HomeMy WebLinkAbout0189.095@
City of Palo Alto
City Manager's Report
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: FlNA.1>!CE
AGENDA DATE: APRIL 18, 1995 c.'IofR: 189: 95
SUIIJECI': 199$096 BUDGET ISSUES
REPORT IN BRlEF
The purpose 0( this reporI is 10 provide the C<lunciI ",ith background information about
<:auin tey issues which are addressed in the 1995-96 Budget. Included in this report is
information 00 the IDIlowing budget issues:
o Implementation of Organizational R.view
o Tempomy 10 permanent employee conversions
o lnfraslIUc!un: (Co>.mcil pricrity)
o Yoodl, Families and Community (Council priocity)
., . Assistance 10 Ea.", Palo Alto
o Graffiti
., Internet
., Parking Pennil Fund status
o Electric rates and reser ....
More in-depth infonr.anoo. will be prO'Vlded in a separate reporI "" Palo Alto Unified School
District fields renovation and maintenance.
The m:<>mmendallOI! from the Tree Task Force are being reviewed by staff, who plan ID
mum 10 Council in early summer with a comprebensive response. which also adclresses the
American Publi<: Power Association Tree Program. The 1995-96 budget indude5
approximately 5 I 00,000 in earmarked funding interuled 10 allow staff to begin rtspoodi ng
10 the recommendations by augmenting tree planting and removal, as recommended by the
Task Force. Staff has applied fa.: a 5130,000 granl",Ih!he Slale Department O(Fore;lr)I
whkb requires matching funds which this allocation would provide,
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The t" .... lk safety recommeodatioos have been recommended by staff I(' be referred 10 the
PoIicy.and Services and Fir>.ance Committees. The Policy and Services Commit'.ee review
will take place on April II .. The isSl!e which is recommended 10 ". referred 10 the Finance
Committee is the coocepI of oddlng two new police otTh:rn '" traffic safety. Since this is
a budget resource allocation issue, staff bas scb..-duled its clSCUOSion for the Police
Department's May 19 budget hearing. The draft 1995-96 Budget contains S 100,000 in
eannarked funding f<K imple:nC!ltation of tbe traffic safety recommendations, but i. no(
specific as 10 where the mooey wi!! be spent. By the lime this item is beard at the p~
Department budget bearing. staff will have completed its analysis and will have a
teC<lIIlIDCIlda on proposed funding '" the two DeW offic.:rs. and for any oon-salary
recommrodations proposed 10 be implemented in 1995-96.
BACKGROUND
For the past tw" budget years, staff has attempted \0 PfO'ide an in-depth briefing'" the
Cooncil on the policy issues related 10 tbe bud~ lS much in .dvance of Council's receipt
of!he actua1 budge! doct!rnenl as possible. For tbe 1993-94 Budget, this briefing was .. ith
!he Council firumce Connnittee, and was held Oil April 26, 1993, approximately one month
prioc 10 receipt of L'le budgeL RcspoOlfrng 10 kedback from the Council about the
<lcsiral:<Jity of expanding the brlefUlg 10 the full Council, staffheld a Council study session
00 April II. 1994, 10 .""'us, the 1994-95 budget isSlleS-
aeaollse ofm. complexity of some of the issues addressed in the 1995-96 Budget, staffbas
taken the additional step of discussing certain issues with the i'inan.:e C<>mmitl<e prior 10 the
full Council study session. 00 MarcII 2 I, 1995, utoJiIy rents were reviewed by tbe Firuince
Committee. The Finance Committee also discoJSSed • major 1995-96 Capital Improvement
Program project, the harbor marsh rcsIOOItion, OIl March 7, 1995.
Due to lhe in!rlcacies oflhe issues involved in prep.r.ng • report on the f1.:ture of the arts in
Palo Aho, Council will be receiving this itcm separately. Staff anticipates coming back \0
Council in early SUJ1lIIlQ.
lMPLEMENf A TION OF ORGANI7..A TIONAL REVIEW RECOMMENDATIONS
While the Genera! Fund <kganlzatiooal Review decisions ",ill nltimately result in $314,600
in ongoing savings ;0 the G<neral Fund, implementation is expected !o take place over
several years. In taking final acOOn on the <kganizatiorW Review, the Council recognized
thaI st!hereDc.: to Iong-Slanding policy '" make reductions Ihroogh attrition wouid delay
realization of the map portion oflt.e savings associated with the Organizational Review.
Attacbmenll provides details of the final Organiza!ionaJ Review recommendatioos adopted
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by the Council. The dollar S3\ings associated wilb chang .. inc<J<porated in the 1995-%
budget lotal $139,100 for the: GenetaI Fund.
Some Organizational Review recommendations are e>pec'.cd 10 he implemented in 1996-91,
and those have been '" indica1ed 00 the at1acbnrent. ODe recommendation depends OIl
successful negotiations with repn:sen!ed employees, and it ww.Jd DOC he prudent to assume
IhaI Chis will be implcm<:nted in I cmain lime frame. A third category is recommendations
",ilich will be implemented 1hrough attrifion. Bee.us<: al1li6on depends on employee
turnover, either due 10 retimne!lt or finding employment elsewbcre, staff has again not
prWicIed when S3\ings wm actually occur. In the: n=rnmendation lOr cootracting out parks
malnr.:nance services, for example, many of the iru:umbcnts have <lver I<"n years with the
City, and lUJooVer lilIJoog p&t maintenance !Iaff is low.
TEMPORARY TO J'ERM.Qj"ENT EMPLOYEE CONVERSIONS
Related to !be Organizational Review, a thorough staff analysis was dODe of the City's use
()(~ =.pleyces. This analysis was undertaken because of the potential fa< inequities
and Inefficiencies. At the present time, I<"mporaIy employees may be wor\:.bg side by ,ide,
year after YeM, and perlOrmIng the same work as permanent employees who are receiving
retiremeD: and bcalth benefits. This situation has patti.Dy arisen because of budgetory
~ on the addition of full-time equivalen~ 10 General Fu."" staffing. In other cases,
deparImenIs have used temporary staff under the '1000 hour limit,' so-called because
employees working <!Vcr ! 000 hours in My fiscal year are required 10 he enrolled in the
Public Employees Retirement System, and Cily procedures require !han such employees be
terminared ptic< 10 ==!In.j ltd> hour limiL While Cbis practice is justifiable for certain job
assignmenls, it is no! cost effective if any significanllraining is required for employees who
are Iben L>rnlinated when they approach the 1000 hour Iimil, and a...., replaced by other staff
10 perfo<m the same functions.
It is important 10 note that I<'mpO<9l)' employ ... play an important part in City operatioos,
e.g. !or .. acation derical coverage, fa< seasooal programmlng needs,Csucb as Recreation
summer programs}, for special progyamming needs (sucl! as the Centennial), and for new or
·slJIrI up. programs being tested hef.,..., committing permanent resources (e.g. graffiti
removal).
The "",,-versions were evaluated based Oil the following criteria: cost effectiveness 0(
CODVersioll, importance 0( the position 10 City operations; demonstrated problems v.ith
complying with the 1000 hour limit (e.g. employee turnover whkb bas had. negative impact
00 customer service or required ex!Imsive re!rainin!l.); and poIentiallo coosolidate other part
time positions as an alternative 10 temporary 10 permanent cooversioo. Cost effectiveness
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was eva1uattd in IennS 0( the fact that cooy""ion necessitates prO\ision IX heaith care
benefits. wilich ore oot pro-<at~<I base<! on less than full-time equivalent statu> (Le.
(:()!]venioo IX. half-time position carries with it the seme cost cc heallh benefits as I run
time position, apprCxllna!el-J $4,100).
1be 100II 0eI1eraI Fund cost 0( an temporary 10 permanent employee cooversi0n5 identified
during the Organizatiooal Review proces.s was $284,000. After careful m-iew, staff is
recommending CODvorsions IOt&Iing $227,000 in the General Fund. Se"eral CODversion
Rquc:sts may be re-evaluale<l •• IUture yeatS, if problems arise wi!b the 1000 limit 10< tb<:sc
positioos. For example, • eooversioo request from !he UtHities Departmen: and a 0.5 FfE
conversion ftom the Police Department are being delayed for coosi<kra6on, sir.u !he
positioos requested need to he evalua!ed in view of the creaf"", of the Administrative
Service< Department in 1995-96.
INFRASTIUJCllJRE (COl1NCIL PRlORlTY)
The 1995-96 Budget cootains a signitkantly enhance<! infrastructure capital and maintenaoce
program. 1be CooociI-approved 1995-96 Budget Guidelines >tate Ihat, "Given sufficient
reyenues, it will be the City', intent 10 maintain I $4.0 million (Jenera! Fund Capital
Improvement ~ ($1 millioo in streets and ~lks projects funded by the Utllity
Users Tax an<! $3 miIlivo in other General Fund projects) whIle shi..'ting S.s I!l11lion in
maintenance items 10 the operating budget in 1995-%.· This budget incOlJXl<ales tbal
guidance. Overall, 1995-96 General Fund capital investment in public infrastructure,
including parks. is U miUion higher than the 1994-95 bcdget.
Significant in5-astructure projects include:
o 51.7 millioo in street maintenance projects
o $600,000 i!I sidewalk repair projects
o $440,000 o'er a two-year period 10 reoo,ate the Foo!Iu11s Pari< water
manai~ system
o $303,000 10 design and install irrigation backflow devices in City parl<s 10
meet health and ,afely requirements
" $750,000 10< restoration of 1 ""res of marsh in !he Palo Alto Ba)'lands
o $235,000 10 remove I5bcstos fr()Ol Civic Center offices
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o $133,000 over • two-)' .... period to design and install • replacement lOr 1M 25
)'ear old cluller unit in City Hall
_ 0 $150,000 to iru;tall water, "",er and electrical connections for • proposed
RSIroomIcooces.>;oo facility in tbe Cubberley field area
o S43Q,OOO in City CacHiI)' roof repat .. (mcluding $200,000 for Cu~1ey
Community Center)
o $730,000 as Ihc fillaI installmeo! in lhe 51.4 million seismic reIroflt project lOr
the Senior Center
Respooding to CO!I«I'J\S exp=sed by the community, Planning Commission and Council
during !he 1994-95 budgtt process, staff retained \he ~e of. design coosultanl f<T the
1995-96 capital bud&et process. The coosultanl played II valuable role in advising project
1tIIlMge:s on bow to mitigate tbe visual impact of projects. She also a<f\,ised staff during tbe
process of priorifu:atioo of projects. Based 00 the success of the design C<lDSUItan(s
involvement in .re.-.Ioping 1M 1995-96 Capital Improvernenl Program (UP)
rerornmendatioo for Cooocil, permanent fuOOinglOr tbese services will be proposed in the
Planning Department'. ~g budget.
The PubIk WO<ts operating budget contains $60,000 for first pbase development of an
inftastructurc management plan. Staff is proposing 10 lOcus on the most significant pari of
the City GeocraI Fum! inftastrucmre, ill! facilities. The 1994-95 financial repor1 showed tbe
City hod • S46 million iovtslme!ll in bwldings and structures-Thi. area is • logical place to
begin work 00 • comprehensive system bccau.<e I) less lime-<X>!lSuming ioterdepartmelllal
coord"l!lation is necessozy in assessing the facilities, as Public WO<ts is mainly respr>ll$ible
for their maintCllBllCe and replacement; and 2) Public Works has more infurma600 aVaIlable
in-house 00 facilities IS <:ompared to 0Iher Genera1 FWld infrastructure.
The proposed funding ",~11 be used \0 hire • consultant to I) inventory and assess the
condition of facilities in1rastructure using a materiality level of $25,000; 2) prepare •
prioritized list ofbacklogged capital projects with cost estimates; 3} determlne!he amount
of mooey Ib& sboold be set aside lIII11ual1) 10 fund replacement of facilities ",..aching the end
of their life cycle; and 4} help irolti1} the lram<'worl< lOr. future computerized In!rastructure
program which addn:sses all Genenil Fund infrastructure capital and maintenance needs.
Although the consultant study would not be completed unti11une 1996. interim report
iolOrmation would be used 10 the cx!en( possible in developing a facilities infrasln-'Cture
project fcc: consideration in the 19%-97 capital budget process.
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FAMILIES, YOUfH AND COMMUNITIES (COUNCIL PRiORITY)
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Several progrdJIlS will be added to the base budSd in 1995-96 in tne Communi\)' Services
Department. 10 respond 10 1he CoImcil prioriIy of Families, Youth and Communities. These
include furxftng lOr Camp Ventura, Open C-ylD, and 1he Teen Center proposed ill 1he
R.aeatlon Division; and to! 1he Family Resource Center Task Fon:e i .. Human Services.
BoCh Camp Venlura and Open Gym were programs ini'Joted in 1994--95 using salary savings
in 1he Re.. ... ""tion Division budget. but would DOW be provided permanent funding. Open
Gym is I prognun designed 10 JlI'O"ide • healthy alternative for ,,-...,ns 10 ''hanging "',' OIl the
.-. • thus reducing 1he chances lOr juveml. rome. The drop-in program operates at 100r
sites throughout the ciIy, Saturday rugbts from 6:00 p.m. 10 midnight, and TuesdayfTh<=!.y
nigbts from (;:30 10 9:30 p.m. The ages of1he participant. range from II to 22 years, with
an average age of IS. App.-oximately 70 }'001h per week participate in this 37 weele program.
Th,ee hundred different individuals have participated in Open Gym Some of1l>ese
indhiduals ha"" been identified by !he Police Department as youth at risk Program
expenses wm loW $8,500, with no ",venue offset.
Camp Ventura was initiated at !he request of:!;. Ventura Neigbborbood Associalion. This
day camp program """"es )'outh ages S 10 10 years. Eigb~ ODe week sessioos (10:00 a.m. to
4:00 p.m.) are offered at a rninimaI fee of$2O, with scholarship oppor1Unlties a ... allable. Not
only has Camp Vcnlura served as affonlable da)' care, but daily lunches "'" provided '" each
child. The Ventura camp staff asked Palo Alto res'.aurants 10 support !he lunch p.-ogram, and
1he restaurants have responded generously. f(est.Iurants sucll as MacArthur Park, Hobee's
and Togo's provided nutritional lunches. Thirty kids per one week sessioo"", served, lOr
• &>tal of 240 young people. Program expenses will IotaI SI8,800, with on estimated
revenue offset of $4,800.
The budget includes $3,500 lOr staff sUpper! of the 30 member Family Resource Center Task
Force, which will meet every other week lOr the fiscal year. Budget expense. fncl;l<le
postage. mailing, special events. and needs assessment costs.
FinaJly, $20,000 is included in the Recreation Divisioo budget lOr ".affing Ibe Teen e'enter
at42S B<yant. Optimally, capital costs 10 retrofit 1he building for osage by the teens can be
accommodated as part of the budgeted expenses lOr relocating Senior Center classroom
activities 10 the 425 Bryant address during the seismic retrofit. The leens would sbare u.<;age
of the build"mg with the Senior Coordinating Cvun<:i1 during !he retrofit (approximately 12
mooths), and at complet.~ have fun use cfthe build"mg.
CouncJ1 should be aware that there are other potential recommendations and associated
expenditures that may arise in this area. These are associated with the wOfk to"at is currently
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being done by the ad hoC group, Positive Ahernatives lOr youth llinmittee. Coonc!1 w;U
recalIl1llIllhi. coounittee WlIS devek>ped Bl Coun<:il <flfection Ie develop loog-tcrm str.te~
recommeodotions 10 deal with gang activlly and )'outh violence.
ASSISTANCE TO EAST PALO ALTO
In 1992, the City Coonci! authorized the funding and reassignment of kur Palo Aho police
<>ffica's to East Palo Aho OS • result of a law cnforcementlcommunlty crisis I1llIl ir!vo/ved the
shooOng of 11 people during. 12 boor period. WI1h the support of lb. Menlo Par1<police
and other local, staIe..oo fedenIllaw enforcement agencies, a group of otli="s came toge'.her
as the RED QtegiooaJ Enforcetnel!l DeIail) Team. During the next 26 months, these officers
were exttaordinarily SUtCeSSful in removing a large ~e"lnge of dangerous cr.mina!s from
the East PaIoAho community.
In ~ 1994, our officers returned 10 Palo A..1to, whm: their sen",es were requ~ fu< the
World Cup games at Stanford University. In [ate 1994, owing 10 a number of industrial
iqjuries and O!her urumticipated vacancies and retirements, the Police Department delerw.!led
that four officers could 001 be released lOr reassignment ID East Palo Aha wit!lOOt
eompromising puNic safety in Palo Aho. Stoff did, however, attempt Ia identifY ODe
volunteer lOr reassignment, but was unsuccessful.
Although violent <:rime in East Palo Alto bas dropped drarnatica Dy. raw enforcement
assi..tance is still being pr<Mded by the San Mateo Coon!y Sberifl; Menlo ParI< por"", and
the CaIiIOrnl. Hlgbwa)· Patrol. Furthermore, wIlll. PaJo AhQ police officers have 001 been
reassigned to East Palo Ah", • IOnnal pclicc Ii.uson bas been established between the
dep~ \0 enswe cptimal communkations and coopei"atkln belWeeR the neighboring
ag<meks. To date, as a rosuIt oflhis cooperation. several dangerous criminals have been
mested !Or committing felonies in Palo Aha and the surroun<fmg COll'Jllwu'ti.!s.
Slatfbas committed to return Ie the CooncI1 in September 1995 with a recommendation on
c000lIued a.sistance to East Palo Aha. Tbe Cooucil-odopted budget guidelin<:s <fu"ecl that,
"Support for East Pale Aha will continue •.. it is expected thai all os5isumce 10 East Palo
Alto will end os of June 30, 1997." Proposed Police Department funding for J 995-96 will
be cooslstent will>. this phasing down approach." Consequently, slaff is proposing 10 carry
over the appropriation for East Pal" Alto assistaru:e in the 1994·95 BuClget, which has 001
bee!! spent, and will use Ihose funds if any .... istance " required prior 10 retUrning \0 Counc11
in Sq>t=ber 1995.
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The Council """,ived. one-year update on L'te trial anti-graffiti program in February 1995 .
(CMR: 127:95). ThaI report indicated Ibat maIci!1g !he progrom permanent would cost
OWllximately 5132,000, indudingtwo permanent otalh'ith overtime and $42,000 in 0011-
sallll)' WSIs. Because staIf is continuing 10 assess t.ie need fur a permanent program, :his
budget c:ontinues fundL'1g fOr 1he program utilizing teIIIp<l<al)' staffing, ot • cost of 5100,000.
Staff will continue 10 report back !o !he Council "" !he effkacy of L"" anti-graffiti P'''$flIID
and make a ~ at midyear \995-96 as 10 whet..l,er the program should be made
permanent.
INTERNET
On April ! 6, 1994. 1he City weill on-line with • demonstration worldwide web server (the
server) 011 the InIemet. The server is atI on-line collection of communn, infunn.Uoo
_vailable 01 public access !<:rmin.ls. It contains go..ernment inlOrmation, elemeDWy 10
lIIliver.;ity-level school infonnation, schedules of local activities, mops, !ransportatioo
information, and comnnmity serv1c<:s and c.>mmerce information, including access 10 the
CIlamberofCommerce and the Palo Alto Wec1r.ly.
Since April 1994, over 425,000 inquiries bave been made electronically 0II1he server. On
• daily basis, approximately 1400 requests fOr infunnation come in o..er the Inlernet. Twelve
!o Jilleen people per day use 1he public access lernJinals in the City HaillOOby. On January
23. 1995. three h1>rarie> in !he City (Main, Ml1cheU Pan and Cfu"klren's) went on-line
through • grant !rom !he C.rOOmia Slate Libnry program. By June, !he three libraries
sIIooJd be tied into t3e City's high speed data connection 10 the Internet.
I" FY 1994-95. limited funding fOr the Internet project was provided in the City's capital
improvement program, while staff studied !he impact of pn.widing infonn.tioo over !he
Internet and developed a long-range plan t() be presen!ed 10 !he CounCIl in Spring I99S.
AlterneItDigital bave continued to provide lIle Int<rnet access COOlIe<,-tion a! DO charge.
Beginning oexI fiscaJ year, lIle City win be required 10 pay • monthly connection fee of
$1,200.
Is !he 1995-96 Budge!, staff is propo5ing 10 place leadership fOr lIle Internet proje<.1 in !he
City Manager. Office, under 1he supervision of the Assistant City Manager. The budget fo<
!he program (S57.ooo) inciudes OIIgoing Internet access ~tion, daiJy system and
security admmistraOOn, and data input 0( City inf<JrnlaOOn. Funding fOr specifIC projects,
lilr.e OIl-line permits, an on-line Enjoy catalogue, oo-Iine comprehen>ive plan information oc
electronic payment offees or fines. would require a budget amendment <l<<\inance.
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PARKING PER.'>UT fU)I.'DSTATUS
During 1994, s1aff documented 1M historic and current costs of operating and maintaining
the parting facilities within tho University Avenue Parldng o;.strlct. These costs in<:lude
Jigllting. pavcmen! striping. signage. !ands<:al'ing. pavement mai~tenance and elevator
maintenance, as weD as s1aff <<>sis associated v.ith selling parling permits and maintaining
permit waiting lists. !Jt the past, the City made ooIy nominallran5fers from the Parlcing
Perntit Fund for reimbursement of these COSIS, and absorl>ed the majority of the cost of
IWIinlenance wi~in the GcneraI Fund.
!Jt 1993-94, the 00_11 Par:Icing Committee of the Palo Alto Chamber of Commerce
raised • number of i£sues related 10 Civic Center parldng. In response, staff prepared •
detailed bodgel for parling .r!Strict mainterumce and <>pCrotioos, and for 1994-95
impl=ted full cost recovery from the Parking Permit Fund for General Fund support of
the parklng <f1Slricl
10 1994-95, permit limd.i have been used 10 fund one-time capital c<lSIs of painting and
installing lighting at !he W.bster Cowper Garage and Q Ga,age, and for painting and
signage in the Civic Cent« Garage. funds for paving Several of the Io!s wilhin the cf!Strict
have beeo encumbered. Interim signage at the lois and • parlting infonn.tioa brochure wen:
also paid for by the Parking Permit Fund. These costs totaled $378,000.
Staff informed 1M Cooncil in March 1994 (CMR:I90:94) ahal palking dis!ricl expenses
eXi:eeded revenues and recoounendod that annual permits be increased from $200 10 $21 S
per year. A11ba! lime. Council decided 10 delay an increase in pernUt f;:es, bc=use • number
of oIher programs were being implemented OOwntOWD, in<:ludlng sleeper parlcing and
·tteodlJ!J( "" parldng permits.
In 199~96, budgeted expenses fix !he district will exceed ""'ellue5 by SI23,OOO, which will
be fimd,od from Parking Permit Fund reserves. The reserves were built up during the years
plio< 10 implementation of full cost ,...,overy for the General Fund, when only nominal
tr.msfen were being made to the General Fund. While there are sufficient funds avaIlable
in lb. nserv. to cover the 199~96 _ operating deficit. the reserve level ",ill be draWl!
down from S92O,000 at 1M beginning of 1994-95 \{} 5557,000 at !he end of 1995-96.
However, because there are stIll • Dumber of l""ldng programs in the process of
implementabon at 1hls lime. staff does no( plan 10 recommend tl>JoI Council consider • permit
fee increase uti! 1996-97.
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ELECTRIC RATES AND RESERVES
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The 1995-96 Electric Fund budge! contains proposals 10 reduce electric rates and !<> move
IIJ'I'I"Oxlmately $9 millie" from the Ele<:tric Fund Rate Slabilizatioo Reserve (RSR) 10 the
CaIavCfllS Reserve. Based OIl the resuI!s 0(.." u¢aled cost 0{ servk. study, the rate decrease
is recommended 10 apply 10 lIOII-resideutial cu..<torners only. Althoogb IlJ'plying ."-' decrease
in this manneI may talse equity i<sues w;!h residential ratepayen and require explanation,
this approach serves t."-' utility's objective 10 retain its industrial customer base in a
competitive marketpJa<:<: ",-lUc" ber:cfits all ratepayers. The rate reduction w!1I reduce
commercial and i."IduslriaI bills betw ... S ~ and II percent, depending on =ge. The
proposal related 10 reserves prolongs the life of the Calaveras Reserve I wuple of yem-s,
help5 defer futun: ",Ie increa.;es, and reduces the RSR 10 its targellevel. These two proposals
allow the utility fkxibitity 10 positioo lIself quicldy in !be new environment of retaU
wheeling.
The electric power industry has erucred a period o{unprecedented cbange and regulatory
reform. Like the lelepbcoe industry nearly ten years ago, the electric U111ity induslIyhas
embarked OIl • path Iowards restructuring and deregulation. With. goal O{lowcring eh."Iric
bills and recognizing that regulated IDCIIOpCIies may no longer be the best .... ay !<> generate
power, federal and.stale regulators are planning 10 fundamenlal1y r,funn the industry .
• "1 the center 0{ the reform movemenl is retall wbeeling. Retail wteeling provides UIl1ity
customers a choice 0{ electricity producers at market driven prices. In this competitive
environment, large retail aJSIO<DelS will be sougbl<>Ut by power marketers representing
independent power producers, join! action agencies, other utilities. and varioos power
suppliers. Thus, retail c:ustOmers will 110 longer be <:aptive o{!heir Ul!lity. In this new power
mari<etpla<:e, the most intense competilloo will be for industrial and commercial customers,
... be are generan)' the moce profitable customers.
Retail wheeling also involYe, the transmis,ion or "wbeeling" o{the power supply from the
genmmoo facility 10 the uu1ity's distribution system. Historically, transmis.>"ion lines coold
ooIy be used by UIllities. Under retal1 wheeling, access '" the transmission grid would
become aVaIlable 10 independent ;>ower producers end others fur • lee. Having obtained •
power supply and transmission rights, what remains is fur !he JlOIO'er 10 be b<ought 10 the
cus\o<Der's site fur another fee by the existing UIllity ~y", its own distribution syslem. To
calculate a lee for provid"mg servke over its distribution system, Utllities will be
"'unbundiingW their retail ,a!es between supply, transmission, end distnouli<>n.
The anticipated emergence 0{ retail wheeling and the possible sale of the power marketing
agencies by !he federal government present major cballenges, risks and opportunities 10 the
Palo Alto electric U!Juty. GiO'en the ulllity's competitive electric rates. strong cash posiTioo,
.... l .. 'U
,
, •
and rclatively low fixed costs, Palo Allo may be able 10 increase its market sha,,, and sales
revenue IS competition is substituted "" mooopoIy regulation. On the other hand, the utiUI)'
is VIIln«able in thai a substantial emount r>f electric revenue comes from I smail nwnber r>f
larS" indu!:IriaI customer5. If some r>f 1hese customets buy power e1sewbere, the Io5s ill .ales
revonue could imp!ICt Ibc Palo Allo electric utility's ability to meet its financial obligations,
Furthermore, if West.em, me City's primary power supplier. is sold and wholesale rates
=slate significantly. Palo AIIo', retail rates could rise 10 • level whereby other suppliers
look more 8Itr8C!ive.
Althougli widespread irlduWiaI and retail competilloo is at least two 10 lOur years away, the
Palo AIIo electric utility has taken • ml!llber of measures 10 positioo. itself for competition.
The utility has a40pted • strategy of ".."iding any Ioog-tenn commitments 10 build new
$><>Wer projects ..mile wading 10 re-define its relatioosliip with Westers as • partner. rather
than a <:usronier. The utility has elevated the emphasis placed on Cl!St<>ma servi;:e,
efficienc)" and 1echnology 10 help iI remain competitive. The utIlity plans 10 expand servke
level., "unbundle-f<w1 roles and adopt a logo 10 e>"!ablish an identily ",th its customers.
Finally, throu$h its policies on rafes, reserves, and funding of capital improvements, the
uIUity has committed 10 remain in strong financial cornfilion. This is particularly i..-nportanI
nqw that sIillting regulatory policy and in<!ustry refonDs pose significan! uocertai.'1ties fur the
future of the industJy and the Palo Alto electric uu1ity.
AD'ACHMf'.NT5
At!acbmen!: Organizatiooal Review Recomme:ndations Implementation
DEPARTMENT HEAD APPROVAL:
CITY MAN.. .... OER APPROVAL:
cc: nJa
""c' II or U
:\
<
-,
.----' .
ORGA.1'GZAll0NAL RE\1EW
FINAL CITY COUNCIL ACTIONS
RecODIJUEod'aUoDJ
IMPLEMENTAnON IN 1995-'6
lle!aiA present in-house oyst= tot: ~"'ing peramedk
billings.
Add <Jeographi< Infom:ation Systems Coordinator
Add one Cede Enf~ pOOtlon '" Ihe lnspc:<;ticn Services
Division.
Redu<:c PlanDing Di"isioo Managc:ment stoff I>y one position.
R"I'I-vaoan! managemc:nl position with new Senior l'!anaer
positioo>~
Transfer Environmental Protection Coordinaloc position from
Planning to Fire Department
Upgrade two Oflke Assistant positions '" Offko Spe<iallst in
!he Planning DepartmenI
Coovott OM roart-time clerical posilio!l to fuO time in Ihe Fi,.
Department
Add an Administrati ... 1: Analyst position iD 1be Fire Department.
"Retain current Pamng Enfon:emenl staffi&g level if ,;.epa
poOOng oofUWl<e is approved by Council.
Reduce ODC Commwrlcations Di..patcll position
lle!aiA current staffing level in Police Invesligatiuns Division.
--"---~-;-
"' ..
Net Aaaaal
~.eral FaDd
CD" (SlIViDgs)
1'1"0 Change
DefeF
$6-4,400
$(92,000)
$79."\00
$(16,100)
$7,400
527,700
Defer
Nocbange
$(42,400)
Nocba.'1.ge
•
.R.ecqmmeBu6ooJ
ORGANIZA TIONA!. REVIEW
FIN.U CITY COUNOL ACOONS
" : ;
.. .-' '
Net ASIlloa]
GeDenl FRlIid
C"sf (SniDp}
lMPLE..VENTIiTiON IN 1995-95 (CONTIN/JED)
Reduce _ tree maintenance done in bouse by five staff, and
shift street _ care 10 000=1 maintena~. Utilize .... ings to $(84,)00)
dedicate Iw<> in bouse staff 10 pm: tree =, resulting ill • net
s!aff Jedoction of three, and efUDinale the <Utr<nl pm:
maintenano. CIP project. (Note: two CJf the net Ihree positions
being reduced are vaca.'lI.. The fina/ positi<Jn ",m be re<t.x:ed
Ihrough atlritioo. N"",bers hen: Iberefure reflect • net
reduc1ion of two slaff, DOl aD lill"" staff in 1995-96)-
Reduce staffing in Heel Management Division by """ $(17,000)
temporary position
Add Business Managor to Community s.r.'ice< Deparonent Defer A_
CombiDc Commilllity Theater 0ir0c1Or and T ocbnk;al $(63,600)
Supervisor j>Csitions iDto 00< position
Mainlain Junior !.!useum Scpervi5cr positi<Jn and request City 0
Maru!geI: 10 propose altemative realignmenl!! in the 1995-96
1roi!gel
Leave Terman Library open, pending .:omplellon of the Libr:Hy " study
Ao VIICIIIlcieo occur, evaluate Parb Maintenance super;isory TBD
and lead stnJctun:
• Create an Adminls:rative Services Department, initially
consisting ofFinanc. and !nfoI!llJltion R<soun:es, whioh
would report 10 the city Manager $6,500
• I'llbbe Wods and C<>mmuni!y Sen-ice. Departments
report 10 the Assistant City Manager
in
..
R .... IIUllftdatiolU
ORGANILAlIONAL REVIEW
FINAL CIT'i COl-'NClL ACTIONS
Conduct an organizational study of the Utilities Department
Retain current Art> a: Cu!t= Division &5 part of ~Ul'jty
s..rviccs DepOltme"t
Within Ibreo years, complete. _ plan addressing the
future of the Art> in the community
Reassign Human Servlces Division to become I part of
Coolmunity Services AdrnJnjstr.ilion
Re1&n Cubberiey Community Center manag=erJ in the
Community Services Departmen!; clearly assign kasingllong-
term rental reopoos1'billty to Real Estate Di>ision offinance
Department
Transfer ltigbl of Way oontracl malntenance furiction,
e.cllJdini !be two IDlY'" business districts, 10 Public Wods
~ \he rest ofPrls Main~ would remain in the
Community SeMces Department
Study the K2sibHity of consolidating admini.<tr.Ilive 5UPI"-""
areas in the Police and Fire Departmenl5 into one Publi<: Safety
administrative function
llelain Tnmsportatioo Division in Planning DeporImeIl1
CooYCrl Fire Department <:>anagemcnt employees to exempt
status
Subwta/: 199>96lmplementatiou
,
Not Auual
Ge.en/had
Co.t (SaviDlI'l
Fur.ded by Utilities
None
NtA
NtA
None
TBD
NiA
($9,000)
$(13~.IOO)
•
.
Retelllmeadatio.u
ORG.~"!lZA nONAL RE\1EW
FINAL cm' COUNCIL ACTIONS
IMPLEMENTATION IN 119(,,11
RrxIuce !be professiooal otaffing In !be Treasury Division by
oneposiMD...
Create a Community Services C<>mmission
Subtolal: 1'196-97
-"-.,
SUIUECT TO MEET A1VD CONFER PROCESS:
RrxIuce authorized vaca60n slots b fuefighlers from 4 10 3
Sub_I: Men and CODfer
-".-..
NotAIID .... 1
Geoeral FIlD If
Cost (Saviup)
5(31.100)
53,000
(528,100)
5(19,800)
5(1',800)
TO I!E IMPLEMENTED IN THE FUTURE THROUGH A TTRInON
Combine !be fleet Service Coordinator arulleall Mccllanic S(27,600)
pOsition into one position
Pl!ase in contracting b maintenance of parks facilitres and 5(100,000)
reduce siaff as attrh....:ion octUI'5
R~ final position in IIeelri=nIng through attrition (547,260)
lnaease contract Ire<: 1rimming 47,260
Snbtolal: Futuro SaviDp nrougli Attrition (SU7,600)
....
Total Sovfnp After CGlDplele Implem<alatio. (S314.600)