorated Pole, will be performed by the City or the Licensee or its City-approved, qualified and licensed contractor. 7. The City will complete the Make-Ready Work for the Licensee Facilities, as needed, within one hundred five (105) Days of execution of the Supplement. For Preparatory Work Fee and Make-Ready Engineering Work Fee please do not remit any fee until you receive an invoice. Signature: ____________________________________ Date:___/______/____ Please submit the completed form with authorized signature and direct questions to: Contract No. ______________ JM 07-001Verizon MLA Exhibits G-3 Utilities Electric Engineering City of Palo Alto Utilities 1007 Elwell Ct Palo Alto, CA 94303 Phone: (650) 566-4500 Fax: (650) 566-4536 Electric.Engineering@CityofPaloAlto.org Note that all inquires of a legal nature must be directed in accordance with section 18 of the Agreement, including to to the Office of the City Attorney, 8th Floor City Hall, 250 Hamilton Avenue, P.O. Box 10250, Palo Alto, CA 94303, Attention of Senior Deputy City Attorney, Utilities. Contract No. ______________ JM 07-001Verizon MLA Exhibits H-1 Exhibit “H” Net Worth Letter See attached. City of Palo Alto (ID # 7030) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Approval of the Purchase of an Exclusive Easment at the Former ITT Site Title: Approval of the Purchase of All Rights, Title, and Interest Held By Globe Wireless at Property Known as Baylands ITT Transmitter Site, Assessor Parcel Numbers: 008-05-001 And 008-05-004 From Globe Wireless Located at 2601 East Bayshore Road From: City Manager Lead Department: Administrative Services RECOMMENDATION Staff recommends Council: 1. Authorize the City Manager or designee to execute the purchase and sale agreement (Attachment A) and quitclaim deed (Attachment B) to purchase all rights, interest, title, interest including exclusive and non-exclusive easements that were part of the Corporation Grant Deed (document number 5887315, recorded on December 29, 1977), executed by ITT Communication; and all furnishings, fixtures, personal property and improvements at the ITT Transmitter Site Property from Globe Wireless for the amount of $250,000 plus closing costs. 2. Authorize the City Manager to execute any documents required to complete the agreement. EXECUTIVE SUMMARY This report transmits a proposed agreement for the purchase and sale of all rights, title, and interest to 36.5 acres of land commonly known as the “Baylands ITT Transmitter site,” (the Property) as shown on Attachment C. In addition, all furnishings, fixtures, personal property, and site improvements at the Property from Globe Wireless would be purchased. On December 12, 1977, ITT World Communication, Inc., donated approximately 69 acres and sold approximately 83 acres for a total of 152 acres in the Baylands to the City of Palo Alto (the City). In the grant deed (Attachment D), ITT reserved an exclusive easement to use and occupy 36.55 acres of the property for a “Public Coast Station” (radio antenna operation). The purchase price was $1,300,000 of which the City of Palo Alto paid $1,000,000 and the Santa Clara Valley Water District paid $300,000. Globe Wireless, the successor to ITT World Communication, KFS City of Palo Alto Page 2 World Communication Inc., and the holder of the current easements, recently contacted the City with an offer to sell all rights and interests held at the Property for the amount of $250,000. Globe Wireless has secured a new property in Rio Vista, California known as the Voice of America site to continue its operation. In conjunction with the sale of the easement, Globe Wireless will quitclaim all rights and interest to the Property and will transfer title and interest in all furnishing, fixtures, personal property and improvements remaining on the Property after it vacates the site. The City currently owns the underlying fee title to the Property and after completing the purchase, it will have full ownership, control and possession of the site. BACKGROUND In 1921 the Federal Telegraph Company leased 200 acres of marshland and built a radio- telegraph transmitting station to serve as the hub of a coastal network of stations and perform ship-to shore communications. In 1928, the property was sold to Mackay Cable & Wireless and in 1930, to ITT. The station transmitted overseas cables, telephone calls, and other communications until the advent of satellite transmission. The site served as a “bounce” station for ships lacking satellite equipment. The high water table and moist soil aid transmission bounce and thus made this a good location for this function. (For additional historical information, Please see: State of California – The Resources Agency – Department of Park and Recreation – Primary Record). In the early 1970s, the Property was recognized as an integral part to rehabilitate the Baylands. The City rezoned it as agriculture-conservation to reflect the city’s long term vision for the property and began negotiations for its purchase. The ultimate goal was to open the area to the tides and allow it to revert to the salt marsh it was prior to diking. The City began negotiation with ITT World Communication (ITT) to acquire the site in 1977 (CMR: 327:07). Later in the same year, the title of the 152 acres of diked marshland was transferred (sold and donated), by grand deed, (Attachment C) to the City and in conjunction with the sale, the City granted an easement to the Santa Clara Valley Water District. (CMR: 355:07). In 1978, the planning Commission by a vote of 4-0 recommended the approval of pre-zoning of the Former ITT Property from A-C-D (Agricultural Conversation –Design Control) to P-F-D (Public Facility –Design Control). The former ITT Site, excluding the 36.5- acre easement for the antenna field was dedicated as parkland on May 3, 1982. The ordinance refers to it as the “John Fletcher Byxbee Recreation Area Addition”. As part of the terms and conditions of the sale, ITT reserved an exclusive easement over the 36.5 acres known as “Parcel I” for the continued use, operation and maintenance of a coast communication station “Public Coast Station” (radio antenna operation) under a license from the Federal Communication Commission (FCC). ITT also maintained a non-exclusive easement over Parcel 2, a fifty (50) foot wide road, for ingress and egress to East Bayshore Road. The purchase price for the 152 acres was $1,300,000 of which the City of Palo Alto paid $1,000,000 and the Santa Clara Valley Water District paid $300,000. The agreement required that ITT must City of Palo Alto Page 3 consolidate all of its improvements onto “Parcel I” within one year of its obtaining all required permits (CMR: 447:08). On September 29, 1992, the City Council approved (CMR: 409:92) the recommendation of the Palo Alto Historical Association to rename the marshland formerly known as the “ITT Marsh” as the “Emily Renzel Marsh”. In 1990, KFS World Communications (KFS) acquired the ITT easement. In 1992, Ken Jones, the owner of KFS approached the City with a proposal to relocate the facility to another location within the Bay Area and sell KFS’ rights to the City for $550,000. The City Manager requested Council direction (CMR: 545:92). The Council discussed buying back the easement, and instructed the staff to continue discussion with KFS and requested more information since the two parties were unable to agree on a price. On January 7, 1993 staff returned to Council (CMR: 116:93) with additional information regarding the economic utility of the ITT site should the site revert to the City. On September 16, 1993, the City Council approved a purchase and sale agreement, (CMR: 462:93), approved a Budget Amendment Ordinance (4172), authorized the purchase of all the rights, interest and all site improvements for the amount of $370,000, and allocated $42,000 for the demolition expense. The agreement was not completed since KFS was not able to secure another location to relocate its operation and secure approval from FCC. The City reappropriated $412,000 that was allocated for the completion of the purchase. In FY 2014, Globe Wireless, the successor to KFS approached the City with an offer to sell all rights and interests held for the Property for $370,000. City staff continued to negotiate this proposal and subsequently Globe Wireless lowered their offer to $250,000 for all rights and interest for the Property. DISCUSSION Easements An easement is a right created by a grant, reservation, agreement, prescription or necessary implication, which one entity has in the land of another. As previously stated, the exclusive easement held by Globe Wireless is a perpetual exclusive easement to use and occupy the Property. According to the terms of the original Grand Deed: “Grantor reserves to itself, its successors and assigns, for as long as Grantor, its successors or assigns continue to operate on parcel One (I ) pursuant to license issued by the Federal Communication Commission, or successor agency, a public coast station as defined in 47 CPR 81, or successors regulation, (herein after “Public Coast Station”), and for a period of 90 days thereafter, the following easements [to operate the Pacific Coast Station].” As the 36.5 acre land parcel was essentially landlocked, part of the agreement also included a non-excusive easement over a fifty (50) feet wide road providing access to the site. This easement road virtually bisects the property in half. In addition, the Santa Clara Valley Water City of Palo Alto Page 4 District has a non-exclusive easement and non-interfering easement over approximately 5.29 acres of the subject site for a flood control easement. In the past twenty five (25) years, the City of Palo Alto has explored the purchase of the easements rights held by various companies and their successors in order to have complete possession, use and control over this sensitive and important property. The City Council did approve the purchase of the easement rights in 1993 and allocated funds to complete the transaction. For a variety of reasons, the deal was not completed and the use of the Property remained with KFS and subsequently acquired by Globe Wireless when the two companies merged. In mid-2014, the facilities and equipment at the site was vandalized and power has been turned off. On December 5, 2015, the City notified Globe Wireless that the easement had expired as there had been no use for 90 days. Globe disputed this but nevertheless offered to sell easement rights to the City for the previously negotiated price of $250,000. After consulting with City Attorney’s office, staff approached Globe Wireless to: terminate easements rights and all rights and interest to the Property via purchase and mutual agreement. Globe Wireless’ offer to sell is an opportunity for the City to gain control, possession and use of this Property in the Baylands at a price that is lower than what the City approved to pay for the easement rights in 1993. The purchase will connect and restore the property to the original ITT acreage. The City can then develop plans to allow public access and restore the property according to Bayland Master Plan guidelines. Terms of Current Offer by Globe Wireless Price The purchase price is $250,000 all cash for all rights and interest held for the Property ($6,850 per acre). City to accept the property “as is”. Purchase is subject to Council approval. Land The subject property is situated within the Baylands Master Plan Area (Former ITT Property Chapter 3. In 1978, the City adopted the Baylands Master Plan as a long-range plan for treating the Baylands as an integrated whole and balancing ecological preservation with continued commercial and recreational use. The overall goal was to preserve and enhance the unique irreplaceable resources while providing a framework and guide for future actions in the area. The Baylands was divided into the yacht harbor, airport, golf course, the former ITT site, landfill, duck pond and Lucy Evans Bayland Nature Interpretive Center areas and natural marshlands preserve. A. Zoning: Public Facilities District (PF-D). B. Interior Portions: Open Space Controlled Development C. Exterior Portion: Public Conservation Land D. Interior Portion: Not dedicated Parkland E. Exterior Portion: Dedicated Parkland City of Palo Alto Page 5 On – Site Improvements The buildings and antenna field are in the middle of the site, surrounded by and separated from the wetlands by levees and a fence and entrance is prohibited. There are five (5) buildings and twenty two (22) antennas on the site. Most of the antennas are wooden poles with copper wire; others are metal including a 60 – foot tower. The buildings consist of the following: 1) Transmitting Building built in 1920’s is approximately 170 X 42.5 feet, for a total of 7,225 square feet. It features an elevated concrete floor with crawl space underneath. It is partitioned into two office space, a machine shop, central control room and one restroom, 2) Warehouse Building: it measures 84 x 30 feet totaling 2,520 square feet. It contains two small storage rooms with an entry door, as well as one open garage area with a ten foot overhead door for access, 3) Two Machine Shop & Garage: They measure 72 X 24 feet, 1728 square feet and 24 X 24 feet, 576 square feet respectively, 4) There are two utility building: The larger one is 16 x 12 feet, 192 square feet and the smaller one is 8.75 X 11.75 feet, 102 square feet. Environmental Assessment Phase One (1) environmental site assessment was completed on June 16, 2015. The site is not listed on any regulatory database related to use, storage, or release of hazardous materials reviewed during the investigation nor does there appear to be any agency listed site in the vicinity that have significant potential to impact soil, groundwater, or soil vapor quality. Further testing was recommended and a Phase II testing will be completed in the next six months. Inventory Titles and interest in all finishing, fixtures, equipment, and personal property will transfer to the City. Staff completed a visual inspection and video filming of all finishing, fixtures, equipment, and personal property at the Property on May 18, 2016. Property Appraisal The perpetual exclusive easement rights were appraised by a City hired appraiser on October 5, 1992. The value was determined to equal $11,144,000. In the opinion of the appraiser, there was virtually no substantial difference between the market value and the exclusive easement value of the land parcel. The property was appraised for highest and best use as land to develop smaller light industrials/research and development buildings, although the land will be developed according to the Baylands Master Plan Guidelines. TIMELINE Staff will open escrow immediately after the Council approval. The completion of the transaction will take approximately 20 to 30 days to complete. After closing, staff will explore potential use options within the allowable parameters and will schedule a study session with the Council to seek directions and inputs for future plans for this Property. RESOURCE IMPACT To obtain the rights cited above, it will cost the City $250,000 plus up to $3,000 in closing expenses. Staff recommends using the General Fund’s Budget Stabilization Reserve for the City of Palo Alto Page 6 purchase. Future improvements on the site will be proposed through the City’s annual Capital Improvement Plan budget process. POLICY IMPLICATIONS This recommendation is consistent with existing City policy and the Bayland Master Plan. ENVIRONMENTAL REVIEW Authorization of the purchase of all rights, titles and interests held by Globe Wireless at the Property is Categorically Exempt from California Environmental Quality Act (CEQA) review under CEQA guidelines section 15301 (existing facilities). Further environmental review will be conducted in connection with any future use of the facility. Attachments:  Attachment A: Purchase and Sale Agreement Globe Wireless (PDF)  Attachment B: Quitclaim Easement ITT Property (PDF)  Attachment C: Former ITT Property_Area Map (PDF)  Attachment D: Former ITT Corporation Grant Deed, Dec 1977 (PDF) Attachment A PLAL\51723\1002478.1 -1- AGREEMENT FOR PURCHASE AND SALE THIS AGREEMENT FOR PURCHASE AND SALE (“Agreement”) is made and entered into as of July ___, 2016, which is the date that Buyer has signed this Agreement (the “Effective Date”) by and between Globe Wireless Inc., a Delaware corporation (“Seller”), and City of Palo Alto, a California Chartered Municipal corporation (“Buyer” or the “City”). RECITALS A. On or about December 1977, ITT World Communications Inc. (“ITT”) conveyed approximately 69 acres of real property to the City, by a Corporation Grant Deed, recorded December 29, 1977 in Book D374 of Official Records, Page 364 under Recorder’s Serial Number 5887315 (the “Public Coast Station Parcels”). Pursuant to said Deed, ITT reserved various easements over the Public Coast Station Parcels for as long as it or its successors operated thereon a Class I-A Public Coast Station in the Maritime Mobile Service pursuant to a license issued by the Federal Communications Commission (the “Public Coast Station”). B. On or about December 1977, ITT conveyed an additional approximately 83 acre parcel of real property to the City by a Corporation Grant Deed, recorded December 29, 1977 in Book D374 of Official Records, Page 267 under Recorder’s Serial Number 5887311 (the “83 Acre Parcel”), pursuant to that certain Purchase Agreement between and among ITT, the City and the Santa Clara Valley Water District dated December 5, 1977 and recorded December 5, 1977 in Book D374 of Official Records, Page 185 under Recorder’s Serial Number 5887309, and pursuant to which ATT reserved easements over the 83 Acre Parcel for water flow, operation and relocation of the Public Coast Station purposes. The 83 Acre Parcel and the Public Coast Station Parcels are more particularly described on Exhibit A attached hereto and are collectively referred to as the “Property”. C. On June 4, 1990, KFS Word Communication, Inc., acquired by deed ITT’s right, title, and interest in the Property in order to continue operation of the Public Coast Station. In 1997, KFS World Communication was merged into Globe Wireless and Globe Wireless became the successor of all rights of KFS. D. Located on the Property are various physical improvements, including, without limitation, wooden and metal antennas and several buildings which contain fixtures and furnishings. An inventory of the general description and number of all such furnishings, fixtures, personal property, and improvements (the “Inventory Items”) was competed on May 18, 2016 by City Staff by electronic video recording. E. Seller has ceased operating a Public Coast Station on the Property and desires to relinquish, convey and sell its interests in the Property and Inventory Items to Buyer, and Buyer desires to purchase the same from Seller, all on the terms, conditions, and provisions set forth in this Agreement. F. Seller and Buyer recognize that the sale and purchase of the Property and Inventory Items is subject to approval by the Palo Alto City Council, in its sole and absolute discretion, and that this Agreement shall have no force or effect unless and until said approval has been obtained. Buyer shall obtain such approval before it executes this Agreement. PLAL\51723\1002478.1 2 NOW, THEREFORE, in consideration of their mutual covenants, Seller and Buyer hereby agree as follows: 1. Seller agrees to relinquish, convey and sell all of Seller’s right, title, and interest in the Property and Inventory Items, and Buyer agrees to purchase and to receive all of Seller’s right, title, and interest in the Property and Inventory Items, upon all of the terms, covenants and conditions set forth in this Agreement. In connection therewith: (a) The Buyer will do a walk-through five days prior to closing of escrow in order to complete the final inspection of the property. (b) Seller understands and acknowledges that Buyer does not wish to be burdened by the responsibility for and costs of removing additional fixtures, personal property , or improvements which Seller may wish to add to the Property after this Agreement is executed and prior to the Closing, and agrees not to add any personal property, fixtures, equipment and improvement to the to the Property. 2. Price. The purchase price for Seller’s right, title and interest in the Property and all Inventory Items (the “Purchase Price”) is the sum of two hundred and fifty thousand dollars ($250,000), and shall be payable by Buyer to Seller in cash at the Closing. The Purchase Price shall be the total consideration paid by Buyer to Seller for the Property and all Inventory Items. 3. Closing. (a) Closing Date. The closing of the transaction described herein (the “Closing”) shall occur thirty (30) days following the Effective Date of this Agreement. Closing shall occur at the offices Old Republic Title Company (“Escrow Agent” or “Title Company”), 555 12th Street, Suite 200, Oakland, CA 94607; (510) 272-1121. (b) Deliveries. At Closing, Seller shall deliver to Escrow (i) an executed and acknowledged quitclaim deed (“Deed”) to the Property, in form suitable for recording, (ii) a bill of sale for the Inventory Items in the form of Exhibit C attached hereto, and (iii) such other documents as may be required to effectuate the Closing. Buyer shall deliver an executed certificate of acceptance and such other documents as may be required to effectuate the Closing. The parties shall cooperate in the preparation of standard escrow instructions to be delivered to Escrow Agent not less than three (3) days before Closing. (c) Prorations. (i) Real estate taxes and assessments, personal property taxes, if any, and all other items of income and expense with respect to the Property shall be prorated between Seller and Buyer as of Closing. All such items attributable to the period through and including the Closing shall be credited or charged to Seller. All such items attributable to the period following the Closing shall be credited or charged to Buyer. Seller shall be entitled to and will arrange for the return of any applicable refundable deposits or bonds held by any utility, govern mental agency or service contractor with respect to the Property. Buyer shall have no obligation to make or cooperate in the making of such arrangements or refunds except where it is obligated as a “utility, govern mental agency, or service contractor.” Seller will indemnify the Buyer against all liability and liens as to any utility, govern mental agency, or service contractor which is owed money by Seller at the Closing. PLAL\51723\1002478.1 3 (ii) All prorations which can be accurately liquidated or reasonably estimated as of the Closing shall be made at Closing. All other proration and adjustments to any estimated proration shall be made by Buyer and Seller with due diligence and cooperation within 30 days prior to closing. (d) Costs. No real property transfer tax is due on the transfer of the rights, and interest from Seller to Buyer. Buyer shall pay any recording costs for the Deed. All other costs and expenses, and escrow fees shall be divided between the Buyer and the Seller as customarily. 4. Condition of Property. Seller disclaims the making of any representations or warranties, express or implied, regarding the Property or matters affecting the Property, including, without limitation, the physical condition of the Property, title to or the boundaries of the Property, pest control matters, soil condition, hazardous waste, toxic substance or other environmental matters, compliance with building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, access to the Property from a public highway or street, and all other information pertaining to the Property. Buyer, moreover, acknowledges that (i) Buyer has entered into this Agreement with the intention of making and relying upon its own investigation of the physical, environmental, economic and legal condition of the Property and (ii) Buyer is not relying upon any representations and warranties made by Seller or anyone acting or claiming to act on Seller’s behalf concerning the Property. Buyer further acknowledges that it has not received from Seller any accounting, tax, legal, architectural, engineering, property management or other advice with respect to this transaction and is relying solely upon the advice of its own accounting, tax, legal, architectural, engineering, property management and other advisors. Buyer hereby agrees that the waiver or satisfaction of the condition set forth in this Section 4 hereof shall constitute an acknowledgment that Seller has given Buyer every opportunity to consider, inspect and review to its satisfaction the physical, environmental, economic and legal condition of the Property and all files and information in Seller’s possession that are material to the purchase of the Property. BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT BUYER SHALL PURCHASE THE PROPERTY IN ITS “AS-IS” CONDITION AS OF CLOSING AND ASSUMES THE RISK THAT ADVERSE PHYSICAL, ENVIRONMENT AL, ECONOMIC OR LEGAL CONDITIONS MAY NOT HAVE BEEN REVEALED BY ITS INVESTIGATION. Notwithstanding the foregoing, (1) Seller warrants to Buyer that Buyer at Closing shall acquire title to the Property free and clear of any leases, licenses, service contracts, or purchase options or rights of first refusal to purchase the Property or Inventory Items; (2) there is no litigation concerning the Property or Inventory Items; and (3) nothing herein contained shall relieve Seller of its duty to disclose to Buyer any material facts relative to the condition of the Property actually known to Seller (without independent investigation or inquiry) and which would not be reasonably apparent to Buyer upon its own inspections and investigations. 5. Conditions Precedent. (a) Conditions. Buyer’s obligation to purchase the Property is subject to and contingent upon the satisfaction or waiver of the following conditions precedent: (i) Buyer’s inspection and approval by written notice to Seller by no later than fifteen (15) business days after the Effective Date of this Agreement of all physical, environmental, economic, legal and other matters relating to the condition of the Property. Buyer shall give notice of approval or disapproval by said date. Buyer shall have the opportunity to review all documents and information in Seller’s possession that are material to PLAL\51723\1002478.1 4 the purchase of the Property, and Seller shall make the same available to Buyer within five (5) business days following the date of this Agreement. Seller shall permit Buyer and its authorized representatives, upon reasonable prior notice, reasonable access to the Property prior to Closing to make tests and conduct inspections and shall cooperate with Buyer in the making of its investigations but shall not be obligated to incur any expense in connection therewith. Buyer shall indemnify and defend Seller against and hold Seller harmless from any and all loss, cost, liability and expense (including reasonable attorneys’ fees) arising out of Buyer’s activities on the Property; (ii) Seller’s performance of each and every covenant of Seller herein; and (iii) The absence of any liens on the Property, whether voluntarily created by Seller or involuntarily suffered by Seller to be imposed thereon (excluding the lien of non-delinquent property taxes and assessments). (b) Seller’s obligation to sell the Property is subject to and contingent upon the satisfaction or waiver of the following conditions precedent: (i) The approval of the sale by the City Council of the City of Palo Alto; and (ii) Buyer’s performance of each and every covenant of Buyer herein. (c) Title. (i) Title Objections. Buyer has had obtained from Title Company a preliminary report dated April 18, 2016 (the “Preliminary Title Report”) covering the Property, a copy of which is attached hereto as Exhibit B. Exception Nos. 1-23, 28, 29, 34, 36 - 41 are deemed to be “Permitted Exceptions”. From time to time after the Effective Date and prior to the Closing Date, Buyer may give written objection to matters of title first appearing in any updated title report issued after the Preliminary Title Report. Seller shall have the right, but not the obligation (except as to monetary objections) to attempt to remove, satisfy or otherwise cure any exceptions to title to which Buyer objects hereunder. Within ten (10) days after receipt of Buyer’s objection notice, Seller shall give written notice to Buyer informing Buyer of Seller’s election with respect to such objections. If Seller fails to give such written notice of election within such ten (10) days, Seller shall be deemed to have elected not to attempt to cure the objections (other than monetary objections). Except as to monetary objections, if Seller elects, or is deemed to have elected, not to cure any exceptions to title to which Buyer has objected or, if after electing to attempt to cure, Seller determines that it is unable to remove, satisfy or otherwise cure any such objections, Buyer’s sole remedy hereunder shall be either (a) to accept title to the Property subject to such exceptions or (b) to terminate this Agreement by written notice to Seller. (ii) Title Insurance. Buyer’s obligation to close escrow shall be subject to Old Republic Title Company issuing, upon payment by Buyer of its regularly schedule premium at the close of escrow, an ALTA Owner’s Policy of Title Insurance (the “Title Policy”) in the amount of the Purchase Price showing title to the Property vested in Buyer, subject only to the Permitted Exceptions. PLAL\51723\1002478.1 5 6. Seller’s Covenants. Seller hereby covenants and agrees that during the period prior to the Closing Seller will (a) maintain the physical condition of the Property in a manner consistent with Seller’s past practices, (b) maintain casualty insurance on the Property in amounts and covering perils consistent with Seller’s past practices, (c) not voluntarily impose or cause to be imposed any liens or encumbrances upon the Property, (d) not install on the Property any material new improvements (such as new structures) without the prior written comment of Buyer, and (e) comply with all applicable laws in any removal by Seller of any hazardous materials from the Property. 7. Casualty: Condemnation. (a) In the event that prior to Closing there is any damage to or destruction of any improvements to the Property, the transaction contemplated by this Agreement nevertheless will proceed according to its terms and without adjustment in the Purchase Price, provided that Seller will assign to Buyer at Closing Seller’s rights under its casualty insurance policy in respect of such damage or destruction, and Buyer shall be entitled to adjust the loss with the insurer; (b) In the event that prior to closing there is any proceeding in eminent domain commenced or threatened (other than by Buyer), Buyer, at Buyer’s election, may terminate this Agreement without liability, or proceed with the transaction contemplated by this Agreement, in the latter of which events the transaction will proceed in accordance with the terms hereof and without any adjustment in Purchase Price, and Buyer shall be entitled to all condemnation proceeds and the right to negotiate and consummate the disposition of the proceeding. 8. Miscellaneous. (a) Insurance. Seller’s existing blanket fire and extended coverage insurance policy, as it affects the Property, shall be cancelled as of the Closing, and Buyer shall have no interest in any premium refund due thereon. (b) Tax-Deferred Exchange. At Seller’s election, Buyer agrees to cooperate with Seller for the purpose of Seller effecting a tax-deferred exchange(s) pursuant to Internal Revenue Code Section 1031 provided (i) Closing occurs on or prior to the last date set forth in Section 3(a) hereof, and (ii) Buyer shall incur no additional expense by reason of such cooperation. Notwithstanding the foregoing, Buyer shall be under no obligation to cooperate with Seller for purposes of Seller effecting a tax-deferred exchange hereunder by selling or exchanging or otherwise transferring other real property owned by Buyer. (c) Brokers. Each party to this Agreement warrants to the other that no person or entity can properly claim a right to a real estate commission , real estate finder’s fee, real estate acquisition fee or other real estate brokerage-type compensation (collectively, “Real Estate Compensation”) based upon the acts of that party with respect to the transaction contemplated by this Agreement. Each party hereby agrees to indemnify and defend the other against and to hold the other harmless from any and all loss, cost, liability or expense (including but not limited to reasonable attorneys’ fees) resulting from any claim for Real Estate Compensation by any person or entity based upon such acts. (d) Successors and Assigns. Buyer shall not assign Buyer’s rights hereunder without the prior written consent of Seller, which consent shall not be unreasonably PLAL\51723\1002478.1 6 withheld (provided that any such assignment in any event shall be to a governmental body exclusively for public purposes). (e) Notices. All written notices required to be given pursuant to the terms hereof shall be either personally delivered, sent by facsimile machine, sent by Federal Express or comparable overnight service or deposited in the United States express mail or first class mail, registered or certified return receipt requested, postage prepaid, and addressed as follows: To Buyer: City of Palo Alto 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Attn: Real Property Manager To Seller: Globe Wireless Inc. 16621 E Indiana Avenue # 1-106 Spokane Valley, WA 99216 Attn: Ron Hays The foregoing addresses may be changed from time to time by written notice. Notices shall be deemed received upon the earlier of actual receipt or three business days following mailing. (f) Time. Time is of the essence of every provision contained in this Agreement. (g) Possession. Possession of the Property shall be delivered to Buyer at Closing. (h) No Deductions or Offsets. Buyer acknowledges that the Purchase Price to be paid for the Property pursuant to this Agreement is a net amount and shall not be subject to any offsets or deductions except for escrow closing expenses. (i) Attorneys’ Fees. In the event any dispute between Buyer and Seller should result in litigation, the prevailing party shall be reimbursed for all reasonable costs incurred in connection with such litigation, including, without limitation, reasonable attorneys’ fees. (j) Review by Counsel. The parties acknowledge that each party has been represented by counsel and such counsel have reviewed and revised this Agreement. (k) Governing Law. This Agreement shall be construed and interpreted in accordance with and shall be governed and enforced in all respects according to the laws of the State of California. (l) Counterparts. This Agreement may be executed in one or more counterparts. All counterparts so executed shall constitute one contract, binding on all parties, even though all parties are not signatory to the same counterpart. PLAL\51723\1002478.1 7 (m) Entire Agreement. This Agreement and the attached exhibits, which are by this reference incorporated herein (and all documents in the nature of such exhibits), when executed, contain the entire understanding of the parties and supersede any other written or oral understanding. (n) Authority. If Seller is a corporation, partnership, trust, association or other entity, Seller and each person executing this Agreement on behalf of Seller does hereby covenant and warrant that (a) Seller is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation, (b) Seller has and is duly qualified to do business in California, (c) Seller has full corporate, partnership, trust, association or other power and authority to enter into this Agreement and to perform all Seller’s obligations hereunder, (d) each person (and all of the persons if more than one signs) signing this Agreement on behalf of Seller is duly and validly authorized to do so, and (e) by entering into this Agreement, performing its obligations under this Agreement, and selling the Property, Seller hall not be in default of any contract to which it is a party. Upon execution hereof and at Buyer’s request, Seller shall provide Buyer and or the Title Company with a written certification of its Corporate Secretary or other appropriate authorizing officer or partner attesting that at a duly noticed meeting of its Board of Directors or other governing body a resolution has been unanimously adopted approving Seller’s execution hereof, thereby binding itself to the terms of this Agreement and identifying the person(s) authorized to execute this Agreement on behalf of Seller. (o) Further Assurances. From and after the Effective Date of this Agreement and following the Closing Date, and for no further consideration, Seller and Buyer shall perform such acts and execute, acknowledge and deliver such additional documents as reasonably requested by the other party to: (i) vest Buyer with all of Seller right, title, and interest in the Property; (ii) carry out the transactions contemplated by this Agreement; and (iii) protect each party’s rights under this Agreement. IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement for Purchase and Sale as of the day and year first written above. SELLER: GLOBE WIRELESS, INC. a Delaware Corporation Its: BUYER: CITY OF PALO ALTO, a California Chartered Municipal Corporation City Manager APPROVED AS TO FORM: Senior Assistant City Attorney PLAL\51723\1002478.1 8 APPROVED: Director of Finance Real Property Manager Page 1 of 2 ORDER NO. : 1117016668-JS EXHIBIT A The land referred to is situated in the County of Santa Clara, City of Palo Alto, State of California, and is described as follows: Parcel One: Beginning at the most Southerly corner of the 151.61 acre parcel of land shown on that certain Record of Survey Map which was filed on August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California; thence from said point of beginning along the general Westerly line of said 151.61 acre parcel North 40° 34’ 12” West 1003.28 feet, and North 38° 59’ 40” West 27.39 feet to a point thereon; thence leaving said general Westerly line South 89° 39’ 37” East 1244.50 feet; thence North 11° 41’ 22” East 592.28 feet; thence North 11° 29’ 20” West 502.06 feet; thence North 18° 14’ 16” West 734.92 feet; thence South 82° 14’ 05” West 222.04 feet; thence North 72° 38’ 46” West 335.26 feet; thence North 79° 14’ 55” West 665.06 feet; thence South 14° 50’ 40” West 676.45 feet; thence North 87° 58’ 26” West 121.20 feet to a point on said general Westerly line above described; thence along said general Westerly line as shown on said Map North 16° 20’ 32” West 384.11 feet, South 79° 39’ 28” West 60.00 feet, North 05° 00’ 10” East 195.67 feet, North 85° 31’ 57” East 127.37 feet and North 10° 35’ 30” West 540.33 feet; thence continuing along the general Northerly line of said 151.61 acre parcel as shown on said Map, North 33° 31’ 50” East 179.72 feet, North 63° 59’ 20” East 17.73 feet, South 37° 17’ 50” East 277.53 feet, North 52° 42’ 10” East 375.72 feet, South 88° 07’ 10” East 224.11 feet, North 66° 47’ 40” East 179.79 feet, North 41° 59’ 20” East 112.05 feet, North 13° 58’ 00” East 203.07 feet, and South 88° 58’ 50” East 1113.34 feet to the Northeasterly corner of said 151.61 acre parcel; thence along the general Easterly line of said parcel, South 00° 50’ 58” West 2690.96 feet, South 06° 31’ 50” East 354.00 feet South 79° 03’ 20” East 93.06 feet, South 22° 53’ 30” East 145.20 feet, South 76° 27’ 30” East 132.00 feet to the most Easterly corner of said 151.61 acre parcel; thence along the Southeasterly line of said parcel as shown on said Map, South 70° 24’ 00” West 1317.52 feet to the point of beginning. Parcel Two: Commencing at the most Southerly corner of the 151.61 acre parcel of land shown on that certain Record of Survey Map, recorded August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California; thence along the Southwesterly line of said parcel as shown on said Map, North 40° 34’ 12” West 1003.28 feet, and North 38° 59’ 40” West 27.39 feet, thence leaving said Southwesterly line South 89° 39’ 37” East 401.49 feet to the true point of beginning of lands to be described herein; thence from said true point of beginning and continuing South 89° 39’ 37” East 843.01 feet; thence North 11° 41’ 22” East 592.28 feet; thence North 11° 29’ 20” West 502.06 feet; thence North 18° 14’ 16” West 734.92 feet; thence South 82° 14’ 05” West 222.04 feet; thence North 72° 38’ 46” West 335.26 feet; thence South 24° 07’ 42” West 525.95 feet; thence South 05° 08’ 41” East 1360.48 feet to the true point of beginning. Parcel Three: Page 2 of 2 Beginning at a point on the general Westerly line of the 151.61 acre parcel of land shown on that certain Record of Survey Map, filed on August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California, said point of beginning being the Southerly terminus of the course designated as “North 05° 00’ 10” East 98.90 feet”, shown on the Northerly portion of said general Westerly line as same is delineated upon Sheet 1 of said Map, and said point of beginning being marked on the ground by 3/4 inch iron pipe monument and tag “RCE 5597”; thence from said point of beginning and continuing along said general Westerly line of said 151.61 acre parcel North 05° 00’ 10” East 98.90 feet, North 84° 59’ 50” West 38.65 feet, North 16° 20’ 32” West 122.01 feet, South 84° 59’ 50” East 83.06 feet, North 05° 00’ 10” East 15.00 feet, and South 84° 59’ 50” East 195.69 feet; thence leaving said general Westerly line of said 151.61 acre parcel, South 87° 58’ 26” East 739.73 feet; thence South 05° 08’ 41” East 396.83 feet; thence South 84° 04’ 53” West 287.98 feet; thence North 72° 39’ 01” West 729.32 feet returning to said general Westerly line of said 151.61 acre parcel; thence along said general Westerly line North 16° 23’ 50” West 25.00 feet to the point of beginning. Parcel Four: Parcel A: Commencing at a point on the general Westerly line of the 151.61 acre parcel of land shown on that certain Record of Survey Map filed on August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California, said point of beginning being the Southerly terminus of the course designated as “North 05° 00’ 10” East 98.90 feet” as shown on the Northerly portion of said general Westerly line as same is delineated upon Sheet 1 of said Map, and said point of beginning being marked on the ground by a 3/4 inch iron pipe monument and Tag “RCE 5597”; thence from a point of beginning and continuing along said general Westerly line of said 151.61 acre parcel North 05° 00’ 10” East 98.90 feet, North 84° 59’ 50” West 38.65 feet, North 16° 20’ 32” West 122.01 feet, South 84° 59’ 50” East 83.06 feet, North 05° 00’ 10” East 15.00 feet, and South 84° 59’ 50” East 195.69 feet; thence leaving said general Westerly line of said parcel, South 87° 58’ 26” East 121.20 feet to the true point of beginning of the parcel of land to be described herein; thence from said true point of beginning North 14° 50’ 40” East 676.45 feet; thence South 79° 14’ 55” East 665.06 feet; thence South 24° 07’ 42” West 525.95 feet; thence South 05° 08’ 41” East 71.97 feet; thence North 87° 58’ 26” West 618.53 feet to the true point of beginning. Parcel B: Beginning at a point on the general Westerly line of the 151.61 acre parcel as shown on the above described Record of Survey Map, which point of beginning is located along said general Westerly line North 40° 34’ 12” West 1003.28 feet, and North 38° 59’ 40” West 27.39 feet from the most Southerly corner of said parcel as shown on said Map; thence from said point of beginning and continuing along said general Westerly line North 38° 59’ 40” West 681.93 feet, thence tangent to the preceding course on the arc of a curve to the right having a radius of 900.05 feet and a central angle of 22° 35’ 50”, an arc distance of 354.98 feet, thence North 16° 23’ 50” West 241.03 feet; thence leaving said general Westerly line South 72° 39’ 01” East 729.32 feet; thence North 84° 04’ 53” East 287.98 feet; thence South 05° 08’ 41” East 891.68 feet; thence North 89° 39’ 37” West 401.49 feet to the point of beginning. APN:008-04-001 OLD REPUBLIC TITLE COMPANY For Exceptions Shown or Referred to, See Attached Page 1 of 14 Pages ORT 3158-A (Rev. 08/07/08) 555 12th Street, Suite 2000 Oakland, CA 94607 (510) 272-1121 Fax: (510) 208-5045 PRELIMINARY REPORT CITY OF PALO ALTO 250 Hamilton Avenue Palo Alto, CA 94301 Attention: HAMID GHAEMMAGHAMI Property Address: Our Order Number 1117016668-JS When Replying Please Contact: Jennifer Senhaji JSenhaji@ortc.com (510) 272-1121 008-04-001, Palo Alto, CA 94301 In response to the above referenced application for a policy of title insurance, OLD REPUBLIC TITLE COMPANY, as issuing Agent of Old Republic National Title Insurance Company, hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said Policy or Policies are set forth in Exhibit I attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties.Limitations on Covered Risks applicable to the Homeowner’s Policy of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Exhibit I. Copies of the Policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit I of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. Dated as of April 18,2016,at 7:30 AM OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 2 of 14 Pages ORT 3158-B The form of policy of title insurance contemplated by this report is: CLTA Standard Coverage Policy -1990. A specific request should be made if another form or additional coverage is desired. The estate or interest in the land hereinafter described or referred or covered by this Report is: Fee Title to said estate or interest at the date hereof is vested in: City of Palo Alto The land referred to in this Report is situated in the County of Santa Clara, City of Palo Alto,State of California, and is described as follows: Parcel One: Beginning at the most Southerly corner of the 151.61 acre parcel of land shown on that certain Record of Survey Map which was filed on August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California; thence from said point of beginning along the general Westerly line of said 151.61 acre parcel North 40° 34’ 12” West 1003.28 feet, and North 38° 59’ 40” West 27.39 feet to a point thereon; thence leaving said general Westerly line South 89° 39’ 37” East 1244.50 feet; thence North 11° 41’ 22” East 592.28 feet; thence North 11° 29’ 20” West 502.06 feet; thence North 18° 14’ 16” West 734.92 feet; thence South 82° 14’ 05” West 222.04 feet; thence North 72° 38’ 46” West 335.26 feet; thence North 79° 14’ 55” West 665.06 feet; thence South 14° 50’ 40” West 676.45 feet; thence North 87° 58’ 26” West 121.20 feet to a point on said general Westerly line above described; thence along said general Westerly line as shown on said Map North 16° 20’ 32” West 384.11 feet, South 79° 39’ 28” West 60.00 feet, North 05° 00’ 10” East 195.67 feet, North 85° 31’ 57” East 127.37 feet and North 10° 35’ 30” West 540.33 feet; thence continuing along the general Northerly line of said 151.61 acre parcel as shown on said Map, North 33° 31’ 50” East 179.72 feet, North 63° 59’ 20” East 17.73 feet, South 37° 17’ 50” East 277.53 feet, North 52° 42’ 10” East 375.72 feet, South 88° 07’ 10” East 224.11 feet, North 66° 47’ 40” East 179.79 feet, North 41° 59’ 20” East 112.05 feet, North 13° 58’00” East 203.07 feet, and South 88° 58’ 50” East 1113.34 feet to the Northeasterly corner of said 151.61 acre parcel; thence along the general Easterly line of said parcel, South 00° 50’ 58” West 2690.96 feet, South 06° 31’ 50” East 354.00 feet South 79° 03’ 20” East 93.06 feet, South 22° 53’ 30” East 145.20 feet, South 76° 27’ 30” East 132.00 feet to the most Easterly corner of said 151.61 acre parcel; thence along the Southeasterly line of said parcel as shown on said Map, South 70° 24’ 00” West 1317.52 feet to the point of beginning. Parcel Two: Commencing at the most Southerly corner of the 151.61 acre parcel of land shown on that certain Record of Survey Map, recorded August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California; thence along the Southwesterly line of said parcel as shown on said Map, North 40° 34’ 12” West 1003.28 feet, and North 38°59’ 40” West 27.39 feet, thence leaving said Southwesterly line South 89° 39’ 37” East 401.49 feet to the true point of beginning of lands to be described herein; thence from said true point of beginning and continuing South 89° 39’ 37” East 843.01 feet; thence North 11° 41’ 22” East 592.28 feet; thence North 11° 29’ 20” West 502.06 feet; thence North 18° 14’ 16” West 734.92 feet; thence South 82° 14’ 05” West 222.04 feet; thence North 72° 38’ 46” West 335.26 feet; thence South 24° 07’ 42” West 525.95 feet; thence South 05° 08’ 41” East 1360.48 feet to the true point of beginning. OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 3 of 14 Pages ORT 3158-B Parcel Three: Beginning at a point on the general Westerly line of the 151.61 acre parcel of land shown on that certain Record of Survey Map, filed on August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California, said point of beginning being the Southerly terminus of the course designated as “North 05° 00’ 10” East 98.90 feet”, shown on the Northerly portion of said general Westerly line as same is delineated upon Sheet 1 of said Map, and said point of beginning being marked on the ground by 3/4 inch iron pipe monument and tag “RCE 5597”; thence from said point of beginning and continuing along said general Westerly line of said 151.61 acre parcel North 05° 00’ 10” East 98.90 feet, North 84° 59’ 50” West 38.65 feet, North 16° 20’ 32” West 122.01 feet, South 84° 59’ 50” East 83.06 feet, North 05° 00’ 10” East 15.00 feet, and South 84° 59’ 50” East 195.69 feet; thence leaving said general Westerly line of said 151.61 acre parcel, South 87° 58’ 26” East 739.73 feet; thence South 05° 08’ 41” East 396.83 feet; thence South 84° 04’ 53” West 287.98 feet; thence North 72° 39’ 01” West 729.32 feet returning to said general Westerly line of said 151.61 acre parcel; thence along said general Westerly line North 16° 23’ 50” West 25.00 feet to the point of beginning. Parcel Four: Parcel A: Commencing at a point on the general Westerly line of the 151.61 acre parcel of land shown on that certain Record of Survey Map filed on August 15, 1969, in Book 258 of Maps, at Pages 4 and 5, records of Santa Clara County, California, said point of beginning being the Southerly terminus of the course designated as “North 05° 00’ 10” East 98.90 feet” as shown on the Northerly portion of said general Westerly line as same is delineated upon Sheet 1 of said Map, and said point of beginning being marked on the ground by a 3/4 inch iron pipe monument and Tag “RCE 5597”; thence from a point of beginning and continuing along said general Westerly line of said 151.61 acre parcel North 05° 00’ 10” East 98.90 feet, North 84° 59’ 50” West 38.65 feet, North 16° 20’ 32” West 122.01 feet, South 84° 59’ 50” East 83.06 feet, North 05° 00’ 10” East 15.00 feet, and South 84° 59’ 50” East 195.69 feet; thence leaving said general Westerly line of said parcel, South 87° 58’ 26” East 121.20 feet to the true point of beginning of the parcel of land to be described herein; thence from said true point of beginning North 14° 50’ 40” East 676.45 feet; thence South 79° 14’55” East 665.06 feet; thence South 24° 07’ 42” West 525.95 feet; thence South 05° 08’ 41” East 71.97 feet; thence North 87° 58’ 26” West 618.53 feet to the true point of beginning. Parcel B: Beginning at a point on the general Westerly line of the 151.61 acre parcel as shown on the above described Record of Survey Map, which point of beginning is located along said general Westerly line North 40° 34’ 12” West 1003.28 feet, and North 38° 59’ 40” West 27.39 feet from the most Southerly corner of said parcel as shown on said Map; thence from said point of beginning and continuing along said general Westerly line North 38° 59’ 40” West 681.93 feet, thence tangent to the preceding course on the arc of a curve to the right having a radius of 900.05 feet and a central angle of 22° 35’ 50”, an arc distance of 354.98 feet, thence North 16° 23’ 50” West 241.03 feet; thence leaving said general Westerly line South 72° 39’ 01” East 729.32 feet; thence North 84° 04’ 53” East 287.98 feet; thence South 05° 08’ 41” East 891.68 feet; thence North 89° 39’ 37” West 401.49 feet to the point of beginning. APN:008-04-001 OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 4 of 14 Pages ORT 3158-B At the date hereof exceptions to coverage in addition to the Exceptions and Exclusions in said policy form would be as follows: 1.Taxes and assessments, general and special, for the fiscal year 2016 -2017, a lien, but not yet due or payable. 2.Taxes and assessments, general and special, for the fiscal year 2015 -2016, as follows: Assessor's Parcel No :008-04-001 Code No.:006-001 1st Installment :NO TAX DUE NOT Marked Paid 2nd Installment :NO TAX DUE NOT Marked Paid 3.The lien of supplemental taxes, if any, assessed pursuant to the provisions of Section 75, et seq., of the Revenue and Taxation Code of the State of California. 4.(a) Any adverse claim based upon the assertion that said land or any part thereof is now or at any time has been included within a navigable river, slough or other navigable body of water. (b) Rights and easements for commerce, navigation and fishery. Any rights in favor of the public which may exist on said land if said land or portions thereof are or were at any time used by the public. 5. 6.Any easement for water course over that portion of said land lying within the banks of Matadero Creek and Mayfield Slough and any changes in the boundary lines of said land that have occurred or may hereafter occur from natural causes. 7.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Standard Electric Company of California, a corporation For :Electrical transmission pole lines Recorded :May 14, 1901 in Book 241 of Deeds, Page 259 Affects :A portion of said lands NOTE: The present ownership of said easement and other matters affecting the interests thereto, if any, are not shown herein OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 5 of 14 Pages ORT 3158-B 8.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Instrument :Agreement Granted To :The Town of Mayfield, a municipal corporation For :Main outfall sewer Recorded :December 23, 1909 in Book 349 of Deeds, Page 367 Affects :Southerly portion of Parcel One Upon the terms and conditions contained therein. 9.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Instrument :Agreement Granted To :The Town of Mayfield, a municipal corporation For :Outfall sewer across said land Recorded :December 23, 1909 in Book 352 of Deeds, Page 446 Affects :Southerly portion of Parcel One Upon the terms and conditions contained therein. 10.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Instrument :Deed Granted To :Federal Telegraph Company, a California corporation For :Pipe line and pole line Dated :January 8, 1921 Recorded :January 15, 1921 in Book 526 of Deeds, Page 355 Affects :A portion of said lands 11.An easement for a double line of poles and wires for electric transmission as condemned by Standard Electric Company of California, a corporation, by Final Judgment in Condemnation dated October 18, 1904, in Case No. 13815, Superior Court of the State of California in and for the County of Santa Clara. The above item affects Parcel Three OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 6 of 14 Pages ORT 3158-B 12.Terms and provisions as contained in an instrument, Entitled :Agreement Executed By :Thomas Seale and the Supervisors of Santa Clara County Recorded :March 17, 1904 in Book 15 of Miscellaneous Records,Page 12 Said matters affect Three 13.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Instrument :Deed For :Drainage culvert Recorded :July 28, 1922 in Book 554 of Deeds, Page 434 Affects :Parcels One and Three NOTE: The present ownership of said easement and other matters affecting the interests thereto, if any, are not shown herein 14.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Pacific Gas and Electric Company, a corporation For :Pipe lines Recorded :May 24, 1929 in Book 466 of Official Records, Page 128 Affects :Westerly portion of Parcels Three and Four 15.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Pacific Gas and Electric Company, a corporation For :Single line of towers and single line of poles for electric transmission Recorded :May 2, 1934 in Book 688 of Official Records, Page 77 Affects :Westerly portion of Parcels Three and Four OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 7 of 14 Pages ORT 3158-B 16.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Pacific Gas and Electric Company For :Anchor Recorded :May 24,1934 in Book 685 of Official Records, Page 448 Affects :Location thereof not disclosed of record 17.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :City of Palo Alto For :Pipes and facilities appertaining to the installation of the sewer system of the City of Palo Alto Recorded :June 26, 1934 in Book 690 of Official Records, Page 267 Affects :A portion of Parcel Three Upon the terms and conditions contained therein. Note: The ownership of easement interest and fee title have merged. Should the City of Palo Alto decide to sell the lands described herein, please consider recreating the hereinabove shown easement. 18.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Pacific Gas and Electric Company For :Gas pipe line and incidental purposes Recorded :September 17, 1935 in Book 740 of Official Records, Page 399 Affects :A portion of said lands 19.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Instrument :Grant of Easement Granted To :City of Palo Alto For :Underground power line and sanitary sewer Recorded :March 20, 1957 in Book 3755 of Official Records, Page 243 under Recorder's Serial Number 1319303 Affects :A portion of Parcels One, Three and Four OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 8 of 14 Pages ORT 3158-B Upon the terms and conditions contained therein. Note: The ownership of easement interest and fee title have merged. Should the City of Palo Alto decide to sell the lands described herein. Please consider recreating the herein above shown easement. 20.Release and relinquishment of abutter’s or access rights to and from the street or highway, upon which premises abuts, as follows: Instrument :Grant Deed (Corporation) To :State of California Dated :June 20, 1957 Recorded :October 23, 1957 in Book 3920 of Official Records, Page 353 under Recorder's Serial Number 1396792 Said matters affect Westerly portion of said land 21.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Pacific Gas and Electric Company For :Anchor Recorded :June 29, 1962 in Book 5630 of Official Records, Page 121 under Recorder's Serial Number 2218289 Affects :Southerly portion of Parcel One 22.Terms and provisions as contained in an instrument, Entitled :Covenant and Agreement Executed By :City of Palo Alto, Santa Clara County Flood Control and Water District Recorded :November 28, 1967 in Book 7952 of Official Records, Page 162 under Recorder's Serial Number 3332305 Said matters affect Parcel One OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 9 of 14 Pages ORT 3158-B 23.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Pacific Gas and Electric Company, a California corporation For :Installation and maintenance of gas pipe lines and other appliance, fittings and devises for controlling electrolyses for use in connection with said pipe lines together with adequate protection therefor Recorded :June 8, 1973 in Book 0414 of Official Records, Page 365 Affects :A portion of said land Upon the terms and conditions contained therein. 24.Terms and provisions as contained in an instrument, Entitled :Covenant and Agreement Executed By :ITT World Communication, Inc. Recorded :December 5, 1977 in Book D374 of Official Records, Page 185 under Recorder's Serial Number 5887309 Which, among other things, provides:Easements Said matters affect Parcel One 25.Covenants, Conditions and Restrictions which do not contain express provision for forfeiture or reversion of title in the event of violation, but omitting any covenants or restriction if any, based upon race, color, religion, sex, handicap, familial status, or national origin unless and only to the extent that said covenant (a) is exempt under Title 42, Section 3607 of the United States Code or (b) relates to handicap but does not discriminate against handicapped persons, as provided in an instrument. Entitled :Corporation Grant Deed Recorded :December 29, 1977 in Book D374 of Official Records, Page 267 under Recorder's Serial Number 5887311 Said matters affect Parcel One OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 10 of 14 Pages ORT 3158-B NOTE: "If this document contains any restriction based on race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income as defined in subdivision (p) of section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status." 26.An easement affecting the portion of said land and for the purpose stated herein, and incidental purpose. No representation is made as to the present ownership of said easement. Purpose :Water flow Recorded :December 29, 1977, as Instrument No. 5887311 Affects :The sloughs on said premises 27.An easement affecting the portion of said land and for the purpose stated herein, and incidental purposes. No representation is made as to the present ownership of said easement. Purpose :Removal of ITT World Communications, Inc., Public Coast Station and continuing to operate said Public Coast Station prior to its removal Recorded :December 29, 1977, as Instrument No. 5887311 Affects :Portion of Parcel One 28.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Santa Clara Valley Water District, a public corporation For :Water pipeline and system of injection, extraction and monitoring wells and ingress and egress and incidental purposes as therein provided; electrical, telephone and other utility service lines, pipes and facilities and other public utilities and ingress and egress Recorded :December 29, 1977 in Official Records under Recorder's Serial Number 5887312 Affects :A portion of said land Upon the terms and conditions contained therein. OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 11 of 14 Pages ORT 3158-B 29.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Santa Clara Valley Water District, a California public corporation For :Flood control and/or storm water drainage, ingress and egress and incidental purposes an as therein provided Recorded :December 29, 1977 in Official Records under Recorder's Serial Number 5887313 Affects :Southerly portion of Parcel One Upon the terms and conditions contained therein. 30.Terms and provisions as contained in an instrument, Entitled :Covenant and Agreement Executed By :ITT World Communications, a Delaware corporation and City of Palo Alto Recorded :December 29, 1977 in Book D374 of Official Records, Page 288 under Recorder's Serial Number 5887314 Said matters affect Parcels Two, Three and Four 31.Covenants, Conditions and Restrictions which do not contain express provision for forfeiture or reversion of title in the event of violation, but omitting any covenants or restriction if any, based upon race, color, religion, sex, handicap, familial status, or national origin unless and only to the extent that said covenant (a) is exempt under Title 42, Section 3607 of the United States Code or (b) relates to handicap but does not discriminate against handicapped persons, as provided in an instrument. Entitled :Corporation Grant Deed Recorded :December 29, 1977 in Book D374 of Official Records, Page 364 under Recorder's Serial Number 5887315 NOTE: "If this document contains any restriction based on race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income as defined in subdivision (p) of section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status." OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 12 of 14 Pages ORT 3158-B Said matters affect Parcels Two, Three and Four 32.An easement affecting the portion of said land and for the purpose stated herein, and incidental purposes. No representation is made as to the present ownership of said easement. Purpose :Water flow Recorded :December 29, 1977, in Book D374, Page 364, as Instrument No. 5887315 Affects :The sloughs on said premises 33.An easement affecting the portion of said land and for the purpose stated herein, and incidental purposes. No representation is made as to the present ownership of said easement. Purpose :Removal of ITT World Communications, Inc., Public Coast Station and continuing to operate said Public Coast Station prior to its removal Recorded :December 29, 1977, in Book D374, Page 364, as Instrument No. 5887315 Affects :A portion of Parcels Two, Three and Four 34.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Santa Clara Valley Water District, a California public corporation For :Water pipeline and system Recorded :December 29, 1977 in Book D374 of Official Records, Page 371 under Recorder's Serial Number 5887316 Affects :Parcels Two, Three and Four Assignment of Easements To :KFS World Communications,a California corporation From :Western Union Corporation, a New York corporation Recorded :June 4, 1990, in Book L375, Page 2096, Instrument No. 10544166 OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 13 of 14 Pages ORT 3158-B 35.An unrecorded lease upon the terms, covenants, and conditions contained or referred to therein, Lessor :City of Palo Alto Lessee :ITT World Communications Inc. Disclosed by :Notice of Non-Responsibility Dated :July 5, 1978 Recorded :July 5, 1978 in Book D791 of Official Records,Page 451 under Recorder's Serial Number 6067640 NOTE: The present ownership of said leasehold or leaseholds and other matters affecting the interest of the lessee or lessees are not shown herein. 36.Terms and provisions as contained in an instrument, Entitled :Agreement and Grant of Easement East Bay Corridor/Santa Clara County Bayfront Bikeway Executed By :City of Palo Alto and State of California Recorded :September 17, 1981 in Book G340 of Official Records, Page 67 under Recorder's Serial Number 7167201 Said matters affect Parcels One, Three and Four 37.An easement affecting that portion of said land and for the purposes stated herein and incidental purposes as provided in the following Granted To :Santa Clara Valley Water District, a public corporation For :Maintain flood basin and appurtenant structures Recorded :April 23, 1986 in Book J669 of Official Records, Page 663 under Recorder's Serial Number 8760241 Affects :Southerly portion of Parcel one 38.The requirement that satisfactory evidence be furnished to this Company of compliance with applicable statutes, ordinances and charters governing the ownership and disposition of the herein described land. 39.Any unrecorded and subsisting leases. OLD REPUBLIC TITLE COMPANY ORDER NO. 1117016668-JS Page 14 of 14 Pages ORT 3158-B 40.Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 41.The requirement that this Company be provided with a suitable Owner's Declaration (form ORT 174). The Company reserves the right to make additional exceptions and/or requirements upon review of the Owner's Declaration. --------------------Informational Notes ------------------- A.The applicable rate(s) for the policy(s) being offered by this report or commitment appears to be section(s) 1.1. B.NOTE: According to the public records, there have been no deeds conveying the property described in this report recorded within a period of 36 months prior to the date hereof except as follows: NONE C.The Cities shown below charge Transfer Tax which must be collected through Escrow: Alameda $12.00 per $1,000.00 Albany $11.50 per $1,000.00 Berkeley 1.5% of the sales price Hayward $4.50 per $1,000.00 Oakland 1.5% of the sales price Piedmont $13.00 per $1,000.00 Richmond $7.00 per $1,000.00 San Leandro $6.00 per $1,000.00 San Francisco Call your Advisory Title Officer. D.All transactions that close on or after March 1, 2015 will include a $20.00 minimum recording service fee, plus actual charges required by the County Recorder. O.N. JF/tb Page 1 of 1 Exhibit I CALIFORNIA LAND TITLE ASSOCIATIONSTANDARD COVERAGE POLICY -1990 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1.(a)Any law, ordinance or governmental regulation (including but not limited to building or zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or {iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien, or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.- (b)Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2.Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3.Defects, liens, encumbrances, adverse claims or other matters: (a)whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b)not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy;. (c)resulting in no loss or damage to the insured claimant; (d)attaching or created subsequent to Date of Policy; or (e)resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4.Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable doing business laws of the state in which the land Is situated. 5.Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6.Any claim, which arises out of the transaction vesting in the insured the estate of interest insured by this policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. EXCEPTIONS FROM COVERAGE -SCHEDULE B, PART I This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1.Taxes or assessments Which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. 2.Any facts, rights, interests, or claims Which are not shown by the public records but which could be ascertained by an inspection of the land which may be asserted by persons in possession thereof, 3.Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4.Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5.(a)Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records. 6.Any lien or right to a lien for services, labor or material not shown by the public records. OLD REPUBLIC TITLE COMPANY Privacy Policy Notice PURPOSE OF THIS NOTICE Title V of the Gramm-Leach-Bliley Act (GLBA) generally prohibits any financial institution, directly or through its affiliates, from sharing nonpublic personal information about you with a nonaffiliated third party unless the institution provides you with a notice of its privacy policies and practices, such as the type of information that it collects about you and the categories of persons or entities to whom it may be disclosed. In compliance with the GLBA, we are providing you with this document, which notifies you of the privacy policies and practices of OLD REPUBLIC TITLE COMPANY We may collect nonpublic personal information about you from the following sources: Information we receive from you such as on applications or other forms. Information about your transactions we secure from our files, or from [our affiliates or] others. Information we receive from a consumer reporting agency. Information that we receive from others involved in your transaction, such as the real estate agent or lender. Unless it is specifically stated otherwise in an amended Privacy Policy Notice, no additional nonpublic personal information will be collected about you. We may disclose any of the above information that we collect about our customers or former customers to our affiliates or to nonaffiliated third parties as permitted by law. We also may disclose this information about our customers or former customers to the following types of nonaffiliated companies that perform marketing services on our behalf or with whom we have joint marketing agreements: Financial service providers such as companies engaged in banking, consumer finance, securities and insurance. Non-financial companies such as envelope stuffers and other fulfillment service providers. WE DO NOT DISCLOSE ANY NONPUBLIC PERSONAL INFORMATION ABOUT YOU WITH ANYONE FOR ANY PURPOSE THAT IS NOT SPECIFICALLY PERMITTED BY LAW. We restrict access to nonpublic personal information about you to those employees who need to know that information in order to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. ORT 287-C 5/07/01 Disclosure to Consumer of Available Discounts Section 2355.3 in Title 10 of the California Code of Regulation necessitates that Old Republic Title Company provide a disclosure of each discount available under the rates that it, or its underwriter Old Republic National Title Insurance Company, have filed with the California Department of Insurance that are applicable to transactions involving property improved with a one to four family residential dwelling. You may be entitled to a discount under Old Republic Title Company’s escrow charges if you are an employee or retired employee of Old Republic Title Company including its subsidiary or affiliated companies or you are a member in the California Public Employees Retirement System “CalPERS” or the California State Teachers Retirement System “CalSTRS” and you are selling or purchasing your principal residence. If you are an employee or retired employee of Old Republic National Title Insurance Company, or it’s subsidiary or affiliated companies, you may be entitled to a discounted title policy premium. Please ask your escrow or title officer for the terms and conditions that apply to these discounts. A complete copy of the Schedule of Escrow Fees and Service Fees for Old Republic Title Company and the Schedule of Fees and Charges for Old Republic National Title Insurance Company are available for your inspection at any Old Republic Title Company office. Attachment A PLAL\51723\1002478.1 -1- Exhibit C Bill of Sale Globe Wireless, Inc., a Delaware corporation (“Seller”) , for good and valuable consideration, receipt of which is hereby acknowledged, hereby sells, assigns and transfers to City of Palo Alto, a California Chartered Municipal Corporation (“Purchaser”), all fixtures and personal property (collectively, the “Property”) documented and filmed by electronic video recording by City staff on May 18, 2016. Such sale, assignment and transfer is made free of all liens and encumbrances whatsoever, but otherwise without recourse, representation or warranty, except as set forth in the Agreement for Purchase and Sale dated as of June ___, 2016, between Seller and Purchaser. IN WITNESS WHEREOF, Seller has executed this Bill of Sale the ____ day of June, 2016. GLOBE WIRELESS, INC., a Delaware corporation By: Name: Its: RECORDING REQUESTED BY: APN: RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO and Mail Tax Statements to: The undersigned Grantor declares: No tax due. R&T 11922 - Grantee is a governmental agency, and deed is for the purposes of releasing any interest in and to an easement described below. QUITCLAIM DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged ________________________________(“Grantor”) hereby releases and grants to ______________ (“Grantee”) all of Grantor’s right, title and interest which may have been acquired by and through that certain ___________, recorded__________, as ________, in that certain real property located in the City of Palo Alto, Santa Clara County, State of California, as more particularly described in Exhibit “A” attached hereto and made a part hereof (the “Property”). Grantor By:_____________________________ Name:__________________________ Title:____________________________ Dated: _______________, 2016 STATE OF CALIFORNIA COUNTY OF SANTA CLARA On ____________________, before me _______________, Notary Public, personally appeared ________________________________ who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal Signature:_________________________________ Name printed or typed:____________________ A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document, to which this certificate is attached, and not the truthfulness, accuracy, or validity of the document. This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc City Boundary Former ITT Property 0' 1200' Fo r m e r I T T P r o p e r t y Ar e a M a p CITY O F PALO A L TO IN C O R P O RATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2016 City of Palo AltoRRivera, 2016-05-25 17:52:19Baylands Former ITT Property (\\cc-maps\gis$\gis\admin\Personal\RRivera.mdb) City of Palo Alto (ID # 7064) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Adoption of a Resolution Proposing the Appropriations Limit for Fiscal Year 2017 Title: Adoption of a Resolution Determining the Proposed Calculation of the Appropriations Limit for Fiscal Year 2017 From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that Council adopt the attached Resolution determining the Proposition 4 (GANN) Appropriations Limit calculation for Fiscal Year 2017 (Attachment A). The City's Fiscal Year 2017 appropriations are estimated to be $41.97 million under the limit based on the Fiscal Year 2017 Adopted Budget. Background California voters approved an initiative on November 6, 1979 that added Article XIIIB to the State Constitution as amended with Proposition 98 in 1988 and Proposition 111 in 1990. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. The Appropriation Limit is based on actual appropriations during the 1978-1979 fiscal year, as increased each year using specified population and inflationary growth factors. The original legislation implementing the provisions of Article XIIIB became effective January 1, 1981. In accordance with that legislation, the governing body of each government jurisdiction must, by resolution, establish its annual Appropriation Limit for the coming year (prior to July 1) at a regularly scheduled meeting or noticed special meeting. Based on Article XIIIB, the City of Palo Alto can use the larger of two measurements of population growth, (county or city population growth) in the Appropriations Limit calculation. For Fiscal Year 2017, the City is using City of Palo Alto population factor, which is greater than the population factor for the County of Santa Clara. The City typically uses the highest factor in order to provide maximum appropriation flexibility. City of Palo Alto Page 2 Discussion The Appropriations Limit is adjusted annually on the basis of population and per capita income changes. This updated information is received from the California Department of Finance in May, after the City's proposed budget has been submitted to Council. Attached is the final Appropriations Limit calculation, based on the updated information as well as allowable appropriation limit adjustment factors such as voter-approved debt and capital outlay expenditures. The Appropriations Limit for Fiscal Year 2017 is $151.49 million for funds subject to the appropriation limits. The City's Fiscal Year 2017 budgeted appropriations are estimated to be $41.97 million under the limit. As required by state law, documentation used to compute the Appropriations Limit has been made available to the public at least fifteen days prior to the Council meeting at which the Appropriations Limit is being adopted, and notice was published of the availability of these materials. Resource Impact The adoption of the Fiscal Year 2017 Appropriations Limit has no impact on City resources. Policy Implications This recommendation is consistent with existing City policies. Environmental Review This is not a project under section 21065 of the California Environmental Quality Act. Attachments:  Attachment A: Appropriations Limit Resolution (DOC)  Attachment A, Exhibit 1: Appropriations Limit Calculation (PDF) 1 RESOLUTION NO.XXXX RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO DETERMINING THE CALCULATION OF THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2016 WHEREAS, under Article XIIIB of the Constitution of the State of California, the City of Palo Alto (City) may not appropriate any proceeds of taxes in excess of its appropriations limit (Limit); and WHEREAS, since fiscal year 1991, the City is permitted to annually adjust its Limit in accordance with inflation and population adjustment factors; and WHEREAS, pursuant to Government Code Section 37200, the calculation of the Limit and the total appropriations subject to the limit were set forth in the annual budget of the City for Fiscal Year 2017, which was adopted by ordinance of the Council on June 13, 2016; and WHEREAS, pursuant to Government Code sections 7901 and 7910, the final calculation of the Limit has been determined, and the adjustment factors on which the calculation is based are a 5.37% percent change in California per capita income and a 1.30% percent change in the population growth for the City of Palo Alto; and WHEREAS, the documentation used in the determination of the Limit has been made available to the general public for fifteen (15) days prior to the date of adoption of this resolution; and WHEREAS, according to the final calculation, the City’s net appropriations subject to limitation are approximately $109.51 million. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The Council of the City of Palo Alto hereby finds that, for Fiscal Year 2017, the final calculation of the Appropriations Limit of the City of Palo Alto has been determined in accordance with the adjustment factors referred to above, the documentation used in the determination of the calculation has been made available to the general public for the period of fifteen days as required by law, and the City’s appropriations subject to limitation are under the Limit by approximately $41.97 million. SECTION 2. The Council hereby adopts the final calculation of the Appropriations Limit of the City for Fiscal Year 2017, a copy of which is attached hereto as Exhibit A. ATTACHMENT A 2 SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under the California Environmental Quality Act, and, therefore, no environmental assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: ___________________________ _______________________________ City Clerk Mayor APPROVED AS TO FORM: _______________________________ City Manager ___________________________ Senior Assistant City Attorney _______________________________ Administrative Services Director Attachment A, Exhibit 1 FY 2017 Adopted Budget 194.17$ 66.53$ 9.85$ 4.90$ 275.44$ Less: Interfund Transfers (23.62)$ -$ (5.75)$ -$ (29.38)$ Allocated Charges (16.75)$ -$ -$ -$ (16.75)$ Non-Proceeds (48.10)$ (66.53)$ (5.18)$ -$ (119.80)$ Net Appropriations Subject to Limit 105.70$ -$ (1.08)$ 4.90$ 109.51$ FY 2017 Per Capita Income Change (CA Department of Finance)5.37% Factor A 1.0537 FY 2017 Population Change (City of Palo Alto)1.30% Factor B 1.0130 141.92$ 1.0674 FY 2017 Adopted Appropriations Limit 151.49$ Net Appropriations Subject to Limit 109.51$ Amount Under the Limit 41.97$ 1.0382 1.0113 1.0499 141.92$ 100.60$ 41.31$ 0.9977 1.0150 1.0127 135.17$ 82.93$ 52.24$ 1.0512 1.0157 1.0677 133.48$ 90.28$ 43.20$ 1.0377 1.0124 1.0506 125.01$ 96.73$ 28.28$ 1.0251 1.0089 1.0342 119.00$ 89.00$ 30.00$ 0.9746 1.0144 0.9886 115.06$ 78.94$ 36.12$ 1.0062 1.0220 1.0283 116.38$ 72.00$ 44.38$ 1.0429 1.0172 1.0608 113.17$ 78.64$ 34.53$ 1.0442 1.0152 1.0601 106.68$ 73.30$ 33.38$ 1.0396 1.0118 1.0519 100.64$ 70.45$ 30.19$ Factor A x Factor B Amount Under the LimitAppropriations Limit Debt Service Fund The City of Palo Alto remains well within its appropriations limit in FY 2017. Future year limit trends can be made based on the average change in regional population and income growth. The appropriations subject to limitation includes proceeds of taxes from the General Fund, Capital Projects Fund, and Special Revenue Funds. Fiscal Year APPROPRIATIONS LIMITATION COMPLIANCE CALCULATION FOR FISCAL YEAR 2017 ADOPTED BUDGET ($ IN MILLIONS) Total Budgeted Appropriations General Fund Capital Projects Funds Special Revenue Funds Combined Funds FY 2016 Adopted Appropriations Limit Per Capita Income Factor Population Change Factor Total Adjustment Factor Appropriations Subject to Limit On November 6, 1979, California voters approved Proposition 4, an initiative that added Article XIIIB to the state Constitution. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. The Appropriations Limit is based on actual appropriations during the 1978-1979 fiscal year, as increased each year using specified population and inflationary growth factors. 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 City of Palo Alto (ID # 6983) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Lucie Stern Buildings Mechanical and Electrical Upgrades Title: Approval of a Construction Contract for the Lucie Stern Buildings Mechanical and Electrical Upgrades, Capital Improvements Program Project PE-14015, With Iron Construction, Inc. in the Amount of $2,239,781 and Approval of Amendment Number 2 to Contract Number C13148737 With Advance Design Consultants Inc. in the Amount of $349,512 for a Not-to- Exceed Amount of $670,267 for Construction Phase Services From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1. Approve and authorize the City Manager or his designee to execute the attached contract with Iron Construction, Inc. in the amount of $2,239,781 (Attachment A) for the Lucie Stern Mechanical and Electrical Upgrades Capital Improvement Program project PE-14015; 2. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Iron Construction, Inc. for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed a ten percent contingency of $223,978; and 3. Approve and authorize the City Manager or his designee to execute the attached Amendment Number 2 to Contract C13148737 with Advanced Design Consultants, Inc. (Attachment B) in the amount of $349,512 and a total contract amount not-to-exceed $670,267 for construction phase services for the Lucie Stern Mechanical and Electrical Upgrades Capital City of Palo Alto Page 2 Improvement Program project PE-14015. Background The Lucie Stern Center was constructed in 1936 and consists of four buildings located at 1305 Middlefield Road. In the past 80 years the Lucie Stern Community Center, Children’s Theatre, Community Theatre, and Children’s Library have been through successive remodeling. Following an expansion to the Children’s Library, the width of the fire access lane behind the Children’s Theatre was reduced, limiting emergency vehicle access. To mitigate, the City of Palo Alto Fire Department requested an upgrade of the existing fire/life safety (wet sprinkler and fire alarm) system in the Children’s Theatre. Additionally, other mechanical and electrical systems in the Children’s Theatre are nearing the end of their useful lives. Similar deficiencies were found in the Community Theatre and Community Center. To address these issues, the Lucie Stern Mechanical and Electrical Upgrades Capital Improvement Program project PE-14015 was created and a design consultant hired to study the buildings’ mechanical, electrical, and fire/life safety components and create plans to upgrade the buildings. Discussion Scope Overview The primary scope of this project is to construct a complete fire/life safety system to meet current National Fire Protection Association codes and Palo Alto Fire Department regulations in the Children’s Theatre, Community Theatre, and Community Center. Coinciding project goals include mechanical and electrical design proficiency, energy savings, code compliance, and aesthetics. Project scope specific to each of the three buildings includes a properly anchored, code-compliant staircase leading to the outdoor stage balcony to be constructed in the Children’s Theatre; the electrical systems in the Community Theatre are to be upgraded and/or replaced, including additional receptacles where needed; and the mechanical systems in the Community Center are to be upgraded and/or replaced, including the addition of air-conditioning. The buildings will remain occupied during the course of the project, however there may be some temporary relocation of department staff to accommodate City of Palo Alto Page 3 construction. Work will be scheduled to keep systems operational during working hours and minimize the impacts of construction on staff and the public. In the Timeline section, the designated shutdown periods to accommodate overhead work and the replacement of electrical switchgear are listed for each building . Bid Process On March 30, 2016, a notice inviting formal bids (IFB) for the Lucie Stern Buildings Mechanical and Electrical Upgrades project was posted to PlanetBids through the City’s web portal and sent to 223 contractors. The bidding period was 27 days. No bids were received from a qualified contractor on the April 26, 2016 due date. Summary of Bid Process Bid Name/Number Lucie Stern Buildings Mechanical and Electrical Upgrades Project – IFB 163446 Proposed Length of Project 388 calendar days Number of vendors notified through PlanetBids 230 Number of Builder’s Exchanges notified through PlanetBids 7 Total Days to Respond to Bid 27 Pre-Bid Meeting April 7, 2016 Attendees at Mandatory Pre- Bid Meeting 9 firms attended: 4 General Contractors and 5 Subcontractors Number of Bids Received: 0 Base Bid Price Range N/A Staff inquired as to why contractors did not submit bids and received feedback similar to past projects, where smaller firms indicated that bonds for projects over $1.5 million are difficult to obtain and larger firms felt the projects were too small and difficult. Other responses indicated that in the current construction environment, private sector work is plentiful with public works projects considered too risky in comparison. This project in particular, is more difficult as it involves working on historical buildings with key milestone dates that must be met or the contractor will incur substantial liquidated damages. City of Palo Alto Page 4 In situations where no bids are received during a formal bidding solicitation, the Palo Alto Municipal Code Section 2.30.360 provides for an exemption from competitive solicitation requirements: “(c) Where competitive bids or requests for proposals have been solicited and no bid or proposal has been received or no bid or proposal meeting the requirements of the invitation to bid or request for proposal has been received, provided that, in the case of a public works project, the project is not otherwise required by the Charter to be formally bid.” Following the formal bid process, staff solicited a bid from one general contractor that showed an earnest effort during the formal bid process. The contractor had been preparing a formal bid to submit, but on the final due date one of their primary subcontractors withdrew from the process. Upon learning of this reason, staff requested they continue to prepare and submit a quote for the work. The sole quote received, $4,188,101, was above the budgeted allotment of $2,895,405 appropriated for this combined project. Staff believes that the busy local construction industry has resulted in higher prices and the higher quote is still reasonable for the complex nature of this project (i.e. historical buildings, tight construction schedule, and milestone liquidated damages). The construction industry is booming in the bay area and local general contractors have been unable to keep up. Many out of state general contractors are coming to the bay area to bid on projects such as the Apple campus. Another contributing factor comes from Senate Bill (SB) 7 and SB 854, which now require bids for Charter Cities to include prevailing wages. Prevailing wages were not factored into the original project budget. Additionally, the fire/life safety upgrades were designed to include the Community Theatre and the Community Center. In attempting to remain within the project’s budgeted allotment, bid components were reviewed and prioritized for inclusion into the construction contract. The following items are included: 1) The fire/life safety upgrade for the Children’s Theatre, Community Theatre, and Community Center; City of Palo Alto Page 5 2) Replacement of the out-of-compliance wooden staircase in the Children’s Theatre used by young actors to access the balcony during performances; 3) Replacement of the outdated electrical components at the Community Theatre; 4) Replacement and upgrading of the current out-of-compliance Community Theatre Company Switch (integrates the equipment provided by companies leasing the theatre); 5) Replacement and updating of the mechanical system at the Community Center with the inclusion of air-conditioning; and 6) Upgrading the fireplaces in the Lucie Stern Ballroom from wood burning to gas inserts. The electrical and mechanical upgrade components to the Children’s Theatre have been removed from the scope of the current recommended construction contract in an attempt to stay within the current budget. These components will be brought forth in a future CIP when funding is available. Staff reviewed the quote submitted and recommends that Iron Construction be awarded a construction contract. Staff recommends that the City award the modified Base Bid ($2,232,806) plus Add Alternate 1 ($6,975) for a total contract award amount of $2,239,781. A contingency amount of $223,978 equal to 10 percent of the total contract is requested for unforeseen conditions, which may be discovered during construction. With renovation of an existing facility, there is a high likelihood of additional required repairs or system replacement triggered by the base construction. In addition, due to the time constraints placed upon the contractor to complete their work during off hours, staff expects that any needed change orders will be billed at a premium rate for night or weekend work. Staff confirmed with the Contractor’s State License Board the contractor has an active license on file. Staff checked references supplied by the contractor for previous work performed and found their projects were similar to this project and were completed to the satisfaction of the owners. Advanced Design Consultants, Inc. (ADC) Contract – Construction Phase Services City of Palo Alto Page 6 The contract amendment with the design consultant, ADC (Attachment B) will provide for the consultant’s construction phase services consisting of: general construction administration, construction management, testing, photographic records, and systems commissioning during the project work. As the designer of record, ADC will respond to design questions and issues raised by the contractor, attend meetings at the job site, make construction observations, review material submittals, review project schedules, review change order requests, answer requests for information (RFIs), review payment applications, and assist in the preparation of the record documents at the completion of construction. The original request for proposal (RFP) and contract scope with ADC indicated that an amendment for construction phase services would be negotiated if and when the project proceeded to actual construction. Staff recommends that Council approve the attached contract amendment with ADC to provide the resources necessary to successfully manage the construction. Timeline The construction of the upgrades to the Lucie Stern buildings are to be completed in 388 days. The project is broken down including milestones that need to be met in order to complete the required work while occupancy is blocked out. These milestones are critical due to the temporary relocation of department staff and cancellation of theatre and ballroom venues. The timeframes for closure of the facilities have been coordinated with the user groups, and the construction contract includes liquidated damages specific to each of the three buildings to ensure the contractor completes the work with minimal impact to users. The timing for the key project phases when full or partial facility closures will occur are as follows: 1. Children’s Theatre- August 9, 2016 thru October 9, 2016. Liquidated damages will be assessed at $1658/day. 2. Community Theatre- August 22, 2016 thru September 2, 2016. Liquidated damages will be assessed at $742/day. 3. Community Center- January 1, 2017 thru March 15, 2017. Liquidated damages will be assessed at $1992/day. Resource Impact Funding for this project as modified has been allocated in Lucie Stern Buildings City of Palo Alto Page 7 Mechanical and Electrical Upgrades Capital Improvement Program project PE- 14015. Staff anticipates a new CIP or a request for additional funding for PE- 14015 will be proposed in the next budget cycle to cover the deferred mechanical and electrical upgrades to the Children’s Theatre building. Policy Implications This recommendation does not represent any change to existing City policies. Environmental Review This project is categorically exempt from California Environmental Quality Act (CEQA) under Sections 15301 and 15302 of the CEQA guidelines as an alteration to an existing facility and no further environmental review is necessary. Attachments:  A- Iron Construction Contract C16163446 (PDF)  B - ADC Contract Amendment No. 2 (PDF) Invitation for Bid (IFB) Package 1 Rev. April 27, 2016 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT Contract No. C16163446 City of Palo Alto Lucie Stern Buildings Mechanical and Electrical Upgrades Project Invitation for Bid (IFB) Package 2 Rev. April 27, 2016 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT TABLE OF CONTENTS SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS…………………………………….…………..6 1.1 Recitals…………………………………………………………………………………………………………………….6 1.2 Definitions……………………………………………………………………………………………………………….6 SECTION 2 THE PROJECT………………………………………………………………………………………………………...6 SECTION 3 THE CONTRACT DOCUMENTS………………………………………………………………………………..7 3.1 List of Documents…………………………………………………………………………………………….........7 3.2 Order of Precedence……………………………………………………………………………………………......7 SECTION 4 CONTRACTOR’S DUTY…………………………………………………………………………………………..8 4.1 Contractor's Duties…………………………………………………………………………………………………..8 SECTION 5 PROJECT TEAM……………………………………………………………………………………………………..8 5.1 Contractor's Co-operation………………………………………………………………………………………..8 SECTION 6 TIME OF COMPLETION…………………………………………………………………………………….......8 6.1 Time Is of Essence…………………………………………………………………………………………………….8 6.2 Commencement of Work…………………………………………………………………………………………8 6.3 Contract Time…………………………………………………………………………………………………………..8 6.4 Liquidated Damages…………………………………………………………………………………………………8 6.4.1 Other Remedies……………………………………………………………………………………………………..9 6.5 Adjustments to Contract Time………………………………………………………………………………….9 SECTION 7 COMPENSATION TO CONTRACTOR……………………………………………………………………….9 7.1 Contract Sum……………………………………………………………………………………………………………9 7.2 Full Compensation……………………………………………………………………………………………………9 SECTION 8 STANDARD OF CARE……………………………………………………………………………………………..9 8.1 Standard of Care…………………………………………………………………………………..…………………9 SECTION 9 INDEMNIFICATION…………………………………………………………………………………………..…10 9.1 Hold Harmless……………………………………………………………………………………………………….10 9.2 Survival…………………………………………………………………………………………………………………10 SECTION 10 NON-DISCRIMINATION……..………………………………………………………………………………10 10.1 Municipal Code Requirement…………….………………………………..……………………………….10 SECTION 11 INSURANCE AND BONDS.…………………………………………………………………………………10 Invitation for Bid (IFB) Package 3 Rev. April 27, 2016 CONSTRUCTION CONTRACT 11.1 Evidence of Coverage…………………………………………………………………………………………..10 SECTION 12 PROHIBITION AGAINST TRANSFERS…………………………………………………………….…11 12.1 Assignment………………………………………………………………………………………………………….11 12.2 Assignment by Law.………………………………………………………………………………………………11 SECTION 13 NOTICES …………………………………………………………………………………………………………….11 13.1 Method of Notice …………………………………………………………………………………………………11 13.2 Notice Recipents ………………………………………………………………………………………………….11 13.3 Change of Address……………………………………………………………………………………………….12 SECTION 14 DEFAULT…………………………………………………………………………………………………………...12 14.1 Notice of Default………………………………………………………………………………………………….12 14.2 Opportunity to Cure Default…………………………………………………………………………………12 SECTION 15 CITY'S RIGHTS AND REMEDIES…………………………………………………………………………..13 15.1 Remedies Upon Default……………………………………………………………………………………….13 15.1.1 Delete Certain Services…………………………………………………………………………………….13 15.1.2 Perform and Withhold……………………………………………………………………………………..13 15.1.3 Suspend The Construction Contract…………………………………………………………………13 15.1.4 Terminate the Construction Contract for Default………………………………………………13 15.1.5 Invoke the Performance Bond………………………………………………………………………….13 15.1.6 Additional Provisions……………………………………………………………………………………….13 15.2 Delays by Sureties……………………………………………………………………………………………….13 15.3 Damages to City…………………………………………………………………………………………………..14 15.3.1 For Contractor's Default…………………………………………………………………………………..14 15.3.2 Compensation for Losses…………………………………………………………………………………14 15.4 Suspension by City……………………………………………………………………………………………….14 15.4.1 Suspension for Convenience……………………………………………………………………………..14 15.4.2 Suspension for Cause………………………………………………………………………………………..14 15.5 Termination Without Cause…………………………………………………………………………………14 15.5.1 Compensation………………………………………………………………………………………………….15 15.5.2 Subcontractors………………………………………………………………………………………………..15 15.6 Contractor’s Duties Upon Termination………………………………………………………………...15 SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES……………………………………………………………16 16.1 Contractor’s Remedies……………………………………..………………………………..………………….16 Invitation for Bid (IFB) Package 4 Rev. April 27, 2016 CONSTRUCTION CONTRACT 16.1.1 For Work Stoppage……………………………………………………………………………………………16 16.1.2 For City's Non-Payment…………………………………………………………………………………….16 16.2 Damages to Contractor………………………………………………………………………………………..16 SECTION 17 ACCOUNTING RECORDS………………………………………………………………………………….…16 17.1 Financial Management and City Access………………………………………………………………..16 17.2 Compliance with City Requests…………………………………………………………………………….17 SECTION 18 INDEPENDENT PARTIES……………………………………………………………………………………..17 18.1 Status of Parties……………………………………………………………………………………………………17 SECTION 19 NUISANCE……………………………………………………………………………………………………….…17 19.1 Nuisance Prohibited……………………………………………………………………………………………..17 SECTION 20 PERMITS AND LICENSES…………………………………………………………………………………….17 20.1 Payment of Fees…………………………………………………………………………………………………..17 SECTION 21 WAIVER…………………………………………………………………………………………………………….17 21.1 Waiver………………………………………………………………………………………………………………….17 SECTION 22 GOVERNING LAW AND VENUE; COMPLIANCE WITH LAWS……………………………….18 22.1 Governing Law…………………………………………………………………………………………………….18 22.2 Compliance with Laws…………………………………………………………………………………………18 22.2.1 Palo Alto Minimum Wage Ordinance…………….………………………………………………….18 SECTION 23 COMPLETE AGREEMENT……………………………………………………………………………………18 23.1 Integration………………………………………………………………………………………………………….18 SECTION 24 SURVIVAL OF CONTRACT…………………………………………………………………………………..18 24.1 Survival of Provisions……………………………………………………………………………………………18 SECTION 25 PREVAILING WAGES………………………………………………………………………………………….18 SECTION 26 NON-APPROPRIATION……………………………………………………………………………………….19 26.1 Appropriation………………………………………………………………………………………………………19 SECTION 27 AUTHORITY……………………………………………………………………………………………………….19 27.1 Representation of Parties…………………………………………………………………………………….19 SECTION 28 COUNTERPARTS………………………………………………………………………………………………..19 28.1 Multiple Counterparts………………………………………………………………………………………….19 SECTION 29 SEVERABILITY……………………………………………………………………………………………………19 29.1 Severability………………………………………………………………………………………………………….19 SECTION 30 STATUTORY AND REGULATORY REFERENCES …………………………………………………..19 Invitation for Bid (IFB) Package 5 Rev. April 27, 2016 CONSTRUCTION CONTRACT 30.1 Amendments of Laws…………………………………………………………………………………………..19 SECTION 31 WORKERS’ COMPENSATION CERTIFICATION………………………………………………….….19 31.1 Workers Compensation…………………………………………………………………………………….19 SECTION 32 DIR REGISTRATION AND OTHER SB 854 REQUIREMENTS………………………………..…20 32.1 General Notice to Contractor…………………………………………………………………………….20 32.2 Labor Code section 1771.1(a)…………………………………………………………………………….20 32.3 DIR Registration Required…………………………………………………………………………………20 32.4 Posting of Job Site Notices…………………………………………………………………………………20 32.5 Payroll Records…………………………………………………………………………………………………20 Invitation for Bid (IFB) Package 6 Rev. April 27, 2016 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT THIS CONSTRUCTION CONTRACT entered into on June 27, 2016 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and IRON CONSTRUCTION, INC. ("Contractor"), is made with reference to the following: R E C I T A L S: A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. Contractor is a Corporation duly organized and in good standing in the State of California, Contractor’s License Number 806231 and Department of Industrial Relations Registration Number 1000037617. Contractor represents that it is duly licensed by the State of California and has the background, knowledge, experience and expertise to perform the obligations set forth in this Construction Contract. C. On April 26, 2016, City issued an Invitation for Bids (IFB163446) to contractors for the Lucie Stern Buildings Mechanical and Electrical Upgrades (“Project”). The City did not receive any Bids in response to the IFB, Per PAMC 2.30.360(C) the City requested a Bid from one Contractor and the Contractor submitted a Bid. D. City and Contractor desire to enter into this Construction Contract for the Project, and other services as identified in the Contract Documents for the Project upon the following terms and conditions. NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the undersigned parties as follows: SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS. 1.1 Recitals. All of the recitals are incorporated herein by reference. 1.2 Definitions. Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the General Conditions. If there is a conflict between the definitions in this Construction Contract and in the General Conditions, the definitions in this Construction Contract shall prevail. SECTION 2 THE PROJECT. The Project is the Lucie Stern Buildings Mechanical and Electrical Upgrades Project, located at 1305 Middlefield Road, Palo Alto, CA. 94301 ("Project"). Invitation for Bid (IFB) Package 7 Rev. April 27, 2016 CONSTRUCTION CONTRACT SECTION 3 THE CONTRACT DOCUMENTS. 3.1 List of Documents. The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist of the following documents which are on file with the Purchasing Division and are hereby incorporated by reference. 1) Change Orders 2) Field Orders 3) Contract 4) Bidding Addenda 5) Special Provisions 6) General Conditions 7) Project Plans and Drawings 8) Technical Specifications 9) Instructions to Bidders 10) Invitation for Bids 11) Contractor's Bid/Non-Collusion Declaration 12) Reports listed in the Contract Documents 13) Public Works Department’s Standard Drawings and Specifications (most current version at time of Bid) 14) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards (most current version at time of Bid) 15) City of Palo Alto Traffic Control Requirements 16) City of Palo Alto Truck Route Map and Regulations 17) Notice Inviting Pre-Qualification Statements, Pre-Qualification Statement, and Pre- Qualification Checklist (if applicable) 18) Performance and Payment Bonds 3.2 Order of Precedence. For the purposes of construing, interpreting and resolving inconsistencies between and among the provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the preceding section. If a claimed inconsistency cannot be resolved through the order of precedence, the City shall have the sole power to decide which document or provision shall govern as may be in the best interests of the City. Invitation for Bid (IFB) Package 8 Rev. April 27, 2016 CONSTRUCTION CONTRACT SECTION 4 CONTRACTOR’S DUTY. 4.1 Contractor’s Duties Contractor agrees to perform all of the Work required for the Project, as specified in the Contract Documents, all of which are fully incorporated herein. Contractor shall provide, furnish, and supply all things necessary and incidental for the timely performance and completion of the Work, including, but not limited to, provision of all necessary labor, materials, equipment, transportation, and utilities, unless otherwise specified in the Contract Documents. Contractor also agrees to use its best efforts to complete the Work in a professional and expeditious manner and to meet or exceed the performance standards required by the Contract Documents. SECTION 5 PROJECT TEAM. 5.1 Contractor’s Co-operation. In addition to Contractor, City has retained, or may retain, consultants and contractors to provide professional and technical consultation for the design and construction of the Project. The Contract requires that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of the Project Team and other contractors retained by City to construct other portions of the Project. SECTION 6 TIME OF COMPLETION. 6.1 Time Is of Essence. Time is of the essence with respect to all time limits set forth in the Contract Documents. 6.2 Commencement of Work. Contractor shall commence the Work on the date specified in City’s Notice to Proceed. 6.3 Contract Time. Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be completed not later than . within Three hundred eighty eight calendar days (388) after the commencement date specified in City’s Notice to Proceed. By executing this Construction Contract, Contractor expressly waives any claim for delayed early completion. 6.4 Liquidated Damages. Pursuant to Government Code Section 53069.85, if Contractor fails to achieve Substantial Completion of the entire Work within the Contract Time, including any approved extensions thereto, City may assess liquidated damages on a daily basis for each day of Unexcused Delay in achieving Substantial Completion, based on the amount of Five Hundred dollars ($500) per day, or as otherwise specified in the Special Provisions. Liquidated damages may also be separately assessed for failure to meet milestones specified elsewhere in the Contract Documents, regardless of impact on the time for achieving Substantial Completion. The assessment of liquidated damages is not a penalty but considered to be a reasonable Invitation for Bid (IFB) Package 9 Rev. April 27, 2016 CONSTRUCTION CONTRACT estimate of the amount of damages City will suffer by delay in completion of the Work. The City is entitled to setoff the amount of liquidated damages assessed against any payments otherwise due to Contractor, including, but not limited to, setoff against release of retention. If the total amount of liquidated damages assessed exceeds the amount of unreleased retention, City is entitled to recover the balance from Contractor or its sureties. Occupancy or use of the Project in whole or in part prior to Substantial Completion, shall not operate as a waiver of City’s right to assess liquidated damages. 6.4.1 Other Remedies. City is entitled to any and all available legal and equitable remedies City may have where City’s Losses are caused by any reason other than Contractor’s failure to achieve Substantial Completion of the entire Work within the Contract Time. 6.5 Adjustments to Contract Time. The Contract Time may only be adjusted for time extensions approved by City and memorialized in a Change Order approved in accordance with the requirements of the Contract Documents. SECTION 7 COMPENSATION TO CONTRACTOR. 7.1 Contract Sum. Contractor shall be compensated for satisfactory completion of the Work in compliance with the Contract Documents the Contract Sum of Two million two hundred thousand thirty nine thousand seven hundred eighty one Dollars ($2,239,781). [This amount includes the Base Bid and Add Optional 1. 7.2 Full Compensation. The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen difficulties or obstructions which may arise or be encountered in performance of the Work until its Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to suspension or discontinuance of the Work, except as expressly provided herein. The Contract Sum may only be adjusted for Change Orders approved in accordance with the requirements of the Contract Documents. SECTION 8 STANDARD OF CARE. 8.1 Standard of Care. Contractor agrees that the Work shall be performed by qualified, experienced and well-supervised personnel. All services performed in connection with this Construction Contract shall be performed in a manner consistent with the standard of care under California law applicable to those who specialize in providing such services for projects of the type, scope and complexity of the Project. Invitation for Bid (IFB) Package 10 Rev. April 27, 2016 CONSTRUCTION CONTRACT SECTION 9 INDEMNIFICATION. 9.1 Hold Harmless. To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its City Council, boards and commissions, officers, agents, employees, representatives and volunteers (hereinafter individually referred to as an “Indemnitee” and collectively referred to as "Indemnitees"), through legal counsel acceptable to City, from and against any and liability, loss, damage, claims, expenses (including, without limitation, attorney fees, expert witness fees, paralegal fees, and fees and costs of litigation or arbitration) (collectively, “Liability”) of every nature arising out of or in connection with the acts or omissions of Contractor, its employees, Subcontractors, representatives, or agents, in performing the Work or its failure to comply with any of its obligations under the Contract, except such Liability caused by the active negligence, sole negligence, or willful misconduct of an Indemnitee. Contractor shall pay City for any costs City incurs to enforce this provision. Except as provided in Section 9.2 below, nothing in the Contract Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor against City or any other Indemnitee. Pursuant to Public Contract Code Section 9201, City shall timely notify Contractor upon receipt of any third-party claim relating to the Contract. 9.2 Survival. The provisions of Section 9 shall survive the termination of this Construction Contract. SECTION 10 NON-DISCRIMINATION. 10.1 Municipal Code Requirement. As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Contractor acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and will comply with all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 11 INSURANCE AND BONDS. 11.1 Evidence of coverage. Within ten (10) business days following issuance of the Notice of Award, Contractor shall provide City with evidence that it has obtained insurance and shall submit Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions. Invitation for Bid (IFB) Package 11 Rev. April 27, 2016 CONSTRUCTION CONTRACT SECTION 12 PROHIBITION AGAINST TRANSFERS. 12.1 Assignment. City is entering into this Construction Contract in reliance upon the stated experience and qualifications of the Contractor and its Subcontractors set forth in Contractor’s Bid. Accordingly, Contractor shall not assign, hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or transfer without said consent shall be null and void, and shall be deemed a substantial breach of contract and grounds for default in addition to any other legal or equitable remedy available to the City. 12.2 Assignment by Law. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor is a partnership or joint venture or syndicate or co-tenancy shall result in changing the control of Contractor, shall be construed as an assignment of this Construction Contract. Control means more than fifty percent (50%) of the voting power of the corporation or other entity. SECTION 13 NOTICES. 13.1 Method of Notice. All notices, demands, requests or approvals to be given under this Construction Contract shall be given in writing and shall be deemed served on the earlier of the following: (i) On the date delivered if delivered personally; (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and addressed as hereinafter provided; (iii) On the date sent if sent by facsimile transmission; (iv) On the date sent if delivered by electronic mail; or (v) On the date it is accepted or rejected if sent by certified mail. 13.2 Notice to Recipients. All notices, demands or requests (including, without limitation, Change Order Requests and Claims) from Contractor to City shall include the Project name and the number of this Construction Contract and shall be addressed to City at: To City: City of Palo Alto City Clerk 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Copy to: City of Palo Alto Public Works Administration 250 Hamilton Avenue Palo Alto, CA 94301 Attn: Matt Raschke AND Invitation for Bid (IFB) Package 12 Rev. April 27, 2016 CONSTRUCTION CONTRACT [Include Construction Manager, If Applicable.] City of Palo Alto Utilities Engineering 250 Hamilton Avenue Palo Alto, CA 94301 Attn: In addition, copies of all Claims by Contractor under this Construction Contract shall be provided to the following: Palo Alto City Attorney’s Office 250 Hamilton Avenue P.O. Box 10250 Palo Alto, California 94303 All Claims shall be delivered personally or sent by certified mail. All notices, demands, requests or approvals from City to Contractor shall be addressed to: IRON CONSTRUCTION, INC ATTN: Daryl Young 270 E. Caribbean Drive Sunny Vale, CA 94089 13.3 Change of Address. In advance of any change of address, Contractor shall notify City of the change of address in writing. Each party may, by written notice only, add, delete or replace any individuals to whom and addresses to which notice shall be provided. SECTION 14 DEFAULT. 14.1 Notice of Default. In the event that City determines, in its sole discretion, that Contractor has failed or refused to perform any of the obligations set forth in the Contract Documents, or is in breach of any provision of the Contract Documents, City may give written notice of default to Contractor in the manner specified for the giving of notices in the Construction Contract, with a copy to Contractor’s performance bond surety. 14.2 Opportunity to Cure Default. Except for emergencies, Contractor shall cure any default in performance of its obligations under the Contract Documents within two (2) Days (or such shorter time as City may reasonably require) after receipt of written notice. However, if the breach cannot be reasonably cured within such time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as City may reasonably require) and will diligently and continuously prosecute such cure to completion within a reasonable time, which shall in no event be later than ten (10) Days after receipt of such written notice. Invitation for Bid (IFB) Package 13 Rev. April 27, 2016 CONSTRUCTION CONTRACT SECTION 15 CITY'S RIGHTS AND REMEDIES. 15.1 Remedies Upon Default. If Contractor fails to cure any default of this Construction Contract within the time period set forth above in Section 14, then City may pursue any remedies available under law or equity, including, without limitation, the following: 15.1.1 Delete Certain Services. City may, without terminating the Construction Contract, delete certain portions of the Work, reserving to itself all rights to Losses related thereto. 15.1.2 Perform and Withhold. City may, without terminating the Construction Contract, engage others to perform the Work or portion of the Work that has not been adequately performed by Contractor and withhold the cost thereof to City from future payments to Contractor, reserving to itself all rights to Losses related thereto. 15.1.3 Suspend The Construction Contract. City may, without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, suspend all or any portion of this Construction Contract for as long a period of time as City determines, in its sole discretion, appropriate, in which event City shall have no obligation to adjust the Contract Sum or Contract Time, and shall have no liability to Contractor for damages if City directs Contractor to resume Work. 15.1.4 Terminate the Construction Contract for Default. City shall have the right to terminate this Construction Contract, in whole or in part, upon the failure of Contractor to promptly cure any default as required by Section 14. City’s election to terminate the Construction Contract for default shall be communicated by giving Contractor a written notice of termination in the manner specified for the giving of notices in the Construction Contract. Any notice of termination given to Contractor by City shall be effective immediately, unless otherwise provided therein. 15.1.5 Invoke the Performance Bond. City may, with or without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, exercise its rights under the Performance Bond. 15.1.6 Additional Provisions. All of City’s rights and remedies under this Construction Contract are cumulative, and shall be in addition to those rights and remedies available in law or in equity. Designation in the Contract Documents of certain breaches as material shall not waive the City’s authority to designate other breaches as material nor limit City’s right to terminate the Construction Contract, or prevent the City from terminating the Agreement for breaches that are not material. City’s determination of whether there has been noncompliance with the Construction Contract so as to warrant exercise by City of its rights and remedies for default under the Construction Contract, shall be binding on all parties. No termination or action taken by City after such termination shall prejudice any other rights or remedies of City provided by law or equity or by the Contract Documents upon such termination; and City may proceed against Contractor to recover all liquidated damages and Losses suffered by City. 15.2 Delays by Sureties. Time being of the essence in the performance of the Work, if Contractor’s surety fails to arrange for completion of the Work in accordance with the Performance Bond, within seven (7) calendar days from the date of the notice of termination, Contractor’s surety shall be deemed to have waived its right to complete the Work under the Contract, and City may immediately make arrangements for the completion of the Work through use of its own forces, by hiring a replacement contractor, or by any other means that City determines advisable under the circumstances. Contractor and its surety shall be jointly and severally Invitation for Bid (IFB) Package 14 Rev. April 27, 2016 CONSTRUCTION CONTRACT liable for any additional cost incurred by City to complete the Work following termination. In addition, City shall have the right to use any materials, supplies, and equipment belonging to Contractor and located at the Worksite for the purposes of completing the remaining Work. 15.3 Damages to City. 15.3.1 For Contractor's Default. City will be entitled to recovery of all Losses under law or equity in the event of Contractor’s default under the Contract Documents. 15.3.2 Compensation for Losses. In the event that City's Losses arise from Contractor’s default under the Contract Documents, City shall be entitled to deduct the cost of such Losses from monies otherwise payable to Contractor. If the Losses incurred by City exceed the amount payable, Contractor shall be liable to City for the difference and shall promptly remit same to City. 15.4 Suspension by City 15.4.1 Suspension for Convenience. City may, at any time and from time to time, without cause, order Contractor, in writing, to suspend, delay, or interrupt the Work in whole or in part for such period of time, up to an aggregate of fifty percent (50%) of the Contract Time. The order shall be specifically identified as a Suspension Order by City. Upon receipt of a Suspension Order, Contractor shall, at City’s expense, comply with the order and take all reasonable steps to minimize costs allocable to the Work covered by the Suspension Order. During the Suspension or extension of the Suspension, if any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered by the Suspension Order. If a Suspension Order is canceled or expires, Contractor shall resume and continue with the Work. A Change Order will be issued to cover any adjustments of the Contract Sum or the Contract Time necessarily caused by such suspension. A Suspension Order shall not be the exclusive method for City to stop the Work. 15.4.2 Suspension for Cause. In addition to all other remedies available to City, if Contractor fails to perform or correct work in accordance with the Contract Documents, City may immediately order the Work, or any portion thereof, suspended until the cause for the suspension has been eliminated to City’s satisfaction. Contractor shall not be entitled to an increase in Contract Time or Contract Price for a suspension occasioned by Contractor’s failure to comply with the Contract Documents. City’s right to suspend the Work shall not give rise to a duty to suspend the Work, and City’s failure to suspend the Work shall not constitute a defense to Contractor’s failure to comply with the requirements of the Contract Documents. 15.5 Termination Without Cause. City may, at its sole discretion and without cause, terminate this Construction Contract in part or in whole upon written notice to Contractor. Upon receipt of such notice, Contractor shall, at City’s expense, comply with the notice and take all reasonable steps to minimize costs to close out and demobilize. The compensation allowed under this Paragraph 15.5 shall be the Contractor’s sole and exclusive compensation for such termination and Contractor waives any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect or incidental damages of any kind resulting from termination without cause. Termination pursuant to this provision does not relieve Contractor or its sureties from any of their obligations for Losses arising from or related to the Work performed by Contractor. Invitation for Bid (IFB) Package 15 Rev. April 27, 2016 CONSTRUCTION CONTRACT 15.5.1 Compensation. Following such termination and within forty-five (45) Days after receipt of a billing from Contractor seeking payment of sums authorized by this Paragraph 15.5.1, City shall pay the following to Contractor as Contractor’s sole compensation for performance of the Work : .1 For Work Performed. The amount of the Contract Sum allocable to the portion of the Work properly performed by Contractor as of the date of termination, less sums previously paid to Contractor. .2 For Close-out Costs. Reasonable costs of Contractor and its Subcontractors: (i) Demobilizing and (ii) Administering the close-out of its participation in the Project (including, without limitation, all billing and accounting functions, not including attorney or expert fees) for a period of no longer than thirty (30) Days after receipt of the notice of termination. .3 For Fabricated Items. Previously unpaid cost of any items delivered to the Project Site which were fabricated for subsequent incorporation in the Work. .4 Profit Allowance. An allowance for profit calculated as four percent (4%) of the sum of the above items, provided Contractor can prove a likelihood that it would have made a profit if the Construction Contract had not been terminated. 15.5.2 Subcontractors. Contractor shall include provisions in all of its subcontracts, purchase orders and other contracts permitting termination for convenience by Contractor on terms that are consistent with this Construction Contract and that afford no greater rights of recovery against Contractor than are afforded to Contractor against City under this Section. 15.6 Contractor’s Duties Upon Termination. Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the notice directs otherwise, do the following: (i) Immediately discontinue the Work to the extent specified in the notice; (ii) Place no further orders or subcontracts for materials, equipment, services or facilities, except as may be necessary for completion of such portion of the Work that is not discontinued; (iii) Provide to City a description in writing, no later than fifteen (15) days after receipt of the notice of termination, of all subcontracts, purchase orders and contracts that are outstanding, including, without limitation, the terms of the original price, any changes, payments, balance owing, the status of the portion of the Work covered and a copy of the subcontract, purchase order or contract and any written changes, amendments or modifications thereto, together with such other information as City may determine necessary in order to decide whether to accept assignment of or request Contractor to terminate the subcontract, purchase order or contract; (iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions thereof, that City elects to accept by assignment and cancel, on the most favorable terms reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof, that City does not elect to accept by assignment; and (v) Thereafter do only such Work as may be necessary to preserve and protect Work already in progress and to protect materials, plants, and equipment on the Project Site or in transit thereto. Upon termination, whether for cause or for convenience, the provisions of the Contract Documents remain in effect as to any Claim, indemnity obligation, warranties, guarantees, Invitation for Bid (IFB) Package 16 Rev. April 27, 2016 CONSTRUCTION CONTRACT submittals of as-built drawings, instructions, or manuals, or other such rights and obligations arising prior to the termination date. SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES. 16.1 Contractor’s Remedies. Contractor may terminate this Construction Contract only upon the occurrence of one of the following: 16.1.1 For Work Stoppage. The Work is stopped for sixty (60) consecutive Days, through no act or fault of Contractor, any Subcontractor, or any employee or agent of Contractor or any Subcontractor, due to issuance of an order of a court or other public authority other than City having jurisdiction or due to an act of government, such as a declaration of a national emergency making material unavailable. This provision shall not apply to any work stoppage resulting from the City’s issuance of a suspension notice issued either for cause or for convenience. 16.1.2 For City's Non-Payment. If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of notice from Contractor, Contractor may terminate the Construction Contract (30) days following a second notice to City of Contractor’s intention to terminate the Construction Contract. 16.2 Damages to Contractor. In the event of termination for cause by Contractor, City shall pay Contractor the sums provided for in Paragraph 15.5.1 above. Contractor agrees to accept such sums as its sole and exclusive compensation and agrees to waive any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect and incidental damages, of any kind. SECTION 17 ACCOUNTING RECORDS. 17.1 Financial Management and City Access. Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper financial management under this Construction Contract in accordance with generally accepted accounting principles and practices. City and City's accountants during normal business hours, may inspect, audit and copy Contractor's records, books, estimates, take-offs, cost reports, ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data relating to this Project. Contractor shall retain these documents for a period of three (3) years after the later of (i) Final Payment or (ii) final resolution of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by law. Invitation for Bid (IFB) Package 17 Rev. April 27, 2016 CONSTRUCTION CONTRACT 17.2 Compliance with City Requests. Contractor's compliance with any request by City pursuant to this Section 17 shall be a condition precedent to filing or maintenance of any legal action or proceeding by Contractor against City and to Contractor's right to receive further payments under the Contract Documents. City many enforce Contractor’s obligation to provide access to City of its business and other records referred to in Section 17.1 for inspection or copying by issuance of a writ or a provisional or permanent mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such court, without the necessity of oral testimony. SECTION 18 INDEPENDENT PARTIES. 18.1 Status of parties. Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’ of the other party. City, its officers or employees shall have no control over the conduct of Contractor or its respective agents, employees, subconsultants, or subcontractors, except as herein set forth. SECTION 19 NUISANCE. 19.1 Nuisance Prohibited. Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in connection in the performance of services under this Construction Contract. SECTION 20 PERMITS AND LICENSES. 20.1 Payment of Fees. Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall provide, procure and pay for all licenses, permits, and fees, required by the City or other government jurisdictions or agencies necessary to carry out and complete the Work. Payment of all costs and expenses for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation shall be paid to the Contractor for these items or for delays caused by non-City inspectors or conditions set forth in the licenses or permits issued by other agencies. SECTION 21 WAIVER. 21.1 Waiver. A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character. Invitation for Bid (IFB) Package 18 Rev. April 27, 2016 CONSTRUCTION CONTRACT SECTION 22 GOVERNING LAW AND VENUE; COMPLIANCE WITH LAWS. 22.1 Governing Law. This Construction Contract shall be construed in accordance with and governed by the laws of the State of California, and venue shall be in a court of competent jurisdiction in the County of Santa Clara, and no other place. 22.2 Compliance with Laws. Contractor shall comply with all applicable federal and California laws and city laws, including, without limitation, ordinances and resolutions, in the performance of work under this Construction Contract. 22.2.1 Palo Alto Minimum Wage Ordinance. Contractor shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, Contractor shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, Contractor shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. SECTION 23 COMPLETE AGREEMENT. 23.1 Integration. This Agreement represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended only by a written instrument, which is signed by the parties. SECTION 24 SURVIVAL OF CONTRACT. 24.1 Survival of Provisions. The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or Final Completion, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after Final Completion or any termination of the Construction Contract. SECTION 25 PREVAILING WAGES. This Project is not subject to prevailing wages. Contractor is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7, if the public works contract does not include a project of $25,000 or less, when the project is for construction work, or the contract does not include a project of $15,000 or less, when the project is for alteration, demolition, repair, or maintenance (collectively, ‘improvement’) work. Or Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work Invitation for Bid (IFB) Package 19 Rev. April 27, 2016 CONSTRUCTION CONTRACT in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the Purchasing Division’s office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. SECTION 26 NON-APPROPRIATION. 26.1 Appropriations. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 27 AUTHORITY. 27.1 Representation of Parties. The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. SECTION 28 COUNTERPARTS 28.1 Multiple Counterparts. This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement. SECTION 29 SEVERABILITY. 29.1 Severability. In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected. SECTION 30 STATUTORY AND REGULATORY REFERENCES. 30.1 Amendments to Laws. With respect to any amendments to any statutes or regulations referenced in these Contract Documents, the reference is deemed to be the version in effect on the date that the Contract was awarded by City, unless otherwise required by law. SECTION 31 WORKERS’ COMPENSATION CERTIFICATION. 31.1 Workers Compensation. Pursuant to Labor Code Section 1861, by signing this Contract, Contractor certifies as follows: Invitation for Bid (IFB) Package 20 Rev. April 27, 2016 CONSTRUCTION CONTRACT “I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the Work on this Contract.” SECTION 32 DIR REGISTRATION AND OTHER SB 854 REQUIREMENTS. 32.1 General Notice to Contractor. City requires Contractor and its listed subcontractors to comply with the requirements of SB 854. 32.2 Labor Code section 1771.1(a) City provides notice to Contractor of the requirements of California Labor Code section 1771.1(a), which reads: “A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5 of the Public Contract Code, provided the contactor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.” 32.3 DIR Registration Required. City will not accept a bid proposal from or enter into this Construction Contract with Contractor without proof that Contractor and its listed subcontractors are registered with the California Department of Industrial Relations (“DIR”) to perform public work, subject to limited exceptions. 32.4 Posting of Job Site Notices. City gives notice to Contractor and its listed subcontractors that Contractor is required to post all job site notices prescribed by law or regulation and Contractor is subject to SB 854-compliance monitoring and enforcement by DIR. 32.5 Payroll Records. City requires Contractor and its listed subcontractors to comply with the requirements of Labor Code section 1776, including: (i) Keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by, respectively, Contractor and its listed subcontractors, in connection with the Project. (ii) The payroll records shall be verified as true and correct and shall be certified and made available for inspection at all reasonable hours at the principal office of Contractor and its listed subcontractors, respectively. Invitation for Bid (IFB) Package 21 Rev. April 27, 2016 CONSTRUCTION CONTRACT (iii) At the request of City, acting by its project manager, Contractor and its listed subcontractors shall make the certified payroll records available for inspection or furnished upon request to the project manager within ten (10) days of receipt of City’s request. City requests Contractor and its listed subcontractors to submit the certified payroll records to the project manager at the end of each week during the Project. (iv) If the certified payroll records are not produced to the project manager within the 10-day period, then Contractor and its listed subcontractors shall be subject to a penalty of one hundred dollars ($100.00) per calendar day, or portion thereof, for each worker, and City shall withhold the sum total of penalties from the progress payment(s) then due and payable to Contractor. This provision supplements the provisions of Section 15 hereof. (v) Inform the project manager of the location of contractor’s and its listed subcontractors’ payroll records (street address, city and county) at the commencement of the Project, and also provide notice to the project manager within five (5) business days of any change of location of those payroll records. IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the date and year first above written. CITY OF PALO ALTO ____________________________ Purchasing Manager City Manager APPROVED AS TO FORM: ____________________________ City Attorney or designee APPROVED: ____________________________ Public Works Director CONTRACTOR By:___________________________ Name:________________________ Title:__________________________ Date: _________________________ 1 Revision April 28, 2014 AMENDMENT NO. TWO TO CONTRACT NO. C13148737 BETWEEN THE CITY OF PALO ALTO AND ADVANCED DESIGN CONSULTANTS, INC. This Amendment No. Two to Contract No. C13148737 (“Contract”) is entered into on this 26th day of June, 2016, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and ADVANCED DESIGN CONSULTANTS, INC , a California corporation, located at 998 Park Avenue, San Jose, CA 95126("CONSULTANT"). R E C I T A L S A. The Contract was entered into between the parties for the provision of design services for the Lucie Stern Buildings Mechanical/ Electrical Upgrades project. B. The parties wish to amend the Contract to increase the scope of services to include Full Construction Administration and Construction Management Services, increase compensation in the amount of $317,738 for Basic Services and $31,774 for Additional Services and extend the contract term through May 19, 2018. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 1, SCOPE OF SERVICES, is hereby amended to read as follows: “CONSULTANT shall perform the Services described in the attached Exhibit “A-1” as an addition to the scope of services described in Exhibit “A” of the original contract, and Exhibit “A” of Amendment No. 1 in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY.” SECTION 2. Section 2, TERM, is hereby amended to read as follows: The term of this Agreement shall be from the date of its full execution through May 19, 2018 unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. Section 4, NOT TO EXCEED COMPENSATION, is hereby amended to read as follows: “The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A “and Exhibit “A-1”, including both payment for professional services and reimbursable expenses, shall not exceed Six hundred nine thousand three hundred thirty three dollars($609,333). In the event Additional Services are authorized, the total compensation for Services, Additional Services and reimbursable expenses shall not exceed Six hundred seventy thousand two hundred sixty seven dollars($670,267). The applicable rates DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 2 Revision April 28, 2014 and schedule of payment are set out in Exhibit “C-1” entitled “HOURLY RATE SCHEDULE” of the original contract, and Exhibit “C-3” of Amendment No.2.entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C” of the original contract, Exhibit “C” of Amendment No.1 and Exhibit “C-2” of Amendment No.2. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit “A” and Exhibit “A-1”. SECTION 4. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a. Exhibit “A-1” entitled “SCOPE OF SERVICES”. b. Exhibit “B-1” entitled “SCHEDULE OF PERFORMANCE”. c. Exhibit “C-2” entitled “COMPENSATION”. d. Exhibit “C-3” entitled “HOURLY RATE SCHEDULE”. SECTION 5. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. 3 Revision April 28, 2014 CITY OF PALO ALTO ____________________________ CITY MANAGER APPROVED AS TO FORM: _____________________________ Senior Deputy City Attorney ADVANCED DESIGN CONSULTANTS, INC By:___________________________ Name:_________________________ Title:________________________ Attachments: Exhibit “A-1” entitled “SCOPE OF SERVICES”. Exhibit “B-1” entitled “SCHEDULE OF PERFORMANCE”. Exhibit “C-2” entitled “COMPENSATION. Exhibit “C-3” entitled “HOURLY RATE SCHEDULE. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 Project Manager Lorenzo Rios Jr 1 EXHIBIT A-1 SCOPE OF SERVICES AMENDMENT NO. 2 Construction Phase Services for the Lucie Stern project are required at this time and the City is accordingly issuing a contract amendment for these services. The Consultant’s services shall include full construction administration and construction management services as required to assist City staff in the management of the construction of the project, as well as with any claims or other contract disputes that may arise. All work performed by Consultant shall be in accordance with the professional standard and quality that prevail among professional construction managers in the Peninsula region. If at any time, the City is not satisfied with the performance of Consultant’s staff, the City reserves the right to request the services of a different individual. If for any reason Consultant proposes a change of staffing during the course of the project, the City reserves the right to approve any new staff. Staffing changes must be approved a minimum of 21 calendar days in advance of any staffing changes, in writing, by the City’s Project Manager (PM). Office space or trailer, computers, cell phones, furnishings and other equipment needed for Consultant’s staff shall be provided by Consultant. Consultant may arrange, at Consultant cost, to have the City’s general contractor (Contractor) provide trailer space and furnishings. Consultant shall list the cost of any needed office trailer and accompanying furnishings and equipment as a separate line item in their proposal. Task 1: Construction Phase Services Consultant shall in accordance with the professional standard and quality that prevail among professional construction managers in the Peninsula region: Consultant shall be the point of contact for the Contractor and shall enforce compliance with all of Contractor’s contractual requirements, as follows: Site Construction Management: Consultant shall oversee the major construction work performed by the Contractor. Consultant shall track the construction process, logistics, Request for Information (RFI), Architect’s Supplemental Information (ASI), Change Order (CO) and other information or requests. Consultant shall oversee the construction activities and ensure that all aspects of the building permit construction requirements are followed and documented and shall work closely with the project's Commissioning Agent, who is a direct consultant to the City. Consultant shall work with the Contractor and any involved parties to implement logistical and communications measures to minimize any impacts to the nearby residential neighborhood, park, fire station, and the various schools in the vicinity. Consultant shall implement expeditious methods for resolving conflicts. Consultant shall handle the coordination between the City staff, Commissioning Agent, Contractor, and design staff. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 2 If night time, holiday or weekend work is required to minimize building occupant impacts or due to delay in the schedule, Consultant services shall still be required in full effect based on hourly rates within T&M contract. Establishment of deadlines: Consultant shall coordinate with City staff, Contractor, and design staff to establish deadlines for submittal of and response to RFI’s, deferred submittals, construction coordination drawings, construction schedules, inspection requests, change order requests, and claims. Consultant shall track all such requests and submittals to ensure compliance with deadlines. Consultant shall track all requests and submittals in a format acceptable to City staff, and shall make the tracking document available to City staff through electronic file sharing. Consultant shall increase its project staffing in a timely manner if needed to process requests and submittals in accordance with the established deadlines and to avoid delays. Outreach: Consultant shall provide monthly construction updates, including project construction cost- tracking, and shall attend quarterly meetings with the building user stakeholders. At these meetings, Consultant shall discuss project progress, distribute recent jobsite photos and answer questions that might arise. Consultant shall respond within 24 hours to Occupants questions and complaints. Consultant shall provide updates suitable for uploading onto the City’s website or other information site. Printing of any needed flyers, presentation boards, advertisement and other related outreach material costs shall be considered a Reimbursable expense, the cost for which shall be approved in writing in advance by the PM. Meetings: Throughout the construction process, Consultant shall be prepared to address comments and concerns of the Contractor, PM, City Staff, and the general public on an as-needed basis. Consultant shall set up and conduct weekly progress OAC meetings during major construction time periods and any other meetings necessary to facilitate the project work. City will provide the administrative support to provide a meeting room and invite attendees. Consultant shall write and distribute the meeting agendas and meeting minutes, including: commissioning meetings, regular site meetings, and meetings with the City staff, contractors, various City departments, and the public. The meeting minutes will explicitly track who has the responsibility for each action item with expected completion dates. Field Inspection and Supervision: Consultant shall provide a CM Field Superintendent (CMFS) who shall maintain a field presence whenever major construction or hazardous work is under way by the Contractor. The role of the CMFS will be to enforce the Construction Contract periodically in the field to ensure that the work is being constructed in compliance with the contract documents, the approved shop drawings, the current RFI answers, and other Construction Contract documents, and in general, to protect the interest of the City daily in the field. The CMFS will also observe and report field problems with respect to quality, cost and schedule. The CMFS will develop and maintain deficiency, incomplete work item, and preliminary punch list reports and will maintain a weekly construction report, as the weekly history of the project, to include significant jobsite field events that occur each day. The CMFS will periodically monitor any ‘time and materials’ work performed by the Contractor to ensure that the work being performed is being charged appropriately to Field Order and not to contract work. The CMFS will not be responsible for means and methods of the Contractor, nor for safety of any of the Contractor’s employees, but will have the authority, although not the responsibility, to observe and report concerns with regard to such issues. Documentation: Consultant shall oversee, manage and track the Contractor’s preparation and/or review of all necessary documentation for the project including, but not limited to: daily logs and inspection progress reports, photos/videos, RFI, ASI, correspondence, and shop drawings. Consultant shall maintain all files and documentation related to managing the project via City provided cloud based DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 3 storage site, such as SharePoint. Responses, approvals, and decisions relative to Contractor's documents shall be provided in a timely manner and as required in the construction documents. Consultant shall review and comment on any project-related correspondence as requested by the City. Routine correspondence that is related to product information or minor design issues may be prepared and answered by Consultant on its letterhead, with a copy of the response directed to PM and design staff. Correspondence requiring City response, including but not limited to correspondence with residents, cost or contractual issues, may be drafted by Consultant, but shall be signed only by City. Submittals: Consultant shall manage, log and track all project submittals (i.e. shop drawings, product information, substitution request, and samples) for approval in a timely manner as required by the construction documents and in order to prevent any delays to the project. Comments from different reviewers of the submittal shall be compiled before being returned to the Contractor for revisions. All submittals shall be sent directly between the Contractor and design staff, with copies, documentation and management reports submitted to and managed by the Consultant. Electronic file sharing: Consultant shall contract with, host and maintain an electronic file sharing internet site, like Dropbox or SharePoint, in order for the Consultant, City staff, design staff, Contractor, commissioning agent, and others as appropriate to post project documents for shared viewing. Documents shall include: plans and specifications, submittals, RFI’s, ASI’s, inspection logs, schedules, meeting agendas and minutes, and any other project documents requested to be posted by City or that will benefit the various parties involved. Construction Schedule: Consultant shall review the Contractor's construction schedule. Consultant shall analyze, monitor, and request updates for the master schedule as the project progresses. Consultant shall analyze the schedule for construction constraints, level of critical activities and to verify progress in conjunction with the analysis of pay applications. Consultant shall review Contractors' individual Critical Path Method (CPM) schedules, monitor Contractor's progress, notify the City of any slippage, and coordinate Contractor recovery plans. Progress Payments: Consultant shall review progress payment requests submitted by Contractor within five (5) days of receipt and verify the accuracy and percentage of completion against the schedule and resolve any discrepancies in the invoices. Consultant shall review the invoices and backup for completeness and compliance with contract documents and make a recommendation to PM for payment of the progress payment requests. Change Order Monitoring and Processing: Consultant shall review all change order requests submitted to the City for accuracy, completeness, appropriateness, and compliance with the City contract documents. Consultant shall work with design staff to determine the validity of change order requests, however, the design staff will not be expected to provide input on the validity of the dollar value of the claim, only input as to whether the work is indeed ‘extra’. In instances when the work is determined to be extra, Consultant shall make recommendations to the City on the pricing of the change orders using compensation methodologies specified in the Construction Contract. If necessary or if requested by the City, Consultant shall prepare an independent estimate of the value of the additional work to verify the reasonableness of fixed price change order requests. Consultant shall reject change order requests that are determined to be invalid. Consultant shall process change order requests according to the schedule developed under “Establishment of deadlines”, and shall coordinate response with the City. Claims: Consultant shall analyze any claims from the Contractor (i.e., compensation and delay) as to whether they are excusable, inexcusable, or compensable and prepare a response for City. Consultant shall process claims according to the schedule developed under “Establishment of deadlines”. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 4 Quality Control and Assurance: Consultant shall monitor and document the Contractor's work for any deviations in scope, schedule, or performance and keep the City informed of and assist in resolving any issues that may arise. Record Drawings: Consultant shall coordinate the preparation of record drawings with the Contractor and design staff on a regular basis, both during the construction and post-construction phases, and review the drawings for "as-built" accuracy. Commissioning: Consultant shall work with the commissioning agent, design staff, and the Contractor to ensure that all new equipment have been installed in accordance with the contract documents, are working properly as stand-alone equipment, and are working properly as part of a complete system. Substantial Completion: As per the construction contract, once the Contractor requests substantial completion and it is determined to be warranted, Consultant shall prepare and compile a project punch list with the assistance from the City and design staff to be forwarded to the Contractor. Consultant shall oversee the completion of the punch list items before the final notice of completion is issued. Close Out: Consultant shall ensure completion and delivery of all required close out documents including operation and maintenance (O&M) manuals, record drawings, and warranties. Consultant shall review all these materials for compliance with the contract documents and for completeness and report any deficiencies or discrepancies to Contractor for corrections and re-submittal. Consultant shall work under the direction of the PM to resolve any contract claim issues that may arise (stop work notices, bonding, delays, extra work, etc). As-Built drawings shall be scanned by Consultant for archiving by City. Files: Consultant shall consolidate and deliver all project files and documentation to be retained by the City. Task 2: Photographic Recording Project Documentation – Photographic Record: Based upon a build period of 12 months, Consultant shall provide a photographic record of the following: pre-construction site-survey of existing conditions;20 maximum exterior progressions; interior progressions; 20 maximum interior mechanical, electrical and fire sprinkler; and finished condition prior to occupancy. All documentation shall include consultations with City identifying project-specific needs, appropriate photographic intervals, schedules, determination of optimal locations based on the site plans, a representative number of digital photographs at such intervals and for such durations and at the specified milestones; linking each photo set to the appropriate location on the site plans and floor plans; and two USB, CD or DVD ROM copies of the entire photo documentation upon completion. Task 3: Allowance for Testing Testing and Special Inspections: If needed, a testing and inspection agency(s) shall be under contract with and paid for by the Consultant. Consultant shall coordinate with the Contractor in scheduling the testing agency services for materials testing and special inspections needed for the life of the project. This testing includes, but is not limited to, soils tests, concrete strength and weld inspection. Consultant shall ensure that all required sign-offs are reviewed and distributed and are in compliance with the specifications and the California Building Codes. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 5 Consultant shall list an allowance of $25,000 for this task. This allowance shall only be expended if authorized in advance, in writing, by the City’s Project Manager. Task 4: Allowance for Commissioning Agent Commissioning: A Commissioning Agent shall be under contract with and paid for by the Consultant. Consultant shall coordinate with the Contractor in scheduling all commissioning activities including but not limited to testing, trending, operation verification, etc. Consultant shall ensure that all required sign- offs are reviewed and distributed and are in compliance with the specifications and City requirements. Consultant shall list an allowance of $30,000 for this task. This allowance shall only be expended if authorized in advance, in writing, by the City’s Project Manager. Task 5: Post Construction Services Record Drawings and Close-Out: Within 60 calendar days after the “Notice of Completion to the Contractor”, Consultant shall: • Coordinate the preparation of record drawings with the Contractor and review these drawings for “as-built” accuracy • Ensure completion and delivery of all Contractor required close-out documentation including O&M manuals, record drawings, warranties, etc. • Consolidate all project files and documentation maintained by the CM to be retained by the City • Under the direction of the City’s Project Manager, work to resolve any contract claim issues (stop notices, bonding, delays, extra work etc.), that may arise • Consultant will set up and coordinate contractor-provided training of City staff as required by the contract documents and as necessary to ensure that the appropriate City personnel are adequately trained and familiar with the new and refurbished equipment • Consultant shall, as requested by the City’s Project Manager, respond to and coordinate with the Contractor or responsible party to repair and/or replace defective work items that are included in the project’s 1-year warranty period, which may extend to one year from the Notice of Completion. Post Construction and Warranty Services: Consultant shall meet with building occupants and Public Works staff monthly for three months commencing after the building is open to the public in order to complete any remaining punch-list items and/or to contact the Contractor for any warranty issues that might arise. After the initial three month period, Consultant shall contact the Staff quarterly for a period of nine months to determine whether any new systems issues have been identified. Systems deficiencies that cannot be resolved by the Contractor shall be reported to the Commissioning Agent, design staff and City. Commissioning Verification: Consultant shall participate in the post-construction activities of the Commissioning Agent as follows: Participate in an off-season testing (i.e., testing the heating system prior to winter) session and work with the Contractor to correct any deficiencies. Compile the final testing documentation for inclusion in the Commissioning Record and in the O&M manuals. 12 Month Warranty Follow Up: Consultant shall return to the site at month 10 of the 12 month warranty DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 6 period and review operating conditions with City facility staff and the Commissioning Agent in order to identify any outstanding issues related to the original and seasonal commissioning. The Commissioning Agent will interview facility staff and identify problems or concerns that they have with operating the building as originally intended. The Commissioning Agent will make suggestions for improvements and for recording these changes in the O&M manuals. The Commissioning Agent will identify areas that may come under warranty or under the original construction contract. The Consultant shall work with the Contractor to resolve any warranty issues. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 7 EXHIBIT B-1 SCHEDULE OF PERFORMANCE AMENDMENT NO. 2 The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-3 up to the not to exceed budget amount for each task set forth below. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, and the total compensation for Additional Services do not exceed the amounts set forth in Section 4 of Tasks Completion Task 1 - Construction Phase 1 Services • Construction Start Concurrent with Construction NTP • Community Center completion 388 days following NTP • Children’s Theater completion 388 days following NTP • Community Theater completion 388 days following NTP Task 2 - Photographic Recording on-going during construction Task 3 - Additional Testing on-going during construction Task 4 – Commissioning on-going during construction • Project Close-Out 30 days following NOC of construction contract Task 5 - Post-Construction Phase Services • Warranty Period 12 months following NOC of construction contract DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 8 EXHIBIT C-2 COMPENSATION AMENDMENT NO. 2 The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as Exhibit C-3 up to the not-to-exceed budget amount for each task set forth below. For subconsultants, such as inspectors, special inspectors, electronic document services, and photographic documentation services, the CITY agrees to compensate the CONSULTANT for services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the actual cost of the subconsultant, plus a fee of 5%, up to the not-to-exceed budget amount for each task set forth below. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, and the total compensation for Additional Services do not exceed the amounts set forth in Section 4 of this Agreement. TASKS NOT-TO-EXCEED AMOUNT Task 1 - Construction Phase Services $226,983 Task 2 - Photographic Recording $21,253 Task 3 - Allowance: Additional Testing $25,000 Task 4 -Allowance Commissioning $30,000 Task 5 - Post-Construction Phase Services $14,502 TOTAL BASIC SERVICES $317,738 Reimbursable Expenses $0 Additional Services (Not to Exceed) $31,774 Total Amendment No. 2: Not To Exceed Compensation: $349,512 REIMBURSABLE EXPENSES DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 9 The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $0 shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit C-3. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement Additional Services include, but are not limited to, attendence at Council and Commission meetings not originally intended in the scope of work and reimbursable expenses not included in the base fee. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 998 Park Avenue San Jose, CA 95126 P: 408.297.1881 | F: 408.294.3186 www.adcengineers.com REV015.216 EXHIBIT C-3 HOURLY RATE SCHEDULE AMENDMENT NO. 2 Item Discipline Billing Rate 0001 Project Manager $214.10 0002 CM Field Superintendent $149.75 0003 CM Project Engineer $108.07 0004 Senior Architect $156.83 0005 Architect‐Designer $108.07 0006 Senior Structural Engineer $154.46 0007 Structural Designer $108.07 0008 Senior Mechanical Engineer $131.43 0009 Mechanical Designer $102.23 0010 Senior Electrical Engineer $131.43 0011 Electrical Designer $102.23 0012 Fire Protection Engineer $128.51 0013 CADD $90.10 0014 Clerical $65.00 These hourly rates are based on personnel salaries, overhead, mark-up, and profit. DocuSign Envelope ID: A58194CB-9B95-4703-9BC2-DD2B03DDA0D9 City of Palo Alto (ID # 7065) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Metropolitan Planning Group On Call Amendment 3 Title: Approval of Amendment Number 3 to Contract Number C14153012 with Metropolitan Planning Group to add $440,000 For a Total Not-to- Exceed Amount of $940,000 for Support of Planning Review of Architectural Review Applications From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council authorize the City Manager or his designee to approve Amendment 3 to Contract C14153012 (Attachment A) with Metropolitan Planning Group (MPG) to increase the contract limit by $440,000 for a total amount not to exceed $940,000. Executive Summary The Planning and Community Environment Department (PCE) routinely uses consultants to secure specific expertise and to help when the number of applications received creates an unusual volume of work or staff vacancies are such that assistance is required. Metropolitan Planning Group has been providing these services and their contract will soon be exhausted if not amended. Background & Discussion PCE has historically maintained contracts with several consultants to provide various on-call planning services. The department relies on on-call service providers to work on special projects requiring particular areas of expertise or to address increases in workload. Following a competitive solicitation and selection process, Council approved five on-call environmental and four on-call planning consulting contracts in February, 2014 (Staff Report 4018). The on-call planning consultation contracts were with: Arnold Mammarella Architecture and Consulting; The Planning Center/DCE; Dudek; and, Metropolitan Planning Group. On-call planning consultants are used as project managers to manage applications for planning entitlements or as independent technical consultants. When consultant assistance is needed, consultants are chosen from the contracted group based upon their experience, specific City of Palo Alto Page 2 expertise, availability, and cost per activity or project. Although the contracts are for a period of three years, the department initially took a cautious approach, limiting contract capacity to modest amounts. This provided the department an opportunity to see which consultant would work best with workload needs without overextending the City’s contracts. The greatest need has been for the services of MPG, Mammarella Architecture and Consulting, and The Planning Center/DCE. As a result, the department cancelled two of its on-call environmental contracts and the on-call planning contract with Dudek and received Council approval to amend the remaining contracts (Staff Reports 5587 and 6013) to provide capacity through June 2016. Due to staff vacancies and heavy workload, the department continues to rely on these consultants and needs capacity to continue using the contract through its June 2017 expiration date. Generally, the department tries to avoid using on-call contracts for developer-reimbursed work, but due to time constraints, this contract was used to get several such projects started quickly. Although the costs will be recovered from developers, this use of the contract means it will be exhausted by the end of June unless amended. The remaining on-call contracts have been utilized more slowly. Staff will return to Council to request amendment of those contracts if needed as they get closer to exhaustion. Staff requests expansion of the MPG contract limit to provide sufficient contract capacity to allow continued use of MPG services until June 30, 2017 when this contract expires. Resource Impact Sufficient funding will be available within the Planning and Community Environment department’s Fiscal Year 2017 Adopted Operating Budget to fund the increase to the contract. At the current rate of utilization, amending the MPG contract to $940,000 will provide enough capacity to cover the department’s needs through June, 2017. The award of the contract would not occur until July 1 or shortly thereafter since funds from FY 2017 are being used to fund this amendment. Attachments:  Attachment13.a: Attachment A: Metropolitan Planning Group Contract C14153012 Amendment 3 (PDF) 1 of 4 Revision April 28, 2014 AMENDMENT NO. 3 TO CONTRACT NO. C14153012 BETWEEN THE CITY OF PALO ALTO AND METROPOLITAN PLANNING GROUP, INC. This Amendment No. 3 to Contract No. C14153012 (“Contract”) is entered into June 27, 2016, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and METROPOLITAN PLANNING GROUP, INC., a California corporation, located at 579 Clyde Avenue, Ste. 340, Mountain View, California, 94043, Telephone (650)938- 1111("CONSULTANT"). R E C I T A L S A. The Contract was entered into between the parties for the provision of planning and planning review on an on-call basis. B. City intends to increase compensation from $500,000.00 by $440,000.00 to $940,000.00 for continuation of services as specified in Exhibit “A” Scope of Services. C. The parties wish to amend the Contract. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 4 is hereby amended to read as follows: “SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, including both payment for professional services and reimbursable expenses, shall not exceed Nine Hundred Forty Thousand Dollars ($940,000.00). The applicable rates and schedule of payment are set out in Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit “A”. ” SECTION 2. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a.Exhibit “C” entitled “COMPENSATION”. b.Exhibit “C1” entitled “ HOURLY RATE SCHEDULE DocuSign Envelope ID: D992E829-4C35-4EEE-AC8D-7C94CD18C163 Attachment A 2 of 4 Revision April 28, 2014 SECTION 3. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO APPROVED AS TO FORM: METROPOLITAN PLANNING GROUP, INC. Attachments: EXHIBIT "C": COMPENSATION EXHIBIT “C1” HOURLY RATE SCHEDULE DocuSign Envelope ID: D992E829-4C35-4EEE-AC8D-7C94CD18C163 PRESIDENT 3 of 4 Revision April 28, 2014 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Services”) and reimbursable expenses shall not exceed $940,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. DocuSign Envelope ID: D992E829-4C35-4EEE-AC8D-7C94CD18C163 4 of 4 Revision April 28, 2014 EXHIBIT “C-1” HOURLY RATE SCHEDULE Principal $175 Principal Planner $155 Project Manager $135 Senior Urban Designer $130 Senior Planner $135 Environmental Planner $125 Urban Designer $110 Associate Planner $100 Assistant Planner $80 Planning Tech/Admin $60 DocuSign Envelope ID: D992E829-4C35-4EEE-AC8D-7C94CD18C163 City of Palo Alto (ID # 7063) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Amendment to Contracts with Renne Sloan Holtzman Sakai LLP for Labor Negotiation Services Title: Approval of Amendment Number 5 to Contract Number S13149754 to add $85,000 for a Total Amount Not-to-Exceed $421,000 and Amendment Number 3 to Contract Number S15155809 to add $45,000 for a Total Amount Not-to-Exceed $95,000 With Renne Sloan Holtzman Sakai LLP Public Law Group for Labor Negotiations Services and to Extend Both Contract Terms to June 30, 2017 From: City Manager Lead Department: Human Resources Recommendation Staff recommends that the Council approve an amendment extending and adding $85,000 to the existing contract S13149754 with Renne Sloan Holtzman Sakai LLP (RSHS) for labor negotiations consulting services for a total amount not to exceed $421,000 through June 30, 2017; and approve a contract amendment extending and adding $45,000 to the existing contract S15155809 with Renne Sloan Holtzman Sakai LLP for contract for labor negotiations consulting services with Utilities Management Professional Association of Palo Alto (UMPAPA) for a total amount not to exceed $95,000 through June 30, 2017. Background Since 2013, the City has engaging in collective bargaining with 7 different labors groups and on 8 different occasions, as a result of which 6 labor contracts were ratified and approved by Council. To fulfill the City’s duty to bargain in good faith, various factors are taken into consideration when proposals are made and accepted. To make the most informed decision and to determine market conditions and trends, the City incorporates, with mindful consideration to the fiscal implications on the City’s approximate $100 million salary and $22 million Benefit funds, a collaborative approach with Renee Sloan Holtzman Sakai LLP in aspects of strategic planning, negotiating, conducting comprehensive classification data surveys and market research. City of Palo Alto Page 2 Such approach has proven to be successful in reaching agreements with three of the City’s larger labor groups: Service Employees International Union, Palo Alto Peace Officers Association and International Association of Fire Fighters 1319. The City is currently bargaining with two labor groups: Fire Chiefs Association (FCA) and Utilities Managers and Professionals Association of Palo Alto (UMPAPA.) With added resources, the City will continue its efforts to successfully negotiate labor agreements with the goal of reaching agreements with all 7 Palo Alto employee groups through 2018. Discussion On November 30, 2015 Council approved amendments to contracts S13149754 and S15155809 with Renne Sloan Holtzman Sakai LLP. Staff Report 6366 (attached) provides further background and contract history with the firm. Contract negotiations have been complex and the duty to bargain in good faith can result in extended timelines to complete the bargaining process. Human Resources did not anticipate that the negotiations with the City’s employee groups would be so lengthy, however, since November 30, 2015 the City has successfully completed negotiations with 4 labor groups: Palo Alto Police Manager’s Association (PAPMA,) Palo Alto Peace Officers Association (PAPOA,) International Association of Fire Fighters (IAFF) and Service Employees International Union (SEIU.) Negotiations with PAPMA, PAPOA, IAFF and SEIU are complete but the City is still actively negotiating with FCA and UMPAPA requiring amendment to contracts and the request for additional funding. During the course of bargaining, the City found it pertinent to review all available resources to successfully reach an agreement. Therefore necessary measures of extensive classification studies, labor strategy meetings and negotiating sessions occurred more often than anticipated. Resource Impact Funding for contract S13149754 is budgeted in the Human Resources Department General Fund. $40,000 of the $85,000 amendment is funded in Fiscal Year 2016. The remaining $45,000 will be funded from Fiscal Year 2017. Funding for contract S15155809 is budgeted from existing funds within the Utilities Department’s various enterprise funds. The $45,000 will come from Fiscal Year 2016 funds. Environmental Review Approval of the recommended contract amendments is not a project under the California Environmental Quality Act (CEQA) and therefore no environmental review is required. Attachments:  Attachment14.a: Attachment A: Contract S13149754 Amendment No. 5 (PDF)  Attachment14.b: Attachment B: Contract S15155809 Amendment No. 3 (PDF)  Attachment14.c: Attachment C: Staff Report 6366 (PDF) 1 of 3 Revision July 25, 2012 AMENDMENT NO. 5 TO CONTRACT NO. S13149754 BETWEEN THE CITY OF PALO ALTO AND RENNE SLOAN HOLTZMAN SAKAI, LLP This Amendment No. 5 to Contract No. S13149754 (“Contract”) is entered into June 27, 2016 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and RENNE SLOAN HOLTZMAN SAKAI, LLP, a California Limited Liability Partnership, located at 350 Sansome Street, Suite 300, San Francisco, California, 94104, Telephone (415) 678-3800 (“CONSULTANT”). R E C I T A L S: WHEREAS, the Contract was entered into between the parties for the provision of labor negotiation services between CITY and labor unions; and WHEREAS, CITY intends to extend the term and increase the compensation From $336,000.00 by $85,000.00 to $421,000.00 for continuation of services as specified in Exhibit “A” Scope of Services; and WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 2 is hereby amended to read as follows: “SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 30, 2017 unless terminated earlier pursuant to Section 19 of this Agreement.” SECTION 2. Section 4 is hereby amended to read as follows: “SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, including both payment for professional services and reimbursable expenses, shall not exceed Four Hundred Twenty One Thousand Dollars ($421,000.00). The applicable rates and schedule of payment are set out in Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit “A”.” DocuSign Envelope ID: 0EA0B0B8-A5A2-46FA-A891-4387F80177B4 2 of 3 Revision July 25, 2012 SECTION 3. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a. Exhibit “C” entitled “COMPENSATION”. SECTION 4. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO APPROVED AS TO FORM: RENNE SLOAN HOLTZMAN SAKAI, LLP Attachments: EXHIBIT "C": COMPENSATION DocuSign Envelope ID: 0EA0B0B8-A5A2-46FA-A891-4387F80177B4 Managing Partner 3 of 3 Revision July 25, 2012 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Scope of Services”) and reimbursable expenses shall not exceed $421,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: None ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. DocuSign Envelope ID: 0EA0B0B8-A5A2-46FA-A891-4387F80177B4 Certificate Of Completion Envelope Id: 0EA0B0B8A5A246FAA8914387F80177B4 Status: Completed Subject: Please DocuSign this document: S13149754 CONTRACT AMENDMENT 5.pdf Source Envelope: Document Pages: 3 Signatures: 1 Envelope Originator: Certificate Pages: 1 Initials: 0 Christopher Anastole AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) 250 Hamilton Ave Palo Alto , CA 94301 chris.anastole@cityofpaloalto.org IP Address: 199.33.32.254 Record Tracking Status: Original 6/6/2016 10:06:03 AM Holder: Christopher Anastole chris.anastole@cityofpaloalto.org Location: DocuSign Signer Events Signature Timestamp Charles Sakai csakai@publiclawgroup.com Managing Partner Security Level: Email, Account Authentication (None)Using IP Address: 69.170.11.34 Sent: 6/6/2016 10:09:11 AM Viewed: 6/6/2016 10:11:53 AM Signed: 6/6/2016 10:12:37 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Khashayar Alaee Khashayar.Alaee@CityofPaloAlto.org Sr. Management Analyst City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 6/6/2016 10:12:38 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Notary Events Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 6/6/2016 10:12:38 AM Certified Delivered Security Checked 6/6/2016 10:12:38 AM Signing Complete Security Checked 6/6/2016 10:12:38 AM Completed Security Checked 6/6/2016 10:12:38 AM Professional Services Rev. Feb. 2014 1 AMENDMENT NO. 3 TO CONTRACT NO. S15155809 BETWEEN THE CITY OF PALO ALTO AND RENNE SLOAN HOLTZMAN SAKAI, LLP This Amendment No. 3 to Contract No. S15155809 (“Contract”) is entered into 27th day of June, 2016, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and RENNE SLOAN HOLTZMAN SAKAI, LLP, a California Limited Liability Partnership, located at 350 Sansome Street, Suite 300, San Francisco, California, 94104, Telephone (415) 678-3800 (“CONSULTANT”). R E C I T A L S A. The Contract was entered into between the parties for the provision of labor consulting services for the Utilities Management and Professional Association (“UMPAPA”). B. CITY intends to extend the term and increase the compensation from $50,000.00 by $45,000.00 to $95,000.00 for continuation of services per EXHIBIT “A” Scope of Services. C. The parties wish to amend the Contract. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 2 is hereby amended to read as follows: “SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 30, 2017 unless terminated earlier pursuant to Section 19 of this Agreement.” SECTION 2. Section 4 is hereby amended to read as follows: “SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, including both payment for professional services and reimbursable expenses, shall not exceed Ninety Five Thousand Dollars ($95,000.00). The applicable rates and schedule of payment are set out in Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit “A”.” SECTION 3. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: DocuSign Envelope ID: 9EF7707A-FE30-4DCC-911A-0D8FB334961B Professional Services Rev. Feb. 2014 2 a. Exhibit “C” entitled “COMPENSATION”. SECTION 4. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO APPROVED AS TO FORM: RENNE SLOAN HOLTZMAN SAKAI, LLP Attachments: EXHIBIT "C": COMPENSATION DocuSign Envelope ID: 9EF7707A-FE30-4DCC-911A-0D8FB334961B Managing Partner Professional Services Rev. Feb. 2014 3 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Services”) and reimbursable expenses shall not exceed $95,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: None All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $0.00 shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. DocuSign Envelope ID: 9EF7707A-FE30-4DCC-911A-0D8FB334961B Certificate Of Completion Envelope Id: 9EF7707AFE304DCC911A0D8FB334961B Status: Completed Subject: Please DocuSign this document: S15155809 AMENDMENT No 3.pdf Source Envelope: Document Pages: 3 Signatures: 1 Envelope Originator: Certificate Pages: 2 Initials: 0 Christopher Anastole AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) 250 Hamilton Ave Palo Alto , CA 94301 chris.anastole@cityofpaloalto.org IP Address: 199.33.32.254 Record Tracking Status: Original 6/2/2016 2:21:56 PM Holder: Christopher Anastole chris.anastole@cityofpaloalto.org Location: DocuSign Signer Events Signature Timestamp Charles Sakai csakai@publiclawgroup.com Managing Partner Security Level: Email, Account Authentication (None)Using IP Address: 75.101.52.53 Sent: 6/2/2016 2:25:45 PM Viewed: 6/3/2016 10:24:33 AM Signed: 6/3/2016 10:26:16 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Frank Lee Frank.Lee@CityofPaloAlto.org Senior Human Resources Administrator City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 6/2/2016 2:25:45 PM Viewed: 6/2/2016 2:39:16 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Khashayar Alaee Khashayar.Alaee@CityofPaloAlto.org Sr. Management Analyst City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 6/2/2016 2:25:45 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Carbon Copy Events Status Timestamp Khashayar Alaee Khashayar.Alaee@CityofPaloAlto.org Sr. Management Analyst City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 6/3/2016 10:26:16 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Notary Events Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 6/3/2016 10:26:16 AM Certified Delivered Security Checked 6/3/2016 10:26:16 AM Signing Complete Security Checked 6/3/2016 10:26:16 AM Completed Security Checked 6/3/2016 10:26:16 AM City of Palo Alto (ID # 6366) City Council Staff Report Report Type: Consent Calendar Meeting Date: 11/30/2015 City of Palo Alto Page 1 Summary Title: Amendment to Contract S13149754 with Renne Sloan Hotlzman Sakai LLP Title: Approval of Amendment Number Four to Contract Number S13149754 to Add $120,000 for a Total Amount Not to Exceed $336,000 and Amendment Number Two to Contract Number S15155809 to Add $25,000 for a Total Amount Not to Exceed $50,000 with Renne Sloan Holtzman Sakai LLP Public Law Group for Labor Negotiations Services and to Extend both Contract Terms to June 30, 2016 From: City Manager Lead Department: Human Resources Recommendation Staff recommends that the Council approve an amendment adding $120,000 to the existing contract S13149754 with Renne Sloan Holtzman Sakai LLP for labor negotiations consulting services with the Service Employees’ International Union (SEIU) and the public safety groups, International Association of Fire Fighters, Local 1319 (IAFF) and Palo Alto Police Officer’s Association (PAPOA) for a total amount not to exceed $336,000 through June 30, 2016; and approve a contract amendment adding $25,000 to the existing contract S15155809 with Renne Sloan Holtzman Sakai LLP for contract for labor negotiations consulting services with Utilities Management Professional Association of Palo Alto (UMPAPA), for a total amount not to exceed $50,000 through June 30, 2016. Background In April 2013, the City entered into an agreement with Renne Sloan Holtzman Sakai LLP (RSHS) to provide labor negotiation services for a focused bargaining process with the Palo Alto Police Managers’ Association (PMA) for $30,000 through December 31, 2014. Following a successful process with PMA, the City amended the contract in August 2013 through June 30, 2014 for RSHS to provide labor strategy and bargaining services for the City’s 2013-2014 negotiations with SEIU for $60,000. In May 2014, the contract with RSHS was amended a second time for additional bargaining support in the City’s negotiations with the two public safety labor groups, IAFF and PAPOA for $90,000. In June 2015, the City Council approved an additional amendment City of Palo Alto Page 2 by adding $36,000 and extending the contract through December 2015 for ongoing labor negotiations with the IAFF and PAPOA. In addition to negotiations with SEIU, PAPOA and IAFF, in August 2014, under the City Manager’s authority level, entered into a specific contract with RSHS to provide labor negotiations services for UMPAPA in the amount of $25,000. Discussion Negotiations with SEIU, UMPAPA, IAFF and PAPOA continue with the utilization of RSHS. Given RSHS’s previous negotiations and their effective and practical labor strategy advice, continuing the City’s contracts will provide important continuity in the bargaining process. RSHS is familiar with labor issues in the City and the issues on the bargaining table with Palo Alto’s labor groups. Resource Impact Costs associated with contract S13149754, for negotiations with SEIU and public safety are estimated to equal $120,000 ($60,000 for SEIU and $60,000 for both public safety groups). Amending the current contract will increase the total not to exceed to $336,000. No additional funding is need at this time, as the funding is budgeted in the Human Resources Department General Fund and Human Resources Contingency allocations. However, should the negotiation process of with any bargaining unit reach the mediation or fact finding stages, staff may have to return with additional contract amendments and funding requests to the City Council. Contract S15155809 with RSHS for Utilities Management Professional Association negotiations will also be increased. The current not to exceed amount for this contract is $25,000. Staff recommends an additional $25,000 for a new not to exceed amount of $50,000. No additional funding is needed, as this contract will be funded from existing funds within the Utilities Department’s various enterprise funds. Attachments:  Attachment A: S13149754 Contract Amendment No. 4 (PDF)  Attachment B: S15155809 Contract Amendment No. 2 (PDF) City of Palo Alto (ID # 7056) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Three Year Contract for Tree Pruning and Removal Services Title: Approval of a Contract with West Coast Arborists, Inc., in an Amount Not-to-Exceed $3,680,960 for Three Years for Tree Pruning and Removal Services on a Ten-year Maintenance Cycle From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to execute the attached three-year contract with West Coast Arborists Inc. (Attachment A) in an amount not to exceed $3,680,960 for tree pruning and removal services on a ten-year maintenance cycle. Background The City has contracted tree pruning and removal services since 2000, providing a proactive cycle of basic tree maintenance for designated areas in the City. Area contracts allow City tree maintenance personnel to respond to varied work tasks including tree removals, plantings and pruning requests in areas outside the contract maintenance area. The most recent tree removal and pruning contract, initiated in 2013, was awarded to West Coast Arborists Inc. (CMR #3252) as a one-year contract with two one-year mutual renewal options to perform tree maintenance for approximately 5,054 trees along street corridors within the City’s limits. The following amendments were executed to extend the contract term and/or add funding:  Amendment No. 1 corrected the original contract agreement termination date of June 30, 2015 to January 13, 2016; City of Palo Alto Page 2  Amendment No. 2 (CMR #5270) added $182,410 and extended the term of the contract to March 14, 2016 to address backlogged pruning work orders, the increase in drought-related work orders and to provide staff more time to complete the Request for Quotations process for a replacement contract;  Amendment No. 3 extended the contract term to June 30, 2016 to bridge the gap between the contract expiration and the expected City Council approval of a new contract; and  Amendment No. 4 added $117,000 to provide additional funding so that tree pruning and removal services could continue until the June 30, 2016 expiration date, thereby increasing the not-to-exceed amount for the three-year contract from $1,050,000 to $1,349,410. A Request for Quotation (RFQ) for Tree Pruning and Removal Services developed in 2015 added 22% more trees, increasing from 5,050 in the previous contract to 6,150 due to the Urban Forest Master Plan directive to maintain trees throughout City parks, open space, golf course, facilities and other green space areas, historically pruned on a reactionary basis. Also added was an increase of 300 stump sites due to the absorption of a stand-alone stump grinding contract and an increase in the number of tree removals due to increased mortality from the cumulative effects of drought. Owing to the unexpectedly high bids received from contractors, staff chose to align the contract award with the new fiscal budget year. During budget hearings on May 19, 2016, staff addressed Finance Committee’s questions related to the higher than expected contract bids and need for additional budget, specifically the ramifications of adding parks and open space trees to the scope of services and cost savings associated with extending the maintenance cycles from seven to ten or fifteen years. Discussion Summary of Bid Process On December 30, 2015, an RFQ for three years of Tree Pruning and Removal Services was posted on the City’s website and sent to seven arboricultural companies. The bidding period was 29 days. A pre-bid meeting was held January 13, 2016. Bids were received from two qualified contractors on January 28 as listed in the bid summary (Attachment B). City of Palo Alto Page 3 Summary of Bid Process Bid Name/Number Tree Pruning and Removal Services/RFQ 162020 Proposed Length of Project 3 years Total Days to Respond to Bid 29 Bids Due January 28, 2016 Pre-Bid Meeting Yes Number of Company Attendees at Pre-Bid Meeting 4 Number of Bids Received 2 Bid Price Range From a low of $4,702,450 to a high of $13,462,985 Bids ranged from $4,702,450 to $13,462,985. The quantities given in the bid schedule were based on an average amount of work that might be expected in a twelve-month period and only given as a basis for comparison of bids with no guarantee the actual amount or proportion of work would correspond therewith. Staff expected more contractors to submit competitive bids, however post-bid closing phone interviews revealed they declined to bid due to inadequate crews and equipment resources, overtime hours and workload from the catastrophic fire season, backlogs in work due to drought and El Nino response, and inability to compete with West Coast Arborists’ rates. Staff reviewed all bids submitted and recommends West Coast Arborists Inc. be declared the lowest responsible bidder. West Coast Arborists’ rates for tree pruning, removal services and specialty equipment are comparable to those of several Bay Area municipalities, including San Mateo, Redwood City, Mountain View, Menlo Park, El Cerrito, Santa Clara, Orinda and Sacramento and within current market rates. Staff confirmed with the Contractor’s State License Board that West Coast Arborists Inc. has an active license on file. West Coast Arborists has performed satisfactory work for the City on a similar multi-year contract from 2013 - 2016 for tree pruning and removal services. City of Palo Alto Page 4 Results from the lowest, responsible bidder indicate a significant increase for services compared to the prior contract. Cost increases are attributed, but not limited to an increase in project scope, an increase in demand rates and removal work due to drought, and changes in labor agreements and prevailing wage requirements. Nonetheless, staff was tasked with exploring cost reduction alternatives with the fewest negative consequences and thereby presented exectutive leadership with cost analyses on expanded maintenance cycles of ten and fifteen years. In turn those analyses were shared with Finance Committee during budget hearings on May 19, 2016. The current cycle maintenace is calculated to ensure every street, park, open space and facility tree is pruned once every seven years. The cost breakdown of all three cycle maintenance options is outlined in Attachment D. Finance Committee tentatively approved and recommends to Council the increase in budget to accommodate a ten-year tree maintenance cycle. Staff concurs. Anything longer poses an unacceptable amount of risk and may lead to increased liabilites due to hazardous tree situations; increased service request calls and response time to customers resulting in a backlog of work and complaints, as well as a possibility of lower citizen ratings in annual performance surveys; and/or more aggressive pruning of trees in one maintenance cycle, resulting in a potential decline in tree health, decreased longevity and increase in wood waste generated. There are six Maintenance Areas in the City. With this contract in place, the first year objective will be routine pruning for clearance and safety of street trees in Maintenance Area 2, with subsequent years focusing on Maintenance Areas 3 and 4 (Attachment C). On-demand services will not be diminished should emergency or priority situations arise in other areas of the city. Tree maintenance operations will be conducted in accordance with current standards as established by the American National Standard Institute ANSI A300 Tree, Shrub and other Woody Plant Maintenance – Standard Practices; ANSI Z133 Safety Requirements for Arboricultural Operations; and standards as defined in “Best Management Practices” publications. Each contract crew will be led by an International Society of Arboriculture (ISA) Certified Tree Worker and all crews will be supervised by an ISA Certified Arborist. City of Palo Alto Page 5 The term of the contract will be up to three years. Staff has found multi-year contracts to be advantageous as they allow a contractor to amortize major equipment purchases, retain highly qualified workers and provide lower bid prices for work. The average annual cost for each year of this 3-year contract is $1,226,986.66 compared to approximately $450,000 in the previous contract. The bid establishes the unit and hourly rates for each type of work, along with a contingency for emergency services. Extending the maintenance cycle from seven to ten years results in 4,308 trees being pruned per year, a total three-year bid of $3,680,960 and total contract savings of $1,021,490. Due to the negative implications of defering tree maintenance and the strong correlation between a healthy, well-maintained tree population and municipal revenue sources, staff concurs with Finance Committee in recommending a 10- year maintenenace cycle as part of this three-year contract with West Coast Aborists Inc. for tree pruning and removal services. Resource Impact Funds for this contract are available in the FY 2017 and subsequent years’ Public Works general fund operating budgets. Policy Implications This recommendation fulfills policy outlined in the Urban Forest Master Plan to perform tree management and maintenance in parks and open spaces and to transfer responsibility from Community Services Department, Parks Division to Public Works Department, Public Services Division. Environmental Review The recommended action is exempt from review under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301(h) (maintenance of existing landscape). Attachments:  Attachment A - Contract (PDF)  Attachment B - Bid Summary (PDF)  Attachment C - City Map Areas (PDF)  Attachment D - Cycle Maintenance Pruning Options 7-10-15 (PDF) 1 City of Palo Alto General Services Agreement Rev. April 27, 2016 CITY OF PALO ALTO CONTRACT NO. C17162020 GENERAL SERVICES AGREEMENT THIS AGREEMENT made and entered into on the 27th day of June, 2016, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and WEST COAST ARBORIST, INC a California corporation, located at 2200 E. Via Burton, Anaheim, CA 92806 , Telephone Number: 714-991-1900 (“CONTRACTOR”). In consideration of their mutual covenants, the parties hereto agree as follows: 1. SERVICES. CONTRACTOR shall provide or furnish the services (the “Services”) described in the Scope of Services, attached at Exhibit A. 2. EXHIBITS. The following exhibits are attached to and made a part of this Agreement: “A” - Scope of Services “A-1” –Area Map “A-2” Map Zones “B” - Schedule of Performance “C” – Schedule of Fees “D” - Insurance Requirements CONTRACT IS NOT COMPLETE UNLESS ALL INDICATED EXHIBITS ARE ATTACHED. 3. TERM. The term of this Agreement is from July 1, 2016 to June 30, 2019 inclusive, subject to the provisions of Sections Q and V of the General Terms and Conditions. 4. SCHEDULE OF PERFORMANCE. CONTRACTOR shall complete the Services within the term of this Agreement in a reasonably prompt and timely manner based upon the circumstances and direction communicated to CONTRACTOR, and if applicable, in accordance with the schedule set forth in the Schedule of Performance, attached at Exhibit B. Time is of the essence in this Agreement. 5. COMPENSATION FOR ORIGINAL TERM. CITY shall pay and CONTRACTOR agrees to accept as not-to-exceed compensation for the full performance of the Services and reimbursable expenses, if any: The total maximum lump sum compensation of dollars ($ ); DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 2 City of Palo Alto General Services Agreement Rev. April 27, 2016 OR The sum of dollars ($ ) per hour, not to exceed a total maximum compensation amount of dollars ($ ); OR A sum calculated in accordance with the fee schedule set forth at Exhibit C, not to exceed a total maximum compensation amount of Three Million Six Hundred Eighty Thousand Nine Hundred Sixty dollars ($3,680,960.00). CONTRACTOR agrees that it can perform the Services for an amount not to exceed the total maximum compensation set forth above. Any hours worked or services performed by CONTRACTOR for which payment would result in a total exceeding the maximum amount of compensation set forth above for performance of the Services shall be at no cost to CITY. CITY has set aside the sum of dollars ($ ) for Additional Services. CONTRACTOR shall provide Additional Services only by advanced, written authorization from the City Manager or designee. CONTRACTOR, at the CITY’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONTRACTOR’s proposed maximum compensation, including reimbursable expense, for such services. Compensation shall be based on the hourly rates set forth above or in Exhibit C (whichever is applicable), or if such rates are not applicable, a negotiated lump sum. CITY shall not authorize and CONTRACTOR shall not perform any Additional Services for which payment would exceed the amount set forth above for Additional Services. Payment for Additional Services is subject to all requirements and restrictions in this Agreement. 6. COMPENSATION DURING ADDITIONAL TERMS. CONTRACTOR’S compensation rates for each additional term shall be the same as the original term; OR CONTRACTOR’s compensation rates shall be adjusted effective on the commencement of each Additional Term. The lump sum compensation amount, hourly rates, or fees, whichever is applicable as set forth in section 5 above, shall be adjusted by a percentage equal to the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco-Oakland- San Jose area, published by the United States Department of Labor Statistics (CPI) which is published most immediately preceding the commencement of the applicable Additional Term, which shall be compared with the CPI published most immediately DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 3 City of Palo Alto General Services Agreement Rev. April 27, 2016 preceding the commencement date of the then expiring term. Notwithstanding the foregoing, in no event shall CONTRACTOR’s compensation rates be increased by an amount exceeding five percent of the rates effective during the immediately preceding term. Any adjustment to CONTRACTOR’s compensation rates shall be reflected in a written amendment to this Agreement. 7. INVOICING. Send all invoices to CITY, Attention: Project Manager. The Project Manager is: Courtney Schumm, Dept.: Public Works, Telephone: (650) 496-6946. Invoices shall be submitted in arrears for Services performed. Invoices shall not be submitted more frequently than monthly. Invoices shall provide a detailed statement of Services performed during the invoice period and are subject to verification by CITY. CITY shall pay the undisputed amount of invoices within 30 days of receipt. GENERAL TERMS AND CONDITIONS A. ACCEPTANCE. CONTRACTOR accepts and agrees to all terms and conditions of this Agreement. This Agreement includes and is limited to the terms and conditions set forth in sections 1 through 7 above, these general terms and conditions and the attached exhibits. B. QUALIFICATIONS. CONTRACTOR represents and warrants that it has the expertise and qualifications to complete the services described in Section 1 of this Agreement, entitled “SERVICES,” and that every individual charged with the performance of the services under this Agreement has sufficient skill and experience and is duly licensed or certified, to the extent such licensing or certification is required by law, to perform the Services. CITY expressly relies on CONTRACTOR’s representations regarding its skills, knowledge, and certifications. CONTRACTOR shall perform all work in accordance with generally accepted business practices and performance standards of the industry, including all federal, state, and local operation and safety regulations. C. INDEPENDENT CONTRACTOR. It is understood and agreed that in the performance of this Agreement, CONTRACTOR and any person employed by CONTRACTOR shall at all times be considered an independent CONTRACTOR and not an agent or employee of CITY. CONTRACTOR shall be responsible for employing or engaging all persons necessary to complete the work required under this Agreement. D. SUBCONTRACTORS. CONTRACTOR may not use subcontractors to perform any Services under this Agreement unless CONTRACTOR obtains prior written consent of CITY. CONTRACTOR shall be solely responsible for directing the work of approved subcontractors and for any compensation due to subcontractors. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 4 City of Palo Alto General Services Agreement Rev. April 27, 2016 E. TAXES AND CHARGES. CONTRACTOR shall be responsible for payment of all taxes, fees, contributions or charges applicable to the conduct of CONTRACTOR’s business. F. COMPLIANCE WITH LAWS. CONTRACTOR shall in the performance of the Services comply with all applicable federal, state and local laws, ordinances, regulations, and orders. G. PALO ALTO MINIMUM WAGE ORDINANCE. CONTRACTOR shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONTRACTOR shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONTRACTOR shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. H. DAMAGE TO PUBLIC OR PRIVATE PROPERTY. CONTRACTOR shall, at its sole expense, repair in kind, or as the City Manager or designee shall direct, any damage to public or private property that occurs in connection with CONTRACTOR’s performance of the Services. CITY may decline to approve and may withhold payment in whole or in part to such extent as may be necessary to protect CITY from loss because of defective work not remedied or other damage to the CITY occurring in connection with CONTRACTOR’s performance of the Services. CITY shall submit written documentation in support of such withholding upon CONTRACTOR’s request. When the grounds described above are removed, payment shall be made for amounts withheld because of them. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 5 City of Palo Alto General Services Agreement Rev. April 27, 2016 I. WARRANTIES. CONTRACTOR expressly warrants that all services provided under this Agreement shall be performed in a professional and workmanlike manner in accordance with generally accepted business practices and performance standards of the industry and the requirements of this Agreement. CONTRACTOR expressly warrants that all materials, goods and equipment provided by CONTRACTOR under this Agreement shall be fit for the particular purpose intended, shall be free from defects, and shall conform to the requirements of this Agreement. CONTRACTOR agrees to promptly replace or correct any material or service not in compliance with these warranties, including incomplete, inaccurate, or defective material or service, at no further cost to CITY. The warranties set forth in this section shall be in effect for a period of one year from completion of the Services and shall survive the completion of the Services or termination of this Agreement. J. MONITORING OF SERVICES. CITY may monitor the Services performed under this Agreement to determine whether CONTRACTOR’s work is completed in a satisfactory manner and complies with the provisions of this Agreement. K. CITY’S PROPERTY. Any reports, information, data or other material (including copyright interests) developed, collected, assembled, prepared, or caused to be prepared under this Agreement will become the property of CITY without restriction or limitation upon their use and will not be made available to any individual or organization by CONTRACTOR or its subcontractors, if any, without the prior written approval of the City Manager. L. AUDITS. CONTRACTOR agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for three (3) years from the date of final payment, CONTRACTOR’s records pertaining to matters covered by this Agreement. CONTRACTOR agrees to maintain accurate books and records in accordance with generally accepted accounting principles for at least three (3) following the terms of this Agreement. M. NO IMPLIED WAIVER. No payment, partial payment, acceptance, or partial acceptance by CITY shall operate as a waiver on the part of CITY of any of its rights under this Agreement. N. INSURANCE. CONTRACTOR, at its sole cost, shall purchase and maintain in full force during the term of this Agreement, the insurance coverage described at Exhibit D. Insurance must be provided by companies with a Best’s Key Rating of A-:VII or higher and which are otherwise acceptable to CITY’s Risk Manager. The Risk Manager must approve deductibles and self-insured retentions. In addition, all policies, endorsements, certificates and/or binders are subject to approval by the Risk Manager as to form and content. CONTRACTOR shall obtain a policy DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 6 City of Palo Alto General Services Agreement Rev. April 27, 2016 endorsement naming the City of Palo Alto as an additional insured under any general liability or automobile policy. CONTRACTOR shall obtain an endorsement stating that the insurance is primary coverage and will not be canceled or materially reduced in coverage or limits until after providing 30 days prior written notice of the cancellation or modification to the Risk Manager. CONTRACTOR shall provide certificates of such policies or other evidence of coverage satisfactory to the Risk Manager, together with the required endorsements and evidence of payment of premiums, to CITY concurrently with the execution of this Agreement and shall throughout the term of this Agreement provide current certificates evidencing the required insurance coverages and endorsements to the Risk Manager. CONTRACTOR shall include all subcontractors as insured under its policies or shall obtain and provide to CITY separate certificates and endorsements for each subcontractor that meet all the requirements of this section. The procuring of such required policies of insurance shall not operate to limit CONTRACTOR’s liability or obligation to indemnify CITY under this Agreement. O. HOLD HARMLESS. To the fullest extent permitted by law and without limitation by the provisions of section M relating to insurance, CONTRACTOR shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents from and against any and all demands, claims, injuries, losses, or liabilities of any nature, including death or injury to any person, property damage or any other loss and including without limitation all damages, penalties, fines and judgments, associated investigation and administrative expenses and defense costs, including, but not limited to reasonable attorney’s fees, courts costs and costs of alternative dispute resolution), arising out of, or resulting in any way from or in connection with the performance of this Agreement. CONTRACTOR’s obligations under this Section apply regardless of whether or not a liability is caused or contributed to by any negligent (passive or active) act or omission of CITY, except that CONTRACTOR shall not be obligated to indemnify for liability arising from the sole negligence or willful misconduct of CITY. The acceptance of the Services by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section survive the completion of the Services or termination of this Agreement. P. NON-DISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONTRACTOR certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONTRACTOR acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 7 City of Palo Alto General Services Agreement Rev. April 27, 2016 agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. Q. WORKERS' COMPENSATION. CONTRACTOR, by executing this Agreement, certifies that it is aware of the provisions of the Labor Code of the State of California which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that Code, and certifies that it will comply with such provisions, as applicable, before commencing and during the performance of the Services. R. TERMINATION. The City Manager may terminate this Agreement without cause by giving ten (10) days’ prior written notice thereof to CONTRACTOR. If CONTRACTOR fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided by law, the City Manager may terminate this Agreement immediately upon written notice of termination. Upon receipt of such notice of termination, CONTRACTOR shall immediately discontinue performance. CITY shall pay CONTRACTOR for services satisfactorily performed up to the effective date of termination. If the termination if for cause, CITY may deduct from such payment the amount of actual damage, if any, sustained by CITY due to CONTRACTOR’s failure to perform its material obligations under this Agreement. Upon termination, CONTRACTOR shall immediately deliver to the City Manager any and all copies of studies, sketches, drawings, computations, and other material or products, whether or not completed, prepared by CONTRACTOR or given to CONTRACTOR, in connection with this Agreement. Such materials shall become the property of CITY. S. ASSIGNMENTS/CHANGES. This Agreement binds the parties and their successors and assigns to all covenants of this Agreement. This Agreement shall not be assigned or transferred without the prior written consent of CITY. No amendments, changes or variations of any kind are authorized without the written consent of CITY. T. CONFLICT OF INTEREST. In accepting this Agreement, CONTRACTOR covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of this Contract. CONTRACTOR further covenants that, in the performance of this Contract, it will not employ any person having such an interest. CONTRACTOR certifies that no CITY Officer, employee, or authorized representative has any financial interest in the business of CONTRACTOR and that no person associated with CONTRACTOR has any interest, direct or indirect, which could conflict with the faithful performance of this Contract. CONTRACTOR agrees to advise CITY if any conflict arises. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 8 City of Palo Alto General Services Agreement Rev. April 27, 2016 U. GOVERNING LAW. This contract shall be governed and interpreted by the laws of the State of California. V. ENTIRE AGREEMENT. This Agreement, including all exhibits, represents the entire agreement between the parties with respect to the services that may be the subject of this Agreement. Any variance in the exhibits does not affect the validity of the Agreement and the Agreement itself controls over any conflicting provisions in the exhibits. This Agreement supersedes all prior agreements, representations, statements, negotiations and undertakings whether oral or written. W. NON-APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Contract are no longer available. This Section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Contract. X. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONTRACTOR shall comply with CITY’s Environmentally Preferred Purchasing policies which are available at CITY’s Purchasing Division, which are incorporated by reference and may be amended from time to time. CONTRACTOR shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, CONTRACTOR shall comply with the following zero waste requirements: • All printed materials provided by CONTRACTOR to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double- sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post-consumer material and printed with vegetable based inks. • Goods purchased by Contractor on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including, but not limited to, Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Division’s office. • Reusable/returnable pallets shall be taken back by CONTRCATOR, at no DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 9 City of Palo Alto General Services Agreement Rev. April 27, 2016 additional cost to CITY, for reuse or recycling. CONTRACTOR shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. Y. AUTHORITY. The individual(s) executing this Agreement on behalf of the parties represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. Z. PREVAILING WAGES This Project is not subject to prevailing wages. Contractor is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7, if the contract is not a public works contract, if contract does not include a public works construction project of more than $25,000, or the contract does not include a public works alteration, demolition, repair, or maintenance (collectively, ‘improvement’) project of more than $15,000. OR Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the Purchasing Division’s office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. AA. DIR REGISTRATION. In regard to any public work construction, alteration, demolition, repair or maintenance work, CITY will not accept a bid proposal from or enter into this Agreement with CONTRACTOR without proof that CONTRACTOR and its listed subcontractors are registered with the California Department of Industrial Relations (“DIR”) to perform public work, subject to limited exceptions. City requires CONTRACTOR and its listed subcontractors to comply with the requirements of SB 854. CITY provides notice to CONTRACTOR of the requirements of California Labor Code section 1771.1(a), which reads: DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 10 City of Palo Alto General Services Agreement Rev. April 27, 2016 “A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.” CITY gives notice to CONTRACTOR and its listed subcontractors that CONTRCATOR is required to post all job site notices prescribed by law or regulation and CONTRACTOR is subject to SB 854-compliance monitoring and enforcement by DIR. CITY requires CONTRACTOR and its listed subcontractors to comply with the requirements of Labor Code section 1776, including: Keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by, respectively, CONTRACTOR and its listed subcontractors, in connection with the Project. The payroll records shall be verified as true and correct and shall be certified and made available for inspection at all reasonable hours at the principal office of CONTRACTOR and its listed subcontractors, respectively. At the request of CITY, acting by its project manager, CONTRACTOR and its listed subcontractors shall make the certified payroll records available for inspection or furnished upon request to the project manager within ten (10) days of receipt of CITY’s request. [For state- and federally-funded projects] CITY requests CONTRACTOR and its listed subcontractors to submit the certified payroll records to the project manager at the end of each week during the Project. If the certified payroll records are not produced to the project manager within the 10-day period, then CONTRACTOR and its listed subcontractors shall be subject to a penalty of one hundred dollars ($100.00) per calendar day, or portion thereof, for each worker, and CITY shall withhold the sum total of penalties from the progress payment(s) then due and payable to CONTRACTOR. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 11 City of Palo Alto General Services Agreement Rev. April 27, 2016 Inform the project manager of the location of CONTRACTOR’s and its listed subcontractors’ payroll records (street address, city and county) at the commencement of the Project, and also provide notice to the project manager within five (5) business days of any change of location of those payroll records. BB. CONTRACT TERMS. All unchecked boxes do not apply to this Agreement. In the case of any conflict between the terms of this Agreement and the exhibits hereto or CONTRACTOR’s proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONTRACTOR’s proposal, the exhibits shall control. IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO ALTO WEST COAST ARBORIST, INC. _____________________________ By________________________________________ City Manager or Designee (Required on contracts $85,000 and over) Name _____________________________________ Title_______________________________________ Telephone: _______________________________ Approved as to form: ___________________________ City Attorney or Designee DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD Vice President Victor Gonzalez 12 City of Palo Alto General Services Agreement Rev. April 27, 2016 EXHIBIT A SCOPE OF SERVICES The scope of contracted work shall consist of pruning, removal, stump grinding, and other maintenance of trees, palms, and other woody plants, along street corridors, and throughout parks, open spaces and facilities within the City of Palo Alto, hereafter referred to as the City. Work shall be administered, and approved by representatives of the Department of Public Works, Public Services Division - Urban Forestry Section. PART I. GENERAL PROVISIONS Contractor shall be aware of and shall comply with the City of Palo Alto Codes governing tree work, traffic control and any other regulations that may affect operations. The General Provisions for this work specifications. In case of conflict, this scope of services shall take precedence over the City of Palo Alto Standard Drawings and Specifications. It shall be understood that the Contractor will be required to perform and completed the proposed tree maintenance work in a thorough and professional manner, and to provide labor, tools, equipment, materials and supplies necessary to perform the work described herein in strict accordance with these specifications and subject to the terms and conditions of the contract. All work shall be performed by tree care contractor who shall be licensed by the State of California Contractors State License Board (Classification C- 61/Category D-49) to provide such contract services within the State of California. A. Measurement and Payment Payment for the various items in the bid schedule, as further specified herein, shall include full compensation to the Contractor for furnishing all labor, materials, tools, equipment and incidentals, and for doing all the work involved in completing the various items of Work as shown on the Plans and in the Specifications. Work not specifically set forth as a pay item in the Bidder’s Bid proposal, but called for in the Contract Specifications or necessary to meet the requirements of this Contract, shall be considered a subsidiary obligation of the Contractor, and all costs in connection therewith shall be included in the bid. No separate payment will be made for any item that is not specifically set forth in the bid schedule except by Additional Services which shall be approved by City’s project manager and all costs therefore shall be included in the prices named in the bid schedule for the various appurtenant items of work. All work not meeting the Contract Specifications, unless otherwise approved by the City, shall be reworked at the Contractor’s expense. 1. Hourly Rates for Basic Services (Bid Item 1) DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 13 City of Palo Alto General Services Agreement Rev. April 27, 2016 Work: Hourly work will be designated at the discretion of the Project Manager and may include, but not limited to: a. Power Line Clearance Pruning b. Crown Reduction/Crown Clean for Modesto Ash and other large-spread canopy trees* c. Pruning requiring significant roping and rigging d. Pruning in areas with limited accessibility (e.g. Open Space Park Trails) e. Special Projects that require special services (e.g. Crane Services or 90- foot aerial lift) f. Palm Skinning g. Additional Stump Grinding outside of specified radii from existing stump *Note: Modesto ashes and other large-spread canopy trees not requiring a crown reduction will be billed at Programmed or Demand based pruning rates. Measurement: This item will be measured on a per hour basis (to the nearest quarter hour) for each three (3) person tree maintenance crew. Time at the Municipal Service Center, job site(s) and travel time between job sites will be measured. Lunchtime and debris disposal time will not be measured. Payment: This item will be paid on a per hour basis (to the nearest quarter hour) for each three (3) person tree maintenance crew or (2) person crew for stump removals. Payment will include full compensation for furnishing all labor, materials, tools, equipment and incidentals, and for doing all the work involved in completing this item of work as shown on the Plans and in the Specifications. The City will not pay for non-productive time due to vehicle or equipment breakdowns, or lack of proper equipment to do the job. Overtime work shall only be authorized by the Project Manager. Contractor shall charge the City no more than the minimum overtime rate required by federal and state law. 2. Unit Prices for Program Pruning, Palm Pruning, and Tree and Stump Removal (Bid Items 2, 3, 5 and 6) Work: General, Programmed Pruning, Palm Pruning, and Tree & Stump Removal areas are planned as contiguous areas or confined geographical areas within the City of Palo Alto boundaries such as:  Street and Parkway Areas The City is divided into 6 geographic areas with approximately 5,054 trees per area (Exhibit A-2). The intent of programmed pruning is to have all trees pruned within three areas a minimum one time by the end of the 3-year contract period. Year one (1) of this contract will focus on tree maintenance in Area 2 (Exhibit A-1).  Park and Facility Areas DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 14 City of Palo Alto General Services Agreement Rev. April 27, 2016 There are approximately 5,000 park and facility trees within the City’s boundaries. The intent of programmed pruning is to have 700 trees pruned per year or a 2,100 pruned by the end of the 3-year contract period.  Open Space Areas There are approximately 1,500 landscape trees in the Arastradero, Foothills, and Baylands Open Space Preserves. The intent of programmed pruning is to have 300 trees pruned per year or a 900 pruned by the end of the 3-year contract period.  Golf Course Area There are approximately 500 landscape trees within the Palo Alto Golf Course. The intent of programmed pruning is to have 100 trees pruned per year or a 300 pruned by the end of the 3-year contract period.  Capital Improvement Projects (CIPs) Trees that will be impacted by development and require pruning or removal will be paid at Unit costs, unless access is restricted, significant travel is required between job sites and/or the job requires specialized equipment detailed in hourly rates. All work for CIPs will be authorized and coordinated by the City’s Landscape Architect. Measurement and Payment: These items will be paid by quantity at a set cost. The Contractor shall include all labor and mobilization of equipment costs into its fee for all work required. There will be no separate measurement or payment for travel time. Those items that are related to CIPs will be invoiced separately, and paid through the associated CIP budget. 3. Unit Prices for Demand Pruning (Bid Item 4) Work orders for Demand-based Pruning are based on service requests with specific objectives in various locations within the City of Palo Alto boundaries and may or may not be at contiguous locations. Measurement and Payment: These items will be paid by quantity at a set cost. The Contractor shall include all labor and mobilization of equipment costs into its fee for all work required. There will be no separate measurement or payment for travel time. B. Invoicing The Contractor shall invoice Urban Forestry at the end of each calendar month, using an MS Excel format provided by the City, or approved format. All invoices shall reference the contract number and detail the dates and hours worked by each crew during that month. Invoice format shall include but not be limited to a list of each street that tree maintenance operations took place, the address of each individual tree, the species and trunk diameter of each individual tree. Other reporting may be DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 15 City of Palo Alto General Services Agreement Rev. April 27, 2016 requested as needed. Failure to submit invoices in this format may result in non- payment until these requirements are met. The City will promptly review all invoices submitted by the Contractor. Any invoice that the City determines is not proper will be returned to the Contractor with a written explanation of the reasons for the City’s determination. Any invoice that is properly submitted and undisputed by the City will be processed for payment and will be paid in full; retention will not be withheld. C. Additional Services The City may require additional Services for the Work to be performed or the materials to be furnished under the Contract pursuant to the provisions of the Contract documents. No change to the Work shall be made or extra work performed or deduction from the Work made unless in pursuance of a written agreement from the City, and signed by the Project Manager stating that the work is is authorized. No claim for additional payment shall be considered unless so ordered. Adjustment to the Contract Price by reason of a duly authorized r will be determined on the basis of one or more of the following methods, at the option of the Project Manager: 1. On the basis of applicable unit and/or hourly prices stipulated in the Contract. 2. On the basis of an acceptable lump sum proposal from the Contractor in response to a quotation request. 3. On the basis of actual necessary cost plus fifteen (15) percent to cover superintendence, general expense and profit. D. Notice to Proceed A Notice to Proceed will be issued to the Contractor upon receipt of a fully executed contract, and , insurance certificates, receipt of approval by other governmental agencies (if required) and any other documentation required by the City. E. Coordination 1. Work Week The Contractor shall provide no more than one (1) unit tree maintenance crew each day, unless requested and authorized by the Project Manager. The Contractor shall provide one (1) hourly crew, tree removal or stump removal crew on an as needed basis; scheduled by mutual agreement with the City. The normal work week shall be Monday through Friday, 8:00 a.m. to 4:00 p.m., excluding City holidays. Crews shall be at the work site and ready to start work by 8:00 a.m. Where traffic, parking or other constraints exist, the work week may DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 16 City of Palo Alto General Services Agreement Rev. April 27, 2016 be modified. All work week modifications shall be approved by Urban Forestry staff. Notify Urban Forestry staff by 7:30 a.m. daily, by email, with starting locations for each crew, crew size and contact phone number of each crew Foreman. The Contractor shall not work on City holidays. City holidays are:  January 1  Third Monday in January  Third Monday in February  Last Monday in May  July 4  First Monday in September  Second Monday in October  November 11  Thanksgiving Day  Day after Thanksgiving  December 25 In the event that any of the aforementioned holidays falls on a Sunday, the following Monday shall be considered a holiday. In the event that any of the aforementioned holidays falls on a Saturday, the preceding Friday shall be considered a holiday. 2. Daily Contact The Contractor’s Foreperson(s) shall report to the City’s designated Inspector each day via cell phone or at pre-designated field locations. 3. Cease of Operations The Project Manager will determine when weather or other conditions prevent safe or efficient work operations. If work operations are canceled after the work day has started (8:00 a.m.) the Contractor will be credited with two (2) hours per crew or the actual hours worked, whichever is greater. 4. Inspection and Oversight The contract will be managed by a member of the Urban Forestry staff, appointed by the Project Manager, serving in the capacity of Contract Inspector. The Inspector provides the principal contract management and monitoring function, and is the primary contact point for communication between the City and the Contractor. The Inspector will insure compliance with the contract documents, observing work both during progress and upon completion. The Inspector will make routine independent inspections of all sites maintained by the Contractor, which may or may not be announced and do not require the presence of the Contractor. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 17 City of Palo Alto General Services Agreement Rev. April 27, 2016 Inspections shall be both visual and operational. In addition, the Inspector may call for the Contractor to meet on the site for walkthrough inspections. The Inspector will schedule such meetings at the discretion of the City. A. Inspection Reports Contractor shall contact Urban Forestry staff daily to request inspection of all work performed. The Inspector will prepare an “Urban Forestry Contract Inspection Report”, with a performance rating. Ratings will reflect the work performance of Contractor at the site locations under the terms and conditions of this contract. The inspection report may include comments with recommendations for improvements, but it does not take away the Contractor’s responsibility to maintain each site per contract specifications and to the satisfaction of the City. Problem areas are to be acted upon promptly and corrective action taken, as applicable. a. Inspection reports will be prepared in two copies. The Inspector will establish a schedule for the Contractor to pick up their copy from the Urban Forestry Office and sign the City’s copy, acknowledging receipt. Failure to retrieve the Contractor’s copy of an inspection report will not relieve the Contractor of their responsibility to correct all note problem areas in a timely manner. b. Inspection report criteria will include, but not be limited to, the following: 1) Site cleanliness 2) Communication with Inspector 3) Adherence to pruning standards 4) Traffic control and safety 5) Posting and notifications c. The inspector will give the contractor an opportunity to correct or replace non-conforming deliverables or services, if this can be accomplished within the required delivery schedule. Correction or replacement will be without additional cost to the City. d. The Inspector will not consider the services complete until all unacceptable performance has been corrected. The value of the contractor’s non-performance will be deducted from any money due the Contractor. The Inspector will document in the contract file the basis for any amounts withheld. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 18 City of Palo Alto General Services Agreement Rev. April 27, 2016 B. Failure to Perform If the Contractor fails to perform in accordance with the terms and conditions of the contract the Inspector will document the deficiencies on the “Urban Forestry Contract Inspection Report” form, which will serve as written notice to the Contractor. a. A rating of “Needs Improvement” will require the Contractor to correct the stated deficiency(s) within seven calendar days, or as otherwise specified by the Inspector. b. A rating of “Unsatisfactory” will require the Contractor to correct the stated deficiency(s) within 48 hours, or as otherwise specified by Inspector. After two consecutive “unsatisfactory” ratings for any area within the contract, a “Failure to Comply” letter may be issued. c. A “Failure to Comply” rating represents a final notice. The City may choose to terminate the contract, or at the discretion of the Inspector, may allow the Contractor to correct deficiencies within 24 hours. Failure to correct deficiencies within 24 hours will result in contract termination. The termination may result in the Contractor being considered “Non- Responsible” during subsequent bid evaluations, for a period of up to three years. d. If the Contractor receives more than two “Unsatisfactory” ratings within a 90-day time span, they may be issued a “Failure to Comply” letter. If two “Failure to Comply” letters are issued within a 180-day period, the City may terminate the Agreement. The termination may result in the Contractor being considered “Non-Responsible” during subsequent bid evaluations, for a period of up to three years. e. If the Contractor receives two “Failure to Comply” letters within a contract year, they may be considered “Non-Responsible” for subsequent bid evaluations. 5. Digital Photos Contractor may be asked to supply “Before and After” trimming pictures that are suitable for reproduction when requested by the City. 6. Allocation and Completion of Work Orders City shall provide the contractor with an electronic database of trees to be pruned by Area. Contractor shall complete an Area entirely before beginning work in a new area. Contractor shall systematically and thoroughly work continuously until completion. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 19 City of Palo Alto General Services Agreement Rev. April 27, 2016 Each Contractor crew Foreman shall complete the City issued Daily Report using the tree database, and the Contractor shall provide a list of complete work locations for review and acceptance by the City’s Inspector at a weekly scheduled meeting at the City’s Municipal Service Center. The tree database may have trees that are missing, dead, or need to be removed. Contractor shall record this on the tree list. Work orders shall be allocated by Urban Forestry based on actual service requirements and available funding. All work orders will be assigned on an as-needed basis as determined by Urban Forestry. It is possible that no services may be required by the City from a contractor during all or any portion of the contract term. All work orders assigned to the contractor shall be completed within thirty (30) days except where otherwise noted. Trees less than 3 years old or 3” in diameter will not be worked on unless specifically requested by the City. 7. Park, Facility and Open Space The Contractor’s Supervisor shall coordinate with the City’s Open Space Manager and Irrigation Coordinator prior to all park, open space and facility work to ensure events, games, parking, and facilities are undisturbed to the best extent possible and irrigation infrastructure is properly flagged by City staff and avoided. The Contractor shall provide plywood and supports as needed to provide adequate protection at designated sites. Vehicles or equipment shall be operated to avoid ruts, damage to turf, and damage or dirt on infrastructure. 8. State and County Roads and Transportation Corridors When requested to perform tree maintenance work on County roads, the Contractor’s Supervisor will coordinate with County, State, and Transportation entities for all necessary permits and submittals in advance of tree maintenance work, at the Contractor’s expense. F. Project Meetings 1. Post-Award Conference A post-award conference will be scheduled as soon as practical after the award of the Contract. The Contractor shall attend the conference along with the prospective Project Manager. The Contractor shall provide at least two (2) local telephone numbers that may be used to contact the Contractor of his authorized representative in the event of an emergency after normal business hours. 2. Monthly Project Meetings The Contractor’s Area Manager and Supervisor shall attend monthly project meetings and specially called meetings throughout progress of the Work. The monthly project meetings will be held at the Public Works Operations office, DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 20 City of Palo Alto General Services Agreement Rev. April 27, 2016 Building C of the Municipal Service Center, 3201 East Bayshore Road, Palo Alto or at field locations designated by the Project Manager. G. Contractor Requirements to be submitted with Bid: 1. Corporate Capability Bidders must submit proof of the contractor’s qualifications applicable to this project, including the following: a. Affirmative statement of compliance with indemnity and insurance b. State of California Contractor’s License number and expiration date, C61/D-49 and any other applicable licenses c. DIR Registration number 2. References In order to be considered for Contract award, the Bidder must be able to demonstrate that they currently provide, or has provided Tree Pruning and Removal Services that are similar in size and scope to this Contract, and shall provide these references with their bid submittal. The Bidder must have five (5) references documenting successfully completed municipal multi-year tree maintenance contracts in the state of California which have been successfully completed within the last ten (10) years. Each project shall be of comparable size and scope of this project. References provided shall be current and not from an immediate family member of Bidder, any employee of the bidder, or of the City. Failure to provide requested documentation may result in disqualification of Bidder’s bid. The City will be the sole judge as to whether the services performed for the references are similar to the scope of services contained herein, and whether the Bidder is capable of performing such services. 3. Experience Contractor shall have at least ten (10) years of current experience performing contract tree pruning and removal work in the state of California. Contractor’s local management staff shall be completely qualified to perform the work of this contract and have a minimum of five (5) years current experience performing this work in the state of California. Bidders shall provide proof of this experience in the state of California with their bid submittal. Failure to provide the requested documentation may result in disqualification of Bidder’s bid. 4. Capacity Contractor shall have sufficient labor and equipment resources to perform the work of this project in a safe and efficient manner. Contractor shall have a minimum crew capacity of three (3) crews with the ability to bring an additional seven (7) crews and sufficient equipment for unforeseen issues (such as DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 21 City of Palo Alto General Services Agreement Rev. April 27, 2016 emergency response) within 24 hours of request, at the discretion of the City. Bidders shall provide proof of sufficient labor and equipment resources as requested in this section to perform the work of this project with their bid submittal. Failure to provide the requested documentation may result in disqualification of Bidder’s bid. 5. Employee Training A written description of the firm’s internal tree maintenance and arboricultural training program shall be submitted with this bid. Tree Care Industry Association (TCIA) accredited tree care companies are preferred. 6. Local Office Contractor’s local office shall be located within 100 miles and Contractor’s yard shall be within 20 miles of the City of Palo Alto limits. 7. Solicitation of Private Tree Work The Contractor and/or its employees shall not solicit and/or perform private tree work within the city limits of Palo Alto for the duration of this Contract. Violation of this provision may be cause for termination of this Contract. H. Staffing Requirements The Contractor is required at all times to provide sufficient workforce and supervisory personnel to perform the specified services and to meet the requirements of the City. When in times of high demand, the contractor shall make available to the City a minimum of four (4) crews. 1. Crew The standard crew is three persons, one chipper truck, one chipper, one aerial tower and all necessary hand tools. The crew and equipment can be modified to complete any type of miscellaneous tasks including special projects or trimming specific trees requiring immediate attention prior to their scheduled trim. 2. Qualified Personnel The contractor shall provide qualified supervisory staff. One competent individual will be available at all times to supervise the work, and assigned to be the Project Superintendent, and must be on site for a regularly scheduled minimum of eight (8) hours per week, and 16 hours per when three (3) or more Contractor crews are working in the City. This individual shall be a full-time employee, and be a current International Society of Arboriculture Certified Arborist. This individual shall be experienced in the type of work being performed and fully capable of managing, directing, and coordinating the work, reading and thoroughly understanding the contract, and receiving and carrying out directions form the City. This individual must be able to speak and write English and receive and communicate to the crew and property owner’s instructions and information relevant to the work order. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 22 City of Palo Alto General Services Agreement Rev. April 27, 2016 One (1) Project Superintendent Arborist shall be provided for every twelve (12) contractor employees assigned to City work. The Project Superintendent individual must be reachable via pager, cell phone or fax during business hours (Monday – Friday, 8:00 AM to 4:00 PM) during the Contract Period. The Contractor shall not change its designated Project Superintendent without written notification to the City seventy-two (72) hours in advance. The new Project Superintendent will be subject to the approval of the Project Manager. Breach of these provisions may constitute just cause for suspension of the Work until a qualified and acceptable superintendent is assigned to the Project. Each tree maintenance crew shall include:  Lead climber who will serve as Crew Foreman with current certification as an ISA Certified Arborist, or Western Chapter International Society of Arboriculture Certified Tree Worker (CTW). The lead climber shall be fluent in English and capable of preparing clear and concise daily work summary reports on City furnished forms.  A second climber, with a minimum of three (3) years current ornamental pruning experience.  A ground person with a minimum of one (1) year general ground work experience. The individual assigned Crew Foreman shall remain with his/her crew at all times throughout the working day. Each stump and tree removal crew shall include:  Three employees with a minimum of three (3) current years removal experience Each stump crew shall include:  Two employees with a minimum of two (2) years stump removal experience Contractor staff assigned to work near Caltrain tracks may require training and certification by the Caltrain, at Contractor’s expense. Bidders shall provide with their bid submittal copies of all certifications, degrees, or any other documentation that provide evidence of experience and certifications of staff. List of staff qualifications include but are not limited to: a. All Certified Arborists employed by the firm b. All Certified Utility Arborists employed by the firm c. All Certified Treeworkers employed by the firm DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 23 City of Palo Alto General Services Agreement Rev. April 27, 2016 d. All Utility Line Clearance Treeworkers employed by the firm All certifications and degrees shall be current at the time of Contract award and shall remain current and up to date throughout the life of the Contract. Failure to provide the requested documentation may result in disqualification of Bidder’s bid. At the time of award, the successful bidder must have staff that includes Certified Crane Operators(s) as recognized by national Commission for the Certification of Crane Operators (NCCCO). All personnel are subject to the approval of the Project Manager. If the Project Manager finds the Contractor’s employee to be unsatisfactory, the Contractor shall replace that employee immediately. 3. Communication Device Requirements The Superintendent and Crew Foreman or equivalents must have a communication device, such as a smart phone, in the field at all times during normal working operations. Two modes of communication such as a smart phone and two-way communication device must also be on-hand during an emergency event. The City may request to utilize this technology for the transfer of electronic documents including, but not limited to, PDFs, shop papers, work requests 4. Emergency Response The Contractor shall be required to provide emergency on call response for damaged trees as a result of storms or other reasons. The Contractor shall provide the City with up to six (6) additional crews including one (1) Supervisor for emergency service after the normal work hours of 8:00 a.m. to 4:00 p.m. when requested by the Project Manager. The Contractor’s Supervisor shall be responsible for coordinating call-out personnel with the Project Manager. Emergency calls may occur at any given time. The Contractor will be provided with locations and the work to be done at each location via telephone from a City authorized representative. Emergency work shall begin within two (2) hours of the initial telephone call. Contractor shall be required to provide a twenty-four (24) hour emergency phone number of the names of at least ten (10) contact individuals upon award of contract. Should the contact persons or their phone numbers change during the course of the contract, those changes shall be submitted to the City within two (2) working days. Contractor shall be required to provide all necessary traffic control during the course of emergency work. Should the work involve high voltage power lines or any utility lines the Contractor shall be required to notify the Project Manager. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 24 City of Palo Alto General Services Agreement Rev. April 27, 2016 When crews are dispatched for storm work, equipment for proper response, in addition to required tooling, shall include but not be limited to: hand held spotlight (minimum 200,000 candle power), flares, sufficient petty cash, and rigs totally operational and fully fueled. Bidders shall provide with their bid submittal a plan that addresses, but not be limited to, information detailing the resources the Contractor has available and the probable response time necessary to mobilize said resources at the City’s request in the event of a storm. Crews assigned to the City shall not be reassigned to storm duty outside the City during an emergency event, without the City’s specific approval. 5. Line Clearance Pruning During the course of this contract the Contractor may be required to perform utility line clearance in conjunction with routine or non-routine pruning activities. The Contractor shall be required to furnish all supervision, labor, equipment and materials necessary to accomplish the work in accordance with the contract. The Contractor has the responsibility for compliance with safety and health standards of the California Occupational Safety and Health Act (OSHA) and all applicable rules, regulations and orders. The manager overseeing the project shall be a Certified Utility Specialist and the persons completing the work shall be Certified Line Clearance Tree Workers. The competency of Contractor’s personnel shall be maintained through regular training. All persons performing tree work on City trees in or around primary electrical lines shall be trained to do so in accordance with the “Electrical Safety Orders” of the State of California. 6. Personnel Uniforms and Identification All contractor personnel shall be required to wear uniforms bearing the contractor’s company name while completing City work assignments. Uniforms shall consist of a shirt and/or jacket with company and employee name neatly screen printed or embroidered and conspicuous. All Contractor personnel shall be clearly identified with the name of the company on their uniform. Tank tops shirts and shorts are not allowed. Shirts must be worn at all times, and personnel shall maintain a neat and clean appearance. All personnel must wear high visibility safety vests that meet ANSI standards while working in traffic areas. I. Equipment Requirements The tree maintenance crew shall be equipped with:  An aerial lift truck (55 feet working height)  A dump truck with chipper body (8 cubic yard capacity)  A disc chipper (minimum 12” capacity) DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 25 City of Palo Alto General Services Agreement Rev. April 27, 2016  Chain saws, hand saws, pole pruners, pole saws, loppers and hand pruners  Climbing and personal safety gear  Traffic control signs and other equipment necessary to perform the work The stump removal crew shall be equipped with:  Dump truck with a minimum of four (4) cubic yard capacity  Power sod cutter (on an as needed basis)  Shielding: 4’x8’ plywood sheeting or approved equal  Wrenches: Shut-off wrenches specifically for water meters and gas meters  Barricades: Type II and III conforming to Section 6F.63 of the California MUTCD. Each barricade shall be equipped with Type A low intensity flashing warning light conforming to Section 6F.78 of the California MUTCD.  Tape: 3 inches wide, yellow vinyl barrier tape with black lettering stating “Caution”  Traffic control signs and other equipment necessary to perform the work All vehicles and equipment used in the performance of work assigned under this contract shall be in good working order and in compliance with all local, state and federal laws. The Contractor must demonstrate to the satisfaction of the City that the maintenance equipment to be used in the Work is in good working condition and suitable for performing the Work required. The Contractor must operate all work equipment in a safe manner so as to not create a hazard to the public. 1. Vehicles shall display signage noting contractor’s name, telephone number, and “City of Palo Alto Urban Forestry Contractor.” City identification signs shall not be displayed when performing any work outside of this contract. 2. Contractor vehicles will be equipped with all warning lights, signage, and other equipment necessary to safely work in the City right-of-way. Bidders shall provide with their bid submittal an equipment inventory list including: Trucks, aerial devices, chippers, stump grinders, hand tools, and other equipment which are necessary to perform the work as outlined in these specifications. Contractor shall submit proof of OSHA certification of aerial equipment to be used throughout the term of this project. Failure to provide the requested documentation may result in disqualification of Bidder’s bid. J. Safety Requirements Contractor shall plan and conduct all work in a manner that will safeguard all persons from injury and shall take all precautions required by applicable local, County, State or Federal requirements. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 26 City of Palo Alto General Services Agreement Rev. April 27, 2016 1. Contractor shall be solely responsible for complying with OSHA and Cal OSHA Safety Orders, City Code, and the California Manual on Uniform Traffic Control Devices (MUTCD), so as to protect all persons, including employees from foreseeable injury, or damage to property. 2. All work within 10 feet of any overhead high voltage electrical conductors shall be referred to the City by the Contractor. Work shall be scheduled by the contractor in cooperation with the City and shall be conducted in such a manner as to minimize disruption of service and disturbance to residents. 3. Tree care operations that involve climbing or other aerial work may be temporarily suspended during inclement weather with prior approval form the Urban Forestry Section. 4. All equipment to be used and all work to be performed shall be in full compliance with most current revision of American National Standards Institute, standard Z- 133.1 (Safety Requirements for Pruning, Trimming, Repairing, Maintaining, Removing, and for Cutting Brush). These standards are made part of the contract by this reference. 5. The Contractor shall be solely responsible for pedestrian and vehicular safety and shall provide warning devices, barricades, and ground personnel needed to give safety, protection and warning to persons and vehicular traffic within the area in accordance with the California MUTCD. K. Liability for Damage to Property and/or Plant Material The Contractor shall be solely and completely responsible for job site conditions and safety during the term of the Contract. This obligation shall include the safety of all persons within or affected by the work zone and all public and private property affected by the Work. The Contractor’s responsibility shall be continuous and not be limited to working hours or days, and shall not cease until formal acceptance of the Work by the City except if the City should make partial acceptance of the Work. The Contractor shall defend, indemnify, and hold harmless the City, its officers, consultants, agents and employees from any and all liability, real or alleged, resulting from the Contractor’s operations, except for liability arising from the sole negligence of the City, et al. Contractor is responsible for ensuring that all work is done in a safe and responsible manner. Any damage done to either City or private property shall be the responsibility of the Contractor to repair or make arrangements to repair with the City’s approval. This shall be done prior to final payment of contract. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 27 City of Palo Alto General Services Agreement Rev. April 27, 2016 The Contractor shall provide plywood and supports as needed to provide adequate protection at designated sites. Contract crews shall take care in removing branches from private property to prevent damage to house siding, fences, gates, lights, landscaping, and other outdoor improvements. The Contractor shall report all damage to public and private improvements to the Project Manager on the day upon which the damage occurs. The Contractor shall notify the owner of damaged private improvements in writing the same day. The Contractor shall repair or replace all damaged improvements in a manner satisfactory to the Project Manager and any private property owner involved. The Contractor shall complete the repair or replacement, at Contractor’s expense, within seventy-two (72) hours from the time damage occurs. Improvements shall include, but are not limited to, turf, trees, vegetation, pavements, irrigation systems, fences and structures. Limbs and trunk sections that cannot be easily controlled by hand shall be lowered by rope or cut into smaller pieces to prevent damage to improvements. Any tree damage caused by the Contractor shall be repaired immediately at no additional cost to the City. Any tree damaged beyond repair will be removed and replaced by the Contractor at no additional cost to the City. The replacement tree will be of a size and species acceptable to the Project Manager. The Contractor will be held responsible for all property and plant damage, including negligence in the course of performing the work. Any property or plants damaged during the course of the work shall be restored by the Contractor to a condition that is equivalent to the condition before the damage was done; this incudes damage to City- owned property, turf, shrubbery, trees, flowers, and other plant material. All repairs or replacements will need to be approved in advance by the City. All vegetation damages must be reported immediately to the Project Manager, and all damaged items must be replaced or returned to their original condition within fourteen (14) calendar days, except shrub and flower beds which must be repaired within seven (7) calendar days. The City will determine whether or not the Contractor is qualified to make the required repairs. The Project Manager will determine the locations, quantities, varieties and approved sources of plant material. No plant replacements are to take place without prior approval from the City. L. Protection of Utilities DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 28 City of Palo Alto General Services Agreement Rev. April 27, 2016 1. The Contractor shall be responsible for the protection of all utilities on both public and private property within and adjacent to the work area and shall take all precautions necessary to prevent damage to such utilities. 2. The Contractor shall report all damage to public and private utilities to the Project Manager and the respective utility company within one (1) hour of the time damage occurs. The Contractor shall notify the resident and owner of any property affected by a damaged utility within one (1) hour of the time damage occurs. 3. The City will repair City utilities damaged by Contractor’s operations. The cost of repairs performed by the City will not be deducted from the Contract price, but shall be paid independently by the Contractor to the City. 4. The Contractor shall repair or replace all non-City utilities damaged by its operations, at Contractor’s expense. The Contractor shall complete repair or replacement of all essential utilities (including telephone, electrical, water and gas) the same day damage occurs. All other non-essential, non-City utilities requiring repair or replacement, shall be completed within seventy-two (72) hours of the time damage occurs. 5. Utilities include, but not limited to, water, gas, sanitary sewer, storm drain system, electrical power, street lighting, traffic signals, signal detector loops, telephone, cable television and fiber optic. M. Site Use and Maintenance 1. The Contractor shall clean the work area, at the end of each working day, to a condition at least equal to that which existed before the start of work. 2. The Contractor shall remove all equipment and materials from City property at the end of each working day, and at other times when the work is suspended for any reason. The Contractor shall not use City property for the overnight storage of equipment and materials. 3. The Contractor shall not use private property with the City of Palo Alto limits for the storage and staging of equipment and materials without written agreement of the property owner. The Contractor shall submit a copy of the agreement to the Project Manager. N. Work Affecting the Public Right-of-Way DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 29 City of Palo Alto General Services Agreement Rev. April 27, 2016 Contractor acknowledges and agrees that the safety of motorists, pedestrians, and maintenance crews while working along the City’s transportation corridors is paramount, and Contractor agrees that during the progress of the work, Contractor shall constantly protect and preserve the safety of the public. Contractor shall not unnecessarily cause inconvenience to the public during the progress of the work and shall minimize the inconvenience caused by Contractor’s operations. Such operations include, but are not limited to, work performed on or adjacent to the work site, traffic lane, driveways, and pedestrian closures and deliveries of material and equipment. 1. Reference a. The current edition of the Standard Specifications of the Department of Transportation, State of California, hereinafter referred to as the California Specifications. b. The current edition of the California Manual on Uniform Traffic Control Devices PART 6 – Temporary Traffic Control of the Department of Transportation, State of California, hereinafter referred to as the California MUTCD. 2. Traffic Control Devices a. Cones: 28” high and conforming to Section 12-3.10 of the Caltrans Standard Specifications b. Barricades: Type II and III conforming to Section 6F.63 of the California MUTCD. Each barricade shall be equipped with a Type A low intensity flashing warning light conforming to Section 6F.78 of the California MUTCD. c. Signs: Portable signs and bases conforming to Section 12-3.06 of the Caltrans Standard Specifications and Chapters 6F and 6H of the California MUTCD. Signs shall not be mounted on barricades or vehicles. d. Flashing Arrow Signs: Solar and/or battery powered and conforming to Section 6F.56 of the California MUTCD. e. Flagger Equipment: Conforming to Chapter 6E and Section 6F.29 of the California MUTCD. f. Tape: 3 inches wide, yellow vinyl barrier tape with black letters stating “Caution”. g. “No Parking” signs: Furnished by the City. 3. Temporary Control Requirements Contractor shall abide by the City’s ‘Requirements for Traffic Control Plan Submission’ and be solely responsible for furnishing, installing and maintaining DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 30 City of Palo Alto General Services Agreement Rev. April 27, 2016 all advance warning signs and devices necessary to safeguard the general public and the work, and to provide for the proper and safe routing of vehicular and pedestrian traffic during the performance of the work. This requirement shall be for the duration of the service or project, and shall not be limited to working hours. The use of flagmen, barricades, and construction signage shall comply with the current edition of California MUTCD. Upon request, the Contractor shall submit a traffic control plan showing proposed traffic control measures and detours for vehicles and pedestrians a minimum of ten working days prior to the start of any work that requires the closure of a sidewalk or traffic lane. 4. Provide Traffic Control a. The Contractor shall provide traffic control for all operations and shall conduct all operations so as to cause the least possible obstruction and inconvenience to the general public and vehicle, bicycle and pedestrian traffic. Unless otherwise approved, Contractor shall maintain at least two travel lanes at all times on one-way Primary Streets. The Contractor shall also maintain local property access to existing public cross-streets. b. Contractor shall provide safe pedestrian and disabled access through or around the work area at all times. Sidewalk closure shall comply with the “Policy for Sidewalk Closures” established by the City of Palo Alto’s Department of Public Works pursuant to federal and state disability access laws and regulations. c. Contractor shall provide access to all existing driveways, adjacent parking areas, and buildings at all times unless other arrangements are made with the property owner and approved by the Inspector. Access for emergency vehicles shall be clear at all times. d. The Contractor shall furnish, place and maintain all necessary traffic control devices during its operations in conformance with the applicable requirements of this section and the California MUTCD. e. The Contractor shall notify the City of Palo Alto Police Department – Communication Division at (650) 329-2413 on a daily basis of significant traffic control measures. f. The Contractor shall use a flashing arrow sign for lane closures on multilane and arterial streets and shall restrict lane closures on multilane and arterial streets to the hours of 9:00 a.m. to 4:00 p.m. The streets include but are not limited to: 1. Alma 2. Arastradero 3. Arboretum 4. Charleston DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 31 City of Palo Alto General Services Agreement Rev. April 27, 2016 5. Embarcadero 6. Middlefield 7. San Antonio 8. Sand Hill 9. University 10. Hansen 11. Hillview 12. Park 13. Channing 14. Stanford 15. California 16. Quarry 17. Welch 18. Meadow 19. E Meadow Cir 20. E. and W. Bayshore frontage roads The above definition of “Arterial Streets” may be modified at any time as the City Traffic Engineer deems necessary, upon written notice to Contractor by City. g. Specific traffic control procedures shall include, but not be limited to, the following: i. Partial street closure, maintain two-way traffic, provide flaggers and one traffic lane: This type of traffic control shall be used for partial closures extending either the full length or a portion of the length of a street. Part of the street shall be coned off, leaving a minimum width of twelve (12) feet open for traffic. The Contractor shall maintain two-way traffic on this street by utilizing at least two flaggers. The flaggers shall allow one direction of traffic at a time to travel in the one remaining twelve (12) foot lane. Traffic control signs shall be placed in appropriate locations at, in advance of, and after the closure. Cones shall be used to separate the traffic from the work zone. ii. Partial street closure, maintain two-way traffic, provide two traffic lanes: this type of traffic control shall be used for partial closures extending either the full length of a portion of the length of a street. Part of the street shall be coned off, and two-way traffic shall be maintained at all times by dividing the remainder of the street into two twelve (12) foot wide traffic lanes. Traffic control signs shall be placed in appropriate locations at, in advance of, and after the closure. Cones shall be used to separate the traffic from the work zone. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 32 City of Palo Alto General Services Agreement Rev. April 27, 2016 iii. Full lane closure on multi-lane street, maintain two-way traffic, provide two traffic lanes minimum: This type of traffic control shall be used for lane closure on a multi-lane street extending either the full length of a portion of the length of a street. The lane shall be coned off, and a flashing arrow sign and cone taper used to shift traffic into the adjacent lane. Traffic control signs shall be placed in appropriate locations at, in advance of, and after the closure. Cones shall be used to separate the traffic from the work zone. h. Holiday Season Construction Moratorium During the holiday season, no work shall be performed in the downtown area bound by University Avenue and the California Avenue parking assessment districts, unless otherwise approved in writing by the Project Manager and/or City Traffic Engineer. As used herein, “holiday season” means the period of time beginning Thanksgiving Day and ending on the first regular working day following New Year’s Day. i. Temporary Street Parking Lane Closure (Post “No Parking” Signs) Contractor shall provide barricades with signage (City-furnished) noting parking restrictions and days and times of scheduled tree care operations at least 72 hours in advance of the work. All barricades and signage must be approved by Urban Forestry staff. Signage must follow the City of Palo Alto Engineering Department’s “No Parking-Tow Away Signage Posting Requirements”. The Contractor shall make efforts to have parked cars removed by contacting the owners at their residence. The Contractor shall remove “no parking” signs if unforeseen circumstances require work to be re-scheduled. j. Traffic Control Plan If required is required to submit a traffic control plan, Contractor shall not be allowed to work until a City-approved traffic control plan is on file with the Inspector. The traffic control plan shall include the following information pursuant to City Code: a. The name and business address of the applicant b. A diagram showing: 1) The location of the proposed work area; 2) The location of areas where the public right-of-way will be closed or obstructed; and 3) The placement of traffic control devices necessary to perform the work DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 33 City of Palo Alto General Services Agreement Rev. April 27, 2016 c. The proposed phases of traffic control in a narrative format including a description and dates for the beginning and ending of each phase d. The time periods when the traffic control will be in effect If the Inspector determines at any time that actual traffic conditions under the approved plan are not adequate to ensure public safety, the Inspector may require the plan to be immediately modified. If a hazardous condition cannot be eliminated by plan modification, the Inspector may require work under the plan be stopped, and the plan suspended, until the safety hazard is remedied. Contractor shall not be entitled to any costs, damages or extension of contract time arising from any stop work order issued by the Inspector under this Section. O. Parking and Traffic Violations Parking and traffic citations as a result of violations shall be solely the responsibility of the Contractor. P. Provide Water Facilities 1. The Contractor shall provide and maintain adequate drinking water facilities at locations easily accessible to workers during working hours. 2. The Contractor shall provide all water necessary for performing the work. 3. The Contractor shall not use residential or business water services for any purpose. Q. Public Notification and Relations The Contractor shall notify the resident of the property bordering City trees of impending pruning forty-eight (48) hours in advance of scheduled pruning via door hanger. The Contractor shall provide all crews with door hangers. The City’s Project Manager will provide the Contractor with the wording to use on the door hanger at the post-award conference, and will approve design of the door hanger prior to distribution. Contractor shall endeavor to maintain good public relations at all times. The work shall be conducted in a manner which will cause the least possible interference and annoyance to the public. Work shall be performed by competent employees and supervised by an experience, English-speaking supervisor in tree maintenance operations. The Contractor shall be responsible for advance notification to the residents at each work location of the intended tree operations. The Contractor shall be responsible to see that private property and vehicles at work locations are not endangered or damaged during the course of the work. Work requested by property DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 34 City of Palo Alto General Services Agreement Rev. April 27, 2016 owners or expressed concerns, beyond that identified for a particular tree, shall be conveyed to the Inspector or Project Manager. II. TECHNICAL SPECIFICATIONS The Contractor shall provide the following services, as requested by Urban Forestry: • Programmed Pruning • Demand Pruning • Hourly Work • Inspection Services • Tree Removal • Stump Grinding • Unscheduled Work or Storm/Emergency Work Crew Services Tree care operations shall be in accordance with current standards as established by the American National Standard Institute (ANSI). Specifically, current ANSI A300 (Tree, Shrub and Other Woody Plant Maintenance-Standard Practices), ANSI Z133.1 (Safety Requirements for Arboricultural Operations) and accompanying “Best Management Practices” publications shall be adhered to. Tree climbing spurs shall not be used except where trees are to be removed, where trees cannot otherwise be safely accessed, or in the case of emergencies. With the exception of work requested on a time and materials basis, all pruning orders shall be based on pruning of the entire tree. A. References a. International Society of Arboriculture (ISA) P.O. Box 3129 Champaign, IL 61826 b. American National Standards Institute, Inc. (ANSI) 11 West 42nd Street New York, NY 10036 c. Government Order 95 (2007) California Public Utilities Commission d. Migratory Bird Treaty Act of 1918 B. Products a. Disinfectant Contact spray: Lysol or equivalent approved by the Project Manager DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 35 City of Palo Alto General Services Agreement Rev. April 27, 2016 C. Tree Pruning Notwithstanding the referenced ANSI standards, trees and palms shall be pruned as follows: 1. Mature Trees Tree crowns shall be cleaned, raised, reduced, thinned or any combination of these methods to achieve the following objectives: a. Limbs that are too heavy to safely support their own weight, whether due to their length, diameter, a weak crotch or structural defect, shall be lightened by thinning the end weight or heading back the ends. Where possible, thinning is preferred over heading back. Conserve inner foliage as much as possible by thinning and shortening. b. Remove dead branches that are greater than 3/4 inch in diameter at the point of attachment c. Remove diseased, decayed, broken, weakly attached, and/or crossing branches d. Remove mistletoe and/or vines growing on the tree. Ivy growing on tree limbs and trunks shall be removed to ground level and one (1) foot laterally from the trunk at ground level. Cutting shall be done with hand tools and shall not damage the trunk. e. Improve tree growth and form to maximize safety, structural integrity, and health f. Small limbs, including suckers and watersprouts, shall be cut close to the trunk or branch from which they arise g. Prune to provide eventual clearance of 14 feet over roadways and bike lanes; 8 feet over pedestrian pathways; 10 feet above ground level over private property, and 10 feet vertically and horizontally around buildings and other structures h. Prune to clear line of sight for streetlights, traffic signs and signals, and street signs. Clearance from street lights shall conform to Drawing AX. Clearance form traffic signals, traffic signs and stop signs shall provide adequate sight line distances to the signals or signs. i. Final cuts six (6) inches or greater in diameter must be approved by the City’s Inspector j. Prune to clear electric service drops only when vegetation is putting a noticeable strain or abrasion on the line, or as required by the Project Manager In achieving the above objectives, the contractor shall not remove more of the tree crown than necessary. Under no circumstances shall more than 25 percent of the DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 36 City of Palo Alto General Services Agreement Rev. April 27, 2016 crown be removed without approval from Urban Forestry staff. When reducing the length of limb, the resulting terminal branch should be at least one-third (1/3) the diameter of the parent branch. Cables, braces, or other installations shall be observed for condition and reported to the Inspector or Project Manager if maintenance, repair, or replacement is needed. 2. Pruning specifications for selected species (General Specifications a-j shall apply as well): a. Liquidambar – Reduce end weight of side limbs by shortening them back to significant laterals. These pruning cuts shall not exceed three (3) inches in diameter. Superfluous leaders (codominant) shall be removed or suppressed by heading back. b. Sycamore – Heavy, long horizontal branches shall be headed back to a suitable lateral to prevent excessive end weights from growing. Crossing branches or areas of tangled foliage shall be thinned using small pruning cuts. c. Broadleaf Evergreen (Magnolia, Live Oak, Holly Oak, Camphor) – The canopy shall remain closed to shade the interior of the tree. Excessive vertical suckers shall be removed. Some heading or thinning may be necessary where end weights are too heavy. d. Chinese Elm – Lighten heavy end weights and raise canopy by shortening ends back to significant laterals. Conserve inner foliage as much as possible. e. Eucalyptus – Reduce heavy end weights by shortening ends back to significant laterals. Remove weakly attached sucker growth. f. Ash – lighten end weights where scaffold branches have narrow angles of attachment and potentially included bark. 3. Young Trees (more than three years old and less than 8 inches dbh) shall be pruned in accordance with the section on training young trees in the International Society of Arboriculture’s Best Management Practices – Tree Pruning (2002) and achieve the following objectives: a. Remove dead branches b. Remove diseased, decayed, broken, weakly attached, and/or crossing branches. c. Develop strong central leader and radially and vertically symmetric distribution of branches as appropriate for the species d. Encourage trunk taper by retaining temporary branches until diameter at the point of attachment is approximately one-third of the diameter of the parent branch DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 37 City of Palo Alto General Services Agreement Rev. April 27, 2016 e. Select and develop permanent branches f. Retain foliage in the lower portion of the canopy as long as possible g. Prune to avoid conflicts with pedestrians, vehicles, and sight-lines at street intersections 4. Palms a. Remove dead and dying fronds b. Prune palm crown to no narrower than a 9 and 3 o’clock position c. Remove loose frond sheaths along the entire length of the trunk d. Remove fruit and flowers e. Palm Skinning (hourly cost): Dead fronds, and parts thereof, including stubs, can be removed along the entire length of the trunk of each palm, leaving a clean unsheathed appearance slicked from the ground to approximately twenty-four to thirty-six (24” – 36”) inches from the base of the green fronds at the top of the tree. The frond stubs (cut close to trunk) can be left in place within a span of at least eighteen (18”) inches but no greater than thirty-six (36”) inches. The use of climbing spurs or spike shoes for the purpose of climbing palm trees is prohibited, except in an emergency situation (such as aerial rescue) or unless specifically approved by the Project Manager or Inspector. The Contractor shall be required to use an aerial tower with sufficient height to reach the crown for the purpose of pruning City Palm trees. A chainsaw may only be used on dead fronds. Use of a handsaw is required on green fronds and fruit/flowers. Handsaws and chainsaws will be cleaned between each palm with City-approved disinfectant. D. Inspection of Hazardous Conditions Tree problems that are clearly visible by the inspection, but not considered hazardous, will be reported to the City for direction and/or further evaluation. Also, the crew performing maintenance shall properly notify the City of any tree- related problems that are clearly visible. Structural defects, including weak crotches, splits, cracks, broken cables and decayed cavities shall be reported to the Project Manager. This may be in written form if not considered hazardous or within 24 hours if deemed hazardous. It is the intent to correct problems prior to reaching crisis levels. E. Tree Removal Notwithstanding the referenced ANSI standards, trees, palms and other woody plants shall be removed as follows: DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 38 City of Palo Alto General Services Agreement Rev. April 27, 2016 1. The City shall prepare lists of trees to be removed, mark trees, notify homeowners and public and submit the list to Contractor. 2. Contractor crew removes tree and hauls away debris. 3. Remove all tree parts in a safe and efficient manner. Where necessary, tree parts shall be lowered by rope, crane, or other suitable means to avoid damage to surrounding property, including adjacent trees. 4. Ropes or other rigging shall not be placed so as to cause damage to adjacent property or trees. 5. Tree shall be removed to within six (6) inches of grade, measured from the soil line where the trunk meets the ground. F. Stump Removal The City will issue Stump Removal lists on an as-needed basis including addresses and locations of stumps to be ground, along with stump diameters. Each list will include no more than fifty (50) removal sites and shall be completed in forty-five (45) calendar days. Contractor crew removes stumps and hauls away debris. In addition the contractor shall be responsible for the following: 1. The Contractor shall grind all stump wood and roots within the stump removal site to a depth 6 inches below grade. The grindings shall be removed from the site and disposed of. The contractor shall then grind the stump removal site to a depth 24 inches below grade and remove grindings as necessary to leave the site 3 inches above grade. When needed topsoil (City Mix as available at Ciardella’s Garden Supply, 1001 San Antonio Road, Palo Alto, CA or approved equal) shall be added to bring the site to 3 inches above grade. 2. The Contractor shall provide adequate shielding to prevent flying debris during all stump removal operations. 3. The Contractor shall backfill the hole with a topsoil blend consisting of 50% compost by weight. 4. The Contractor shall compact soil to minimize settlement 5. The Contractor is responsible for notifying Underground Service Alert (USA) five (5) working days prior to stump grinding or excavating. The Contractor shall delineate the limits of work in white paint in conformance with the requirements of USA and shall notify USA at (800) 227-2600. Notification shall include the specific address or a location description of the work. 6. The Contractor shall call in no more than ten (10) stump removal addresses or locations to USA each day. 7. The Contractor shall remove all USA markings, which remain after completion of the work. Markings on asphalt concrete pavement shall be covered with RS-1 or SS-1 asphaltic emulsion. USA markings on DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 39 City of Palo Alto General Services Agreement Rev. April 27, 2016 Portland cement concrete and other surfaces shall be removed by methods complying with all local, state and federal laws and subject to review by the Project Manager. 8. The Contractor shall temporarily remove (and replace following completion of the work) any public or private improvements located within the stump removal site. Improvements shall include, but are not limited to, loose bricks and pavers, landscape rocks and stones, small shrubs and plants, filter fabrics and mulch. 9. The Contractor shall mark the limits of the stump removal site before starting work. The stump removal site shall be defined as follows: a. < 13” stump diameter: An area four (4) feet in diameter centered on the stump or centered as directed by the Project Manager b. 13” – 30” stump diameter: An area six (6) feet in diameter centered on the stump or centered as directed by the Project Manger c. > 30” stump diameter: An area eight (8) feet in diameter centered on the stump or centered as directed by the Project Manager 10. The Contractor shall respond to all non-urgent stump grinding work orders within 5 working days. Stump grinding work orders related to sidewalk repairs shall be completed within 3 working days. 11. The Contractor shall secure open stump removal sites with barricades and tape until inspected by the Project Manager and backfilled as directed with grindings and/or topsoil. 12. Where stump grinding is being performed to accommodate a replacement sidewalk, all surface roots within the footprint of the sidewalk shall be ground to a depth of 6 inches. G. Additional Root Grinding 1. The Contractor shall grind additional surface and subsurface roots outside the stump removal site when directed in writing by the Project Manager. Written authorization will specify the work location, area for grinding and time allocated for the grinding. 2. The Contractor shall remove and dispose of grindings and/or add topsoil when included in the written authorization. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 40 City of Palo Alto General Services Agreement Rev. April 27, 2016 H. Debris Removal The work shall include removal and disposal of brush and debris generated by said work. Waste material shall be disposed of at the contractor’s expense at a location designated and/or approved by the City. Waste material shall not be given away or sold as firewood. Waste material shall not be landfilled. Recycling of wood and wood chips through sustainable uses is strongly encouraged. Contractor shall furnish data to the City on a monthly basis listing the type, quantity and disposal location of all debris generated by the work. All wood generated from removed trees is the property of the City and shall be disposed of at the direction of the Project Manager. No wood shall be left along public right-of-way unless approved by the Project Manager. All tree parts are to be loaded into transport vehicles or containers. The vehicles or containers must have the front, sides and rear solid and the top shall be tarped or otherwise tightly enclosed. The transporting of tree parts must be made so that no debris escapes during the transport. Branches, suckers, bark and other tree parts that are chipped are to be covered while transported and hauled to the disposal site during the workday. Debris resulting from contractor’s operations shall not be left on any work sites overnight, unless given permission by the City to do so otherwise. Debris along major thoroughfares or active pedestrian and/or bikeways, at the discretion and direction of the City’s Inspector, may require chipping and cleanup within an hour of pruning to allow for the safe passage of traffic. All lawn areas shall be raked, all streets and sidewalks swept, and all brush, branches, and logs shall be removed from the site. Areas are to be left in a condition equal to that which existed prior to the commencement of arboriculture operations. Stump grindings shall be removed from site within forty-eight (48) hours from completion of actual grinding operation, unless instructed to do otherwise by the City. Chippers shall only be run at 15-20 minute intervals. To minimize offensive noise, chippers shall not be run continuously. Contractor may be required to utilize electric/battery-powered blowers at the City’s discretion during any portion or all of the contract term. Contractor shall comply with all Federal, State and County regulations for pests, including but not limited to, Sudden Oak Death (SOD) and Light Brown Apple Moth. Contractor shall follow the Sudden Oak Death Guidelines for Arborists (California Oak Mortality Task Force, 2008) when working in SOD areas in order to limit the spread of this disease. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 41 City of Palo Alto General Services Agreement Rev. April 27, 2016 I. Tool Sanitation and Disease Transmittal Contractor’s tools that have potential to transmit pests or diseases to other trees shall be disinfected prior to initiating work within the City, after working on any potentially diseased trees, and prior to and after pruning any Elm (Ulmus species) tree. Due to disease concerns regarding Canary Island Date Palms (Phoenix canariensis) and California Fan Palms (Washingtonia filifera), live fronds, flowers and fruit parts shall only be pruned with handsaws. Chainsaws and handsaws shall be disinfected with Lysol or a 10% mixture of water and household bleach. Chainsaws shall have the clutch cover removed and the chain, bar, and clutch area shall be sprayed. Handsaws are to be completely disinfected after each use. Chainsaws and handsaws shall be disinfected with each use before pruning the next tree. J. Protection of Nesting and Migratory Birds Contractor shall adhere to all restrictions of the Migratory Bird Treaty Act of 1928 as they apply to the work of this contract. Pruning in the Foothills Preserve during winter months is highly recommended to avoid the nesting season. Care should be taken not to disturb or destroy bird nesting and habitat when pruning. Many birds build nest in trees during the spring and summer months and these birds are protected by law. The Audubon Society in conjunction with the California Department of Fish and Game published a Guide to Bird-Friendly Tree and Shrub Trimming and Removal containing information to help avoid damaging birds and nests. DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD EX H I B I T A -1 Do c u S i g n E n v e l o p e I D : 9 5 C 4 8 9 F 1 - C 6 E 1 - 4 4 0 6 - 9 7 B 7 - D F 7 6 A 2 D B D A C D SCALE: 1" = 600' AREA 4 AREA 5 AREA 2 AREA 3 AREA 1 AREA 6 EXHIBIT A-2 CITY AREA MAP DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 42 City of Palo Alto General Services Agreement Rev. April 27, 2016 EXHIBIT B SCHEDULE OF PERFORMANCE CONTRACTOR shall perform the Services according to the following schedule: 1. Ongoing tree pruning and removal services June 30, 2019 DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 43 City of Palo Alto General Services Agreement Rev. April 27, 2016 EXHIBIT C SCHEDULE OF FEES CITY shall pay CONTRACTOR according to the following rate schedule. The maximum amount of compensation to be paid to CONTRACTOR, including both payment for services and reimbursable expenses, shall not exceed the amounts set forth in Sections 5 and 6 of the Agreement. Any services provided or hours worked for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to CITY. 1. HOURLY RATES FOR BASIC SERVICES TASK FIRST YEAR OF CONTRACT SECOND YEAR OF CONTRACT THIRD YEAR OF CONTRACT HOURLY RATE HOURLY RATE HOURLY RATE 3-PERSON CREW AND BUCKET, DURING REGULAR WORK HOURS (SEE NOTE 1, BELOW) $225 $237 $249 3-PERSON CREW AND BUCKET, DURING EMERGENCIES AND AFTER REGULAR WORK HOURS $315 $330 $345 90 FT BUCKET DURING REGULAR WORK HOURS $120 $130 $140 90 FT BUCKET DURING EMERGENCIES AND AFTER REGULAR WORK HOURS $210 $220 $230 CRANE SERVICES DURING REGULAR WORK HOURS $120 $130 $140 CRANE SERVICES DURING EMERGENCIES AND AFTER REGULAR WORK HOURS $210 $220 $230 ADDITIONAL ROOT GRINDING $160 $170 $180 DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 44 City of Palo Alto General Services Agreement Rev. April 27, 2016 2. UNIT PRICES FOR PROGRAM PRUNING SIZE CLASS FIRST YEAR OF CONTRACT SECOND YEAR OF CONTRACT THIRD YEAR OF CONTRACT UNIT PRICE UNIT PRICE UNIT PRICE 3 to 6” d.b.h. $100 $115.00 $130 7 – 12” d.b.h. $134 $144 $154 13 – 24” d.b.h. $134 $144 $154 25 – 36” d.b.h. $134 $144 $154 37 - 48” d.b.h. $134 $144 $154 49” + d.b.h. $134 $144 $154 3. UNIT PRICES FOR PALM PRUNING SIZE CLASS FIRST YEAR OF CONTRACT SECOND YEAR OF CONTRACT THIRD YEAR OF CONTRACT UNIT PRICE UNIT PRICE UNIT PRICE DATE PALM SPECIES UNDER 55’ WORKING HEIGHT $275 $285 $295 DATE PALM SPECIES OVER 55’ WORKING HEIGHT $375 $385 $395 WASHINGTONIA PALM SPECIES UNDER 55’ WORKING HEIGHT $145 $150 $155 WASHINGTONIA PALM SPECIES OVER 55’ WORKING HEIGHT $175 $185 $195 DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 45 City of Palo Alto General Services Agreement Rev. April 27, 2016 4. UNIT PRICES FOR DEMAND PRUNING SIZE CLASS FIRST YEAR OF CONTRACT SECOND YEAR OF CONTRACT THIRD YEAR OF CONTRACT UNIT PRICE UNIT PRICE UNIT PRICE 3 to 6” d.b.h. $65 $70 $75 7 – 12” d.b.h. $125 $135 $145 13 – 24” d.b.h. $225 $235 $245 25 – 36” d.b.h. $325 $335 $345 37 - 48” d.b.h. $480 $495 $525 49” + d.b.h. $525 $550 $575 DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 46 City of Palo Alto General Services Agreement Rev. April 27, 2016 5. UNIT PRICES FOR TREE REMOVAL (TO 6 INCHES ABOVE SOIL LINE) SIZE CLASS FIRST YEAR OF CONTRACT SECOND YEAR OF CONTRACT THIRD YEAR OF CONTRACT UNIT PRICE UNIT PRICE UNIT PRICE Up to 6” d.b.h. $150 $170 $190 7 – 12” d.b.h. $350 $360 $370 13 – 24” d.b.h. $725 $750 $775 25 – 36” d.b.h. $1,900 $2,050 $2,150 37 - 48” d.b.h. $2,400 $2,550 $2,650 49” + d.b.h. $3,300 $3,550 $3,650 6. UNIT PRICES FOR STUMP GRINDING SIZE CLASS FIRST YEAR OF CONTRACT SECOND YEAR OF CONTRACT THIRD YEAR OF CONTRACT UNIT PRICE UNIT PRICE UNIT PRICE Less than 13” diameter $175 $185 $195 13 - 30” diameter $300 $335 $375 Greater than 30” diameter $450 $475 $495 DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 47 City of Palo Alto General Services Agreement Rev. April 27, 2016 EXHIBIT D INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION EMPLOYER’S LIABILITY STATUTORY STATUTORY YES GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 NO PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD 48 City of Palo Alto General Services Agreement Rev. April 27, 2016 A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONTRACTOR SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON- PAYMENT OF PREMIUM, THE CONTRACTOR SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE EMAILED TO: InsuranceCerts@CityofPaloAlto.org PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 DocuSign Envelope ID: 95C489F1-C6E1-4406-97B7-DF76A2DBDACD ATTACHMENT B #BID ITEM QNTY TYPE WCA RATE Y1 WCA COST Y1 WCA RATE Y2 WCA COST Y2 WCA RATE Y3 WCA COST Y3 PTS RATE Y1 PTS COST Y1 PTS RATE Y2 PTS COST Y2 PTS RATE Y3 PTS COST Y3 1 3 per crew & bucket regular 500 HR 225.00$ 112,500.00$ 237.00$ 118,500.00$ 249.00$ 124,500.00$ 255.00$ 127,500.00$ 260.00$ 130,000.00$ 263.00$ 131,500.00$ 2 3 per crew & bucket emerg 100 HR 315.00$ 31,500.00$ 330.00$ 33,000.00$ 345.00$ 34,500.00$ 285.00$ 28,500.00$ 290.00$ 29,000.00$ 293.00$ 29,300.00$ 3 90 ft bucket regular 100 HR 120.00$ 12,000.00$ 130.00$ 13,000.00$ 140.00$ 14,000.00$ 95.00$ 9,500.00$ 98.00$ 9,800.00$ 100.00$ 10,000.00$ 4 90 ft bucket emergency 100 HR 210.00$ 21,000.00$ 220.00$ 22,000.00$ 230.00$ 23,000.00$ 110.00$ 11,000.00$ 112.00$ 11,200.00$ 114.00$ 11,400.00$ 5 crane services regular hours 40 HR 120.00$ 4,800.00$ 130.00$ 5,200.00$ 140.00$ 5,600.00$ 165.00$ 6,600.00$ 168.00$ 6,720.00$ 170.00$ 6,800.00$ 6 crane services emergency 40 HR 210.00$ 8,400.00$ 220.00$ 8,800.00$ 230.00$ 9,200.00$ 195.00$ 7,800.00$ 198.00$ 7,920.00$ 200.00$ 8,000.00$ 7 additional root grinding 24 HR 160.00$ 3,840.00$ 170.00$ 4,080.00$ 180.00$ 4,320.00$ 200.00$ 4,800.00$ 200.00$ 4,800.00$ 200.00$ 4,800.00$ 8 program prune 3-6" dbh 800 EA 100.00$ 80,000.00$ 115.00$ 92,000.00$ 130.00$ 104,000.00$ 50.00$ 40,000.00$ 52.00$ 41,600.00$ 54.00$ 43,200.00$ 9 program prune 7-12" dbh 1300 EA 134.00$ 174,200.00$ 144.00$ 187,200.00$ 154.00$ 200,200.00$ 125.00$ 162,500.00$ 127.00$ 165,100.00$ 129.00$ 167,700.00$ 10 program prune 13-24" dbh 1600 EA 134.00$ 214,400.00$ 144.00$ 230,400.00$ 154.00$ 246,400.00$ 325.00$ 520,000.00$ 328.00$ 524,800.00$ 330.00$ 528,000.00$ 11 program prune 25-36" dbh 1300 EA 134.00$ 174,200.00$ 144.00$ 187,200.00$ 154.00$ 200,200.00$ 800.00$ 1,040,000.00$ 810.00$ 1,053,000.00$ 820.00$ 1,066,000.00$ 12 program prune 37-48" dbh 600 EA 134.00$ 80,400.00$ 144.00$ 86,400.00$ 154.00$ 92,400.00$ 1,750.00$ 1,050,000.00$ 1,800.00$ 1,080,000.00$ 1,850.00$ 1,110,000.00$ 13 program prune > = 49" dbh 230 EA 134.00$ 30,820.00$ 144.00$ 33,120.00$ 154.00$ 35,420.00$ 1,750.00$ 402,500.00$ 1,800.00$ 414,000.00$ 1,850.00$ 425,500.00$ 14 date palm prune < 55' height 30 EA 275.00$ 8,250.00$ 285.00$ 8,550.00$ 295.00$ 8,850.00$ 225.00$ 6,750.00$ 228.00$ 6,840.00$ 230.00$ 6,900.00$ 15 date palm prune >=55' height 10 EA 375.00$ 3,750.00$ 385.00$ 3,850.00$ 395.00$ 3,950.00$ 325.00$ 3,250.00$ 328.00$ 3,280.00$ 330.00$ 3,300.00$ 16 washington palm prune<55'20 EA 145.00$ 2,900.00$ 150.00$ 3,000.00$ 155.00$ 3,100.00$ 225.00$ 4,500.00$ 228.00$ 4,560.00$ 230.00$ 4,600.00$ 17 washington palm prune>=55'20 EA 175.00$ 3,500.00$ 185.00$ 3,700.00$ 195.00$ 3,900.00$ 325.00$ 6,500.00$ 328.00$ 6,560.00$ 330.00$ 6,600.00$ 18 demand prune 3-6" dbh 20 EA 65.00$ 1,300.00$ 70.00$ 1,400.00$ 75.00$ 1,500.00$ 50.00$ 1,000.00$ 52.00$ 1,040.00$ 54.00$ 1,080.00$ 19 demand prune 7-12" dbh 50 EA 125.00$ 6,250.00$ 135.00$ 6,750.00$ 145.00$ 7,250.00$ 125.00$ 6,250.00$ 127.00$ 6,350.00$ 129.00$ 6,450.00$ 20 demand prune 13-24" dbh 230 EA 225.00$ 51,750.00$ 235.00$ 54,050.00$ 245.00$ 56,350.00$ 325.00$ 74,750.00$ 328.00$ 75,440.00$ 330.00$ 75,900.00$ 21 demand prune 25-36" dbh 200 EA 325.00$ 65,000.00$ 335.00$ 67,000.00$ 345.00$ 69,000.00$ 800.00$ 160,000.00$ 810.00$ 162,000.00$ 820.00$ 164,000.00$ 22 demand prune 37-48" dbh 200 EA 480.00$ 96,000.00$ 495.00$ 99,000.00$ 525.00$ 105,000.00$ 1,750.00$ 350,000.00$ 1,800.00$ 360,000.00$ 1,850.00$ 370,000.00$ 23 demand prune > =49"dbh 100 EA 525.00$ 52,500.00$ 550.00$ 55,000.00$ 575.00$ 57,500.00$ 1,750.00$ 175,000.00$ 1,800.00$ 180,000.00$ 1,850.00$ 185,000.00$ 24 removal <= 6" dbh 10 EA 150.00$ 1,500.00$ 170.00$ 1,700.00$ 190.00$ 1,900.00$ 100.00$ 1,000.00$ 102.00$ 1,020.00$ 105.00$ 1,050.00$ 25 removal 7-12" dbh 20 EA 350.00$ 7,000.00$ 360.00$ 7,200.00$ 370.00$ 7,400.00$ 250.00$ 5,000.00$ 255.00$ 5,100.00$ 260.00$ 5,200.00$ 26 removal 13-24" dbh 25 EA 725.00$ 18,125.00$ 750.00$ 18,750.00$ 775.00$ 19,375.00$ 600.00$ 15,000.00$ 625.00$ 15,625.00$ 650.00$ 16,250.00$ 27 removal 25-36" dbh 20 EA 1,900.00$ 38,000.00$ 2,050.00$ 41,000.00$ 2,150.00$ 43,000.00$ 1,150.00$ 23,000.00$ 1,200.00$ 24,000.00$ 1,250.00$ 25,000.00$ 28 removal 37-48" dbh 10 EA 2,400.00$ 24,000.00$ 2,550.00$ 25,500.00$ 2,650.00$ 26,500.00$ 2,500.00$ 25,000.00$ 2,600.00$ 26,000.00$ 2,700.00$ 27,000.00$ 29 removal >= 49" dbh 8 EA 3,300.00$ 26,400.00$ 3,550.00$ 28,400.00$ 3,650.00$ 29,200.00$ 2,950.00$ 23,600.00$ 3,050.00$ 24,400.00$ 3,150.00$ 25,200.00$ 30 stump grind < 13" diameter 140 EA 175.00$ 24,500.00$ 185.00$ 25,900.00$ 195.00$ 27,300.00$ 125.00$ 17,500.00$ 130.00$ 18,200.00$ 135.00$ 18,900.00$ 31 stump grind 13-30" diameter 200 EA 300.00$ 60,000.00$ 335.00$ 67,000.00$ 375.00$ 75,000.00$ 300.00$ 60,000.00$ 310.00$ 62,000.00$ 320.00$ 64,000.00$ 32 stump grind > 30" diameter 60 EA 450.00$ 27,000.00$ 475.00$ 28,500.00$ 495.00$ 29,700.00$ 450.00$ 27,000.00$ 475.00$ 28,500.00$ 495.00$ 29,700.00$ BASE BID TOTAL:1,465,785.00$ 1,567,150.00$ 1,669,515.00$ 4,395,800.00$ 4,488,855.00$ 4,578,330.00$ SERVICE TOTALS WCA PTS 3 YEAR TOTAL FOR BASIC (HOURLY) SERVICES 613,740.00$ 596,940.00$ 3 YEAR TOTAL FOR PROGRAM PRUNING 2,448,960.00$ 9,833,900.00$ 3 YEAR TOTAL FOR PALM PRUNING 57,300.00$ 63,640.00$ 3 YEAR TOTAL FOR DEMAND PRUNING 852,600.00$ 2,354,260.00$ 3 YEAR TOTAL FOR TREE REMOVAL 364,950.00$ 288,445.00$ 3 YEAR TOTAL FOR STUMP GRINDING 364,900.00$ 325,800.00$ GRAND BID TOTAL 4,702,450.00$ 13,462,985.00$ FY 17 TREE PRUNING AND REMOVAL SERVICES BID SUMMARY Attachment B Attachment C ATTACHMENT C-2 CITY AREA MAP SCALE: 1 " = 1800' 7-YEAR TREE MAINTENANCE CYCLE PRUNING AND REMOVAL SERVICES COSTS - RFQ 162020 - WEST COAST ARBORISTS’ BID WORK TYPE # TREES or HOURS YEAR 1 COSTS (2016 – 2017) YEAR 2 COSTS (2017 – 2018) YEAR 3 COSTS (2018 – 2019) HOURLY WORK 904 $194,040 $204,580 $215,120 UNIT WORK 5,380 $754,020 $816,320 $878,620 PALM PRUNING 80 $ 18,400 $ 19,100 $ 19,800 DEMAND PRUNING 800 $272,800 $283,200 $296,600 REMOVALS 93 $115,025 $122,550 $127,375 STUMP GRINDING 400 $111,500 $121,400 $132,000 YEARLY TOTALS $1,465,785 $1,567,150 $1,669,515 GRAND TOTAL $4,702,450 10-YEAR TREE MAINTENANCE CYCLE PRUNING AND REMOVAL SERVICES COSTS - RFQ 162020 - WEST COAST ARBORISTS’ BID WORK TYPE # TREES/ HOURS YEAR 1 COSTS (2016 – 2017) YEAR 2 COSTS (2017 – 2018) YEAR 3 COSTS (2018 – 2019) HOURLY WORK 904 $194,040 $204,580 $215,120 UNIT WORK 10 year cycle 3,415 $754,020*128 $437,120 $816,320 *140 $478,100 $878,620*150 $512,250 PALM PRUNING 80 $ 18,400 $ 19,100 $ 19,800 DEMAND PRUNING 800 $272,800 $283,200 $296,600 REMOVALS 93 $115,025 $122,550 $127,375 STUMP GRINDING 400 $111,500 $121,400 $132,000 YEARLY TOTALS 1,465,785 $1,148,885 $1,567,150 $1,228,930 $1,669,515 $1,303,145 GRAND TOTAL $4,702,450 $3,680,960 15-YEAR TREE MAINTENANCE CYCLE PRUNING AND REMOVAL SERVICES COSTS - RFQ 162020 - WEST COAST ARBORISTS’ BID WORK TYPE # TREES/ HOURS YEAR 1 COSTS (2016 – 2017) YEAR 2 COSTS (2017 – 2018) YEAR 3 COSTS (2018 – 2019) HOURLY WORK 904 $194,040 $204,580 $215,120 UNIT WORK 15 year cycle 1,978 $754,020*128 $253,184 $816,320 *140 $276,920 $878,620*150 $296,700 PALM PRUNING 80 $ 18,400 $ 19,100 $ 19,800 DEMAND PRUNING 800 $272,800 $283,200 $296,600 REMOVALS 93 $115,025 $122,550 $127,375 STUMP GRINDING 400 $111,500 $121,400 $132,000 YEARLY TOTALS 1,465,785 $964,949 $1,567,150 $1,027,750 $1,669,515 $1,087,595 GRAND TOTAL $4,702,450 $3,080,294 Attachment D City of Palo Alto (ID # 7126) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Resolution Adopting Management Employees Compensation Plan Title: Adoption of Resolution Adopting the 2017-2019 Management & Professional Compensation Plan From: City Manager Lead Department: Human Resources Recommendation Staff recommends that Council adopt the attached resolution approving the Fiscal Year 2017- 2019 Management and Professional Compensation Plan. Background The City of Palo Alto employs approximately 224 Management and Professional employees whose salaries and benefits are established by Council resolution, as outlined in the City’s Management, Professional and Council Appointees Compensation Plan (Compensation Plan). Employees covered by the Compensation Plan do not collectively bargain and are not represented by an employee union. As such, it is necessary to update the Compensation Plan periodically for the purpose of maintaining competitive salaries and benefits to attract and retain top talent in the City’s unrepresented management positions1. The current Compensation Plan was effective July 1, 2014 and the last general wage adjustment was effective July 1, 2015. Discussion 1. Maintenance of Salaries It is recommended that the Compensation Plan be updated with general wage adjustments of 2.5% annually in the pay periods that include July 1 of each Fiscal Year (FY) for FY 2017, FY 2018, and FY 2019. The adoption of these general wage adjustments through FY 2019 will assist in 1 The Management, Professional and Council Appointees Compensation Plan does not include Police, Fire or Utilities managers who are covered under separate agreements and collectively bargain as an employee union or employee association. City of Palo Alto Page 2 providing stability for future planning and budgeting and provide adjustments intended to address annual increases in inflation. To maintain market competitiveness, it is also recommended that the City conduct a market study to identify job classes that have fallen below the market median. (The last market study for management positions was conducted in 2014.) Human Resources and Budget staff will return to Council with costs and recommendations for updated market-based salary adjustments following the completion of the study. The expected timeframe for a new market study is the Fall of 2016, with the results to be brought to Council before the end of the current calendar year. The recommended approach of providing annual 2.5% general wage increases, supplemented by a market study, is similar to the pattern applied to agreements recently reached with other employee groups. In addition to the general wage adjustments, market adjustments were provided for job classes that had fallen below the median of the market. 2. Alignment of Benefits In addition to the maintenance of salaries, it is also recommended that the Compensation Plan be updated to align benefits in a manner consistent with other employee groups. The recommended changes are noted below, with additional detail noted in the attached red-line version of the Compensation Plan. Substantive changes to the Compensation Plan are as follows: A. Medical Contributions In alignment with the premium cost-sharing method applied to other employee groups and adopted as part of the previous Management & Professional Compensation Plan, the 2016 plan year rates will be updated as follows: Maximum City Contribution for Plan Year FY 2016 Employee Only $743 Employee + 1 $1,485 Employee + Family $1,931 For each subsequent calendar year, the maximum city contribution will increase by 4% on January 1 each year. This fixed method caps the City’s costs, while also encouraging employees to become informed consumers by choosing the health care plan that provides the best value for their needs. Under the City’s contract with CalPERS, employees have the option of choosing from up to 10 different medical plans with varying monthly premiums. City of Palo Alto Page 3 B. Pension Contributions Currently, the Compensation Plan requires management and professional employees to pay the full employee portion of the CalPERS Member Contribution at 6.25%, 7%, 8% or 9% of salary2 depending upon an employee’s benefit formula. Effective no sooner than the pay period that includes July 1, 2017, employees in the Management and Professional Group regardless of pension formula will pay an additional 0.5% (non- safety) or 1.5% (safety) towards the Employer share of pension. The following year, employees will pay an additional 0.5% (non-safety) or 1.5% (safety) effective the pay period that includes July 1, 2018. C. Retiree Health The Compensation Plan further aligns management and professional employees with other employee groups by offering a one-time irrevocable opt-in to a retiree health plan offered under State Code 22893. This opt-in provides an alternative method of calculating a retiree’s health contribution, as defined by Government Code Section 22893. D. Other Changes An additional update to the Compensation Plan includes the ability for the City to explore the conversion of the existing management excess benefit (currently $2,500) and professional development (currently $500) to a pre-tax matching deferred compensation contribution up to $4,000 annually. This provision requires further research and is included as an option for possible implementation in January 2017 or as soon as administratively possible. Resource Impact The recommended changes discussed in this staff report are projected at a total cost of $3.95 million to the General Fund ($6.06 million for all funds) over the three fiscal years. The difference between the budgeted assumptions in the FY 2017 Budget and the recommended changes will cost approximately $243,000 in the General Fund and $374,000 in all funds, which will be absorbed through vacancy savings. Any additional adjustments from the results of the market study are not addressed in these projected costs and are subject to approval once the study has been completed. Policy Implications The proposed Plan is consistent with and will further many of the goals identified by the City Council in the City’s Labor Guiding Principles. 2 New members to the pension plan since 2013 are charged “50% of the normal cost” as defined under the Public California Public Employees' Pension Reform Act (PEPRA). City of Palo Alto Page 4 Environmental Review Approval of the Compensation Plan affecting the wages, hours and working conditions of City employees is not a project under the California Environmental Quality Act (CEQA). Attachments:  RESO Adopting Mgmt Prof Comp Plan 2016-2019 (PDF)  2016-2019 Management Professional Compensation Plan (PDF)  2016-2019 Management Professional Compensation Plan Red-Line Version (PDF)  Final FY17-FY19 Final Mgmt & Prof Salary Schedule (PDF) *NOT YET APPROVED* 1 Resolution No. ____ Resolution of the Council of the City of Palo Alto Adopting the 2016- 2019 Compensation Plan for Management and Professional Personnel The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the 2014-2016 Compensation Plan for Management and Professional Personnel is repealed in its entirety and the 2016-2019 Compensation Plan for Management and Professional Personnel is hereby adopted as set forth in Exhibit “A”, attached hereto and incorporated herein by reference, effective with the pay period including July 1, 2016. SECTION 2. The Director of Administrative Services is authorized to implement the amended Compensation Plan as set forth in Section 1. SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ______________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ______________________________ Senior Deputy City Attorney City Manager _____________________________ Director of Administrative Services ____________________________ Chief People Officer CITY OF PALO ALTO COMPENSATION PLAN Management and Professional Personnel And Council Appointees Effective July 1, 2016 through June 30, 2019, except where specifically noted. 2 SECTION I. COMPENSATION ....................................................................................................... 1 A. MANAGEMENT AND PROFESSIONAL COMPENSATION POLICY .......................................... 1 B. BASIC PLAN ELEMENTS ........................................................................................................ 1 C. MANAGEMENT AND PROFESSIONAL COMPENSATION ADJUSTMENT AUTHORIZATION ... 3 SECTION II. SPECIAL COMPENSATION ...................................................................................... 4 A. OVERTIME ............................................................................................................................ 4 B. IN LIEU HOLIDAY PAY ........................................................................................................... 4 C. WORKING ABOVE CLASSIFICATION PAY .............................................................................. 4 D. STAND-BY PAY .................................................................................................................. 5 E. CALL OUT PAY ...................................................................................................................... 5 F. NIGHT SHIFT PREMIUM ....................................................................................................... 5 G. UNIFORM PURCHASE PLAN - SWORN POLICE, FIRE PERSONNEL, and OPEN SPACE PERSONNEL ................................................................................................................................. 5 H. GROUP INSURANCE .......................................................................................................... 5 I. EMPLOYEE ASSISTANCE PLAN ............................................................................................ 10 J. SAFETY DIFFERENTIALS ...................................................................................................... 10 K. MANAGEMENT and PROFESSIONAL BENEFIT PROGRAM ................................................. 11 L. LEAVES................................................................................................................................ 13 M. RETIREMENT PENSION ................................................................................................... 17 N. COMMUTE INCENTIVES and PARKING ........................................................................... 19 O. AT-WILL STATUS ............................................................................................................. 20 P. ADDITIONAL COMPENSATION FOR MAYOR AND VICE MAYOR ........................................ 21 Q. REIMBURSEMENT FOR RELOCATION EXPENSE .............................................................. 21 R. MEAL ALLOWANCE ............................................................................................................ 22 S. GRIEVANCES REGARDING COUNCIL APPOINTED OFFICERS .............................................. 22 T. MERIT RULES ...................................................................................................................... 22 1 COMPENSATION PLAN FOR THE CITY OF PALO ALTO Management and Professional Personnel As used in this Plan, the term “Management and Professional” refers to all employees, including Confidential employees, previously classified as “Management and Confidential” by the City. This group will hereafter be identified as “Management and Professional” personnel. SECTION I. COMPENSATION This section applies to all management and professional employees and does not include Council Members or Council-appointed officers. Each Council-appointed officer shall be the responsible decision-maker under this Plan for those employees in departments under his/her control. A. MANAGEMENT AND PROFESSIONAL COMPENSATION POLICY The City's policy for management and professional compensation is to establish and maintain a general structure based on marketplace norms and internal job alignment with broad compensation grades and ranges. Structures and ranges will be reviewed and updated as necessary based on marketplace survey data, internal relationships, and City financial conditions. Individual compensation adjustments will be considered by the Council-appointed officer based on (1) performance factors including achievement of predetermined objectives; (2) pay structure adjustments; and (3) City financial conditions. B. BASIC PLAN ELEMENTS 1. Structure. The compensation plan includes separate multi-grade structures for both management and professional employees. Each grade will have a salary range with a mid-point which is 20% above the minimum, and 20% below the maximum of the range. All management and professional positions will be assigned an appropriate pay grade based on salary survey data and internal relationships. Actual salary within the range is determined by experience and performance. Competitive marketplace studies will be conducted as needed by surveying a maximum of 14 organizations similar to Palo Alto in number of employees, funding mechanisms, population and services provided. A market study is planned to be completed by January 2017. These studies will focus on total compensation for management positions such as first line supervisors, administrative, confidential, professional and top management. Periodically, studies will include position-by-position comparisons using market research and internal equity data. The results of these studies may indicate that the entire pay grade structure be adjusted, that individual positions be reassigned to different pay grades, or that no change 2 takes place. Such adjustments will only affect the salary administration framework. No individual salaries will be automatically changed because of structural adjustments. A department director may request that HR reevaluate a job or jobs in his or her department based on significant and permanent changes in job content. In doing so the director will supply needed information and will provide a position description questionnaire as requested. The Chief People Officer will respond to such requests within his or her discretion. 2. Compensation Adjustment Authorization. In consultation with feedback received from the Management and Professional Compensation Committee, the City Manager may propose as part of the budget process for Council approval of a compensation adjustment based on (1) competitive market data, (2) changes in internal position relationships, (3) the City's ability to pay, and (4) a recommendation received from the Chief People Officer. Effective the first pay period following Council adoption of this plan all classifications will receive a two and one-half percent (2.5%) salary increase. Effective the pay period including July 1, 2017, all classifications will receive a two and one-half percent (2.5%) salary increase. Effective the pay period including July 1, 2018, all classifications will receive a two and one-half percent (2.5%) salary increase. a) Base Compensation. Compensation for management and professional employees includes bi-weekly base salary and is paid on a continuing basis. On a fiscal year basis, the bi-weekly base salary must fall within pay grade limits of no less than 20% below the mid-point and no more than 20% above the mid-point. Base salary increases are earned and authorized in accordance with administrative guidelines based upon growth within the position and performance, which must meet or exceed position standards defined through the performance planning and appraisal process described in subsection b below, the salary structure and the City’s ability to pay. Management/professional employees who have received an overall rating of "Meets", “Higher” or "Exceeds" expectations on their annual review and who have not been on a performance improvement plan during the preceding fiscal year will be eligible for an adjustment to base compensation. Nothing herein shall preclude an employee's manager from awarding a mid-point adjustment increase to an employee on a performance plan at a later date should employee's performance improve. b) Performance Planning and Appraisal. Performance appraisals will be conducted at the end of each fiscal year during the months of July through September 30 each year prior to determining individual employee fixed compensation. This process includes both review of previous performance plan and preparation of the performance plan for the next planning period (usually the fiscal year). Performance plans are jointly prepared by the employee and supervisor with the concurrence of the department head or Council-appointed officer. The performance plans shall contain measurable objectives which place special emphasis on position description duties or specific assignments. Progress toward meeting objectives 3 shall be monitored periodically. The performance appraisals should be implemented in a manner that will achieve the following objectives: • Define the employee’s job duties and expected level of performance for the next review period to ensure that both the employee and supervisor have a clear understanding of the employee’s role and responsibilities; • Evaluate and document past performance to serve as a basis for establishing and obtaining future performance standards/objectives; • Facilitate two-way communication and understanding between the employee and his or her supervisor; • Counsel and encourage employees to work toward a learning development plan and realize their full potential; • Establish future work plan objectives. Work plans should include job related projects or special goals related to regular job duties when applicable. At the conclusion of the fiscal year (or review period), supervisors shall make a final determination of the overall performance rating. Recommendations shall be forwarded to department heads and to the Chief People Officer or appropriate Council appointed officer who will then determine individual fixed adjustments according to the provisions of the compensation plan. Each department will ensure that metrics tie to the performance appraisal. The performance planning and appraisal process should be completed by September 30. C. MANAGEMENT AND PROFESSIONAL COMPENSATION ADJUSTMENT AUTHORIZATION 1. Council-appointed officers are authorized to pay salaries in accordance with this plan to non-Council-appointed management and professional employees in an amount not to exceed the aggregate of approved management and professional positions in the Table of Organization for the applicable fiscal year. 2. Individual management and professional compensation authorized by a Council-appointed officer under the Management and Professional Compensation Plan may not be less than 20% below nor more than 20% above the mid-point for the individual position grades authorized in Salary Schedule attached. 3. The Council-appointed officers are authorized to establish such administrative rules as are necessary to implement the Management and Professional Salary Plan subject to the limitations of the approved compensation adjustment authorization and the approved grade and mid-point structure. 4. Notwithstanding any other provision of this Compensation Plan, in the event a downward adjustment of a position grade assignment indicates a reduction in the established salary of 4 an individual employee, the Council-appointed officer may, if circumstances warrant, continue the salary for such employee in an amount in excess of the revised grade limit for a reasonable period of time. Such interim salary rates shall be defined as "Y-rates." Employees in “Y-rated” positions shall not be eligible for any increase to base salary unless and until the amount of the “Y-rated” salary is equal to or less than the published pay rates. Employees assigned to work above class duties shall not be eligible for “Y-rated” pay on conclusion of a work above class assignment. SECTION II. SPECIAL COMPENSATION This section applies to all eligible regular management and professional positions including Council Appointed Officers as applicable and including Council Members where indicated. Eligibility shall be in conformance with the Merit Rules and Regulations and Administrative Directives issued by the City Manager for the purposes of clarification and interpretation. A. OVERTIME Compensation for overtime work shall be in conformance with the Merit Rules and Regulations and Policies and Procedures. B. IN LIEU HOLIDAY PAY Employees who work a schedule where a regular day off falls on a holiday will be paid for the hours they would have normally worked on that day. If the holiday falls on a non-workday for an exempt employee, the employee may, with supervisory approval, take another day off within the pay period or the following pay period. C. WORKING ABOVE CLASSIFICATION PAY Where management and professional employees, on a temporary basis, are assigned to perform all significant duties of a higher classification for a period of one month or more, the City Manager may authorize payment within the range of the higher classification for the specified time frame. Working above classification will not exceed six months, unless renewed at the discretion of the City Manager. On expiration of that timeframe, working above classification pay will cease and the employee will return to his or her former pay level. Working above classification pay is not to exceed 10% more than the employee’s current salary and shall be documented on a Personnel Action Form, with a description of the additional duties in the higher classification to be performed and an end date. 5 D. STAND-BY PAY Employees eligible for overtime may be entitled to stand-by pay, approved by the City Manager on a case by case basis, in extreme circumstances involving unavailability of non-management staff. Compensation is as follows: Monday through Friday $40 per day Saturday, Sunday, Holidays $58 per day E. CALL OUT PAY Effective pay period beginning February 26, 2011, Exempt management and professional classifications will be compensated for Call Out as outlined below with Management approval (and will not be eligible for overtime pay). Call Out applies when: (1) an employee previously left City premises, (2) is called back to the work location outside of regularly scheduled working hours, and (3) the Call Back is for an emergency arising out of situations involving real or potential loss of service, property or personal danger. Employees called back will be expected to respond directly to the location of the problem. Compensation is per Call Out as reported on timecard and will be paid as follows: Monday through Friday: $140 per day Saturday and Sunday: $200 per day F. NIGHT SHIFT PREMIUM Night shift differential shall be paid at the rate of five percent (5%) to regular full-time employees who are regularly assigned to shift work between 6:00 p.m. and 8:00 a.m., or to employees who are temporarily assigned to work a full shift between 6:00 p.m. and 8:00 a.m. G. UNIFORM PURCHASE PLAN - SWORN POLICE, FIRE PERSONNEL, and OPEN SPACE PERSONNEL Uniforms, including cleaning, will be provided with replacement provisions on an as-needed basis in conformance with department policy. H. GROUP INSURANCE 1. Effective Date of Coverage for New Employees For newly-hired regular employees coverage begins on the first day of the month following date of hire for the health plan, dental plan, vision care plan, long term disability and life insurance plans if these benefits are elected. 6 2. Dual coverage. When a City employee is married to or has a registered domestic partner with the California Secretary of State with another City employee, each shall be covered only once (as an individual or as a spouse of the other City employee, but not both) and dependent children, if any, shall be covered by only one spouse. 3. Active Employee Health Plan a) During the term of this compensation plan, the maximum City contribution towards medical premiums for eligible full-time employees per category shall be up to a maximum of the following for any plan: Medical Premium Category (Coverage Level) PEMHCA contribution *2016/2017/ 2018/ 2019 (projected for 2018 and 2019) Additional City Contribution 2016/2017/ 2018/ 2019 (projected for 2018 and 2019) Up to a Total Maximum City Contribution Effective as soon as administratively possible following plan adoption Up to a Total Maximum City Contribution Effective January 1, 2017 Up to a Total Maximum City Contribution Effective January 1, 2018 Up to a Total Maximum City Contribution Effective January 1, 2019 Single (EE only) 2016 2017 2018 2019 $125 $128 $131 $135 $618 $645 $673 $702 $743 $773 $804 $837 2- Party (EE +1) 2016 2017 2018 2019 $125 $128 $131 $135 $1360 $1416 $1475 $1536 $1,485 $1,544 $1606 $1671 Family (EE + 2 or more) 2016 2017 2018 2019 $125 $128 $131 $135 $1806 $1880 $1957 $2037 $1,931 $2,008 $2088 $2172 *The PEMHCA minimum changes per statutory determination. Any increases to the PEMHCA minimum during the term of this plan will result in a corresponding decrease to the amount of the additional City contribution, so that the total maximum City contribution never exceeds the amount listed in the “Total Maximum City Contribution” columns above. 7 b) The City’s total maximum contribution towards medical premiums for eligible part time employees shall be prorated based on the number of hours per week the part-time employee is assigned to work. c) Coverage For Domestic Partners 1) Domestic Partnership Registered with the California Secretary of State: Employees may add their domestic partner as a dependent to their elected health plan coverage if the domestic partnership is registered with the Secretary of State and will be eligible for the Alternative Medical Benefit Program in paragraph 3 below. 2) Domestic Partnership Not Registered with the California Secretary of State: Domestic partners who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the People Strategy and Operations Department, will be eligible for a stipend of two hundred and eighty four dollars ($284.00) per month toward the cost of an individual health plan. Evidence of premium payment will be required with request for reimbursement. 4. Alternative Medical Benefit Program If a regular employee and/or the employee’s dependent(s) are eligible for and elect to receive medical insurance through another non-City of Palo Alto employer-sponsored or association medical plan, the employee may choose to waive his/her right to the City of Palo Alto’s medical insurance and receive cash payments in the amount of $284.00. Examples of waivers eligible for this payment are: • Employee waives all applicable City medical coverage; or • Employee is eligible to enroll his or her spouse or register his or her domestic partner with the California Secretary of State and waives medical coverage for the spouse or domestic partner; or • Employee has additional eligible dependents and waives family-level medical coverage. Participation must result in a health insurance cost savings to the City and payments per employee shall not exceed a total of two hundred eighty four dollars ($284.00) per month. To participate in the program the employee and dependents must be eligible for coverage under PEMHCA medical plans, complete a waiver of medical coverage form, and provide proof of eligible alternative medical coverage. When a City employee is married to or has a registered domestic partner with the California Secretary of State with another City employee, each shall only be eligible once (as an individual or as a spouse of the other City employee, but not both) and not eligible for a waiver. Payments will be made in the employee’s paycheck beginning the first month following the employee’s completion of the waiver form. Payments are subject to state and federal taxes and are not considered earnings under PERS law. Employees are responsible for notifying the 8 City of any change in status affecting eligibility for this program (for example, life changes affecting dependent’s eligibility for medical coverage through the employee) and will be responsible for repayment of amounts paid by the City contrary to the terms of this program due to the employee’s failure to notify the City of a change in status. 5. Retiree Health Plan a) Employees Hired Prior to January 1, 2004 Monthly City-paid premium contributions for a retiree-selected health plan through the CalPERS Health Benefits Program will be made as provided under the Public Employees” Medical and Hospital Care Act. The City’s monthly employer contribution for each employee retiring on or after January 1, 2007 and prior to March 31, 2011 shall be the amount necessary to pay for the cost of his or her enrollment in a health benefits plan up to the monthly premium for the second most expensive plan offered to management and professional personnel during the contract term (among the existing array of plans.) The City’s contribution for an employee hired before January 1, 2004 who retires on or after March 30, 2011 shall be the same contribution amount it makes from time to time for active City employees. b) Post – 1/1/04 Hires For those Management and professional employees hired after January 1, 2004, the PERS law vesting schedule set forth in Government Code section 22893 will apply. Under that law, an employee is eligible for 50% of the specified employer health premium contribution after ten (10) years of service credit, provided at least five (5) of those years were performed at the City of Palo Alto. After ten (10) years of service credit, each additional service credit year increases the employer contribution percentage by 5% until, at 20 years’ service credit, the employee will be eligible upon retirement for 100% of the specified employer contribution and 90% of their dependent coverage. The City of Palo Alto’s health premium contribution for eligible post – 1/1/04 hires shall be the minimum contribution set by PERS under section 22893 based on a weighted average of available health plan premiums. c) Effective upon ratification and adoption of this compensation plan, the City shall provide active Management employees who were hired before January 1, 2004 with a one-time opportunity to opt-in to retiree health benefits provided under California Government Code section 22893. Eligible employees who wish to exercise this option shall inform the Human Resources department of their election in writing no later than 90 days following the ratification and adoption of this compensation plan. 6. Dental Plan a) The City shall pay covered plan charges on behalf of all eligible employees and dependents. (Domestic partners who are either registered with the Secretary of State or who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department are considered 9 dependents under the plan.) Benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) The City’s Dental Plan provides the following: • Maximum Benefits per Calendar Year- $2,000 per person • Lifetime Maximum for Orthodontics- The City will pay up to $2,000.00 for orthodontia coverage (not included in annual dental maximum) • Major Dental Services 50% UCR* • Orthodontics 50% UCR* • Basic Benefits (All other covered services) First Calendar Year of Eligibility 70% UCR* Subsequent Calendar Years 70%-100% *Usual, Customary, and Reasonable • Composite (tooth covered) fillings for posterior teeth For each dental plan member, the percentage of coverage for basic benefits will begin at 70% for the first calendar year of coverage and increase by 10% (up to a maximum of 100%) effective the first day of the next calendar year as long as the member utilizes the plan at least once during the current year. Per the Delta Dental contract effective October 1, 2005, if the member does not utilize the plan during the current year, the percentage of coverage for the next calendar year shall remain unchanged from the current year. If a dental plan member ever loses coverage under the plan, the applicable percentage of coverage for basic benefits provided during any future period of coverage will commence at 70% as if the dental plan member was a new enrollee. Examples of when a member might lose coverage under the plan would include: • Employee goes on an unpaid leave of absence and elects not to pay the required dental premiums for his/her family’s coverage during the leave. • Employee elects to drop one or more covered dependents from the plan during an open enrollment period so that they might be covered on a spouse’s non- City of Palo Alto dental plan. 7. Basic Life Insurance The City shall provide a basic group term life insurance with Accidental Death and Dismemberment (AD&D) coverage, in an amount equal to the employee's annual basic pay (rounded to the next highest $1,000) at no-cost to the employee. AD&D pays an additional amount equal to the employee’s annual basic pay (rounded to the next highest $1,000). 8. Supplemental Life And AD&D Insurance An employee may, at his/her cost, purchase additional life insurance and additional AD&D coverage equal to one- or two-times his or her annual salary. The maximum amount of life 10 insurance available to the employee is up to $325,000 and the maximum amount of AD&D coverage available is up to $325,000. 9. Long Term Disability Insurance a) The City shall provide long term disability (LTD) insurance with a benefit of 2/3 monthly salary, up to a maximum benefit of $10,000 per month. The City shall pay the premium for the first $6,000 of base monthly salary. For employees whose base monthly salary exceeds $6,000, the employee shall pay the cost of the required premium based upon their monthly salary between $6,000 and $15,000. b) For employees whose base monthly salary exceeds $6,000 and who have no eligible dependents covered under the City’s medical, dental or vision plans, the City will pay up to $17.50 per month towards the employee’s cost for LTD coverage. 10. Vision Care a) The City shall provide vision care coverage for employee and dependents. Coverage is administered by Vision Service Plan (VSP). The plan provides an exam every 12 months; lenses every 24 months; frames every 24 months, all subject to a $20 co-payment as defined in the Vision Services Benefits Plan A schedule. Benefits for regular part-time employees will be prorated as follows: Employees hired after January 1, 2004, who will work less than full time, will receive prorated premium costs for vision benefits in accordance with his/her percentage of a full-time work schedule. Vision benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) Effective July 1, 1996, dependents include eligible domestic partners who are either registered with the Secretary of State. I. EMPLOYEE ASSISTANCE PLAN The Employee Assistance Plan (EAP) provides employees with confidential personal counseling, work and family related issues, eldercare, substance abuse, etc. In addition, EAP programs provide a valuable tool for supervisors to refer troubled employees to professional outside help. This service staffed by experienced clinicians is available to employees and their dependents by calling a toll-free phone line 24 hours a day, seven days a week. Guidance is also available online. J. SAFETY DIFFERENTIALS 1. Police Department - Personnel Development Program 11 Pursuant to administrative rules governing eligibility and qualification, one of the following differentials, whichever is higher, may be granted to sworn police personnel: • P.O.S.T. Intermediate Certificate: five percent (5%) above base salary • P.O.S.T. Advanced Certificate: seven and a half (7 ½%) above base salary 2. Fire Department - EMT Differential Pursuant to administrative rules governing eligibility and qualification, the following differential may be granted to sworn Fire personnel: • EMT Differential: three percent (3%) above base salary K. MANAGEMENT and PROFESSIONAL BENEFIT PROGRAM Management and professional employees are eligible for Sections 1, 2, and 3of the Management Benefit Program below. City Council Members are not eligible for benefits under Section 1 and 2 below. 1. Professional Development - Reimbursement The purpose of this program is to provide employees with resources to improve and supplement their job and professional skills. Reimbursement for authorized self- improvement activities may be granted each management and professional employee up to a maximum of five hundred dollars ($500) per fiscal year. A departmental training fund of one thousand dollars per employee ($1,000) will be established for subject matter, leadership or other training that the Department Director identifies as a need for employees within that Department. The following items are eligible for reimbursement: a) Civic and professional association memberships b) Conference participation and travel expenses, which must occur within the compensation plan period. c) Educational programs, books and videos, and tuition reimbursement designed to maintain or improve the employee's skills in performing his or her job or future job opportunities, should support the City’s mission or be necessary to meet the educational requirements for qualification for employment. Permissible educational expenses are refresher courses, courses dealing with current developments, academic or vocational courses, as well as the travel expenses associated with the courses as defined by the City’s travel expense report from the Policy & Procedures Manual Section 1-02 ASD. 12 d) Professional and trade journal subscriptions not to exceed 12 months. e) Approval will be at discretion of department head and signature is required on reimbursement form. Amounts under this professional development program will be pro-rated in the first year of employment or promotion into a position covered by this Compensation Plan 2. Excess Benefit This benefit is designed to meet the requirements of Section 125 of the Internal Revenue Code, with exception of Gym or Health Club Membership. Every calendar year, each employee will be provided with $2,500 that they can designate among the following options, subject to caps pursuant to IRS regulations: a) Medical Flexible Spending Account (Medical FSA). Provides reimbursement for excess medical/dental/vision, or expenses that are incurred by employees and their dependents which are not covered or reimbursed by any other source, including existing City-sponsored plans. This includes prescribed medications and copayments. However, nonprescription dietary supplements (e.g. vitamins, etc.) toiletries (e.g. toothpaste), cosmetics (e.g. face cream), and items used for cosmetic purposes (e.g. Rogaine) are not acceptable. b) Dependent Care Flexible Spending Account (Dependent Care FSA). Provides reimbursement for qualified dependent care expenses under the City's Dependent Care Assistance Program (DCAP), subject to the following limits: Dependent care expenses will be reimbursed only to the extent that the amount of such expenses reimbursed under this Management Benefit Program, when added to the amount (if any) of annual dependent care expenses that the participant has elected under the City's Flexible Benefits Plan, do not exceed the maximum permitted under the DCAP. 1) The annual amount submitted for reimbursement cannot exceed the income of the lower-paid spouse. 2) The expenses must be employment-related expenses for the care of one or more dependents who are under 13 years of age and entitled to a dependent deduction under Internal Revenue Code section 151(e) or a dependent who is physically or mentally incapable of caring for himself or herself. 3) The payments cannot be made to a child under 19 years of age or to a person claimed as a dependent. 13 4) If the services are provided by a dependent care center, the center must comply with all state and local laws and must provide care for more than six (6) individuals (other than a resident of the facility). 5) Dependent care expenses not submitted under this section are eligible under the City Dependent Care Assistance Plan (DCAP). However, the maximum amount reimbursed under DCAP will be reduced by any amount reimbursed under the Excess Benefit Plan. c) Non-taxable Professional Development Spending Account. Provides reimbursement for Non-Taxable professional development expenses (e.g., job-related training and education, seminars, training manuals, etc.) to the extent they are not paid or reimbursed under any other plan of the City. d) Gym or Health Club memberships. Provides reimbursement for annual or monthly memberships, including personal trainers. Reimbursement of this expense is taxable to the employee. e) Deferred Compensation. Provides a one-time contribution to the employee’s City- sponsored 457 Deferred Compensation plan with either ICMA-RC or Mass Mutual. Amounts designated by employees to either the Medical FSA, Dependent Care FSA, or Professional Development options are done so on a “use–it-or-lose-it” basis. This means that any amounts designated and not used by the end of the calendar year (or end of the extended grace period for the medical FSA) will be forfeited by the employee and returned to the plan. Specified amounts under this benefit will be applied on a pro-rated basis for employees who are part-time or who are in a management or professional pay status for less than the full fiscal year. Such benefits will be pro-rated in the first year of employment (based on hire date) but will not be pro-rated upon separation of employment. 3. City will explore options including a deferred compensation match up to $4000 through a pre-tax retirement savings account as a replacement for Professional Development in Section 1 and Excess Benefit as provided under Section 2. L. LEAVES 1. Sick Leave a) Sick leave shall be accrued bi-weekly provided the employee has been in a pay status for 50% or more of a bi-weekly pay period. Sick leave shall be accrued at the rate of 3.7 hours per bi-weekly pay period for those employees working a 40-hour duty schedule. Those assigned work schedules which are greater or lesser than 40 hours will accrue sick leave at the ratio of their work schedule to 40 hours. 14 b) Employees may use up to 20 hours of sick leave per calendar year for personal business. The scheduling of such leave is subject to the approval of the appropriate level of Management. c) Employees leaving the municipal service shall forfeit all accumulated sick leave, except as otherwise provided by law and by Section 609 of the Merit Rules and Regulations. In the event that notice of resignation is given, sick leave may be used only through the day which was designated as the final day of work by such notice. d) Employees that were hired before December 1, 1983 and who leave the municipal service in good standing, or who die while employed in good standing by the city, and who have 15 or more years of continuous service shall receive compensation for unused sick leave hours in a sum equal to two and one-half percent (2½%) of their unused sick leave hours multiplied by their years of continuous service and their basic hourly rate of pay at termination. Full sick leave accrual will be paid in the event of termination due to disability. See Merit System Rules and Regulations, Chapter 6, Section 609. e) Up to nine (9) days of sick leave per calendar year may be used for illness in the immediate family, including a registered domestic partner. f) Management and Professional employees eligible, as specified above if hired before December 1, 1983, to be compensated for sick leave may annually convert sick leave hours in excess of 600 to cash or deferred compensation, according to the formula set forth above, up to a maximum of $2,000 per fiscal year. g) In accordance with the City Merit Rules and Regulations, a new employee may, if necessary, use up to 48 hours or shift equivalent of sick leave at any time during the first six (6) months of employment. 2. Management Annual Leave a) Exempt Employees Regular management and professional employees will be credited with 80 hours of annual leave. This leave is granted in recognition of the extra hours Management and Professional employees work over their regular schedule. This leave may be taken as paid time off, added to vacation accrual (subject to vacation accrual limitations), taken as cash or taken as deferred compensation. When time off is taken under this provision, 10-hour shift workers will receive one shift off for each 8 hours charged; 24-hour shift workers will receive one-half (½) shift off for each 8 hours charged. 15 In 2012, the City transitioned this benefit from a fiscal to calendar year basis for administrative purposes. Beginning in 2013 and each calendar year thereafter, employees will be credited with 80 hours of management annual leave. Entitlement under this provision will be reduced on a prorated basis for part-time status, or according to the number of months in paid status during the year; employees who have used more than the pro-rated share at the time they leave City service shall be required to repay the balance or have it deducted from their final check. Unused balances as of the end of the year will be paid in cash unless a different option as indicated above is elected by the employee. b) Non-Exempt Employees Based on an audit recommendation to eliminate payment of overtime as well as management leave for non-exempt employees in the management group, the City is transitioning away from providing management leave to non-exempt employees. As part of the transition, and in order to minimize impacts to current employees, the City will phase-out elimination of the 80 hours of management leave for all current non-exempt Management and Professional employees (those eligible to earn overtime). Beginning on July 1, 2014 all employees in non-exempt positions will receive overtime pay for hours actually worked, but will no longer receive management leave. Employees hired into non-exempt management positions on or after February 26, 2011 will receive overtime only and will not be eligible for management leave. 3. Vacation Vacation will be accrued when an employee is in pay status and will be credited on a bi- weekly basis. Total vacation accrual at any one time may not exceed three (3) times the annual rate of accrual. Each eligible employee shall accrue vacation at the following rate for continuous service performed in pay status: a) Less than nine (9) years. For employees completing less than nine (9) years continuous service: 120 hours vacation leave per year; provided that: i. The City Manager is authorized to adjust department head annual vacation accrual to provide for a maximum of 160 hours for those hired between July 1, 1996 and June 30, 2001; and ii. The City manager is authorized to adjust the annual vacation accrual of employees hired on or after July 1, 2001, to provide up to 40 additional hours (i.e., to a maximum annual accrual of 160 hours) for service with a prior employer. 16 b) Nine (9), but less than fourteen (14) years. For employees completing nine (9), but not more than fourteen (14) years continuous service; 160 hours vacation per year. c) Fourteen (14), but less than nineteen (19) years. For employees completing fourteen (14), but not more than nineteen (19) years continuous service; 180 hours vacation leave per year. d) Nineteen (19) or more years. For employees completing nineteen (19) or more years continuous service; 200 hours vacation leave per year. e) Employees are eligible to cash out vacation accrual balances in excess of 80 hours. An employee may cash out a minimum of eight (8) hours to a maximum of 120 hours of accrued vacation provided the employee has taken 80 vacation hours in the previous 12 months and has followed the election procedures set forth in this section. Employees must elect the number of vacation hours they will cash-out during the next calendar year, up to the maximum of 120 hours. For the 2012 calendar vacation year, employees will make their election for vacation hours to cash out no later than November 1, 2012. The election will apply only to vacation hours that are accrued in the next calendar year and that are eligible for cash-out. The election to cash-out vacation hours in each designated year will be irrevocable. This means that employees who elect to cash-out vacation hours must cash-out the number of accrued hours pre-designates on the election form. Employees who do not elect a cash-out amount by November 1 of the prior calendar year will be deemed to have waived the right to cash out any leave in the following tax year and will not be eligible to cash-out vacation hours in the next tax year Employees who elect cash-out amounts may request a cash-out at any time in the designated tax year by submitting a cash-out form to payroll. Payroll will complete the cash-out upon request, provided the requested cash-out amount has accrued and is consistent with the amount the employee pre-designated. If the full amount of hours designated for cash-out is not available at the time of cash-out request, the maximum available will be paid. For employees who have not requested cash-out of the elected amount by November 1 of each year, Payroll will automatically cash-out the elected amount in a paycheck issued on or after the payroll date including November 1. 4. Bereavement Leave of absence with pay of three (3) days may be granted an employee by the head of his/her department in the event of death in the employee’s immediate family, which is 17 defined for purposes of this section as wife, husband, son, son-in-law, step-son, daughter, daughter-in-law, step-daughter, mother, mother-in-law, father, father-in-law, brother, brother-in-law, sister, sister-in-law, grandmother, grandmother-in-law, grandfather, grandfather-in-law, grandchild, aunt, uncle, niece, nephew, registered domestic partner, or a close relative residing in the household of employee. Such leave shall be at full pay and shall not be charged against the employee’s accrued vacation or sick leave. Requests for leave in excess of three days shall be subject to the approval of a Council-Appointed Officer for employees under his/her control. 5. Use of accrued leave credits during leaves of absence. During unpaid leaves of absence for disability or other reasons, the employee may elect and the City may require the employee to use accrued paid vacation and sick leave in a manner consistent with state and federal law. Requests for leaves without pay shall not be unreasonably denied. In order to avoid misunderstandings, all leaves without pay must be in writing to be effective. M. RETIREMENT PENSION 1. Miscellaneous Pension Formulas: a. Miscellaneous Pension Group A: 2.7% at 55. The City provides retirement benefits under the California Public Employees Retirement System at the level of 2.7% at age 55 for employees hired before July 17, 2010, with a one year final compensation period. b. Miscellaneous Pension Group B: 2% at 60:For miscellaneous employees hired on or after July 17, 2010, and before January 1, 2013, and employees hired on or after January 1, 2013 who are not “new members” of CalPERS as defined in the Public Employees’ Pension Reform Act (often referred to as “Classic” CalPERS members)the City offers the CalPERS retirement formula two percent (2.0%) of final salary at age sixty (60), with a one (1) year final compensation period. c. Miscellaneous Pension Group C: 2% at 62. Employees hired on or after January 1, 2013 meeting the definition of “new member” under the Public Employees’ Pension Reform Act (Gov’t. Code s. 7522 et seq.) shall be subject to all of the provisions of that law, including but not limited to the two percent at age 62 (2%@62) retirement formula with a three (3) year final compensation period. 2. Safety Pension Formulas: a. Safety Pension Group A: 3% at 50. For Safety members, the City currently offers the CalPERS "3% at 50" full formula (Section 21362.2) benefit, with a one (1) year final compensation period. 18 b. Safety Pension Group B: 3% at 55. Local Fire Safety members newly hired after 6/08/12 will be placed in the 3%@55 formula. As soon as administratively possible, the City intends to modify the Local Police Safety formula for new hires to 3%@55 formula. c. Safety Pension Group C: New employees hired on or after January 1, 2013 who are “new members” as defined by the California Public Employees’ Pension Reform Act (PEPRA), will be subject to the terms of that statute, with a three (3) year final compensation period. 3. Employee PERS Share. a. Miscellaneous Employee Shares: Employees in Miscellaneous Pension Group A shall pay the full eight percent (8%) employee contribution. Employees in Miscellaneous Pension Group B shall pay the full seven percent (7%) employee contribution. Employees in Miscellaneous Pension Group C shall pay the employee contribution required by the Public Employees Pension Reform Act, calculated at fifty percent (50%) of the normal cost. b. Safety Employee Shares. Employees in Safety Pension Group A shall pay the full nine percent (9%) PERS employee contribution. Employees in Safety Pension Group B shall pay the full eight percent (9%) PERS employee contribution. Employees in Safety Pension Group C shall pay the employee contribution required by the Public Employees Pension Reform Act, calculated at fifty percent (50%) of the normal cost. Employees under the 2%@62 benefit shall pay at least 50 percent of the total normal cost or the same contribution rate as “similarly situated” employees, whichever is higher. 4. Employer Share a. Miscellaneous (Non-Safety) Management and Professional: As soon as administratively possible, but no sooner than pay period including July 1, 2017 each Miscellaneous (non-Safety) Management and Professional employee shall pay one- half percent (0.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. Effective the first full pay period including July 1, 2018, each Miscellaneous (non-Safety) Management and Professional employee shall pay an additional one-half percent (0.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. This will result in Miscellaneous (non-Safety) Management and Professional employees paying a total of one (1) percent of the employer share in addition to their employee contribution . 19 b. Safety Management: As soon as administratively possible, but no sooner than pay period including July 1, 2017 each Safety Management employee shall pay one and one-half percent (1.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. Effective the first full pay period including July 1, 2018, each Safety Management employee shall pay an additional one and one-half percent (1.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. This will result in Safety Management employees paying a total of three (3) percent of the employer share in addition to their employee contribution. 5. Final Compensation. Final compensation for purposes of retirement shall be as set forth in the City’s contract with CalPERS, including, when applicable, the Government Code Section 20692: Optional Benefit, except as may otherwise be required by PEPRA. 6. Employee PERS contributions shall be made on a tax deferred basis, in accordance with Section 414(h)(2) of the Internal Revenue Code. All provisions of this subsection are subject to and conditioned upon compliance with IRS regulations. 7. Final compensation for employees under the 2%@62 benefit shall be as set forth in PEPRA, including calculation based on the average of three highest consecutive years and a cap on pensionable compensation based on IRS limits for employers that do not participate in social security. N. COMMUTE INCENTIVES and PARKING 1. Civic Center Parking. Employees assigned to Civic Center and adjacent work locations. The City will provide a Civic Center Garage parking permit. Employees hired after June 30, 1994 may initially receive a parking permit for another downtown lot, subject to the availability of space at the Civic Center Garage. 2. Alternative Commute Incentives: Employees who qualify may voluntarily elect one commute incentives, including but not limited to the following options, for those using an eligible commute alternative on 60% or more of their scheduled work days per month: a) Public Transit and Vanpool. The City provides tax-free commute incentives up to the current IRS limit, as may be amended from time to time, (currently $125/month) are available through the Commuter Check Direct (CCD) website for employees 20 using Bay Area public transportation or riding in a registered vanpool at least 60% of their scheduled work days. Administration of the Commuter Check benefit shall be subject to the rules and regulations of the third- party administrator. b) Go Pass. The Go Pass program will offer civic center and other downtown-based employees a Caltrans Go Pass that allows unlimited rides on Caltrain in all zones seven days per week, to any City of Palo Alto employee. c) Bicycle. The City will provide employees with a tax-free incentive of $20 per month to eligible employees who ride a bicycle to work. d) Carpool. The City will provide with a taxable incentive of $30 per month to each eligible employee in a carpool with two or more licensed drivers. e) Walk. The City will provide employees with a taxable incentive of $20 per month to eligible employees who walk to work. O. AT-WILL STATUS Certain Management and Professional Positions are designated as having “at-will” employment status. Employees hired into “at-will” positions shall have no constitutionally protected property or other interest in their employment with the City. Notwithstanding any provision in the Merit System Rules and Regulations or any other City rule, policy or procedure, at-will employees have no right to continued employment or pre-or post-disciplinary due process and work at the will and pleasure of the hiring authority (City Council, City Manager or Council-Appointed Officer). Work for an at-will employee may be eliminated and/or the employee may be terminated, or asked to resign, at any time, with or without cause, upon notice to that employee, and the employee may resign at any time upon written notice to the hiring authority. 1. At-will Management & Professional positions. Department heads hired after July 1, 2004 and prior to the date of adoption of this plan were hired as at-will employees whose terms of employment are specified by an employment contract that includes a severance package. Effective on the date of adoption of this plan, new employees hired or promoted to department head, assistant department director, and all other positions listed on Attachment B shall be at-will employees. At-will employees will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution to the extent paid by City, etc.) and vacation, sick leave, and management leave as are generally provided to management employees and described in this compensation plan, as amended from time to time. At-will employees who are terminated or asked to resign shall, upon execution of a release of all claims against the 21 City, be eligible for a severance payment equivalent to four (4) weeks of salary and benefits, increasing after completion of the first full year of service by one (1) week for every completed year of service, up to a maximum of 12 weeks. For example, an at-will employee who has completed six (6) years of service would be eligible to receive ten (10) weeks of severance (4 weeks plus 1 week for each year of service). No severance shall be paid if the employee is terminated for serious misconduct involving abuse of his or her office or position, including but not limited to waste, fraud, violation of the law under color of authority, misappropriation of public resources, violence, harassment or discrimination. If the employee is later convicted of a crime involving such abuse of his or her position the employee shall fully reimburse the City as set forth in Government Code section 53243.3. 2. Provisional employees. The City has created a program for Provisional employment when funding is available. The program’s purpose is to create limited duration senior management level work for the City Manager’s Office or as designated by the City Manager. A Provisional Employee will be an “at will” employee whose term of employment shall be no more than two (2) years. A Provisional Employee shall be exempt and not eligible to earn overtime. A Provisional Employee will receive limited benefits as specified in an Employment Agreement. Sections I and II of this Compensation Plan shall not apply to Provisional Employees, except as specified by the City Manager. 3. Management and Legal Fellows. The City has created programs for Management Fellows and Legal Fellows when funding is available. The programs’ purpose is to create limited duration entry level positions for management graduates and lawyers. Fellows will be “at will” employees whose term of employment shall be no more than two (2) years. Fellows shall be PERS exempt to the extent allowed by law, but may receive vacation, sick leave, health care benefits and other limited benefits, as determined by the City Manager or City Attorney. Sections I and II of this Plan shall not apply to Management and Legal Fellows, except as specified by the City Manager or City Attorney. P. ADDITIONAL COMPENSATION FOR MAYOR AND VICE MAYOR The Mayor shall receive $150 monthly, and the Vice Mayor $100 monthly to defray additional expenses of these offices. Q. REIMBURSEMENT FOR RELOCATION EXPENSE Policy Statement The City of Palo Alto, in rare instances, may provide a Basic Relocation Benefits Package for new management and professional employees, upon the approval of the City Manager or designated subordinate. In addition, the provision of “Optional Benefits” or portions thereof, may be 22 extended for exceptional circumstances and only the approval of the City Manager or designee, or for Council-appointed officers, the City Council. The details of the Relocation Expense program are specified in the City’s Relocation Expense policy and all relocation reimbursements shall be subject to the provisions of that policy. R. MEAL ALLOWANCE Management and professional employees assigned to attend night meetings are eligible to receive reimbursement for up to $20.00 per dinner. This provision covers only receipted meals actually taken and submitted for reimbursement. S. GRIEVANCES REGARDING COUNCIL APPOINTED OFFICERS Notwithstanding the grievance procedures provided in Chapter 11 of the City of Palo Alto’s Merit System Rules and Regulations, any Management and Professional employee who is supervised by a Council Appointed Officer and has a grievance against that Council Appointed Officer or regarding the conduct of that Council Appointed Officer shall, following an attempt to resolve the grievance pursuant to Step One (informal discussion), summarize the grievance regarding the Council Appointed Officer in writing and submit it to the Director of Human Resources for review and resolution using the methods he/she considers appropriate. T. MERIT RULES The City will include members of the Management/Professional Compensation Committee in discussions regarding revision of the Merit Rules and Regulations. 23 Attachment B At-Will Positions Management and Professional Unit The intent of this provision under the Management/Professional Compensation Plan is to designate classifications at the department head, assistant director, deputy director, division manager and senior professional levels as at-will. The applicable Council Appointed Officer may designate newly created positions at those levels not included on this list as at-will. Existing classifications that shall be at-will include but are not limited to: Department Heads- All departments Assistant Directors- All departments Deputy Directors- All departments Division Managers Administrative Services Director, Administrative Services/Chief Financial Officer Director, Office of Management & Budget Assistant Director, Administrative Services Chief Budget Officer Manager, Accounting Chief Procurement Officer Manager, Real Property City Attorney Senior Assistant City Attorney Assistant City Attorney Sr. Deputy City Attorney Deputy City Attorney Legal Fellow City Auditor Deputy City Auditor Sr. Performance Auditor City Clerk Assistant City Clerk Deputy City Clerk City Manager Assistant City Manager/Chief Operating Officer Assistant to City Manager 24 Chief Communications Officer Chief Sustainability Officer Communications Manager Manager, Economic Development Management Fellow Community Services Director, Community Services Assistant Director, Community Services Manager, Community Services Manager, Community Services Program Senior Human Resources Director of Human Resources/Chief People Officer Assistant Director, Human Resources Human Resources Manager Senior Administrator Human Resources IT Director, IT/Chief Information Officer Manager, Information Technology Library Director, Libraries Assistant Director, Library Services Division Head, Collection & Technical Services Manager, Library Services Planning & Community Environment Director, Planning & Community Environment Assistant Director, Planning & Community Environment Planning Manager Division Manager, Chief Planning Official Division Manager, Chief Transportation Official Development Services Department Development Services Director Chief Building Official Assistant Building Official Planning Manager Public Safety Chief of Police/Director of Public Safety Fire Chief /Assistant Public Safety Director Assistant Police Chief 25 Emergency Services Director Deputy Director – Technical Services Division (police department) Deputy Fire Chief Public Works Director, Public Works/City Engineer Assistant Director, Public Works – Environmental Services Assistant Director, Public Works – Public Services Assistant Director, Public Works – Engineering Manager, Airport Manager, Fleet Water Quality Control Plant Manager Utilities Director, Utilities CITY OF PALO ALTO COMPENSATION PLAN Management and Professional Personnel And Council Appointees Effective July 1, 2014 2016 through June 30, 20162019, except where specifically noted. 2 SECTION I. COMPENSATION ....................................................................................................... 1 A. MANAGEMENT AND PROFESSIONAL COMPENSATION POLICY .......................................... 1 B. BASIC PLAN ELEMENTS ........................................................................................................ 1 C. MANAGEMENT AND PROFESSIONAL COMPENSATION ADJUSTMENT AUTHORIZATION ... 3 SECTION II. SPECIAL COMPENSATION ...................................................................................... 4 A. OVERTIME ............................................................................................................................ 4 B. IN LIEU HOLIDAY PAY ........................................................................................................... 4 C. WORKING ABOVE CLASSIFICATION PAY .............................................................................. 4 D. STAND-BY PAY .................................................................................................................. 5 E. CALL OUT PAY ...................................................................................................................... 5 F. NIGHT SHIFT PREMIUM ....................................................................................................... 5 G. UNIFORM PURCHASE PLAN - SWORN POLICE, FIRE PERSONNEL, and OPEN SPACE PERSONNEL ................................................................................................................................. 5 H. GROUP INSURANCE .......................................................................................................... 5 I. EMPLOYEE ASSISTANCE PLAN ............................................................................................ 11 J. SAFETY DIFFERENTIALS ...................................................................................................... 11 K. MANAGEMENT and PROFESSIONAL BENEFIT PROGRAM ................................................. 12 L. LEAVES................................................................................................................................ 14 M. RETIREMENT PENSION ................................................................................................... 18 N. COMMUTE INCENTIVES and PARKING ........................................................................... 20 O. AT-WILL STATUS ............................................................................................................. 21 P. ADDITIONAL COMPENSATION FOR MAYOR AND VICE MAYOR ........................................ 22 Q. REIMBURSEMENT FOR RELOCATION EXPENSE .............................................................. 22 R. MEAL ALLOWANCE ............................................................................................................ 23 S. GRIEVANCES REGARDING COUNCIL APPOINTED OFFICERS .............................................. 23 T. MERIT RULES ...................................................................................................................... 23 1 COMPENSATION PLAN FOR THE CITY OF PALO ALTO Management and Professional Personnel As used in this Plan, the term “Management and Professional” refers to all employees, including Confidential employees, previously classified as “Management and Confidential” by the City. This group will hereafter be identified as “Management and Professional” personnel. SECTION I. COMPENSATION This section applies to all management and professional employees and does not include Council Members or Council-appointed officers. Each Council-appointed officer shall be the responsible decision-maker under this Plan for those employees in departments under his/her control. A. MANAGEMENT AND PROFESSIONAL COMPENSATION POLICY The City's policy for management and professional compensation is to establish and maintain a general structure based on marketplace norms and internal job alignment with broad compensation grades and ranges. Structures and ranges will be reviewed and updated as necessary based on marketplace survey data, internal relationships, and City financial conditions. Individual compensation adjustments will be considered by the Council-appointed officer based on (1) performance factors including achievement of predetermined objectives; (2) pay structure adjustments; and (3) City financial conditions. B. BASIC PLAN ELEMENTS 1. Structure. The compensation plan includes separate multi-grade structures for both management and professional employees. Each grade will have a salary range with a mid-point which is 20% above the minimum, and 20% below the maximum of the range. All management and professional positions will be assigned an appropriate pay grade based on salary survey data and internal relationships. Actual salary within the range is determined by experience and performance. Competitive marketplace studies will be conducted as needed by surveying a maximum of 14 organizations similar to Palo Alto in number of employees, funding mechanisms, population and services provided. A market study is planned to be completed by January 2017. These studies will focus on total compensation for management positions such as first line supervisors, administrative, confidential, professional and top management. Periodically, studies will include position-by-position comparisons using market research and internal equity data. The results of these studies may indicate that the entire pay grade structure be adjusted, that individual positions be reassigned to different pay grades, or that no change 2 takes place. Such adjustments will only affect the salary administration framework. No individual salaries will be automatically changed because of structural adjustments. A department director may request that HR reevaluate a job or jobs in his or her department based on significant and permanent changes in job content. In doing so the director will supply needed information and will provide a position description questionnaire as requested. The Chief People Officer will respond to such requests within his or her discretion. 2. Compensation Adjustment Authorization. In consultation with feedback received from the Management and Professional Compensation Committee, the City Manager may propose as part of the budget process for Council approval of a compensation adjustment based on (1) competitive market data, (2) changes in internal position relationships, (3) the City's ability to pay, and (4) a recommendation received from the Chief People Officer. Effective the first pay period following Council adoption of this plan all classifications will receive a two and one-half percent (2.5%) salary increase in consideration of the medical changes described in section H., retroactive to the pay period including July 1, 2014. Effective the pay period including July 1, 20152017, all classifications will receive a two and one-half percent (2.5%) salary increase. Effective the pay period including July 1, 2018, all classifications will receive a two and one-half percent (2.5%) salary increase. a) Base Compensation. Compensation for management and professional employees includes bi-weekly base salary and is paid on a continuing basis. On a fiscal year basis, the bi-weekly base salary must fall within pay grade limits of no less than 20% below the mid-point and no more than 20% above the mid-point. Base salary increases are earned and authorized in accordance with administrative guidelines based upon growth within the position and performance, which must meet or exceed position standards defined through the performance planning and appraisal process described in subsection b below, the salary structure and the City’s ability to pay. Management/professional employees who have received an overall rating of "Meets", “Higher” or "Exceeds" expectations on their annual review and who have not been on a performance improvement plan during the preceding fiscal year will be eligible for an adjustment to base compensation. Nothing herein shall preclude an employee's manager from awarding a mid-point adjustment increase to an employee on a performance plan at a later date should employee's performance improve. b) Performance Planning and Appraisal. Performance appraisals will be conducted at the end of each fiscal year during the months of July through September 30 each year prior to determining individual employee fixed compensation. This process includes both review of previous performance plan and preparation of the performance plan for the next planning period (usually the fiscal year). Performance plans are jointly prepared by the employee and supervisor with the concurrence of the department head or Council-appointed officer. The performance plans shall contain measurable objectives which place special emphasis on position description duties or specific assignments. Progress toward meeting objectives 3 shall be monitored periodically. The performance appraisals should be implemented in a manner that will achieve the following objectives: • Define the employee’s job duties and expected level of performance for the next review period to ensure that both the employee and supervisor have a clear understanding of the employee’s role and responsibilities; • Evaluate and document past performance to serve as a basis for establishing and obtaining future performance standards/objectives; • Facilitate two-way communication and understanding between the employee and his or her supervisor; • Counsel and encourage employees to work toward a learning development plan and realize their full potential; • Establish future work plan objectives. Work plans should include job related projects or special goals related to regular job duties when applicable. At the conclusion of the fiscal year (or review period), supervisors shall make a final determination of the overall performance rating. Recommendations shall be forwarded to department heads and to the Chief People Officer or appropriate Council appointed officer who will then determine individual fixed adjustments according to the provisions of the compensation plan. Each department will ensure that metrics tie to the performance appraisal. The performance planning and appraisal process should be completed by September 30. C. MANAGEMENT AND PROFESSIONAL COMPENSATION ADJUSTMENT AUTHORIZATION 1. Council-appointed officers are authorized to pay salaries in accordance with this plan to non-Council-appointed management and professional employees in an amount not to exceed the aggregate of approved management and professional positions in the Table of Organization for the applicable fiscal year. 2. Individual management and professional compensation authorized by a Council-appointed officer under the Management and Professional Compensation Plan may not be less than 20% below nor more than 20% above the mid-point for the individual position grades authorized in Salary Schedule attached. 3. The Council-appointed officers are authorized to establish such administrative rules as are necessary to implement the Management and Professional Salary Plan subject to the limitations of the approved compensation adjustment authorization and the approved grade and mid-point structure. 4. Notwithstanding any other provision of this Compensation Plan, in the event a downward adjustment of a position grade assignment indicates a reduction in the established salary of 4 an individual employee, the Council-appointed officer may, if circumstances warrant, continue the salary for such employee in an amount in excess of the revised grade limit for a reasonable period of time. Such interim salary rates shall be defined as "Y-rates." Employees in “Y-rated” positions shall not be eligible for any increase to base salary unless and until the amount of the “Y-rated” salary is equal to or less than the published pay rates. Employees assigned to work above class duties shall not be eligible for “Y-rated” pay on conclusion of a work above class assignment. SECTION II. SPECIAL COMPENSATION This section applies to all eligible regular management and professional positions including Council Appointed Officers as applicable and including Council Members where indicated. Eligibility shall be in conformance with the Merit Rules and Regulations and Administrative Directives issued by the City Manager for the purposes of clarification and interpretation. A. OVERTIME Compensation for overtime work shall be in conformance with the Merit Rules and Regulations and Policies and Procedures. B. IN LIEU HOLIDAY PAY Employees who work a schedule where a regular day off falls on a holiday will be paid for the hours they would have normally worked on that day. If the holiday falls on a non-workday for an exempt employee, the employee may, with supervisory approval, take another day off within the pay period or the following pay period. C. WORKING ABOVE CLASSIFICATION PAY Where management and professional employees, on a temporary basis, are assigned to perform all significant duties of a higher classification for a period of one month or more, the City Manager may authorize payment within the range of the higher classification for the specified time frame. Working above classification will not exceed six months, unless renewed at the discretion of the City Manager. On expiration of that timeframe, working above classification pay will cease and the employee will return to his or her former pay level. Working above classification pay is not to exceed 10% more than the employee’s current salary and shall be documented on a Personnel Action Form, with a description of the additional duties in the higher classification to be performed and an end date. 5 D. STAND-BY PAY Employees eligible for overtime may be entitled to stand-by pay, approved by the City Manager on a case by case basis, in extreme circumstances involving unavailability of non-management staff. Compensation is as follows: Monday through Friday $40 per day Saturday, Sunday, Holidays $58 per day E. CALL OUT PAY Effective pay period beginning February 26, 2011, Exempt management and professional classifications will be compensated for Call Out as outlined below with Management approval (and will not be eligible for overtime pay). Call Out applies when: (1) an employee previously left City premises, (2) is called back to the work location outside of regularly scheduled working hours, and (3) the Call Back is for an emergency arising out of situations involving real or potential loss of service, property or personal danger. Employees called back will be expected to respond directly to the location of the problem. Compensation is per Call Out as reported on timecard and will be paid as follows: Monday through Friday: $140 per day Saturday and Sunday: $200 per day F. NIGHT SHIFT PREMIUM Night shift differential shall be paid at the rate of five percent (5%) to regular full-time employees who are regularly assigned to shift work between 6:00 p.m. and 8:00 a.m., or to employees who are temporarily assigned to work a full shift between 6:00 p.m. and 8:00 a.m. G. UNIFORM PURCHASE PLAN - SWORN POLICE, FIRE PERSONNEL, and OPEN SPACE PERSONNEL Uniforms, including cleaning, will be provided with replacement provisions on an as-needed basis in conformance with department policy. H. GROUP INSURANCE 1. Effective Date of Coverage for New Employees For newly-hired regular employees coverage begins on the first day of the month following date of hire for the health plan, dental plan, vision care plan, long term disability and life insurance plans if these benefits are elected. 6 2. Dual coverage. When a City employee is married to or has a registered domestic partner with the California Secretary of State with another City employee, each shall be covered only once (as an individual or as a spouse of the other City employee, but not both) and dependent children, if any, shall be covered by only one spouse. 2.3. Active Employee Health Plan a) For health coverage in calendar year 2014, based on an employee’s family status, participating employees will contribute 10% of the premium cost for the employee- selected plan and the City shall pay up to 90% of the monthly medical premium for the second most expensive plan among the existing array of plans available during the term of this compensation plan on behalf of eligible employees (including Council Appointed Officers and Council Members) and dependents, except that the total maximum City contribution shall not exceed 90% of the second highest plan. Eligible dependents, under current law, include spouses, children under the age of 26 and never married (natural, adopted, or stepchildren), economically dependent children, and domestic partners registered with the Secretary of State. b) [paragraph deleted] c) Health coverage beginning January 1, 2015. Beginning January 1, 2015 the maximum City contribution towards medical premiums for eligible full time employees per employee category shall be up to a maximum of the following for any plan: a) During the term of this compensation plan, the maximum City contribution towards medical premiums for eligible full-time employees per category shall be up to a maximum of the following for any plan: Medical Premium Category PEMHCA contribution* Additional City Contribution 2015 Up to a Total Maximum City Contribution Effective January 1, 2015 Employee only $122.00 $586.00 $708.00 Employee plus one $122.00 $1293.00 $1415.00 Employee Family $122.00 $1718.00 $1840.00 7 Medical Premium Category (Coverage Level) PEMHCA contribution *2016/2017/ 2018/ 2019 (projected for 2018 and 2019) Additional City Contribution 2016/2017/ 2018/ 2019 (projected for 2018 and 2019) Up to a Total Maximum City Contribution Effective as soon as administratively possible following plan adoption Up to a Total Maximum City Contribution Effective January 1, 2017 Up to a Total Maximum City Contribution Effective January 1, 2018 Up to a Total Maximum City Contribution Effective January 1, 2019 Single (EE only) 2016 2017 2018 2019 $125 $128 $131 $135 $618 $645 $673 $702 $743 $773 $804 $837 2- Party (EE +1) 2016 2017 2018 2019 $125 $128 $131 $135 $1360 $1416 $1475 $1536 $1,485 $1,544 $1606 $1671 Family (EE + 2 or more) 2016 2017 2018 2019 $125 $128 $131 $135 $1806 $1880 $1957 $2037 $1,931 $2,008 $2088 $2172 *The PEMHCA minimum changes per statutory determination. Any increases to the PEMHCA minimum during the term of this plan will result in a corresponding decrease to the amount of the additional City contribution, so that the total maximum City contribution never exceeds the amount listed in the “Total Maximum City Contribution” columns above. d) For health coverage beginning January 1, 2016, the City’s contribution to medical premiums will be the same contribution that the City makes for employees in the unit represented by SEIU. e)b) The City’s total maximum contribution towards medical premiums for eligible part time employees shall be prorated based on the number of hours per week the part-time employee is assigned to work. f) City medical premium contributions will be prorated for part-time employees based on the number of hours per week the part-time employee is assigned to work. g)c)Coverage For Domestic Partners 1) Domestic Partnership Registered with the California Secretary of State: Employees may add their domestic partner as a dependent to their elected health plan coverage if the domestic partnership is registered with the Secretary of State and will be eligible for the Alternative Medical Benefit Program in paragraph 3 below. 2) Domestic Partnership Not Registered with the California Secretary of State: Domestic partners who meet the requirements of the City of Palo Alto Declaration 8 of Domestic Partnership, and are registered with the People Strategy and Operations Department, will be eligible for a stipend of two hundred and eighty four dollars ($284.00) per month toward the cost of an individual health plan. Evidence of premium payment will be required with request for reimbursement. 3.4. Alternative Medical Benefit Program If a regular employee and/or the employee’s dependent(s) are eligible for and elect to receive medical insurance through another non-City of Palo Alto employer-sponsored or association medical plan, the employee may choose to waive his/her right to the City of Palo Alto’s medical insurance and receive cash payments in the amount of $284.00. Examples of waivers eligible for this payment are: • Employee waives all applicable City medical coverage; or • Employee is eligible to enroll his or her spouse or register his or her domestic partner with the California Secretary of State and waives medical coverage for the spouse or domestic partner; or • Employee has additional eligible dependents and waives family-level medical coverage. Participation must result in a health insurance cost savings to the City and payments per employee shall not exceed a total of two hundred eighty four dollars ($284.00) per month. To participate in the program the employee and dependents must be eligible for coverage under PEMHCA medical plans, complete a waiver of medical coverage form, and provide proof of eligible alternative medical coverage. When a City employee is married to or has a registered domestic partner with the California Secretary of State with another City employee, each shall only be eligible once (as an individual or as a spouse of the other City employee, but not both) and not eligible for a waiver. Payments will be made in the employee’s paycheck beginning the first month following the employee’s completion of the waiver form. Payments are subject to state and federal taxes and are not considered earnings under PERS law. Employees are responsible for notifying the City of any change in status affecting eligibility for this program (for example, life changes affecting dependent’s eligibility for medical coverage through the employee) and will be responsible for repayment of amounts paid by the City contrary to the terms of this program due to the employee’s failure to notify the City of a change in status. 4.5. Retiree Health Plan a) Employees Hired Prior to January 1, 2004 Monthly City-paid premium contributions for a retiree-selected health plan through the CalPERS Health Benefits Program will be made as provided under the Public Employees” Medical and Hospital Care Act. The City’s monthly employer contribution for each employee retiring on or after January 1, 2007 and prior to March 31, 2011 shall be the amount necessary to pay for the cost of his or her enrollment in a health 9 benefits plan up to the monthly premium for the second most expensive plan offered to management and professional personnel during the contract term (among the existing array of plans.) The City’s contribution for an employee hired before January 1, 2004 who retires on or after March 30, 2011 shall be the same contribution amount it makes from time to time for active City employees. b) Post – 1/1/04 Hires For those Management and professional employees hired after January 1, 2004, the PERS law vesting schedule set forth in Government Code section 22893 will apply. Under that law, an employee is eligible for 50% of the specified employer health premium contribution after ten (10) years of service credit, provided at least five (5) of those years were performed at the City of Palo Alto. After ten (10) years of service credit, each additional service credit year increases the employer contribution percentage by 5% until, at 20 years’ service credit, the employee will be eligible upon retirement for 100% of the specified employer contribution and 90% of their dependent coverage. The City of Palo Alto’s health premium contribution for eligible post – 1/1/04 hires shall be the minimum contribution set by PERS under section 22893 based on a weighted average of available health plan premiums. c) Effective upon ratification and adoption of this compensation plan, the City shall provide active Management employees who were hired before January 1, 2004 with a one-time opportunity to opt-in to retiree health benefits provided under California Government Code section 22893. Eligible employees who wish to exercise this option shall inform the Human Resources department of their election in writing no later than 90 days following the ratification and adoption of this compensation plan. 5.6. Dental Plan a) The City shall pay covered plan charges on behalf of all eligible employees and dependents. (Domestic partners who are either registered with the Secretary of State or who meet the requirements of the City of Palo Alto Declaration of Domestic Partnership, and are registered with the Human Resources Department are considered dependents under the plan.) Benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) The City’s Dental Plan provides the following: • Maximum Benefits per Calendar Year- $2,000 per person • Lifetime Maximum for Orthodontics- The City will pay up to $2,000.00 for orthodontia coverage (not included in annual dental maximum) • Major Dental Services 50% UCR* • Orthodontics 50% UCR* • Basic Benefits (All other covered services) First Calendar Year of Eligibility 70% UCR* Subsequent Calendar Years 70%-100% 10 *Usual, Customary, and Reasonable • Composite (tooth covered) fillings for posterior teeth For each dental plan member, the percentage of coverage for basic benefits will begin at 70% for the first calendar year of coverage and increase by 10% (up to a maximum of 100%) effective the first day of the next calendar year as long as the member utilizes the plan at least once during the current year. Per the Delta Dental contract effective October 1, 2005, if the member does not utilize the plan during the current year, the percentage of coverage for the next calendar year shall remain unchanged from the current year. If a dental plan member ever loses coverage under the plan, the applicable percentage of coverage for basic benefits provided during any future period of coverage will commence at 70% as if the dental plan member was a new enrollee. Examples of when a member might lose coverage under the plan would include: • Employee goes on an unpaid leave of absence and elects not to pay the required dental premiums for his/her family’s coverage during the leave. • Employee elects to drop one or more covered dependents from the plan during an open enrollment period so that they might be covered on a spouse’s non- City of Palo Alto dental plan. 6.7. Basic Life Insurance The City shall provide a basic group term life insurance with Accidental Death and Dismemberment (AD&D) coverage, in an amount equal to the employee's annual basic pay (rounded to the next highest $1,000) at no-cost to the employee. AD&D pays an additional amount equal to the employee’s annual basic pay (rounded to the next highest $1,000). 7.8. Supplemental Life And AD&D Insurance An employee may, at his/her cost, purchase additional life insurance and additional AD&D coverage equal to one- or two-times his or her annual salary. The maximum amount of life insurance available to the employee is up to $325,000 and the maximum amount of AD&D coverage available is up to $325,000. 8.9. Long Term Disability Insurance a) The City shall provide long term disability (LTD) insurance with a benefit of 2/3 monthly salary, up to a maximum benefit of $10,000 per month. The City shall pay the premium for the first $6,000 of base monthly salary. For employees whose base monthly salary exceeds $6,000, the employee shall pay the cost of the required premium based upon their monthly salary between $6,000 and $15,000. 11 b) For employees whose base monthly salary exceeds $6,000 and who have no eligible dependents covered under the City’s medical, dental or vision plans, the City will pay up to $17.50 per month towards the employee’s cost for LTD coverage. 9.10. Vision Care a) The City shall provide vision care coverage for employee and dependents. Coverage is administered by Vision Service Plan (VSP). The plan provides an exam every 12 months; lenses every 24 months; frames every 24 months, all subject to a $20 co-payment as defined in the Vision Services Benefits Plan A schedule. Benefits for regular part-time employees will be prorated as follows: Employees hired after January 1, 2004, who will work less than full time, will receive prorated premium costs for vision benefits in accordance with his/her percentage of a full-time work schedule. Vision benefits for regular part-time employees hired or assigned to a part-time schedule will be prorated in accordance with his/her percentage of a full- time work schedule. b) Effective July 1, 1996, dependents include eligible domestic partners who are either registered with the Secretary of State. 10. Dual coverage for dental and vision benefits. When a City employee is married to or has a registered domestic partner with the California Secretary of State with another City employee, each shall only be covered only once (as an individual or as a spouse of the other City employee, but not both) and dependent children, if any, shall be covered by only one spouse. I. EMPLOYEE ASSISTANCE PLAN The Employee Assistance Plan (EAP) provides employees with confidential personal counseling, work and family related issues, eldercare, substance abuse, etc. In addition, EAP programs provide a valuable tool for supervisors to refer troubled employees to professional outside help. This service staffed by experienced clinicians is available to employees and their dependents by calling a toll-free phone line 24 hours a day, seven days a week. Guidance is also available online. J. SAFETY DIFFERENTIALS 1. Police Department - Personnel Development Program Pursuant to administrative rules governing eligibility and qualification, one of the following differentials, whichever is higher, may be granted to sworn police personnel: • P.O.S.T. Intermediate Certificate: five percent (5%) above base salary • P.O.S.T. Advanced Certificate: seven and a half (7 ½%) above base salary 12 2. Fire Department - EMT Differential Pursuant to administrative rules governing eligibility and qualification, the following differential may be granted to sworn Fire personnel: • EMT Differential: three percent (3%) above base salary K. MANAGEMENT and PROFESSIONAL BENEFIT PROGRAM Management and professional employees are eligible for Sections 1, 2, and 3, and 4 of the Management Benefit Program below. City Council Members are not eligible for benefits under Section 1 and 2 below 3 only. 1. Professional Development - Reimbursement The purpose of this program is to provide employees with resources to improve and supplement their job and professional skills. Reimbursement for authorized self- improvement activities may be granted each management and professional employee up to a maximum of five hundred dollars ($500) per fiscal year. A departmental training fund of one thousand dollars per employee ($1,000) will be established for subject matter, leadership or other training that the Department Director identifies as a need for employees within that Department. The following items are eligible for reimbursement: a) Civic and professional association memberships b) Conference participation and travel expenses, which must occur within the compensation plan period. c) Educational programs, books and videos, and tuition reimbursement designed to maintain or improve the employee's skills in performing his or her job or future job opportunities, should support the City’s mission or be necessary to meet the educational requirements for qualification for employment. Permissible educational expenses are refresher courses, courses dealing with current developments, academic or vocational courses, as well as the travel expenses associated with the courses as defined by the City’s travel expense report from the Policy & Procedures Manual Section 1-02 ASD. d) Professional and trade journal subscriptions not to exceed 12 months. e) Approval will be at discretion of department head and signature is required on reimbursement form. 13 Amounts under this professional development program will be pro-rated in the first year of employment or promotion into a position covered by this Compensation Plan 2. Excess Benefit This benefit is designed to meet the requirements of Section 125 of the Internal Revenue Code, with exception of Gym or Health Club Membership. Every calendar year, each employee will be provided with $2,500 that they can designate among the following options, subject to caps pursuant to IRS regulations: a) Medical Flexible Spending Account (Medical FSA). Provides reimbursement for excess medical/dental/vision, or expenses that are incurred by employees and their dependents which are not covered or reimbursed by any other source, including existing City-sponsored plans. This includes prescribed medications and copayments as well as over-the-counter drugs, including: antacids, allergy medicines, pain relievers and cold medicines. However, nonprescription dietary supplements (e.g. vitamins, etc.) toiletries (e.g. toothpaste), cosmetics (e.g. face cream), and items used for cosmetic purposes (e.g. Rogaine) are not acceptable. b) Dependent Care Flexible Spending Account (Dependent Care FSA). Provides reimbursement for qualified dependent care expenses under the City's Dependent Care Assistance Program (DCAP), subject to the following limits: Dependent care expenses will be reimbursed only to the extent that the amount of such expenses reimbursed under this Management Benefit Program, when added to the amount (if any) of annual dependent care expenses that the participant has elected under the City's Flexible Benefits Plan, do not exceed the maximum permitted under the DCAP. 1) The annual amount submitted for reimbursement cannot exceed the income of the lower-paid spouse. 2) The expenses must be employment-related expenses for the care of one or more dependents who are under 13 years of age and entitled to a dependent deduction under Internal Revenue Code section 151(e) or a dependent who is physically or mentally incapable of caring for himself or herself. 3) The payments cannot be made to a child under 19 years of age or to a person claimed as a dependent. 4) If the services are provided by a dependent care center, the center must comply with all state and local laws and must provide care for more than six (6) individuals (other than a resident of the facility). 14 5) Dependent care expenses not submitted under this section are eligible under the City Dependent Care Assistance Plan (DCAP). However, the maximum amount reimbursed under DCAP will be reduced by any amount reimbursed under the Excess Benefit Plan. c) Non-taxable Professional Development Spending Account. Provides reimbursement for Non-Taxable professional development expenses (e.g., job-related training and education, seminars, training manuals, etc.) to the extent they are not paid or reimbursed under any other plan of the City. d) Gym or Health Club memberships. Provides reimbursement for annual or monthly memberships, including personal trainers. Reimbursement of this expense is taxable to the employee. e) Deferred Compensation. Provides a one-time contribution to the employee’s City- sponsored 457 Deferred Compensation plan with either ICMA-RC or the Hartford Mass Mutual. Amounts designated by employees to either the Medical FSA, Dependent Care FSA, or Professional Development options are done so on a “use –it-or-lose-it” basis. This means that any amounts designated and not used by the end of the calendar year (or end of the extended grace period for the medical FSA) will be forfeited by the employee and returned to the plan. Specified amounts under this benefit will be applied on a pro-ratarated basis for employees who are part-time or who are in a management or professional pay status for less than the full fiscal year. Such benefits will be pro-rated in the first year of employment (based on hire date) but will not be pro-rated upon separation of employment. 3. City will explore options including a deferred compensation match up to $4000. through a pre-tax retirement savings account as a replacement for Professional Development in Section 1 and Excess Benefit as provided under Section 2. L. LEAVES 1. Sick Leave a) Sick leave shall be accrued bi-weekly provided the employee has been in a pay status for 50% or more of a bi-weekly pay period. Sick leave shall be accrued at the rate of 3.7 hours per bi-weekly pay period for those employees working a 40-hour duty schedule. Those assigned work schedules which are greater or lesser than 40 hours will accrue sick leave at the ratio of their work schedule to 40 hours. b) Employees may use up to 20 hours of sick leave per calendar year for personal business. The scheduling of such leave is subject to the approval of the appropriate level of Management. 15 c) Employees leaving the municipal service shall forfeit all accumulated sick leave, except as otherwise provided by law and by Section 609 of the Merit Rules and Regulations. In the event that notice of resignation is given, sick leave may be used only through the day which was designated as the final day of work by such notice. d) Employees that were hired before December 1, 1983 and who leave the municipal service in good standing, or who die while employed in good standing by the city, and who have 15 or more years of continuous service shall receive compensation for unused sick leave hours in a sum equal to two and one-half percent (2½%) of their unused sick leave hours multiplied by their years of continuous service and their basic hourly rate of pay at termination. Full sick leave accrual will be paid in the event of termination due to disability. See Merit System Rules and Regulations, Chapter 6, Section 609. e) Up to nine (9) days of sick leave per calendar year may be used for illness in the immediate family, including a registered domestic partner. f) Management and Professional employees eligible, as specified above if hired before December 1, 1983, to be compensated for sick leave may annually convert sick leave hours in excess of 600 to cash or deferred compensation, according to the formula set forth above, up to a maximum of $2,000 per fiscal year. g) In accordance with the City Merit Rules and Regulations, a new employee may, if necessary, use up to 48 hours or shift equivalent of sick leave at any time during the first six (6) months of employment. 2. Management Annual Leave a) Exempt Employees Regular management and professional employees will be credited with 80 hours of annual leave. This leave is granted in recognition of the extra hours Management and Professional employees work over their regular schedule. This leave may be taken as paid time off, added to vacation accrual (subject to vacation accrual limitations), taken as cash or taken as deferred compensation. When time off is taken under this provision, 10-hour shift workers will receive one shift off for each 8 hours charged; 24-hour shift workers will receive one-half (½) shift off for each 8 hours charged. In 2012, the City transitioned this benefit from a fiscal to calendar year basis for administrative purposes. Beginning in 2013 and each calendar year thereafter, employees will be credited with 80 hours of management annual leave. 16 Entitlement under this provision will be reduced on a prorated basis for part-time status, or according to the number of months in paid status during the year; employees who have used more than the pro-rated share at the time they leave City service shall be required to repay the balance or have it deducted from their final check. Unused balances as of the end of the year will be paid in cash unless a different option as indicated above is elected by the employee. b) Non-Exempt Employees Based on an audit recommendation to eliminate payment of overtime as well as management leave for non-exempt employees in the management group, the City is transitioning away from providing management leave to non-exempt employees. As part of the transition, and in order to minimize impacts to current employees, the City will phase-out elimination of the 80 hours of management leave for all current non-exempt Management and Professional employees (those eligible to earn overtime). Beginning on July 1, 2014 all employees in non-exempt positions will receive overtime pay for hours actually worked, but will no longer receive management leave. Employees hired into non-exempt management positions on or after February 26, 2011 will receive overtime only and will not be eligible for management leave. 3. Vacation Vacation will be accrued when an employee is in pay status and will be credited on a bi- weekly basis. Total vacation accrual at any one time may not exceed three (3) times the annual rate of accrual. Each eligible employee shall accrue vacation at the following rate for continuous service performed in pay status: a) Less than nine (9) years. For employees completing less than nine (9) years continuous service: 120 hours vacation leave per year; provided that: i. The City Manager is authorized to adjust department head annual vacation accrual to provide for a maximum of 160 hours for those hired between July 1, 1996 and June 30, 2001; and ii. The City manager is authorized to adjust the annual vacation accrual of employees hired on or after July 1, 2001, to provide up to 40 additional hours (i.e., to a maximum annual accrual of 160 hours) for service with a prior employer. b) Nine (9), but less than fourteen (14) years. For employees completing nine (9), but not more than fourteen (14) years continuous service; 160 hours vacation per year. 17 c) Fourteen (14), but less than nineteen (19) years. For employees completing fourteen (14), but not more than nineteen (19) years continuous service; 180 hours vacation leave per year. d) Nineteen (19) or more years. For employees completing nineteen (19) or more years continuous service; 200 hours vacation leave per year. e) Employees are eligible to cash out vacation accrual balances in excess of 80 hours. An employee may cash out a minimum of eight (8) hours to a maximum of 120 hours of accrued vacation provided the employee has taken 80 vacation hours in the previous 12 months and has followed the election procedures set forth in this section. Employees must elect the number of vacation hours they will cash-out during the next calendar year, up to the maximum of 120 hours. For the 2012 calendar vacation year, employees will make their election for vacation hours to cash out no later than November 1, 2012. The election will apply only to vacation hours that are accrued in the next calendar year and that are eligible for cash-out. The election to cash-out vacation hours in each designated year will be irrevocable. This means that employees who elect to cash-out vacation hours must cash-out the number of accrued hours pre-designates on the election form. Employees who do not elect a cash-out amount by November 1 of the prior calendar year will be deemed to have waived the right to cash out any leave in the following tax year and will not be eligible to cash-out vacation hours in the next tax year Employees who elect cash-out amounts may request a cash-out at any time in the designated tax year by submitting a cash-out form to payroll. Payroll will complete the cash-out upon request, provided the requested cash-out amount has accrued and is consistent with the amount the employee pre-designated. If the full amount of hours designated for cash-out is not available at the time of cash-out request, the maximum available will be paid. For employees who have not requested cash-out of the elected amount by November 1 of each year, Payroll will automatically cash-out the elected amount in a paycheck issued on or after the payroll date including November 1. 4. Bereavement Leave of absence with pay of three (3) days may be granted an employee by the head of his/her department in the event of death in the employee’s immediate family, which is defined for purposes of this section as wife, husband, son, son-in-law, step-son, daughter, daughter-in-law, step-daughter, mother, mother-in-law, father, father-in-law, brother, brother-in-law, sister, sister-in-law, grandmother, grandmother-in-law, grandfather, 18 grandfather-in-law, grandchild, aunt, uncle, niece, nephew, registered domestic partner, or a close relative residing in the household of employee. Such leave shall be at full pay and shall not be charged against the employee’s accrued vacation or sick leave. Requests for leave in excess of three days shall be subject to the approval of a Council-Appointed Officer for employees under his/her control. 5. Use of accrued leave credits during leaves of absence. During unpaid leaves of absence for disability or other reasons, the employee may elect and the City may require the employee to use accrued paid vacation and sick leave in a manner consistent with state and federal law. Requests for leaves without pay shall not be unreasonably denied. In order to avoid misunderstandings, all leaves without pay must be in writing to be effective. M. RETIREMENT PENSION 1. Miscellaneous Pension Formulas: a. Miscellaneous Pension Group A: 2.7% at 55. The City provides retirement benefits under the California Public Employees Retirement System at the level of 2.7% at age 55 for employees hired before July 17, 2010, with a one year final compensation period. b. Miscellaneous Pension Group B: 2% at 60:For miscellaneous employees hired on or after July 17, 2010, and before January 1, 2013, and employees hired on or after January 1, 2013 who are not “new members” of CalPERS as defined in the Public Employees’ Pension Reform Act (often referred to as “Classic” CalPERS members)the City offers the CalPERS retirement formula two percent (2.0%) of final salary at age sixty (60), with a one (1) year final compensation period. c. Miscellaneous Pension Group C: 2% at 62. Employees hired on or after January 1, 2013 meeting the definition of “new member” under the Public Employees’ Pension Reform Act (Gov’t. Code s. 7522 et seq.) shall be subject to all of the provisions of that law, including but not limited to the two percent at age 62 (2%@62) retirement formula with a three (3) year final compensation period. 2. Safety Pension Formulas: a. Safety Pension Group A: 3% at 50. For Safety members, the City currently offers the CalPERS "3% at 50" full formula (Section 21362.2) benefit, with a one (1) year final compensation period. b. Safety Pension Group B: 3% at 55. Local Fire Safety members newly hired after 6/08/12 will be placed in the 3%@55 formula. As soon as administratively possible, the City intends to modify the Local Police Safety formula for new hires to 3%@55 formula. 19 c. Safety Pension Group C: New employees hired on or after January 1, 2013 who are “new members” as defined by the California Public Employees’ Pension Reform Act (PEPRA), will be subject to the terms of that statute, with a three (3) year final compensation period. 3. Employee PERS Share. a. Miscellaneous Employee Shares: Employees in Miscellaneous Pension Group A shall pay the full eight percent (8%) employee contribution. Employees in Miscellaneous Pension Group B shall pay the full seven percent (7%) employee contribution. Employees in Miscellaneous Pension Group C shall pay the employee contribution required by the Public Employees Pension Reform Act, calculated at fifty percent (50%) of the normal cost. b. Safety Employee Shares. Employees in Safety Pension Group A shall pay the full nine percent (9%) PERS employee contribution. Employees in Safety Pension Group B shall pay the full eight percent (98%) PERS employee contribution. Employees in Safety Pension Group C shall pay the employee contribution required by the Public Employees Pension Reform Act, calculated at fifty percent (50%) of the normal cost. c. Employees under the 2%@62 benefit shall pay at least 50 percent of the total normal cost or the same contribution rate as “similarly situated” employees, whichever is higher. 4. Employer Share a.Miscellaneous (Non-Safety) Management and Professional: As soon as administratively possible, but no sooner than pay period including July 1, 2017 each Miscellaneous (non-Safety) Management and Professional employee shall pay one- half percent (0.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. Effective the first full pay period including July 1, 2018, each Miscellaneous (non-Safety) Management and Professional employee shall pay an additional one-half percent (0.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. This will result in Miscellaneous (non-Safety) Management and Professional employees paying a total of one (1) percent of the employer share in addition to their employee contribution . b. Safety Management: 20 As soon as administratively possible, but no sooner than pay period including July 1, 2017 each Safety Management employee shall pay one and one-half percent (1.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. Effective the first full pay period including July 1, 2018, each Safety Management employee shall pay an additional one and one-half percent (1.5%) of their salary toward the employer cost of retirement in accordance with Section 20516 of the California Government Code. This will result in Safety Management employees paying a total of three (3) percent of the employer share in addition to their employee contribution. 4.5. Final Compensation. Final compensation for purposes of retirement shall be as set forth in the City’s contract with CalPERS, including, when applicable, the Government Code Section 20692: Optional Benefit, except as may otherwise be required by PEPRA. 5.6. Employee PERS contributions shall be made on a tax deferred basis, in accordance with Section 414(h)(2) of the Internal Revenue Code. All provisions of this subsection are subject to and conditioned upon compliance with IRS regulations. 6.7. Final compensation for employees under the 2%@62 benefit shall be as set forth in PEPRA, including calculation based on the average of three highest consecutive years and a cap on pensionable compensation (currently $136,440) based on IRS limits for employers that do not participate in social security. N. COMMUTE INCENTIVES and PARKING 1. Civic Center Parking. Employees assigned to Civic Center and adjacent work locations. The City will provide a Civic Center Garage parking permit. Employees hired after June 30, 1994 may initially receive a parking permit for another downtown lot, subject to the availability of space at the Civic Center Garage. 2. Alternative Commute Incentives: Employees who qualify may voluntarily elect one commute incentives, including but not limited to the following options, for those using an eligible commute alternative on 60% or more of their scheduled work days per month: a) Public Transit and Vanpool. The City provides tax-free commute incentives up to the current IRS limit, as may be amended from time to time, (currently $125/month) are available through the Commuter Check Direct (CCD) website for employees using Bay Area public transportation or riding in a registered vanpool at least 60% 21 of their scheduled work days. Administration of the Commuter Check benefit shall be subject to the rules and regulations of the third- party administrator. b) Go Pass. The Go Pass program will offer civic center and other downtown-based employees a Caltrans Go Pass that allows unlimited rides on Caltrain in all zones seven days per week, to any City of Palo Alto employee. b) c) Bicycle. The City will provide employees with a tax-free incentive of $20 per month to eligible employees who ride a bicycle to work. d) Carpool. The City will provide with a taxable incentive of $30 per month to each eligible employee in a carpool with two or more licensed drivers. e) Walk. The City will provide employees with a taxable incentive of $20 per month to eligible employees who walk to work. O. AT-WILL STATUS Certain Management and Professional Positions are designated as having “at-will” employment status. Employees hired into “at-will” positions shall have no constitutionally protected property or other interest in their employment with the City. Notwithstanding any provision in the Merit System Rules and Regulations or any other City rule, policy or procedure, at-will employees have no right to continued employment or pre-or post-disciplinary due process and work at the will and pleasure of the hiring authority (City Council, City Manager or Council-Appointed Officer). Work for an at-will employee may be eliminated and/or the employee may be terminated, or asked to resign, at any time, with or without cause, upon notice to that employee, and the employee may resign at any time upon written notice to the hiring authority. 1. At-will Management & Professional positions. Department heads hired after July 1, 2004 and prior to the date of adoption of this plan were hired as at-will employees whose terms of employment are specified by an employment contract that includes a severance package. Effective on the date of adoption of this plan, new employees hired or promoted to department head, assistant department director, and all other positions listed on Attachment B shall be at-will employees. At-will employees will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution to the extent paid by City, etc.) and vacation, sick leave, and management leave as are generally provided to management employees and described in this compensation plan, as amended from time to time. At-will employees who are terminated or asked to resign shall, upon execution of a release of all claims against the City, be eligible for a severance payment equivalent to four (4) weeks of salary and 22 benefits, increasing after completion of the first full year of service by one (1) week for every completed year of service, up to a maximum of 12 weeks. For example, an at-will employee who has completed six (6) years of service would be eligible to receive ten (10) weeks of severance (4 weeks plus 1 week for each year of service). No severance shall be paid if the employee is terminated for serious misconduct involving abuse of his or her office or position, including but not limited to waste, fraud, violation of the law under color of authority, misappropriation of public resources, violence, harassment or discrimination. If the employee is later convicted of a crime involving such abuse of his or her position the employee shall fully reimburse the City as set forth in Government Code section 53243.3. 2. Provisional employees. The City has created a program for Provisional employment when funding is available. The program’s purpose is to create limited duration senior management level work for the City Manager’s Office or as designated by the City Manager. A Provisional Employee will be an “at will” employee whose term of employment shall be no more than two (2) years. A Provisional Employee shall be exempt and not eligible to earn overtime. A Provisional Employee will receive limited benefits as specified in an Employment Agreement. Sections I and II of this Compensation Plan shall not apply to Provisional Employees, except as specified by the City Manager. 3. Management and Legal Fellows. The City has created programs for Management Fellows and Legal Fellows when funding is available. The programs’ purpose is to create limited duration entry level positions for management graduates and lawyers. Fellows will be “at will” employees whose term of employment shall be no more than two (2) years. Fellows shall be PERS exempt to the extent allowed by law, but may receive vacation, sick leave, health care benefits and other limited benefits, as determined by the City Manager or City Attorney. Sections I and II of this Plan shall not apply to Management and Legal Fellows, except as specified by the City Manager or City Attorney. P. ADDITIONAL COMPENSATION FOR MAYOR AND VICE MAYOR The Mayor shall receive $150 monthly, and the Vice Mayor $100 monthly to defray additional expenses of these offices. Q. REIMBURSEMENT FOR RELOCATION EXPENSE Policy Statement The City of Palo Alto, in rare instances, may provide a Basic Relocation Benefits Package for new management and professional employees, upon the approval of the City Manager or designated subordinate. In addition, the provision of “Optional Benefits” or portions thereof, may be 23 extended for exceptional circumstances and only the approval of the City Manager or designee, or for Council-appointed officers, the City Council. The details of the Relocation Expense program are specified in the City’s Relocation Expense policy and all relocation reimbursements shall be subject to the provisions of that policy. R. MEAL ALLOWANCE Management and professional employees assigned to attend night meetings are eligible to receive reimbursement for up to $20.00 per dinner. This provision covers only receipted meals actually taken and submitted for reimbursement. S. GRIEVANCES REGARDING COUNCIL APPOINTED OFFICERS Notwithstanding the grievance procedures provided in Chapter 11 of the City of Palo Alto’s Merit System Rules and Regulations, any Management and Professional employee who is supervised by a Council Appointed Officer and has a grievance against that Council Appointed Officer or regarding the conduct of that Council Appointed Officer shall, following an attempt to resolve the grievance pursuant to Step One (informal discussion), summarize the grievance regarding the Council Appointed Officer in writing and submit it to the Director of Human Resources for review and resolution using the methods he/she considers appropriate. T. MERIT RULES The City will include members of the Management/Professional Compensation Committee in discussions regarding revision of the Merit Rules and Regulations. 24 Attachment B At-Will Positions Management and Professional Unit The intent of this provision under the Management/Professional Compensation Plan is to designate classifications at the department head, assistant director, deputy director, division manager and senior professional levels as at-will. The applicable Council Appointed Officer may designate newly created positions at those levels not included on this list as at-will. Existing classifications that shall be at-will include but are not limited to: Department Heads- All departments Assistant Directors- All departments Deputy Directors- All departments Division Managers Administrative Services Director, Administrative Services/Chief Financial Officer Director, Office of Management & Budget Assistant Director, Administrative Services Chief Budget Officer Manager, Accounting Chief Procurement Officer Manager, Real Property City Attorney Senior Assistant City Attorney Assistant City Attorney Sr. Deputy City Attorney Deputy City Attorney Legal Fellow City Auditor Deputy City Auditor Sr. Performance Auditor City Clerk Assistant City Clerk Deputy City Clerk City Manager Assistant City Manager/Chief Operating Officer Assistant to City Manager 25 Chief Communications Officer Chief Sustainability Officer Communications Manager Manager, Economic Development Management Fellow Community Services Director, Community Services Assistant Director, Community Services Manager, Community Services Manager, Community Services Program Senior Human ResourcesPeople Strategy and Operations Director of Human Resources/Chief People Officer Assistant Director, Human Resources Human Resources Manager Senior Administrator Human Resources IT Director, IT/Chief Information Officer Manager, Information Technology Library Director, Libraries Assistant Director, Library Services Division Head, Collection & Technical Services Manager, Library Services Planning & Community Environment Director, Planning & Community Environment Assistant Director, Planning & Community Environment Planning Manager Division Manager, Chief Planning Official Division Manager, Chief Transportation Official Development Services Department Development Services Director Chief Building Official Assistant Building Official Planning Manager Public Safety Chief of Police/Director of Public Safety Fire Chief /Assistant Public Safety Director 26 Assistant Police Chief Emergency Services Director Deputy Director – Technical Services Division (police department) Deputy Fire Chief Public Works Director, Public Works/City Engineer Assistant Director, Public Works – Environmental Services Assistant Director, Public Works – Public Services Assistant Director, Public Works – Engineering Manager, Airport Manager, Fleet Water Quality Control Plant Manager Utilities Director, Utilities Page 1 Effective 7/1/2018 (2.5% Increase) Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate 190 Non-Exempt Accountant 690P $32.89 $41.11 $49.34 $7,125.73 $85,508.80 $33.72 $42.14 $50.57 $34.56 $43.20 $51.84 76 Exempt Administrative Assistant 750P $28.37 $35.46 $42.56 $6,146.40 $73,756.80 $29.08 $36.35 $43.62 $29.81 $37.26 $44.72 115 Exempt Assistant Chief Building Official 405M $46.08 $57.60 $69.12 $9,984.00 $119,808.00 $47.24 $59.04 $70.85 $48.42 $60.52 $72.63 132 Exempt Assistant Chief of Police 100A $75.43 $94.28 $113.14 $16,341.87 $196,102.40 $77.32 $96.64 $115.97 $79.25 $99.06 $118.88 108 Exempt Assistant City Attorney 165A $63.94 $79.92 $95.91 $13,852.80 $166,233.60 $65.54 $81.92 $98.31 $67.18 $83.97 $100.77 109 Exempt Assistant City Clerk 630M $37.21 $46.51 $55.82 $8,061.73 $96,740.80 $38.15 $47.68 $57.22 $39.11 $48.88 $58.66 107 Exempt Assistant City Manager 20E $78.36 $97.94 $117.53 $16,976.27 $203,715.20 $80.32 $100.39 $120.47 $82.32 $102.90 $123.48 73 Exempt Assistant Director Administrative Services 120A $64.47 $80.58 $96.70 $13,967.20 $167,606.40 $66.08 $82.60 $99.12 $67.74 $84.67 $101.61 126 Exempt Assistant Director Community Services 150A $61.72 $77.14 $92.57 $13,370.93 $160,451.20 $63.26 $79.07 $94.89 $64.84 $81.05 $97.26 1007 Exempt Assistant Director Human Resources 155A $59.65 $74.56 $89.48 $12,923.73 $155,084.80 $61.15 $76.43 $91.72 $62.68 $78.35 $94.02 2001 Exempt Assistant Director Library Services 160A $59.03 $73.78 $88.54 $12,788.53 $153,462.40 $60.51 $75.63 $90.76 $62.03 $77.53 $93.04 10 Exempt Assistant Director Planning & Community Environment 130A $63.23 $79.03 $94.84 $13,698.53 $164,382.40 $64.81 $81.01 $97.22 $66.44 $83.04 $99.65 143 Exempt Assistant Director Public Works 140A $62.49 $78.11 $93.74 $13,539.07 $162,468.80 $64.06 $80.07 $96.09 $65.67 $82.08 $98.50 168 Exempt Assistant Fleet Manager 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 102 Exempt Assistant Manager WQCP 240D $50.52 $63.14 $75.77 $10,944.27 $131,331.20 $51.78 $64.72 $77.67 $53.08 $66.34 $79.61 30 Exempt Assistant to the City Manager 390M $48.82 $61.02 $73.23 $10,576.80 $126,921.60 $50.04 $62.55 $75.06 $51.30 $64.12 $76.95 118 Exempt Chief Building Official 290M $59.99 $74.98 $89.98 $12,996.53 $155,958.40 $61.49 $76.86 $92.24 $63.04 $78.79 $94.55 2008 Exempt Chief Communications Officer 135A $62.89 $78.61 $94.34 $13,625.73 $163,508.80 $64.47 $80.58 $96.70 $66.08 $82.60 $99.12 112 Exempt Chief Planning Official 220D $53.61 $67.01 $80.42 $11,615.07 $139,380.80 $54.96 $68.69 $82.43 $56.33 $70.41 $84.50 95 Exempt Chief Procurement Officer 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 2010 Exempt Chief Sustainability Officer 435M $54.75 $68.43 $82.12 $11,861.20 $142,334.40 $56.12 $70.15 $84.18 $57.53 $71.91 $86.30 82 Exempt Chief Transportation Official 204D $56.40 $70.50 $84.60 $12,220.00 $146,640.00 $57.82 $72.27 $86.73 $59.27 $74.08 $88.90 96 Exempt Claims Investigator 660P $34.56 $43.19 $51.83 $7,486.27 $89,835.20 $35.42 $44.27 $53.13 $36.31 $45.38 $54.46 24 Exempt Communication Specialist 615M $37.43 $46.78 $56.14 $8,108.53 $97,302.40 $38.36 $47.95 $57.54 $39.32 $49.15 $58.98 89 Exempt Contracts Administrator 585P $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 186 Non-Exempt Coordinator Library Circulation 675M $32.95 $41.18 $49.42 $7,137.87 $85,654.40 $33.77 $42.21 $50.66 $34.62 $43.27 $51.93 191 Exempt Deputy Chief/Fire Marshall 125A $63.71 $79.63 $95.56 $13,802.53 $165,630.40 $65.31 $81.63 $97.96 $66.95 $83.68 $100.42 9 Exempt Deputy City Attorney 480P $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 71 Exempt Deputy City Clerk 720M $29.80 $37.25 $44.70 $6,456.67 $77,480.00 $30.56 $38.19 $45.83 $31.32 $39.15 $46.98 195 Exempt Deputy Director Technical Services Division 200D $63.52 $79.39 $95.27 $13,760.93 $165,131.20 $65.11 $81.38 $97.66 $66.74 $83.42 $100.11 20 Exempt Deputy Fire Chief 110A $66.38 $82.97 $99.57 $14,381.47 $172,577.60 $68.04 $85.05 $102.06 $69.75 $87.18 $104.62 81 Exempt Director Administrative Services/Chief Financial Officer 50E $75.11 $93.88 $112.66 $16,272.53 $195,270.40 $76.99 $96.23 $115.48 $78.92 $98.64 $118.37 72 Exempt Director Community Services 45E $75.68 $94.60 $113.52 $16,397.33 $196,768.00 $77.58 $96.97 $116.37 $79.52 $99.40 $119.28 1012 Exempt Director Development Services 145A $66.45 $83.06 $99.68 $14,397.07 $172,764.80 $68.12 $85.14 $102.17 $69.82 $87.27 $104.73 133 Exempt Director Human Resources/Chief People Officer 55E $71.58 $89.47 $107.37 $15,508.13 $186,097.60 $73.37 $91.71 $110.06 $75.21 $94.01 $112.82 128 Exempt Director Information Technology/Chief Information Officer 25E $78.21 $97.76 $117.32 $16,945.07 $203,340.80 $80.17 $100.21 $120.26 $82.18 $102.72 $123.27 131 Exempt Director Libraries 60E $70.84 $88.54 $106.25 $15,346.93 $184,163.20 $72.61 $90.76 $108.92 $74.43 $93.03 $111.64 2005 Exempt Director Office of Emergency Services 215D $55.58 $69.47 $83.37 $12,041.47 $144,497.60 $56.97 $71.21 $85.46 $58.40 $73.00 $87.60 49 Exempt Director Office of Management and Budget 120A $64.47 $80.58 $96.70 $13,967.20 $167,606.40 $66.08 $82.60 $99.12 $67.74 $84.67 $101.61 134 Exempt Director Planning & Community Environment 40E $75.86 $94.82 $113.79 $16,435.47 $197,225.60 $77.76 $97.20 $116.64 $79.71 $99.63 $119.56 135 Exempt Director Public Works/City Engineer 30E $76.84 $96.04 $115.25 $16,646.93 $199,763.20 $78.76 $98.45 $118.14 $80.74 $100.92 $121.11 City of Palo Alto Management, Professional and Confidential Salary Schedule Effective 7/1/2016 (2.5% Increase)Effective 7/1/2017 (2.5% Increase) Page 2 Effective 7/1/2018 (2.5% Increase) Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Effective 7/1/2016 (2.5% Increase)Effective 7/1/2017 (2.5% Increase) 121 Exempt Director Utilities 10E $98.47 $123.08 $147.70 $21,333.87 $256,006.40 $100.93 $126.16 $151.40 $103.46 $129.32 $155.19 2002 Exempt Division Head Library Services 260D $46.36 $57.95 $69.54 $10,044.67 $120,536.00 $47.52 $59.40 $71.28 $48.72 $60.89 $73.07 172 Exempt Division Manager Open Space, Parks & Golf 245D $49.84 $62.29 $74.75 $10,796.93 $129,563.20 $51.08 $63.85 $76.62 $52.36 $65.45 $78.54 1005 Exempt Executive Assistant to the City Manager 705M $32.09 $40.11 $48.14 $6,952.40 $83,428.80 $32.90 $41.12 $49.35 $33.72 $42.15 $50.58 139 Exempt Fire Chief 35E $76.41 $95.51 $114.62 $16,555.07 $198,660.80 $78.32 $97.90 $117.48 $80.28 $100.35 $120.42 163 Exempt Hearing Officer 480M $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 101 Exempt Human Resources Representative 735P $29.08 $36.34 $43.61 $6,298.93 $75,587.20 $29.80 $37.25 $44.70 $30.56 $38.19 $45.83 90 Exempt Landscape Architect Park Planner 510M $43.16 $53.94 $64.73 $9,349.60 $112,195.20 $44.24 $55.29 $66.35 $45.35 $56.68 $68.02 2015 Exempt Legal Fellow 755P $37.11 $46.38 $55.66 $8,039.20 $96,470.40 $38.04 $47.54 $57.05 $38.99 $48.73 $58.48 171 Exempt Management Analyst 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 79 Exempt Manager Accounting 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 2007 Exempt Manager Airport 210D $55.59 $69.48 $83.38 $12,043.20 $144,518.40 $56.98 $71.22 $85.47 $58.41 $73.01 $87.62 2023 Exempt Manager Budget 360M $53.84 $67.29 $80.75 $11,663.60 $139,963.20 $55.19 $68.98 $82.78 $56.57 $70.71 $84.86 38 Exempt Manager Communications 525M $42.11 $52.63 $63.16 $9,122.53 $109,470.40 $43.16 $53.95 $64.74 $44.24 $55.30 $66.36 154 Exempt Manager Community Services 630M $37.21 $46.51 $55.82 $8,061.73 $96,740.80 $38.15 $47.68 $57.22 $39.11 $48.88 $58.66 169 Exempt Manager Community Services Sr Program 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 1013 Exempt Manager Development Center 495M $44.24 $55.29 $66.35 $9,583.60 $115,003.20 $45.35 $56.68 $68.02 $46.48 $58.10 $69.72 63 Exempt Manager Economic Development 220D $53.61 $67.01 $80.42 $11,615.07 $139,380.80 $54.96 $68.69 $82.43 $56.33 $70.41 $84.50 44 Exempt Manager Employee Benefits 450M $45.81 $57.26 $68.72 $9,925.07 $119,100.80 $46.96 $58.70 $70.44 $48.14 $60.17 $72.21 45 Exempt Manager Employee Relations & Training 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 93 Exempt Manager Environmental Control Program 419M $46.91 $58.63 $70.36 $10,162.53 $121,950.40 $48.08 $60.10 $72.12 $49.29 $61.61 $73.94 1116 Exempt Manager Facilities 445M $46.50 $58.12 $69.75 $10,074.13 $120,889.60 $47.67 $59.58 $71.50 $48.86 $61.07 $73.29 127 Exempt Manager Fleet 255D $46.97 $58.71 $70.46 $10,176.40 $122,116.80 $48.15 $60.18 $72.22 $49.36 $61.69 $74.03 2018 Exempt Manager Human Services 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 32 Exempt Manager Information Technology 230D $51.85 $64.81 $77.78 $11,233.73 $134,804.80 $53.16 $66.44 $79.73 $54.49 $68.11 $81.74 2006 Exempt Manager Information Technology Security 420M $47.01 $58.76 $70.52 $10,185.07 $122,220.80 $48.19 $60.23 $72.28 $49.40 $61.74 $74.09 158 Exempt Manager Laboratory Services 495M $44.24 $55.29 $66.35 $9,583.60 $115,003.20 $45.35 $56.68 $68.02 $46.48 $58.10 $69.72 78 Exempt Manager Library Services 565M $38.61 $48.26 $57.92 $8,365.07 $100,380.80 $39.58 $49.47 $59.37 $40.57 $50.71 $60.86 92 Exempt Manager Maintenance Operations 469M $43.33 $54.16 $65.00 $9,387.73 $112,652.80 $44.42 $55.52 $66.63 $45.53 $56.91 $68.30 26 Exempt Manager Transportation Planning 345M $50.71 $63.38 $76.06 $10,985.87 $131,830.40 $51.98 $64.97 $77.97 $53.28 $66.60 $79.92 51 Exempt Manager Planning 415M $46.96 $58.70 $70.44 $10,174.67 $122,096.00 $48.14 $60.17 $72.21 $49.35 $61.68 $74.02 103 Exempt Manager Real Property 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 2011 Exempt Manager Revenue Collections 250D $47.64 $59.55 $71.46 $10,322.00 $123,864.00 $48.84 $61.04 $73.25 $50.06 $62.57 $75.09 160 Exempt Manager Solid Waste 330M $51.30 $64.12 $76.95 $11,114.13 $133,369.60 $52.59 $65.73 $78.88 $53.91 $67.38 $80.86 57 Exempt Manager Treasury, Debt & Investments 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 86 Exempt Manager Urban Forestry 436M $45.50 $56.87 $68.25 $9,857.47 $118,289.60 $46.64 $58.30 $69.96 $47.81 $59.76 $71.72 178 Exempt Manager Water Quality Control Plant 205D $57.08 $71.34 $85.61 $12,365.60 $148,387.20 $58.51 $73.13 $87.76 $59.97 $74.96 $89.96 39 Exempt Manager Watershed Protection 330M $51.30 $64.12 $76.95 $11,114.13 $133,369.60 $52.59 $65.73 $78.88 $53.91 $67.38 $80.86 1008 Exempt Office of Emergency Services Coordinator 525M $42.11 $52.63 $63.16 $9,122.53 $109,470.40 $43.16 $53.95 $64.74 $44.24 $55.30 $66.36 2024 Exempt Performance Auditor I 750P $28.37 $35.46 $42.56 $6,146.40 $73,756.80 $29.08 $36.35 $43.62 $29.81 $37.26 $44.72 100 Exempt Performance Auditor II 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 148 Exempt Police Chief 15E $84.96 $106.19 $127.43 $18,406.27 $220,875.20 $87.08 $108.85 $130.62 $89.27 $111.58 $133.90 2021 Exempt Principal Attorney 101A $77.36 $96.70 $116.04 $16,761.33 $201,136.00 $79.30 $99.12 $118.95 $81.28 $101.60 $121.92 2016 Exempt Principal Business Analyst 310M $54.06 $67.57 $81.09 $11,712.13 $140,545.60 $55.41 $69.26 $83.12 $56.80 $71.00 $85.20 Page 3 Effective 7/1/2018 (2.5% Increase) Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Effective 7/1/2016 (2.5% Increase)Effective 7/1/2017 (2.5% Increase) 2003 Exempt Principal Management Analyst 360M $53.84 $67.29 $80.75 $11,663.60 $139,963.20 $55.19 $68.98 $82.78 $56.57 $70.71 $84.86 2009 Exempt Project Manager 570M $39.36 $49.20 $59.04 $8,528.00 $102,336.00 $40.35 $50.43 $60.52 $41.36 $51.70 $62.04 2012 Exempt Public Safety Communications Manager 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 166 Exempt Public Safety Program Manager 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 117 Exempt Senior Accountant 555M $40.08 $50.10 $60.12 $8,684.00 $104,208.00 $41.09 $51.36 $61.64 $42.12 $52.65 $63.18 152 Exempt Senior Assistant City Attorney 105A $70.33 $87.91 $105.50 $15,237.73 $182,852.80 $72.09 $90.11 $108.14 $73.90 $92.37 $110.85 2013 Exempt Senior Business Analyst - M 420M $47.01 $58.76 $70.52 $10,185.07 $122,220.80 $48.19 $60.23 $72.28 $49.40 $61.74 $74.09 11 Exempt Senior Deputy City Attorney 375M $50.04 $62.55 $75.06 $10,842.00 $130,104.00 $51.30 $64.12 $76.95 $52.59 $65.73 $78.88 187 Exempt Senior Engineer 300M $53.90 $67.37 $80.85 $11,677.47 $140,129.60 $55.25 $69.06 $82.88 $56.64 $70.79 $84.95 106 Exempt Senior Executive Assistant 450M $45.81 $57.26 $68.72 $9,925.07 $119,100.80 $46.96 $58.70 $70.44 $48.14 $60.17 $72.21 157 Exempt Senior Human Resources Administrator 545M $39.93 $49.91 $59.90 $8,651.07 $103,812.80 $40.93 $51.16 $61.40 $41.96 $52.44 $62.93 14 Exempt Senior Management Analyst 465M $45.77 $57.21 $68.66 $9,916.40 $118,996.80 $46.92 $58.65 $70.38 $48.10 $60.12 $72.15 130 Exempt Senior Performance Auditor 510M $43.16 $53.94 $64.73 $9,349.60 $112,195.20 $44.24 $55.29 $66.35 $45.35 $56.68 $68.02 53 Exempt Senior Project Manager 300M $53.90 $67.37 $80.85 $11,677.47 $140,129.60 $55.25 $69.06 $82.88 $56.64 $70.79 $84.95 33 Exempt Senior Technologist 420M $47.01 $58.76 $70.52 $10,185.07 $122,220.80 $48.19 $60.23 $72.28 $49.40 $61.74 $74.09 155 Exempt Superintendent Animal Services 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 83 Exempt Superintendent Community Services 480M $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 1117 Exempt Superintendent Recreation 480M $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 2022 Exempt Supervising Librarian 675M $33.07 $41.33 $49.60 $7,163.87 $85,966.40 $33.90 $42.37 $50.85 $34.75 $43.43 $52.12 161 Exempt Supervisor Facilities Management 600M $38.24 $47.79 $57.35 $8,283.60 $99,403.20 $39.20 $48.99 $58.79 $40.18 $50.22 $60.27 113 Exempt Supervisor Inspection and Surveying 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 146 Exempt Supervisor Warehouse 660M $34.56 $43.19 $51.83 $7,486.27 $89,835.20 $35.42 $44.27 $53.13 $36.31 $45.38 $54.46 181 Exempt Supervisor Water Quality Control Operations 525M $42.11 $52.63 $63.16 $9,122.53 $109,470.40 $43.16 $53.95 $64.74 $44.24 $55.30 $66.36 184 Exempt Veterinarian 555M $40.08 $50.10 $60.12 $8,684.00 $104,208.00 $41.09 $51.36 $61.64 $42.12 $52.65 $63.18 Confidential Classifications Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate 905 Non-Exempt Human Resources Technician 830C $25.08 $31.34 $37.61 $5,432.27 $65,187.20 $25.71 $32.13 $38.56 $26.36 $32.94 $39.53 903 Non-Exempt Legal Secretary-Confidential 820C $25.70 $32.12 $38.55 $5,567.47 $66,809.60 $26.35 $32.93 $39.52 $27.01 $33.76 $40.52 67 Exempt Secretary to City Attorney 800C $30.55 $38.18 $45.82 $6,617.87 $79,414.40 $31.32 $39.14 $46.97 $32.10 $40.12 $48.15 1004 Non-Exempt Senior Legal Secretary - Confidential 810C $28.37 $35.46 $42.56 $6,146.40 $73,756.80 $29.08 $36.35 $43.62 $29.81 $37.26 $44.72 City of Palo Alto (ID # 7062) City Council Staff Report Report Type: Action Items Meeting Date: 6/27/2016 City of Palo Alto Page 1 Council Priority: City Finances Summary Title: Blue Ribbon Storm Drain Committee Recommendations Report Title: Review of Recommendations From the Storm Drain Blue Ribbon Committee Regarding Future Storm Water Management Funding and Request for Council Direction on Whether to Proceed With a Proposition 218 Hearing and Property Owner Ballot-by-Mail to Approve Future Storm Water Management Rates (Continued From June 6, 2016) (Staff Requests This Item be Continued to June 28, 2016) From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1.Review and accept a report from the Storm Drain Blue Ribbon Committee on its recommendations for future storm water management funding; and 2.Provide guidance to staff on whether to proceed with a Proposition 218 protest hearing and property owner ballot-by-mail to approve future storm water management rates. Executive Summary The City’s storm drain programs are funded through the Storm Drainage Fund, an enterprise fund established by Council in 1989. Revenue to fund the Storm Drainage Fund’s programs and projects is currently generated by a Storm Drainage Fee assessed to all developed properties in Palo Alto on monthly utility bills. Council traditionally had the authority to set the Storm Drainage rates as City of Palo Alto Page 2 part of the annual City budget approval process. In November 1996, however, California voters passed Proposition 218, a comprehensive constitutional amendment that set substantive and procedural requirements for property- related fees. As a result, the City must obtain property owner or voter approval before increasing Storm Drainage fees. In April 2005, Palo Alto property owners approved a ballot-by-mail measure increasing the Storm Drainage Fee to for a typical single-family residential parcel to $10.00 per month, with provision for annual inflationary increases through FY 2017. If no action is taken to approve updated fees, the fee structure approved in 2005 will sunset in June 2017, and the fee will revert back to its pre-2005 level of $4.25 per month. Revenue from the post-sunset rate will not support current operational costs for storm drain system maintenance and State-mandated storm water quality protection programs and will provide no funding for continuation of a storm drain capital improvement program. On October 19, 2015, Council approved staff’s recommended conceptual strategy for identifying a funding mechanism for future storm drain improvements and enhanced storm water quality protection programs, including the appointment by the city manager of a Blue Ribbon Committee (Committee) of residents to review storm drain funding needs. The city manager appointed ten community leaders from neighborhoods throughout Palo Alto. The Committee had its first meeting on February 4, 2016 and met for two hours on a weekly or bi-weekly basis through early May. At their final meeting on May 5, 2016, the Committee voted on and approved a summary report containing their findings and recommendations to the city manager for future storm drain funding. The Committee recommends a renamed Storm Water Management Fee of $13.65 per month for FY 2018, with a provision for annual inflationary increases and a partial 15-year sunset horizon. The fee revenue would support construction of a set of high-priority storm drain capital improvements, preparation and implementation of a green stormwater infrastructure plan, as well as ongoing storm drain system maintenance and storm water quality protection programs. The Committee recommends that a portion of the new fee not be subject to the sunset provision in order to provide a stable funding basis for ongoing non-capital expenditures for engineering, maintenance, and storm water quality staffing, expenses, and permit compliance. City of Palo Alto Page 3 Staff and the Committee concur that the City should proceed with a Proposition 218 protest hearing and property owner ballot-by-mail election to approve future storm water management rates. Staff recommends that the process be timed such that the protest hearing is held in October 2017 and ballots are sent to property owners in early 2017. The following report describes the specifics of the Committee’s recommendations and a potential election process and timeline for Council consideration. Background The City’s storm drain capital improvement, maintenance and water quality protection programs are funded through the Storm Drainage Fund, an enterprise fund established by Council in 1989. Revenue to fund the Storm Drainage Fund’s programs and projects is currently generated by a Storm Drainage Fee assessed to all developed properties in Palo Alto on monthly utility bills. Description of Current Rate Structure The Storm Drainage fee schedule is based upon the premise that a property’s use of the municipal storm drain system is dependent upon the amount of storm water runoff that it generates during storm events, which in turn is related to the amount of impervious surface (hardscape such as buildings, driveways, patios, parking lots, etc.) on the property. The current Storm Drainage fee schedule has three flat rates for single-family residential parcels based on lot size and a multi- family residential/commercial/industrial rate based on actual measured impervious surface on each parcel (see Attachment A: Utility Rate Schedule D-1 - General Storm and Surface Water Drainage; and Attachment B: Utility Rule and Regulation 25 -General Storm and Surface Water Drainage). The Storm Drainage rate schedule billing unit is the Equivalent Residential Unit (ERU). One ERU equates to 2,500 square feet of impervious surface, the amount of hardscape on a typical Palo Alto single-family residential property. The Storm Drainage Fee was originally set with the establishment of the Storm Drainage Enterprise Fund in 1989 at a rate of $3.25 per month per ERU. Council increased the monthly rate to $4.25 per month per ERU as part of the FY 1994 budget approval process. History of Earlier Proposition 218 Elections Council traditionally had the authority to set the Storm Drainage rates as part of the annual City budget approval process. In November 1996, however, California voters passed Proposition 218, a comprehensive constitutional amendment that City of Palo Alto Page 4 set substantive and procedural requirements for many types of property-related fees, assessments, and taxes. Under Proposition 218, most property-related fees (with some exceptions, such as water and sewer) cannot be imposed or increased without the approval of a majority of property owners subject to the fee or a supermajority of voters.California courts have held that storm drainage fees like Palo Alto’s are property-related fees subject to Proposition 218’s procedural and substantive requirements. As a result, the City must obtain property owner or voter approval before increasing Storm Drainage fees. After a failed property owner election in September 2000 (which garnered only a 37 percent approval rating), the City conducted a second election in April 2005 seeking approval of an increased Storm Drainage Fee to fund needed storm drain capital improvements and enhanced storm drain maintenance and storm water quality protection. The ballot measure, crafted jointly by staff and a city manager- appointed Blue Ribbon Committee,included the following key elements: ·An initial Storm Drainage Fee of $10.00 per month per ERU (fee for the typical single-family residential property owner); ·Funding for seven high-priority storm drain capital improvements, estimated to cost approximately $17 million (2004 dollars); ·Annual funding for innovative projects that reduce storm water runoff and pollutant levels; ·Annual inflation-based adjustments to the proposed fee increase, subject to Council approval, with a maximum annual increase of 6%; ·Twelve-year sunset provision for the proposed fee increase (ending in June 2017); and ·Council appointment of a citizen oversight committee tasked with ensuring that the money raised from the increased Storm Drainage Fee is spent in accordance with the ballot measure. The 2005 Storm Drainage ballot measure (Attachment C) was approved, with 58 percent of responding property owners voting in favor of the fee increase. This 2005 property owner authorized funding is scheduled to sunset on June 1, 2017.1 The successful ballot measure has provided enhanced revenue for a fully self- sufficient Storm Drainage Fund, including funding for capital projects and ongoing 1 The small pre-Proposition 218 fee amount of $4.25/month/ERU will not sunset and does not require re- authorization. City of Palo Alto Page 5 operating expenses. Five of the seven storm drain capital improvement projects specified in the ballot measure have been completed to-date. A contract for construction of the final phase of the Lincoln Avenue Storm Drain Improvements Project was submitted to Council for approval on June 20th, and the final project (Matadero Storm Water Pump Station Improvements)will be substantially completed in FY 2017. As described in the proposed FY 2017-2021 Capital Budget, the storm drain pipeline element of the Matadero project will be deferred to FY 2018 due to a funding shortfall. Attachment D provides a status update on the Storm Drainage Fund Capital Improvement Program. The Council- appointed Storm Drain Oversight Committee has performed annual reviews of the Storm Drainage Fund budget and expenditures to ensure compliance with the approved 2005 ballot measure. As authorized by property owners through the 2005 ballot measure, Council has approved increases in the base single-family residential Storm Drainage rate of $10.00 per month per ERU each year based on an index representing the local rate of inflation. The single-family residential rate proposed for FY 2017 is $13.03 per month per ERU, representing an average increase of 2.4 percent per year since 2005. If no action is taken to approve updated fees, the previously-approved fees will sunset, and the fee will revert back to its pre-2005 level of $4.25 per month per ERU in June 2017. Revenue from the $4.25 per month fee will not support current operational costs for storm drain system maintenance and State- mandated storm water quality protection programs and will provide no funding for continuation of a storm drain capital improvement program. Basis of Property Owner-Approved Projects The seven high-priority storm drain capital improvement projects specified for funding in the 2005 Storm Drainage ballot measure were based on recommendations made in the 1993 Storm Drain Master Plan. During the Blue Ribbon Committee’s deliberations on the scope and size of the ballot measure, the Committee acknowledged that there were a number of additional capital projects that would need to be funded after the June 2017 sunset date. Much of the City’s storm drainage infrastructure was constructed in a poorly coordinated manner as part of multiple individual residential subdivision developments during the high growth years between the mid-1940s and late-1960s. Many elements of the existing storm drain system do not meet the modern design standard of being able to convey the storm runoff from a 10% or 10-year recurrence storm event City of Palo Alto Page 6 without street flooding. 2015 Storm Drain Master Plan Update In preparation for a potential future Storm Drainage ballot measure, staff completed a Storm Drain Master Plan Update in June 2015 that rexamined and reprioritized the storm drain capital improvements needed to increase the flow capacity of the City’s storm drain system to bring it into conformance with current design standards. The Master Plan Update identifies an estimated $43 million in high-and medium-priority storm drain capital improvement projects needed for flow capacity augmentation (the Storm Drain Master Plan is posted for viewing at: http://www.cityofpaloalto.org/gov/depts/pwd/stormwater/drains.asp). On October 19,2015, Council approved staff’s recommended conceptual strategy for identifying a funding mechanism for future storm drain improvements and enhanced storm water quality protection programs. The approved strategy included the appointment by the city manager of a Blue Ribbon Committee of residents and business representatives to review storm drain funding needs. Water Board’s New Municipal Regional Permit In November 2015, the San Francisco Bay Regional Water Quality Control Board (Water Board) adopted a new Municipal Regional Permit (MRP) that regulates storm water discharges from municipalities and local agencies throughout the Bay Area. The MRP has traditionally included 15 provisions requiring activities to prevent storm water pollution, including business and construction site inspections, control of specific pollutants such as trash, pesticides, copper, PCBs, and mercury, new and redevelopment requirements, potable water discharge practices, public outreach and education. The renewed MRP continues all of the requirements from the prior permit and adds several new mandates, notably the development of a Green Storm Water Infrastructure Plan. Green storm water infrastructure protects or restores the natural water cycle by collecting and retaining and/or treating runoff rather than discharging it directly to storm drains. Green storm water infrastructure practices, also referred to as low impact development measures, include preserving natural landscapes and utilizing infiltration planters, rain gardens, tree wells, green roofs, pervious pavement, and rainwater harvesting to manage storm water runoff. These practices help to limit the discharge of pollutants from City of Palo Alto Page 7 streets, parking lots, and roofs by infiltrating storm water into soils. Future storm water program budgets will need to include funding for these new MRP requirements. Discussion In January 2016, as part of the October 19, 2015 Council-approved strategy for reviewing options for storm drain funding, staff contacted members of the public to solicit their participation on the Storm Drain Blue Ribbon Committee (Committee). The city manager appointed ten residents and community leaders to the Committee (see list of Committee members, Attachment E). The Committee members live in neighborhoods throughout the City and have expertise and interests in a variety of fields. The Committee had its first meeting on February 4, 2016 and met for two hours on a weekly or bi-weekly basis through early May. The Committee met 10 times for a total of 20 hours. The Committee meetings were open to members of the public, and information about the Committee meetings, including agendas, meeting summaries, and briefing materials, was posted to a special page on the City’s web site: http://www.cityofpaloalto.org/sdbrc.At the first few meetings, staff presented detailed information to the Committee on a variety of topics relevant to storm drainage, including existing programs, storm drain funding, Proposition 218, recommended storm drain capital improvements, and enhanced storm water quality protection programs, including green storm water infrastructure planning. During the remainder of the meetings, the focus switched to the Committee’s internal discussion and analysis of the issues. At their final meeting on May 5, 2016, the Committee voted on and approved a summary report containing their findings and recommendations to the city manager for future storm drain funding (Attachment F). Members of the Committee will be present at the June 6 Council meeting to address the Council and answer questions regarding their report. The Committee focused particular attention on the following set of key recommendations: ·The name of the enterprise fund and the user fee should be changed to “Storm Water Management Fund” and “Storm Water Management Fee,” respectively,to reflect a broader, more holistic approach to storm water management; City of Palo Alto Page 8 ·The Storm Water Management Fee structure should include a fee amount sufficient to fund ongoing non-capital expenditures for engineering, maintenance and storm water quality staffing, expenses and permit compliance that does not sunset; and ·The City should place an emphasis on green storm water infrastructure planning and implementation, a paradigm shift in storm water management, in its future storm water program and City-wide capital improvement program scoping and budgeting. Staff worked cooperatively with the Committee on its summary report and concurs with its findings and recommendations. The following is a complete listing of the recommendations contained in the Committee’s summary report: 1)A renewed and renamed “Storm Water Management Fee” should be proposed to Palo Alto property owners for their approval in order to generate funding for storm water infrastructure improvements, system maintenance, and storm water quality protection on a pay-as-you-go basis as follows: a)Increase the base Storm Water Management Fee from $4.25 per month per Equivalent Residential Unit (ERU) to $6.62/month/ERU to cover ongoing non-capital expenditures for engineering, maintenance, and storm water quality staffing, expenses, and permit compliance. This increase would reflect the true cost of storm water management baseline services. The City Council should have the discretion to increase the base fee by the amount of change in the local Consumer Price Index (CPI) or 6% per year, whichever is less, and the base fee should not sunset. b)Include an additional Capital Improvement Project (CIP), Incentive Project (IP), and Green Storm Water Infrastructure (GSI) Project fee of $7.03 per month per ERU that would sunset after 15 years. The storm water capital improvement projects listed in Attachment A, totaling $27.2 million in Year 2015 dollars, should be pursued through renewal of the Storm Water Management Fee over a period of 15 years. These improvements would eliminate street flooding in storms up to the 10-year level in the areas they serve. These improvements also are intended to reduce road/sidewalk/curb/gutter repair costs by reducing subsoil water saturation and to increase traffic safety during storms. City of Palo Alto Page 9 c)The total monthly fee, including the base fee and CIP/IP/GSI fee, would be $13.65 per ERU beginning in FY 2018, a 2.3% increase over the current funding model approved in 2005. The City Council should have the discretion to increase the fee by the amount of change in the local Consumer Price Index (CPI) or 6% per year, whichever is less. d)The Storm Water Management Fund should maintain a reserve balance of at least $1.5 million to cover potential cost overruns on project or operational expenses. e)Further details on the project/program elements to be funded by the $13.65 monthly fee are contained in Attachment A (List of Proposed Storm Drain Capital Improvement Projects) and Attachment B (Recommended Storm Water Management Program and Funding Plan). f)The Storm Water Management Fee rate structure for single-family residential properties should retain its existing three rate categories, based on parcel size (less than 6,000 square feet; between 6,000 and 11,000 square feet; and greater than 11,000 square feet). g)As is currently the case, a fee reduction appeal process to City staff should be in place for those property owners who can demonstrate that the run-off from their properties drains directly to a creek or another city’s storm drain system, and that they have complied with all applicable permit and other legal requirements for such drainage. In addition, this appeal process should apply to those property owners who can demonstrate that they have constructed improvements to their properties to retain storm runoff onsite. In keeping with the present policy, the reduction in fees would not apply to that portion of the monthly fee attributable to City-wide programs. 2)The City should take all steps necessary to conduct a property owner, ballot-by-mail election in conformance with the provisions of Proposition 218 as early as possible in CY 2017 so that the fee can be implemented on June 1, 2017, when the existing property owner-approved fee sunsets. The election would require a simple majority vote to pass. City of Palo Alto Page 10 3)The fee name should be changed from “Storm Drainage Fee” to “Storm Water Management Fee.” 4)The City should develop an Integrated Water Management Plan (Plan) that takes a comprehensive look at how all water-related issues (water supply and demand, storm water, recycled water and groundwater) might be best addressed to achieve multiple benefits. This Plan is intended to complement the Utilities Department’s Urban Water Management Plan and Water Integrated Resources Plan. 5)Per the terms of the Municipal Regional Storm Water Discharge Permit, the City should adopt the framework for a Green Storm Water Infrastructure Plan by June 30, 2017. Until the Green Storm Water Infrastructure Plan is completed in 2019, staff should identify and implement opportunities for green storm water infrastructure projects. The framework should also elucidate goals for green infrastructure and consider the interaction between green infrastructure and shallow groundwater. 6)The City should implement pilot projects, such as utilizing pervious pavement materials to test their feasibility and effectiveness (e.g. use permeable materials for parking lane or bicycle lane as part of a scheduled street maintenance project). If the pilot projects are successful, the City should implement policies that make use of permeable pavement materials a standard practice. 7)Proposed Green Storm Water Infrastructure (GSI) funding will cover both the cost of the Green Storm Water Infrastructure Plan preparation and GSI projects. GSI projects retain, infiltrate and/or treat storm water and include, but are not limited to, rain gardens, green roofs, tree wells, bioswales, bioretention/infiltration basins, and permeable pavement. Incentive Project (IP) funding (as distinguished from GSI funding) will encourage residents and commercial property owners to incorporate green infrastructure measures into their private property projects. 8)A Council-appointed Storm Water Management Oversight Committee should be formed to oversee expenditures for all storm water funding elements, City of Palo Alto Page 11 including, but not limited to, Green Storm Water Infrastructure projects, CIP projects, and Incentive Project funding. The Committee should be empowered to consider and recommend consolidation of Green Storm Water Infrastructure and Incentive Project funding for particular projects. The Committee will annually review the Storm Water Management Fund budget and expenditures to ensure they are consistent with the funding plan included in the ballot measure approved by property owners and not used for other purposes. 9)Each new City storm drain capital improvement project should incorporate Green Storm Water Infrastructure measures to the extent practicable. 10)City staff should consider opportunities to include green infrastructure into all appropriate City capital improvement projects that impact storm water. Although GSI funds from the Storm Water Management Fund can be used to fund pilot projects, all City Departments should rapidly include funding for GSI elements when budgeting for their projects, and not be dependent upon funding from the Storm Water Management Fund. 11)The City should develop or participate in the development of green infrastructure design guidelines and standard specifications and drawings that can inform designers of private and public projects as they incorporate these features into their project designs. 12)The ongoing Comprehensive Plan Update, the City Parks Master Plan, Urban Forest Master Plan, and other City planning documents should include green infrastructure goals and policies as required by the Municipal Regional Storm Water Permit. 13)The City should expand the scope of its storm water rebate program to promote the use of green storm water infrastructure measures to reduce storm water runoff from private property, including, but not limited to, new rebates for rain gardens and increased rebate amounts for rain barrels, cisterns, green roofs, and permeable pavement. 14)The City should evaluate the implementation of a user fee for point-source discharges to the storm drain system to reflect their utilization of the system capacity. Exceptions should be provided for artesian well discharges and similar City of Palo Alto Page 12 non-discretionary discharges. 15)The City should look for opportunities to work with the Santa Clara Valley Water District and others to minimize new concrete channels and replace portions of existing concrete channels with more natural creek channel materials, to the extent that flood protection is not compromised. The purposes of such projects are to increase infiltration, protect creek banks, and create recreational and educational opportunities. Staff has prepared conceptual 15-year revenue and spending plans based upon the Blue Ribbon Committee’s recommendations that correspond with the proposed sunset period to be included in the ballot measure. The first financial plan determines the fee amount needed to sustain the ongoing programs proposed to be supported with a permanent (non-sunsetting) base fee (Attachment G). As presented in the Attachment G spreadsheet, the monthly base fee is calculated to be $6.62 for FY 2018, increasing to $10.01 in FY 2032 under the assumption of annual 3% inflationary rate increases. Using the Committee’s recommended approach, the monthly Storm Water Management Fee would revert to the escalated base fee (estimated at $10.01 per month), as opposed to the current base fee of $4.25 per month,when the ballot measure would sunset in FY 2032, thus providing adequate ongoing funding for a base- level storm water management program. The second financial plan shows how the Committee’s recommended rate plan would fund its recommended operational and capital expenditures over the 15- year term of the ballot measure (Attachment H). As presented in the Attachment H spreadsheet, the monthly base fee is calculated to be $13.65 for FY 2018, increasing to $20.65 in FY 2032 under the assumption of annual 3% inflationary rate increases. The proposed FY 2018 monthly Storm Water Management Fee of $13.65 represents a 4.7 percent increase over the proposed FY 2017 rate of $13.03. The Committee believes that property owners are likely to support this recommended rate proposal, since it represents a one-time increase of only 2.3 percent above the 2.4 percent annual growth that occurred during the term of the 2005 ballot measure. Next Steps Staff and the Blue Ribbon Committee concur that the City should proceed with a City of Palo Alto Page 13 Proposition 218 protest hearing and property owner ballot-by-mail election to approve future storm water management rates. Approval of a new Storm Water Management Fee would require multiple steps, including specific procedures mandated by Proposition 218 (Attachment I). The first step is the tabulation of the specific monthly fee to be charged to each developed land parcel in Palo Alto under the proposed spending plan.Public notices including a detailed description of the spending plan and parcel-specific monthly cost information would then be mailed to each property owner. The mailing of the public notices would initiate a 45-day comment period which would culminate with a majority protest hearing held during a regular Council meeting. Property owners would have the opportunity to appear before Council during the hearing to register their concerns and protest the proposed fee increase. Those opposed to the proposed fee increase would need to submit a written protest to the City Clerk to officially register their opposition. At the end of the hearing, the City Clerk would report the number of valid written protests so the Council could determine whether a majority protest had been received. If Council were to determine, at the close of the public testimony portion of the public hearing, that written protests had been received from property owners representing a majority of the parcels subject to the proposed fee increase, the Mayor would declare the proceedings closed, and the fee increase would not be approved. If, however, Council were to determine that less than a majority of property owners have submitted written protest, Council could choose to move forward to the next stage of the Proposition 218 approval process, the mailing of ballots to eligible property owners. If Council were to decide to call for a mail ballot proceeding, the ballots would then be mailed to all eligible property owners. Ballots for the Storm Water Management Fee ballot proceeding would consist of a single question that requires a checkmark either for or against the proposed fee increase. The ballots would be supplemented with a summary of the balloting procedures and a description of the proposed fee and storm water management spending plan. The ballot measure would be approved if a simple majority of property owners returning ballots voted in favor of the measure. If the ballot measure were approved, Council could proceed to approve the new fee schedule consistent with the ballot measure. Staff recommends that the implementation of a Storm Water Management Fee increase proposal be timed such that the ballots are sent to property owners and received in early 2017. This schedule would ensure that the voting period is City of Palo Alto Page 14 outside the distractions of the hectic general election cycle and the holiday season and provides adequate time for a resident-driven outreach and advocacy campaign. The proposed schedule would also provide timely financial information about the Storm Water Management Fund for preparation of the FY 2018 budget. A potential implementation schedule for a Storm Drainage ballot measure is provided in the Timeline section of this report. If Council recommends that the City proceed with a property owner ballot-by-mail election, staff will return to Council after the summer recess to seek approval of the necessary Council resolutions specifying the scope and timing of the ballot measure. Staff will incorporate feedback from the Council into the final implementation of the balloting process. Timeline The following is a potential timeline for implementation of a Storm Drainage ballot measure: 8/15/16 Council adoption of resolutions proposing a Storm Water Managment Fee increase and establishing procedures for protest hearing/mail ballot proceeding 9/2/16 Legal notices mailed; start of 1st 45-day noticing period 10/17/16 Protest hearing (Need at least 45-day protest period) 1/16/17 Ballots mailed 2/13/17 Ballots due back to City Clerk (Need at least 45 days between protest hearing & final balloting day) 3/20/17 Council certification of election results 6/1/17 Effective date of new rate Resource Impact To maintain the self-sufficiency of the Storm Drainage Fund, the City must secure City of Palo Alto Page 15 property owner approval of a ballot measure authorizing increased storm drain funding before the 2005 ballot measure sunsets in June 2017. If the Storm Drainage Fee reverts back to its pre-2005 level of $4.25 per month per ERU, it will generate approximately $2.2 million per year.This amount of revenue would not support a minimum level of storm drainage service, which would cost approximately $4.3 million per year. (Please note that the $4.3 million figure includes $950,000 in annual debt service that will end in FY 2024.)In addition, the pre-2005 level of funding would preclude any further storm drain capital improvement projects. If a new ballot measure is not approved, storm drain system operations would need to be significantly curtailed. If the rate schedule recommended by the Committee were approved, it would generate the following revenue for storm water management programs and capital improvement projects in FY 2018: Base Fee ($6.62/month/ERU):$3.3 million CIP/IP/GSI Fee ($7.03/month/ERU):$3.6 million Total Storm Water Management Fee Revenue:$6.9 milion Policy Implications Identification of funding for storm drain capital improvements is consistent with Policy N-24 of the Comprehensive Plan, which states that the City should “improve storm drainage performance by constructing new system improvements where necessary and replacing undersized or otherwise inadequate lines with larger lines or parallel lines.” Program N-36 further states that the City should “complete improvements to the storm drainage system consistent with the priorities outlined in the City’s 1993 Storm Drainage Master Plan, provided that an appropriate funding mechanism is identified and approved by the City Council.” Environmental Review Review and adoption of of a funding mechanism for storm water management projects does not constitute a project subject to California Environmental Quality Act (CEQA) review, and no environmental analysis is required at this time. The level of future CEQA review will depend on the scope of the storm drain capital improvement projects that may be funded by the updated storm water management fees. City of Palo Alto Page 16 Courtesy Copies Storm Drain Oversight Committee Attachments: ·A -Utility Rate Schedule D-1 (PDF) ·B -Utility Rule and Regulation 25 (PDF) ·C -2005 Storm Drain Ballot (PDF) ·D -Status of Storm Drainage Fund Capital Projects Listed in 2005 Ballot Measure (PDF) ·E -Blue Ribbon Storm Drain Committee Members (PDF) ·F -Blue Ribbon Storm Drain Committee Recommendations Report (PDF) ·G -Ongoing Storm Water Management Funding/Spending Plan (PDF) ·H -Recommended Storm Water Management Funding/Spending Plan (PDF) ·I -Timeline for Potential Storm Drain Protest Hearing & Ballot Measure (PDF) GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2015 Supersedes Sheet No.D-1-1 dated 7-1-2014 Sheet No.D-1-1 A. APPLICABILITY: This schedule applies to all storm and surface water drainage service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the city. C. RATES: Per Month: Storm Drainage Fee per Equivalent Residential Unit (ERU) .......................................................$12.63 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm drainage fees for residential and non-residential customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERU's computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2. For more details on the storm drainage fee, refer to Utilities Rule and Regulation 25. {End} SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -1 dated 7-1-98 Sheet No. 1 A. GENERAL: For the purpose of CPAU Rate Schedule D-1 and this Rule and Regulation, the following words and terms shall be defined as follows, unless the context in which they are used clearly indicates otherwise. The definitions of words and terms set forth in Titles 12 and 13 of the Palo Alto Municipal Code shall also apply herein to the extent that they are not inconsistent herewith: 1.“Developed Parcel”shall mean any lot or parcel of land altered from its natural state by the construction, creation, or addition of impervious area, except public streets and highways. 2.“Equivalent Residential Unit (ERU)” shall mean the basic unit for the computation of storm drainage fees. The ERU’s for all parcels other than single-family residential properties shall be computed to the nearest 1/10 ERU using the following formula: Number of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. The ERU's for single-family residential properties shall be computed as set forth in CPAU Rate Schedule D-1. 3. “Impervious Area”shall mean any part of any developed parcel of land that has been modified by the action of persons to reduce the land’s natural ability to absorb and hold rainfall. This includes any hard surface area which either prevents or retards the entry of water into the soil mantle as it entered under natural conditions pre-existent to development, and/or a hard surface area which causes water to run off the surface in greater quantities or at an increased rate of flow from the flow present under natural conditions pre-existent to development. By way of example, common impervious areas include, but are not limited to roof tops, walkways, patios, driveways, parking lots or storage areas, concrete or asphalt paving, gravel roads, or any cleared, graded, paved, graveled, or compacted surface or packed earthen materials, or areas covered with structures or other surfaces which similarly impede the natural infiltration of surface water into the soil mantle. SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -2 dated 7-1-98 Sheet No. 2 4.“Non-Single-Family Residential Property”shall include all developed parcels zoned or used for multi-family, commercial, industrial, retail, governmental, or other non-single family residential purposes and shall include all developed parcels in the City of Palo Alto not defined as single-family residential property herein. 5 “Parcel”shall mean the smallest separately segregated lot, unit or plot of land having an identified owner, boundaries, and surface area which is documented for property tax purposes and given a tax lot number by the Santa Clara County Assessor. 6.“Primary CPAU Account”shall mean that CPAU account, as determined below, that will be assessed the storm drainage fee for a given developed parcel: (A) If there is only one CPAU account associated with a developed parcel, then that account is the Primary CPAU Account. (B) If there is more than one CPAU account associated with a developed parcel, then the Primary CPAU account shall be the account listed below, in order of preference: (1) The CPAU account designated as the “house account” or, if none or more than one, then; (2) The CPAU account in the name of the owner of the parcel, or if none, then; (3) The CPAU account(s) in the name of the occupier(s) of the parcel. (4) If more than one account, then the CPAU account that includes the most CPAU services. 7. “Single-Family Residential Property” shall include all developed parcels with either one or two single-family detached housing units or one two-unit attached dwelling structure commonly known as a “duplex.” 8.“Storm and Surface Water Control Facilities” shall mean all man-made structures or natural water course facility improvements, developments, properties or interest therein, made, constructed or acquired for the conveyance of storm or surface water runoff for the purpose SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -3 dated 7-1-98 Sheet No. 3 of improving the quality of, controlling, or protecting life or property from any storm, flood, or surplus waters. 9.“Storm Drainage Facilities” shall mean the storm and surface water drainage systems comprised of storm and surface water control facilities and any other natural features which store, control, treat and/or convey storm and surface water. Storm Drainage Facilities shall include all natural and man-made elements used to convey storm water from the first point of impact with the surface of the earth to the suitable receiving body of water or location internal or external to the boundaries of the City of Palo Alto. Such facilities include all pipes, appurtenant features, culverts, streets, curbs, gutters, pumping stations, channels, streams, ditches, wetlands, detention/retention basins, ponds, and other storm water conveyance and treatment facilities whether public or private. See CPAU Rule and Regulation No. 8 “Access to Premises.” 10.“Storm and Surface Water”shall mean water occurring on the surface of the land, from natural causes such as rainfall, whether falling or flowing onto the land in question. 11.“Undeveloped Parcel” shall mean any parcel which has not been altered from its natural state by the construction, creation, or addition of impervious area. B. STORM DRAINAGE FEES: 1. There is hereby imposed on each and every developed parcel of land within the City of Palo Alto, and the owners and occupiers thereof, jointly and severally, a storm drainage fee. This fee is deemed reasonable and is necessary to pay for: (A) Improving the quality of storm and surface water; (B) The operation, maintenance, improvement and replacement of the existing City storm drainage facilities; and (C) The operation, maintenance, and replacement of future such facilities. It is the intent of the City of Palo Alto, and the City has calculated the storm drainage fee in such a manner, that the amount of the fee imposed upon any parcel shall not exceed the proportional cost of the service attributable to the parcel. It is the further intent of the City SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -4 dated 7-1-98 Sheet No. 4 that revenues derived from the fee shall not exceed the funds required to provide the property-related services described in this Rule and Regulation 25, and that revenues derived from the fee shall not be used for any purpose other than those described in this Rule and Regulation 25. 2. All of the proceeds of these fees are deemed to be in payment for use of City storm drainage facilities by the developed parcel on, and with respect to, which the fee is imposed, and the owners and/or occupiers thereof. 3. The storm drainage fee shall be payable monthly and shall be paid to CPAU, as billed by CPAU, for each and every developed parcel in the City by the owner or occupier responsible for the Primary CPAU account for other CPAU services for the subject parcel, unless otherwise agreed in writing by CPAU. The method of billing described in this Rule and Regulation 25 has been designed for administrative efficiency. However, because the storm drainage fee is a "property-related fee" as defined by Article XIIID, Section 6 of the California Constitution, a property owner may in writing request that the storm drainage fee for a parcel owned by the property owner be billed directly to the owner, notwithstanding the typical method of billing. Because the storm drainage fee is a "property-related fee," the parcel owner shall be responsible to pay all unpaid or delinquent storm drainage fees. For administrative efficiency, the storm drainage fee for condominium and townhouse-style developments is typically billed to the CPAU account of the Homeowners' Association. 4. If a developed parcel does not have a CPAU account on the effective date of this Rule and Regulation, a new account shall be established for that parcel and billed to the owner as shown on the latest County Assessor's property tax rolls until such time as a Primary CPAU account is established for other CPAU services. 5. When an undeveloped parcel is developed, a new account shall be established and billed to the owner of that parcel as shown on the latest property tax rolls of the Santa Clara County Assessor until such time as a Primary CPAU account is established for other CPAU services. 6. BASIS FOR CALCULATION SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-13-2000 Supersedes Sheet No. -5 dated 7-1-98 Sheet No. 5 (A) The storm drainage fee shall be based on the relative contribution of storm and surface water from a given developed parcel to City storm drainage facilities. (B) The relative contribution of storm and surface water from each developed parcel shall be based on the amount of impervious area on that parcel and shall determine that parcel’s storm drainage fee. (C) For administrative efficiency, the impervious area of condominium and townhouse- style developments is typically calculated for the entire development rather than on a per-parcel basis. (D) The extent of impervious area will be established to the nearest square foot by any of the following methods: (1) Computation of the impervious area using on-site measurements of the apparent outside boundaries of the impervious area in or on such developed parcels made by CPAU or on its behalf; or (2) Computation of the impervious area using the dimensions of the impervious area in or on the developed parcels which are set forth and contained in the records of the office of the County Assessor. (3) Estimation, calculation and computation of the impervious area using aerial photography or photogrammetry, or using the information and data from on- site measurements of like or similar property or features or as contained in City or County records. (4) Computation of the impervious area using information submitted by building permit Applicants on forms provided by the City, subject to review and correction by the City. 7. CALCULATION OF MONTHLY FEE Monthly fees for all developed parcels shall be computed in accordance with the following formula: SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-1-2005 Supersedes Sheet No. -6 dated 6-13-2000 Sheet No. 6 Number of ERU’s x Rate per ERU as set forth in CPAU Rate Schedule D-1. 8. APPLICATION (A) Developed Parcels: Storm drainage fees shall apply to all developed parcels within the City, including those classified as non-profit or tax-exempt for ad valorem tax purposes. The fees shall apply to all government properties, to the full extent permitted by the constitutions of the United States and the State of California, including developed parcels of the City of Palo Alto, City-owned buildings and parks, but excluding public streets and highways. (B) Undeveloped Parcels: Storm drainage fees shall not be levied against undeveloped parcels that have not been altered from their natural state as defined herein under “Impervious Areas.” (C) Proportional Reduction of Fees: Developed parcels that have their own maintained storm drainage facility or facilities, and which do not utilize City facilities or which make no substantial contribution of storm or surface water to the City’s storm drainage facilities shall be liable to pay only that portion of the storm drainage fee attributable to the generic discharge of storm runoff (e.g. coordination with the Santa Clara Valley Water District on regional flood control projects, administration of the City's flood hazard regulations, and implementation of the urban runoff pollution prevention program) and shall not be liable to pay for the portion of the fee attributable to the actual usage of (i.e. drainage into) the City's storm drain system (e.g. storm drain system capital improvements and maintenance). Developed parcels that have a portion of their impervious area within City of Palo Alto shall be charged only for that portion of impervious area which is in the City of Palo Alto. Developed parcels that drain totally or partially into an area outside the City of Palo Alto shall be liable to pay only that portion of the storm drainage fee attributable to the generic discharge of storm runoff (e.g. coordination with the Santa Clara Valley Water District on regional flood control projects, administration of the City's flood hazard regulations, and implementation of the urban runoff pollution prevention program) and shall not be liable to pay for the portion of the fee attributable to the actual usage of (i.e. drainage into) the City's storm drain system (e.g. storm drain system capital improvements and maintenance). The City of Palo Alto has calculated the storm drainage fee for each parcel based on information available to the Public Works Department as to the amount of SPECIAL STORM AND SURFACE WATER DRAINAGE UTILITY REGULATIONS RULE AND REGULATION 25 (Continued) CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 6-1-2005 Supersedes Sheet No. -7 dated 6-13-2000 Sheet No. 7 impervious area for the parcel, as well as other relevant information regarding the parcel. However, it is the intent of the City of Palo Alto that no fee shall exceed the proportional cost of services attributable to the parcel. Therefore, a parcel owner has the right, through Administrative Review, to request a proportional reduction in the storm drainage fee if the owner believes that the parcel contributes less water to the City's storm drainage facilities or uses fewer storm or surface water treatment services, notwithstanding the amount of the parcel's impervious area. 9. ADMINISTRATIVE REVIEW (A) Any person who owns or pays the storm drainage fee for a developed parcel and who disputes the amount of any storm drainage fee for the parcel, or who requests a deferred payment schedule therefor may request a revision or modification of such fee from the City Engineer. (B) The person seeking Administrative Review shall make such request in writing pursuant to Rule and Regulation 11 Section F. The request for Administrative Review must be signed by the property owner. The City Engineer shall conduct the review. (C) The City Engineer shall review the request and all data and documentation deemed by the City Engineer to be relevant to the request, and shall make a written determination as to whether the fee for the parcel exceeds the proportional cost of the service attributable to the parcel. If the City Engineer determines that the fee is proportional to the cost of service, no adjustment shall be made. If the City Engineer determines that the fee exceeds the proportional cost of service, the fee shall be adjusted accordingly. {End} April 4, 2005 Dear Property Owner: On March 7, 2005, the City Council held a public hearing on a proposed Storm Drainage Fee increase for properties within the City of Palo Alto. In January, you were mailed a notice and informational flyer regarding this public hearing and the specific fee increase proposed for your property. After receiving public testimony, the City Council took action to submit the proposed fee increase to property owners for approval. Enclosed with this letter is an official City of Palo Alto Property Owner Ballot and an official postage paid Return Envelope. Please mark your ballot “yes” or “no” and return it in the Return Envelope to the City Clerk by no later than 8:00 p.m. on April 26, 2005, to 250 Hamilton Avenue, Palo Alto. The City must receive mailed ballots by April 26, 2005. Postmarks do no count. The votes cast as “yes” or “no” will determine the fate of this fee increase. Ballots that are not returned or are returned late cannot be counted, so please return your ballot. Two items are enclosed with these ballot materials for your information. First, a summary of the procedures for the ballot proceeding is provided on the back of this letter. The complete procedures for this process are on file at the City Clerk’s office and are posted on the City’s web site (www.cityofpaloalto.org/stormdrain). The second enclosure is a copy of Resolution 8483, which the City Council passed on December 6, 2004, to formally establish the terms and amount of the proposed fee increase, and the projects/programs on which funds will be spent if property owners approve the fee increase. If you have any questions about the ballot proceeding, or if you are disabled and need special accommodation to vote, please call City Clerk Donna Rogers at (650) 329-2571. If you have questions regarding the fee increase, please call Matt Raschke in the Public Works Department at (650) 617-3183, or visit the City’s web site at www.cityofpaloalto.org/stormdrain. Please Vote! 4/4/2005 Page 1 RESOLUTION NO. 8483 RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ADOPTING THE AMOUNT OF THE PROPOSED STORM DRAINAGE FEE INCREASE, DESCRIBING THE STORM DRAIN CAPITAL IMPROVEMENTS AND PROGRAM ENHANCEMENTS ON WHICH THE PROPOSED FEE WILL BE SPENT IF APPROVED, AND ADOPTING A SCHEDULE FOR THE PROTEST HEARING AND MAIL BALLOT PROCEEDINGON THE PROPOSED FEE INCREASE [Approved By Palo Alto City Council on December 6, 2004] EXHIBIT “A” Description Of Amount Of The Proposed Storm Drainage Fee Increase A. Summary of current storm drainage fee system The City’s current storm drainage billing system is based on Equivalent Residential Units (“ERU”), which are generally determined by the square footage of impervious surface area on a property. One ERU equals 2500 square feet of impervious surface area on a property, and the current fee for one ERU is four dollars and twenty-five cents ($4.25). The ERU calculation was based on a sampling of single-family and duplex properties in the City, in which the typical impervious surface area was 2500 square feet. Thus, all single-family and duplex residential properties in the City are presumed to have one ERU of impervious surface area and are currently charged $4.25 per month for that ERU, regardless of the actual impervious surface area of their property. Commercial, industrial, institutional, government, and multi-family residential properties are charged for their actual amounts of impervious surface area, at a rate of one ERU per 2500 square feet of impervious area. B. Proposed storm drainage fee increase 1. New residential rate structure and increased fee The proposal to increase storm drainage fees involves two components. First, the charge per ERU would be raised from four dollars and twenty-five cents ($4.25) to ten dollars ($10). Second, the impervious surface area would no longer be presumed to be one ERU for all single- family and duplex properties. Instead, those properties would be placed into one of three ERU tiers based on the size of the property. Commercial, industrial, institutional, government, and multi-family residential properties would continue to be charged based on actual impervious surface area, but at the increased rate of $10 per ERU. The following tables describe the changed rate structure and proposed fee increase: RESIDENTIAL RATES (Single-Family & Duplex) PARCEL SIZE (sq.ft.) ERU PROPOSED RATE < 6,000 sq.ft. .8 ERU $8.00 6,000-11,000 sq.ft. 1 ERU $10.00 > 11,000 sq.ft. 1.4 ERU $14.00 COMMERCIAL RATES (Commercial, industrial, multifamily res.) $10.00 per 2,500 square feet of impervious surface area (ERU), rounded to the nearest 0.1 ERU. 4/4/2005 Page 2 2. Annual inflation adjustments to proposed fee increase In order to offset the effects of inflation on labor and material costs, the proposed fee increase would be subject to annual increases beyond the initial $10.00 per ERU rate as of July 1 of each year, starting in 2006. Inflation adjustments would be based on the lesser of the local rate of inflation (based on the change in the Consumer Price Index [CPI] for the San Francisco- Oakland-San Jose CSMA, published by the United States Department of Labor, Bureau of Labor Statistics) or 6 percent. The City Council would have the authority and discretion to implement inflation adjustments on an annual basis as part of the City budget process. 3. Twelve year sunset provision for proposed fee increase The proposed storm drainage fee increase would sunset twelve (12) years from the date the fee increase is implemented, as the storm drain capital improvements to be funded by the increase would be completed by that time. 4. Oversight provision for proposed fee increase The City Council would appoint an oversight committee to monitor and review the proposed storm drain capital improvements and insure that the money raised from the increased Storm Drainage Fee is spent in accordance with this resolution. The oversight committee would report its findings to the City Council at least annually. 5. Applicability of the Rate Assistance Program The City’s existing Rate Assistance Program, which provides a 20% discount to qualified low- income utility customers, would apply to the Storm Drainage Fee. 6. Pay-as-you-go funding of capital improvements The storm drain capital improvements to be funded through the proposed Storm Drainage Fee increase would be paid for on a pay-as-you-go basis, without debt financing. 7. Up-front payment of Storm Drainage Fees by City of Palo Alto In order to accelerate the construction of the proposed storm drain capital improvements, the City of Palo Alto would pre-pay in advance the Storm Drainage Fees attributable to City-owned properties for a period of twelve years, upon approval of the increased Storm Drainage Fee. 4/4/2005 Page 3 EXHIBIT “B” List Of Storm Drain Capital Improvements And Program Enhancements To Be Completed With Funding From The Proposed Fee Increase A. Seven proposed storm drain capital improvement projects 1. Construct pump station at 96” storm drain outfall to San Francisquito Creek (estimated cost = $4.5 million) 2. Install new storm drain pipelines to increase drainage capacity on Channing and Lincoln Avenues (from Channing/Heather to Lincoln/Alma) (estimated cost = $4.6 million) 3. Install Southgate neighborhood storm drain system (estimated cost = $2.0 million) 4. Extend Gailen Avenue/Bibbits Drive storm drain outfall to the Adobe Storm Water Pump Station (estimated cost = $650 thousand) 5. Connect the Clara Drive storm drains to the Matadero Storm Water Pump Station (estimated cost = $900 thousand) 6. Construct improvements to the Matadero Storm Water Pump Station and install new storm drain pipelines to increase drainage capacity leading to the Matadero Storm Water Pump station (estimated cost = $3.0 million) 7. Install storm drainage improvements along southbound Alma Street (estimated cost = $1.5 million) A map of the proposed projects is included in this exhibit. B. Proposed funding for enhanced maintenance of the City’s storm drain system 1. $500,000 budgeted annually (subject to annual adjustment for inflation) to replace and/or rehabilitate deteriorated components of the City’s storm drain system, including pipelines, catch basins, and manholes. 2. $90,000 budgeted annually (subject to annual adjustment for inflation) to fund additional storm drain maintenance resources, including staff and/or contract services, to perform services including, but not limited to, storm drain cleaning, minor storm drain repairs, video inspection of storm drain pipelines, and/or curb and gutter repairs. C. Funding of innovative projects 1. $125,000 budgeted annually (subject to annual adjustment for inflation) for innovative projects to reduce the amount of storm water runoff and environmental pollutants that enter storm drains and creeks. D. Funding of storm water quality protection activities 1. $100,000 budgeted annually (subject to annual adjustment for inflation) to pay for existing services related to storm water quality protection currently funded through the Wastewater Treatment Fund. E. Funding of additional engineering staff 1. $115,000 budgeted annually (subject to annual adjustment for inflation) for an additional staff engineer to assist with implementation of the recommended storm drain capital improvements. 5. EXTEND CLARA DRIVE STORM DRAIN TO MATADERO PUMP STATION 1. NEW PUMP STATION @ SAN FRANCISQUITO CK 6. IMPROVE MATADERO PUMP STATION& FEEDER STORM DRAINS 4. EXTEND GAILEN/BIBBITSSTORM DRAIN TOADOBE PUMP STATION 3. SOUTHGATE NEIGHBORHOODSTORM DRAINS 7. ALMA STREET STORM DRAINS (EXACT LIMITS OF PIPINGTO BE DETERMINED) 2. CHANNING/LINCOLN TRUNK LINE ($3 MILLION) ($1.5 MILLION) ($900 THOUSAND) ($650 THOUSAND) ($2 MILLION) ($4.5 MILLION) ($4.6 MILLION) Oregon Expressway C h a r l e s t o n R o a d E ast B a y sh ore W est B a y sh ore 1 0 1 S e r ra Bo ulev a r d San Antoni o Av e n u e P a ge M i l l Road University Avenue Middlefield Road El Camino Real E m b arc a d ero R o a d E m b a r c a d e r o R o a d El Ca m i no R eal Palm Drive F o o t hil l Expr e s s 0'3000' Proposed Storm Drain Capital Improvements This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. CITY O F PALO A L TO I N C O R P O RAT E D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1 894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2004 City of Palo Alto mraschk, 2005-03-10 11:00:53PROPOSED PROJECTS - MRICS (\\cc-maps\gis$\gis\admin\Personal\mraschk.mdb) City of Palo Alto Proposed Storm Drainage Fee Increase The information in this notice and the accompanying materials were compiled and are distributed at public expense by the City of Palo Alto in compliance with Article XIIID of the California Constitution, the Proposition 218 Omnibus Implementation Act and procedures adopted by the City of Palo Alto Resolution No. 8484. This information is presented in the public interest. It is not intended to influence or attempt to influence the actions of the voters to vote “yes” or “no” on the enclosed ballot. SUMMARY OF BALLOTING PROCEDURES If you are the owner of the property described on the enclosed Return Envelope, or a voting representative designated according to the City’s procedures for this ballot proceeding, you may submit the enclosed ballot to the City to support or oppose the proposed Storm Drainage Fee increase. Please follow the instructions below to complete and return your ballot. The full text of the procedures governing the fee increase proceedings is available on the City’s website at www.cityofpaloalto.org/stormdrain/docs/2005-voting-procedure.pdf. 1. Register your vote on the enclosed ballot in favor of or against the proposed fee increase by placing an “X” in the corresponding box. Mark your ballot in ink, not pencil. 2. Place the marked ballot in the official Return Envelope, and seal the envelope. 3. Mark, sign and date the Return Envelope in ink. Do not use pencil. Ballots received in a Return Envelope without a signature will not counted. 4. Mail or personally deliver your ballot to the City Clerk’s office at P.O. Box 51470, 250 Hamilton Avenue, Palo Alto, CA 94303 (The Return Envelope provides postage prepaid). The City must receive all ballots by April 26, 2005. Postmarks do not count. 5. Ballots must be received by the City Clerk prior to 8:00 p.m. on Tuesday, April 26, 2005. Any ballots received after this time cannot legally be counted (ballots may be hand-delivered to the City Clerk any time prior to this date and time). 6. After 8:00 p.m., the City Clerk and her designees will tabulate the ballots. Only one ballot may be submitted for each property. 7. If the results of the balloting indicate that a majority of the property owners voting upon the fee increase voted in favor of the increase, the City Council may adopt the fee increase. Shall the monthly Storm Drainage Fee for developed residential and non- residential properties be increased to $10.00 per Equivalent Residential Unit (ERU) for a period of 12 years, subject to an annual adjustment for inflation up to a maximum of six percent per year? The storm drainage fee will be used to improve local drainage and prevent street flooding by funding: • high-priority storm drain system capacity upgrades, • drainage system repairs, • enhanced storm drain maintenance, and • storm water quality protection activities □ YES □ NO Status of Storm Drainage Fund Capital Projects Listed in 2005 Ballot Measure   Project Name      Project Status    Project Expenditure  1. San Francisquito Creek Pump Station    Complete    $   9,135,000  2. Gailen Ave/Bibbits Ave SD Improvements  Complete    $      650,000  3. Alma Street Storm Drain Improvements  Complete    $      785,000  4. Clara Drive Storm Drain Improvements  Complete    $      750,000  5. Southgate Neighborhood SD Improvements  Complete    $   2,026,000  6. Channing Ave/Lincoln Ave SD Improvements 2 of 3 Phases Complete*  $   6,415,000 (est.)  7. Matadero Creek Pump Station Upgrade  Design Stage Near Complete  $   6,060,000 (est.)  TOTAL            $ 25,821,000    *  Construction is completed along Channing Avenue (Heather Lane to Lincoln Avenue) and Lincoln Avenue  (Channing Avenue to Middlefield Road.  Phase 3 (Lincoln Avenue – Middlefield Road to Alma Street will be  constructed starting in July 2016.   Design of the Matadero Creek Pump Station Upgrade began in June 2015; pipeline element of project deferred  to FY 2018 due to funding shortfall; pump station construction is scheduled to start in Fall 2016.    All seven projects will be substantially completed prior to the sunset of the Storm Drainage Fee in June 2017.  Attachment E Blue Ribbon Storm Drain Committee Membership List Name Address Beamer, Norm 1005 University Avenue Bower, David 868 Boyce Avenue Clark, Nancy 225 Addison Avenue Drekmeier, Peter 311 Fulton Street Rosenberg, Susan 1425 Stanford Avenue Wenzlau, Bob 1409 Dana Avenue Elliott, Claire 271 Chestnut Ave McGraw, Stepheny 3303 Thomas Drive Mickelson, Hal 167 Greenmeadow Way Whaley, Richard 4240 Briarwood Way Attachment F 2016 STORM DRAIN BLUE RIBBON COMMITTEE RECOMMENDATIONS REPORT To the City Manager: The Storm Drain Blue Ribbon Committee is pleased to provide this report recommending a package of storm water capital improvement projects, storm drain system maintenance actions, and storm water quality protection programs for the City of Palo Alto (City) to be paid for by a renewal of the Storm Drainage Fee (to be renamed the “Storm Water Management Fee”). BACKGROUND The City’s storm drain capital improvement, maintenance and water quality protection programs are funded through the Storm Drainage Fund, an enterprise fund established by Council in 1989. Revenue is generated through a Storm Drainage Fee, which is collected through monthly City utility bills. Before the current Storm Drainage Fee rate structure was approved in 2005 by a majority of property owners in a ballot-by-mail election, the fee was $4.25 per month per Equivalent Residential Unit (ERU). An ERU is the billing unit for the Storm Drainage Fee and is based on the average amount of impervious surface on a typical single-family residential property (2,500 square feet). Single-family residential (SFR) parcels are billed a flat rate of 0.8 to 1.4 ERUs based on parcel size, while non-SFR parcels are billed the number of ERUs corresponding to the actual measured quantity of impervious surface on the parcel. The 2005 property owner approval increased the fee to $10.00 per month per ERU, with provisions for an annual adjustment for inflation at the discretion of the City Council. The fee, which is set at $12.63 per month per ERU for FY 2016, is scheduled to sunset on June 1, 2017. Without renewal of the increased Storm Drainage Fee, the monthly fee would revert back to the base fee of $4.25 per month, which is insufficient to cover the storm drain program’s base operating costs. The Storm Drainage Fee is a property-related fee subject to the provisions of Proposition 218, requiring a majority of voting property owners to approve a fee increase. In 2000, the City conducted a property owner election seeking approval to increase the Storm Drainage Fee from $4.25 per month up to $9.00 per month to cover needed storm drain improvements. The ballot measure was unsuccessful. In 2002, the City Manager appointed a Blue Ribbon Committee to work with staff to review storm drain funding needs and identify a funding mechanism for future storm drain operational and capital improvement program expenses. The Committee recommended funding a storm drain program including augmented maintenance activities, expanded storm water quality protection activities, and a specific set of seven prioritized storm drain capital improvement projects on a pay-as-you-go basis by increasing the Storm Drainage Fee to $10.00 per month. The Committee also endorsed the creation of an oversight committee, the capping of annual inflationary rate increases at 6%, sunsetting of the higher fees after a program duration of 12 years, and funding for innovative projects. The Committee’s proposals were approved by the City Council and presented to property owners in a ballot-by-mail election in Spring 2005. The ballot measure passed with an approval rate of 58%. 2 The 2005 ballot measure provided for funding of the storm drain program through June 1, 2017. The resulting ratepayer revenues have enabled Public Works staff to implement a successful set of operational enhancements and storm drain capital improvements. All seven of the high- priority capital improvements specified in the ballot measure will be substantially completed or under construction by the June 1, 2017 sunset date. The following is a summary of the accomplishments achieved since passage of the 2005 ballot measure. Photos of some of the improvements are shown on pages 3 and 4 of this report.  Implementation of Storm Drain Capital Improvement Projects o San Francisquito Creek Storm Water Pump Station ($9.1 million) Completed in 2009 o Channing Ave/Lincoln Ave Storm Drain Improvements ($6.4 million) Completed in 2011 through 2016 (three phases) o Matadero Creek Storm Water Pump Station Upgrade ($6.1 million) To be completed in 20171 o Southgate Neighborhood Storm Drain Improvements ($2.0 million) Completed in 2014 o Alma Street Storm Drain Improvements ($785K) Completed in 2010 o Clara Drive Storm Drain Improvements ($750K) Completed in 2014 o Gailen Ave/Bibbits Drive Storm Drain Improvements ($650K) Completed in 2006  Operational enhancements implemented over the 12-year funding period o $7 million in storm drain system replacement and rehabilitation projects o $1 million in enhanced storm drain system maintenance (pump and equipment maintenance and replacement) o $1.2 million for increased staffing and expenses for storm water quality protection o $55,000 in incentive rebates to residents and businesses for rain barrels, cisterns, green roofs, and permeable pavement Storm water discharge regulations designed to protect local creeks and the Bay are stricter than those in place at the time of the 2005 ballot measure. Palo Alto received its first municipal storm water permit from the San Francisco Bay Regional Water Quality Control Board (Water Board) in June 1990. In 2009, the Water Board issued a single Municipal Regional Storm Water NPDES Permit (MRP) to regulate storm water discharges from municipalities and local agencies throughout the Bay Area. The MRP expanded regulatory requirements and included 15 provisions requiring activities to prevent storm water pollution, including business and construction site inspections, control of specific pollutants such as trash, pesticides, copper, PCBs, and mercury, new and redevelopment requirements, potable water discharge practices, public outreach and education. The storm water quality protection regulations were further strengthened with the Water Board’s issuance of an updated MRP in November 2015. 1 excepting the associated pipeline improvement project, which will be deferred to FY2018 3 Examples of Completed Storm Drain Capital Improvement Projects San Francisquito Creek Pump Station Channing Avenue box culvert Southgate neighborhood bioretention planter Southgate neighborhood permeable crosswalk Gailen/Bibbits storm drain pipeline 4 Examples of Storm Runoff Reduction Measures Funded Through the City’s Storm Water Rebate Program Rain Barrel Installation Permeable Interlocking Concrete Pavers Rain Barrel Installation Pervious Concrete Driveway Residential Green Roof 5 THE FUTURE OF STORMWATER MANAGEMENT Looking to the future, the City’s storm water management program will place a growing emphasis on activities and measures that protect and enhance the quality of the storm water entering our local creeks and San Francisco Bay. The updated MRP added a new focus on managing storm water runoff generated by the built environment using “green storm water infrastructure.” The following paragraphs provide background information and context for this new concept. Green Storm Water Infrastructure A new Municipal Regional Storm Water permit was issued in November 2015 and went into effect on January 1, 2016. The new permit continues all of the requirements from the prior permit and adds several new mandates, including the development of a Green Storm Water Infrastructure Plan. Green storm water infrastructure protects or restores the natural water cycle by collecting and retaining, and/or treating, runoff rather than discharging it directly to storm drains. Green storm water infrastructure practices, also referred to as low impact development measures, include preserving natural landscapes and utilizing infiltration planters, rain gardens, tree wells, green roofs, pervious pavement, and rainwater harvesting to manage storm water runoff. These practices help to limit the discharge of pollutants from streets, parking lots, and roofs by infiltrating storm water into soils. Furthermore, green infrastructure provides amenities with many benefits beyond water quality improvement and groundwater replenishment, including creation of attractive tree-lined streetscapes, wildlife habitat, reduction of heat island effect, bicycle and pedestrian accessibility, and enhanced public health. The recently completed Southgate Neighborhood Storm Drain Improvement and Green Street Project, with its bioretention planters and permeable crosswalks, is a local example of a green storm water infrastructure project. Green Storm Water Infrastructure Plan The MRP’s green infrastructure requirement includes development of a Council-approved Green Storm Water Infrastructure Plan (Plan) framework by June 2017, and development of a full Plan by June 2019, that includes a mechanism and set of criteria to prioritize projects for inclusion of green infrastructure, a list of prioritized projects and targets for green infrastructure implementation, design guidelines/standard specifications, ordinance changes, and a funding plan. The permit also requires annual review of proposed capital projects for green storm water infrastructure integration. Other City plans are also incorporating the concept of green storm water infrastructure. For example, the City’s draft Sustainability and Climate Action Plan (S/CAP) includes a strategy to create and implement a Green Infrastructure Plan that prioritizes green streets infrastructure (W-2.1):  Create policies that integrate the design of green infrastructure into City and private sector projects to store, infiltrate, cleanse and evapotranspire storm water.  Expand permeable paving and reduce impermeable paving.  Increase rainfall infiltration, replenish groundwater, utilize soil to filter pollutants, increase habitat, retain and detain storm water and meet State and Federal permit requirements. 6  Utilize: bioswales, raingardens, infiltration basins, retention basins, rain barrels cisterns, green roofs, vegetation, and permeable blocks, pavement and systems. Development of a Green Storm Water Infrastructure Plan and implementation of green infrastructure projects is a key new element of the Committee’s recommended storm water program and funding plan. Storm Drain System Capacity Upgrades In anticipation of the sunsetting of the 2005 ballot measure, Public Works Department staff retained an engineering consultant to update the Storm Drain Master Plan in 2015. The consultant updated the digital storm drain system model and identified a prioritized list of storm drain system improvements needed to enable the system to convey the runoff from a 10-year storm without street flooding over the top of the curb. The Master Plan Update lists approximately $98 million of recommended storm drain pipeline and pump station upgrades, including approximately $43 million of high- and medium-priority projects, which are those projects that address areas currently subject to street flooding depths over 6 inches over an extended period of time. The Committee sought to provide funding for as many of the projects as possible within the recommended rate structure and revenue stream, starting with the highest- priority projects. RECOMMENDATIONS The Storm Drain Blue Ribbon Committee recommends the following: 1) A renewed and renamed “Storm Water Management Fee” should be proposed to Palo Alto property owners for their approval in order to generate funding for storm water infrastructure improvements, system maintenance, and storm water quality protection on a pay-as-you-go basis as follows: a) Increase the base Storm Water Management Fee from $4.25 per month per Equivalent Residential Unit (ERU) to $6.62/month/ERU to cover ongoing non-capital expenditures for engineering, maintenance, and storm water quality staffing, expenses, and permit compliance. This increase would reflect the true cost of storm water management baseline services. The City Council should have the discretion to increase the base fee by the amount of change in the local Consumer Price Index (CPI) or 6% per year, whichever is less, and the base fee should not sunset. b) Include an additional Capital Improvement Project (CIP), Incentive Project (IP), and Green Storm Water Infrastructure (GSI) Project fee of $7.03 per month per ERU that would sunset after 15 years. The storm water capital improvement projects listed in Attachment A, totaling $27.2 million in Year 2015 dollars, should be pursued through renewal of the Storm Water Management Fee over a period of 15 years. These improvements would eliminate street flooding in storms up to the 10-year level in the areas they serve. These improvements also are intended to reduce road/sidewalk/curb/gutter repair costs by reducing subsoil water saturation and to increase traffic safety during storms. 7 c) The total monthly fee, including the base fee and CIP/IP/GSI fee, would be $13.65 per ERU beginning in FY 2018, a 2.3% increase over the current funding model approved in 2005. The City Council should have the discretion to increase the fee by the amount of change in the local Consumer Price Index (CPI) or 6% per year, whichever is less. d) The Storm Water Management Fund should maintain a reserve balance of at least $1.5 million to cover potential cost overruns on project or operational expenses. e) Further details on the project/program elements to be funded by the $ 13.65 monthly fee are contained in Attachment A (List of Proposed Storm Drain Capital Improvement Projects) and Attachment B (Recommended Storm Water Management Program and Funding Plan). f) The Storm Water Management Fee rate structure for single-family residential properties should retain its existing three rate categories, based on parcel size (less than 6,000 square feet; between 6,000 and 11,000 square feet; and greater than 11,000 square feet). g) As is currently the case, a fee reduction appeal process to City staff should be in place for those property owners who can demonstrate that the run-off from their properties drains directly to a creek or another city’s storm drain system, and that they have complied with all applicable permit and other legal requirements for such drainage. In addition, this appeal process should apply to those property owners who can demonstrate that they have constructed improvements to their properties to retain storm runoff onsite. In keeping with the present policy, the reduction in fees would not apply to that portion of the monthly fee attributable to City-wide programs. 2) The City should take all steps necessary to conduct a property owner, ballot-by-mail election in conformance with the provisions of Proposition 218 as early as possible in CY 2017 so that the fee can be implemented on June 1, 2017, when the existing property owner-approved fee sunsets. The election would require a simple majority vote to pass. 3) The fee name should be changed from “Storm Drainage Fee” to “Storm Water Management Fee.” 4) The City should develop an Integrated Water Management Plan (Plan) that takes a comprehensive look at how all water-related issues (water supply and demand, storm water, recycled water and groundwater) might be best addressed to achieve multiple benefits. This Plan is intended to complement the Utilities Department’s Urban Water Management Plan and Water Integrated Resources Plan. 5) Per the terms of the Municipal Regional Storm Water Discharge Permit, the City should adopt the framework for a Green Storm Water Infrastructure Plan by June 30, 2017. Until the Green Storm Water Infrastructure Plan is completed in 2019, staff should 8 identify and implement opportunities for green storm water infrastructure projects. The framework should also elucidate goals for green infrastructure and consider the interaction between green infrastructure and shallow groundwater. 6) The City should implement pilot projects, such as utilizing pervious pavement materials to test their feasibility and effectiveness (e.g. use permeable materials for parking lane or bicycle lane as part of a scheduled street maintenance project). If the pilot projects are successful, the City should implement policies that make use of permeable pavement materials a standard practice. 7) Proposed Green Storm Water Infrastructure (GSI) funding will cover both the cost of the Green Storm Water Infrastructure Plan preparation and GSI projects. GSI projects retain, infiltrate and/or treat storm water and include, but are not limited to, rain gardens, green roofs, tree wells, bioswales, bioretention/infiltration basins, and permeable pavement. Incentive Project (IP) funding (as distinguished from GSI funding) will encourage residents and commercial property owners to incorporate green infrastructure measures into their private property projects. 8) A Council-appointed Storm Water Management Oversight Committee should be formed to oversee expenditures for all storm water funding elements, including, but not limited to, Green Storm Water Infrastructure projects, CIP projects, and Incentive Project funding. The Committee should be empowered to consider and recommend consolidation of Green Storm Water Infrastructure and Incentive Project funding for particular projects. The Committee will annually review the Storm Water Management Fund budget and expenditures to ensure they are consistent with the funding plan included in the ballot measure approved by property owners and not used for other purposes. 9) Each new City storm drain capital improvement project should incorporate Green Storm Water Infrastructure measures to the extent practicable. 10) City staff should consider opportunities to include green infrastructure into all appropriate City capital improvement projects that impact storm water. Although GSI funds from the Storm Water Management Fund can be used to fund pilot projects, all City Departments should rapidly include funding for GSI elements when budgeting for their projects, and not be dependent upon funding from the Storm Water Management Fund. 11) The City should develop or participate in the development of green infrastructure design guidelines and standard specifications and drawings that can inform designers of private and public projects as they incorporate these features into their project designs. 12) The ongoing Comprehensive Plan Update, the City Parks Master Plan, Urban Forest Master Plan, and other City planning documents should include green infrastructure goals and policies as required by the Municipal Regional Storm Water Permit. 9 13) The City should expand the scope of its storm water rebate program to promote the use of green storm water infrastructure measures to reduce storm water runoff from private property, including, but not limited to, new rebates for rain gardens and increased rebate amounts for rain barrels, cisterns, green roofs, and permeable pavement. 14) The City should evaluate the implementation of a user fee for point-source discharges to the storm drain system to reflect their utilization of the system capacity. Exceptions should be provided for artesian well discharges and similar non-discretionary discharges. 15) The City should look for opportunities to work with the Santa Clara Valley Water District and others to minimize new concrete channels and replace portions of existing concrete channels with more natural creek channel materials, to the extent that flood protection is not compromised. The purposes of such projects are to increase infiltration, protect creek banks, and create recreational and educational opportunities. STORM DRAIN BLUE RIBBON COMMITTEE MEMBERS Peter Drekmeier, Co-Chair Claire Elliott, Co-Chair Norm Beamer David Bower Nancy Clark Stepheny McGraw Hal Mickelson Susan Rosenberg Bob Wenzlau Richard Whaley 10 ATTACHMENT A STORM DRAIN BLUE RIBBON COMMITTEE’S RECOMMENDED LIST OF STORM DRAIN CAPITAL IMPROVEMENT PROJECTS Project Name Location Cost (2016$K) 1. Loma Verde Ave (Louis to Sterling Canal) capacity upgrade Midtown $2,200 2. Corporation Way/E Bayshore Road Pump Station to Adobe Ck Baylands $2,420 3. W. Bayshore Rd to Adobe Ck capacity upgrade Palo Verde $1,390 4. W. Bayshore Rd Pump Station to Adobe Creek Palo Verde $1,040 5. E. Charleston Rd to Adobe Ck capacity upgrade Charleston Terrace $1,300 6. E. Meadow Cir connection to Adobe Ck PS E Meadow Circle $ 360 7. E. Meadow Dr to Adobe Ck PS capacity upgrade Ortega $ 400 8. Fabian Way capacity upgrade Fabian Way $ 580 9. Hamilton Ave (Center to Rhodes) capacity upgrade Duveneck-St Francis $3,440 10. Louis Rd (Embarcadero to Seale-Wooster Canal) capacity upgrade Garland/Midtown $6,910 11. Louis Rd (Seale-Wooster Canal to Matadero Ck) overflow pipe Midtown $1,560 12. Colorado Pump Station removal Midtown $ 430 13. Loma Verde Ave (Ross to Louis) capacity upgrade Midtown/Palo Verde $1,340 14. Center Drive capacity upgrade Crescent Park $1,620 15. E. Charleston Rd (San Antonio to Fabian) capacity upgrade Charleston Terrace $1,030 16. Embarcadero Road (Fulton to Newell) capacity upgrade Leland Manor $1,200 TOTAL $27,200 11 Map of Completed and Proposed Storm Drain Improvements = Previously completed storm drain capital improvements = Proposed storm drain capital improvements 12 Examples of Street Flooding to be Addressed by Proposed Storm Drain Capital Improvements Ashby Drive East Meadow Circle East Bayshore Road E. Charleston Road Fabian Way 13 ATTACHMENT B STORM DRAIN BLUE RIBBON COMMITTEE’S RECOMMENDED STORM WATER MANAGEMENT PROGRAM AND FUNDING PLAN A) Base (Ongoing) Components 1) Ongoing storm drain maintenance & water quality programs 2) New Regulatory Water Quality Protection Requirements (Municipal Regional Permit from State) 3) Resulting new Base Fee Amount: starts at $ 6.62/month 4) Escalates by Consumer Price Index (CPI) or 6%, whichever is less, each year 5) No Sunset provision on Base (goes on indefinitely) B) Project/Green Infrastructure Components 1) Funding for listed Storm Drain Capital Improvement Projects (CIP) 2) Annual Green Stormwater Infrastructure (GSI) funding (starting at $450K/year) (unused funding goes to capital improvement projects, unless it is to be carried forward to an identified GSI project in subsequent years) 3) Annual Incentive Project (IP) funding component (starting at $154K/year) 4) Annual Storm Drain Repair/Rehabilitation CIP funding (starting at $500K/year) 5) Maintain reserve balance of $1.5M (~15% of annual expenditures) to cover potential cost overruns on project or operational expenses 6) Project/Green Infrastructure Fee Amount: starts at $ 7.03/month 7) Escalates by CPI or 6%, whichever is less, each year 8) Sunsets after 15 years C) Total Fee Amount for All Components 1) Resulting new Total Fee Amount (Ongoing + Project/GI Components): starts at $ 13.65/month in FY 2018 2) Equates to 2.3% increase from projected FY 2018 Fee under current funding scenario (which is estimated to be $ 13.34/month in FY 2018) STORM DRAIN PROGRAM FINANCIAL MODEL (All dollars expressed in thousands) ONGOING FUNDING SCENARIO: PERMANENT FUNDING FOR ONGOING NON-CAPITAL EXPENSES Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 152018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Annual Revenues Fee Revenue 3,356 3,457 3,561 3,667 3,777 3,891 4,007 4,128 4,252 4,379 4,510 4,646 4,785 4,929 5,077Interest Earnings 130 130 130 130 130 130 130 130 130 130 130 130 130 130 130Storm Drain Violation Fines 333333444444445Storm Drain Development Review Fees 90 93 95 98 101 104 107 111 114 117 121 125 128 132 136From Fund Reserves 000000000000000 Total Revenue 3,579 3,683 3,789 3,899 4,012 4,129 4,249 4,372 4,499 4,630 4,765 4,904 5,048 5,195 5,347 Annual Expenses - Base Program Flood Control Improvement 95 98 101 104 107 110 113 117 120 124 128 132 135 140 144Capital Program Support 193 199 205 211 217 224 230 237 244 252 259 267 275 283 292Storm Water Quality Protection 1,087 1,120 1,153 1,188 1,223 1,260 1,298 1,337 1,377 1,418 1,461 1,505 1,550 1,596 1,644Storm Drainage Maintenance 1,153 1,188 1,223 1,260 1,298 1,337 1,377 1,418 1,461 1,504 1,550 1,596 1,644 1,693 1,744Emergency Response 116 119 123 127 131 134 139 143 147 151 156 161 165 170 175Debt Service 000000000000000Administrative Support Costs 937 965 994 1,024 1,055 1,086 1,119 1,152 1,187 1,223 1,259 1,297 1,336 1,376 1,417To Fund Reserves 000000000000000 Subtotal - Base Expenses 3,581 3,688 3,799 3,913 4,030 4,151 4,276 4,404 4,536 4,672 4,813 4,957 5,106 5,259 5,417 Annual Expenses - Proposed Additional Program Elements Green Municipal Infrastructure 000000000000000Capital Improvements (2) (6) (10) (14) (18) (23) (27) (32) (37) (42) (47) (52) (58) (64) (69)Storm Drain System Repairs 000000000000000Add'l Engineering staff 000000000000000Innovative Projects 000000000000000 Subtotal - Proposed New Program Elements (2) (6) (10) (14) (18) (23) (27) (32) (37) (42) (47) (52) (58) (64) (69) Total Current and Proposed Expenses 3,579 3,683 3,789 3,899 4,012 4,129 4,249 4,372 4,499 4,630 4,765 4,904 5,048 5,195 5,347 Monthly Fee Per ERU $6.62 $6.82 $7.02 $7.23 $7.45 $7.67 $7.90 $8.14 $8.39 $8.64 $8.90 $9.16 $9.44 $9.72 $10.01 Ongoing Funding Scenario 5/3/2016 STORM DRAIN PROGRAM FINANCIAL MODEL (All dollars expressed in thousands) FINAL SCENARIO: ENHANCED STORM DRAIN PROGRAM + NEW WATER QUALITY MANDATES + $27.2M HIGH- & MEDIUM-PRIORITY CIPs (15 years) + $450/YEAR GREEN INFRASTRUCTURE (ANNUALLY ADJUSTED FOR INFLATIO Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Annual Revenues Fee Revenue 6,920 7,128 7,342 7,562 7,789 8,022 8,263 8,511 8,766 9,029 9,300 9,579 9,867 10,163 10,467 Interest Earnings 130 130 130 130 130 130 130 130 130 130 130 130 130 130 130Storm Drain Violation Fines 333333444444445Storm Drain Development Review Fees 90 93 95 98 101 104 107 111 114 117 121 125 128 132 136From Fund Reserves 000000000000000 Total Revenue 7,143 7,354 7,570 7,794 8,023 8,260 8,504 8,755 9,014 9,281 9,555 9,838 10,129 10,429 10,738 Annual Expenses - Base Program Flood Control Improvement 95 98 101 104 107 110 113 117 120 124 128 132 135 140 144 Capital Program Support 193 199 205 211 217 224 230 237 244 252 259 267 275 283 292Storm Water Quality Protection 1,087 1,120 1,153 1,188 1,223 1,260 1,298 1,337 1,377 1,418 1,461 1,505 1,550 1,596 1,644Storm Drainage Maintenance 1,153 1,188 1,223 1,260 1,298 1,337 1,377 1,418 1,461 1,504 1,550 1,596 1,644 1,693 1,744 Emergency Response 116 119 123 127 131 134 139 143 147 151 156 161 165 170 175 Debt Service 94794795095195094794700000000Administrative Support Costs 937 965 994 1,024 1,055 1,086 1,119 1,152 1,187 1,223 1,259 1,297 1,336 1,376 1,417To Fund Reserves 000000000000000 Subtotal - Base Expenses 4,528 4,635 4,749 4,864 4,980 5,098 5,223 4,404 4,536 4,672 4,813 4,957 5,106 5,259 5,417 Annual Expenses - Proposed Additional Program Elements Green Municipal Infrastructure 450 464 477 492 506 522 537 553 570 587 605 623 642 661 681Capital Improvements 1,351 1,416 1,480 1,548 1,620 1,697 1,772 2,796 2,876 2,959 3,044 3,131 3,221 3,314 3,409 Storm Drain System Repairs 500 515 530 546 563 580 597 615 633 652 672 692 713 734 756Add'l Engineering staff 160 165 170 175 180 185 191 197 203 209 215 222 228 235 242 Innovative Projects 154 159 163 168 173 179 184 189 195 201 207 213 220 226 233 Subtotal - Proposed New Program Elements 2,615 2,718 2,821 2,929 3,043 3,162 3,281 4,351 4,478 4,608 4,743 4,881 5,024 5,170 5,322 Total Current and Proposed Expenses 7,143 7,354 7,570 7,794 8,023 8,260 8,504 8,755 9,014 9,281 9,555 9,838 10,129 10,429 10,738 Monthly Fee Per ERU $13.65 $14.06 $14.48 $14.92 $15.36 $15.82 $16.30 $16.79 $17.29 $17.81 $18.34 $18.89 $19.46 $20.05 $20.65 Capital improvements completed per year:1,351 1,416 1,480 1,548 1,620 1,697 1,772 2,796 2,876 2,959 3,044 3,131 3,221 3,314 3,409 Year-end capital improvement program balance:27,200 26,665 26,048 25,350 24,562 23,678 22,692 21,601 19,453 17,160 14,716 12,113 9,346 6,405 3,283 (27) Assumed annual inflation rate 3.00% Total capital improvement program total 27,200 Final Scenario 5/9/2016 Attachment I Proposition 218 Property Owner Election Process and Timeline Start Council adoption of ordinance authorizing mail ballot process and resolution establishing procedures for protest hearing/election 3 weeks Legal notices/brochures mailed; start of 1st 45-day noticing period 7 weeks Protest hearing (Need at least 45-day protest period) 3 weeks Ballots mailed 4 weeks Ballots due back to City Clerk (Need at least 45 days between protest hearing and ballot due day) 5 weeks Council certification of election results (Need time to process staff report) 4 weeks Effective date of new rate Minimum 26 weeks elapsed time City of Palo Alto (ID # 7125) City Council Staff Report Report Type: Action Items Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Approval of MOU re Buena Vista Mobile Home Park Title: Approval of Memorandum of Understanding (MOU) Between the Santa Clara County Housing Authority, the County of Santa Clara and the City of Palo Alto to Provide up to $14.5 Million in City Affordable Housing Funds in Support of the Housing Authority’s Potential Acquisition of the Buena Vista Mobile Home Park for Deed Restricted Affordable Housing, From June 28, 2016 Through June 28, 2018; Authorize the City Manager to Implement MOU Subject to Council Conditions and Reporting From: City Manager Lead Department: City Attorney Recommendation Staff recommends that Council consider the following Motion: 1. Approve the attached Memorandum of Understanding (MOU) with the Housing Authority of the County of Santa Clara and the County of Santa Clara relating to providing funding for the Housing Authority's potential acquisition of the Buena Vista Mobile Home Park in an amount not to exceed $14,500,000 for period June 28, 2016 through June 28, 2018, for the purpose of affordable housing. 2. Authorize the City Manager or his designee to implement and administer the Memorandum of Understanding, subject to conditions described in this report and as determined by Council. Background The Buena Vista Mobilehome Park is a privately-held property containing 104 mobile homes, 12 studio apartments, and one single family residence on approximately 4.5 acres. The site is within the Barron Park neighborhood of Palo Alto and is home to about 400 people, including many families with children who attend local public schools. In 2012, the Buena Vista Park owner filed an application with the City to close the Mobilehome Park. State and local law gives mobilehome park owners the right to close those businesses, City of Palo Alto Page 2 provided they mitigate the impact on displaced residents. In May 2015, the Council approved the Park owner’s closure plan with mitigation measures and conditions. The Residents’ Association filed a writ petition in Santa Clara County Superior Court seeking to reverse the closure approval on the grounds that the mitigations are inadequate and fail to comply with state mobilehome park residency law and the Palo Alto Municipal Code. Subsequently, the owner filed a suit in U.S. District Court contending that the mitigations are excessive and violate the federal Constitution. Both suits are pending. Santa Clara County Supervisor Joe Simitian has initiated an effort to find ways to preserve affordable housing at Buena Vista. In 2015, the County Board of Supervisors and the Palo Alto City Council each voted to set aside $14.5 million in restricted affordable housing funds, to fund acquisition of the Buena Vista site and preservation of the site as affordable housing. Working with the County, a non-profit housing provider stepped forward to put together a market-rate offer to acquire the Park, plan for needed improvements, and maintain it as a source of deed- restricted affordable housing. Negotiations between the non-profit and the Park owner ended when litigation over the closure began. Discussion The Santa Clara Valley Housing Authority is a public agency with a mission to “provide and inspire affordable housing solutions to enable low-income people in Santa Clara County to achieve financial stability and self-reliance.” The Housing Authority administers the federal Section 8 rental assistance program, and develops, controls and manages affordable rental housing properties throughout the County, assisting approximately 17,000 households to find and maintain housing. The Authority has expressed an interest in acquiring and owning the Buena Vista Mobilehome Park for the purpose of providing affordable housing. In support of this effort, the City and the County are asked to confirm that each will provide the same level of funding ($14.5 million) previously set aside for acquisition of the Park. The Housing Authority would provide pre-development funding to assess feasibility and acquisition cost. If the Housing Authority determined to move forward with acquisition, it would contribute additional funds, if needed, and retain a non-profit with expertise in operating mobilehome housing to improve, manage and operate Buena Vista as a mobilehome park with spaces deed restricted for use by households qualifying for affordable housing. The attached MOU documents the responsibilities of the County, City and Housing Authority. The MOU is a preliminary step, to be followed by the Housing Authority completing the feasibility analysis and other pre-development activities, and determining whether to move forward with acquisition. The Housing Authority states that the feasibility analysis will be completed later in the summer or early fall. Staff recommends that Council delegate to the City Manager, or designee, authority to review and evaluate the analysis and take subsequent actions to proceed with making funding City of Palo Alto Page 3 available to the Housing Authority for the proposed acquisition, provided Council’s conditions and directions are met, and with appropriate reporting as directed by Council. The County approved the attached MOU on June 20, 2016. The Housing Authority Board is scheduled to vote on the MOU on June 28, 2016. Buena Vista Funding Conditions Staff recommends that Council delegate authority to implement the MOU to the City Manager provided that the following conditions are satisfied: 1. The Buena Vista Mobile Home Park shall be maintained as an affordable mobilehome park or equivalent housing resource for up to 50 years. The Housing Authority or a qualified non-profit entity shall maintain and operate the affordable housing. 2. The Housing Authority and the nonprofit operator shall avoid displacing current residents to the maximum extent allowed by law. 3. The Housing Authority shall invest or cause to be invested at least $10 million in upgrades to the Park to ensure appropriate site improvements are made. 4. City funds committed shall be affordable housing funds, and the Housing Authority shall comply with the restrictions imposed on the use of those funds. Prior to the transfer of City funds, the Housing Authority or its agents shall enter into a regulatory agreement in a form acceptable to the City and the Authority that documents the affordability restrictions and other requirements. 5. In order to protect the City’s general funds, the Housing Authority shall fully indemnify the City for any liability exposure in connection with the Housing Authority’s acquisition, site improvements, or tenant displacement. 6. In the event that the Park is sold or transferred at any time in the future, the Housing Authority shall reinvest all proceeds in the City of Palo Alto to create additional affordable housing. Environmental Review Approval of the MOU would provide funding to perpetuate an existing mobile home park and is not a project subject to environmental review. Policy Implications The City’s adopted Housing Element (Program H3.1.8) recognizes the Buena Vista mobilehome park as providing low-and moderate-income housing opportunities and states that to the City of Palo Alto Page 4 extent feasible, the City will seek appropriate local, State and federal funding to assist in the preservation and maintenance of the existing units. The City’s Housing Element contains policies both supporting the preservation and rehabilitation of existing units (Policy H1.1 and H1.2), and policies supporting actions to increase the supply of affordable housing (Policy H2.1 and H2.2). The Housing Element also documents at length some of the housing challenges facing Palo Alto and the region, and articulates quantified objectives for the 2015-2023 planning period for rehabilitation (600 below market rate units), preservation (334 below market rate units), and new development (1,401 below market rate units), indicating the need for investments in all of these activities. Attachments:  Attachment A: BV MOU Signature Final (HACSC June 14 2016) (PDF) 6/14/16 1   MEMORANDUM OF UNDERSTANDING BY AND AMONG THE COUNTY OF SANTA CLARA, THE CITY OF PALO ALTO AND THE HOUSING AUTHORITY OF THE COUNTY OF SANTA CLARA This Memorandum of Understanding (MOU) is entered into as of June 28, 2016 by and among the County of Santa Clara (County), the City of Palo Alto (City) and the Housing Authority of the County of Santa Clara (HACSC) (each a “Party” and collectively the “Parties”). R E C I T A L S WHEREAS, County and City and HACSC each acknowledge that there has been and there continues to be an acute shortage of affordable housing for the residents of the County and the City; and WHEREAS, one of the few existing sites of moderate cost housing in the City is a certain mobile home park known as Buena Vista Mobile Home Park (Park), which consists of 104 mobile homes, 12 studio units and one single family home and provides housing for approximately 400 people; and WHEREAS, the owner of the Park has sought to terminate the tenancy of the Park residents and close the Park for the development of market-rate housing; and WHEREAS, it is HACSC’s mission to provide and inspire affordable housing solutions to enable low-income people in Santa Clara County to achieve financial stability and self-reliance; and WHEREAS, the parties recognize that the ongoing operation of the Park (or an equivalent housing resource for the Park community) for a period of up to 50 years and the continuing use of the property for affordable housing will benefit the residents of the County and the City because it will create a long term affordable housing resource. NOW, THEREFORE, County, City and HACSC agree as follows: 1. PURPOSE It is the goal of this MOU to preserve the Park as an affordable housing resource, by operating the Park as a mobile home park, or equivalent, for up to 50 years and using the property continuously as an affordable housing resource, and to avoid displacement of the current Park tenants. The parties intend to accomplish this goal by jointly funding HACSC’s acquisition and improvement of the Park, as needed to preserve the Park as an affordable housing resource while avoiding permanent displacement of the current Park tenants. 6/14/16 2   2. TERM This MOU shall be in effect from the date of its execution by all parties until the date of Acquisition Determination and thereafter until terminated in accordance with Section 6 below. 3. PRE-DEVELOPMENT ACTIVITIES HACSC hereby commits an amount not to exceed $250,000 for Pre-development Activities, which may include securing an appraisal, and retaining consultants and vendors to assist in due diligence and determining feasibility of various preservation and improvement alternatives. 4. ACQUISITION AND FUNDING OBLIGATIONS After concluding its due diligence and feasibility analysis, HACSC will make a determination about whether to proceed with the acquisition of the Park (Acquisition Determination), subject to the Affordability Restrictions referenced in Section 5. If HACSC decides to acquire the property subject to the Affordability Restrictions, the County and City shall each contribute such amounts as the parties determine are necessary for the acquisition of the Park, but not to exceed $14.5 million each (Maximum Financial Commitment). The parties will deposit the funds with the HACSC. HACSC will establish its Maximum Financial Commitment after consideration of the appraisal amount, and completion of its due diligence and feasibility activities. In approving this MOU the City Council and County Board of Supervisors shall designate their respective Authorized Representatives who shall be authorized to take all actions necessary and reasonable for the City and the County to accomplish the purposes of this MOU, up to their respective Maximum Financial Commitments, and within the authority granted by their respective legislative bodies. 5. IMPROVEMENT AND MANAGEMENT In the event HACSC acquires the Park, HACSC will own, operate and maintain the Park, subject to reasonable County and City recorded restrictions on use of the land (Affordability Restrictions), including, but not limited to, a restriction to operate the Park for up to 50 years and to use the property continuously for affordable housing. The Parties agree that they have a common interest in establishing the potential financial viability of the Park as a housing resource. Prior to the final Acquisition 6/14/16 3   Determination the Parties will confer in accordance with their common interest and define the Affordability Restrictions to be recorded immediately after HACSC takes title to the Park. To the maximum extent allowed by law, HACSC will give housing priority to the tenants of the Park as of the date of the approval of this MOU, subject to compliance with reasonable and necessary rental rules, and income eligibility under applicable affordable housing financing. 6. TERMINATION This MOU will automatically terminate on June 28, 2018 unless one of the termination events specified herein occurs first. Prior to June 28, 2018, this MOU may be terminated by any of the parties by written notice to each of the other parties following the occurrence of any of the following events: 6.1 Decision by HACSC not to acquire the Park; 6.2 Decision by any party not to agree to the Affordability Restrictions; 6.3 The Recording of Affordability Restrictions approved by each of the parties to the MOU. Within 90 days of termination of this MOU for any reason, the HACSC will return any contribution amounts, as determined by Section 4, not used for the acquisition of the Park to the parties. 7. NOTICES All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be personally served, mailed (or electronic mail), postage prepaid and return receipt requested, addressed to the respective parties as follows: To County: Megan Doyle Clerk of the Board of Supervisors County of Santa Clara 70 W. Hedding Street East Wing, 10th Floor San Jose, CA 95110 Email: megan.doyle@ceo.sccgov.org Phone: 408-299-5060 6/14/16 4   Jeff Smith County Executive County of Santa Clara 70 W. Hedding Street East Wing, 11th Floor San Jose, CA 95110 Email: jeff.smith@ceo.sccgov.org Phone: 408-299-5102 To City: James Keene City Manager City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Email: james.keene@cityofpaloalto.org Phone: 650-329-2105 To HACSC: Katherine Harasz Executive Director Housing Authority of the County of Santa Clara 505 W. Julian St. San Jose, CA 95110 Email: katherine.harasz@hacsc.org Phone: (408) 993-2903 8. PRIOR AGREEMENTS This Agreement, including all Attachments, represents the entire understanding of the parties. This Agreement may only be modified by a written amendment duly executed by the parties to this Agreement. 9. INDEMNIFICATION In lieu of and notwithstanding the pro rata risk allocation, which might otherwise be imposed between the Parties pursuant to Government Code Section 895.6, the Parties agree that all losses or liabilities incurred by a Party shall not be 6/14/16 5   shared pro rata but, instead, HACSC, County and City agree that, pursuant to Government Code Section 895.4, each of the Parties hereto shall fully indemnify and hold each of the other Parties, their officers, board members, employees, and agents, harmless from any claim, expense or cost, damage or liability imposed for injury (as defined in Government Code Section 810.8) occurring by reason of the negligent acts or omissions or willful misconduct of the indemnifying party, its officers, employees or agents, under or in connection with or arising out of any work, authority or jurisdiction delegated to such party under this Agreement. No party, nor any officer, board member or agent thereof shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of the other Parties hereto, their officers, board members, employees, or agents, under or in connection with or arising out of any work authority or jurisdiction delegated to such other Parties under this MOU. Notwithstanding the foregoing, HACSC shall indemnify, defend, and hold harmless the County and City, its officers, agents and employees from any claim, liability, loss, injury or damage arising out of, or in connection with, the acquisition of the Park and/or the relocation of Park tenants, excepting only loss, injury or damage caused by the negligence or willful misconduct of the County and City. HACSC shall reimburse the County and City for all costs, attorneys’ fees, expenses and liabilities incurred with respect to any litigation in which HACSC is obligated to indemnify, defend and hold harmless the County and City under this MOU. Each Party agrees that all obligations under this Section 9, Indemnification, shall survive the termination of this Agreement and shall remain binding on all Parties notwithstanding the Agreement’s termination. 10. AMENDMENT This MOU may not be amended except in a writing signed by all Parties. This MOU shall be binding on all successors and assigns of the Parties. 11. EXECUTION This MOU may be executed and delivered in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, but such counterparts together shall constitute one and the same document. Signatures may be transmitted electronically. 6/14/16 6   WITNESS THE EXECUTION HEREOF the parties hereto have executed this Agreement on the day and year indicated below. HOUSING AUTHORITY OF THE COUNTY OF SANTA CLARA __________________________ Kathy Espinoza-Howard, Chair Board of Commissioners Date: APPROVED AS TO FORM Brian Doyle General Counsel COUNTY OF SANTA CLARA Dave Cortese, President Board of Supervisors Date: ATTEST: Megan Doyle Clerk of the Board of Supervisors APPROVED AS TO FORM AND LEGALITY: Elizabeth G. Pianca Lead Deputy County Counsel 6/14/16 7   City of Palo Alto By:_________________________________ James Keene City Manager Date:_______________ ATTEST: ____________________________________ City Clerk APPROVED AS TO FORM: ____________________________________ City Attorney City of Palo Alto (ID # 7122) City Council Staff Report Report Type: Action Items Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Downtown Palo Alto Business Improvement District Title: CONTINUED PUBLIC HEARING: to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District; Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2017 on the Downtown Palo Alto Business Improvement District; and Possible Council Direction on Next Steps (Continued from June 6, 2016) From: City Manager Lead Department: City Manager Recommendation 1. Close public hearing on the levy of proposed assessments in Fiscal Year 2017 in connection with the Downtown Palo Alto Business Improvement District; and 2. Approve a resolution confirming the report of the Advisory Board and levying an assessment for Fiscal Year 2017 on the Downtown Palo Alto Business Improvement District. Background On June 6, 2016, Council opened the annual public hearing to consider the BID reauthorization, receive protests, if any, and levy assessments for FY 2017. Council deferred action on these items and directed staff to: 1. Review mechanisms for modifying the Fee Structure to require larger companies to pay a larger portion of the district costs; and 2. Review mechanisms for modifying the contract with the Downtown Business and Professional Association so that activities are not construed to include lobbying; and 3. Investigating other structures for the Business Improvement District (BID) that may provide a more efficient use of the funds that minimizes staff and administrative overhead and focuses more on direct services; and 4. Evaluate the boundaries of the BID to align with other Downtown boundaries. Staff indicated that the item would need to return to before June 28, 2016, Council recess. City of Palo Alto Page 2 On June 8 and June 16, staff met with Board of Directors of the Palo Alto Downtown Business and Professional Association (PADBPA) to discuss Council direction. Discussion Discussions between staff and PADBPA Board members demonstrated that additional time is needed to explore a number of Council’s concerns, including potential contract amendments. In the limited time available for discussion, PADBPA identified areas needing further exploration, including how changes would work in practice with respect to the various tasks and services that PADBPA and City staff undertake downtown. As an initial step, PADBPA proposed and City staff agreed to advance to Council with our recommendation an amendment to the Annual Report which includes actions for the upcoming fiscal year and a structure for exploring and making recommendations to Council and the PADBPA Board on the additional issues: In the coming year, the Association will endeavor to minimize administrative and overhead costs, and focus expenditures on tangible assets and direct services to District businesses and their customers. The Association and the City will convene a taskforce that will work to define appropriate and inappropriate uses of District funds, including the Association's work as a liaison between businesses and City departments, advocacy on behalf of member businesses, and lobbying. The taskforce will also review the assessment structure and district boundaries as directed by City Council on June 6, 2016. The taskforce will recommend appropriate amendments to the Agreement between the Association and the City for the 2017-18 year. The PADBPA Board voted to support this change to the Annual Report. Staff believes that it would be appropriate for the Council to close the public hearing and assess the levy so that important PADBPA programs and services can continue, while staff spends the early part of the fiscal year working with PADBPA on Council recommendations. PADBPA has requested that a Council Member participate in these discussions. Attached is a letter received from PADBPA on June 22, 2016. Resource Impact Staff time from the City Manager’s Office and City Attorney’s Office will be required to implement this recommendation. Due to two vacancies in the City Manager’s Office the timeline maybe adjusted based on competing Council and organizational priorities. Attachments:  Attachment A: PADBPA Revised Annual Report 2016-17 (PDF)  Attachment B: Resolution (PDF)  Attachment C: PADBPA Letter 6-22-16 (PDF)  Attachment D: Staff Report ID# 6810 (PDF) Palo Alto Downtown Business Improvement District 2016 -1 7 Annual Report Prepared  for:  Palo  Alto  City  Council               Prepared  by:  Russ  Cohen,  Executive  Director,   Palo  Alto  Downtown  Business  and  Professional  Association     “Keeping Downtown Palo Alto Safe, Spotless and Successful. Introduction This report from the Advisory Board of the Palo Alto Downtown Business & Professional Association (“PAd”) was prepared for City Council to review for the annual reauthorization of the Downtown Palo Alto Business Improvement District (“BID”) pursuant to Section 36533 of the Parking and Business Improvement Law of 1989 (Section 36500 and following of the California Streets and Highways code) (the “Law”). This report is for the proposed fiscal year for the BID commencing July 1, 2016 and ending June 30, 2017. (“Fiscal Year 2016-17”). As required by the Law, this report contains the following information: I. Any proposed changes in BID boundaries and benefit zones within the BID; II. The improvements and activities to be provided for Fiscal Year 2016-17; III. An estimate of the cost of providing the improvements and the activities for Fiscal Year 2016-17; IV. The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2016-17. V. The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. VI. The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Submitted by Brad Ehikian, Chair, and Russ Cohen, Executive Director on behalf of the Advisory Board (“Advisory Board”) of the Palo Alto Downtown Business & Professional Association (“PAd”). The Advisory Board approved this report on April XX, 2016. Received on file in the Office of the City Clerk of the City of Palo Alto on April XX, 2016. In the coming year, the Association will endeavor to minimize administrative and overhead costs, and focus expenditures on tangible assets and direct services to District businesses and their customers. The Association and the City will convene a taskforce that will work to define appropriate and inappropriate uses of District funds, including the Association's work as a liaison between businesses and City departments, advocacy on behalf of member businesses, and lobbying. The taskforce will also review the assessment structure and district boundaries as directed by City Council on June 6, 2016. The taskforce will recommend appropriate amendments to the Agreement between the Association and the City for the 2017-18 year. Section I: BID boundaries and Benefit Zones There have been no changes in the BID boundaries or benefit zones within the BID and no changes are proposed. The current boundaries are depicted on the map below. The area of the BID is referred to as “Downtown.” 934- 9 4 4 927 932 233 281 933- 9 3 7 943 327 1001 942 469 475 744 459 832 801 A P T 1 - 5 427-453 920912 362 370 900 838 846 471 459 835 - 8 5 5 460 815 840836 834 845 400 803 928930 931933 835 - 8 3 7 831 - 8 3 3 451453 802800 810 - 8 1 6 818 - 8 2 0 828 - 8 3 0 817 - 8 1 9 823 - 8 2 5 567-569 559563 536 526 1001 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925518-520 539541543 515-517 809811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903825837 581 575940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529525 542516140 102 116124 163 145 566556 167 528 643635 635 645-685 660- 666 620 180 164 158156 624628632636 640644 617621 151-165 171-195 203 642640636 200 151 115 125135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530- 534536540 552 177 156 201209215225 595 229231 611-623 180 508500 625-631 170 172-174 542544 538-542 552548546 541-547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762-776740-746 250 275 270 255741 265 724 730 651 221-225 227 668 707 205 201203451449 209 219 221 233235450460470 442444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435-439 346344 333335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300310301 581 259-267 533535537 261267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202-216 228226234238 244242 210- 216 228- 234 223-229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300-310 431401 366 436 426 #1-7 369 335319 390 301 315 375 307- 311 325330 332 1&2330 1-3 324 326316 318 373-377 416-424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535-539 318-324 326 352 425 439-441 435429 425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425555 400 436-452 456 379 370-374376380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744734 724-730 720712704 360 351 315737 332 300 653-681 683 685 512 501619 609605 518 482486496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351357 369-379360 258-296 350 210204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204218236240250-252 477 475 467 457453249235225221 201 60 275 505-509 239-243 209- 213 210- 214 513-519 460 474472228-230 535 558 201 1612 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465 463 489-499360 530 480 420 430 480 463 451443437411405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571530 619-6 520 440-446 579 567 523610 600 555 581420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 7517537737-62611 601600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829833 839 800 812818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251249 252 247 244250 177220 261 251-257 205245231225213205 70 2206 234240 183 251 270 241-247 215- 237 210-216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188190 251- 293 202206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903903A 408412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302306308312316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949943941 715 95 445 324 328 545 590 425447 827 565585595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548 550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643415 12 700 802 99 89 87 901 560564568572576580584588592594 906908 910912914 916918920 922924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 -760 940 930 544546 515 7 745 7 549 211213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street talm Dr iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo AltoBusiness ImprovementDistrictArea Map CITY O F PALO A L TO INC OR P ORATE D C ALIFORN I A P a l o A l t oT h e C i t y o f A PRIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) Overview: Today’s Downtown Palo Alto is a far different place than it was when the organization was founded in 2004. The downtown is now a dynamic, youthful, entrepreneurial neighborhood that boasts clean and safe walkable streets, a well balanced confluence of small, medium and large businesses and an almost even balance of independently owned retail and restaurants operating along side national chains. It is a globally recognized mecca for innovating the social and the technical. Without hyperbole, it is not only a valuable asset to the City of Palo Alto; it has become a valuable asset for the rest of the country if not the world. At a glance, there are approximately 88 restaurants and 72 retail establishments. 13 national chain restaurants or franchises exist amongst 75 privately owned restaurants. Amongst retail, there are approximately 21 national retailers and 51 independently owned stores. * The commonly held perception of downtown being dominated by chains and restaurants is simply that, a myth. It is the second largest generator of sales tax revenue for the City of Palo Alto. Strategic partnerships, execution and outcomes Real estate investments in the past decade have drawn the spotlight to the area and paved the way for growth. While some nearby cities have emulated Downtown Palo Alto’s live/work/play environment, this growth has not surprisingly resulted in a variety of challenges. To maximize our efforts to address those new and ongoing challenges we brought together partners to facilitate dialogue and develop programs between business, government and non- profits that have resulted in positive outcomes. In no particular order: • Collaborated with City of Palo Alto Public Works Division and the Public Arts Commission on the systematic replacement of downtown benches to both enhance the esthetics of downtown and inhibit loitering. A combination of a more utilitarian bench design along with a small variety of artful benches will be installed in late Spring 2016. • Collaborated with Zero Waste and the Pubic Arts Division to identify replacement trash receptacles that inhibit illegal and unsavory reclaiming of refuse and update the decades old current receptacles. Scheduled to be installed in late Spring 2016. • Initiated programs with non-profits Food Runners, Go Box and others in order to reduce food waste and divert edible food to resources that help feed the needy as well as recycle to-go containers. • Partnered with the Palo Alto Chamber of Commerce to develop a walking and interactive map promoting Downtown Palo Alto. • Offered recommendations as a member of the City of Palo Alto’s Parking Technology Working Group, identifying systems that will ease the search for available parking spaces in both downtown garages and surface lots. • Provided guidance as a member of the Parking Way-finding Task Force helping to develop graphic and electronic smart signage helping to inform and direct drivers to available parking options. • Supported the newly formed Transportation Management Association as a member of its 15-month long Steering Committee with resulting development of association bylaws, missions statement, goals and non-profit status. • Major member outreach efforts promoting American Express’s “Shop Small” annual event helping to promote locally owned retail in downtown Palo Alto including the development of social, web and print campaign. • Designed and managed the downtown Lamppost banner program which provided Holiday, Spring and Summer banners and now has complied a library of banner designs that can be used in years to come. • Developed, managed and promoted the 6 week long Summer concert series, “Music On the Plaza” including the development and design of social media, web and print efforts as well as raising the $40K in sponsorships needed to execute the series. The results were an increase in attendees well over that of the previous year’s “Concerts at Cogswell.” • Initiated dialog with City of Palo Alto Engineering Department to audit existing conditions and possible consolidation and removal of downtown news racks. Program expected to begin Summer 2016 with the majority of the tasks executed by the Palo Alto Downtown Business and Professional Association. • Engaged with Sa Jose State University Professor K. Rohrmeir and SFSU students on the “Activate the Alleys” project with the intent to identify ways to make downtown Palo A lot’s alleyways more efficient, clean and attractive. • Partnered with the Friends of Lytton Plaza to add umbrellas, foliage, public art and banners to the plaza to enliven and soften the hardscape of the plaza. • Sponsored, participated and promoted the annual Holiday Tree Lighting ceremony that resulted in hundreds of attendees in a family friendly atmosphere benefiting the downtown merchants and restaurants and highlighting Lytton Plaza . • Participated a s the Master of Ceremonies for the annual Avenidas New Year’s Holiday Brunch and Auction. • Partnered with Green Waste on an educational program directed towards restaurants regarding the importance of alleyway cleanliness and maintenance. • Helped develop and launch the first “Meet the Street” event including logo map and advertising design as well as the design and installation of lamp post banners that highlight the side streets of downtown Palo Alto including Emerson, Bryant, Ramona and Waverely. • Provided outreach to members of the downtown district regarding advertising opportunities on the newly developed walking and interactive map. • Promoted the City of Palo Altos’ Business Registry in order to help that program become more robust and successful with data collection. • Worked with Green Waste/Zero Waste o educating district members about newly created composting regulations. • Met with the Palo Alto Police Department leaders to discuss homeless and panhandling issues. Letter submitted to council regarding these ongoing concerns. As a result, parking garage issues have decreased dramatically. • Worked with Santa Clara County Small Business Administration to educate restaurants about the county’ new health inspection regulations and placard program. • Participated in the development of the Public Arts Commission Downtown Public Art master Plan. • Developed relationship with Hertz Rental Car to provide a Downtown Palo Alto Discount Program available to all downtown district members. • Participated in the Palo Alto Chamber of Commerce regular Public Policy Forum meetings. • Engaged in annual new board member recruitment and nomination process including the development and execution of election materials. • Built upon the downtown brand and welcomed new business to Downtown Palo Alto with the presentation fo the “Downtown Crown” at grand openings including Hana House, Opa, Coupa Café on Lytton and more. • Provided administrative oversight of the Palo Alto Downtown parking Assessment District subcommittee. • Worked with MuniServices LLC to provide invoicing, database management, reporting and collections. • Suppoted the Downtown Streets Team. * Methodology: Ratio estimates based on one time data collection through quick probability samplings considered a “windshield survey.” Margin of error is estimated to be 10-15%. With the addition of the City’s Business Registry data, this summary is expected to become even more accurate in the future. Section II: Ongoing and Planned Activites for Fiscal Year 2016-2017 Summary: Creating a spotless downtown. The sidewalks downtown are steam cleaned once per month with powerful equipment that helps remove stubborn stains like chewing gum. (For the record, individual businesses can sweep but are prohibited from using water to “hose down” the sidewalks, as that debris will flow directly to the bay. Steam cleaning is the most effective and the most environmentally responsible method.) These increases in frequency along with better equipment and the help of the Downtown Streets Team, (founded by The Palo Alto Downtown Business and Professional Association in 2004) help to keep downtown Palo Alto “spotless.” Creating a safe downtown. The Palo Alto Downtown Business and Improvement Association also administers the standing committee known as the Downtown Parking Assessment District Subcommittee, a committee charged with oversight of the funds and activities associated with the garages. As a reminder, in addition to the association fees, many merchants in the downtown district also contribute fees to the downtown parking district, which helped fund the building of the parking garages downtown and fund the ongoing maintenance of the garages at an approximate cost of $1million each year. The garages are patrolled by the Palo Alto Police Department and outreach efforts by the Downtown Streets Team—both are currently funded by these fees. The return of dedicated patrols downtown with two officers assigned to the beat also ensure a presence downtown that helps deter crime and provides rapid response to downtown incidents was initiated three years ago and last year, the number of dedicated officers was increased to four. Creating a destination. Keeping downtown a great place to do business, whether you are a retailer, restaurant, start-up or a one- person office is our mission. Making certain that downtown is its own unique brand, one that differentiates itself from any other downtown, is an area of focus for The Palo Alto Downtown Business and Professional Association. Creating this brand comes from not only ensuring an attractive downtown, but also a downtown that prides itself on the reputation it has earned as a center of innovation. Photos above: City Hall announcement of “Meet the Street event. Graphics deigned by The PADB&PA. Fashion runway showcasing local downtown boutiques and street musicians celebrating Bell’s Books anniversary as part of the Meet the Street festivities. Dancing crowds enjoying “Music on the Plaza” Summer Concert series. Photos below: Adding umbrellas, foliage and banners have added to the experience of relaxing in Lytton Plaza making it a better destination than ever before. Holiday banners and the Holiday Tree Lighting Ceremony give downtown a festive atmosphere, just right for shopping and dining. Creating an environment that is business friendly. The Palo Alto Downtown Business and Professional Association provides a conduit to leaders and staff at city hall for its dues paying members We don’t work for the city of Palo Alto; we work with it on behalf of all the business located downtown. From helping to develop public policy to helping find funding sources for events, the Downtown Association plays a vital role with the best interests of the business community in mind. The “Downtown Crown” as presented to each business that chooses to open downtown. Section III. Budget for 2016-17 The total funds available for activities for this fiscal year are estimated to be $197,721. The budget for providing the activities is set forth as follows: BID 2016/17 Budget INCOME Total Non-Assessment Sources Assessments $130,000 Allowance for Uncollectible Assessments ($25,000) Other Revenue $54,000 $54,000 15-16 Surplus Carryover $13,721 TOTAL INCOME $197,721 EXPENSES Operating Expenses Staff Salaries Executive Director Salary $74,600 Payroll taxes and expense $7,460 Office Supplies & Expenses $150 Internet/Website/ Phone Maintenance $861 Rent $7,200 Reauthorization Advertising $2,650 Audit-Tax Returns $5,700 Legal $1,000 $1,000 Insurance - Liability $2,300 Workman's Comp $800 Nominating $1,500 Invoicing $16,500 Contingencies $3000 Subtotal -- Operating Expenses $123,721 $1,000 Programs, Marketing and Events Banners $16,000 $8,000 Location Specific Banners $1000 Summer Concert Series $40,000 $40,000 Events $5000 $5000 Outreach & Communication $3000 Downtown Streets Team $5000 District Opportunity Reserve $4000 Subtotal --Programs, Marketing & Events $74,000 $54,000 TOTAL EXPENSES $197,721 Section IV: Method and Basis of Levying the Assessment Cost Benefit Analysis / Bid Assessments The method and basis of levying the assessment is provided in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2016-17 and is not changed from the FY 2015-16 assessment. There have been no changes made to the Cost-Benefit Analysis or to the BID Assessments since they were approved by City Council on February 2, 2004. The method of calculation used to determine the cost and benefit to each business located in the BID is described below. The BID assessments are based on three criteria: the type of business, the location of the business and the size of the business. It has been consistently demonstrated that the typical BID program places a higher priority on activities such as commercial marketing. As a result, the retail and restaurant establishments in the BID are assessed more than service and professional businesses in the district. While service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more than professional businesses such as medical, dental, architectural, consultant and legal offices with their minimal advertising and promotion needs. For these reasons, various business types are assessed according to the benefit that they receive from the BID, as follows: Ø Retail and Restaurant 100% of base amount Ø Service 75% of base amount Ø Professional 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. The location of a business also determines the degree of benefit that accrues to that business. Centrally located businesses tend to benefit more, as do businesses located on the ground floor. For this reason, A and B benefit zones have been identified for the BID. In Palo Alto, Zone A benefit businesses are assessed 100% of the base benefit assessment while Zone B businesses are assessed 75%. A third criterion is used in the BID to determine benefit. This criterion, the size of the business, takes into consideration the number of full time employees employed by the business. Please refer to Attachment 1 for a more complete understanding of the application of these three variables to establish BID benefit. Attachment 2 is the BID assessment for each business located within the BID boundaries. Applying the criteria identified in Attachment 1, a summary of the assessment that applies to each business by size, type and location is outlined. In addition to the Cost-Benefit Analysis, the assessments include the following criteria: Ø An exemption for “single person professional businesses” that have 25% or fewer full time equivalent (“FTE”), including the business owner. This covers employees who work less than 10 hours a week (based on a 40 hour work week; an FTE equals approximately 2000 hours annually) Ø An assessment specifically for “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID (An FTE equals approximately 2000 hours annually) Ø The tiering of other professional businesses by size based (according to benefit) on the “single person business” criteria This outline provides information by which a business can determine its annual assessment based on objective criteria. Except where otherwise defined, all terms shall have the meanings identified below: Definitions of Business Types in the Downtown Business Improvement District Retailers and Restaurants: Businesses that buy or resell goods such as clothing stores, shoe stores, office supplies as well as businesses that sell prepared food and drink. Service Businesses: Businesses that sell services such as beauty or barber shops, repair shops, most automotive businesses, dry cleaners, art and dance studios, printing firms, film processing companies, travel agencies, entertainment businesses such as theatres, etc. Hotel and Lodging: These include businesses that have as their main business the lodging of customers. This is restricted to residential businesses that provide lodging services to customers for less than 30 days. Professional Businesses: Businesses that require advanced and/or specialized licenses or academic degrees such as architects, engineers, attorneys, chiropractors, dentists, doctors, accountants, optometrists, realtors, insurance brokers, venture capital firms, consultants, advertising and marketing professionals and mortgage brokers and similar professions. Financial Institutions: Includes banking, savings and loan institutions and credit unions. Additional clarification on business definitions will be defined according to Section 18.04.030 (Definitions) of the Palo Alto Municipal Code. The Advisory Board recommends that the following businesses be exempt from the BID assessment: Ø New businesses established in the BID area following the annual assessment for the year in which they locate in the BID area Ø Non-profit organizations Ø Newspapers Ø “Single person professional businesses” that have 25% or less FTE, including the business owner The Assessment calculated shall be paid to the City no later 30 days after receipt of the invoice with the amount of the annual assessment sent by the City. A second notice will be mailed as a reminder to businesses that have not remitted payment by that date. Late payment will be subject to a 10% late fee. Section V: Revenue Surplus or Deficit The Assessment calculated shall be paid to the City no later 30 days after receipt of the invoice with the amount of the annual assessment sent by the City. A second notice will be mailed as a reminder to businesses that have not remitted payment by that date. Late payment will be subject to a 10% late fee. Section V: Revenue Surplus or Deficit Based on the revenue balance on 3/27/16 of $82,644, the PAd expects a surplus carryover of $13,721. Expected expenses for the remainder of FY 16-17 are as follows: Current Revenue Balance $82,644 Expected expenses for remaining FYE6/30/2016 Staff Salaries $36,300 Payroll Taxes $3,300 Banners $2,302 Downtown Streets Team $2,500 Rent $3,600 Workers Comp $350.50 Audit & Tax Return $6,900 District Opportunity Reserve $0 Nominating/elections $0 Invoicing $8500 Office Expense $0 Internet maintenance $0 Reauthorization advertising $1370 Contingencies $2000 Outreach & Communication $0 Total Expected Expense $68,923 Expected Carryover $13,721 Section VI: Non-assessment Income It is estimated that $54,000.00 will be raised in fundraising, and sponsor support. Additionally, we anticipate in kind contribution towards expenses for fiscal year 2016-17. Projected Income for Fiscal Year 2016-17 Legal (donation) $1,000 Banners $8,000 Summer Concert Series $40,000 Events $5,000 Total $54,000 Section VI: PAd Board of Directors by Business Type Retailers and Restaurants   Georgie Gleim, Gleim the Jeweler Alex Giovanotto, Joya Travis Nichols, Keen Garage Susan Graf, Susan Graf Mistie Cohen, Oren’s Hummus Service Businesses Robert Peterson, Peterson Architects Hospitality Barbara Gross, Garden Court Hotel Financial Institutions Patricia Behoumonde, Boston Private Bank & Trust Company* Katie Seedman, Presidio Private Bank and Trust Professional Organizations Brad Ehikian, Premier Properties Patty McGuigan, Cornish & Carey Commercial Sheila Liskar, Palo Alto Laser Skin Care Mila Zelkha, Palintir* Carlie Factor, Salesforce/RelateIQ* Non Profit Organizations Chris Richardson, Downtown Streets Team Zia MacWilliams, Downtown Street Team* Phil Carter, Palo Alto Farmer’s Market COMMUNITY PARTNERS Palo Alto Chamber of Commerce Judy Kleinberg, President & CEO Downtown Streets Team Eileen Richardson, Executive Director City Of Palo Alto Eric Filseth, Palo Alto City Council Liaison Thomas Fehrenbach, Manager of Economic Development *nominated ATTACHMENT 1 A General Statement Regarding Cost-Benefit Analysis For BID Businesses Using The Traditional Three Criteria Formula Criteria 1) Type of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Type Of Business: In a review of 200 California Business Improvement Districts, it is consistently demonstrated that the typical BID Program places a higher priority on Commercial Marketing Programs than on Civic Beautification and Commercial Recruitment Programs. With that trend in mind, retail and restaurant businesses, with their emphasis on, and need for, commercial marketing, are traditionally assessed more than less marketing-sensitive service-oriented or professional-oriented businesses. However, while service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more, (from commercial marketing programs), than professional businesses such as medical, dental and legal offices with their minimal advertising and promotion needs. Therefore, set forth below, is an example of how various business types might be considered regarding the computation of the annual benefit assessment. • Retail and Restaurant: 100% of base amount • Service: 75% of base amount • Professional: 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. Lodging businesses are assessed based on the total number of rooms because it is a more equitable manner of determining size. Many lodging businesses have many part time employees, but revenues are based on the room occupancies of the hotel, not the goods sold or serviced provided by employees. Criteria 2) Location of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Location of Business: It has also been consistently demonstrated that the more centrally located businesses tend to benefit from BID activities and services to a greater degree than businesses located toward the periphery of the proposed BID boundaries. Events and activities tend to originate in the central core of the Downtown area and spread benefit to the outer areas with diminishing energy and impact, much like the ripple effect of a stone tossed into a body of calm water. Furthermore, ground floor businesses tend to benefit to a greater degree than businesses located in upper floors. Therefore, in some cases, a new BID's annual benefit assessment formula also takes these street level criteria into account. As mentioned above, special events, fairs, festivals and other activities tend to take place within, or along, the Main Street core rather than in the areas at the periphery of the Downtown core. Additionally, Attachment 2 BID-sponsored seasonal decorations, public art projects, street banners and street furniture tend to be located within the immediate core area. Therefore, businesses located within the most central area of the proposed BID are considered to be within "Zone A" which should be considered the primary benefit zone. There is typically a "secondary zone" or "Zone B" within most proposed BID areas. This area receives less benefit than Zone A and should be assessed accordingly. An example of how different zones might be treated regarding the computation of the annual benefit assessment is as follows. • Zone A: 100% of base benefit assessment • Zone B: 75% of base benefit assessment In the case of Downtown Palo Alto, it is recommended that all Zone A upper floor businesses, as well as any other businesses located at the periphery of the proposed BID, be considered as Zone B businesses. Please refer to the map in Attachment I. Criteria 3) Size of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Size of Business: In approximately 50% of newly established BIDs, a third assessment criterion is used. This criterion involves the size of each individual business that is based upon the businesses’ total number of full-time employees. Full-time employees are those working a total of 2,000 hours per year. Part-time employees are grouped into full-time job positions, i.e., two half-time employees total one full-time. Fractions are rounded down to the nearest whole number with no less than one person as a minimum for business. An example of how various business sizes might be treated regarding the computation of the annual benefit assessment is as follows: Retail/Restaurants Service Businesses Small 50% of base amount Under 6 FTE* Under 4 FTE Medium 75% of base amount 6 to under 11 FTE 4 to under 7 FTE Large 100% of base amount 11 or more FTE 7 or more FTE * FTE = full time employees Additionally, an exemption was established for “single person professional businesses” that have 25% or less FTE, including the business owner. This covers employees who work less 10 hours a week (based on a 40 hour work week) Since “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID benefit the very least from the assessment, their assessments have been tiered by size based (according to benefit) on the new “single person business” criteria. Attachment 2 ATTACHMENT 2 Downtown Palo Alto Business Improvement District Annual BID Assessments ZONE A ZONE B (75% of Zone A amount) Restaurants & Retailers Under 6 FTE (50% of base amount) $225 $170 6 to under 11 FTE (75% of base amount) $340 $260 11 or more FTE (100% of base amount) $450 $340 Service Businesses Under 4 FTE (50% of base amount) $170 $130 4 to under 7 FTE (75% of base amount) $260 $200 Over 7 FTE (100% of base amount) $340 $260 Professional Businesses 25% or fewer FTE, including owner (0% of base amount) Exempt Exempt 26% FTE to under 1 FTE (25% of base amount) $60 $50 2 to 4 FTE (50% of base amount) $110 $90 5 to 9 FTE (75% of base amount) $170 $130 10+ FTE (100% of base amount) $225 $170 Lodging Businesses Up to 20 rooms (50% of base amount) $2258 $170 21 to 40 rooms (75% of base amount) $340 $260 41+ rooms (100% of base amount) $450 $340 Financial Institutions $500 $500 Note 1: For retail, restaurant, service, and professional businesses, size will be determined by number of employees either full-time or equivalent (FTE) made up of multiples of part-time employees. A full FTE equals approximately 2000 hours annually. Lodging facilities will be charged by number of rooms available and financial institutions will be charged a flat fee. Note 2: Second floor (and higher) businesses located within Zone A will be assessed the same as similar street-level businesses located within Zone B. Note 3: Assessment amounts are rounded to the nearest ten dollars. The minimum assessment will be $50.00. Not Yet Approved 160517 jb 0131522 1 Resolution No. _____ Resolution of the Council of the City of Palo Alto Confirming the Report of the Advisory Board and Levying an Assessment for Fiscal Year 2017 on the Downtown Palo Alto Business Improvement District THE CITY COUNCIL OF THE CITY OF PALO ALTO HEREBY FINDS, DECLARES, AND ORDERS AS FOLLOWS: SECTION 1. The Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Sections 36500 et seq. (the “Law”), authorizes the City Council to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. SECTION 2. Pursuant to the Law, the City Council adopted Ordinance No. 4819 establishing the Downtown Palo Alto Business Improvement District (the "District") in the City of Palo Alto. SECTION 3. The City Council, by Resolution No. 8416, appointed the Board of Directors of the Palo Alto Downtown Business & Professional Association, a California nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the "Advisory Board"). SECTION 4. In accordance with Section 36533 of the law, the Advisory Board prepared and filed with the City Clerk a report entitled "Downtown Palo Alto Business Improvement District, Annual Report 2016-2017” (the "Report”), and, by previous resolution, the City Council preliminarily approved such report as filed. SECTION 5. The boundaries of the District are within the City limits of the City of Palo Alto (the "City") and encompass the greater downtown area of the City, generally extending from El Camino Real to the West, Webster Street to the East, Lytton Avenue to the North and Addison Avenue to the South (east of Emerson Street, the boundaries extend only to Forest Avenue to the South). Reference is hereby made to the map of the District attached hereto as Exhibit "A" and incorporated herein by reference for a complete description of the boundaries of the District. SECTION 6. The City Council has adopted a Resolution of Intention, Resolution No. 9588 declaring its intention to levy and collect an assessment for fiscal year 2017 against the businesses in the District. SECTION 7. Following notice duly given pursuant to law, the City Council has held a full and fair public hearing regarding the levy and collection of an assessment within the District for fiscal year 2017. All interested persons were afforded the Not Yet Approved 160517 jb 0131522 2 opportunity to hear and be heard regarding protests and objections to the levy and collection of the assessment for fiscal year 2017. The City Council finds that there was no majority protest within the meaning of the Law. All protests and objections to the levy and collection of the assessment and any and all protests and objections are hereby overruled by the City Council. SECTION 8. Based on its review of the Report, a copy of which has been presented to the City Council and has been filed with the City Clerk, and other reports and information, the City Council hereby finds and determines that (i) the businesses in the District will be benefited by the expenditure of funds raised by the assessment (ii) the District includes all of the businesses so benefited; and (iii) the net amount of the assessment levied within the district for the 2017 fiscal year in accordance with the Report is apportioned by a formula and method which fairly distributes the net amount in proportion to the estimated benefits to be received by each such business. SECTION 9. The City Council hereby confirms the Report as originally filed by the Advisory Board. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 10. The Adoption of this resolution constitutes a levy of an assessment for the fiscal year 2017 (commencing July 1, 2016, and ending June 30, 2017). The assessment formula, including the method and basis of levying the assessment, is set forth Exhibit “B” attached hereto and incorporated herein by reference. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 11. The City Council hereby declares that the proposed uses of the revenues derived from the assessments levied against the businesses in the District are for the following facilities and activities: The types of improvements to be funded by the levy of an assessment against businesses within the District are the acquisition, construction, installation or maintenance of any tangible property with an estimated useful life of five years or more. The types of activities to be funded by the levy of an assessment against businesses within the District are the promotion of public events which benefit businesses in the area and which take place on or in public places within the District; the furnishings of music in any public place in the District; and activities which benefit businesses locating and operating in the District. Not Yet Approved 160517 jb 0131522 3 SECTION 12. The Council finds that the adoption of this resolution does not meet the definition of a project under Section 21065 of the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Senior Assistant City Attorney City Manager _____________________________ Director of Administrative Services 934 - 9 4 4 927 932 233 281 933 - 9 3 7 943 327 1001 94 2 469 475 74 4 459 832 801 A P T 1 - 5 427-453 920 912 362 370 900 838 846 471 459 835 - 8 5 5 460 81 5 840 836 834 845 400 803 928930 931 933 835 - 8 3 7 831 - 8 3 3 451453 802800 81 0 - 8 1 6 81 8 - 8 2 0 82 8 - 8 3 0 817 - 8 1 9 82 3 - 8 2 5 567-569 559563 536 526 100 1 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925 518-520 539541543 515-517 809 811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903 825 837 581 575940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529 525 542516140 102 116124 163 145 566 556 167 528 643635 635 645- 685 660- 666 620 180 164 158156 624628 632636 640 644 617621 151-165 171-195 203 642640 636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530- 534 536540 552 177 156 201 209215 225 595 229231 611-623 180 508500 625-631 170 172-174 542544 538- 542 552 548 546 541- 547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762- 776740-746 250 275 270 255 741 265 724 730 651 221-225 227 668 707 205 201203 451449 209 219 221 233235450 460470 442 444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435- 439 346344 333 335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300 310 301 581 259-267 533535537 261 267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202- 216 228226 234238 244 242 210- 216 228- 234 223- 229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300- 310 431401 366 436 426 #1-7 369 335 319 390 301 315 375 307- 311 325330 332 1&2330 1-3 324 326316 318 373- 377 416- 424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535- 539 318-324 326 352 425 439-441 435429425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425555 400 436-452 456 379 370-374 376 380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744 734 724-730 720 712 704 360 351 315737 332 300 653 -681 683 685 512 501619 609605 518 482486496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351357 369-379360 258- 296 350 210 204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250- 252 477 475 467 457 453249235225221 201 60 275 505-509 239- 243 209- 213 210- 214 513-519 460 474472228- 230 535 558 201 1612 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465463 489-499360 530 480 420 430 480 463 451443437411 405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542 548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571 530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 751753 7 737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975 945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829833 839 800 812 818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909 909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251 249 252 247 244250 177220 261 251-257 205245 231225213205 70 2 206 234240 183 251 270 241-247 215- 237 210- 216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188 190 251- 293 202 206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903 903A 408 412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302 306 308 312 316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A 919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425447 827 565 585 595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564568572576580584588592594 906 908 910 912 914 916 918920 922 924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 - 760 940 930 544546 515 7 745 7 549 211 213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443 445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street ta l m D r iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0' 500' Downtown Palo AltoBusiness ImprovementDistrictArea Map CITY O F PALO A L TO IN C O R P O RATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) City of Palo Alto (ID # 7118) City Council Staff Report Report Type: Action Items Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Election Measure - Business Tax Title: Consideration of Ad Hoc Committee Report and Recommendations, Review of Polling, and Discussion and Direction on Potential 2016 Business Tax to Fund Transportation and Parking Improvements, Including Alternative Timing Options, Elements of Measure, Preliminary Revenue Estimates, and Potential Projects and Impacts From: City Manager Lead Department: City Manager Recommendation: Staff recommends that the City Council discuss second polling results and related findings, consider and discuss the Ad Hoc Committee report, framing issues and recommendations and provide direction to staff on whether to place local business tax measure on the ballot for November 2016 or an alternative election timeframe. The next opportunity for a General Tax election would be November 2018. A Special Tax election, which requires a 2/3 vote majority could take place at different times in 2017 or 2018. Note: If the City Council desires to place a measure on the November 2016 ballot, staff recommends that the Council also schedule two special meetings before August 12, the deadline for submitting ballot language. These meetings would allow for input on a draft ordinance, as well as review of the final ordinance and ballot question. Executive Summary: During the week of April 14-20, Fairbank, Maslin, Maullin, Metz & Associates (FM3) conducted an initial poll of 400 community members to gauge the level of support on the concept of a potential local business tax to generate funds that Council intends to use for transportation related purposes. Since the initial poll was conducted, the Local Transportation Ad Hoc Committee of the Council has met three times on June 2, 8 and 15 to discuss outreach and a potential second poll. The second round of polling was conducted June 11-12 with the results provided at the Ad Hoc Committee Meeting’s June 16 meeting. The first and second polling results are included as Attachments A and B. City of Palo Alto Page 2 The second polling results showed that in general:  Voters support a local traffic congestion relief measure with total yes (including definitely, probably and undecided, leaning yes) – 65%  FM 3 characterized support as “soft” given that nearly half of supporters indicated they would only probably vote yes or started as undecided and indicated they would lean toward voting yes when pushed  A plurality of voters support using funding on improvements that take cars off the road – 48%  The measure is vulnerable to opposition messaging with the argument that it is rushed persuasive to nearly two-thirds  Connecting the measure’s benefits to the mechanism is especially persuasive  Other tax measures such as a parcel tax, sales tax, or increase in utility tax are much less popular than an employee head tax  Three-quarters support the Countywide VTA transportation measure (which requires a 2/3 vote countywide), but the County measure loses about 6% support in Palo Alto after voters hear about a potential local tax, which would represent about a 0.25% decrease in countywide support. (Polling did not consider the potential interaction with other funding measures on the ballot, such as the County’s housing bond.) The polling showed similar levels of support and opposition for such a measure among likely 2018 voters in a general, non-presidential year election. Based on the second polling results and feedback from outreach efforts, outreach consultant TBWB outlined three paths forward for Council to consider in terms of timing for a potential tax measure: 1. Proceed with placing a general tax measure on the November 2016 ballot, but consider the impact of an opposition campaign focused on the process by which this measure was developed 2. Consider placing a special tax measure requiring a two-thirds vote on a special election ballot in 2017 and utilize the additional time to refine the proposal, build consensus and neutralize potential sources of opposition 3. Consider placing a general tax measure requiring a simple majority vote on the November 2018 ballot and utilize the additional time to refine the proposal, build consensus and neutralize potential sources of opposition. In options 2 and 3, the City could use the time between now and the election to improve the Business Registry and develop the infrastructure needed to implement a business tax. City of Palo Alto Page 3 The Ad Hoc Committee directed staff to bring these options, as well as a series of issues to consider to the full Council at its June 27 meeting. Background During the week of April 14-20, Fairbank, Maslin, Maullin, Metz & Associates (FM3) conducted an initial poll of 400 community members to gauge the level of support on the concept of a potential local business tax to generate funds that Council intends to use for transportation related purposes. This poll was designed to test support for such a tax with its use directed to localized transportation improvements. The poll tested a local tax on business related to funding City transportation improvements through an employee head count based structure. Various rates and exemptions were tested. No other local City tax approaches, such as a City sales tax was tested. The initial poll was designed to help assess whether a special tax requiring 2/3rd majority vote could be successful (tax for a single purpose that could be scheduled for any election). The poll also tested for support for a general tax, which requires a simple 50% majority vote, but which can only be held in a general election (November every two years. 2016 or 2018 for example). At the Ad Hoc Committee meeting on June 2, the Committee gave our outreach consultant TBWB and staff direction on potential groups and organizations to include in its outreach efforts. TBWB and staff met with an executive group from the Chamber Board, members of the Stanford Research Park TMA, and sent a survey out to all small, medium and large businesses included in the Business Registry to solicit input for the Committee to consider. On June 8, TBWB and staff returned to the committee with an update on feedback and input received as a result of these efforts. A summary of the results from the small and medium/large business survey are included as Attachments C and D. The Committee then discussed conducting a second round of polling with more specific language and potential uses for a general tax; details on a tiered structure and exemption for business with less than 10 employees, as well as a question about other potential types of taxes. In addition, the County has now voted to place a transportation measure on the county ballot in November. The second round of polling was also intended to clarify whether having a local transportation tax measure would impact the likelihood of the County’s measure passing. The second round of polling was conducted June 11-12 with the results provided to the ad hoc committee at its meeting on June 16. Due to the compressed timeframe, staff focused on completing the polling of residents to inform the Committee’s process. Discussion Based on the second polling results, Charles Health of TBWB outreach firm outlined for the committee three paths forward to consider in terms of timing for a potential tax measure. The “soft” support of 65%, with nearly half indicating they would probably vote yes or are undecided but lean yes, leaves the measure vulnerable to an opposition campaign, especially if the opposition conveys that the measure is rushed and poorly planned. TBWB worked on the City’s Transient Occupancy Tax (TOT – Measure B) in 2014 to fund infrastructure investments City of Palo Alto Page 4 and indicated that there was very little organized or funded opposition to the measure because of the time invested in a thorough planning and outreach process to develop a thoughtful plan and build community consensus. As a result, and even with only a modest advocacy campaign supporting the measure, Measure B received support from 76.28% of voters, which exceeded FM3’s pre-election polling on the measure. TBWB estimates that a fundraising effort for proponents of the measure would likely need to be in the $150,000 to $200,000 range. Based on the public testimony at the Ad Hoc Committee meeting and feedback so far from the business community, there are numerous indications that a November 2016 business tax measure aimed at traffic relief would face significantly more opposition than Measure B in 2014. While FM3’s polling does indicate that a measure could succeed in the face of organized and funded opposition, the Council should consider the risks and consequences of an unsuccessful measure in 2016. At the end of the poll after voters have heard potential arguments that may be made against the measure, overall support is 66%, but only 37% of voters indicate they will definitely vote yes. The 29% difference between the 66% overall support and the 37% definite support represents the supporters that may be persuadable by an opposition campaign. Exactly what portion of those supporters might be persuaded to oppose the measure is difficult to quantify and highly dependent upon the strength and sophistication of an opposition campaign, as well as the strength and sophistication of a campaign in support of the measure to offset and counteract opposition activities. Included in the Committee’s consideration of placing a measure on the November 2016 ballot was a discussion about the “pairing” of the VTA and a local tax measure as a unique opportunity to pair the City’s share of the regional measure with its local funding and the potential impacts of increased traffic congestion by waiting an additional two years to move forward with a tax measure. As an alternative, the Council could also choose to put the measure on the ballot in 2017 as a special election for a special tax with funds earmarked for specific purposes, and that requires two-thirds voter support to pass. Given that overall support for the measure reaches 72% after voters hear potential arguments in favor of the measure and in the absence of a simulated opposition campaign, it is reasonable to believe that a measure could potentially reach the two- thirds passage threshold given the right set of circumstances. Delaying until 2017 would provide additional time to build consensus among stakeholders and neutralize potential sources of opposition by addressing their concerns. Even if all opposition could not be neutralized, efforts to blunt criticisms that the measure is rushed or poorly planned would likely make any opposition less damaging to a measure’s probability for success. When thinking about the potential for a two-thirds measure in 2017, the Council should continue to consider the significant portion of support that is “soft support” that could diminish between now and an election and the narrow margin of support measured in polling above the two-thirds threshold required for passage. The Council should also consider any potential delay in the implementation of a measure and receipt of funds associated with a delay in the election. City of Palo Alto Page 5 Finally, the Council could decide to put a general tax measure requiring simple majority support on the November 2018 general election ballot. November 2018 is a gubernatorial election, which has historically produced marginally lower voter turnout than presidential general elections like November 2016 but more than a special election. FM3’s polling suggests that the marginal decline in turnout expected in 2018 does not result in material decline in support for the measure. Accordingly, the advantages associated with a 2018 election are largely the same as a November 2016 election but this date allows more time for planning and consensus building. The primary disadvantage of a 2018 election is the potential delay in the implementation of a measure, delay in the receipt of funds and the delay in accrued community benefits from investments in traffic congestion relief. At the same time, staff estimates, based on our experience with the Business Registry and analysis performed at the last effort on a Business License Tax, which failed, suggest that the earliest date for completion of implementation measures for the tax would be January of 2018, for an election held in 2016. By comparison, a 2018 election could allow staff to develop the potential implementation measures in advance of the measure appearing on the ballot, and significantly shorten the gap between the vote and readiness to collect the tax. Implementation may be possible as soon as January 2019, reducing the effective gap between the 2016 and 2018 election to a year or only slightly more. Council should consider this factor in addition to other pros and cons of timing on an election date. Based on the polling results, outreach feedback and discussion at the three Ad Hoc meetings, the Committee directed staff to provide a framework of the major points of discussion for the full Council to consider at their June 27 meeting. These include:  Formation of an oversight committee  Sunset of tax or not  Estimated revenue generated by measure  Structure and form of tax  Relationship among timeframe for election, implementation and collection of revenues  Potential projects that could be funded by tax proceeds  Enforcement and other administrative elements and costs  Impact on traffic congestion of no action/putting measure in place Regardless of which scenario the Council may choose, there will need to be a thoughtful design and deployment of any business tax. Unlike the Business Registry, which simply requires businesses to fill out information with all self-reported data and includes a nominal registration fee, imposing a tax on a business is much different in scope. A tax obligation imposed on employers has different implications and repercussions if inaccurate or incomplete. There needs to be audit provisions, as well as enforcement provisions, penalties for non-compliance and numerous quality assurance protocols in place. City of Palo Alto Page 6 Oversight committee The Ad Hoc Committee was unanimous in its recommendation for both the formation of an oversight committee, as well as its membership to include both the business and residential communities. Council should note that funds generated by a general tax must be placed in the City’s general fund. While Council could appoint an advisory committee to advise Council on expenditure of funds generated by the business tax, the committee’s work would differ from that of a bond oversight committee and would be advisory to Council’s Charter authority to adopt a budget and expend general funds. Sunset or not The Ad Hoc Committee heard from TBWB, the City’s outreach consultant that support for a tax measure typically increases on tax measures if voters know there is an opportunity to reconsider the tax at a set future date. There was no specific date agreed upon by the committee or whether a sunset date should be included. The VTA measure on the ballot is a 30-year measure, and there was a suggestion by one committee member to consider 2028 to coincide with the Comprehensive Plan update time horizon (which is 2030). Estimated revenue generated by measure As originally discussed by the Ad Hoc Committee, staff estimated the revenue generated by a measure structured as 1) exempting businesses with 10 or fewer employees; 2) employers with 11-50 employees would pay $50 per employee and 3) employers with 100 or more would pay $100 per employee. Using these criteria and the list of businesses registered for 2015 (the year for the most current data), staff estimates the revenue at approximately $4.6 million. However, businesses in the Registry self-report the number of employees, but per the administrative regulations of the BRC are only made available within ranges. There are a number of businesses that do not indicate any size range, and it is unknown at this time exactly how many employees the larger employer may have. It is likely this number would be higher than approximately $5 million or greater. There will be one-time costs for implementation and then ongoing administrative costs estimated at just under $400,000 year, which must be deducted from the tax yield estimates. Also note that the total number of businesses who were required to register for 2016 is expected to decrease due to new exemptions put in place for the registry primarily to exempt businesses and nonprofit organizations with less than one FTE, as well as religious organizations with no ancillary business on site. This would likely have minimal impact on any estimated revenue projections. The self-reported number of employers in each size range listed in the BRC for 2015 (the latest available) are as follows: Business Registry 2015 Data City of Palo Alto Page 7 0-10: 1,734 11-25: 395 26-50: 171 51-100: 79 251-500: 20 501-1000: 6 1001-2000: 7 2001 and up: 1 Using the $4.6 million estimate as a baseline and the average number of employees within each sized employer, the Committee directed staff to calculate the potential revenue based on various tiered tax rates. The breakdown is as follows: Classification by Number of Employees Number of Businesses in Classification Average Employees Fee Amount Total Fee 0-10 employees 1,734 11-25 395 18 $50 $355,500 26-50 171 38 $50 $324,900 51-100 79 75 $100 $592,500 101-250 51 175 $100 $892,500 251-500 20 375 $100 $750,000 501-1000 6 750 $100 $450,000 1001-2000 7 1500 $100 $1,050,000 2001 and up 1 2001 $100 $200,100 Grand Total $4,615,500 10 and under: Not exempt, $50/employee 11-50: $50/employee 51 and up: $100/employee Additional $86,700 City of Palo Alto Page 8 Classification by Number of Employees Number of Businesses in Classification Average Employees Fee Amount Total Fee 0-10 employees 1,734 5 $50 $433,500 11-25 395 18 $50 $355,500 26-50 171 38 $50 $324,900 51-100 79 75 $100 $592,500 101-250 51 175 $100 $892,500 251-500 20 375 $100 $750,000 501-1000 6 750 $100 $450,000 1001-2000 7 1500 $100 $1,050,000 2001 and up 1 2001 $100 $200,100 Grand Total $5,049,000 10 and under exempt $100/employee for all others, no discounted rate Additional $1.36 million Classification by Number of Employees Number of Businesses in Classification Average Employees Fee Amount Total Fee 0-10 employees 1,734 11-25 395 18 $100 $711,000 26-50 171 38 $100 $649,800 51-100 79 75 $100 $592,500 101-250 51 175 $100 $892,500 251-500 20 375 $100 $750,000 501-1000 6 750 $100 $450,000 1001-2000 7 1500 $100 $1,050,000 2001 and up 1 2001 $100 $200,100 Grand Total $5,295,900 City of Palo Alto Page 9 Companies with more than 500 employees listed in the Business Registry include: City of Palo Alto CPI Palantir Nordstrom Lucile Packard Children’s Hospital Stanford Google Hewlett Packard SAP Silicon Valley Bank SSL Tesla Varian Medical VM Ware Form and Structure of tax Although the Committee did discuss the initial structure in terms of exemption size, discount for mid-sized employers and an amount per employee, these issues are before the full Council for discussion and direction to staff. In the section above, estimated revenues have been included based on various exemptions and cost-per-employee scenarios. Other issues for the Council to consider include:  Whether to impose and minimum (floor) or maximum amount (cap)  Whether to provide for annual adjustment based on inflation  The definition of an employee  How to determine average monthly or yearly headcount Potential projects to be included for funding The Committee discussed at length potential transportation projects that could be funded with proceeds raised through a local business tax. The second polling found that a plurality of voters support using funding on improvements that take cars off the road. Included in the 48% support were alternatives designed to reduce the number of cards on the road, focusing on shuttle busses, pedestrian bicycle improvements, and other alternatives to driving. The Committee directed staff to include potential projects that would maximum traffic congestion relief and provide the “biggest bang for the buck” in terms of impact. Projects in the City’s transportation pipeline that could be funded include: Table: Potential Transportation Projects/Programs for Funding City of Palo Alto Page 10 Potential Project/Program One-time Capital Cost Annual Ongoing/ Operating + Maintenance Cost (calculated at 2% of capital) Justification/Source Citywide Bicycle Parking Program (Ongoing) - $100,000 In order to attain Platinum-level Bicycle Friendly Community status, the City will need to add a large amount of additional bicycle parking. The lack of bicycle parking throughout the City was identified as a gap in the League of American Bicyclists report card for Palo Alto. Project is scalable and any substantial funding allocation could be used to install bicycle parking. Citywide Bicycle Sharing System* $1,100,000 $200,000 Provides gap funding for the installation and operation of the 350-bike citywide smart bike system identified in the Peninsula Communities Strategic Plan, which projects that over 189,070 annual trips will be made using the system and 62 SOV trips per day will be removed. Citywide Shuttle System Expansion (three new routes and two route extensions) - $1,500,000 Based on a draft Shuttle Study and work completed in 2015 by the consultant and Staff, it is estimated that each new route would generate 15-25 boardings per revenue hour of service. The two existing shuttle routes generate 46,000 and 76,000 boardings per year. If the three new routes perform at the level as the existing routes they can be expected to generate between 138,000 and 228,000 boardings per year. The impacts of the extension of the Crosstown and Embarcadero routes is difficult to estimate. Assuming a 50% increase in ridership, the extensions would generate an additional 61,000 boardings per year. Citywide Traffic Calming Program (Ongoing) - $500,000 This program would address the regional traffic impacts to local neighborhoods by reducing motor vehicle speeds and volumes on local streets, thereby encouraging motorists to remain on arterial and collector streets for as long as possible when traveling through Palo Alto or accessing locations within Palo Alto. Project is scalable and any substantial funding allocation could be used to install traffic calming devices. Citywide Transit Amenities and Infrastructure Improvements (benches, shelters, signal priority, queue-jump lanes, etc.) $1,200,000 $24,000 This program would encourage new transit ridership by adding transit amenities along transit routes within Palo Alto, including those operated by the City, VTA, SamTrans, AC Transit and Stanford University. Project is scalable and any substantial funding allocation could be used to install transit amenities. Downtown Parking $3,000,000 $60,000 Provides funding for the installation and operation of City of Palo Alto Page 11 Access Controls and Revenue Collection Equipment** parking access controls and revenue collection equipment in the City’s downtown garages and lots. Downtown Parking Automated Guidance Systems** $2,100,000 $50,000 Provides funding for the installation and operation of Council-recommended automated parking guidance system equipment in the City’s downtown garages and lots. Expand Safe Routes to School (high school student and adult education) - $200,000 Provides funding for the expansion of the City’s successful safe routes to school program to high schools and the adult population. It is assumed that two new full-time staff members would be needed to execute this expansion. Loma Verde Avenue Class IV Separated Bikeway* $2,000,000 $40,000 Provides funding for the planning, design, construction and operation of a Class IV separated bikeway on Loma Verde Avenue between Alma Street and West Bayshore Road. Assumes that the $1.5 million in Santa Clara County grant funding is not available for this project. Palo Alto Transportation Management Association - $1,000,000 Provides funding to the Palo Alto Transportation Management Association to achieve a 30% reduction in SOV trips to and from downtown within three to five years. The proposed funding level starts at $100,000 and increases to $1,000,000 over a three- or five-year period, depending on the speed at which the TMA ramps up to full capacity. Railroad Grade Separations $50,000,000 to $200,000,000 - Provides a 20% local match for the construction of one to four grade separations, with an assumed cost of $250 million per grade separation. Operating costs are assumed to be borne by the railroad corridor owner. Railroad grade separations are identified as a potential project category to be funded through the county transportation sales tax, which is up for a public vote in November 2016. South Palo Alto Caltrain Bike/Ped Crossing (Alma St/Caltrain in Matadero Creek area) $3,700,000 $260,000 Provides a 20% local match for the planning, design and construction, and full funding for the operation, of a bicycle and pedestrian crossing of Alma Street and Caltrain in the Matadero Creek area. This project is identified as a significant Across Barrier Connection in the VTA Bicycle Plan and also identified in the VTA Bicycle Expenditure Plan and as a potential project to be funded through the county transportation sales tax, which up for a public vote in November 2016. * The FY2017-2021 Capital Improvement Program assumes that these projects will be funded through the PL-04010 Bicycle + Pedestrian Transportation Plan Implementation project. Funding these with a new source of revenue would free up additional capital funding for other projects. ** The FY2017-2021 Capital Improvement Program assumes that these projects will be funded through revenue generated by the introduction of paid parking downtown. City of Palo Alto Page 12 In addition, the Committee discussed the measure’s funding to potentially allow the downtown Transportation Management Association to expand its programs to reduce solo car trips to the South of Forest Avenue area, as well as California Avenue. Timing for election, implementation and collection of revenues The Committee discussed a number of scenarios related to the timing of a potential business tax, time needed to create an implementation and collection structure, as well as the effective date when businesses would need to remit payment. The Committee discussed the time to create the operational structure if a tax measure was placed on the November 2016 ballot. Staff estimates that it would take at least six months to assess and hire either permanent staff or contractors needed to administer collection of the tax, and then additional design and testing of the collection system suggest the soonest date to be fully up and running as January 2018. If a measure is placed on the 2016 ballot, the soonest it could go into effect would be at the beginning of 2018. Full implementation would follow that date, but tax billings could be assessed back to January 2018. The Committee also discussed the impact of placing such a measure on the 2018 ballot, which again would be a general tax measure needing only majority support. They discussed whether having a longer horizon would help in the ramp up needed to create an infrastructure to support the implementation and collection of the tax. In this scenario, if a tax measure was placed on the November 2018 general election ballot, staff indicated potentially the measure could go into effect at the beginning of 2019 and be implemented on the same schedule as the 2018 measure. The net effect of the two-year difference in the election dates could be a one year difference in tax collection. Enforcement and other administrative elements and costs Some of the questions to consider related to enforcement and other administrative elements of a tax are:  Self reporting – would need to be verified through some form of authentication  When is tax due? o Annually on Jan. 1 for prospective year or possibly when other businesses taxes are due o Based on prior year’s data  Special rules for newly-established business without a year of data  Apportionment  Appeals procedures  Audit authority  Refunds  Civil or criminal enforcement  Interest and penalties for late payments  Interface with the BRC City of Palo Alto Page 13 Below are administrative cost estimates based on updated figures from the 2009 business license tax (BLT) initiative. These assume starting the program from scratch in a department, such as Administrative Services. As a tax there would be substantial start-up costs that were not reflected in the Business Registry. These would include appeals process, audit authority, a formal collection and refund process, a system of checks and balances, as well as a more rigorous enforcement process. As a tax, there would need to be a more rigorous system of checks and balances that not only ensures that the taxes were collected fairly but that they were spent in line with the ballot language. There would also be the need to enhance or customize software that would meet the needs of this local business tax and provide staff the needed metrics and customization to administer and audit both the collection taxes and enforcement. Table: Estimated Administrative Costs Implementation Ongoing Fixed Costs Staffing (2.5 FTE) $342,873 $342,873 Variable Costs (Forms, envelopes, software) $100,000 $50,000 Contingency $20,000 Total $462,873 $392,873 Traffic congestion impacts The “Business as Usual” scenario in the Comprehensive Plan Update Draft Environmental Impact Report (EIR) from February 2016 provides a picture of what traffic conditions would look like in 2030 if the Comprehensive Plan is not updated and there is no funding for transportation investments beyond what is currently available. Under this scenario, multiple intersections and freeway ramps would see congestion above acceptable levels in peak commute times. The Comprehensive Plan Update anticipates policy changes and investments aimed at improving upon the “Business as Usual” scenario. City staff has been directed to quantify the effectiveness of these policies and mitigation measures, and this analysis is ongoing. Staff is also conducting a study of potential expansions to the City’s shuttle program, and supporting the efforts of the Transportation Management Agency (TMA) that has been formed to reduce SOV commute trips to/from Downtown. As indicated in the list of possible projects/programs for funding, a draft shuttle indicates that shuttle ridership could increase by approximately 163-236%, potentially generating between 199,000 and 289,000 new boardings annually, with an investment of about $1,500,000 per year. This investment would provide for increased shuttle frequencies, extensions of the two City of Palo Alto Page 14 existing routes, and creation of three new routes. Also, the TMA board has estimated that they could achieve a shift of 30% reduction in solo commute trips to other modes if they had up to $1,000,000 to invest in mode-shift encouragement programs over a three- to five-year period. The potential shift from single occupant vehicle use to transit that could be achieved by the shuttle and TMA programs with additional funding could be noticeable to drivers during the commute period if there is no concurrent increase in vehicle trips by other drivers coming/going to or through Palo Alto. Deadlines for 2016 Ballot Measure If the Council chooses to move forward with placing a measure on the November 2016 at its June 27 meeting, at least two additional City Council meetings would need to be scheduled over the summer break to approve draft ballot language, as well as a draft ordinance. Staff recommends that the current Ad Hoc Committee or another sub-group of the Council be available to work directly with staff on ordinance language to facilitate bringing back to the full Council for approval. The measure must be submitted by August 12 in order to appear on the November 2016 ballot. The first regularly scheduled meeting for the Council following the break is on August 15. Attachments:  Attachment A: First Polling Results (PPTX)  Attachment B: Second Polling Results (PPTX)  Attachment C: Small business survey results summary (DOCX)  Attachment D: Medium/Large business survey summary results (DOCX)  Attachment E: Local Transportation Funding Committee Transcripts (PDF) 220-4446 Key Findings from a Citywide Voter Survey Conducted April 14-20, 2016 Funding Transportation Improvements 1 Methodology •400 telephone interviews with Palo Alto voters likely to participate in the November 2016 election •Conducted April 14-20,2016 via landline and cell phones •Margin of sampling error +/-4.9%at the 95%confidence interval •Due to rounding,some percentages do not add up to 100% •Selected comparisons to 2013 and 2008 community surveys 2 Mood of the Electorate 3 46% 27% 22% 14% 13% 10% 30% 39% 31% 23% 17% 14% 15% 22% 29% 38% 37% 33% 7% 12% 16% 25% 33% 39%5% 0%20%40%60%80%100% The cost of housing Current drought conditions in California Traffic and congestion on local streets and roads A lack of parking in commercial districts Too much growth and development Changing character of the community Ext. Ser. Prob.Very Ser Prob.Smwt. Ser. Prob.Not Too Ser. Prob.DK/NA Ext./Very Ser. Prob. 76% 65% 53% 37% 30% 24% Q8. Split Sample The cost of housing is seen as by far the most-urgent problem in Palo Alto. I'd like to read you some problems facing the City of Palo Alto that other people have mentioned. Please tell me whether you think it is an extremely serious problem, a very serious problem, somewhat serious problem, or a not too serious problem in Palo Alto. 4 7% 8% 8% 5% 15% 10% 9% 9% 5% 5% 49% 33% 34% 22% 16% 29% 26% 39% 36% 64% 73% 64% 10% 13% 5% 0%20%40%60%80%100% Homelessness The amount people pay in City taxes Waste and inefficiency in local government Airplane noise The condition of the local economy Crime, in general Ext. Ser. Prob.Very Ser Prob.Smwt. Ser. Prob.Not Too Ser. Prob.DK/NA Ext./Very Ser. Prob. 22% 18% 17% 14% 6% 6% Q8. I'd like to read you some problems facing the City of Palo Alto that other people have mentioned. Please tell me whether you think it is an extremely serious problem, a very serious problem, somewhat serious problem, or a not too serious problem in Palo Alto. Split Sample Concern about taxation, the economy and crime is very low. 5 18% 15% 16% 56% 53% 56% 19% 23% 22% 5% 6% 0%20%40%60%80%100% 2016 2013 2008 Excellent Good Only Fair Poor Job Don't Know Q1. Voters’ impression of City service delivery has reached a new high. How would you rate the overall job being done by Palo Alto city government in providing services to the City’s residents? Excellent/ Good Fair/ Poor 74%24% 68%29% 72%26% 6 27% 13% 16% 48% 54% 48% 13% 13% 10% 8% 7% 7% 13% 20% 0%20%40%60%80%100% Maintaining the City’s infrastructure Efficiently utilizing local tax dollars Managing the City’s budget and finances Strng. App.Smwt. App.Smwt. Disapp.Strng. Disapp.DK/NA Total App. Total Disapp. 75%21% 67%20% 64%17% Q2. Voters especially approve of the City’s work maintaining infrastructure. I am going to read you a list of specific aspects of the City of Palo Alto’s work in managing City government. Please tell me whether you generally approve or disapprove of the job the City is doing in that area. 7 27% 28% 13% 14% 16% 16% 48% 47% 54% 49% 48% 46% 13% 14% 13% 19% 10% 15% 8% 8% 7% 6% 7% 8% 13% 12% 20% 14% 0%20%40%60%80%100% 2016 2013 2016 2013 2016 2013 Strng. App.Smwt. App.Smwt. Disapp.Strng. Disapp.DK/NA Total App. Total Disapp. 75%21% 75%23% 67%20% 63%26% 64%17% 62%23% Q2. I am going to read you a list of specific aspects of the City of Palo Alto’s work in managing City government. Please tell me whether you generally approve or disapprove of the job the City is doing in that area. Impressions of fiscal management have largely held steady. Maintaining the City’s infrastructure Efficiently utilizing local tax dollars Managing the City’s budget and finances 8 Q3. Many see the City doing well; explaining the need for additional funding could be a challenge. 5% 31% 18% 36% 10% 0%20%40%60% Great need Some need Little need No real need Don't know Little/ No Real Need 54% Great/ Some Need 36% How would you rate the City of Palo Alto’s need for additional funding? 9 Testing a Potential City Transportation Measure 10 Q4. Do you think you would vote “yes” in favor of this measure or “no” to oppose it? Santa Clara County leaders are considering a transportation measure for the county ballot in November.This 30-year,half-cent sales tax would fund transit improvements like Caltrain to increase capacity and improve safety at crossings,provide funds for street maintenance and pothole repair,bike and pedestrian improvements,especially near schools,and ease congestion on County Expressways and key highway interchanges. Nearly three-quarters support the County’s transportation measure. 34% 37% 2% 0% 9% 13% 4% 0%20%40% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided To tal Yes 74% To tal No 22% 11 Q5. Do you think you would vote yes or no on such a measure? The City of Palo Alto is considering a City transportation tax on businesses to raise funds to reduce traffic congestion,increase the availability of parking,upgrade traffic signals and intersections,expand local shuttle bus service and improve bicycle and pedestrian options. Two-thirds support the concept of a Citywide transportation measure. 30% 35% 3% 1% 13% 15% 4% 0%20%40% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided To tal Yes 67% To tal No 29% 12 Q6. In that case, do you think you would vote yes or no on such a measure? The structure of this measure has not been finalized,but it could involve having medium and large Palo Alto businesses pay an annual tax for each employee they have in the City. A smaller and more tentative majority backs a “head tax.” 22% 32% 3% 4% 15% 16% 8% 0%20%40% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes 57% Total No 35% 13 64% 47% 54% 49% 57% 58% 28% 43% 41% 35% 36% 31% 60%40%20%0%20%40%60%80% Democrats Independents Republicans Asians/Pacific Islanders Whites Voters of Color Total Yes Total No Mechanism Vote by Party and Ethnicity % of Sample 54% 31% 15% 14% 71% 22% Q6. In that case, do you think you would vote yes or no on such a measure? Patterns of support for the measure are only modestly partisan. 14 51% 63% 56% 65% 52% 43% 27% 37% 27% 39% 60%40%20%0%20%40%60%80% Men Women 18-49 50-64 65+ Total Yes Total No Mechanism Vote by Gender and Age % of Sample 48% 52% 38% 30% 32% Q6. In that case, do you think you would vote yes or no on such a measure? Women and voters between 50 and 64 years old are especially supportive. 15 63% 63% 70% 51% 27% 29% 27% 40% 60%40%20%0%20%40%60%80% <$100,000 $100,000-$150,000 $150,000-$250,000 $250,000+ Total Yes Total No Mechanism Vote by Household Income % of Sample 23% 17% 15% 25% Q6. In that case, do you think you would vote yes or no on such a measure? Voters in wealthier households are more likely to oppose the concept. 16 74% 47% 18% 45% 60%40%20%0%20%40%60%80% Great/Some Need Little/No Real Need Total Yes Total No Mechanism Vote by City’s Perceived Need for Funding % of Sample 36% 54% Q6. In that case, do you think you would vote yes or no on such a measure? There is a strong correlation between “yes” votes and perceptions of the City’s overall need. 17 Impact of Messaging 18 An exchange of messaging drops support below the two-thirds threshold. Q5/Q6/Q11/Q12. In that case, do you think you would vote yes or no on such a measure? 67% 57% 66% 61% 29% 35% 26% 33% 4%8%8%6% 0% 15% 30% 45% 60% 75% Concept Vote Mechanism Vote After Positives Final Vote To tal Yes To tal No Undecided 19 Segmenting the Electorate by Consistency of Support v Consistent Yes:Voters who consistently indicated they would vote yes on the measure v Consistent No:Voters who consistently indicated they would vote no on the measure v Swing:Voters who do not fall into any of the other categories – remaining consistently undecided or switching positions The following slide shows demographic groups that disproportionately fall into one category or the other. v Consistent Yes:Voters who consistently indicated they would vote yes on the measure v Consistent No:Voters who consistently indicated they would vote no on the measure v Swing:Voters who do not fall into any of the other categories – remaining consistently undecided or switching positions The following slide shows demographic groups that disproportionately fall into one category or the other. Consistent Ye s 42% Consistent No 16% Swing 42% 20 Consistent Yes Swing Consistent No 42%of the Electorate 42%of the Electorate 16%of the Electorate Multi-Democrat Households Ages 75+ Republicans Ages 50+ Democrats Ages 18-49 Asians/Pacific Islanders Independent Men Women Ages 18-49 Some College or Less Republicans Democratic Women Mixed Partisan Households Independents Ages 18-49 HH Income $150,000-$250,000 Voters of Color 1+ Independent Households Ages 30-39 Republicans Ages 50+ Independents Democrats Ages 40-49 Men Ages 18-49 Single Democrat Households ZIP Code 94303 College-Educated Men Ages 50-64 HH Income <$100,000 Independents Ages 50+ HH Income $100,000-$150,000 Republicans Men Ages 65-74 Ages 18-29 ZIP Code 94303 College-Educated Women Single Democrat Households Mixed Partisan Households Independents Ages 50+ Ages 65+ Ages 40-49 ZIP Code 94306 Ages 18-49 Four-year College Graduate Democrats Ages 50+ Democratic Women Independent Women Demographic Profiles of the Segments 21 38% 34% 37% 29% 35% 37% 30% 38% 0%20%40%60%80% Very Conv.Smwt. Conv. 73% 67% 71% (FAIRNESS) It is only fair to increase what businesses pay to fund transportation and parking improvements in Palo Alto, since businesses contribute to the City’s traffic and parking problems. (GROWTH) The growth of businesses is beneficial for our community in many ways, but it has caused huge traffic headaches and parking nightmares. Employers should pay a little to help solve the problems that come with their growth in Palo Alto. (NO BIZ LICENSE TAX) Palo Alto currently registers businesses of all sizes for just $50, but is one of the only cities in the Bay Area that currently does not have a business license tax. This measure is a sensible way to ensure businesses pay their fair share for the services the City provides. (SAFETY) Te rrible traffic jams have caused more and more drivers to leave main roads and instead drive on neighborhood streets, endangering children, cyclists, and pedestrians in our City. This measure will make improvements to improve traffic flow and make our City safer. Q10. Here are some statements we have heard from various people who support the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote yes on the measure. A message around fairness is most broadly persuasive. 67% 22 Q10. Here are some statements we have heard from various people who support the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote yes on the measure. Statement All Voters Consistent Yes Swing Consistent No Fairness 73%95%67%31% Growth 71%90%67%33% Safety 67%80%66%36% No Biz License Tax 67%86%65%24% (Very/Somewhat Convincing) Swing voters find each message about equally convincing. 23 Q12. Do you think you would vote yes or no on the potential measure that would have medium and large Palo Alto businesses play a flat annual tax for each employee they have in the City, to fund transportation and parking improvements? Opposition Message Tested Opponents say that increasing taxes on local businesses is the wrong way to fund transportation improvements.This proposal will increase taxes on nearly all local businesses,including some longtime small businesses that are already barely making ends meet in a City that already has a very high cost of doing business.This tax could force many of them to cut jobs or relocate.In addition, there will be all kinds of taxes from the County and State on November’s ballot,and adding a City tax on top of it is too much.We just can’t tax our way out of every problem in Palo Alto. Opponents say that increasing taxes on local businesses is the wrong way to fund transportation improvements.This proposal will increase taxes on nearly all local businesses,including some longtime small businesses that are already barely making ends meet in a City that already has a very high cost of doing business.This tax could force many of them to cut jobs or relocate.In addition, there will be all kinds of taxes from the County and State on November’s ballot,and adding a City tax on top of it is too much.We just can’t tax our way out of every problem in Palo Alto. 24 24% 35% 7% 3% 11% 12% 8% 0%20%40%60% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes 66% Total No 26% Q11/Q12. Do you think you would vote yes or no on the potential measure that would have medium and large Palo Alto businesses play a flat annual tax for each employee they have in the City, to fund transportation and parking improvements? Support ticks below two-thirds after this message. 22% 33% 6% 2% 14% 16% 6% 0%20%40%60% 1 2 3 4 5 6 7 8 9 Total Yes 61% To tal No 33% Final VoteAfter Positives 25 The Structure of a Measure 26 62% 36% 30% 27% 13% 25% 20% 32% 40%20%0%20%40%60%80% Requiring that funding from the measure could only be used for transportation improvements Scaling the tax so that offices that pack large numbers of employees in small spaces pay more Charging a discounted rate for employees 11 through 50 Charging $100 per employee per year for each employee above 50 Total More Lkly.Total Less Lkly.Difference +49% +11% +10% -5% Voters have mixed feelings about different alternative rate strucures. Q7 a/b/f/g. I am going to read you a list of some specific elements that could be included in such a potential measure. Please tell me whether including that provision would make you more likely or less likely to vote for the measure. 27 Q7 a/b/f/g. I am going to read you a list of some specific elements that could be included in such a potential measure. Please tell me whether including that provision would make you more likely or less likely to vote for the measure. Statement All Voters Consistent Yes Swing Consistent No Requiring that funding from the measure could only be used for transportation improvements 62%73%65%27% Scaling the tax so that offices that pack large numbers of employees in small spaces pay more 36%48%33%9% Charging a discounted rate for employees 11 through 50 30%38%32%8% Charging $100 per employee per year for each employee above 50 27%41%21%8% (Total More Likely) Supporters and swing voters like the dedication of funding to transportation. 28 67% 49% 31% 11% 16% 30% 40%20%0%20%40%60%80% Exempting small non-profit organizations Exempting the first 10 employees in each business Exempting retail and restaurants Total More Lkly.Total Less Lkly.Difference +56% +33% +1% Exemptions for non-profits are much more favored than for retail. Q7 c/d/e. I am going to read you a list of some specific elements that could be included in such a potential measure. Please tell me whether including that provision would make you more likely or less likely to vote for the measure. 29 Q7 c/d/e. I am going to read you a list of some specific elements that could be included in such a potential measure. Please tell me whether including that provision would make you more likely or less likely to vote for the measure. Statement All Voters Consistent Yes Swing Consistent No Exempting small non-profit organizations 67%82%69%24% Exempting the first 10 employees in each business 49%62%47%22% Exempting retail and restaurants 31%34%35%18% (Total More Likely) Exemptions for non-profits appeal strongly to swing voters. 30 34% 28% 17% 19% 20% 22% 20% 20% 37% 40% 47% 43% 41% 36% 36% 34% 21% 23% 33% 29% 31% 31% 34% 35% 7% 8% 6% 9% 10% 9% 11% 0%20%40%60%80%100% Providing safe routes to school for students Providing safe routes for bicyclists and pedestrians Maintaining City streets and roads Maintaining the City’s core infrastructure Providing safe sidewalks, paths and bridges for pedestrians Reducing traffic congestion Making sidewalks, City buildings and parks accessible for people with disabilities Providing adequate parking Ext. Impt.Very Impt.Smwt. Impt.Not Too Impt.DK/NA Q9. I am going to read you a list of ways in which funds generated by this measure could be spent. Please tell me how important each item is to you personally: extremely important, very important, somewhat important, or not too important. Safety for students, cyclists and pedestrians are top spending priorities. Ext./Very Impt. 71% 68% 64% 62% 61% 58% 56% 54% 31 19% 18% 12% 12% 15% 12% 11 % 8% 7% 35% 32% 36% 31% 23% 26% 23% 16% 17% 33% 36% 40% 37% 37% 39% 37% 34% 43% 12% 13% 12% 18% 24% 23% 25% 40% 30% 0%20%40%60%80%100% Fixing potholes Improving traffic light timing and flow Repairing and maintaining City sidewalks Providing regular and frequent bus shuttle service Expanding the shuttle bus system throughout the City Providing more and safer bike racks and storage options throughout the City Improving traffic calming on neighborhood streets Providing free transit passes to people who work in Palo Alto Providing an app to make local ridesharing, transit schedules and parking easier Ext. Impt.Very Impt.Smwt. Impt.Not Too Impt.DK/NA Q9. I am going to read you a list of ways in which funds generated by this measure could be spent. Please tell me how important each item is to you personally: extremely important, very important, somewhat important, or not too important. Many other proposed priorities lack urgency. Ext./Very Impt. 54% 50% 48% 43% 37% 37% 34% 25% 24% 32 Conclusions 33 Conclusions •Roughly two-thirds rate the City’s performance positively on a variety of aspects. •However,only one-third of those polled (36%)see “some need”for additional funding for City services. •Housing costs are by far the top local concern;traffic comes in third, after the drought. •A City tax funding transportation improvements has two-thirds support in concept;however,just 57%say they would vote “yes”with an employee head tax as the mechanism. •Voters express mixed feelings about a variety of the structural features,in terms of rates,tiers,and exemptions. •Top spending priorities are safety for bicycles and pedestrians, particularly students going to school;maintaining core infrastructure also ranks highly. •Support does reach two-thirds after positive messaging,but opposition messaging pushes it back below that threshold. 34 Next Steps •The Council could provide direction on whether placement of a local tax on the November ballot should be further explored. –TBWB,the firm that conducted outreach related to the infrastructure measure ballot measure,could conduct possible community outreach from early May to early June to further inform the Council’s decision. –Results of that outreach could then inform a second follow-up tracking poll in early June to provide Council with more data to inform its decision on a ballot measure by the July 2 meeting. •Alternatively,Council may decide that 2016 is not the best time for a measure and,having more time,provide alternate direction to staff. •Finally,the Council could decide to not proceed with any further direction. For more information, contact: 1999 Harrison St., Suite 2020 Oakland, CA 94612 Phone (510) 451-9521 Fax (510) 451-0384 Dave@FM3research.com Miranda@FM3research.com 220-4556 Survey Conducted June 11-14, 2016 Palo Alto Vo ter Support for a Tr ansportation Finance Measure 1 Methodology •400 interviews with Palo Alto voters likely to participate in the November 2016 election •Conducted June 11-14, 2016 via landline and cell phones •Margin of error of +/-4.9% at the 95% confidence interval •Due to rounding, some percentages do not add up to 100 2 Voters are quite optimistic about the direction of life in the City. Q1. Right direction 61%Wrong track 25% DK/NA 14% Would you say that things in Palo Alto are generally headed in the right direction, or do you feel that things are pretty seriously off on the wrong track? 3 A Traffic Congestion Relief Measure 4 36% 22% 8% 5% 10% 14% 6% 0%20%40%60% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided PALO ALTO TRAFFIC CONGESTION RELIEF MEASURE.To fund general City services such as reduced traffic congestion;improved driver,pedestrian and cyclist safety;upgraded traffic signals and intersections;expanded shuttle bus service and trip planning;and improved parking availability,shall the City of Palo Alto enact a $50 to $100 per employee business tax, exempting businesses with up to 10 employees,providing approximately $5 million annually until ended by voters,requiring annual independent audits,with all funds spent locally? Total Yes 65% To tal No 28% Voters softly support a local traffic congestion relief measure. Q3. If the election were held today, do you think you would vote “yes” in favor of this measure, or “no” to oppose it? 5 •It could fund traffic and parking improvements, including improved driver, pedestrian and cyclist safety; upgraded traffic signals and intersections; expanded shuttle bus service and trip planning; and improve parking availability; •Funding would come from an annual tax on businesses in Palo Alto, which would pay a flat tax for each full-time, Palo Alto-based employee; •Businesses with up to 10 employees would be exempted; and •Businesses with 51 or more employees would pay $100 each, while businesses with between 11 and 50 employees would pay $50 each. Q5. Having heard more about it, do you think you would vote yes or no on such a measure? Additional Information Provided 6 38% 22% 7% 6% 8% 14% 4% 0%20%40%60% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes 67% To tal No 29% A description of the measure leaves support essentially unchanged. Q5. Having heard more about it, do you think you would vote yes or no on such a measure? Having heard more about it, do you think you would vote yes or no on such a measure? 7 48% 30% 12% 10% 0%20%40%60% The measure should largely fund alternatives designed to reduce the number of cars on the road, focusing on shuttle buses, pedestrian and bicycle improvements, and other alternatives to driving Funding from this measure should focus on improving traffic flow by expanding road and parking infrastructure in the City to accommodate more cars Both Neither/DK/NA Which of the following statements comes closer to your opinion: Q7. A plurality of voters support using funding on improvements that take cars off the road. 8 Messaging and Movement 9 The measure is vulnerable to opposition messaging. 65% 72% 66% 28%25%30% 6%3%4% 0% 15% 30% 45% 60% 75% 90% Initial Vote After Support Messages After Opposing Messages To tal Yes To tal No Undecided Q3, Q9 & Q11. If the election were held today, do you think you would vote “yes” in favor of this measure, or “no” to oppose it? 10 Support Messages Tested Q8. Here are some statements we have heard from various people who support the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote yes on the measure. *Split Sample, **Split Sample B **(FAIRNESS)Palo Alto is one of the only cities in the Bay Area that does not charge a business tax to provide funding to help address issues like traffic congestion and parking.Currently,Palo Alto registers businesses of all sizes for just a flat fee of $50.This measure is a sensible way to ensure businesses pay their fair share for the transportation services the City provides. (NEIGHBORHOODS)As main roads have become more congested,commuters are using small residential streets to avoid traffic.This creates congestion on neighborhood streets and growing safety risks for children walking and biking to school,as well as for cyclists and other pedestrians.This measure would make traffic flow improvements to keep our streets safe. *(RETAIN SHOPPERS)Palo Alto suffers from a severe shortage of downtown and California Avenue parking.Residents nearby are seeing more and more shoppers park in their neighborhoods,and some people choose to shop elsewhere in the region rather than try to find parking in Palo Alto.This measure is a small price for Palo Alto businesses to pay to help retain customers. *(RETAIN EMPLOYEES)Local traffic congestion creates frustrations for employees as once short 15-to 30-minute commutes grow to 45 minutes to an hour or longer.As frustrations grow and congestion impacts local quality of life,traffic and transportation can become an impediment to local businesses attracting and retaining employees.This measure is a small price for Palo Alto businesses to pay to help retain quality employees and continue to grow. (WALK/BIKE)Part of the solution to traffic congestion is to make it easier and safer to walk and bike in Palo Alto.Funding would provide programs and projects that make it easier to get around without a car at all. 11 Support Messages Tested; Continued Q8. Here are some statements we have heard from various people who support the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote yes on the measure. *Split Sample *(FAIRNESS)Since businesses contribute to the City’s traffic and parking problems,it is only fair to increase what they pay to fund transportation and parking improvements in Palo Alto.This measure is a sensible way to ensure businesses pay their fair share for the transportation services the City provides. (NEED)The City currently spends millions each year on improving streets,sidewalks,and bicycle and pedestrian safety programs,but traffic and parking problems keep getting worse. The additional funding provided by this measure is needed if we are going to address this problem. (ENVIRONMENT)Funding from this measure would take cars off the road by helping commuters shift to carpools,shuttles,public transit,walking,and biking.Fewer cars on our streets mean less pollution in the air and fewer greenhouse gas emissions that drive global warming. (PAIRED)The County is placing a measure on the ballot to fund improvements to Caltrain,the VTA,and freeways.Palo Alto has a unique opportunity to pair its share of this County funding with City investments in improving local parking and traffic. (SPECIFICITY)The City Council is adopting a plan to outline specifically how these funds will be used to relieve traffic congestion and improve parking availability in Palo Alto. 12 47% 39% 37% 37% 37% 36% 33% 31% 27% 24% 31% 36% 36% 32% 31% 30% 37% 35% 38% 38% 0%20%40%60%80%100% **Fairness Neighborhoods *Retain Shoppers *Retain Employees Walk/Bike *Fairness Need Environment Paired Specificity Very Conv.Smwt. Conv. Connecting the measure’s benefits to the mechanism is especially persuasive. Q8. Here are some statements we have heard from various people who support the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote yes on the measure. *Split Sample, **Split Sample B 77% 76% 73% 69% 68% 67% 71% 66% 65% 62% 13 Opposing Messages Tested Q10. Here are some statements we have heard from various people who oppose the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote no on the measure. (ANTI-TAX) Ta xes in Palo Alto are simply too high. We should not vote for anything that further increases our taxes. (WASTE) Instead of pushing another tax measure, the City should fund transportation improvements by cutting unnecessary spending. We don’t need to raise taxes again and allow bureaucrats and politicians to waste more of our tax dollars. (ANYTHING) Supporters say this tax would be for transportation, but in reality they could spend the money on anything they want. We should vote no on this blank check for local politicians. (RUSHED) This is a rushed plan being pushed through by City leaders with no real plan for how the funds would be used. Instead they should wait and come back to voters when they have a detailed plan for how the tax would actually improve traffic and parking problems in Palo Alto. (PRIVAT E SECTOR) Many Palo Alto businesses are already leading the way with innovative solutions to our transportation problems. This tax would just replace private- sector transportation solutions with inefficient government programs. We should vote no. (VTA) Voters Countywide are about to vote on a half-cent transportation sales tax that will address these same problems, from parking and traffic to public transit and bicycling. There’s just no need for a City tax measure as well. 14 33% 30% 27% 27% 22% 22% 31% 21% 27% 25% 22% 19% 0%20%40%60%80% Rushed Anything Waste VTA Private Sector Anti-tax Very Conv.Smwt. Conv. An argument that the measure is poorly planned is persuasive to nearly two-thirds. Q10. Here are some statements we have heard from various people who oppose the potential transportation measure we have been discussing. Please tell me whether you find it very convincing, somewhat convincing, or not convincing as a reason to vote no on the measure. 64% 51% 54% 52% 44% 41% 15 Other Options 16 18% 11% 7% 32% 21% 21% 9% 6% 6% 7% 5% 18% 23% 21% 23% 27% 40% 44% 59% 0%20%40%60%80%100% A business tax not based on the number of employees but based on a percentage of a business’s gross receipts or total revenue generated An increase in Palo Alto’s local sales tax paid by anyone who shops in Palo Alto A parcel tax paid by all residential and commercial property owners in Palo Alto An increase in Palo Alto’s utility users tax charged on water, electricity, gas, cable TV, phone, and internet bills Def. Yes Prob./Undec., Lean Yes Undecided Prob./Undec., Lean No Def. No Other tax mechanisms are much less popular. Q13. Some people say that a per-employee tax on businesses isn’t the right way to fund traffic and parking improvements. Next I will read some alternative funding sources that could be used to address traffic and parking problems in Palo Alto. Please tell me whether you would you vote yes to support it, or no to oppose it. To tal Yes To tal No 50%45% 32%62% 27%66% 14%82% 17 33% 21% 7% 5% 11 % 16% 7% 0%20%40%60% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes 61% To tal No 32% Voters likely to vote in a non-Presidential race show similar levels of support and opposition. Q5. Likely 2018 Voters, n=282 18 Impact on the Countywide Measure 19 43% 25% 7% 4% 6% 11 % 4% 0%20%40%60% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Santa Clara County leaders have placed a transportation measure on the County ballot in November.This 30-year,half-cent sales tax would fund transit improvements like Caltrain to increase capacity and improve safety at crossings,provide funds for street maintenance and pothole repair,bike and pedestrian improvements,especially near schools,and ease congestion on County Expressways and key highway interchanges.Do you think you would vote “yes”in favor of this measure,or “no”to oppose it? Total Yes 75% To tal No 21% Three-quarters support the concept of a Countywide transportation measure. Q2. 20 The County measure loses support after voters hear about a potential local tax. Q2 & Q12. 43% 25% 7% 4% 6% 11 % 4% 0%20%40%60% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided 37% 23% 9% 5% 8% 15% 3% 0%20%40%60% Final VoteInitial Vote To tal Yes 75% Total No 21% To tal Yes 69% To tal No 28% 21 Conclusions 22 Conclusions •The Palo Alto Traffic Congestion Relief Measure begins with support from nearly two-thirds of voters, though about half as many are “definitely” yes voters. •Informational messaging brings the measure to 72% yes, though support remains soft. Opposition argumentation again reduces the overall yes vote and its intensity to the original two-thirds. •The most-effective messages stress the impact of congestion on local neighborhoods, and explain the direct benefits to businesses. The strongest opposition messages claim the measure is rushed or a “blank check.” •Given the choice, a plurality favors funding alternatives to driving. •Other finance mechanisms –such as a sales tax, UUT, or parcel tax – are largely unpopular when tested briefly and conceptually. •The Countywide transportation measure has solid support from three- quarters of Palo Alto voters, though this erodes slightly once they learn of a potential Citywide measure. For more information, contact: 1999 Harrison St., Suite 2020 Oakland, CA 94612 Phone (510) 451-9521 Fax (510) 451-0384 Dave@FM3research.com Miranda@FM3research.com Small Business Survey Response Summary (10 Employees or Fewer) The Palo Alto City Council is considering a traffic congestion relief tax on businesses to fund local transportation and parking improvements. The proposal currently under discussion would exempt businesses and non-profits with ten employees or fewer and provide a discounted rate for businesses with 50 or fewer employees. Please answer the following questions in order to help inform upcoming decisions by the Palo Alto City Council regarding a potential ballot measure to provide local funding for traffic congestion relief, parking and transportation improvements. Will addressing traffic and parking problems help Palo Alto business attract and retain employees and customers? Yes: 76 (82.6%) No: 16 (17.4%) Other Response:  It's a start  Making it harder to park downtown (like you're already doing now) is making it very hard for small business to attract and retain employees.  Only if problems are in fact alleviated. Merely addressing problems is nothing more than a preliminary step.  Only if existing congested conditions and lack of parking can be improved and if new development completely mitigates any parking requirement.  Make developers supply parking.  I wasn't aware there was parking issues in my area Is it fair for businesses to contribute funding for local transportation solutions by paying a business tax similar to those paid by businesses in neighboring cities? Yes: 50 (58.1%) No: 36 (41.9%) Other Responses:  I am not familiar with taxes in other cities so I can't answer the question.  Small businesses are already paying enough taxes. Don't penalize us for providing jobs or small mom and pop stores will not want to do business in Palo Alto. You should be encouraging businesses like this, not punishing them.  It depends on what the "transportation solutions" are and on who else will be "contributing." Also depends on whether businesses in neighboring cities "contribute" funding for similar "transportation solutions" in those cities. To the extent that local residents and non-profits benefit, they should "contribute" as well and should not get a free ride on the backs of local for-profit businesses.  No you will only waste any tax  It depends on where they are located. It seems that those most impacted (i.e. downtown) that will benefit should contribute. Our business is by the airport with plenty of parking and little traffic in the immediate area. Also I don't think the same issue apply to business e.g. on Fabian Way in Palo Alto.  Don't you already receive taxes and revenues from the businesses here?  I don't know if the taxes in neighboring cities are fair. The question seems like an attempt to shift responsibility. I would not vote for it without some credible, non-BS justification other than "other cities do it".  I don't have enough information  Business should pay the ENTIRE amount--they're the only ones benefitting from destroying Palo Alto's charm.  Perhaps for bigger business, but not for a part time small business like myself.  Depends on the tax  Make developers supply a fair share of parking Is a tax based on the number of employees a fair way to ensure the cost scales with the number of employees from a business utilizing roads, transit and parking in Palo Alto? Yes: 61 (71.8%) No: 24 (28.2%) Other Responses:  Employees & Business Sales  Might want to take sales, Profit or wage levels of employees into account  Tax should be a sales tax since all will benefit  Employees who take transit, walk, or ride bikes use a lot less resources. There should be a tax credit for businesses where a large portion of employees do these things instead of driving.  No, because that discourages businesses from providing more jobs to more people.  Tax should based on how much a business gross per year.  This seems unfair to businesses having night shifts, part-time employees and telecommuters. A more accurate measure might be the number of employees who arrive at a business location between, say, 8:00 top 10:00 am and leave between, say, 4:00 to 6:30 pm. As well, it seems unfair to count part-time employees the same as full-time, especially in the case of part-time employees working less than all of the five business days in a week.  It's reasonable, although a business with a warehouse might have few employees but take up a lot of space and have a lot of trucks coming and going. Another method might be based on square footage occupied/leased.  No because it does nothing to reduce the existing congestion.  The number of employees, by itself, seems like a crude measure of the parking/traffic. A training company, for example, may have just a few employees, but hold classes with dozens of “students”. Most retail traffic is the customers, not the employees. Consulting companies, on the other hand, may generate almost no traffic. A law firm may have very little traffic from clients. I have a sole proprietorship. Most of my work is paperwork done from my home office. I average about 15 hours per week in the office and about 4 2-hour meetings with 2 clients for a total of about 30 parking-hours per week.  I don't have enough information  Doing a tax will discourage business formation  Less # of Emp. In transit Progs  Number of employees is good, but any fee should have reductions for employees that telecommute, are part-timers or drive into the city at non-congestion times/days. You should also consider in the costing the extent to which the business offers and employees use carpooling benefits and mass transit coupons.  You gave developers defferent. Change your policy. Make developers pay the full tax Does knowing that small businesses would be exempt from the cost make you more favorable to this proposal? Yes: 78 (81.3%) No: 18 (18.8%) Other Response:  It doesn't look like small businesses are exempt. We are a very small business but because our employees are part time there will be more than 10 employees (but some might only be working 10 hours per week!)  If “small” is defined solely by the number of employees, then probably not. If the purpose of exempting or reducing the burden on small businesses is to allow them to survive or to encourage startups, then profit and time in business should also be taken into account.  The tax should be placed on city of PA utilities, so everyone pays something  Have real estate developers pay the cost of their rape of Palo Alto  As long as wealthy developers are hammered by the tax  You should also include Small Medical Offices the parking restrictions hurt access to care.  It depends on how small business is defined. What should be the highest priorities for the use of funds from the proposed measure?  Upgrade traffic signals, intersections and streets to improve traffic flow: 28 (39.4%)  Implement innovative transportation demand management strategies and policies to reduce traffic at peak hours and make more efficient use of existing parking: 22 (31.0%)  Provide supplemental funding to expand Palo Alto’s Transportation Management Associations (TMAs) that help businesses and their employees solve transportation and parking problems by planning efficient commutes, identifying carpool opportunities and link commuters to shuttles and public transportation options in order reduce traffic and parking as a barrier to employee satisfaction and retention: 18 (25.4%)  Expand local shuttle service to reduce the number of cars on the road: 3 (4.2%) Other Responses:  Make it more expensive to drive/park. (e.g. Increase the gas tax, big time). It shouldn't be so cheap to drive! Fund bicycle lanes. Subsidize bikers. Improve Bay Area wide public transport. Local solutions can only go so far when we have most of our employees coming from out of the city.  More parking structures  Provide useful and meaningful public transportation.  Increase # of parking spaces available  Build more parking garages and fix signals  The problem is a regional one, not a city one. Organize the region to build an extensive subway train system for the whole valley.  Oppose funding these initiatives  Create more parking structures  Increase Parking Structures  Build garages where you have only lots right now. Also when I tried to help out by taking my motorcycle to work and park it next to the electrical box on the High Street Parking lot, which is basically an unused half space I got ticketed. So much for no good deed goes unpunished.  Build new parking facilities, widen streets, fund a long tern agreement with Caltrans for signal light coordination.  Enforce the parking limit and draw parking space lines so car use one space not two or more  Build a five story parking building unlimited hours and free for employee  We need more parking structures for employees without the high cost of permits. The majority of people that work in a Palo Alto cannot afford to live in Palo Alto.  I seriously doubt that any of those options will really “solve” the problem. As long as the city allows commercial buildings to be built and high-density businesses (employees + customers) to exist without regard to, especially, parking, everything else is a bandaid.  I need more information  Repair the badly crumbled El Camino  Stop shrinking our streets thru road diets.  Add pay to park parking garages  Reduce the number and size of businesses approved to operate within the Palo Alto city limits.  Parking structure and parking meters  Before I can make a decision on these options, I would recommend looking at the existing data to determine which have been most effective in this community and other like communities.  Put pressure on CalTrain to allow dogs on the train. I would be taking the train to work if I could have my dog on the train.  More tickets for red light runners, rolling through stop signs & the speedway called Alma. That should bring in money for traffic issues  Zone for greater density with limited parking. People will not rent there unless they work near by or plan to use alternative means of transportation  By assuming all people can take public transportation if they only try harder is not a very inclusive position. For example not providing an exemption to small healthcare facilities forces patients to have reduced assess to care. Health workers in small offices have already started to leave the area and it is harder now to hire. Yes permits are available at a reduced fee, but if they have to walk 4+ blocks because they got hired after the logical zone is full. Why provide their health services to the people of Palo Alto? Especially if you’re of a certain age or have a minor disability, now the potential employment pool is even smaller. By giving small healthcare workers exemptions it would benefit the healthcare to the residence of Palo Alto.  Build more parking garages. Should the rate structure adjust with changes in the local Consumer Price Index (CPI) to account for inflation and protect the purchasing power of transportation funding? Yes: 57 (67.1%) No: 28 (32.9%) Other Responses:  Not sure, small businesses are earning pennies  Not sure what this means, but you should not be penalizing the people who are providing jobs and services to the community.  Probably not. Providing for this kind of rate adjustment implies that this will be a long-lived tax. It shouldn't be. Determine what needs to be done, what it will cost, and obtain enough funding for it. Don't enact another permanent tax. If you need long-term funding, issue municipal bonds.  I am against a tax period.  This is a good idea in theory, but in practice it simply allows governments to set it and forget it. I think taxes need to be re-justified periodically.  Index to transport costs only  What are you funding and what are the costs  If this is for large corporations then the CPI is too low if it's a national standard. Does your business currently contribute to a Transportation Management Association (TMA)? Yes: 2 (2%) No: 96 (98%) If yes, which one?  Yes, we pay for downtown parking permits  Not sure If yes, if Palo Alto businesses paid a transportation tax, would you continue voluntarily contributing to a TMA? Yes: 5 (9.8%) No: 46 (90.2%) Other comments:  One person business with large pro bono work  Palo Alto is already too expensive for businesses. We're moving to Redwood City. Creating additional parking is a short-term solution. Taxing businesses is well intentioned, but misguided. Really, Bay Area public transportation sucks and driving is too easy. The solution is not making driving and parking easier.  It is naive to think that improving shuttle services will help the congestion problem. Most people in this area are not interested in shuttle services. The money would be better spent building parking structures. From a personal standpoint, please make Kipling a one way street like it use to be. I've never seen so many accidents and near- accidents as I have on this narrow little street.  If the planning commission and city council would stop making exceptions for developers' project submittals we would have a less severe problem. Every single developer who submits a proposal is asking for an exception to the required parking. Stop granting exceptions. Enforce the rules.  When school is out due to a winter break or for the summer have you noticed the amount of traffic is greatly reduced? City councils have contributed to this problem not keeping up with parking and downsizing the roads available for vehicles. Now you want to blame and put the burden on the business community. Our city government has no clue on what to do and seem to make the matter worse when they try.  N/A  Please, please start planning and then building a rapid subway train system for the whole valley. Light rail and buses that average around 15 miles per hour are a waste of resources. Visit New York City, London, Paris, etc. to see how it is done.  When the business registry went into effect it was stated that it would not become a tax. Now City Hall is proposing to turn it into a tax no doubt to fund "necessary" staff to administer it. WE DO NOT NEED MORE ADMINISTRATION TO RUN A PROGRAM LIKE THIS. What's next? We are in a part of Palo Alto that does not have parking and congestion problems; I object to funding something that is a downtown problem.  Alternate suggestion: reduce the monthly fees on the paid permit parking in the downtown garages to something more in line with what Menlo Park charges and you will likely get more people to pay for those permits plus eliminate all those unused vacant spaces. The monthly fee being charged is too high which is why everyone tries to find free all day parking in the side neighborhoods.  In general, I don't think building more traffic infrastructure for cars is a good thing. There is already plenty of space in Palo Alto wasted on parking lots. What's needed is to encourage more people to avoid driving single occupant cars on a daily basis. If the tax can be used to encourage that, it will have a bigger impact. Collecting a tax and using the money to add more parking garages or widening roads will just contribute to sprawl and make the problem worse.  It's easy to dump every problem on the business community, but we are the ones who are providing jobs (as well as the most delicious ice cream) to people in the community. Stores are closing in the downtown area because of exorbitant rents, high wages, and taxes. This plan will only hurt businesses more.  The main traffic problems can be greatly alleviated by upgrading roadways and traffic signals. This would benefit not just for-profit businesses, but residents and non-profit businesses (including PAMF, which accounts for a substantial amount of vehicular traffic). Taxing for-profit businesses may have political appeal, but ultimately it is the customers of those businesses who wind up paying the tax.  build a parking structure - and provide a better shuttle service to the business districts. Charging employees to park is ridiculous  It would behoove Palo Alto to keep larger employers and service/retail hubs geographically distinct. The former generate rush-hour traffic, requiring major roads. The latter draw lighter traffic more continuously during the day, and have positive instead of negative implications for surrounding residential areas. Careful zoning and review of building proposals (e.g. at 550 Hamilton Ave) are critical to protecting Palo Alto's human friendly residential and small business atmosphere from overwhelming peak traffic.  We are a very small business, just seven employees.  It seems I would be paying twice for the same thing  The majority of the City Council has continued to approve developer oriented proposals which have not carried their fair share for real improvements--parking facilities, widening of streets and turn lanes. TDM programs or paper mitigation have not proven to be effective and developers themselves have said so. True mitigation of new development has to occur before new financing is sought. The word "sustainability" is used a lot without implementation. Whether it is parking, water or affordable housing, new development should mitigate its impact. Neighborhood conclutation should be required early in the process. The appearance is that nearly all-new development is driven by the City Manager and controlling land use documents are not followed.  As long as parking improves within a reasonable time  I doubt that the parking problem will ever be solved until self-driving cars eliminate the need for parking altogether. They will also greatly improve the traffic problem.  I am a sole business, however, I know that some days my patients drive around for 15 to 20 minutes looking for parking.  This should have been addressed during the planning & development phase of construction.  Not if I don't have to. I am local and feel it is people's responsibility to get themselves to work. I don't like supplementing others transportation.  You need to give credit to businesses, which provide own parking for their employees and customers.  Very small business ($20K/year) -- solo medical practice  I believe the transportation issue is directly related to the over-building issue and the increased rental rates for businesses, which only big businesses with big labor forces can afford.  This whole problem is a result of past city council kowtowing to big business leaders. The city council permitted the outsized expansion of businesses within the city limits, when it should have restricted the business population to that which would gainfully employ the number of people who can be housed within the city limits. Having 60K+ commuters coming into the area each day is a very poor choice caused by past errors in city judgment, and is responsible for all the current problems. Learn to not repeat the mistakes.  We already pay the new business tax plus the downtown association fees. Another fee is going to drive business away. Stop hitting us with new fees. Its already expensive enough to do business here with out you driving us out with more taxes that don’t improve the situation. Your part of the problem not the solution.  We are a dog friendly office. Being near the train, our workers would like to take the train to work, but Caltrain does not allow any kind of dogs other than those required under the ADA. Caltrain should adjust the rules to be similar to BART, and allow small dogs if they are in carriers.  As a voter, I would want to see a detailed accounting of how current funds are managed and the qualifications of those who make decisions in this area. I have been very surprised by some decisions made in the recent past that greatly add to our traffic problems (e.g. the inexplicably poor planning near the intersection of Embarcadero and El Camino; the very unattractive roundabouts that are being installed like the new one on Cowper Street in old Palo Alto). Survey Respondents Name Name of Business Kaloma A. Smith University AME Zion Church JON GOVIND THE PALO ALTO INN Irena Smith Irena Smith College Consulting Isaac H. Winer Law Office of Isaac H. Winer cary no name Michael Sarrett Yogurtland Nancy Nancy Trueblood, MFT xxx yyy Samir Tuma Kila Properties Ed Castano BlueVine pat blumenthal pat blumenthal Nick Vino Locale Stephen levy Ccsce miriam joann blessing-moore md inc Peter N. Brewer Law Ofcs. of Peter N. Brewer david bena Church stephen atkinson atkinson architecture Paul Russell Hand in Hand Parenting mimi richart nonobject Alex Tennant Aerobie, Inc. Edwin Oh Infrastructure Group LLC Laurie Rohrbach Lobird James Howard Real Artists Inc Cindy Somasunderam Scoop Microcreamery Sandeep OpsHub Henry Yee Sharetea a a Alec Hsu Flight Ventures Alan Nopar Nopar & Assoicates Michael Bence Duxiana Andrea Bogan Henderson Anders Greenwood Anders Greenwood, Doctor of Psychology, Inc GR Mine Maureen Ruffell Maureen Ruffell, M.D. Carol Field Field Architecture, Inc. Hope Case Sacks, Ricketts & Case G J N/A Michael Tompert Raygun Studio joe hedges voelker sensors, inc William Ross Law Offices of William Ross Carlos Carlos for Hair Melissa Lu ELLA Lynn Kearney Lynn J Kearney, MFT JENNY G JEROME CLIKAWAY Myrna Green Office of Myrna S. Green, Ph.D. Babak Kahrobaie Gate Cleaners Michael K. Smith Michael K. Smith, Ph.D. Alan Brauer MD Totalcare Clinic Lori Romero True Hugh Baras Hugh Baras, Ph.D. Wes Christensen C. Wesley Christensen, MS Lynn Kearney Lynn J Kearney, MFT Demetra Paras Demetra Paras MA MFT Roger Strom Strom Properties marty klein marty klein & associates Eval Gal-Oz E.U Int'l corp Dr Eric Wu Wu Orthodontics Padmini Schuet Ananda Church our private P. lot is overcrowded with nonchurch members on weekdays Jonathan Lam ClickAway Verizon mehrdokht shirmohammadi Clickaway Verizon Palo Alto Alexander Johnson Www.nurseregistry.com, Nurse Logistics, Nurse solutions, Law Officd of Alexander Johnson, California Catalyst LLC Peter Wexler FATG Jack Morton Morton & Associates Kathy Styles Target Discovery Anonymous Palo Alto Business choosing anonymity Katherine Hohbach Katherine Hohbach, LMFT L. Branden Studio Kicks Gerd Goette Siemens Fianancial Services Sherry Brown Sherry Brown, LMFT Chris Macie Christopher J Macie L.Ac Donna Dagenais Mid Peninsula Speech and Language Clinic Alena Campagna Stoecker & Northway Terry Walker Walker Systems Steve McGraw Steve McGraw, Psy.D. Miriam Rivera Ulu Ventures Carol Campbell, MFT Carol Campbell, MFT Susan Graf Susan Graf Limited rick barry barry real estate Dilip Sheth Sysorex Abby Haile Abby Haile, PsyD mo.kashefi Cielo Btq. Inc. info PAPIE A Singh VIP Jon Leeb Leebco, Inc. Audra Johnson Vertex Ventures Jessica Nisperos Mental Research Institute Heather Bernikoff The Special Hope Foundation Brian S. Ackerman-Practicon Inc Tracy Tripp Blum & Tripp CPAs David Heinichen heinichen's Garage Omonike Weusi- Puryear Primerica Jean Kirsch Jean P Kirsch MD steve steve None None Justin Trepel Arastradero West Apartments Danielle Computerlaw Group LLP Hsin Yang Core Studio Reza Riahi Palo Alto Endodontic Center Ben Cintz Law Offices of Benjamin Cintz Duanni Hurd StarLight CareGivers Loy Martin Loy D. Martin Furniture Laura Seitel Laura Seitel, Ph.D. Serena Garcia Good Vibrations Medium/Large Business Survey Response Summary (11 Employees and up) Please answer the following questions in order to help inform upcoming decisions by the Palo Alto City Council regarding a potential ballot measure to provide local funding for traffic congestion relief, parking and transportation improvements. Will addressing traffic and parking problems help Palo Alto business attract and retain employees and customers? Yes: 29 (78.4%) No: 8 (21.6%) Other Response:  Only in conjunction with major improvement in public transportation Is it fair for businesses to contribute funding for local transportation solutions by paying a business tax similar to those paid by businesses in neighboring cities? Yes: 14 (43.8%) No: 18 (56.3%) Other Responses:  Perhaps, depending on how  This is something that the downtown businesses already do. We pay an assessment for parking garages already.  People who collect sales tax should pay  Depends on the solution  Business already contribute to taxes through both property and sales taxes Is a tax based on the number of employees a fair way to ensure the cost scales with the number of employees from a business utilizing roads, transit and parking in Palo Alto? Yes: 16 (50%) No: 16 (50%) Other Responses:  NO if a business has 10 employees but none drive a car is it fair that they are required to pay the same as a business with 10 employees where they all drive?  The 50% partners who collect the 9.5% sales tax should pay for infrastructure improvement.  Only if the building that the business resides in does not provide parking  Not sure, plus all businesses will be taxed, not just ones in impacted areas. Should revenue also be a "driver"?  Revenues Should small and medium sized businesses receive an exemption or discount? Yes: 29 (78.4%) No: 8 (21.6%) Other Response:  Businesses under 15 employees should have a lower rate than a very large company Should small non-profit organizations receive an exemption from the cost? Yes: 25 (66.7%) No: 12 (32.4%) Other Response:  They're already exempt from so many taxes What should be the highest priorities for the use of funds from the proposed measure?  Upgrade traffic signals, intersections and streets to improve traffic flow: 13 (46.4%)  Implement innovative transportation demand management strategies and policies to reduce traffic at peak hours and make more efficient use of existing parking: 6 (21.4%)  Expand local shuttle service to reduce the number of cars on the road: 5 (17.9%)  Provide supplemental funding to expand Palo Alto’s Transportation Management Associations (TMAs) that help businesses and their employees solve transportation and parking problems by planning efficient commutes, identifying carpool opportunities and link commuters to shuttles and public transportation options in order reduce traffic and parking as a barrier to employee satisfaction and retention: 4 (14.3%) Other Responses:  Build bicycle infrastructure  What about walking and cycling???  Require developers to provide sufficient parking for all new construction  No new taxes  All this should come out of sales taxes  None  Replace your people who say a school near business on a 2 lane rd will not effect traffic flow  We need a comprehensive approach Should the rate structure adjust with changes in the local Consumer Price Index (CPI) to account for inflation and protect the purchasing power of transportation funding? Yes: 18 (54.5%) No: 15 (45.4%) Other Responses:  Not sure  No new taxes  Not sure Does your business currently contribute to a Transportation Management Association (TMA)? Yes: 2 (5.4%) No: 35 (94.6%) If yes, which one?  National Center for Transit Research at the University of South Florida, Best Workplaces for Commuters If yes, if Palo Alto businesses paid a transportation tax, would you continue voluntarily contributing to a TMA? Yes: 0 (0%) No: 12 (100%) Other comments:  Our employees are most sensitive to length in time of total commute. That includes walking, waiting for transport and or parking. Anything to reduce the over all time getting from their home to the actual office is very welcome to us! And please, please don't make it confusing or more hoops to jump through. Thank you for your work making PA a premium city to work in.  Our business is across the street from the Palo Alto Airport. Every work night from 4:00 p.m. until about 6:00 p.m. we have gridlock at Bayshore and Embarcadero. The traffic is due to cars going to the East Bay. The East Bay commuters jam the intersection so during a light change cars going west on Embarcadero rarely get the full use of the green light.  Traffic calming and keeping bus stops away from intersections would be very helpful for traffic on Middlefield. The intersection of Middlefield and Colorado is dangerous and often backed up due to busses stopping right at the intersection  Not sure  Your traffic planners do not know what they are doing especially on E. Bayshore Rd. They need to open Laura Ln. for school traffic thru the Post Office Parking lot to allow 2 ways traffic can move for the school/post office/bridge traffic.  We are located on California Avenue and already contribute through property tax as well as our sales taxes. If this tax were to pass, how would the city guarantee that the funds would only go to transportation issues, building more garages, etc...  Tax should be based on all traffic generated by the business, not just employee travel - maybe revenues would better approximation.  Amount of traffic generated by business (e.g., retail store) should be taken into account, not just number of employees. Survey Respondents Name Name of Business Chen HCA Name Name of Business Ken Martin Mike's Bikes Matt Hengehold Hengehold Motor Co. Jeff Selzer Palo Alto Bicycles Dan Fortner Tipalti Franco Campilongo Terun Lindsay Van Keuren Adaptive Insights, Inc. Peter Licari Jack Mobile Inc. (Ozlo Inc.) Cameron Tipalti AnDi Irvin Aerion Technologies Corporation Patricia Nojima Gallery House Lee Boman Eastman Anika Sargent Living Wisdom School of Palo Alto Linda Winter Lodge Not Necessary Not Necessary Abby Wittmayer Whole Foods Market Rigel St. Michael's Alley Wade Smith Hammon Plating Israel Rind Izzy's Brooklyn Bagels Dave Stellman Palo Alto Glass Max Silverstein Eversight Anonymous Anonymous SM NA Chris Boreta Orchard Commercial Dana PlaceIQ Terry Boyle Children's Health Council Ron Malouf Jazz Pharmaceuticals Anonymous Anonymous Jay Patel Sciton, Inc. Audrey Smith CK-12 Foundation K S Montelaro PBC Mandy Brown Castilleja School Scott Yeaman Yeaman Auto Body 2025 E. Bayshore Rd. Guillaume Bienaime Zola Michael Ekwall La Bodeguita del Medio Maureen Breen Avenidas Marina Remmel Communications & Power Industries LLC Local Transportation Funding Committee Meeting Transcripts (Hard copies for City Council Only) A. March 24, 2016 Local Transportation Funding Committee Meeting Transcript http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=52332 B. May 13, 2016 Local Transportation Funding Committee Meeting Transcript http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=52979 C. June 2, 2016 Local Transportation Funding Committee Meeting Transcript http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=52980 D. June 8, 2016 Local Transportation Funding Committee Meeting Transcript http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=52981 E. June 16, 2016 Local Transportation Funding Committee Meeting Transcript http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=52982 Agendas, Action Minutes, and Videos of Local Transportation Funding Committee Meetings are available online: http://www.cityofpaloalto.org/gov/agendas/local_transportation_funding_committee.asp City of Palo Alto (ID # 6864) City Council Staff Report Report Type: Informational Report Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Update on the Voluntary Summer Demand Response Program Title: Update on the Voluntary Summer Demand Response Program and Plans to Leverage Local Distributed Energy Resources From: City Manager Lead Department: Utilities This is an informational report, no action is requested. Executive Summary Palo Alto’s large and increasing number of communicating and controllable distributed energy resources (DERs) require the City to position itself to maximize the value of such systems for the benefit of the community and electric utility operations. DERs include technologies such as electric vehicles (EVs), EV charging stations, smart thermostats, controllable customer loads, distributed photovoltaics and storage systems, among others. Enabling these demand-side resources to respond to needs of the electrical grid is crucial to the state’s long-term pursuit of decarbonizing the electric grid as well as local interest in electrifying transportation, and certain needs such as space and water heating. Leveraging DERs within the service territory will enhance the City’s efforts to provide cost-effective, reliable, and decarbonized energy. The City began this effort in 2011 with the implementation of an innovative voluntary demand response (DR) program for large commercial customers. The program enabled large buildings to reduce their air-conditioning and lighting loads during critical periods on hot summer days. This in turn lowered utility and customer electricity purchase costs and reduced air pollution by limiting production from inefficient and polluting electric generation resources in the Bay Area. The total costs of the program, including administrative and customer compensation costs, have been approximately $10,000 to $15,000 per year over the past five years. The report outlines past performance of the voluntary DR program and the City of Palo Alto Utilities’ (CPAU’s) plans to leverage the value of additional DERs in the coming years. Staff is planning to continue the DR program and is seeking additional projects from vendors to leverage DERs within Palo Alto to participate in similar programs. Staff estimates that this effort will cost $60,000 in the first year, with resources expanding or contracting in subsequent years City of Palo Alto Page 2 depending on the value delivered. The resources required to implement and administer this program will be sought through the normal budgeting process. The progress and value of these programs will be reported to the Utilities Advisory Commission (UAC) and Council through the annual Demand Side Management (DSM) Program report. Background The Council approved a pilot summer DR program for large commercial customers in 2011 (Staff Report 1450) and extended it in 2013 (Staff Report 3454). The objective of the program was to reduce electrical loads during hot summer days in order to reduce electricity purchase cost and air pollution by limiting production from the most inefficient and heavily polluting electric generation resources in California. Commercial customers participating in the DR program reduce their air conditioning and lighting in response to a request made by the City during DR events in the summer. Under the program, participants are paid 50 cents per kilowatt-hour reduced during the period requested on DR days (approximately 4 times the average energy rate they pay for electricity consumed). This payment is made based on CPAU’s avoided cost for reduced electricity consumption during these peak times. Since 2013 CPAU’s electric supply has been carbon neutral on an annual basis. However, CPAU remains interconnected with, and dependent upon, the larger electricity grid that currently utilizes fossil fuel-based resources to balance generation and load in order to meet daily and hourly customer demand. In order to reduce the overall cost and reliance on fossil fuel generation, staff has begun exploring additional opportunities to maximize the value of DERs. Discussion The ability for large commercial customers to communicate and control their air conditioning and lighting loads is one example of a DER, and the voluntary DR program was designed to leverage this resource for the benefit of the customer and CPAU. Over the past 5 years, about 10 large commercial customers participated in the DR program and the City reduced its summertime peak electrical load by about 0.5%. The value of the peak- time demand reduction to CPAU is between $10,000 and $20,000 per year. For example, in 2015 the program resulted in a peak load reduction of 0.6 megawatts (MW), which saved CPAU about $12,000 while the corresponding customer payments and administrative costs totaled about $15,000. Although the City incurred some costs in connection with the DR pilot program, the pilot program was nevertheless important for beginning to understand the future potential for broader DERs in Palo Alto. Continuing to test and implement such programs to control DERs will be crucial for identifying least-cost pathways to decarbonize the electric grid and electrify transportation and fossil fuel fired appliances while maintaining—or even enhancing— reliability. As such, CPAU plans to continue to test and implement such systems commensurate City of Palo Alto Page 3 with the size and resources available for a small utility like CPAU. CPAU’s effort in this innovative program has been recognized by State regulators and legislators. As a technology savvy community in the heart of Silicon Valley, Palo Alto has a high penetration of controllable and communicating DERs such as EVs, EV chargers, smart thermostats, solar photovoltaic (PV) systems, back-up generation, storage systems, and automated building energy management systems. The estimated penetration of such DER systems in Palo Alto at the end of 2015 is: 1. Nearly 800 solar PV systems with an aggregate capacity of over 7 MW; approximately 40% of this capacity is sited on residences 2. About 1,000 residential Wi-Fi thermostats 3. Between 100 and 200 automated building energy management systems in commercial buildings 4. About 1,300 EVs are registered in Palo Alto as of January 2016; close to 1,000 commuter EVs are driven into Palo Alto daily; about 300 EV chargers in town can be remotely monitored; and approximately 500 EVs with on board telematics are registered in Palo Alto 5. Approximately 12 commercial facilities within the City have back-up generation (fueled by natural gas or diesel) and the City owns 4 natural gas-fired generation units with a capacity of 4.6 MW In January 2016, CPAU issued a request for proposals (RFP) to leverage the value of existing and future DER systems within the City to provide electric grid services such as peak load reduction, load shifting, ancillary services, distribution system voltage support, and overall load reduction. Vendors were asked to propose services related to communicating and controllable (connected) devices, aggregation platforms, or other DER related services and equipment. The RFP recognized that some concepts may first have to be demonstrated at a pilot scale before it would be feasible to implement them at full commercial scale, and the RFP encouraged such proof-of-concept proposals. CPAU is evaluating the responses and may award contracts to proposing vendors that respond to the RFP, both in the area of proven and emerging technologies. Such commitments to leverage existing and future systems also complement CPAU’s Program for Emerging Technologies (PET)1. Role of Energy Storage Systems as a DER in Palo Alto Energy storage is another DER that is gaining popularity. There are number of energy storage systems in Palo Alto. These systems include battery energy storage systems in residential 1 PET provides an opportunity for nascent technologies to be tested and evaluated in Palo Alto. For more detail, see: http://www.cityofpaloalto.org/gov/depts/utl/projects/program_for_emerging_technologies/default.asp City of Palo Alto Page 4 homes (to serve higher reliability needs of some customers), and an ice storage system at a commercial customer site to shift operation of the chiller from on-peak to off-peak hours. Battery based energy storage systems are expected to become economically viable for customer and utility applications in the coming years as the cost of such systems continues to decrease. Palo Alto undertook an energy storage assessment in 2014 and found such systems to be too expensive and not cost effective in Palo Alto (Staff Report 4384). As such, CPAU currently does not provide monetary incentives for storage systems, but continues to facilitate the installation of such system at customer sites. Staff is in the process of reevaluating the cost- effectiveness of storage systems and may recommend undertaking small pilot scale storage projects in the 2017-18 time period. Staff expects that storage systems will take on greater significance as a DER in Palo Alto in the next decade. Programs to leverage emerging DERs will become part of the portfolio of CPAU’s customer DSM programs. While customer conservation, efficiency, and local solar PV programs will continue to be the central focus of CPAU’s DSM programs, efforts to maximize the value of emerging DERs take on increased importance in the coming years. As pilot programs mature and prove themselves, they will be folded into the regular DSM program offerings to customers. Resource Impact Resources required to leverage existing and planned DER in Palo Alto is estimated at $60,000 per year and has been included in the upcoming budget. The monetary value garnered from this investment is anticipated to initially be lower than the program’s cost, but is expected to be very valuable in the long run in a variety of ways, including compliance with state mandates to reduce peak load, a reduction in generation-based pollution, and in gathering knowledge on how best to encourage efficient energy use and improve grid reliability. Staff resources of about 0.5 FTE will be devoted to this effort in the first year and is expected to drop to 0.25 FTE in subsequent years. Existing staffing resources will be used to administer the program. Policy Implications This program meets CPAU’s strategic plan objectives of implementing environmentally sustainable program for efficient use of resources and to maximize the value of existing resources. Environmental Review Provision of this informational update on DR programs and plans to leverage DER resources does not meet the California Environmental Quality Act’s (CEQA’s) definition of “project” under California Public Resources Code Sec. 21065, thus no environmental review is required. City of Palo Alto (ID # 6990) City Council Staff Report Report Type: Informational Report Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: Utilities Quarterly Update Title: City of Palo Alto Utilities Update for the Third Quarter of Fiscal Year 2016 From: City Manager Lead Department: Utilities This update, on water, gas, electric, wastewater collection and fiber utilities, efficiency programs, legislative/regulatory issues, utility-related capital improvement programs, operations reliability impact measures and a utility financial summary, is for the Council and Utilities Advisory Commission’s (UAC) information. This update has been prepared to keep the UAC and Council apprised of the major issues that are facing the water, gas, electric, wastewater collection and fiber utilities. Items in this quarterly report that are related to five topics highlighted at the joint UAC/Council meeting that was held on April 20, 2015 include: 1. Fiber to the premises (FTTP): fiber optics updates start on page 15. 2. Undergrounding of electric lines: no update in this quarterly report; the UAC received an update at its January 2016 meeting. 3. Second electric connection: no update in this quarterly report; an update was provided in the last quarterly report (Staff Report 6672). 4. Electrification: no update is provided in this quarterly report; the heat pump water heater pilot was described in the last quarterly report (Staff Report 6672). 5. Recycled water: an update is provided on page 13. Items of special interest this quarter include:  an update on the water supply status and a description of the State Water Resource Control Board’s drought regulations (page 12)  a chart showing the City’s water use compared to savings targets (Figure 11, page 13)  an updated chart showing participation in the PaloAltoGreen Gas program since the program launch (Figure 14, page 20)  a statement that all rebate funds for the PV Partners program are exhausted (page 21)  a list of the Spring Utilities workshops and outreach events (page 21) City of Palo Alto Page 2  the status of the financial reserves as of the end of the third quarter of FY 2016 for all Utilities funds (Table 11, page 34) Attachments:  Attachment A: Utilities Update for the Third Quarter of FY 2016 (DOCX) Utilities Quarterly Update Third Quarter of Fiscal Year 2016 June 2016 ATTACHMENT A Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 i Utilities Quarterly Update Table of Contents I. Electricity ................................................................................................................... 1 Electric Supplies ............................................................................................................................................ 1 Electric Budget and Portfolio Performance Measures ................................................................................. 4 II. Natural Gas................................................................................................................. 8 Market Price History and Projections ........................................................................................................... 8 Gas Supply Retail Rates ................................................................................................................................. 9 Gas Budget and Portfolio Performance Measures ....................................................................................... 9 III. Water ....................................................................................................................... 12 Water Availability ........................................................................................................................................ 12 Recycled Water Project ............................................................................................................................... 13 Water Budget Performance Measures ....................................................................................................... 14 IV. Fiber Optics .............................................................................................................. 15 Commercial Dark Fiber Service ................................................................................................................... 15 Google Fiber ................................................................................................................................................ 16 Fiber and Wireless Telecommunications Project Manager ........................................................................ 18 Citizen Advisory Committee ........................................................................................................................ 18 V. Public Benefit, Demand Side Management Programs and Communications ............... 18 Energy Efficiency, Water Conservation and Local Renewable Energy Program Achievements ................. 18 Water Conservation .................................................................................................................................... 20 Communications Update ............................................................................................................................ 21 VI. Research and Development and Innovation .............................................................. 24 Program for Emerging Technologies ........................................................................................................... 24 Customer Connect Pilot Program ............................................................................................................... 25 VII. Legislative and Regulatory Issues .............................................................................. 26 Summary ..................................................................................................................................................... 26 State Legislative Issues ................................................................................................................................ 26 Federal Legislative Issues ............................................................................................................................ 28 State Regulatory Proceedings ..................................................................................................................... 29 VIII. Utility Financial Summary ......................................................................................... 29 Electric Utility Overview .............................................................................................................................. 29 Gas Utility Overview.................................................................................................................................... 30 Wastewater Collection Utility Overview ..................................................................................................... 30 Water Utility Overview ............................................................................................................................... 31 Fiber Optic Utility Overview ........................................................................................................................ 31 Financial Projections and Operations Reserve Balances ............................................................................ 31 CIP Reserves (Reappropriations and Commitments) Summary ................................................................. 33 Residential Bill Comparisons (based on 30 day bills) .................................................................................. 35 Non-Residential Bill Comparisons ............................................................................................................... 36 CIP Project Detail ........................................................................................................................................ 36 Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 ii List of Figures Figure 1: Electric Supply Resource Projection, 2015 to 2017 (as of May 5, 2016) ...................................... 2 Figure 2: Northern California Peak Electric Prices (as of May 3, 2016) ....................................................... 3 Figure 3: FY 2016 Electric Load and Resource Balance ................................................................................ 6 Figure 4: FY 2016 Electric Market Purchase Costs and Market Prices ......................................................... 7 Figure 5: Natural Gas Prices – Historical and Projected as of May 2, 2016 ................................................. 8 Figure 6: CPAU’s Gas Commodity Rates—July 2012 through May 2016 ...................................................... 9 Figure 7: Cumulative Redwood Pipeline Cost vs. Market Benchmarks ..................................................... 10 Figure 8: Natural Gas Consumption – Budget vs. Actual ........................................................................... 11 Figure 9: Natural Gas Supply Cost – Budget vs. Actual .............................................................................. 11 Figure 10: FY 2016 Natural Gas Prices ($/MMBtu) – Expected vs. Actual ................................................. 12 Figure 11: Water Use Compared to Target for Compliance Period ............................................................ 13 Figure 12: Water Consumption – Budget vs. Actual .................................................................................. 14 Figure 13: Water Cost – Budget vs. Actual ................................................................................................. 15 Figure 14: PaloAltoGreen Gas Program Performance ................................................................................ 20 List of Tables Table 1: FY 2016 Electric Utility Supply Cost Summary ................................................................................ 4 Table 2: FY 2016 Electric Load and Generation Compared to Budget Projections ....................................... 5 Table 3: Spring 2016 Events and Workshops .............................................................................................. 21 Table 4: Status to date of all applications to the Program for Emerging Technologies ............................. 25 Table 5: Financial Projections, FY 2016 ....................................................................................................... 32 Table 6: FY 2016 Operations Reserves ($000) ............................................................................................ 32 Table 7: Electric CIP Reappropriations and Commitments ......................................................................... 33 Table 8: Gas CIP Reappropriations and Commitments ............................................................................... 33 Table 9: Wastewater Collection Utility CIP Reappropriations and Commitments ..................................... 33 Table 10: Water Utility CIP Reappropriations and Commitments .............................................................. 33 Table 11: FY 2016 Q3 Reserve Report from the City’s Financial System .................................................... 34 Table 12: Residential Electric Bill Comparison ($/month) .......................................................................... 35 Table 13: Residential Natural Gas Bill Comparison ($/month) ................................................................... 35 Table 14: Residential Water Bill Comparison ($/month) ............................................................................ 35 Table 15: Residential Wastewater Collection (Sewer) Bill Comparison ($/month) .................................... 35 Table 16: Median Residential Overall Bill Comparison ($/month) ............................................................. 36 Table 17: Non-Residential Electric Bill Comparison ($/month) .................................................................. 36 Table 18: Non-Residential Natural Gas Bill Comparison ($/month) ........................................................... 36 Table 19: Electric Utility CIP Project Detail (pg 1/2) ................................................................................... 37 Table 20: Gas Utility CIP Project Detail (pg 1/2) ......................................................................................... 39 Table 21: Water Utility CIP Project Detail ................................................................................................... 41 Table 22: Wastewater Collection Utility CIP Projects ................................................................................. 42 Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 1 I. Electricity Electric Supplies Western Area Power Administration (Western) Issues Unfortunately the ongoing drought continues to keep projected Western Base Resource generation levels well below long-term average levels (399 gigawatt-hours, or GWh). For the third quarter of FY 2016, Western supply delivered 0 GWh (64 GWh below long-term average levels, and 12 GWh lower than in FY 2015). Even assuming median precipitation levels going forward, Western is projected to supply only 264 GWh in FY 2016 (34% below long-term average levels). Calaveras Hydroelectric Project Issues Dought conditions are lessening their impact on Calaveras, as the reservoir has benefited from average precipitation during the El Niño winter. A federal flush requirement (releasing a certain volume of water to flush out sediment downstream) occurred over several weeks in March also helped to greatly increase generation. For the third quarter of FY 2016 Palo Alto’s share of this project’s generation was 53.3 GWh (121% above the long-term average level, and 368% higher than in FY 2015). Assuming median precipitation levels going forward, Calaveras is projected to deliver 106 GWh in FY 2016 (19% below long-term average levels). Renewable Energy Contract Summary Since the last quarterly report, construction was completed on the third of the City’s five utility- scale solar photovoltaic (PV) projects, the 20 megawatt (MW) Frontier Solar project in Stanislaus County. A ribbon-cutting event was held in May to commemorate its completion, and the project is expected to begin full commercial operation in June or July. Meanwhile, the remaining three solar PV projects that are in the development process (Elevation Solar C, Western Antelope Blue Sky Ranch B, and Wilsona Solar) continue to make good progress toward completion. Electric Load and Resource Balance The size of the committed and planned market purchases over the last, current and next two calendar years (CY) (shown in Figure 1 below) reflects a significantly below average level of hydroelectric output, as discussed above. For CYs 2015 and 2016 combined, committed fixed- price forward market purchases currently account for approximately 474 GWh, which represents 24% of the City’s total load for the two-year period. Net planned market purchases represent another 13% of the City’s total load for this period. (There are currently no planned forward market purchases for CY 2017). Long-term resources (everything but forward and planned market purchases) currently account for the remaining 76% of the City’s total load over the three-year period of CY 2015 through CY 2017. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 2 Figure 1: Electric Supply Resource Projection, 2015 to 2017 (as of May 5, 2016) Electric Market Price History and Projections As of May 3, 2016, the price for on-peak energy for June 2016 in Northern California was $25.93 per megawatt-hour (MWh)1, while the prices for July 2016 and August 2016 were $31.68/MWh and $34.27/MWh, respectively. These values are all approximately $0.30/MWh higher than they were at the time of the last quarterly report.2 On-peak prices for calendar year strips are in the range of $33 to $38/MWh for 2016 through 2018. These prices are approximately $2.48/MWh higher than they were at the time of the last quarterly report. Figure 2 below illustrates historical monthly on-peak prices and projected monthly forward prices for Northern California from 2005 through 2023. 1 Note that $30 per megawatt-hour is equal to 3 cents per kilowatt-hour. 2 Market prices for the previous quarterly report were from January 26, 2016. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 3 Figure 2: Northern California Peak Electric Prices (as of May 3, 2016) Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 4 Electric Budget and Portfolio Performance Measures Electric Supply Cost Summary Compared to Budget Estimates Table 1 below shows the City of Palo Alto Utilities’ (CPAU’s) supply cost by cost category through the third quarter of FY 2016. Supply costs were $1.2 million (2.0%) under budget primarily due to the FY 2015 NCPA true-up refund (designated to each supply cost category accordingly). However, transmission costs were higher than expected. Table 1: FY 2016 Electric Utility Supply Cost Summary Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 5 Electric Usage and Generation Summary Compared to Budget Estimates Table 2 and Figure 3 below summarize the City’s electric supply sources through the third quarter of FY 2016. Hydroelectric generation was split, with Western substantially below budget projections due to drought conditions, and Calaveras substantially above budget due to increased required flow and precipitation. Table 2: FY 2016 Electric Load and Generation Compared to Budget Projections Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 6 Figure 3: FY 2016 Electric Load and Resource Balance Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 7 Electric Market Prices and Costs Compared to Budget Estimates Figure 4 shows monthly market prices and the cost of purchasing energy from the market. Electric market prices through the third quarter of FY 2016 were lower due to continued lower natural gas prices that impact the electricity markets. The cost of market purchases through the third quarter of FY 2016 was about $2.56M higher than it would have been if all energy had been purchased in the spot market3. As discussed previously, the total cost of market purchases in the third quarter was lower than budgeted due to higher than projected output from hydroelectric resources. Figure 4: FY 2016 Electric Market Purchase Costs and Market Prices 3 Note that some market purchases are made on a forward basis to lock in market prices. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 8 II. Natural Gas Market Price History and Projections Ample supply and large volumes of gas in storage continue to keep gas prices low. Forward gas prices at PG&E Citygate are in the $3.00 - $3.50 per million British Thermal Units (MMBtu)4 range for the next 12 months. Figure 5 below shows historical monthly bidweek index prices through May 2016 and forward natural gas prices at PG&E Citygate as of May 2, 2016. Figure 5: Natural Gas Prices – Historical and Projected as of May 2, 2016 4 Note that 1 million British Thermal Unti (MMBtu) is equal to 10 therms. Therefore, a gas cost of $3 per MMBtu is equivalent to 30 cents per therm. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 9 Gas Supply Retail Rates Since July 1, 2012, the commodity portion of CPAU’s retail gas rates for all customers varies every month depending on the market price of natural gas. Figure 6 below shows the actual commodity rates charged from July 2012 through May 2016. These rates can also be found on the web site at: http://www.cityofpaloalto.org/civicax/filebank/documents/30399. Note that gas commodity rates are currently at their lowest level since July 2012 when these costs began being passed on directly to customers on a monthly basis. Figure 6: CPAU’s Gas Commodity Rates—July 2012 through May 2016 Gas Budget and Portfolio Performance Measures Value of CPAU’s Share of Redwood Pipeline Capacity Figure 7 below shows the cost of the Redwood gas transmission line compared to the value at month-ahead spot market prices as well as daily spot market prices. The Redwood pipeline allows the City to buy gas at the receipt point of Malin, Oregon and transport the gas to “PG&E Citygate”, which is normally a higher value receipt point. The City’s share of the Redwood pipeline was a net benefit to the Gas Utility of approximately $213,000 through the third quarter of FY 2016. This is the difference between the value of Redwood capacity of $598,000 (the difference of the monthly index prices at the ends of the Redwood pipeline in Malin, Oregon and PG&E Citygate) and the transportation cost of using the Redwood pipeline of $385,000. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 10 Figure 7: Cumulative Redwood Pipeline Cost vs. Market Benchmarks Natural Gas Consumption and Costs: Budget vs. Actual Figure 8 and Figure 9 compare actual natural gas use and supply costs with the FY 2016 budget. Natural gas use through the third quarter of FY 2016 was 15% below the budget forecast, and costs were 53% lower than budgeted amounts. Gas usage was lower than estimated in the budget since the weather has been much warmer than average. Reduced gas usage may also be impacted by the drought and customer’s reduced usage of (hot) water. Lower than budgeted gas prices were a main contributor to the lower than budgeted commodity cost. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 11 Figure 8: Natural Gas Consumption – Budget vs. Actual Figure 9: Natural Gas Supply Cost – Budget vs. Actual Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 12 Figure 10 shows actual gas prices at PG&E Citygate (CG) versus gas prices that were projected at the time the FY 2016 budget was developed. Since July 2015, gas prices have been lower than budget. The price of gas is passed directly to consumers through the monthly-varying, market-based commodity portion of CPAU’s gas retail rate so commodity prices—and commodity revenues—are lower than projected. Figure 10: FY 2016 Natural Gas Prices ($/MMBtu) – Expected vs. Actual III. Water Water Availability Precipitation was around average for the season although a full recovery from the drought will require normal amounts and above normal precipitation over several years. Water storage utilized by City’s water supplier, the San Francisco Public Utilities Commission (SFPUC), has been an effective tool for managing the system and has benefited from recent precipitation, but is still heavily impacted by the consecutive dry years. As of May 8, 2016 the total water in storage for the SFPUC’s regional water system was 72% of the system’s capacity; in a normal year, the amount of water in storage is about 82% of the system’s capacity. The State Water Resources Control Board (SWRCB) mandated that Palo Alto reduce potable water use for the compliance period (June 1, 2015 through February 28, 2016) by 24% compared to usage during the same period in 2013. On February 2, 2016, the SWRCB extended the mandate through October 31, 2016. On May 9, Governor Brown issued a new order extending the emergency regulations through January 2017 and directed the SWRCB to make adjustments based on local water supply and demand conditions. On May 18, the SWRCB ordered water supply agencies to self-certify the level of available supplies based on a prescriptive methodology that assumes that the next three years have the same (dry) conditions as in 2013 through 2015 and that water usage is equal to the average of 2013 and Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 13 2014. By June 8, the SFPUC must determine whether these conditions would result in a water supply shortfall and, if so, that will become the “conservation standard”, or mandate for water use reduction through January 2017, for agencies such as CPAU that purchase all of its potable supplies from the SFPUC. Compliance with the new standard begins June 1, 2016. To achieve mandatory water use reductions, CPAU placed particular emphasis on continuing to irrigate and protect the health of trees in the City while still reducing outdoor irrigation. As of May 5, the City’s water use was 31% less than 2013 for the compliance period and is on track to meet the 24% target, as shown in Figure 11 below. Figure 11: Water Use Compared to Target for Compliance Period Recycled Water Project Since the City Council certified the Final Environmental Impact Report for expanding the recycled water pipeline system to reach the Stanford Research Park on September 28, 2015 (Staff Report 5962), staff has issued a request for proposals for pre-design work, and preparation of a business plan for the project as well as examining alternatives such as installing equipment to purify treated wastewater to potable water standards. Responses are due back in May with interviews to follow in June 2016. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 14 Water Budget Performance Measures Figure 12 and Figure 13 below compare actual water consumption and water supply cost to the FY 2016 budget projections. The community has responded with substantial water savings CPAU has been working diligently with the City’s interdepartmental drought team to ensure the message about necessary water use reduction has been widespread, and to develop innovative solutions to help the City and community members meet its water use reduction target. Actual water use through the third quarter of FY 2016 was 9% lower than budget estimates. Actual supply costs through the third quarter of FY 2016 were 8% below budget, mostly due to the lower consumption. Figure 12: Water Consumption – Budget vs. Actual Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 15 Figure 13: Water Cost – Budget vs. Actual IV. Fiber Optics Commercial Dark Fiber Service The total number of commercial dark fiber customers was 105 as of the end of the third quarter of FY 2016. There was no change in the total number of customers from Q1 2016 to Q3 2016, but the total number of active dark fiber service connections serving commercial customers and the City increased from 232 to 234 (some customers have multiple connections). Commercial customers generate 81% of the dark fiber license revenues. Through the end of the third quarter of FY 2016, seventeen new dark fiber service connections to existing and new customers were completed, while twenty service connections were disconnected. Dark Fiber Optic Network Audit and Process Improvements Based on a request for proposals process, a vendor was selected in February 2016, to provide professional services to perform a physical inventory of the dark fiber optic network. The purpose of the audit is to improve the operation and maintenance of the network. The retrieved data from the audit confirms complete fiber routes and usage to optimize network reliability, minimize outages and improve efficiency in designing and installing new connections. The audit facilitates the collection of information and data that will verify customer connectivity and populate the geographical information system (GIS). The audit began February 22, 2016 and was completed April 29, 2016. The vendor audit reports were submitted for approval by staff as the audit progressed for each individual enclosure/splice point in the fiber backbone. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 16 In addition to the network audit, the fiber customer service team is working on streamlining existing customer engagement processes using a recently purchased Autodesk platform. The revamped system will facilitate inter-departmental collaborations and cut down on customer sign-up processes significantly. Google Fiber Staff has reviewed Google Fiber’s Draft Project Description (“Fiber to the Premises City-Wide Master Plan”) and the City Attorney’s office and department staff are currently working with Google’s business staff and legal counsel to finalize a Master Encroachment Agreement (MEA) for use of the public rights-of-way. The MEA will also facilitate a project determination under the California Environmental Quality Act. Other activities for the proposed project include finalizing a Master License Agreement (MLA) for use of City-controlled space on utility poles and conduit, discussions regarding a potential co-build,, in addition to hiring temporary or contract resources for the proposed project. Substantial staff and third-party contracting resources for legal services, engineering, inspection, planning and administration will be required in order to prepare for and implement any approved project by Google Fiber. The City has already incurred, and will incur, costs and expenses beyond what the City would otherwise recover under the Municipal Fee Schedule and will request that Google reimburse the City for such costs and expenses. On March 28, 2016, in anticipation of Google Fiber’s fiber optic network build-out, Utilities issued a request for proposals to add temporary resources to supplement and assist staff to perform the administrative, engineering, and operations tasks necessary to do a complete review of the large volume of pole attachment applications as well as inspections before and after construction. Staff estimates that 30 percent of the poles will require make-ready and/or replacement to accommodate new attachments by Google Fiber. Four bids were received and vendor interviews are being scheduled. Staff plans to bring a recommendation to the Council for the MEA, MLA and other aspects of the project by summer or early fall 2016. Fiber-to-the-Premises Network Co-Build Opportunities Based on Council direction, the City Manager and Chief Information Officer met with Google Fiber officials in January and February 2016, to explore what a conceptual “co-build” model for citywide fiber-to-the-premises. The key objective for these discussions was to explore the feasibility of the City collaborating with Google as it builds its network to install City fiber and supporting infrastructure, possibly aerially and underground, in furtherance of a parallel citywide dark fiber network. The intent of the discussions was to form a basis for a set of principles to pursue a model. Staff has met with Google representatives to develop technical specifications for a co-build that will lead to a draft Term Sheet, including cost sharing considerations. Once the a Term Sheet is Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 17 drafted and cost sharing methodologies are understood and negotiated by both parties, the City Attorney’s office and Google’s legal counsel will meet to discuss legal and regulatory issues affecting a co-build proposal. The City’s Chief Information Officer has also met with AT&T representatives regarding a co-build opportunity. AT&T GigaPower In April 2014, AT&T announced its plan to bring gigabit-speed broadband to the Silicon Valley area and other cities throughout their operating territory. AT&T’s “GigaPower” service is an upgrade to its existing U-verse service and will be deployed to residents initially in neighborhoods with high potential for adoption. AT&T plans to begin construction and provide GigaPower service to selected Palo Alto neighborhoods in 2016 under phase one of its project. AT&T is currently working with the City to secure permits to install two cabinets for its GigaPower launch in Palo Alto. Each cabinet serves approximately 400 premises. It is expected that AT&T will install approximately 25 additional cabinets in 2016/2017, with long-term plans to install a total of approximately 54 cabinets to provide GigaPower throughout most of the city. AT&T has informed staff that the GigaPower upgrade is contingent on achieving a sufficient customer take-up rate for service during its phased rollout. Fiber-to-the-Premises Master Plan and Wireless Network Plan Staff is currently working on the following tasks for the FTTP and wireless plans as directed by the Council on September 28, 2015: 1. Identifying disagreements with the Citizen Advisory Committee (CAC) regarding detailed assumptions, and their impacts, used to forecast the capital additions in the FTTP Master Plan prepared by CTC Technology & Energy (CTC). Staff and CTC met with the CAC in January and February to review the cost estimates in the FTTP Master Plan for outside plant construction and the assumptions developed to support the cost estimates. As a result of these meetings, the CAC is now in agreement with the FTTP network cost estimates in the report. 2. Developing a “Dig Once” ordinance: Staff is working with CTC to evaluate existing dig once models, ordinances and strategies implemented by other municipalities and counties. CTC’s findings and recommendations will be completed by mid-May and staff anticipates reviewing them with the Council by late summer or early fall 2016. 3. Developing and issuing a request for information (RFI) to explore potential municipally- owned and public-private partnership models for FTTP. The RFI was issued in May 2016. 4. Developing information and a scope of work to issue RFP(s) to expand Wi-Fi access in unserved City facilities and retail areas, in addition to dedicated wireless communications for Public Safety and Utilities: Staff expects to issue the RFP(s) by June 30, 2016.5 5 1) Citywide Mobile Data Network for Public Safety; (2) Point-to-Multipoint Network for Secure City Enterprise Access (Public Safety & Utilities); (3) Extension of existing City Wi-Fi to unserved City facilities & public areas/parks, and an evaluation of expanding wireless access in retail areas. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 18 Fiber and Wireless Telecommunications Project Manager On November 30, 2015, Council approved hiring a temporary Fiber and Wireless Telecommunications Project Manager for up to 3 years at an annual cost of $228,000. This position will manage various City fiber and wireless initiatives, including working as a special point of contact for the City if Google Fiber builds its network in Palo Alto. The interview process is underway and a candidate is expected to be selected by the end of June. Citizen Advisory Committee Staff continues to meet on a regular basis with the committee regarding fiber and wireless initiatives. In April 2016, the City Manager invited the six current committee members to renew their memberships and serve for the next 24 months (May 1, 2016 - April 30, 2018). All of the current members agreed to continue to serve. The City Manager also plans to recruit 3 to 5 new members to the committee and expects to appoint them by June 30, 2016. V. Public Benefit, Demand Side Management Programs and Communications Energy Efficiency, Water Conservation and Local Renewable Energy Program Achievements CPAU offers a wide range of customer programs and services to encourage energy and water efficiency and customer-owned renewable generation. Some of these programs are administered by CPAU staff, although the majority of the energy and water savings are achieved through third-party administered programs. The Annual DSM Report summarizes overall savings goals versus achievements, program-level achievements and expenditures, as well as key initiatives undertaken by CPAU. The Annual DSM Report for FY 2015 was provided to Council on April 18, 2016 and UAC in May 2016 (Staff Report 6715). 2016 Summer Demand Response Program The Demand Response Pilot Program (Program) is designed to encourage participating customers to reduce their electrical loads during summer peak days when electrical demand is high, helping to reduce Palo Alto’s annual peak electricity demand. Incentive payments are given to participating customers who are able to reduce their electrical loads when called upon by CPAU during high peak load periods. As of May 2, 2016, there are five participating customers at six locations. If participants took part in a Demand Response event, the aggregate load reduction would be about 500 kW. Home Efficiency Genie Program Staff launched a new residential energy audit program called the Home Efficiency Genie where residents pay a small co-payment for a comprehensive building performance audit. Since initial participation was slow, in December 2015 staff launched a co-marketing campaign with the PaloAltoGreen Gas program to increase participation in both programs. A program video was produced and the logo and website were redesigned to launch the extensive marketing campaign in January 2016. Two bill inserts, a Palo Alto Weekly ad, online ads, envelope ads and Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 19 an email blast later, participation picked up from 26 assessments in the second quarter to 35 assessments in the third quarter. As of the end of March 2016, a total of 95 assessments have been completed since the launch of the program in July 2015. Georgetown University Energy Prize Competition The competition attempts to reduce energy use in 2015 and 2016. The winner will receive a $5 million prize to be used for energy efficiency programs. After data from January through September 2015 was released, Palo Alto ranked 15th (out of 50) in the competition, as determined by energy usage reduction of their residential, school, and municipal customers. In February 2016, the City released a new Utility Portal where customers can learn about their commodity use, CPAU’s efficiency programs, tips to reduce usage, and CPAU’s new energy savings lottery program (a key part of our Georgetown strategy) that will be unveiled in Summer 2016. While 25% of the competition’s scoring is based on energy usage, the remaining 75% includes factors such as whether energy saving programs are innovative, replicable, lasting, and related to education. Thus, to strengthen its position CPAU is engaging with schools and community organizations to promote Utility energy efficiency programs such as the lottery and the Portal. CPAU’s high school internship program engages customers through students and their families, and we are coordinating with the Cool City Challenge program to ensure that their block leaders are well-informed about Utility programs and can promote the programs amongst their neighbors. On May 9, the City Council approved dedicating $1 million of the $5 million prize, should the City win, to the Palo Alto Unified School District. The district is excited to help the City win the prize and has plans for how it could use the $1 million for efficiency improvements. On March 17th, Palo Alto hosted the second of five regional Georgetown University Energy Prize workshops at the Mitchell Park Community Center. The workshop was designed for elected officials and other community leaders to discuss strategies of how to engage people in energy efficiency measures. The other workshop host cities include Bellevue WA, Cambridge MA, Chattanooga TN and Madison WI. At the Palo Alto workshop, Mayor Burt delivered the welcoming address and Chief Sustainability Officer Gil Friend was the keynote speaker. A video of the event can be viewed at: https://www.facebook.com/guenergyprize/ PaloAltoGreen Gas The voluntary PaloAltoGreen Gas (PAGG) program provides the opportunity for residential and commercial customers to reduce or eliminate the impact of GHG emissions associated with their gas usage, through the purchase of certified environmental offsets. The program’s goal for 2020 is to achieve subscription of 20% of natural gas customers, representing approximately 10% of gas load and 16,000 metric tons of GHG emission reduction. As shown in Figure 14 below, as of end of April 2016, 909 customers have signed up for PAGG, representing 5.37% of March’s total city gas load. Although the bulk of the participants are residential customers, the majority of the gas load enrolled in the program is for City facilities since all City facilities enrolled in the program for 100% of their gas usage starting in July 2015. Staff Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 20 anticipates that program participation will grow following the marketing push with Home Efficiency Genie that started in January 2016 with co-marketing to continue into the 4th quarter of 2016. Figure 14: PaloAltoGreen Gas Program Performance Water Conservation CPAU partners with the Santa Clara Valley Water District (SCVWD) to provide residential and commercial water conservation programs which include free water audits to residential customers, landscape surveys, rebates for landscape conversions, irrigation hardware, clothes washers, High-Efficiency Toilets (HETs) and urinals. Despite a vastly increased budget during the drought, SCVWD’s funding for the Landscape Rebate Program was depleted for FY 2016. Net Energy Metering Cap On October 26, 2015 City Council approved a formal definition of the Net Energy Metering (NEM) cap of 9.5 MW (Staff Report 6139). As of April 30, 2016 Palo Alto has 7.6 MW of local solar photovoltaic (PV) capacity, representing 79% of the NEM cap. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 21 PV Partners All remaining rebate funds for the PV Partners program were reserved on April 21, 2016. CPAU has opened a wait list for customers installing a PV system on a small commercial site (served by electric rate schedule E-2 or E-4). CPAU’s share of the SB1 mandated goal was to pay $13M in rebates for 6.5 MW of PV system capacity by 2017. Palo Alto’s SB1 funded PV installations are expected to total 7.3 MW by 2018 and the final performance-based incentive payments are expected to end in fiscal year 2023. Education, Workshops and Community Outreach Activities March was the beginning of the spring series of workshops and events, reaching out to approximately 1,000 individuals. For the first event of the season, Palo Alto hosted a Georgetown University Energy Prize Conference for neighboring cities and community leaders to discuss strategies for engaging customers in energy efficiency measures. For the first workshop of the season, CPAU teamed with BAWSCA (Bay Area Water Supply and Conservation Agency) and coordinated a rain barrel installation workshop. Attendance was boosted to 65 residents with the use of the Utilities email blast and Nextdoor. For Earth Day related events staff hosted a Native Garden workshop along with tabling Earth Day events at Wilson Sonsini, Tesla, Addison Elementary School, Nest and the Great Race for Water. At the May Fete Parade, the Utilities table was the most popular booth where children and parents were lining up to scratch and sniff natural gas and play a game to answer questions about energy and water conservation. Table 3: Spring 2016 Events and Workshops Event Date Attendance Georgetown University Energy Prize Conference 3/17/2016 35 Rainwater Harvesting/Rain Barrel Workshop (BAWSCA) 3/26/2016 65 Design It Yourself Native Garden (BAWSCA) 4/13/2016 93 WSGR Wilson Sonsini Goodrich Rosati - Earth Day Event 4/19/2016 100+ Tesla - Earth Day Event 4/21/2016 100+ Addison Elementary School Earth Day Event 4/21/2016 50 Nest Bring Your Kids to Work Day 4/28/2016 40 Great Race For Water/Run the Earth 5k - Climate Change 4/30/2016 200 May Fete Parade 5/7/2016 200+ Graywater to Green Garden (BAWSCA) 5/21/2016 Tbd Communications Update This section summarizes communications highlights, updates on major campaigns and noteworthy events. SEPA Top 10 Award for Solar Watts per Customer CPAU earned a spot on the national Top 10 utility solar list compiled by the Smart Electric Power Alliance (SEPA - formerly the Solar Electric Power Association). SEPA ranked CPAU third Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 22 for the number of “Watts per Customer” in 2015. As of the time SEPA conducted its survey for 2015, Palo Alto integrated a total of 1,846 solar electric watts per customer and 861 photovoltaic (PV) systems onto the grid. SEPA’s ninth annual survey of solar activities includes figures from more than 300 utilities across the country. This is the third time CPAU has made SEPA’s Top 10 list. Awards were announced April 12 at SEPA’s flagship Utility Solar Conference in Denver. SEPA also awarded Palo Alto with Public Power Utility of the Year in 2014, and every year dating back from 2013 to 2009, as well as 2007, the PV Partners Program earned Palo Alto with a spot on the top 10 list of all municipal utilities nationally for cumulative installed solar capacity or annual installed capacity. Additionally, in 2002, SEPA awarded the City with the Solar Business Achievement Award for Development of a Solar Community. The Great Race for Saving Water The City teamed up with the Tuolumne River Trust, Palo Alto Weekly, Project Enybody, KEEN, non-profits and environmental organizations to host a 5K fun run/walk and Earth Day festival at the Baylands on April 30. Mayor Burt, Council Member Berman, City Manager Keene, and other representatives from the City Manager’s Office, Community Services, Fire, Office of Emergency Services, Police, Public Works Utilities, and local youth and community organizations who came out to join the approximately 200 race participants. Attendees enjoyed a fun-filled day with raffle prizes, music, goodies, and a chance to catch the “running toilet!” Photos are available on the City’s SmugMug account and Facebook. Information at www.cityofpaloalto.org/GreatRace. Annual Walking & Mobile Gas Leak Survey CPAU began its annual safety check of gas utility services on April 25. This annual, routine safety check is conducted every year as required by Department of Transportation Pipeline Safety Regulations, and is carried out to ensure the safety of all who live and work in Palo Alto. Approximately one-half of the city is covered every year so that the City’s entire gas service system can be reviewed in a two year period. The 2016 survey begins on April 25 and should be finished by September. A City contractor, Manesco Corporation, will walk residential areas to check for gas leaks along pipes, gas meters and covers. The business districts will be surveyed with a moving vehicle canvassing natural gas service points, mains and meters. The mobile survey includes atmospheric tests near gas mains, in utility manholes, at pavement and sidewalk cracks, and other locations in which it is possible to identify gas leaks. In the end, over 200 miles of gas main pipeline will be checked through this thorough review. If any gas leaks are found, they are documented and repaired according to CPAU’s policies. Read more on our CPAU news page. Mayor’s Green Business Leader Awards The City’s "Mayor Green Business Leader” Awards program recognizes and promotes Palo Alto companies who have made major strides in improving building energy efficiency. In Palo Alto, Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 23 businesses that benchmark their energy use and receive ENERGY STAR certification are considered a Green Business Leader. On April 4, Mayor Burt honored eight companies for their leadership in energy efficient building management in 2015. Thirty buildings totaling over 2.3 million square feet of office space qualified for this 4th annual award. CPAU’s news webpage (cityofpaloalto.org/utilities) provides more information about the companies honored. National Mayor’s Challenge for Water Conservation Mayor Burt joined the Mayor’s Challenge for Water Conservation in April. This is a national competition in which city mayors encourage their residents to save water and sign the “My Water Pledge” on behalf of their city. The city with the most pledges at the end of the month wins, and residents are then entered into a chance to win prizes such as a new Toyota Prius! The water pledge is at mywaterpledge.com CPAU Celebrated April as National Safe Digging Month April is National Safe Digging Month, a campaign to educate people to "Know What's Below and Call 811 Before You Dig." The City promotes this important safety reminder to our community throughout the year, but places additional emphasis on the message in the month of April. Excavation damage remains one of the leading causes of gas and other utility pipeline accidents. Our message informs people that these accidents are preventable by first calling 811 prior to digging. The Underground Service Alert (USA) is a free service that will come out and mark all underground utilities. Visit Call811.com for more information. Palo Alto Recognized with Tree Line USA Utility Award For the second year in a row, CPAU has been recognized with the Tree Line USA Utility award by the National Arbor Day Foundation. CPAU has demonstrated how trees and utilities can co-exist for community and citizen benefits by exceeding the five core standards criteria: 1. Quality Tree Care ensures that industry standards for pruning, planting, removals, trenching, and tunneling near trees are consistently followed. 2. Annual Worker Training for Utility employees and contract workers. 3. Tree Planting and Public Education programs are available to the public and paying customers, demonstrating proper tree planting, placement, and pruning, while expanding the tree canopy in the community. 4. A Tree-Based Energy Conservation Program places special consideration on the value of trees in conserving energy. 5. Arbor Day Celebration events are sponsored or participated in annually, including collaboration with community groups. Read more on the CPAU news page. Automated Phone Surveys for Gas Safety Awareness In March, CPAU participated in the federally mandated Gas Overall Awareness Level (GOAL) survey, a nationwide program to assess the public’s gas safety knowledge. This telephone survey is administered by the American Public Gas Association, and conducted every year to Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 24 insure that people living along a gas pipeline have adequate gas safety information. Both residential and non-residential customers are selected randomly for polling through this automated phone survey. Over 96% of the respondents believed they had adequate safety information in regards to gas safety measures. Communication about Rate Adjustments for Fiscal Year 2017 The City is proposing rate increases for electric, gas, water, wastewater, refuse and storm drain services effective July 1, 2016. CPAU Communications staff has developed a communications plan to explain the reasons behind the rate increases, including talking points, the City’s webpage (www.cityofpaloalto.org/RatesOverview), information in utility bills, frequently asked questions, and through direct communication with internal and external stakeholders, such as City Council, City staff, media and customers. One cost driver for the rate increases is the ongoing drought. The drought has reduced hydroelectric supplies, requiring the City to purchase replacement electricity supplies. Gas revenues declined as the year was unusually warm and customers used less hot water while saving water. Water savings have also reduced revenues and increased the cost of water from San Francisco. The City has drawn down reserves over the past few years in order to offset rate increases to the electric and gas utilities. Now, facing vastly lowered reserves and higher commodity costs, the City must raise rates to cover all costs—many of which are fixed—to operate and maintain safe and reliable utility services. The City Council will consider the rates on June 13 as part of the FY 2017 budget review and approval process. Drought Outreach The City continued its outreach efforts in response to California’s drought conditions, including educating the community about the need to irrigate trees to preserve their lasting legacy through the severely dry conditions. CPAU’s webpage dedicated to drought response (www.cityofpaloalto.org/water) provides links to a variety of resources related to water management. Staff will update outreach materials to reflect new regulations by the State Water Resource Control Board and communicate any changes to customers via standard marketing and communication channels: utility bill inserts, website, social media, newspaper and online advertisements, television commercials, email newsletters, outreach to neighborhood, business, school and community groups through email and in-person meetings. VI. Research and Development and Innovation Program for Emerging Technologies CPAU’s Program for Emerging Technologies, or PET, (www.cityofpaloalto.org/UTLInnovation) provides the opportunity for local businesses and organizations to submit proposals for innovative and impactful products to CPAU for review as a prospective partner. The goal is to find and nurture creative products and services that will manage and better use electricity, gas, water and fiber optic services. From the program’s inception in June 2012 through the third Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 25 quarter of FY 2016, the program received a total of 46 applications. Table 4 below summarizes the status of all applications through the third quarter of FY 2016. Table 4: Status to date of all applications to the Program for Emerging Technologies Deadline Total Received Under Review Declined/Closed Active Completed July 2012 2 0 2 0 0 Oct 2012 5 0 5 0 0 Jan 2013 1 0 1 0 0 April 2013 5 0 3 0 2 July 2013 3 0 2 0 1 Oct 2013 5 0 3 1 1 Jan 2014 3 0 3 0 0 April 2014 4 0 1 2 1 July 2014 2 0 2 0 0 Oct 2014 5 0 2 2 1 Jan 2015 2 0 1 1 0 April 2015 6 2 3 0 1 July 2015 2 0 1 0 1 Oct 2015 1 0 0 0 1 Jan 2016 9 3 3 0 3 TOTAL 55 2 32 6 12 PET Project Highlight from the third quarter of FY 2016:  Enabling High Penetrations of Renewables on the Electric Distribution System – A research team from the SLAC National Accelerator Laboratory and Stanford University held a kick-off workshop on March 30, 2016, for their U.S. Department of Energy funded “VADER: Visualization and Analytics of Distributed Energy Resources” research program. Two CPAU staff working on distributed energy resources and emerging technologies participated in the workshop. The proposed VADER program is to develop an open-source unified data analytics platform that will enable the integration of high penetrations of renewables on the electric distribution system. CPAU staff provided feedback to help maximize the value of the results of the 3-year research program to Palo Alto’s service territory and other similar small municipal utilities. Outcomes will facilitate the City reaching multiple strategic sustainability goals, including meeting 4% of the City’s energy needs from local solar by 2023. Customer Connect Pilot Program This program provided advanced meters (AMI) for up to 300 homes, giving participants the ability to monitor and control their electricity, natural gas and water consumption. This program also gave CPAU the opportunity to test different meter technologies, database management and network systems. The pilot program is currently in its fourth year. All 119 customers who signed up to be a part of the associated time-of-use (TOU) residential electric rate pilot have now been enrolled. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 26 The current AMI system is able to detect potential water leaks from participants. In 2015, 24% of pilot participants (69 of the 300 participants) had at least one water leak incident detected from the AMI system. The leaks were estimated at 4,128 gallons per day and without the AMI system these leaks would have persisted for far longer. Ancillary programs based on the AMI system were also developed and implemented; these include conservation voltage reduction, outage notification, customer load profile analysis, and a pilot program for seniors with Palo Alto Medical Foundation. An evaluation of this program is being planned for early 2017. The pilot program is currently slated to end in December 2017. VII. Legislative and Regulatory Issues Summary CPAU staff has been very active on many legislative and regulatory issues during the first part of the year. Staff met with federal and state elected and appointed officials, testified in a state legislative committee hearing, and worked directly with political offices to help craft legislative language. Staff traveled to Sacramento and Washington, D.C. to share Palo Alto’s environmental goals and programs, and to discuss policies that most benefit residents and businesses. Staff continues to work with the Northern California Power Agency (NCPA) and the California Municipal Utilities Association (CMUA), and interacts more frequently with the City’s state and federal legislative consultants. Staff also monitors activity by the California Public Utilities Commission (CPUC), the California Air Resources Control Board (CARB), the California Energy Commission (CEC), and the California Independent System Operator (CAISO). State Legislative Issues 2016 is the second year of California’s two-year (2015-2016) legislative session. Most bills new in 2016 and carried over from 2015 are moving through their respective policy and fiscal committees. The legislative focus thus far includes a successor to the net energy metering program, deterring residential excessive water users, renewable resources, and climate pollutants. While CPAU staff tracks many bills, those noted below are ones of heightened monitoring: Energy Legislation AB 2339 (Irwin) – Net energy metering (NEM): This bill defines a specific way for most Publically Owned Utilities (POUs) across the state to calculate a NEM program cap. As currently written, this bill would (1) extend the current NEM program, (2) cause Palo Alto to expend resources simply to comply with this bill, and (3) jeopardize the implementation of our successor program already undergoing citywide review. CPAU staff has been very active in communicating our concerns, which includes testifying at a policy committee hearing. Staff is working closely with NCPA in opposition to the bill, and engaging with CMUA. Status: Referred to Appropriations Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 27 AB 2699 (Gonzales) – Department of Consumer Affairs: Contractor's State License Board: Solar energy systems companies: Regulations. Otherwise known as the solar customer consumer protection bill, AB 2699 would require that the Contractor’s Board develop and make available on its Web site a “solar energy system disclosure document.” This document must be provided by the solar companies to the consumer prior to completion of a sale, financing, or lease of a solar system. The bill would require the Board to establish, through regulation requirements for a contractor, a blanket performance and payment bond for the purpose of solar installation. Introduced in response to complaints about some “bad actors” in the solar industry and to provide consumer protections, it is supported by NCPA and CMUA. Status: Referred to Appropriations AB 1800 (Hadley) – Utility outage compensation claims: annual posting. This bill would require electric utilities to annually post on its Web site specified information relating to utility outage compensation claims for the previous year. The posting requirement is applicable only to those outages that the CAISO, the CUC, or the utility has determined are the fault of the utility or those claims relating to outages that the utility has determined to pay. It prohibits information relating to utility outage compensation claims from being admitted as evidence in any action for damages against a local publicly owned electric utility arising out of an outage. Status: Referred to Appropriations SB 32 (Pavley) – California Global Warming Solutions Act of 2006: This bill would require CARB to approve statewide GHG emissions limits equivalent to 40% below the 1990 level by 2030 and 80% below the 1990 level by 2050, with an interim goal by 2040. Prohibits CARB from implementing the next update of the California Global Warming Solutions Act of 2006 Scoping Plan until it has taken specified actions, including waiting at least one year before adopting the Plan. While CARB is moving forward with a scoping plan for meeting the post-2020 targets, this bill would formalize CARB’s role. Status: Stalled in the Assembly in 2015 Water Legislation SB 814 (Hill) – Drought: excessive water use: urban retail water suppliers: This bill, which would be enforceable only during a declared emergency based on drought conditions, states that excessive water use by a residential customer is prohibited and requires each urban retail water supplier to establish a method to identify and restrict excessive water use. CPAU and CMUA staff actively engaged with Senator Hill’s office before the bill was introduced to express concerns with language related to public records requests of water users. That language was amended out. Status: Referred to Appropriations AB 2594 (Gordon) – Stormwater resources: use of captured water. Currently, the Stormwater Resource Planning Act authorizes public agencies to develop a stormwater resource plan that meets specified standards to address the capture of stormwater. This bill would authorize a Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 28 public entity that captures stormwater, before the water reaches a natural channel, to use the captured water. Status: Referred to Appropriations Natural Gas Legislation AB 2460 (Irwin) – Solar Thermal Systems. This bill would revise the current Solar Water Heating and Efficiency program to promote the installation of solar water systems; set the funding cap between January 1, 2017, and July 31, 2027, at $1 billion; reserve 50% of the total program budget for low-income residential housing or in buildings in disadvantaged communities; and extend the operation of the program through July 31, 2027. It would also extend the current requirement that the governing body of each POU providing gas service, until August 1, 2027, adopt, implement, and finance a solar water heating system incentive program. Status: Referred to Appropriations Federal Legislative Issues After much external discussion, Senator Feinstein introduced S. 2533, The California Long-Term Provisions for Water Supply and Short-Term Provisions for Emergency Drought Relief Act. The bill allows for competitive funding of recycled water projects, long-term water supply projects and short-term, temporary solutions to make the water-delivery system more efficient during the current drought. This bill has not yet been heard in committee. Staff also follows Representative Tonko’s H.R. 4653, which would amend the Safe Drinking Water Act to increase assistance for States, water systems, and disadvantaged communities among other provisions. Thus far, the bill has not moved to its first committee. Meanwhile, Senator Murkowski’s S.2012, the Energy Policy Modernization Act of 2015, passed the Senate and will head to the House for conference. NCPA is very active on S.2012 through its federal lobbyist; this bill was also discussed recently with congressional staff when CPAU, NCPA, and other POU representatives traveled to Washington, D.C. for NCPA’s Federal Policy Conference. This April conference also provided an opportunity to support further action on other Palo Alto and NCPA priorities.  Hydropower licensing reforms: modernizing the regulatory review for hydropower projects and removing unnecessary barriers to relicensing;  Workforce development amendments to S.2012: allowing participation of local governments and adding continuing education (retraining opportunities) as an eligible program activity under the workforce development title;  Protection of tax-exempt financing: maintaining existing rules on the deductibility of interest earned on municipal tax-exempt bonds; and  Combating wildfires: NCPA is advocating for adequate federal funding for fire suppression. This is important to Palo Alto because of wild fire impacts to the City’s hydro resources and the environmental impact of wild fires. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 29 State Regulatory Proceedings California Air Resources Board CARB continues to hold public workshops regarding a proposed regulation to create POU compliance penalties supporting enforcement of the Renewable Portfolio Standard (RPS) Program. Following NCPA comments and a workshop, CARB agreed to include specific language articulating how they will actually process penalty recommendations. CMUA is also active on this issue, and has submitted comments. A major focus for CARB this year is the agency’s coordinated updates to the state’s climate Scoping Plan, updates to the cap-and-trade regulations (both to address the post 2020 GHG reduction goals), and implementation of the federal Clean Power Plan, which California is moving ahead in implementing despite the Supreme Court’s current stay on enforcement. Cap- and-trade workshops continued through April; the final update of the Scoping Plan is planned for the end of the year, with final plan approval anticipated in 2017. California Energy Commission The CEC began working on implementing the building energy use data access and public disclosure provisions of AB 802. Specifically, the CEC will establish a new statewide building energy use benchmarking and public disclosure program. The prior program ended in 2015; this new program will be implemented in 2017. Thus far, the CEC has held a public workshop and received comments from stakeholders, including NCPA and CMUA. The CEC is also working on updating the power source disclosure (power content label) regulations to effectuate changes consistent with CMUA and other utility stakeholder’s suggestions. Another major focus this year for CEC is SB 350 implementation. In April CPAU staff attended CEC’s first workshop on Integrated Resource Plans (IRP). SB 350 requires larger electric POUs (including Palo Alto) to prepare IRPs every 5 years and submit them to the CEC for review. At April’s workshop, CPAU staff described Palo Alto’s existing long term planning activities and how those efforts already meet the requirements of SB 350. VIII. Utility Financial Summary This section describes the unaudited actual financial results for FY 2016 for all Utilities funds. The Council-adopted long-term Financial Plans for the Electric, Gas, Wastewater Collection, and Water Funds will be updated for FY 2017 during the budget review and approval process. Electric Utility Overview Sales through the third quarter of FY 2016 were 1.0% lower than expected. Sales revenues have been lower by 0.5%, but due to the ongoing drought, deliveries from Western and Calaveras hydroelectric resources have been lower than average. While this has necessitated additional electricity market purchases, market prices have been lower than projected. Transmission costs Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 30 have continued to be higher than budget. Offsetting this, but also increasing market purchases, are lower renewables costs stemming from a delayed start to the Kettleman and Hayworth solar projects. Current projections indicate higher net energy costs of $1.48 million for FY 2016. This combination of higher costs and lower revenues would result in a decrease in the level of the Electric Supply Operations Reserve to $6.4 million and take the Distribution Operations Reserve below zero. Because of this, several transfers were recommended in the FY 2016 and FY 2017 Financial Forecasts: $9 million will be transferred from the Supply Rate Stabilization Reserve, and $5.6 million each from the Hydro Rate Stabilization and CIP Reserves to help bring the Supply and Distribution Operations Reserves to near minimum levels. After these transfers, the Electric Rate Stabilization Reserve has $5.4 million which could be used for contingencies. As shown in Table 7, the Electric Utility CIP Reappropriation and Commitment Reserves totaled $14.2 million at the end of Q3 FY 2016, of which $3.5 million was under contract. Gas Utility Overview Gas Utility sales through the third quarter of FY 2016 were lower than the adopted budget by 7.1%. FY 2015 sales were 13.2% lower than budget, mainly due to warm weather and also to lower (hot) water usage because of the drought. Decreased consumption has resulted in $1.3 million lower distribution sales revenue through the third quarter, and this has been reflected in midyear adjustments to reserves. Gas supply revenues to date have also been lower than budget by $2.3 million, or around 28%, although costs are reduced as well since as gas prices are passed through directly to customers through the market-based monthly-varying commodity rate. The Gas Operations Reserve is projected to be between the minimum and maximum reserve guideline range for FY 2016. As shown in Table 8, preliminary levels for the Gas Utility CIP Reappropriation and Commitment Reserves totaled $8.3 million at the end of Q3 FY 2016, of which $284,000 was committed to projects under contract. Wastewater Collection Utility Overview Sales revenues are projected to be slightly lower than forecast, mainly due to lower commercial wastewater revenues, which are based on winter water usage. The Wastewater Collection Operations Reserve is projected to be at the minimum reserve guideline level for FY 2016. Should it be needed, the CIP reserve has an additional $2.6 million that could be utilized in case of emergency. As shown in Table 9, the Wastewater Collection Utility CIP Reappropriation and Commitment Reserves totaled $12.2 million at the end of Q3 FY 2016, of which $10.4 million was committed to projects under contract. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 31 Water Utility Overview Due to the ongoing drought, the Water Fund continues to be volatile with respect to sales and revenue. Because of the reductions in water use mandated by the SWRCB after the preparation of the FY 2016 Financial Plan, sales revenues and purchase costs were revised downward and Council activated the drought surcharge effective September 1, 2015. The FY 2016 Financial Plan estimated water purchases of 4.77 million hundred cubic feet (CCF) for FY 2016, but this was revised to 4.27 million CCF after the SWRCB mandate. Customers in Palo Alto have exceeded these savings targets, and as such, sales and revenues are projected to be even lower than what was presented in the most recent financial plan updates by around $800,000. Corresponding purchase cost savings to date are around $1.1 million. The Water Operations Reserve is projected to be within the guideline range, but should it be needed, the CIP Reserve has an additional $13.3 million that could be utilized. As shown in Table 10, the Water Utility CIP Reappropriation and Commitment Reserves totaled $17.2 million at the end of Q3 FY 2016, of which $6.2 million was for projects under contract. Fiber Optic Utility Overview Fiber revenues and expenses through the third quarter of 2016 are $3.8 million and $1.7 million respectively. Revenues are in alignment with the FY 2016 budget. Total expenses are projected to be $1.0 million below budget, $2.8 million instead of $3.8 million. The Fiber Fund budgeted $1.2M for the Fiber Optic System Rebuild CIP project. Since the fiber optic network audit is still in progress, the findings will not be available until the fourth quarter. $1.0 million of the CIP rebuild project was set aside for construction and repairs of the dark fiber network. This phase of the project will not begin until FY 2017. As shown in Table 6, the Fiber Optics Rate Stabilization Reserve is projected to be $23.4 million as of the end of FY 2016. Financial Projections and Operations Reserve Balances Table 5 is a summary of financial projections for all funds as of the third quarter of FY 2016. Table 6 provides a summary of the projected reserve balance for the Operating Reserves for all funds as of the end of FY 2016. Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 32 Table 5: Financial Projections, FY 2016 Sales Volumes Revenue ($000) Expense ($000) Net Reserve Change ($000) Electric Utility Financial Plan 717,427,173 kWh 129,249 (139,587) (10,338) Current Forecast 710,104,903 kWh 123,121 (142,155) (19,034) Change from Financial Plan -7,322,270 kWh (6,128) (2,568) (8,696) -1.0% (4.7%) 1.8% Gas Utility Financial Plan 22,537,907 therms 35,993 (40,683) (4,690) Current Forecast 20,931,666 therms 30,665 (35,886) (5,221) Change from Financial Plan -1,606,241 therms (5,328) 4,797 ( 531) -7.1% (14.8%) (11.8%) Water Utility Financial Plan 3,313,185 ccf 41,517 (46,454) (4,937) Current Forecast 2,825,909 ccf 38,764 (44,999) (6,235) Change from Financial Plan -487,276 CCF (2,753) 1,455 (1,298) -14.7% (6.6%) (3.1%) Wastewater Collection Utility Financial Plan 18,319 (20,164) (1,845) Current Forecast 18,106 (20,041) (1,935) Change from Financial Plan (213) 123 ( 90) 0.1% (0.6%) Fiber Optic Utility Financial Plan 4,842 (3,785) 1,057 Current Forecast 4,842 (2,785) 2,057 Change from Financial Plan 0 0.0% 1,000 (26%) 1,000 Table 6: FY 2016 Operations Reserves ($000) Electric Supply Electric Distribution Gas Water Wastewater Collection Fiber Optic * Beginning 16,012 6,486 10,847 11,664 2,431 21,361 Projected Change (9,589) (9,445) (5,221) (6,235) (1,935) 2,057 Transfers 11,217 9,340 1,531 4,700 3,950 - FY 2016 Ending 17,460 6,381 7,157 10,129 4,446 23,418 Reserve Minimum 14,596 8,937 4,772 6,208 2,541 895 Reserve Maximum 29,193 13,426 9,543 12,415 6,352 2,238 * For Fiber Optics, the Reserve is the Rate Stabilization (not the Operations) Reserve Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 33 CIP Reserves (Reappropriations and Commitments) Summary Table 7: Electric CIP Reappropriations and Commitments Table 8: Gas CIP Reappropriations and Commitments Table 9: Wastewater Collection Utility CIP Reappropriations and Commitments . Table 10: Water Utility CIP Reappropriations and Commitments Includes unspent funds from previous years carried forward or reappropriated into the current fiscal year **Equal to Reserve for Reappropriations + Reserve for Commitments (CIP Reserves). Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 34 Table 11: FY 2016 Q3 Reserve Report from the City’s Financial System Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 35 Residential Bill Comparisons (based on 30 day bills) Table 12: Residential Electric Bill Comparison ($/month) As of May 1, 2016 Season Usage (KWh/mo) Palo Alto PG&E Santa Clara Roseville Summer (May -Oct) 300 28.57 54.64 34.16 53.70 365 (Median) 37.04 69.12 41.83 60.57 650 76.33 152.24 75.47 98.42 1200 172.03 352.38 140.38 184.87 Table 13: Residential Natural Gas Bill Comparison ($/month) As of May 1, 2016 Season Usage (therms) Palo Alto Menlo Park, Redwood City, Mountain View, Los Altos, and Santa Clara (PG&E Zone X) Roseville (PG&E Zone S) Summer (Apr-Oct) 15 19.93 17.77 18.35 18 (Median) 21.94 21.46 23.37 30 35.13 41.55 43.46 45 52.91 66.66 68.57 Table 14: Residential Water Bill Comparison ($/month) As of May 1, 2016 Usage CCF/month Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward 4 41.31 44.60 43.69 31.46 33.48 16.64 28.68 (Winter median) 7 63.47 63.24 57.13 48.77 45.34 29.12 48.42 (Annual median) 9 82.51 75.67 66.77 60.31 53.26 37.44 61.58 (Summer median) 14 130.11 108.30 95.46 89.16 74.04 58.24 96.24 25 234.83 180.91 182.14 187.23 120.30 104.00 181.49 Based on the FY 2013 BAWSCA survey, the fraction of SFPUC as the source of potable water supply was 100% for Palo Alto, 95% for Menlo Park, 100% for Redwood City, 87% for Mountain View, 10% for Santa Clara and 100% for Hayward. Table 15: Residential Wastewater Collection (Sewer) Bill Comparison ($/month) As of May 1, 2016 Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward 31.95 81.08 74.95 28.80 32.01 37.94 28.93 Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 36 Table 16: Median Residential Overall Bill Comparison ($/month) As of May 1, 2016 Utility and Usage Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward Electricity (365 kWh/mo) $ 37.04 $ 69.12 $ 69.12 $ 69.12 $ 69.12 $ 41.83 $ 69.12 Gas (18 th/mo) 21.94 21.46 21.46 21.46 21.46 21.46 21.46 Wastewater 31.95 81.08 74.95 28.80 32.01 37.94 28.93 Water (9 CCF/mo) 82.51 75.67 66.77 60.31 53.26 37.44 61.58 TOTAL $173.44 $247.33 $232.30 $179.69 $175.85 $138.67 $181.09 Non-Residential Bill Comparisons Table 17: Non-Residential Electric Bill Comparison ($/month) As of May 1, 2016 Usage (KWh/mo) Palo Alto PG&E Santa Clara Roseville 1,000 140 263 176 140 160,000 21,290 32,856 19,965 20,034 500,000 61,395 78,536 61,124 49,731 2,000,000 213,070 373,383 236,304 188,897 Table 18: Non-Residential Natural Gas Bill Comparison ($/month) As of May 1, 2016 Usage (therms/mo) Palo Alto PG&E 500 497 437 5,000 4,298 3,642 10,000 8,808 6,507 50,000 42,596 27,429 CIP Project Detail Tables showing the details regarding the Capital Improvement Program projects are shown in: 1. Table 19 for the Electric Utility; 2. Table 20 for the Gas Utility; 3. Table 21 for the Wastewater Collection Utility; and 4. Table 22 for the Water Utility Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 37 Table 19: Electric Utility CIP Project Detail (pg 1/2) Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 38 Table 19: Electric Utility CIP Project Detail (pg 2/2) Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 39 Table 20: Gas Utility CIP Project Detail (pg 1/2) Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 40 Table 20: Gas Utility CIP Project Detail (pg 2/2) Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 41 Table 21: Water Utility CIP Project Detail Utilities Quarterly Update for Third Quarter of FY 2016 June 2016 42 Table 22: Wastewater Collection Utility CIP Projects City of Palo Alto (ID # 7013) City Council Staff Report Report Type: Informational Report Meeting Date: 6/27/2016 City of Palo Alto Page 1 Summary Title: State Gas Tax Audit Title: State Gas Tax Audit and Response From: City Manager Lead Department: Administrative Services This is an informational report and no City Council action is required. Discussion On April 18, 2016 the California State Controller issued an audit report on the City of Palo Alto Special Gas Tax Street Improvement Fund (Attachment A). The audit report was distributed to the Mayor and staff is now forwarding it to Council. The audit found that the City had accounted for and expended its gas tax allocations in compliance with State requirements. However, the report notes that the fund balance in the Special Gas Tax and Street Improvement Fund was understated by $994,217 as of June 30, 2013 and a procedure is needed to appropriately reference project transfers in the future. The reason for the understatement was due to the City transferring the funds to another fund, Stanford Research Park Fund, for street-related expenditures without an appropriate transfer cross reference. The City, however, never expended the funds and the funds were subsequently returned to the Special Gas Tax and Street Improvement Fund. The return of the funds is identified on page 114 of the 2015 City of Palo Alto Comprehensive Annual Financial Report (CAFR). These funds were used in the FY2016 capital improvement budget to fund street maintenance and safe routes to school projects as transfers from the Gas Tax Fund, which is appropriate and addresses the audit issue. To address the second part of the recommendation in the audit, staff has created a procedure that clearly identifies the project to which transfers are made. Transfers continue to be documented in the City’s SAP financial system. Staff will send a letter to the State Controller making them aware of the need procedure in response to the audit. Attachments:  Attachment A - Gas Tax Audit from State Controller (PDF) CITY OF PALO ALTO Audit Report SPECIAL GAS TAX STREET IMPROVEMENT FUND July 1, 2007, through June 30, 2013 TRAFFIC CONGESTION RELIEF FUND ALLOCATIONS July 1, 2005, through June 30, 2011 PROPOSITION 1B FUND ALLOCATIONS July 1, 2007, through June 30, 2013 BETTY T. YEE California State Controller April 2016 BETTY T. YEE California State Controller April 18, 2016 The Honorable Patrick Burt Mayor of the City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Dear Mayor Burt: The State Controller’s Office audited the City of Palo Alto’s Special Gas Tax Street Improvement Fund for the period of July 1, 2007, through June 30, 2013. The audit should have included all years subsequent to the prior audit, which covered through June 30, 2003; however, we were unable to review the records for the period of July 1, 2003, through June 30, 2007, because these records were not available due to the City’s seven-year record retention policy. We also audited the Traffic Congestion Relief Fund (TCRF) allocations, recorded in the Capital Improvement Fund, for the period of July 1, 2005, through June 30, 2011, and the Proposition 1B Fund allocations, recorded in the Capital Improvement Fund, for the period of July 1, 2007, through June 30, 2013. Our audit found that although the city accounted for and expended its Special Gas Tax Street Improvement Fund, TCRF allocations, and Proposition 1B Fund allocations in compliance with requirements, the city understated the fund balance in the Special Gas Tax Street Improvement Fund by $994,217 as of June 30, 2013, because it transferred the amount to another fund with the intent of using it for street-related expenditures, but the funds were never spent. If you have any questions, please contact Christopher Lek, Interim Chief, Local Government Audits Bureau, at (916) 284-0120. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/rg cc: Lalo Perez, Chief Financial Officer City of Palo Alto Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Objective, Scope, and Methodology ................................................................................. 2 Conclusion .......................................................................................................................... 3 Follow-Up on Prior Audit Findings ................................................................................. 4 Views of Responsible Officials .......................................................................................... 4 Restricted Use .................................................................................................................... 4 Schedule 1—Reconciliation of Fund Balance ...................................................................... 5 Finding and Recommendation .............................................................................................. 6 Attachment–City’s Response to Draft Audit Report Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations -1- Audit Report The State Controller’s Office (SCO) audited the City of Palo Alto’s:  Special Gas Tax Street Improvement Fund for the period of July 1, 2007, through June 30, 2013. The audit should have included all years subsequent to the prior audit, which covered through June 30, 2003; however, we were unable to review the records for the period of July 1, 2003, through June 30, 2007, because these records were not available due to the City’s seven-year record retention policy.  Traffic Congestion Relief Fund (TCRF) allocations recorded in the Capital Improvement Fund, for the period of July 1, 2005, through June 30, 2011.  Proposition 1B Fund allocations recorded in the Capital Improvement Fund, for the period of July 1, 2007, through June 30, 2013. Our audit found that although the city accounted for and expended its Special Gas Tax Street Improvement Fund, TCRF allocations, and Proposition 1B Fund allocations in compliance with requirements, the city understated the fund balance in the Special Gas Tax Street Improvement Fund by $994,217 as of June 30, 2013, because it transferred the amount to another fund with the intent of using it for street-related expenditures, but the funds were never spent. The State apportions funds monthly from the Highway Users Tax Account in the Transportation Tax Fund to cities and counties for the construction, maintenance, and operation of local streets and roads. The highway users taxes derive from state taxes on the sale of motor vehicle fuels. In accordance with Article XIX of the California Constitution and Streets and Highways Code section 2101, a city must deposit all apportionments of highway users taxes in its Special Gas Tax Street Improvement Fund. A city must expend gas tax funds only for street-related purposes. We conducted our audit of the city’s Special Gas Tax Street Improvement Fund under the authority of Government Code section 12410. Chapter 91, Statutes of 2000, (Assembly Bill 2928) as amended by Chapter 636, Statutes of 2000, (Senate Bill 1662) and Government Code section 14556.5, created a Traffic Congestion Relief Fund in the State Treasury for allocating funds quarterly to cities and counties for street or road maintenance, reconstruction, and storm damage repair. Cities must deposit funds received into the city account designated for the receipt of State funds allocated for transportation purposes. The city recorded its TCRF allocations in the Capital Improvement Fund. We conducted our audit of the city’s TCRF allocations under the authority of Revenue and Taxation Code section 7104. Summary Background Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations -2- Senate Bill 1266, Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006, was introduced as Proposition 1B and approved by the voters on November 7, 2006, for a variety of transportation priorities, including the maintenance and improvement of local transportation facilities. Proposition 1B funds transferred to cities and counties shall be deposited into an account that is designated for the receipt of State funds allocated for streets and roads. The city recorded its Proposition 1B Fund allocations in the Capital Improvement Fund. A city also is required to expend its allocations within four years following the end of the fiscal year in which the allocation was made and to expend the funds in compliance with Government Code section 8879.23. We conducted our audit of the city’s Proposition 1B allocations under the authority of Government Code section 12410. Our audit objective was to determine whether the city accounted for and expended its Special Gas Tax Street Improvement Fund, TCRF allocations, and Proposition 1B Fund allocations in compliance with Article XIX of the California Constitution, the Streets and Highways Code, Revenue and Taxation Code section 7104, and Government Code section 8879.23. To meet the audit objective, we performed the following procedures: Special Gas Tax Street Improvement Fund  Reconciled the fund revenue recorded in the city ledger to the balance reported in the SCO’s apportionment schedule to determine whether Highway Users Tax Account (HUTA) funds received by the city were completely accounted for in the Gas Tax Fund.  Judgmentally selected sample expenditure transactions and verified proper documentation and eligibility to determine whether HUTA funds were expended in accordance with the criteria above.  Analyzed and tested sample transactions to determine whether recoveries of prior HUTA fund expenditures were identified and credited to the Special Gas Tax Street Improvement Fund.  Reviewed the fund cash and liabilities accounts for unauthorized borrowing to determine whether unexpended HUTA funds were available for future street-related expenditures.  Interviewed city employees and reviewed policies and procedures to gain an understanding of the city’s internal controls and accounting systems related to this engagement. Traffic Congestion Relief Fund (TCRF) Allocations  Reconciled the TCRF revenue recorded in the city ledger to confirm that the TCRF allocations received by the city agreed with the SCO’s apportionment schedule. Objective, Scope, and Methodology Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations -3-  Judgmentally selected sample expenditure transactions and verified proper documentation and eligibility to determine the city’s compliance with the criteria above.  Reconciled the City’s “Schedule of Expenditures as Reported in the Streets and Roads Annual Report” with the SCO’s “Average Annual Expenditures Computation of Discretionary Funds” to determine compliance with the maintenance-of-effort (MOE) requirement. Proposition 1B Fund Allocations  Reconciled the Proposition 1B revenue recorded in the city ledger to confirm that the Proposition 1B allocations received by the city agreed with the SCO’s apportionment schedule.  Judgmentally selected sample expenditure transactions and verified proper documentation and eligibility to determine the city’s compliance with the criteria above. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We did not audit the city’s financial statements. We limited our audit scope to planning and performing the audit procedures necessary to obtain reasonable assurance that the city accounted for and expended its Special Gas Tax Street Improvement Fund, TCRF allocations, and Proposition 1B Fund allocations in accordance with the requirements of the Streets and Highways Code, Revenue and Taxation Code section 7104, and Government Code section 8879.23. Accordingly, we examined transactions, on a test basis, to determine whether the city expended funds for street purposes. We considered the city’s internal controls only to the extent necessary to plan the audit. Our audit found that the City of Palo Alto accounted for and expended its:  Special Gas Tax Street Improvement Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code for the period of July 1, 2007, through June 30, 2013, except as noted in Schedule 1 and described in the Finding and Recommendation section of this report. The finding required an adjustment of $994,217 to the city’s accounting records.  TCRF allocations recorded in the Capital Improvement Fund in compliance with Article XIX of the California Constitution, the Streets and Highways Code, and Revenue and Taxation Code section 7104 for the period of July 1, 2005, through June 30, 2011. Conclusion Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations -4-  Proposition 1B Fund allocations recorded in the Capital Improvement Fund in compliance with Government Code section 8879.23 for the period of July 1, 2007, through June 30, 2013. Our prior audit report, issued on April 21, 2004, disclosed no findings. We issued a draft audit report on November 24, 2015. David Ramberg, Assistant Director, Administrative Services Department, responded by letter dated January 7, 2016, requesting language clarification. The SCO has clarified the report accordingly. The city’s response is included in this final audit report as an attachment. This report is intended for the information and use of the City of Palo Alto’s management and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits April 18, 2016 Restricted Use Views of Responsible Officials Follow-Up on Prior Audit Findings Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations -5- Schedule 1— Reconciliation of Fund Balance July 1, 2012, through June 30, 2013 Special Gas Tax Street Improvement Fund Highway Users Tax Allocations 1,2,3 Beginning fund balance per city $1,060,734 Revenues 1,465,896 Total funds available 2,526,630 Expenditures ( 1,942,490) Ending fund balance per city 584,140 SCO adjustment: 4 Finding—Ineligible expenditures 994,217 Ending fund balance per audit $1,578,357 ___________________________ 1 The city receives apportionments from the State Highway Users Tax Account, pursuant to Streets and Highways Code sections 2103, 2105, 2106, 2107, and 2107.5. The basis of the apportionments varies, but the money may be used for any street-related purpose. Streets and Highways Code section 2107.5 restricts apportionments to administration and engineering expenditures, except for cities with populations of fewer than 10,000 inhabitants. Those cities may use the funds for rights-of-way and for the construction of street systems. The audit period was July 1, 2007, through June 30, 2013; however, this schedule includes only the period of July 1, 2012, through June 30, 2013. 2 Government Code section 14556.5 created a Traffic Congestion Relief Fund (TCRF) in the State Treasury for allocating funds quarterly to cities and counties for street and road maintenance, reconstruction, and storm damage repair. The TCRF allocations were recorded in the Capital Improvement Fund. The audit period was July 1, 2005, through June 30, 2011. The city did not receive any TCRF revenues and did not incur any TCRF expenditures during FY 2012-13; therefore, it is not included in this schedule. 3 Senate Bill 1266, Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006, introduced as Proposition 1B, provided funds for a variety of transportation priorities. The audit period was July 1, 2007, through June 30, 2013. The city did not receive any Proposition 1B revenues and did not incur any Proposition 1B expenditures during FY 2012-13; therefore, it is not included in this schedule. 4 See the Finding and Recommendation section. Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations -6- Finding and Recommendation During fiscal year 2008-09, the city transferred out $994,217 from the Special Gas Tax Street Improvement Fund to the Stanford Research Park Fund, with the intent of using the funds for street-related expenditures. However, the funds were never spent. Streets and Highways Code section 2101 specifies that the Highway Users Tax apportionments are to be expended only for the construction, maintenance, and operation of public streets and roads and related administrative costs. As a result, the transfer of $994,217 is unallowable. Recommendation The city should return $994,217 into the Special Gas Tax Street Improvement Fund. In addition, the city should establish procedures to ensure that all costs charged to the Special Gas Tax Street Improvement Fund are for street-related projects and are properly documented. FINDING— Ineligible expenditures Special Gas Tax Street Improvement Fund, Traffic Congestion City of Palo Alto Relief Fund Allocations, and Proposition 1B Fund Allocations Attachment— City’s Response to Draft Audit Report State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250-5874 http://www.sco.ca.gov S15-GTA-0006 CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR June 27, 2016 The Honorable City Council Palo Alto, California City of Palo Alto Sales Tax Digest Summary Fourth Quarter Sales (October - December 2015) The following files are attached for this informational report for which no action is required. ATTACHMENTS:  Attachmenta: Attachment A: Sales Tax Digest Summary - Background and Discussion (PDF)  Attachmentb: Attachment B: MuniServices Sales Tax Digest Summary (PDF)  Attachmentc: Attachment C: Economic Categories and Segments (PDF)  Attachmentd: Attachment D: MuniServices Economic News and Trends (PDF) Department Head: Harriet Richardson, City Auditor Page 2 Informational Report to the City Council BACKGROUND Sales and use tax represents about $27.6 million, or 15 percent, of projected General Fund revenue in the City’s adopted operating budget for fiscal year 2016. This revenue includes sales and use tax for the City of Palo Alto and pool allocations from the state and Santa Clara County.1 We contract with MuniServices LLC (MuniServices) for sales and use tax recovery services and informational reports. We use the recovery services and informational reports to help identify misallocation of tax revenue owed to the City, and to follow up with the State Board of Equalization to ensure that the City receives identified revenues. We include sales and use tax recovery information in our quarterly reports to the Policy and Services Committee. The California Revenue and Taxation Code, Section 7056, requires that sales and use tax data remain confidential. Therefore, the City may not disclose amounts of tax paid, fluctuations in tax amounts, or any other information that would disclose the operations of a business. This report, including the attached Sales Tax Digest Summary, includes certain modifications and omissions to maintain the required confidentiality of taxpayer information. We share the information provided by MuniServices with the Administrative Services Department (ASD) for use in revenue forecasting and budgeting and coordinated this report with them. DISCUSSION MuniServices prepared the attached report (Attachment B) covering calendar year 2015 fourth quarter sales (October through December 2015). These funds are reported as part of the City’s fiscal year 2016 revenue. In June, ASD should receive information from the state on aggregate sales and use tax receipts for the first quarter of 2016. Following are some highlights of the sales and use tax information:  Palo Alto’s overall sales and use tax revenue (cash receipts) for the fourth quarter of 2015 increased by about $432,000, or 5.8 percent, including pool allocations, compared to the fourth quarter of 2014. For all Santa Clara County jurisdictions, sales and use tax revenue for the fourth quarter of 2015 increased by $6.2 million, or 5.8 percent, compared to the fourth quarter of 2014.  Statewide, almost every region in California experienced an increase in sales and use tax revenue for the year ending in December 2015, with a one-year statewide increase of 3.2 percent.  Palo Alto’s sales and use tax revenue totaled $27.1 million for the year ending in December 2015, an increase of 5.8 percent from $25.6 million during the prior one-year period. 1 See definitions of state and county pools on page 3. Office of the City Auditor Sales Tax Digest Summary – Fourth Quarter Sales (October – December 2015) Attachment A  Excluding pool allocations and adjusting for prior-period and late payments, Palo Alto’s sales and use tax revenue for the fourth quarter of 2015 increased by 4.2 percent compared to the fourth quarter of 2014 and increased by 3.9 percent compared to the prior year. More detailed information is shown in Attachment B. Economic Influences on Sales and Use Tax In its Economic News & Trends (Attachment D), MuniServices discusses economic influences, including national and state economic trends, e-commerce, and auto and retail sales, that may affect the City’s sales and use tax revenue. Preliminary estimates from the California Employment Development Department show that the March 2016 unemployment rate, which is not seasonally adjusted, is 3.8 percent in Santa Clara County and 2.6 percent in Palo Alto. Economic Category Analysis MuniServices’ analysis of economic categories for the year ending December 2015 shows: Economic category % of Palo Alto’s sales and use tax revenue % Increase (Decrease) compared to prior year General retail 36.3% (1.4%) Food products 19.8% 6.3% Business-to-business 17.2% 17.0% Construction 3.9% 25.9% Miscellaneous 22.8% (0.8%) The following chart shows sales and use tax revenue by geographical area, based on information provided by MuniServices. Exhibit 1 – Palo Alto’s Sales and Use Tax Revenue by Geographical Area For the Year Ending December 2015 (Amounts include tax estimates and exclude pool allocations) Stanford Shopping Center $5.7 million, 25% Stanford Research Park $3.0 million, 13% Downtown/University Avenue $3.4 million, 15% California Ave/Park Blvd/Lambert Ave $1.5 million, 7% Town & Country $0.6 million, 3% All Other Areas $8.6 million, 37% Attachment A DEFINITIONS In California, either sales tax or use tax may apply to a transaction, but not both. The sales and use tax rate in Palo Alto is 8.75 percent. Sales tax – imposed on all California retailers; applies to all retail sales of merchandise (tangible personal property) in the state. Use tax – generally imposed on consumers of merchandise (tangible personal property) that is used, consumed, or stored in this state; purchases from out-of-state retailers when the retailer is not registered to collect California tax, or for some other reason does not collect California tax; leases of merchandise (tangible personal property). Countywide/statewide pools – mechanisms used to allocate local tax that cannot be identified with a specific place of sale or use in California. Local tax reported to the pool is distributed to the local jurisdiction each calendar quarter using a formula that relates to the direct allocation of local tax to each jurisdiction for a given period. Examples of taxpayers who report use tax allocated through the countywide pool include construction contractors who are consumers of materials used in the improvement of real property and whose job site is regarded as the place of business, out-of-state sellers who ship goods directly to consumers in the state from inventory located outside the state, and California sellers who ship goods directly to consumers in the state from inventory located outside the state. Other examples of taxpayers who report use tax through the pools include auctioneers, construction contractors making sales of fixtures, catering trucks, itinerant vendors, vending machine operators and other permit holders who operate in more than one local jurisdiction but are unable to readily identify the particular jurisdiction where the taxable transaction takes place. Respectfully submitted, Harriet Richardson City Auditor Sources: MuniServices California State Board of Equalization California Employment Development Department City of Palo Alto Fiscal Year 2016 Adopted Operating Budget Audit staff: Lisa Wehara Attachment A City of Palo Alto Sales Tax Digest Summary Collections through March 2016 Sales through December 2015 (2015Q4) www.MuniServices.com (800) 800-8181 Page 1 California Overview The percent change in cash receipts from the prior year was 3.2% statewide, 3.2% in Northern California and 3.2% in Southern California. The period’s cash receipts include tax from business activity during the period, payments for prior periods and other cash adjustments. When we adjust for non-period related payments, we determine the overall business activity increased for the year ended 4th Quarter 2015 by 2.6% statewide, 2.4% in Southern California and 2.8% in Northern California. City of Palo Alto For the year ended 4th Quarter 2015, sales tax cash receipts for the City increased by 5.8% from the prior year. On a quarterly basis, sales tax revenues increased by 5.8% from 4th Quarter 2014 to 4th Quarter 2015. The period’s cash receipts include tax from business activity during the period, payments for prior periods and other cash adjustments. Excluding state and county pools and adjusting for anomalies (payments for prior periods) and late payments, local sales tax increased by 3.9% for the year ended 4th Quarter 2015 from the prior year. On a quarterly basis, sales tax activity increased by 4.2% in 4th Quarter 2015 compared to 4th Quarter 2014. Regional Overview This seven-region comparison includes estimated payments and excludes net pools and adjustments. % of Total / % Change City of Palo Alto California Statewide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast Central Coast General Retail 36.3 / -1.4 28.4 / 3.1 26.8 / 2.2 27.7 / 3.8 30.8 / 3.4 29.3 / 3.0 26.6 / 4.5 28.2 / 3.2 31.5 / 1.7 Food Products 19.8 / 6.3 20.3 / 5.6 21.7 / 6.3 16.9 / 5.6 16.4 / 4.6 21.4 / 5.4 17.1 / 6.0 18.4 / 3.2 31.0 / 3.4 Construction 3.9 / 25.9 9.5 / 8.0 9.5 / 8.1 11.3 / 9.2 12.1 / 8.1 8.3 / 6.2 11.8 / 12.5 13.6 / 11.5 9.3 / 3.8 Business to Business 17.2 / 17.0 16.5 / -1.2 19.7 / 2.3 14.4 / 7.3 13.0 / -9.5 16.1 / -3.8 15.6 / 2.5 8.6 / -3.0 6.2 / 20.5 Miscellaneous/Other 22.8 / -0.8 25.3 / 0.3 22.3 / -0.5 29.7 / 2.3 27.7 / -0.4 25.0 / 0.1 28.9 / 2.1 31.3 / -1.0 21.9 / -2.5 Total 100.0 / 3.9 100.0 / 2.6 100.0 / 3.0 100.0 / 4.7 100.0 / 1.2 100.0 / 1.9 100.0 / 4.6 100.0 / 2.4 100.0 / 2.4 City of Palo Alto State Wide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast Central Coast Largest Segment Restaurants Restaurants Restaurants Restaurants Department Stores Service Stations Restaurants Service Stations Restaurants % of Total / % Change 17.6 / 6.2 14.3 / 7.1 15.4 / 7.4 15.6 / 6.8 13.7 / 1.8 26.5 / -7.1 11.1 / 7.6 11.4 / -14.4 22.3 / 3.3 2nd Largest Segment ***Auto Sales - New Auto Sales - New Auto Sales - New Auto Sales - New Restaurants Auto Sales - New Auto Sales - New Misc. Retail % of Total / % Change *** / ***11.1 / 8.8 10.7 / 8.8 11.3 / 7.6 10.8 / 10.4 13.0 / 5.0 11.0 / 11.7 11.2 / 13.1 10.5 / 9.7 3rd Largest Segment Department Stores Department Stores Department Stores Department Stores Restaurants Food Markets Department Stores Department Stores Department Stores % of Total / % Change 10.4 / 0.1 9.6 / 1.0 8.0 / -0.4 9.4 / 0.9 10.5 / 7.4 8.4 / -0.7 10.7 / 2.8 11.1 / 1.7 8.7 / -1.7 *** Not specified to maintain confidentiality of tax information CITY OF PALO ALTO ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 4th QUARTER 2015 ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 4th QUARTER 2015 BENCHMARK YEAR 2015Q4 COMPARED TO BENCHMARK YEAR 2014Q4 Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 2 Gross Historical Sales Tax Performance by Benchmark Year and Quarter (Before Adjustments) $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 BENCHMARK YEAR QUARTERLY Net Cash Receipts for Benchmark Year 4th Quarter 2015: $27,079,275 *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2015Q4 BMY is sum of 2015 Q4, Q3, Q2 & Q1) Restaurants 15%Department Stores 9% Miscellaneous Retail 8% Electronic Equipment 7% Bldg.Matls-Whsle 3% Food Markets 2% Leasing 2%Recreation Products 1% All Other 37% Net Pools & Adjustments 16% Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 3 TOP 25 SALES/USE TAX CONTRIBUTORS The following list identifies Palo Alto’s Top 25 Sales/Use Tax contributors. The list is in alphabetical order and represents the year ended 4th Quarter 2015. The Top 25 Sales/Use Tax contributors generate 49.5% of Palo Alto’s total sales and use tax revenue. Anderson Honda Hewlett-Packard Tesla Lease Trust Apple Stores Integrated Archive Systems Tesla Motors Audi Palo Alto Loral Space Systems Tiffany & Company Bloomingdale's Macy's Department Store USB Leasing Bon Appetit Management Co.Magnussen's Toyota Varian Medical Systems Critchfield Mechanical Neiman Marcus Department Store Volvo Cars Palo Alto CVS/Pharmacy Nordstrom Department Store Wilkes Bashford Eat Club Pottery Barn Kids Fry's Electronics Stanford University Hospital Sales Tax from Largest Non-confidential Economic Segments $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 Benchmark Year 2015Q4 Benchmark Year 2014Q4 Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 4 Historical Analysis by Calendar Quarter Economic Category % 2015Q4 2015Q3 2015Q2 2015Q1 2014Q4 2014Q3 2014Q2 2014Q1 2013Q4 2013Q3 2013Q2 General Retail 32.2%2,526,551 1,935,178 2,009,743 1,797,756 2,591,589 1,994,264 2,032,155 1,791,298 2,585,931 1,945,413 1,959,201 Miscellaneous/Other 19.0%1,491,158 1,609,541 1,564,157 1,400,769 1,655,225 1,400,415 1,437,507 1,283,210 1,553,169 1,196,569 2,974,293 Food Products 14.9%1,166,195 1,146,174 1,167,014 1,061,755 1,096,087 1,054,462 1,051,681 972,997 1,009,848 950,359 966,208 Business To Business 18.2%1,428,210 888,609 833,370 757,827 885,327 596,226 970,762 858,119 1,268,059 848,634 800,341 Net Pools & Adjustments 15.6%1,226,261 1,060,979 1,039,250 968,777 1,178,482 945,653 786,945 1,013,633 1,095,801 924,963 1,227,552 Total 100.0%7,838,375 6,640,481 6,613,534 5,986,884 7,406,710 5,991,020 6,279,050 5,919,257 7,512,808 5,865,938 7,927,595 Economic Segments % 2015Q4 2015Q3 2015Q2 2015Q1 2014Q4 2014Q3 2014Q2 2014Q1 2013Q4 2013Q3 2013Q2 Miscellaneous/Other 41.3%3,237,983 2,720,241 2,549,852 2,370,361 2,906,134 2,211,697 2,577,014 2,328,959 3,184,808 2,230,000 3,943,660 Restaurants 13.1%1,029,733 1,019,505 1,045,011 942,709 962,018 936,160 940,540 870,158 890,739 833,865 845,107 Miscellaneous Retail 9.1%714,151 478,994 479,298 415,270 628,099 508,061 514,133 481,305 661,268 458,124 471,954 Department Stores 9.1%714,831 553,325 595,374 503,590 750,481 548,595 591,500 472,857 762,760 574,389 603,773 Apparel Stores 6.6%519,318 397,534 428,100 370,810 507,843 398,747 429,748 365,777 515,296 400,201 404,202 Service Stations 1.8%140,758 173,082 181,582 148,902 166,861 203,484 215,162 184,185 177,096 214,276 196,568 Food Markets 1.5%116,778 113,092 106,818 104,856 117,245 105,600 98,705 90,272 104,592 104,815 106,760 Business Services 1.0%76,156 51,885 120,003 103,773 131,505 66,163 62,060 63,768 61,832 57,139 67,759 Recreation Products 0.8%62,406 71,844 68,246 57,836 58,042 66,860 63,243 48,343 58,616 68,166 60,260 Net Pools & Adjustments 15.6%1,226,261 1,060,979 1,039,250 968,777 1,178,482 945,653 786,945 1,013,633 1,095,801 924,963 1,227,552 Total 100.0%7,838,375 6,640,481 6,613,534 5,986,884 7,406,710 5,991,020 6,279,050 5,919,257 7,512,808 5,865,938 7,927,595 *Net Pools & Adjustments reconcile economic performance to periods’ net cash receipts. The historical amounts by calendar quarter: (1) include any prior period adjustments and payments in the appropriate category/segment and (2) exclude businesses no longer active in the current period. Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 5 Quarterly Analysis by Economic Category, Total and Segments: Change from 2014Q4 to 2015Q4 Ge n e r a l R e t a i l Fo o d P r o d u c t s Co n s t r u c t i o n Bu s i n e s s t o Bu s i n e s s Mi s c / O t h e r 20 1 5 / 4 T o t a l 20 1 4 / 4 T o t a l % C h g La r g e s t G a i n Se c o n d L a r g e s t Ga i n La r g e s t D e c l i n e Se c o n d L a r g e s t De c l i n e Campbell 5.5%4.4%-1.2%-3.6%-10.6%2,414,177 2,420,570 -0.3%Restaurants Recreation Products Service Stations Business Services Cupertino -10.9%2.2%-47.1%-24.7%-13.1%6,159,871 8,201,480 -24.9%Office Equipment Electronic Equipment Business Services Bldg.Matls-Whsle Gilroy 0.8%4.3%10.3%3.4%13.3%3,781,110 3,597,640 5.1%Auto Sales - New Misc. Vehicle Sales Service Stations Apparel Stores Los Altos 14.4%11.9%35.7%16.5%-6.4%634,841 578,259 9.8%Restaurants Liquor Stores Food Processing Eqp Service Stations Los Gatos -2.4%0.5%-11.5%-8.6%-9.0%1,788,513 1,873,503 -4.5%Auto Sales - New Restaurants Miscellaneous Other Service Stations Milpitas 4.2%9.2%18.2%18.7%-0.9%5,099,316 4,683,481 8.9%Electronic Equipment Bldg.Matls-Whsle Service Stations Bldg.Matls-Retail Morgan Hill 4.7%4.8%7.9%2.0%5.6%1,847,531 1,759,592 5.0%Auto Sales - New Light Industry Electronic Equipment Service Stations Mountain View -3.4%10.7%10.6%-4.0%-8.9%4,165,632 4,197,294 -0.8%Restaurants Business Services Light Industry Service Stations Palo Alto -3.5%4.8%-38.3%60.8%-8.0%6,612,113 6,345,269 4.2%Electronic Equipment Leasing Furniture/Appliance Bldg.Matls-Whsle San Jose 1.7%4.6%4.6%2.0%9.5%40,965,029 39,328,074 4.2%Misc. Vehicle Sales Light Industry Office Equipment Service Stations Santa Clara 4.6%1.2%10.2%31.7%-1.4%12,418,424 10,885,502 14.1%Office Equipment Electronic Equipment Service Stations Health & Government Santa Clara Co.40.4%8.1%34.5%31.1%-8.5%1,155,395 990,475 16.7%Health & Government Miscellaneous Retail Closed Acct-Adjustmt Leasing Saratoga -10.1%3.7%54.2%83.2%-7.8%257,862 250,861 2.8%Office Equipment Restaurants Miscellaneous Retail Service Stations Sunnyvale 0.7%6.6%11.1%-2.3%-2.3%6,914,546 6,873,684 0.6%Bldg.Matls-Whsle Restaurants Health & Government Electronic Equipment Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 6 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 El Camino Real 1,143,951 1,090,870 1,055,524 1,049,438 1,038,409 2,563,317 1,084,815 1,108,045 1,102,757 1,105,340 1,090,236 1,088,571 1,140,412 Town and Country 509,180 522,374 523,504 525,116 550,852 570,860 590,134 624,333 629,346 637,224 644,288 636,497 639,830 Midtown 181,654 183,780 184,646 185,301 185,348 185,472 185,910 187,120 188,251 192,122 194,028 195,907 192,190 East Meadow Area 67,124 74,680 77,869 100,045 103,590 107,316 109,171 114,419 104,735 117,701 172,602 166,805 161,897 Charleston Center 74,683 76,315 78,734 81,455 90,116 84,760 86,432 86,288 87,413 88,622 89,612 90,642 91,711 City of Palo Alto - Selected Geographic Areas of the City Benchmark Year 4th Quarter 2015 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 El Camino Real Town and Country Midtown East Meadow Area Charleston Center *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2015Q4 BMY is sum of 2015 Q4, Q3, Q2 & Q1) Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 7 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Stanford Shopping Ctr 5,388,747 5,519,326 5,501,836 5,508,513 5,637,256 5,647,210 5,685,894 5,713,169 5,726,273 5,769,236 5,775,751 5,765,715 5,670,796 Stanford Research Park 4,362,778 5,995,489 5,075,848 7,949,998 7,307,557 4,299,015 4,027,889 3,724,671 3,304,003 3,082,331 2,869,143 2,411,043 2,953,900 Downtown 3,013,183 3,007,123 3,027,279 3,022,194 3,068,553 3,108,592 3,124,224 3,189,273 3,220,248 3,251,198 3,318,323 3,351,331 3,399,758 San Antonio 2,114,306 2,047,925 1,997,654 2,106,291 2,122,586 2,234,235 2,393,463 2,453,548 2,495,915 2,504,156 2,465,311 2,483,850 2,476,949 California Avenue 1,034,151 1,058,098 1,072,925 1,078,153 1,104,341 1,104,237 1,109,685 1,119,047 1,120,996 1,113,385 1,108,904 1,106,175 1,097,493 City of Palo Alto - Selected Geographic Areas of the City Benchmark Year 4th Quarter 2015 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 Stanford Shopping Ctr Downtown #REF!San Antonio California Avenue 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Stanford Shopping Ctr Downtown San Antonio California Avenue $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Stanford Shopping Ctr Stanford Research Park Downtown San Antonio California Avenue *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2015Q4 BMY is sum of 2015 Q4, Q3, Q2 & Q1) Attachment B City of Palo Alto www.MuniServices.com (800) 800-8181 Page 8 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Valley Fair 6,855,987 6,865,443 6,808,919 6,815,517 6,883,838 6,885,378 6,958,214 7,108,448 7,455,179 7,588,546 7,273,028 7,282,265 7,248,371 Stanford Shopping Ctr 5,388,747 5,519,326 5,501,836 5,508,513 5,637,256 5,647,210 5,685,894 5,713,169 5,726,273 5,769,236 5,775,751 5,765,715 5,670,796 Oakridge Mall 3,957,195 3,972,739 3,974,067 3,954,094 3,924,360 3,934,469 3,972,556 4,005,370 4,040,521 4,159,367 4,236,080 4,215,653 4,158,194 Hillsdale 2,348,668 2,367,315 2,356,855 2,367,935 2,387,185 2,374,185 2,401,370 2,438,295 2,450,278 2,494,792 2,513,866 2,470,404 2,434,086 Santana Row 1,819,616 1,795,942 1,938,742 2,156,984 1,765,101 2,453,638 2,523,193 2,525,349 2,565,665 2,634,908 2,706,867 2,735,522 2,834,796 City of Palo Alto - Regional Shopping Mall Comparison Benchmark Year 4th Quarter 2015 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 Valley Fair Stanford Shopping Ctr Oakridge Mall Hillsdale Santana Row *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2015Q4 BMY is sum of 2015 Q4, Q3, Q2 & Q1) Attachment B Economic Categories and Segments Economic Category Economic Segment Description Business to Business - sales of tangible personal property from one business to another business and the buyer is the end user. Also includes use tax on certain purchases and consumables. Business Services Advertising, banking services, copying, printing and mailing services Chemical Products Manufacturers and wholesalers of drugs, chemicals, etc. Electronic Equipment Manufacturers of televisions, sound systems, sophisticated electronics, etc. Energy Sales Bulk fuel sales and fuel distributors and refiners Heavy Industry Heavy machinery and equipment, including heavy vehicles, and manufacturers and wholesalers of textiles and furniture and furnishings Leasing Equipment leasing Light Industry Includes, but is not limited to, light machinery and automobile, truck, and trailer rentals Office Equipment Businesses that sell computers, and office equipment and furniture, and businesses that process motion pictures and film development Construction Building Materials – Retail Building materials, hardware, and paint and wallpaper stores Building Materials - Wholesale Includes, but is not limited to, sheet metal, iron works, sand and gravel, farm equipment, plumbing materials, and electrical wiring Food Products Food Markets Supermarkets, grocery stores, convenience stores, bakeries, delicatessens, health food stores Food Processing Equipment Processing and equipment used in mass food production and packaging Liquor stores Stores that sell alcoholic beverages Restaurants Restaurants, including fast food and those in hotels, and night clubs Attachment C Economic Categories and Segments Economic Category Economic Segment Description General Retail – all consumer focused sales, typically brick and mortar stores Apparel Stores Men’s, women’s, and family clothing and shoe stores Department Stores Department, general, and variety stores Drug Stores Stores where medicines and miscellaneous articles are sold Florist/Nursery Stores where flowers and plants are sold Furniture/Appliance Stores where new and used furniture, appliances, and electronic equipment are sold Miscellaneous Retail Includes, but is not limited to, stores that sell cigars, jewelry, beauty supplies, cell phones, and books; newsstands, photography studios; personal service businesses such as salons and cleaners; and vending machines Recreation Products Camera, music, and sporting goods stores Miscellaneous/Other Miscellaneous/Other Includes but not limited to health services, government, nonprofit organizations, non- store retailers, businesses with less than $20,000 in annual gross sales, auctioneer sales, and mortuary services and sales Transportation Auto Parts/Repair Auto parts stores, vehicle and parts manufacturing facilities, and vehicle repair shops Auto Sales - New New car dealerships Auto Sales - Used Used car dealerships Miscellaneous Vehicle Sales Sale and manufacture of airplanes and supplies, boats, motorcycles, all-terrain vehicles, trailers and supplies Service stations Gas stations, not including airport jet fuel Attachment C ECONOM MIC NEWS & & TRENDS ECO NOMIC NNEWS & April 20 & TREND 0, 2016 DS Attachment D CONTENTS  Section 1: U.S. Economy (Financial markets, CPI, employment data, “gig” economy, trends and outlook) Page 1  Section 2: California’s Economy (2015 CAFR, forecast, employment trends, forecast and real estate) Page 3  Section 3: California Travel and Tourism (Trends and economic impact) Page 5  Section 4: California’s Minimum Wage (SB 3, perspectives, regional impact and analysis) Page 5  Section 5: The Shared Economy and On-Line Platforms (SB 1102/ TOT revenues) Page 7  Section 6: E Commerce & the Changing Economy (Data, NCSL legislation, and shopping local resource) Page 7  Section 7: California Auto Sales (Outlook and sales of diesel cars) Page 8  Section 8: Gasoline (Trends as of April 18, 2016) Page 8  Section 9: Grocery Stores (Supplier news and trends) Page 9  Section 10: Retail News (Online vs. retail, changes, “snacking”, spending and trends) Page 10  Section 11: Restaurant News (Cocktail vs. wine, and trends) Page 12 HIGHLIGHTS  U.S. GDP: Increased at an annual rate of 1.4% in 4Q2015; 2.3% growth for 2016, down slightly from 2015.  E-commerce sales in the U.S: 4Q2015 accounted for 7.5% of total sales.  CPI components that rose: Shelter, recreation, medical care, education, tobacco, and personal care (March, 2016).  CPI components that declined: Apparel, airline fares, communication, household furnishings and operations, and used cars and trucks (March, 2016).  Imports and exports: Year-to-date goods and services increased $13.1 %, from the same period in 2015. Exports decreased 5.5%; Imports decreased 2.1%.  U.S. automobile dealers’ sales: Dropped 2.1% in March, the biggest decrease since February 2015. Purchases of cars and light trucks grew at a 16.5 million annualized rate in March, the slowest in more than a year.  2015 California new car dealer results: Total sales: $117.36 billion; Total taxes collected or paid: $9.63 billion; Total spent for products and services from other California businesses: $2.571 billion.  Barrel trading: Continued trading between $35 and $40 per barrel in coming weeks (April 15, 2016).  California’s ranking: Is the eighth largest in the world with a 2015 GDP of $2.3 trillion; ranks third among 50 states in the 2014 State New Economy Index (Controller’s CAFR, March, 2016)  California sales and use tax year to date: Sales tax cash (includes final payment for fourth quarter 2015 sales) and the first prepayment for the 1Q 2016 sales is $122 million below forecast. The Controller in April, 2016 reported for the first nine months of the fiscal year, the sales tax is lagging by 0.9% for the fiscal year, to date.  California’s unemployment: Decreased to 5.4% and nonfarm payroll jobs increased by 4,200 (April 15, 2016)  Hotel occupancy rates: Increased to 74.7% in 2015, driving growth in revenue per available room of 10.5% (Controller’s CAFR, March, 2016). CLIENT SERVICE TEAM Patricia.Dunn@MuniServices.com (Contracts) Julia.Erdkamp@MuniServices.com (Client Service Manager) Mary.Flynn@MuniServices.com (Client Service Manager) Robert.Hamud@MuniServices.com (Client Service Manager) Bret.Harmon@MuniServices.com (AVP Client Innovation) Doug.Jensen@MuniServices.com (Senior Vice President, Client Services) Fran.Mancia@MuniServices.com (Vice President, Government Relations) Brenda.Narayan@MuniServices.com (Government Relations, Report Editor) Marina.Sloan@MuniServices.com (Client Service Manager) Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 1 www.MuniServices.com SECTION 1 - U.S. ECONOMY Financial Market and Economies (1Q2016) https://www.morningstar.com/news/dow-jones/washington-wire/TDJNDN_201604015131/economy-chugs-on-despite- fears.html (04/01/16); Wall Street Journal (02/17/16); http://www.federalreserve.gov/newsevents/press/monetary/20160406a.htm U.S. economy: Grew at a rate of 2.1% in 2015; U.S GDP growth rate in 2016 will remain between the 2-3% ideal range. Industrial production: A broad measure of everything made by manufacturers, mines and utilities jumped 0.9% in January from a month earlier. Production hadn’t expanded by more than that in a single month since May 2010. Odds of a recession: The economy has been expanding at a steady but moderate pace since emerging from the recession in mid-2009. The odds of recession in the next 12 months have climbed to 21% (based on WSJ economist survey from February, 2016). Housing: Housing has remained a bright spot in the U.S. economy, supported by low interest rates and ongoing job creation. Soaring rents in hot job markets make home purchase more appealing for those who can afford a down payment. New-home construction: U.S. housing starts fell 3.8% from a month earlier to a seasonally adjusted annual rate of 1.099 million in January, 2016 (Commerce Department), the lowest rate since October, 2015. Starts: Single-family homes (2/3rds market) fell to a rate of 731,000 from December’s revised 761,000; multifamily units, which include apartments and condominiums, fell to 368,000. Impact from shortage of land and labor: Leading to delays in projects’ completion. Those delays often serve to push prices up so the builder can recoup costs. Jobs: U.S. employers’ added 215,000 jobs in March, 2016 with growth in just about every domestically oriented sector. Unemployment: The unemployment rate, obtained from a separate survey of U.S. households, edged up to 5% in March, 2016, but that was largely due more Americans joining the labor force. Wage: Relatively moderate wage growth suggests the labor market still has considerable room to bring in more workers without spurring high inflation. Wages were up 2.3% from a year earlier, slightly slower than the 2.6% year-over-year wage growth in December that marked the strongest improvement since 2009. U.S. manufacturing activity: The Labor Department reports the manufacturing sector shedding 29,000 jobs in March, 2016 on top of February's loss of 18,000, the worst-hit major sector of the economy. The mining-and-logging: A category that includes energy firms lost 12,000 jobs in March, 2016. The industry has cut 185,000 jobs since its peak in September 2014. Auto dealerships: Contributed 5,000 new jobs as car sales remained elevated due to low interest rates and cheap gasoline. Low interest rates: Helped sectors such as housing and boosting construction jobs. Consumer Price Index (CPI) http://www.bls.gov/news.release/cpi.nr0.htm (next release is May 17, 2016); http://www.wsj.com/articles/u-s-consumer- prices-rose-slightly-in-march-1460637302 (for March, 2016) All urban consumers: Increased 0.1% in March, 2016 and 0.9 over the last 12 months. Food index: Fell 0.2% after rising in February, 2016 as five of the six major grocery store food groups declined. Energy index: Rose for the first time since November, with all of its major components except natural gas increasing. Major component indexes that rose: Shelter, recreation, medical care, education, tobacco, and personal care. Major component indexes that declined: Apparel, airline fares, communication, household furnishings and operations, and used cars and trucks. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 2 www.MuniServices.com Employment Data (March 2016) http://www.bls.gov/news.release/empsit.nr0.htm (04/01/16) Employment and unemployment: Total nonfarm payroll employment rose by 215,000 in March 2016; unemployment had little change at 5.0% in March; employment gains occurred in several industries, led by retail trade, construction, and health care; mining and manufacturing employment continued to decline. Persons employed part time for economic reasons: Was unchanged in March at 6.1 million and has shown little movement since November. These individuals, who would have preferred full-time employment, were working part-time because their hours had been cut back or because they were unable to find a full-time job. Persons not in the labor force that wanted work: In March, 1.7 million persons were marginally attached to the labor force, down by 335,000 from a year earlier. These individuals had looked for a job sometime in the prior 12 months. Discouraged workers: Among the marginally attached, there were 585,000 discouraged workers in March, down by 153,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in March had not searched for work for reasons such as school attendance or family responsibilities. Retail: Retail trade added 48,000 jobs in March. Employment gains occurred in general merchandise stores (+12,000), health and personal care stores (+10,000), building material and garden supply stores (+10,000), and automobile dealers (+5,000). Over the past 12 months, retail trade has added 378,000 jobs. Construction: Added 301,000 jobs over the last year (March 2015 to March 2016). Professional and business services industry: Added an average of 52,000 jobs per month in 2015. Employment in manufacturing: Declined by 29,000 in March 2016. Health care: Increased by 503,000 (March 2015 to March 2016). “Gig Economy” http://www.marketwatch.com/story/gig-economy-jobs-mostly-supplement-income-2016-02-18  Since 2005, the number of workers in alternative arrangements has climbed by more than half, rising to nearly 16% of the workforce from 10% a decade ago. The on-demand workforce or gig economy employs only about 600,000 people, or less than 0.5% of the workforce.  Nearly 1% of U.S. adults earned income in September 2015 via one of the growing number of firms that are part of the sharing or gig economy. The average monthly income for someone who provided labor via one of the platforms was $533, representing a third of total income.  At 2.5 million, the sharing labor force is roughly equivalent to the number of teachers and others that work for public schools in the U.S., though the study finds that people driving for Lyft or selling crafts on eBay typically have other sources of income. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 3 www.MuniServices.com U.S. Trends and Outlook https://www.census.gov/retail/marts/www/marts_current.pdf (04/13/16); http://bea.gov/newsreleases/international/trade/tradnewsrelease.htm; (04/05/16); http://www.bls.gov/news.release/empsit.nr0.htm (04/01/16); http://bea.gov/newsreleases/national/GDP/GDPnewsrelease.htm (03/25/16) http://urbanland.uli.org/development-business/six-global-trends-commercial-real-estate-watch-2016/ Gross Domestic Product (GDP): Increased at an annual rate of 1.4% in 4Q2015; in 3Q2015 the real GDP increased 2.0%; 2.3% growth for 2016, down slightly from 2015. U.S. manufacturing: Production will grow 2.6% in 2016, 3.0% in 2017, and 2.8% in 2018. Interest rates: The Federal Reserve Board raised the Federal funds rate to 0.5% in December 2015. Business spending: Increasing by 4% in 2016. Inflation: 2.4% in 2016; up from 0.7% rise in 2015. Helping to restore overall inflation to more normal levels of around 2% this year is an end to sharp declines in energy prices, including gasoline prices, which ended last year below $2 a gallon. The recovery is likely to be small, perhaps only to $2.25 a gallon for gasoline, but enough to push total inflation above 2%. Food sales: $446.8 billion in March 2016 (an increase of 1.7% from March 2014). Retail sales: Core retail sales, excluding cars, gas, building materials and food and drink, will increase by 3.8% in 2016, down from 4.6% from 2015. Building material and garden equipment and supplies dealers were up 10.8% from March 2015, while gasoline stations were down 15.6% from last year. Imports and exports: Year-to-date goods and services increased $10.8 billion, or $13.1 %, from the same period in 2015. Exports decreased $20.5 billion or 5.5%; Imports decreased $9.7 billion or 2.1% (decrease in consumer goods). Issues affecting real estate: Demographic shifts; excess capital supply; rising interest rates; global instability and currency devaluation; urbanization; energy; gap between rich and poor; infrastructure; real estate technology and crowd funding; and the changing retail model. SECTION 2 - CALIFORNIA’S ECONOMY Comprehensive Annual Financial Report for Fiscal Year Ended June 2015 http://www.sco.ca.gov/Files-ARD-Local/LocRep/cafr15web.pdf (released March, 16, 2016) California’s economy: Eighth largest in the world with a 2014-15 fiscal year GDP of $2.3 trillion. Sales and use tax: Year-to-date, sales tax cash (includes final payment for fourth quarter 2015 sales) as well as the first prepayment for the first quarter of 2016 sales is $122 million below forecast. The Controller in April, 2016 reported for the first nine months of the fiscal year, the sales tax is lagging by 0.9% for the fiscal year, to date. Ranking in the U.S.: California ranked third among 50 states in the 2014 State New Economy Index - an index that evaluates a state’s economy based on factors related to innovation and knowledge based industries. Exports: In 2014 exported $174.1 billion in products (top five are computers and electronic products, transportation equipment, machinery (except electrical), manufactured commodities and chemicals. Visitor impact on the economy: Attracted visitors spent more than $1.7 billion in 2014. Recovery: Completed its sixth year of recovery as it ended the fiscal year on June 30, 2015. Personal income: Increased by 5.5% during the year, compared to the 4.6% increase posted for the U.S. Auto registrations: A 9.9% increase in registrations occurred (this is an increase from the 6.6% year-over-year) Home value and sales: As of June 2015 prices for existing single family homes were 7.0% higher and sales up by 11% compared to the prior year. Employment: For June 2015 rose to 17.8 million jobs, a gain of more than 481,000 jobs from June 2014. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 4 www.MuniServices.com California Forecast http://www.mercurynews.com/business/ci_29732433/job-growth-slow-california-but-no-recession-horizon; UCLA Anderson Forecast (04/06/16) Growth in California: Slowing, but the tech boom and the sturdy job market in Silicon Valley and the Bay Area should help the state ward off a recession until at least 2018, economic forecasters predicted. Supply of labor, products and services: Does not appear to have outstripped the demand for those. This means that the kinds of severe imbalances that tend to cause recessions have yet to sprout. Job growth: California jobs grew by 3.0% in 2015. Anderson predicts that will slow to 2.4% growth in 2016. Unemployment: Expected to improve over the next two years; should fall to an average of 5% in 2017, before rising to 5.1% during 2018. As of February, the statewide jobless rate was 5.5%. In February 2015, the statewide jobless rate was 6.7%. Personal income: Adjusted for inflation, personal income rose 4.5% during 2015 in California, and is expected to increase 3.6% during 2016. But in 2017, should rise 3.2% and in 2018, 3.0%. Retail sales: Expected to increase over the next few years, retail sales also are predicted to soften. Inflation: Expected to worsen. Consumer prices rose 1.5% statewide in 2015 and expected to rise by an annual pace of 2.3% in 2016. In 2017, consumer prices are expected to jump 3.5%. California Economic Outlook Beacon Economics (March and April, 2016) Hype: High taxes, over regulated, people and businesses fleeing. Reality: State outperforming, certain industries more vulnerable than others, but others doing great, the enemy is California Environmental Quality Act (CEQA), and ‘dumb taxes.’ U.S. Recession: Coming in 2018. Minimum wage: Only $1 out of $4 in increased payroll costs go to needy households; there are small employment effects which mainly hit the most at-risk workers; increases in costs impact those on fixed incomes. What not to worry about: The US dollar, asset bubbles, drought, income inequality, California business, taxes, California tax levels, Central Valley, politics. What to worry about: China, bad financial regulation, water policy, useless wage floor policies, California housing, lack of public investment, California tax structure, Sacramento, a lack of engagement. (Editor’s note: See https://beaconecon.com for context.) California Labor and Employment Trends http://www.labormarketinfo.edd.ca.gov/Publications/Labor-Market-Analysis/calmr.pdf (February, 2016) http://www.edd.ca.gov/About_EDD/pdf/urate201604.pdf (April, 2016) Unemployment rate: Decreased to 5.4 and nonfarm payroll jobs increased by 4,200 (April 15, 2016). Lowest unemployment rates: In February was 3.0% in San Mateo. Twelve other counties had rates below 5.0% in February: Marin (3.2%); San Francisco (3.3%); Santa Clara (3.8%); Orange (4.0%); Sonoma (4.1%); Alameda (4.3%); San Luis Obispo (4.3%); Contra Costa (4.5%); Napa (4.5%); Placer (4.6%); San Diego (4.7%) and Mono (4.8%). Highest unemployment rate: In February was 21.6% in Colusa County. Employment gains: Forty-eight of the 50 sub-state areas recorded year-over employment gains, with the Los Angeles-Long Beach-Glendale showing the largest numerical job growth of 107,300 jobs (2.5%) and Alpine County showing the largest percentage growth of 33.3% (270 jobs). Sierra County was the only area to show a decrease in employment over the year, down 20 jobs (3.6%) since February 2015. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 5 www.MuniServices.com California Real Estate http://www.dof.ca.gov/finance_bulletins/2016/april/ Sales and Median Prices: The median price of homes sold in February was $446,460, down 3.8% from the February 2015 median. Sales of existing homes totaled 393,360 units at a seasonally adjusted annualized rate in February, an increase from both the previous month and year by 2.6 percent and 6.4 percent, respectively. SECTION 3 - CALIFORNIA TRAVEL AND TOURISM TRENDS AND ECONOMIC IMPACT Tourism Trends http://industry.visitcalifornia.com/media/uploads/files/editor/CA%20Forecast%20February%202016%20-%2020160210.pdf (February, 2016) Visitation to California: Forecast to grow by 2.3% in 2016, following a 2.6% expansion in 2015 which outperformed our previous forecast. Visits to California from overseas will grow by 4.9% in 2016, on par with the previous year. Domestic visitation: Will expand 2.2% in 2016 after outperforming expectation in 2015 with a gain of 2.6%. Occupancy rates: California hotels increased to 74.7% in 2015, driving growth in revenue per available room of 10.5%. Visitation to California: Grew 2.6% in 2015, kicking off a period of more moderate growth. Total visits will grow by 2.3% in 2016 before ticking up 2.4% in 2017 and settling to 2.0% in the outer years Domestic business travel to California: Will outperform that of the U.S. in the near-term before tracking the nation more closely over the forecast horizon. Domestic leisure travel: Will outpace the state’s business segment and the nation as steady job and income growth in key source markets and expansion at attractions, such as Disneyland’s Star Wars and Marvel theme parks, support travel demand. Visitor spending: While food and lodging prices advanced in 2015, lower transportation costs kept overall travel prices subdued, tempering spending growth to 2.8%. There is an anticipated total visitor expenditures growth between 4.1% and 4.3% between 2018 and 2020. SECTION 4 - CALIFORNIA’S MINIMUM WAGE SB 3 (Leno) raises the State’s minimum wage to $10.50 per hour on January 1, 2017 for businesses with 26 or more employees, and will rise each year until reaching $15 per hour in 2022. Small businesses (25 or fewer employees) are allowed until 2023 to phase in the increases. The law phases sick leave for In-Home Supportive Services workers starting in July 2018. Once the minimum wage reaches $15 per hour for all businesses, wages could then be increased each year up to 3.5% (rounded to the nearest 10 cents) for inflation as measured by the CPI. The Governor can act by September 1 of each year to pause the next year's wage increase for one year if there is a forecasted budget deficit (of more than 1% of annual revenue) or poor economic conditions (negative job growth and lower retail sales receipts). Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 6 www.MuniServices.com UC Berkeley Labor Center Analysis http://laborcenter.berkeley.edu/wp-content/uploads/2016/03/CA-15-Min-Wage-Impacts.jpg; http://www.irle.berkeley.edu/research/livingwage; http://www.nytimes.com/2016/04/03/sunday-review/how-the-15-minimum-wage-went-from-laughable-to-viable.html Workers impacted: Estimates that 5.6 million workers will receive wage increases. This does not include an additional 800,000 workers who will already receive wage increase due to $15 an hour a result of local policies; represents 37% of the State’s workforce. Affected workers throughout California’s economy: Retailers and restaurants account for more than a third of those who would be affected by the wage increase. Effects on businesses: Higher wages will be absorbed by employers. The adverse effects on charging slightly higher prices are offset by the increased sales generated by the workers who receive raises. (Editor’s note: There is significant risk to jobs all the way back to suppliers. This runs the risk of costing many workers their jobs and companies will not absorb the costs.) Workers by County Impacted Alameda (211,000); Alpine, Amador, Calaveras, Inyo, Mariposa (24,000); Butte (39,000): Colusa, Glenn, Tehama, Trinity (20,000); Contra Costa (117,000); Del Norte, Lassen, Modoc, Plumas, Siskiyou (17,000); El Dorado (22,000); Fresno (193,000); Humboldt (24,000); Imperial (35,000); Kern (155,000); Kings (24,000) Lake, Mendocino (23,000); Los Angeles (1,936,000); Madera (23,000); Marin (32,000); Merced (42,000); Monterey, San Benito (90,000); Napa (31,000); Nevada, Sierra (14,000); Orange (605,000); Placer (56,000); Riverside (339,000); Sacramento (242,000); San Bernardino (331,000); San Diego (522,000); San Francisco (144,000); San Joaquin (105,000); San Luis Obispo (51,000) ; San Mateo (100,000); Santa Barbara (90,000); Santa Clara (271,000); Santa Cruz (47,000); Shasta (30,000); Solano (54,000); Sonoma (73,000); Stanislaus (82,000); Sutter, Yuba (19,000); Tulare (94,000); Ventura (145,000) and Yolo (36,000). University of the Pacific / Center for Business and Policy Research Analysis http://www.pacific.edu/Documents/school-business/BFC/MinWage/CBPR_$15%20minimum%20wage%20fact%20sheet.pdf In many counties, particularly those with a heavy dependence on agriculture and tourism, approximately 50% of current jobs have wages that would be affected by the legislation. Overall, it is estimated that 36.9% of all jobs across the Northern California mega region will be affected. The most affected industries are agriculture, restaurants, and retail while the least affected industries are utilities, information, and finance. In the San Francisco and the Silicon Valley 25-30% of workers will be affected, although many of these jobs will be impacted by local minimum wage ordinances even in the absence of statewide action. Cal Chamber Analysis http://advocacy.calchamber.com/2016/04/01/minimum-wage-job-killer-goes-to-governor/ They increase pay for minimum wage impacts salaried employees’ compensation. In order for employees to qualify as “exempt” under any of the six exemptions in California, they must meet the salary-basis test, which is two times the monthly minimum wage. Under SB 3 that amount in January 2022 will rise from the current annual salary of $41,600 to at least $62,400, which is an increased cost to employers of $20,800 per exempt employee. An increase in minimum wage will drive up workers’ compensation costs, uniform/tool reimbursements, overtime, and consumer prices. (Editor’s note: This seems to imply one out of three will lose their jobs due to the additional costs.) Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 7 www.MuniServices.com SECTION 5 - THE SHARED ECONOMY / ON-LINE PLATFORMS (SB 1102/ MCGUIRE) Shared Economy - On-Line Platforms – Impact on TOT Revenues http://leginfo.ca.gov/pub/15-16/bill/sen/sb_1101-1150/sb_1102_cfa_20160408_114832_sen_comm.html SB 1102 (McGuire) was amended in early April to develop policy that would create a method that would allow online platforms (“collecting platforms”) to elect to participate and collect TOT revenues and the return the revenue to locals. The State Controller would be responsible for developing guidelines to implement the bill. There are provisions to note including that local governments must notify the State Controller if they wish to be a “collecting jurisdiction”; “collecting platforms” would be subject to an annual audit or review that is conducted by the Controller; local governments’ would need to make a request of the Controller to allow locals or designated officer to review the Controller’s audit findings. MuniServices is carefully vetting the legislation and implications for locals – we are especially concerned with the local control implications that the bill presents. SECTION 6 - E-COMMERCE AND CHANGING ECONOMY Quarterly Retail E-Commerce Sales / 4th Q 2015/ Released February 17, 2016 https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf (CB16-24) (next release is 05/17/16) Estimate: Adjusted for seasonal variation for the fourth quarter of 2015, but not for price changes was $89.1 billion, an increase of 2.1% from the third quarter of 2015. Total retail sales: Estimated at $1,184.8 billion from the third quarter of 2015. Increase in estimates: Increased 14.7% from the fourth quarter of 2014. E-commerce sales: Fourth quarter of 2015 accounted for 7.5% of total sales. How State Revenuers Are Going After E-Commerce http://www.wsj.com/articles/how-state-revenuers-are-going-after-e-commerce-1457737547 (March, 2016) In January a task force of the National Conference of State Legislatures (NCSL) voted to send out model legislation that lawmakers could use to undermine current precedent. The NCSL’s president, Utah state Sen. Curtis Bramble, stated that “states have the ability to enact legislation to overturn” the Quill decision. The state of Alabama has an effort to collect millions of dollars of tax revenue from businesses beyond its borders. Alabama’s revenue commissioner, Julie Magee, is putting forward an untested and suspect legal theory: The state claims that if its residents buy more than $250,000 a year from a remote business, then the seller has an “economic presence” and should be treated the same as a brick-and-mortar shop in Mobile or Birmingham. Teaching and Learning the Benefits of Supporting the Local Economy http://www.kidscoop.com/downloads/category/financial-literacy/ Please note that locals may use this resource: The Financial Literacy section of Kid’s Scoop includes a ‘shop local’ series and asks the younger generation to consider: What happens to the money you spend in stores? Why is it important to support small local businesses in your community? How do the community in turn benefit from those businesses? The January 15, 2016 edition, focus is on teaching children about sales tax, looks at some basic economic principles about the relationship between exchanging money for goods and services. See http://www.kidscoop.com/downloads/sales-tax/. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 8 www.MuniServices.com SECTION 7 - AUTO SALES AND TRENDS California Auto Outlook/ 4th Q 2015 / Released February 2016 http://www.cncda.org/CMS/pubs/CNCDA%20EIR%202016%20FINAL.pdf 2015 Vehicle Sales: New vehicles sold: 2,052,750; Used retail vehicles sold: 769, 500; Total: 2,822,250 New Car Registrations: New vehicle registration expects to remain above 2 million units in 2016; increased for the 6th consecutive year. Economic Impact Report: Annual contributions of the State’s new car dealers for 2015: Total sales: $117.36 billion; Total taxes collected or paid: $9.63 billion; Total spent for products and services from other California businesses: $2.571 billion. Sales of Diesel Cars Fall http://www.nasdaq.com/article/sales-of-diesel-cars-tumble-in-the-us-20160219-00041 (02/19/16) Sales of new, diesel-powered passenger cars have nearly disappeared in the U.S. on the heels of Volkswagen AG's diesel- emissions cheating scandal, according to a U.S. automotive data provider. In January auto makers overall reported selling fewer than 225 such passenger cars compared with between 4,800 and 9,500 a month through the first eight months of 2015 (WardsAuto.com). Auto makers sold 3,500 diesel cars in U.S. September of 2015, and sales fell below 800 in each of the subsequent three months. There were 222 diesel-powered cars sold in the U.S. in January, a sharp decline from the 4,448 sold in the same period a year ago. January's U.S. sales were about a third of the 631 sold in December. Diesel car sales for 2015 peaked in May, when 9,300 were sold. Car Sales / Luxury Car Sales Dropping http://www.thetruthaboutcars.com/2016/03/luxury-car-sales-plunging-america-early-2016/ (March, 2016) U.S. automobile dealers’ sales dropped 2.1% in March, the biggest decrease since February 2015. Purchases of cars and light trucks grew at a 16.5 million annualized rate in March, the slowest in more than a year. Lost in the story of booming auto sales volume in February 2016, the highest-volume February since 2001, was the underachieving premium market. Auto sales jumped 7 percent in February, a gain of 86,000 units, but 19 premium brands, from sector-leading Mercedes- Benz to one-model Alfa Romeo, combined for only a 1-percent year-over-year uptick during the same period. SECTION 8 - GASOLINE California Gas Prices and Gas Tax http://energyalmanac.ca.gov/gasoline/index.html (as of 04/18/16)  After a short lived fall dropping for a week, regular is higher than last week’s price by a few cents.  The average price in California for regular gasoline increased 2.1-cents from the previous week. The average statewide price for regular was $2.771.  The national average for self-serve regular is at $2.137, up 6.8 cents from the previous week; is 63.4 cents lower than the price of regular in California. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 9 www.MuniServices.com National Gas Prices and Energy Prices Kiplinger (04/15/16)  Barrel trading: Continued trading between $35 and $40 per barrel in coming weeks.  Increased national average: Prices for gas will keep rising; the national average price of regular unleaded gasoline hit $2.11 per gallon week of 04/15/16, up 7 cents from a week ago. Diesel is moving higher; at $2.11 per gallon, the national average price of diesel is tied with gasoline.  Natural gas prices: The benchmark gas futures contract continues to hold near our expected level of about $2. The production is faltering because of a drop in drilling activity that should eventually push benchmark gas prices higher, especially if the coming summer. Wal-Mart’s Decision to Pump Its Own Gas http://www.cspnet.com/fuels-news-prices-analysis/fuels-news/articles/behind-wal-mart-s-decision-pump-its-own-gas (02/03/16) Wal-Mart will build and operate its own gas stations. The shift is a sign that Wal-Mart is trying to profit as the retailer pours billions into boosting e-commerce sales to fend off Amazon and improve slow sales growth at stores, and by raising minimum wages for hourly employees to improve customer service. Like other retailers adding gas stations to parking lots, Wal-Mart will lure more shoppers to stores so they buy other, higher-margin items in the main store. SECTION 9 - GROCERY STORE/ SUPPLIER NEWS Grocery Store Changes http://www.theshelbyreport.com (January 2016 to April 2016) Aldi: 45 stores in Southern California will open and nearly 2,000 coast to coast by the end of 2018 365: In May 2016 Whole Foods Market will open first 365 in Los Angeles Yummy.com: Will open new stores in Hollywood, Los Angeles, Santa Monica, Silver Lake and Playa Vista Barons: Opens in San Diego in Fresh & Easy location for a total of seven in Southern California Woodlands Market: Opens in San Francisco Vintage Grocers: Opens second store in Los Angeles; first location is in West Malibu Save Mart: Closed two stores in Sacramento; and plans for closures in Stockton, San Jose and Santa Clara Whole Foods Market’s: First North Orange County location opened in February in Brea Grocery Outlet: Has 244 stores in six states; has opened 10 since December 2015 in Los Angeles and between 12 and 15 will open in Southern California Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 10 www.MuniServices.com SECTION 10 - RETAIL NEWS Retailers / On-Line Trends www.nreionline.com  Marketing: E-commerce is more of an opportunity than a threat to bricks-and-mortar retailing, bolstering marketing outreach and customer engagement.  Environmental impact: Online shopping has an environmental impact that is 7% greater than mall shopping if shoppers bought the same number of products at a mall as they did in an online store  Returns: 33% of online purchases are returned versus 7% of bricks-and-mortar purchases  Jobs: Physical retail generates five times more jobs than online shopping for the same value of sales.  Reasons why physical retailers are closing shop: Retailers are pouring “huge investments” into e-commerce, determining their physical stores are too big to sustain. “E-commerce is growing 12-13% per year, physical stores 2-3% per year, meaning there are less available dollars for physical retailers. (Source: McMillan Doolittle). In addition, while consumer confidence started to increase in the past few years, consumers’ willingness and ability to spend on discretionary purchases may not have had enough time to offset all the damage done by the Great Recession. On-Line Shopping and Store Changes www.nreionline.com; www.plainvanillashsell.com (January 2016 to April 2016) Ambercrobie & Fitch: Closing 60 stores per year Aeropostale: Closing 175 in the years ahead Brookstone: Filed bankruptcy in 2014; expanding in China with three stores Barnes and Noble: Closing 223 stores through 2023; 10 stores closing in fiscal 2017 while opening four new concept stores Bargain Hunt: Takes over Office Depot space in Antioch; is the 46th store under the discount retail chain concept and one of 20 planned openings nationwide this year Dollar General: Approximately 1,000 new stores will open over the course of fiscal 2017 Radio Shack: In 2015 announced closing 1,784 of its 5,000 stores J. Crew: Closing stores; opening discount namesake stores, J. Crew Factory and Madewell Jos. A. Banks: Will close 250 stores this year (was purchased by Men’s Warehouse) Walmart: Closing 154 stores in 2017, including 7 Southern California locations (overall 269 locations are being closed worldwide) Juice It Up!: Will develop throughout Southern California, opening a first location in Beaumont location with additional site selections in progress Kohl’s: 18 underperforming stores will close this year; half in California Kmart: Will close 13 locations in March, 2016 Office Depot: Closed 56 stores in the final quarter of 2015 and planning 50 closings in 2016 Quiznos: Closed more than 300 stores; filed for bankruptcy in 2015; has less than 1,000 locations down from 5,000 in 2006 PacSun: Closed over 250 stores between January 2011 and September 2015 Petco: Opening stores throughout the Country including one in Los Angeles in April Sports Authority: Will close 140 of 450 stores Sports Chalet: Closing all California locations and stopped selling on-line Staples: Staples closed between 242 stores between 2014 and 2015; another 50 is planned for 2016 Sears: Sears will close 50 locations in 2016 Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 11 www.MuniServices.com Spending Trends: Retail Sales See Surprise Drop http://www.retaildive.com/news/us-retail-sales-see-surprise-drop-as-consumers-remain-wary/417364/ (April, 2016) 2016); http://www.bloomberg.com/news/articles/2016-04-13/retail-sales-unexpectedly-fall-as-u-s-spending-loses- momentum(April, 2016)  Wary consumers: The Commerce Department’s March 2016 shows a snapshot of the American spender. Although employment has been steady or improving for months and wage gains are happening, middle and lower incomes still must rise for Americans to widen their wallets.  U.S. retail and food services sales: Fell 0.3% in March to $446.9 billion. That missed a median forecast of a 0.1% gain from 81 economists surveyed by Bloomberg.  Retail trade sales: March clothing and accessories sales fell 0.9%, general merchandise sales rose 0.5%, and electronics and appliance sales rose 0.1%. E-commerce sales fell 0.1%.  Paying debt: Consumers are also choosing to save or pay off debt rather than spend, and when they do, they are increasingly favoring experiences over stuff.  Spending trends: These new spending trends are forcing retailers to reconsider their marketing strategies and physical stores, offering more value to the consumer with no-cost online resources and free in-store events.  Decreases: Led by the biggest drop in demand for autos in a year, and cutbacks at clothing stores, Internet merchants and restaurants.  Automobile dealers’ sales: Dropped 2.1% in March, the biggest decrease since February 2015. Purchases of cars and light trucks grew at a 16.5 million annualized rate in March, the slowest in more than a year, according to Ward’s Automotive Group.  Gasoline: Regular gasoline at the pump climbed last month to an average $1.94 a gallon, or up 21 cents from the February average of $1.73, according to AAA, the biggest U.S. auto group. Fuel costs, however, remain a tailwind for consumers as the February level was the lowest since 2009.  Purchases: Excluding autos, purchases rose 0.2% last month after being little changed in February. The increase was paced by a 0.9% jump in receipts at service stations that probably reflected the recent pickup in gasoline prices. The Changing Retail Model http://cre.org/CRE_2015-16_Top_Ten.cfm The retail sector faces continued challenges. Merchandise offerings are subject to the preferences of demographic groups in transition. The sector is skewered by decreasing consumer purchasing power, often hampered by aging infrastructure, subject to steep declines in spending if an adverse event (think terrorist attack or cyber security breach) occurs. And yesterday’s best location may be todays or tomorrow’s worst as urbanization draws more households into cities. On the bright side, despite steady increases in online shopping, there is still a role for physical presence, where shoppers can browse and try products. Retailers that incorporate e-commerce elements, including fast delivery options, are well positioned, at least in the short term. There is continued pressure on existing properties to keep occupancy strong and adapt logistics. Store sizes, particularly within live/work/play, walkable, and transit-oriented developments are shrinking, but the attractive amenities of such “urban” shopping districts are being incorporated into suburban shopping areas. Attachment D ECONOMIC NEWS & TRENDS April 20, 2016 12 www.MuniServices.com New Retail Phenomenon – “Snacking” – Nibble at Purchase http://www.pymnts.com/news/mobile-commerce/2016/snacking-shoppers-use-apps-to-nibble-at-purchases/ App-based “snacking,” or small, impulsive purchases made on mobile devices through the day, is largely coming to replace the increasingly antiquated practice of making a lower number of larger purchases on less portable devices. Not all retailers are finding themselves behind the eight ball, though. Amazon’s mobile app, which presents a user interface similar to its desktop version. Gift Cards - Retailers and Responsible for Fraud https://ca.finance.yahoo.com/news/gift-cards-feel-pinch-rules-234200369.html (March, 2016) Americans are expected to load $651 billion on prepaid cards this year, up 57% from six years ago. Nearly half of that is expected to involve the “open-loop” cards that can be used anywhere and that are affected by the new limits. Retailers are making it tougher to buy gift cards, a consequence of new credit-card rules that put them on the hook for fraud. Others have cut back to smaller denominations, put limits on repeat purchases or stopped selling certain cards altogether. Shopping Trends – When and How Men and Women Shop http://www.wsj.com/articles/men-are-shopping-like-women-1455657516 (02/17/16) Increasingly, men shop for clothes on their phones and frequently check retailer websites for new products or brands. As an example traffic at Mr Porter, Net-a-Porter’s luxury online men’s store, picks up noticeably on Tuesdays and Fridays. Those are the days when new products and brand launches arrive on the site. The retailer reports that 25% of its traffic comes from men shopping on their mobile devices, up from 12% in 2014. Nordstrom’s E-Commerce Strategy: Failure or Success? http://nreionline.com/retail/nordstrom-s-e-commerce-strategy-failure-or-success  In 2014 Nordstrom said it would continue to invest in e-commerce, to deliver merchandise to its customers in whichever way they preferred.  In the first quarter of 2014, the net sales had increased year-over-year by 33.0%, on top of a 25.0% increase experienced the year before. The company reported that in the fourth quarter of 2015 same-store sales for its off-price division, Nordstrom Rack, dipped 3.2%. SECTION 11 – RESTAURANT TRENDS Cocktail and Beer Market Share: Despite the craft beer craze, beer lost a portion of its share of U.S. alcohol revenue in 2015 to liquor for the sixth consecutive year and the 12th time in the past 15 years. U.S. Beer’s market share fell to 48% last year from 56% in 2000. Liquor has risen to 35% from 29% and wine to 17% from 16%. Spirits tastings are now allowed in stores in 38 states compared with 22 in 2001. No Restaurants for App: There is a revolution in high-speed food delivery. Some chefs are trading in restaurants for an ordering app. Fast Causal: Traffic to fast-casual restaurants grew even faster, with 6% more customer visits in the year ending February 2016 compared to a year ago. Zero Waste: Two restaurant concepts are opening in Los Angeles that will take a zero waste approach. The average kitchen probably wastes about 30% – the new restaurants by Chef Marcel Vigneron are in the 5% range. Attachment D 1 | P a g e 250 Hamilton Ave., Palo Alto CA 94301 cityofpaloalto.org CITY ROSTER – June 2016 CITY INFORMATION: Discovered: 1769 Incorporated: April 23, 1894 Incorporated as a Charter City: July 1, 1909 Population: 66,029 Housing Units: approximately 28,216 Size: 25.925 square miles Sister Cities: Palo, Leyte, Philippines 1963 | Oaxaca, Mexico 1964 | Enschede, The Netherlands 1980 Linköping, Sweden 1987 | Albi, France 1994 | Tsuchiura City, Japan 2009 Note: Stanford University is not part of the City of Palo Alto, but Stanford Research Park and Stanford Shopping Center are included. CITY COUNCIL MEETING INFORMATION: When: Regular meetings are held on the first three Mondays of the month, at 6:00 P.M. Where: City Council Chambers are located on the first floor of City Hall, 250 Hamilton Avenue, Palo Alto, 94301. Meetings are cablecast live in most cases (and replayed) on Government Channel 26 or 29 and broadcast via KZSU Radio, 90.1 FM. Video streaming of City Council meetings can be accessed at midpenmedia.org. Call the Community Media Center at 650-494-8686 for exact times of replays. Agendas are available on the City Webpage (http://cityofpaloalto.org/gov/agendas/) and the agendas are posted in King Plaza in front of City Hall on Thursday evenings 11 days prior to the Council meeting. In compliance with the Americans with Disabilities Act (ADA), this document will be provided in other accessible formats. For information, contact ADA Coordinator, City of Palo Alto, 650-329-2368 (Voice) or ada@cityofpaloalto.org Please contact the City Clerk's office at 650-329-2571 to advise of roster amendments. 2 | P a g e CITY COUNCIL MEMBER CONTACT INFORMATION: The terms of the Mayor and Vice-Mayor are for one year and expire at the first City Council meeting in January. Council terms are for four years and Council Member’s may serve two consecutive terms. Your correspondence with City Council is a public record and is available for public inspection. Members of the public may address the entire Council via email correspondence at city.council@cityofpaloalto.org. NAME ADDRESS/EMAIL PHONE TERM Marc Berman 250 Hamilton Ave., 94301 marc.berman@cityofpaloalto.org (650) 329-2480 (c) 1/1/2013 – 12/31/2016 Patrick Burt Mayor 250 Hamilton Ave., 94301 patrick.burt@cityofpaloalto.org (650) 388-8639 (c) 1/1/2008 – 12/31/2016 Tom DuBois 250 Hamilton Ave., 94301 tom.dubois@cityofpaloalto.org (415) 377-8455 (c) 1/1/2015 – 12/31/2018 Eric Filseth 250 Hamilton Ave., 94301 eric.filseth@cityofpaloalto.org (650) 329-2162 (c) 1/1/2015 – 12/31/2018 Karen Holman 250 Hamilton Ave., 94301 karen.holman@cityofpaloalto.org (650) 444-4017 (c) 1/1/2010 – 12/31/2018 Liz Kniss 1985 Cowper St., 94301 liz.kniss@cityofpaloalto.org (650) 888-8671 (c) 1/1/2013 – 12/31/2016 Greg Scharff Vice Mayor 250 Hamilton Ave., 94301 gregscharff@aol.com (650) 868-9303 (c) 1/1/2010 – 12/31/2018 Greg Schmid 250 Hamilton Ave., 94301 greg.schmid@cityofpaloalto.org (650) 444-6313 (c) 1/1/2008 – 12/31/2016 Cory Wolbach 250 Hamilton Ave., 94301 cory.wolbach@cityofpaloalto.org (650) 329-2145 (c) 1/1/2015 – 12/31/2018 3 | P a g e CITY SERVICES For a listing of City services and departmental phone numbers, visit the City’s website at http://cityofpaloalto.org/iwantto/contact/phone.asp For emergency assistance call 9-1-1. COUNCIL APPOINTED OFFICERS City Attorney Molly Stump (650) 329-2171 City Auditor Harriet Richardson (650) 329-2629 City Clerk Beth Minor (650) 329-2379 City Manager James Keene (650) 329-2563 EXECUTIVE LEADERSHIP TEAM Assistant City Manager Ed Shikada (650) 329-2146 Director of Administrative Services /Chief Financial Officer Lalo Perez (650) 329-2675 Chief Communications Officer Claudia Keith (650) 329-2607 Director of Community Services Rob de Geus (650) 463-4951 Director of Development Services Peter Pirnejad (650) 329-2349 Director of Emergency Services Kenneth Dueker (650) 617-3197 Fire Chief Eric Nickel (650) 329-2424 Director of Human Resources Rumi Portillo (650) 329-2124 Director of Information Technology/Chief Information Officer Jonathan Reichental (650) 329-2182 4 | P a g e Director of Library Services Monique Ziesenhenne (650) 329-2403 Director of Planning and Community Environment Hillary Gitelman (650) 329-2321 Police Chief Dennis Burns (650) 329-2103 Director of Public Works Mike Sartor (650) 329-2270 Chief Sustainability Officer Gil Friend (650) 329-2447 Interim Utilities Director/Assistant City Manager Ed Shikada (650) 329-2146 5 | P a g e BOARDS/COMMISSIONS/COMMITTEE ROSTER (C) Denotes Chair (VC) Denotes Vice Chair ARCHITECTURAL REVIEW BOARD (ARB) Regular meetings are held at 8:30 A.M. on the first and third Thursdays of each month and are cablecast live in most cases on Government Channel 26. Terms are for three years. See Palo Alto Municipal Code (PAMC) Sections 2.16 and 2.21. Staff Liaison: Jodie Gerhardt – Planning Manager, Planning & Community Environment (650) 329-2575 Administrative Support: Alicia Spotwood – Administrative Associate II (650) 617-3168 Board Email: arb@cityofpaloalto.org Name Address Phone Term Peter Baltay 450 Kipling St., 94301 (415) 407-1621 (c) 12/15/2018 Wynne Furth 216 Everett Ave., 94301 (650) 326-9313 (h) 12/15/2017 Robert Gooyer (C) 1900 S. Norfolk St., Ste. 216, San Mateo, 94403 (650) 349-6549 (o) 12/15/2018 Kyu Kim 1130 Oregon Ave., 94303 (650) 852-9747 (c) 12/15/2017 Alexander Lew (VC) 372 A Bush St., 94041 (650) 694-4662 (h) 12/15/2018 HISTORIC RESOURCES BOARD (HRB) Regular meetings are held at 8:30 A.M. on the second and fourth Thursdays of each month and are cablecast live in most cases on Government Channel 26. Terms are for three years. See PAMC Chapters 2.16 and 16.49. Council Liaison: Council Member Karen Holman Staff Liaison: Matthew Weintraub – Planner, Planning & Community Environment (650) 329-2336 Administrative Support: Alicia Spotwood – Administrative Associate II (650) 617-3168 Board Email: hrb@cityofpaloalto.org Name Address Phone Term Martin Bernstein (C) 250 Hamilton Ave., 94301 (650) 324-9610 (o) 12/31/2017 David Bower 250 Hamilton Ave., 94301 (650) 329-8564 (o) 12/15/2016 Beth Bunnenberg 250 Hamilton Ave., 94301 12/15/2016 Patricia DiCicco 250 Hamilton Ave., 94301 (650) 804-6550 (c) 12/15/2016 Roger Kohler 721 Colorado Ave., Ste. 102, 94303 (650) 328-1086 (o) 12/15/2017 Michael Makinen 250 Hamilton Ave., 94301 (440) 503-4926 (c) 12/15/2017 Margaret Wimmer (VC) P.O. Box 60681, 94306 (650) 646-1610 (o) 12/15/2017 6 | P a g e HUMAN RELATIONS COMMISSION (HRC) Regular meetings are held at 7:00 P.M. on the second Thursday of each month and are cablecast live in most cases on Government Channel 26. Terms are for three years. See PAMC Sections 2.16 and 2.22. Council Liaison: Council Member Cory Wolbach Alternate Council Liaison: Council Member Marc Berman Staff Liaison: Minka van der Zwaag – Manager of Human Services, Community Services (650) 463-4653 Administrative Support: Mary Constantino – Program Assistant II (650) 463-4906 Commission Email: hrc@cityofpaloalto.org Name Address Phone Term Mehdi Alhassani 4000 Middlefield Rd., T2, 94303 (650) 687-7544 (c) 5/31/2017 Theresa Chen 4000 Middlefield Rd., T2, 94303 (650) 463-4906 (o) 5/31/2018 Shelly Gordon Gray 4000 Middlefield Rd., T2, 94303 (650) 856-1607 (o) 5/31/2018 Jill O’Nan 4000 Middlefield Rd., T2, 94303 5/31/2019 Daryl Savage 4000 Middlefield Rd., T2, 94303 5/31/2017 Valerie Stinger (VC) 4000 Middlefield Rd., T2, 94303 (650) 493-6043 (h) 5/31/2018 Greer Stone (C) 4000 Middlefield Rd., T2, 94303 (650) 575-0405 (c) 5/31/2019 LIBRARY ADVISORY COMMISSION (LAC) Regular meetings are held at 7:00 P.M. on the fourth Thursday, every other month. Terms are for three years. See PAMC Sections 2.16 and 2.24. Council Liaison: Council Member Tom DuBois Staff Liaison: Monique Ziesenhenne – Director, Library Services (650) 329-2403 Administrative Support: Evelyn Cheng – Administrative Assistant (650) 329-2516 Commission Email: library.commission@cityofpaloalto.org Name Address Phone Term Sheena Chin (C) 250 Hamilton Ave., 94301 5/31/2019 Doug Hagan 250 Hamilton Ave., 94301 (650) 326-2367 (h) 5/31/2017 June Loy (VC) 250 Hamilton Ave., 94301 5/31/3017 Don McDougall 250 Hamilton Ave., 94301 (650) 815-1455 (c) 5/31/2017 Robert Moss 4010 Orme St., 94306 (650) 493-2178 (h) 5/31/2019 7 | P a g e PALO ALTO MEDIATION PROGRAM Created by the Human Relations Commission (HRC) in September 1973, and charged with facilitating the resolution of rental housing and community disputes. Regular meetings are held at 7:15 P.M. on the third Thursday of each month. HRC Liaisons: Theresa Chen & Mehdi Alhassani – Human Relations Commissioners Staff Liaison: Minka van der Zwaag – Manager of Human Services, Community Services (650) 463-4953 Emeritus Mediators Jim Baer Alice Fischgrund Claudia Schweikert Richard Bloomfield Mark Harris Elisabeth Seaman Mediators Gill Barsley Martin Eichner Karen Michael Aruna Bellary Elaine El Bizri Judith Stewart Jeff Blum Virginia Feira Pam Sturner Marina Brodskaya Megan Gorman Sarah Tkach Kitty Clark Rick Gross Anjali Vishwanath Joyce Davidson Dyane Matas Andrea Werboff PALO ALTO YOUTH COUNCIL Created by the Human Relations Commission at the direction of City Council in March 1979 and restructured at the direction of City Council in December 1983. The Youth Council is charged with representing the issues and concerns of youth to municipal government. Regular meetings are held at 5:00 P.M. every Monday. Council Liaison: Council Member Cory Wolbach Alternate Council Liaison: Council Member Tom DuBois Youth Council President: Ellen Lee Youth Council Vice-President: Nikhil Kumar Staff Liaison: Lacee Kortsen – Manager, Community Services (650) 463-4910 Members Mathew Antony Louisa Keyani Jojo Qi Elinor Aspegren Akhil Kumar Wendy Qi Anyi Cheng Audrey Li Alyssa Sales Deiana Hristov Tara Madhav Sid Sharma Ashabi Idris Elise Most Sarah Sundermeyer Kevin Ji Albert Phan Michelle Tang Jolie Kemp Simran Pujji Dhara Yu 8 | P a g e PARKS AND RECREATION COMMISSION (PARC) Regular meetings are at 7:00 P.M. on the fourth Tuesday of each month, and are cablecast live in most cases on Government Channel 29. Terms are for three years. See PAMC Sections 2.16 and 2.25. Council Liaison: Council Member Eric Filseth Staff Liaison: Kristen O’Kane – Assistant Director, Community Services (650) 463-4908 Administrative Support: Catherine Bourquin – Program Assistant II (650) 496-6962 Commission Email: parkrec.commission@cityofpaloalto.org Name Address Phone Term Jim Cowie 250 Hamilton Ave., 94301 (650) 800-7467 (h) 12/15/2018 Anne Cribbs 250 Hamilton Ave., 94301 (415) 264-2067 (c) 12/15/2018 Jennifer Hetterly 250 Hamilton Ave., 94301 12/15/2016 Abbie Knopper (VC) 1143 Greenwood Ave., 94301 (650) 384-0822 (h) 12/15/2016 Ed Lauing 1400 Webster St., 94301 (650) 327-8890 (h) 12/15/2016 David Moss 250 Hamilton Ave., 94301 (650) 494-7234 (h) 12/15/2018 Keith Reckdahl (C) 256 Edlee Ave., 94306 (650) 575-1981 (c) 12/15/2016 PLANNING AND TRANSPORTATION COMMISSION (PTC) Regular meetings are held at 6:00 P.M. on the second and last Wednesdays of each month and are cablecast live in most cases on Government Channel 26. Terms are for four years. See PAMC Sections 2.16, 2.20, and 19.04. Staff Liaison: Jonathan Lait – Assistant Director, Planning and Community Environment (650) 329-2679 Administrative Support: Robin Ellner – Administrative Associate III (650) 329-2603 Commission Email: planning.commission@cityofpaloalto.org Name Address Phone Term Michael Alcheck 250 Hamilton Ave., 94301 12/15/2017 Yekaterina “Kate” Downing 450 Pepper Ave., 94306 (650) 575-9843 (c) 12/15/2018 Adrian Fine (C) 2002 Columbia St., 94306 (650) 468-6331 (c) 12/15/2018 Przemek Gardias (VC) 1252 Cedar St., 94301 (650) 323-1238 (c) 12/15/2016 Eric Rosenblum 154 Bryant St., 94301 (206) 604-0443 (c) 12/15/2017 Greg Tanaka 250 Hamilton Ave., 94301 (415) 968-9436 (c) 12/15/2016 Asher Waldfogel 300 Santa Rita Ave., 94301 (650) 224-2425 (c) 12/15/2019 9 | P a g e PUBLIC ART COMMISSION (PAC) Regular meetings are held at 7:00 P.M. on the third Thursday of each month, and are cablecast live in most cases on Government Channel 26. Terms are for three years. See PAMC Sections 2.16, 2.18, and 2.26. Council Liaison: Council Member Liz Kniss Alternate Council Liaison: Council Member Karen Holman Staff Liaison: Elise DeMarzo – Management Specialist, Community Services (650) 617-3517 Administrative Support: Nadya Chuprina – Program Assistant II (650) 329-2227 Commission Email: pac@cityofpaloalto.org Name Address Phone Term Amanda Beard Ross 1313 Newell Rd., 94303 5/31/2017 Loren Gordon 428 Maple St., 94301 (650) 269-6489 (c) 5/31/2018 Jim Migdal (C) 1313 Newell Rd., 94303 5/31/2017 Ben Miyaji (VC) 1313 Newell Rd., 94303 5/31/2018 Dara Olmsted Silverstein 1313 Newell Rd., 94303 5/31/2017 Nia Taylor 444 San Antonio Rd., #1C, 94306 (650) 380-5991 (c) 5/31/2017 Mila Zelkha 1313 Newell Rd., 94303 5/31/2018 STORM DRAIN OVERSIGHT COMMITTEE (SDOC) Meetings are held as needed. Terms are for four years. Staff Liaison: Joe Teresi – Senior Engineer, Public Works (650) 329-2129 Name Address Phone Term Nancy Clark (VC) 225 Addison Ave., 94301 (650) 327-8205 (c) 12/15/2018 Stepheny McGraw 3303 Thomas Dr., 94303 (650) 856-0296 (h) 12/15/2016 Hal Mickelson (C) P.O. Box 20062, Stanford, 94309 (650) 868-2938 (h) 12/15/2018 Susan Rosenberg 1425 Stanford Ave., 94306 (650) 424-1448 (h) 12/15/2016 Richard Whaley 4240 Briarwood Way, 94306 (650) 494-0675 (h) 12/15/2018 10 | P a g e UTILITIES ADVISORY COMMISSION (UAC) Regular meetings are held at 7:00 P.M. on the first Wednesday of each month and are cablecast live in most cases on Government Channel 26. Terms are for three years. See PAMC Sections 2.16 and 2.23. Council Liaison: Vice Mayor Greg Scharff Alternate Council Liaison: Council Member Eric Filseth Staff Liaison: Ed Shikada – Interim Utilities Director & Assistant City Manager (650) 329-2146 Administrative Support: Marites Ward – Administrative Assistant (650) 329-2326 Commission Email: uac@cityofpaloalto.org Name Address Phone Term Arne Ballantine 250 Hamilton Ave., 94301 5/31/2018 James Cook (C) 730 College Ave., 94306 (650) 455-1855 (c) 5/31/2017 Michael Danaher (VC) 1355 Hamilton Ave., 94301 (650) 320-4625 (o) 5/31/2018 Lisa Forssell 250 Hamilton Ave., 94301 (650) 566-1040 (h) 5/31/2017 A.C. Johnston 325 Channing Ave., Apt. 301, 94301 (650) 823-5561 (c) 5/31/2019 Judith Schwartz 2330 Bryant St., 94301 (650) 906-9927 (h) 5/31/2019 Terry Trumbull 5/31/2019 EMERGENCY STANDBY COUNCIL The Standby Emergency Council is composed of former Council Members who have indicated a willingness to serve in an emergency situation; these individuals are appointed by the City Council. See PAMC Section 2.12.090. Name Address Phone Bern Beecham 321 Cowper St., 94301 (650) 248-0903 (c) Peter Drekmeier 311 Fulton St., 94301 (650) 223-3333 (h) Sid Espinosa 488 University Ave. #515, 94301 (650) 693-1397 (w) Yoriko Kishimoto 251 Embarcadero Rd., 94301 (650) 323-5590 (h) Larry Klein 872 Seale Ave. 94301 (650) 444-6367 (c) Dena Mossar 1024 Emerson St, 94301 (650) 575-0990 (c) Lanie Wheeler 362 Diablo Ct., 94306 (650) 799-1633 (c) 11 | P a g e COUNCIL MEMBER ASSIGNMENTS Mayor: Patrick Burt Vice Mayor: Greg Scharff COMMITTEE ASSIGNMENTS City/School Liaison Committee (CS) Meets at 8:30 A.M. on the third Thursday of the month. Staff Liaison: Khashayar “Cash” Alaee, Senior Management Analyst (650) 329-2230 Council Member Tom DuBois, City Representative (C) Council Member Cory Wolbach, City Representative School Board Vice President Terry Godfrey, Palo Alto Unified School District School Board Member Melissa Baten Caswell, Palo Alto Unified School District Cathy Mak, District Chief Business Officer Council Appointed Officer’s Committee (CAO) Meets on an as needed basis. Council Member Karen Holman Council Member Liz Kniss (C) Vice Mayor Greg Scharff Finance Committee (FC) Meets at 7:00 P.M. on the first and third Tuesdays of the month. Staff Liaison: Lalo Perez, Administrative Services Director & Chief Financial Officer (650) 329-2675 Council Member Eric Filseth (C) Council Member Karen Holman Council Member Greg Schmid Council Member Cory Wolbach Local Transportation Funding Committee (LTFC) Meets on an as needed basis. Staff Liaison: Claudia Keith, Chief Communications Officer (650) 329-2607 Mayor Pat Burt (C) Council Member Karen Holman Council Member Liz Kniss Vice Mayor Greg Scharff 12 | P a g e Policy and Services Committee (P&S) Meets at 7:00 P.M. on the second Tuesday of the month. Staff Liaison: Ed Shikada, Assistant City Manager (650) 329-2146 Council Member Marc Berman Council Member Tom DuBois (C) Council Member Liz Kniss Vice Mayor Greg Scharff City Council Rail Committee (CCRC) Meets on an as needed basis. Staff Liaison: Ed Shikada, Assistant City Manager (650) 329-2146 Council Member Marc Berman (C) Mayor Pat Burt Council Member Tom DuBois Vice Mayor Greg Scharff 13 | P a g e CITY COUNCIL LIAISON ASSIGNMENTS CITY AND LOCAL Art Center Foundation Council Member Liz Kniss Avenidas Council Member Liz Kniss Council Member Greg Schmid (Alternate) Business Association of California Avenue (BACA) Council Member Karen Holman Palo Alto Chamber of Commerce Vice Mayor Greg Scharff Council Member Liz Kniss (Alternate) Palo Alto Community Child Care Council Member Tom DuBois Palo Alto Downtown Business & Professional Association (BID) Council Member Eric Filseth Friends of Junior Museum & Zoo Council Member Eric Filseth Council Member Marc Berman (Alternate) Palo Alto Housing Corporation Council Member Marc Berman Council Member Cory Wolbach (Alternate) Lytton Gardens Council Member Tom DuBois Palo Alto/Stanford Citizen Corps Council Council Member Tom DuBois Neighbors Abroad Council Member Liz Kniss Vice Mayor Greg Scharff (Alternate) Staff Liaison: Jessica Brettle, Assistant City Clerk (650) 329-2630 Youth Liaison Council Member Cory Wolbach Council Member Tom DuBois (Alternate) 14 | P a g e COUNTY Joint Recycled Water Committee Mayor Pat Burt (Chair) Council Member Tom DuBois Santa Clara County Cities Association Vice Mayor Greg Scharff (First Vice President) Council Member Cory Wolbach (Alternate) Santa Clara County Cities Association, Legislative Action Committee Vice Mayor Greg Scharff Council Member Cory Wolbach (Alternate) Santa Clara County Emergency Operational Area Council Vice Mayor Greg Scharff Santa Clara Valley Water District Commission Council Member Greg Schmid Council Member Marc Berman (Alternate) Silicon Valley Board of Realtors Council Member Liz Kniss Valley Transportation Authority Grand Boulevard Task Force Council Member Tom DuBois Valley Transportation Authority, Policy Advisory Committee Council Member Liz Kniss Council Member Cory Wolbach (Alternate) Valley Transportation Authority, El Camino Real Rapid Transit Policy Advisory Board Council Member Liz Kniss (Alternate) 15 | P a g e REGIONAL, STATE AND NATIONAL Association of Bay Area Governments (ABAG) Vice Mayor Greg Scharff Council Member Cory Wolbach (Alternate) Bay Area Regional Water System Financing Authority Council Member Greg Schmid Vice Mayor Greg Scharff (Alternate) Board of Directors for Bay Area Water Supply & Conservation Agency (BAWSCA) Council Member Greg Schmid Vice Mayor Greg Scharff (Alternate) Caltrain Policy Maker Committee Mayor Pat Burt League of California Cities, Peninsula Division Council Member Liz Kniss (President) Council Member Cory Wolbach (Alternate) Northern California Power Agency (NCPA) Vice Mayor Greg Scharff Alternate: Ed Shikada, Interim Utilities Director (650) 329-2146 Alternate: Debra Lloyd, Senior Resource Planner, Utilities (650) 329-2369 Alternate: Jane Ratchye, Assistant Utilities Director (650) 329-2119 Peninsula Cities Consortium Mayor Pat Burt Council Member Marc Berman (Alternate) SFO (San Francisco) Airport Roundtable Liaison Council Member Eric Filseth San Francisquito Creek Joint Powers Authority Mayor Pat Burt Vice Mayor Greg Scharff (Alternate) Transmission Agency of Northern California (TANC) Vice Mayor Greg Scharff Alternate: Ed Shikada, Interim Utilities Director (650) 329-2146 Alternate: Debra Lloyd, Senior Resource Planner, Utilities (650) 329-2369 Alternate: Jane Ratchye, Assistant Utilities Director (650) 329-2119 16 | P a g e SCHOOL DISTRICTS Palo Alto Unified School District School Board elections are held on the first Tuesday after the first Monday in November, in even-numbered years. School Board terms are for four years. School Board meetings are held every other Tuesday, no later than 6:00 P.M. Board of Education 25 Churchill Ave., Palo Alto, CA 94306 (650) 329-3700 pausd.org President: Heidi Emberling Vice President: Terry Godfrey Superintendent of Schools: Dr. Glen “Max” McGee Assistant Superintendents: Scott Bowers, Human Resources, & Holly Wade, Ed. Services Chief Business Official: Cathy Mak Student Board Member: Grace Park, Gunn High School Student Board Member: Emma Cole, Palo Alto High School Name Phone Term Melissa Baten Caswell (650) 823-1166 11/30/2016 Ken Dauber (650) 906-4340 11/30/2018 Heidi Emberling (650) 308-4702 11/30/2016 Terry Godfrey (650) 387-3210 11/30/2018 Camille Townsend (650) 493-3410 11/30/2016 Los Altos School District School Board elections are held on the first Tuesday after the first Monday in November, in even-numbered years. School Board terms are four years. Regular meetings are held at 7:00 P.M. on the second and fourth Mondays of the month. 201 Covington Rd. Los Altos, CA 94024 (650) 947-1150 losaltos.k12.ca.us 17 | P a g e COUNTY AND STATE GOVERNMENT Santa Clara County Government Regular meetings of the Santa Clara Board of Supervisors are held Tuesdays at 9:00 A.M. Palo Alto is located within the fifth District. sccgov.org County Executive Jeffery V. Smith 70 West Hedding St. 11th Floor San Jose, CA 95110 (408) 299-5105 County Clerk Recorder Regina M. Alcomendras 70 West Hedding St. 1st Floor San Jose, CA 95110 (408) 299-5688 clerkrecorder@rec.sccgov.org Santa Clara County Board of Supervisors 70 West Hedding St., 10th Floor San Jose, CA 95110 (408) 299-5001 Name District Phone E-Mail Address Term Mike Wasserman District 1 (408) 299-5010 mike.waserman@bos.sccgov.org December 2018 Cindy Chavez District 2 (408) 299-5020 cindy.chavez@bos.sccgov.org December 2020 Dave Cortese President District 3 (408) 299-5030 dave.cortese@bos.sccgov.org December 2020 Ken Yeager District 4 (408) 299-5040 ken.yeager@bos.sccgov.org December 2018 Joe Simitian Vice President District 5 (Palo Alto) (408) 299-5050 joe.simitian@bos.sccgov.org December 2020 18 | P a g e California State Government Governor Jerry Brown – Term ends January 2, 2019 Office of the Governor State Capitol Building, Suite 1173 Sacramento, CA 95814 (916) 445-2841 governor@governor.ca.gov State Assembly Palo Alto is located within the 24th Assembly District Assembly Member Rich Gordon (24th District) - Term ends December 4, 2016 Capitol Office State Assembly PO Box 942849 Sacramento, CA 94249-0024 (916) 319-2024 (916) 319-2124 Fax assemblymember.gordon@assembly.ca.gov District Office 5050 El Camino Real, Suite 117 Los Altos, CA 94022 (650) 691-2121 (650) 691-2120 Fax Speaker of the Assembly (78th District) - Term ends December 4, 2016 Toni G. Atkins State Assembly State Capitol, P.O. Box 942849 Sacramento, CA 94249 (916) 319-2078 toni.atkins@asm.ca.gov 19 | P a g e State Senate Palo Alto is located within the 13th Senate District Senator Jerry Hill (13th District) – Term ends December 5, 2016 Capitol Office State Senate State Capitol, Room 5035 Sacramento, CA 95814 (916) 651-4013 senator.hill@senate.ca.gov District Office 1528 South El Camino Real Suite 303 San Mateo, CA 94402 (650) 212-3313 Senate President Pro-Tempore (24th District) – Term ends December 2, 2018 Kevin De León State Senate State Capitol, Room 205 Sacramento, CA 95814 (916) 651-4024 senator.deleon@senate.ca.gov 20 | P a g e United States Government United States Senate Barbara Boxer (D-CA) – Term ends January 3, 2017 Washington D.C. Office 112 Hart Senate Office Building Washington, DC 20510 (202) 224-3553 (202) 224-0454 Fax boxer.senate.gov Local Office 70 Washington St., Suite 203 Oakland, CA 94607 (510) 286-8537 Dianne Feinstein (D-CA) – Term ends January 3, 2019 Washington D.C. Office 331 Hart Senate Office Building Washington, DC 20510 (202) 224-3841 (202) 224-3954 Fax feinstein.senate.gov Local Office One Post St., Suite 2450 San Francisco, CA 94104 (415) 393-0707 (415) 393-0710 Fax Unites States Congress Anna Eshoo (D – 18th Congressional District) – Term ends January 3, 2017 Washington D.C. Office 241 Cannon Building Washington, DC 20515 (202) 225-8104 (202) 225-8890 Fax eshoo.house.gov Local Office 698 Emerson St. Palo Alto, CA 94301 (650) 323-2984 (650) 323-3498 Fax Voter Information Applications for Voter Registration by mail are available from: County of Santa Clara Registrar of Voters Department of Elections & Records PO Box 611360 San Jose, CA 95161 866-430-VOTE (8683) sccvote.org Office of the City Clerk City of Palo Alto 250 Hamilton Ave., 7th Floor Palo Alto, CA 94301 (650) 329-2571 city.clerk@cityofpaloalto.org cityofpaloalto.org/clerk