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HomeMy WebLinkAbout2026-08-10 City Council Agenda PacketCITY COUNCIL Regular Meeting Monday, August 10, 2026 Council Chambers & Hybrid 5:30 PM Amended Agenda Amended agenda items appear below in RED Councilmember Keith Reckdahl Remote Call In Teleconference Location: Holiday Inn Huntsville Research Park 5903 University Drive, Huntsville, Alabama 35806 City Council meetings will be held as “hybrid” meetings with the option to attend virtually or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Translation services are available upon request at least 24 hours before the meeting. The meeting will be broadcast on Cable TV Channel 76, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900-6833 PUBLIC COMMENTS Public Comment for items not on the agenda will be accepted for up to 3 minutes or an amount of time determined by the Chair. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. In-person general public comment will be heard for 30 minutes. Additional in-person public comments, if any, will be heard at the end of the agenda. Public comments for agendized items will be accepted both in person and via Zoom for up to 3 minutes or an amount of time determined by the Chair. Requests to speak will be taken until 5 minutes after the staff’s presentation or as determined by the Chair. Written public comments can be submitted in advance to city.council@PaloAlto.gov and will be provided to the Council and available for inspection on the City’s website. Multiple individuals wishing to speak on the same item may designate a spokesperson. Spokespeople must be representing 5 or more verified individuals who are present in person or via Zoom. Spokespeople are allowed up to 10 minutes, at the discretion of the Chair. Speaking time may be reduced if the Chair reduces the speaking time for individual speakers. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@PaloAlto.gov at least 24 hours before the meeting. Once received, the Clerk will share them at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: sticks, posts, poles or similar/other type of handle objects are strictly prohibited; the items do not create a facility, fire, or safety hazard; and persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. 1 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. TIME ESTIMATES Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, change the order of items and/or continue items to another meeting. 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.   CALL TO ORDER   AGENDA CHANGES, ADDITIONS AND DELETIONS   IN-PERSON PUBLIC COMMENT (5:30 - 6:00 PM) Members of the public may speak to any item NOT on the agenda. 1-3 minutes depending on number of speakers. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. In-person Public Comment is limited to 30 minutes. Additional in-person public comments, if any, will be heard at the end of the agenda. COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (6:00 - 6:10 PM) Members of the public may not speak to the item(s).   CONSENT CALENDAR (6:10 - 6:15 PM) Items will be voted in one motion unless removed from the calendar by three Council Members.   1.Approval of Minutes from June 8 and June 15, 2026 Meetings 2.Recommend City Council Approval to Extend Certain FY 2026 City Auditor Task Orders with No Impact to Task Order Budgets 3.Recommend City Council Approval of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders. CEQA Status: Not a Project. 4.Approve Program Guidelines for a Public Agency Electric Vehicle Charging Hub Grant Program; CEQA Status - Under CEQA Guidelines Section 15183, Projects Consistent with an Existing General or Comprehensive Plan do not Require Additional CEQA Review 5.Adoption of a Resolution Establishing the FY 2027 Property Tax Levy for City of Palo Alto General Obligation Bonds (2008 Measure N Library Projects); CEQA Status: Not a Project 6.Adopt a Resolution Making Required Findings in Support of Acceptance of Funding from Vehicle Registration Fee-Intelligent Transportation Systems (VRF-ITS) Cycle 5 Grant Program; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301b Existing Facilities).  2 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. 7.Adoption of a Resolution Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements; CEQA Status: Not a Project, CEQA Guidelines 15378(b)(5) 8.Adoption of an Ordinance Amending Section 2.38.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code, as accepted by the Policy and Services Committee, to increase the thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make other technical changes. 9.Approval of Purchase Order with JAM Services, Inc. for the purchase of Traffic Signal Network Switches for a Total Not-To-Exceed Amount of $714,639 for 2 years; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301). 10.Approval of Contract C27197195 with High Point Power Systems in the Amount of $286,660 for the Repair and Refurbishment of a Load Tap Changer Located at Adobe Creek Substation; and Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed $28,666, for a Total Contract Not-to-Exceed Amount of $315,326. CEQA Status –Categorically Exempt Under CEQA Guidelines Sections 15301 and 51302. 11.Approval of Contract No. C27196740 with Blackhawk Painting Inc. in the Amount of $735,500 Over a Period of 18 Months for Electric Substations Equipment and Mechanical Structures Painting Services; Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed of $73,550, for a Total Not-to-Exceed Contract Amount of $809,050; and Approval of a Budget Amendment in the Electric Fund; CEQA Status: Categorically Exempt Under CEQA Guidelines Section 15301. 12.Authorization to Execute Amendment to Legal Services Contract S25194587 with Atkinson Andelson Loya Ruud & Romo to Increase Amount by $100,000 for Total Not-to- Exceed Amount of $285,000; CEQA Status – Not a Project.  3 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. 13.Approval of Amendment No. 1 to Contract No. C24189086 with Carollo Engineers, Inc., to Increase the Contract Amount by $551,755 for a Revised Total Not-to-Exceed Amount of $3,294,529, and to Extend the Contract Term by Six Months through December 2027, for the Long Range Facilities Plan Update for the Regional Water Quality Control Plant (WQ-19002); CEQA Status – Not a Project 14.Approval of Contract Amendment No. 1 to Contract No. C25191297 with Kittelson & Associates to Extend the Term through September 9, 2028, and Update the Scope of Services and Schedule of Rates for the South Palo Alto Bike/Ped Connectivity Project (Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study), with No Increase to the Previously Approved Not-to-Exceed Compensation; CEQA Status – Categorically Exempt 15.SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District (FIRST READING: June 15, 2026; PASSED: 7-0) 16.SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures (FIRST READING: June 15, 2026; PASSED: 7-0) 17.SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations (FIRST READING: June 8, 2026; PASSED: 7-0) 18.SECOND READING: Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods (FIRST READING: June 15, 2026; PASSED: 7-0) CITY MANAGER COMMENTS (6:15 - 6:25 PM)   BREAK (15 MINUTES)  4 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. ACTION ITEMS (Item 19: 6:40 - 6:55 PM, Item 20: 6:55 - 8:25 PM; Item 21: 8:25 - 9:25 PM; Item 22: 9:25 - 10:00 PM; Item AA1: 10:00 - 10:30 PM) Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.   19.PUBLIC HEARING: Consideration of Objections for Weed Abatement Assessments; and Adoption of Resolution Confirming the Weed Abatement Report and Ordering Abatement Costs to be a Special Assessment on the Properties Specified in the Report; CEQA status – categorically exempt. 20.Approval to Proceed with Final Design for the Permanent Installation of the Crescent Park Traffic Calming Project including a Bulb-out on Southwood Drive and East Crescent Drive; CEQA status – categorically exempt. 21.Adoption of a Resolution Authorizing the Borrowing of Funds on an Interim Basis for Improvements to the City's Regional Water Quality Control Plant and Authorizing the Execution and Delivery of a Revolving Credit Agreement, Fee Letter and Related Note; CEQA Status - Not a Project 22.​Adoption of a Resolution to Reduce the Membership of the Stormwater Management Oversight Committee and Direction Related to an Amendment to the Palo Alto Municipal Code to Streamline the Functions of the Historic Resources Board; CEQA Status - Not a Project AA1.Removal of Planning and Transportation Commissioner Forest Olaf Peterson New Item Added VIRTUAL PUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. 1-3 minutes depending on number of speakers. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. In-person Public Comment is limited to 30 minutes. Additional in-person public comments, if any, will be heard at the end of the agenda. ADJOURNMENT INFORMATION REPORTS Information reports are provided for informational purposes only to the Council and the public but are not listed for action or discussion during this meeting’s agenda.   A.Monthly Investment Report - May 2026 (Unaudited) B.Monthly Investment Report - June 2026 (Unaudited) C.Sales Tax Digest Summary for Q1 2026 (January - March). CEQA Status - Not a project.  5 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. D.City Council Summer Recess Report OTHER INFORMATION Standing Committee Meetings this week Policy & Services Committee August 11, 2026 Public Comment Letters Schedule of Meetings   AMENDED AGENDA ITEMS   AA1.Removal of Planning and Transportation Commissioner Forest Olaf Peterson New Item Added      6 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1.Written public comments may be submitted by email to city.council@PaloAlto.gov. 2.For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3.Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom- based meeting. Please read the following instructions carefully. ◦You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. ◦You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. ◦When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. ◦When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4.Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 362-027-238 Phone: 1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing ada@PaloAlto.gov. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  7 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. California Government Code §84308, commonly referred to as the "Levine Act," prohibits an elected official of a local government agency from participating in a proceeding involving a license, permit, or other entitlement for use if the official received a campaign contribution exceeding $500 from a party or participant, including their agents, to the proceeding within the last 12 months. A “license, permit, or other entitlement for use” includes most land use and planning approvals and the approval of contracts that are not subject to lowest responsible bid procedures and have a value over $50,000. A “party” is a person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. A “participant” is a person who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use, and has a financial interest in the decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform Act, which encompasses interests in business entities, real property, sources of income, sources of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a “party” or “participant” to a proceeding, and you have made a campaign contribution to a Council Member exceeding $500 made within the last 12 months, you must disclose the campaign contribution before making your comments.  8 August 10, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. City Council Staff Report Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: August 10, 2026 Report #:2606-6467 TITLE Approval of Minutes from June 8 and June 15, 2026 Meetings RECOMMENDATION Staff recommends that the City Council review and approve the minutes. ATTACHMENTS Attachment A: June 8, 2026 Draft Action Minutes Attachment B: June 15, 2026 Draft Action Minutes APPROVED BY: Mahealani Ah Yun, City Clerk Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 1  Packet Pg. 9 of 412  CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 5 Regular Meeting June 08, 2026 The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: Absent: Special Orders of the Day 1.Proclamation Expressing Appreciation to Daniel Bergen Upon Retirement NO ACTION 2.Proclamation Expressing Appreciation to Julie Weiss Upon Retirement NO ACTION Agenda Changes, Additions and Deletions Public Comment Council Member Questions, Comments and Announcements Consent Calendar MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lu to approve Agenda Item Numbers 3-12. Item 1 Attachment A - June 8, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 2  Packet Pg. 10 of 412  DRAFT ACTION MINUTES Page 2 of 5 City Council Meeting Draft Action Minutes: 6/8/2026 MOTION PASSED: 7-0 3.Adoption of a Resolution Calling for a General Municipal Election to be held on November 3, 2026; CEQA Status – Not a Project 4.Recommendation from the Council Appointed Officers Committee to City Council to approve the FY26 Council Appointed Officers annual evaluation process timeline, the modified CAO self-evaluation questions and Council interview questions for the annual evaluation process - CEQA: Not a Project 5.Accept the City of Palo Alto Utility Reserves Advisory Report and Public Safety Staffing and Overtime Audit as recommended by the Policy & Services Committee. CEQA Status: Not a Project. 6.Approval of the City of Palo Alto's Permanent Water Use Ordinance. CEQA Status: Exempt under CEQA Guidelines Sections 15307 and 15308. 7.Approval of Purchase Order C27197380 with Optiv Security, Utilizing a State of California Department of General Services Software Licensing Program (SLP) SLP-24-70- 0184Z Contract, to Procure Varonis Systems for a Three-Year Term with an Annual Amount of $154,043 for a Total Not-To-Exceed Amount of $462,129. CEQA Status - exempt under CEQA regulation § 15061(b)(3). 8.Approval of Construction Contract C26197221 with Valentine Corporation in an Amount Not-to-Exceed $503,990 and Authorization for the City Manager or Their Designee to Negotiate and Execute Change Orders for Related Additional but Unforeseen Work that May Develop During the Project up to a Not-to-Exceed Amount of $50,399, for the Guardrail Repair Project, Capital Improvement Program Project PE-86070; CEQA Status – Exempt under Section 15301(c) and 15301(d) 9.Approval of Professional Services Contract Number C27196575 with Presidio Systems, Inc. in the Amount Not-to-Exceed $938,452 for Closed-Circuit Television (CCTV) Sanitary Sewer Pipeline Inspection for a Period of Three Years; CEQA Status – Not a Project Under CEQA Guidelines Section 15378. 10.Approval of Amendment No. 1 with Eight Professional Services Contracts for IT On-Call Services: Contract C26193247A INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc., to Increase the Not-to-Exceed Amount by $1.5 Million and Extend the Term through June 30, 2027; CEQA Status – Not a Project 11.QUASI-JUDICIAL. 405 Kipling Street [25PLN-00322] Approval of a Record of Land Use Action to Upgrade the Property Located at 405 Kipling Street From a Category 4 Item 1 Attachment A - June 8, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 3  Packet Pg. 11 of 412  DRAFT ACTION MINUTES Page 3 of 5 City Council Meeting Draft Action Minutes: 6/8/2026 Resource on the Local Historic Inventory to a Category 2 Resource. CEQA Status: Not a Project Pursuant to Public Resources Code Section 21065. 12.QUASI-JUDICIAL. 3980 El Camino Real (Buena Vista) [26PLN-00090]: Request for a Final Map to Subdivide a Single, 4.52-Acre Parcel into Two Parcels. The Subdivision would Facilitate Renovation of the Buena Vista Mobile Home Park as well as Future Construction of a 100% Affordable Apartment Building on the Resulting Parcels (24PLN- 00041). A Tentative Map was Previously Approved on August 12, 2024. CEQA Status: Not a Project. City Manager Comments Ed Shikada, City Manager Action Items 13.PUBLIC HEARING: Adopt a Resolution Adopting the 2025 Urban Water Management Plan and a Resolution Adopting the 2025 Water Shortage Contingency Plan. CEQA Status: Exempt under Water Code Sec. 10652. MOTION: Mayor Veenker moved, seconded by Vice Mayor Stone to adopt a resolution adopting the 2025 Urban Water Management Plan and a resolution adopting the 2025 Water Shortage Contingency Plan with the following caveat: “While our response is based on the SFPUC’s design drought and water supply reliability analysis, this is not an endorsement or concurrence in those analyses and the City reserves our right to object to those analyses in other fora.”, and to direct staff to return this back to Council for a Study Session after the Council break. MOTION PASSED: 7-0 14.Adopt an Ordinance and Resolution Calling an Election and Placing a ½ Cent (0.5%) Transactions and Use Tax Measure on the November 3, 2026 Ballot; and a Resolution Adopting Advisory Spending Guidelines for the Use of the Proceeds if the Measure Passes to Support Improving the Cubberley Community Center; CEQA Status - Not a Project. MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember Burt to: 1.Adopt an ordinance and a companion resolution to place a ½ cent (0.5%) transactions and use tax measure on the November 3, 2026 ballot (Attachments A and B). The Item 1 Attachment A - June 8, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 4  Packet Pg. 12 of 412  DRAFT ACTION MINUTES Page 4 of 5 City Council Meeting Draft Action Minutes: 6/8/2026 ordinance designates the members of the Cubberley Ad Hoc Committee (Councilmembers Burt, Lythcott-Haims, and Reckdahl) to author the argument in support of the measure. (2/3 vote required). 2.Adopt a resolution approving advisory spending guidelines in support of improving the Cubberley Community Center if the measure passes. (Attachment C, to be published in late packet on June 4, 2026). MOTION PASSED: 7-0 15. San Antonio Road Area Plan Core Scenario and Transportation Analysis Work Plan. CEQA Status: Exempt under CEQA Guidelines Section 15262. MOTION: Vice Mayor Stone moved, seconded by Mayor Veenker to: 1.Endorse the core scenario for the San Antonio Road Area Plan as the basis for Phase 3 analysis, modified as needed to reflect Council priorities; and 2.Direct staff to explore the replacement of commercial areas into the CTI (Commercial Street, Transport Street, Industrial Avenue) area and the replacement of jobs to jobs rather than square footage options; and 3.Authorize the transportation analysis described in Attachment A, to be completed and presented to Council in Q4 2026 alongside a recommended land use and transportation plan. MOTION PASSED: 6-1, Reckdahl no Closed Session 16. CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATION Subject: Potential exposure to litigation Authority: Government Code Section 54956.9(d)(2) Number of potential cases: 1, as Defendant. MOTION: Councilmember Lu moved, seconded by Councilmember Lauing to go into Closed Session. MOTION PASSED: 7-0 Council went into Closed Session at 10:28 P.M. Item 1 Attachment A - June 8, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 5  Packet Pg. 13 of 412  DRAFT ACTION MINUTES Page 5 of 5 City Council Meeting Draft Action Minutes: 6/8/2026 Council returned from Closed Session at 11:27 P.M. Mayor Veenker announced no reportable action. Adjournment: The meeting was adjourned at 11:28 P.M. ATTEST: APPROVED: ____________________ ____________________ City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website. Item 1 Attachment A - June 8, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 6  Packet Pg. 14 of 412  CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 11 Regular Meeting June 15, 2026 The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: Absent: Special Orders of the Day 1. Proclamation Expressing Appreciation to Bill Gutoff Upon His Retirement NO ACTION Agenda Changes, Additions and Deletions Public Comment Council Member Questions, Comments and Announcements Action Items 2. PUBLIC HEARING & PROPOSITION 218 HEARING: Finance Committee Recommends Adoption of Seven Resolutions: 1) Approving the Fiscal Year 2027 Water Utility Financial Forecast, Reserve Management Practices and Reserve Transfer, and Amending Water Rate Schedules W-1, W-2, W-3, W-4, and W-7; 2) Approving the Fiscal Year 2027 Wastewater Collection Utility Financial Forecast and Reserve Management Practices, and Amending Wastewater Collection Rate Schedules S-1, S-2, S-6 and S-7; 3) Amending Refuse Utility Rate Schedules R-1 and R-C; 4) Approving the Fiscal Year 2027 Electric Utility Financial Forecast and Reserve Transfer, Amending the Electric Reserve Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 7  Packet Pg. 15 of 412  DRAFT ACTION MINUTES Page 2 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 Management Practices and Electric Rate Schedules E-1, E-1 TOU, 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, E-EEC-1, and E-NSE-1, and Directing the Use of Up To $225,000 in Renewable Energy Certificate Exchange Net Revenues in Fiscal Year 2027 to Reduce Electric Customers’ Photovoltaic Generation and Energy Storage System Installation Costs; 5) Approving the Fiscal Year 2027 Gas Utility Financial Forecast, Reserve Transfer, and General Fund Transfer, and Amending the Reserve Management Practices and Gas Rate Schedules G-1, G-2, and G-3; 6) Amending Utility Rate Schedules EDF-1, and EDF-2; 7) Amending Storm Water Utility Rate Schedule D-1; CEQA Status: Not a project under CEQA Guidelines Sections 15378(b)(4) and (5) and Exempt Under Section 15273(a) Note: Resolutions are included in the packet as Attachments A – G, Attachment H reflects the Table of URLs for the Exhibits to Attachments A – G. MOTION: Councilmember Lauing moved, seconded by Councilmember Burt to adopt the Water Utility Resolution (Attachment A): a. Approving the FY 2027 Water Utility Financial Forecast and Reserves Management Practices; and b. Approving the transfer of up to $5.5 million from the Operations Reserve to the CIP Reserve in FY 2026; and c. Amending the Water Utility Rate Schedules effective July 1, 2026 (FY 2027): i. W-1 (General Residential Water service), ii. W-2 (Water Service from Fire Hydrants), iii. W-3 (Fire Service Connections), iv. W-4 (Residential Master-Metered and General Non-Residential Water Service), and v. W-7 (Non-Residential Irrigation Water Service). MOTION PASSED: 7-0 MOTION: Councilmember Lauing moved, seconded by Councilmember Lu to adopt the Wastewater Collection Utility Resolution (Attachment B): a. Approving the Fiscal Year (FY) 2027 Wastewater Collection Utility Financial Forecast and Reserves Management Practices; and b. Amending the Wastewater Collection Utility Rate Schedules effective July 1, 2026 (FY 2027): i. S-1 (Residential Wastewater Collection and Disposal), ii. S-2 (Commercial Wastewater Collection and Disposal), iii. S-6 (Restaurant Wastewater Collection and Disposal), and iv. S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger). MOTION PASSED: 7-0 Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 8  Packet Pg. 16 of 412  DRAFT ACTION MINUTES Page 3 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 MOTION: Councilmember Burt moved, seconded by Councilmember Lu to adopt the Refuse Resolution (Attachment C): a. Amending the Refuse Rate Schedules effective July 1, 2026 (FY 2027): i. R-1 (Domestic Refuse Collection), and ii. R-C (Commercial Refuse Collection). MOTION PASSED: 7-0 MOTION: Councilmember Reckdahl moved, seconded by Vice Mayor Stone to approve: 1. The Electric Utility Resolution (Attachment D): a. Approving the FY 2027 Electric Utility Financial Forecast, and Amending the Electric Utility Reserves Management Practices; and b. Approving the transfer of up to $5 million from the Electric Utility Distribution Operations Reserve to the Electric Utility Capital Reserve in FY 2026; and c. Amending the Electric Utility Rate Schedules effective July 1, 2026 (FY 2027): i. E-1 (Residential Electric Service), ii. E-1 TOU (Residential Time of Use Electric Service) iii. E-2 (Small Non-Residential Electric Service), iv. E-2-G (Residential Master-Metered and Small Non-Residential Green Power Electric Service, v. E-4 (Medium Non-Residential Electric Service), vi. E-4-G (Medium Non-Residential Green Power Electric Service), vii. E-4 TOU (Medium Non-Residential Time of Use Electric Service), viii. E-7 (Large Non-Residential Electric Service), ix. E-7-G (Large Non-Residential Green Power Electric Service), x. E-7 TOU (Large Non-Residential Time of Use Electric Service), xi. E-14 (Street Lights), xii. E-16 (Unmetered Electric Service), xiii. E-EEC-1 (Export Electricity Compensation), xiv. E-NSE-1 (Net Surplus Electricity Compensation); and d. Directing the Use of Up To $225,000 in Renewable Energy Certificate Exchange Net Revenues in Fiscal Year 2027 to Reduce Electric Customers’ Photovoltaic Generation and Energy Storage System Installation Costs, as local decarbonization efforts, via: i. Changing the funding mechanism for the Cap-and-Invest Reserve to allocate up to $225,000 less in Cap-and-Invest auction revenues in FY 2027 to the City’s Cap-and-Invest Reserve and instead allocate these funds for other local decarbonization efforts; and, as a related matter: 1. Directing staff to review existing HVAC incentive levels including consideration of financial offsets to lower the cost of related work including panel upgrades, electric utility service upgrades, or the cost Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 9  Packet Pg. 17 of 412  DRAFT ACTION MINUTES Page 4 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 of building permit fees; and 2. Directing staff to return to City Council within FY 2027 to review the Electric Supply Portfolio Carbon Neutral Plan and use of revenues derived from the REC Exchange program. 2. The Gas Utility Resolution (Attachment E): a. Approving the FY 2027 Gas Utility Financial Forecast, and Amending the Gas Utility Reserves Management Practices; and b. Approving the transfer of up to $1.5 million from the Gas Utility Operations Reserve to the Distribution Rate Stabilization Reserve in FY 2026; and c. Transferring up to 18% of gas utility gross revenues received during FY 2025 to the General Fund in FY 2027; and d. Amending the Gas Utility Rate Schedules effective July 1, 2026 (FY 2027): i. G-1 Residential Gas Service, ii. G-2 Residential Master-Metered and Commercial Gas Service, and iii. G-3 Large Commercial Gas Service; and 3. The Fiber Optics Utility Resolution (Attachment F): a. Amending the Dark Fiber Optic Utility Rate Schedules, consistent with the applicable Consumer Price Index, effective July 1, 2026 (FY 2027): i. EDF-1 (Dark Fiber Licensing Services), and ii. EDF-2 (Dark Fiber Service Connection Fees); and 4. The Storm Water Management Resolution (Attachment G): a. Amending the Storm Water Management Fee Rate Schedule, consistent with the applicable Consumer Price Index, D-1 effective July 1, 2026 (FY 2027): i. D-1 (General Storm and Surface Water Drainage) MOTION PASSED: 7-0 3. PUBLIC HEARING: Adoption of an Ordinance Adopting the Operating and Capital Budgets, Revised Table of Organization, and Municipal Fee Schedule for Fiscal Year 2027; Adoption of a Resolution Proposing the Appropriations Limit for Fiscal Year 2027 - State Law/ City Charter; Accept the Bi-Annual Actuarial Valuation Report of Palo Alto's Retiree Healthcare and Other Post-Employment Benefits (OPEB) as of June 30, 2025 and Approve Annual Actuarially Determined Contribution for Fiscal Years 2027 and 2028; Authorize the City Manager or their Designee to Negotiate and Execute a Memorandum of Understanding and Funding Agreement (or Lease Agreement Amendment) with the Palo Alto Museum to Provide Cost Sharing for Repairs to the Basement and Waterproofing in the Roth Building and Improvements to Heritage Park Drainage Councilmembers Lu, Veenker and City Manager Shikada recuse from Stanford-related items for the Fiscal Year 2027 Budget (outlined in Attachment C). Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 10  Packet Pg. 18 of 412  DRAFT ACTION MINUTES Page 5 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember Burt to approve the Stanford-related items for the Fiscal Year 2027 Budget. MOTION PASSED: 5-0-2, Veenker, Lu recused MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to: 1. Adopt the Fiscal Year 2027 Budget Ordinance (Attachment A), which includes: • City Manager’s Fiscal Year 2027 Proposed Operating and Capital Budgets, previously distributed at the May 4th City Council Meeting (Attachment A, Exhibit 1) • Amendments to the City Manager’s Fiscal Year 2027 Proposed Operating Budget (Attachment A, Exhibit 2) • Amendments to the City Manager’s Fiscal Year 2027 Proposed Capital Budget (Attachment A, Exhibit 3) • Fiscal Year 2027 City Table of Organization (Attachment A, Exhibit 4) • Fiscal Year 2027 Municipal Fee Changes (Attachment A, Exhibit 5) 2. Accept the Fiscal Year 2027 – 2031 Capital Improvement Program (CIP) 3. Adopt a Resolution determining the Appropriations Limit for Fiscal Year 2027 (Attachment B) 4. Accept the June 30, 2025 actuarial valuation of Palo Alto's Retiree Healthcare Plan and fund the annual Actuarially Determine Contribution (ADC) for Fiscal Year 2027 and 2028 5. Authorize the City Manager or their designee to negotiate and execute a Memorandum of Understanding and Funding Agreement (or Lease Agreement Amendment) with the Palo Alto Museum to provide cost sharing for repairs to the basement and waterproofing in the Roth Building and improvements to Heritage Park drainage in an expedited efforts to try to make sure that accomplished before the next rain season. a) City to waive the permitting and inspection fees for the Museum. b) Direct staff to move forward with cashflow support for the museum toward repairs and to support the continued expedited process that staff is already pursuing. c) The City cover the expenses for the park repair to the extent that it can be determined that it is principally the city's responsibility, and the City Manager negotiate a cost-sharing on the building repairs. 6. Direct staff to return at mid-year or sooner to review whether there are any remaining Canopy budgetary requests or if resolved through donations. MOTION PASSED: 7-0 Consent Calendar Councilmember Lythcott-Haims requested to pull Agenda Item Number 23a, 23b. Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 11  Packet Pg. 19 of 412  DRAFT ACTION MINUTES Page 6 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 Councilmembers Stone, Lythcott-Haims, and Veenker requested to pull Agenda Item Number 23c. Councilmembers Lu and Veenker recused from Agenda Item Number 12. Councilmember Lu and Reckdahl recused from Agenda Item Number 23a-c. MOTION: Vice Mayor Stone moved, seconded by Mayor Veenker to approve Agenda Item Numbers 4-17 (Item Number 18 Removed Off Agenda), 19-23a-b, and to pull off the Consent Calendar Agenda Item Number 23c for Action. MOTION PASSED ITEMS 4-11, 13-17, 19-22: 7-0 MOTION PASSED ITEM 12: 5-0-2, Lu, Veenker recused MOTION PASSED ITEM 23a-b: 4-1-2, Lythcott-Haims no, Lu, Reckdahl recused 4. Approval of Minutes from June 1, 2026 Meeting 5. Approve Submittal of the 2026 Annual Water Shortage Assessment Report; CEQA status: exempt. 6. Approve Conceptual Design for Alma Street-Charleston Road Railroad Crossing Near- Term Section 130 Safety Improvement Project – Direct Staff to Complete Final Design, Environmental Analysis, Project Specifications, and Engineering Cost Estimates based off of the Conceptual Design as Recommended by Rail Committee; CEQA status: Categorically Exempt under Section 15301-Class 1 minor alternations to existing facilities. 7. Adoption of a Resolution Authorizing the City Manager to Submit the City’s Prohousing Designation Program Application to the California Department of Housing and Community Development. CEQA Status: Not a Project. 8. Adoption of Amended Salary Schedules for Service Employees‘ International Union, Utilities Management and Professional Association of Palo Alto, International Association of Fire Fighters, and Unrepresented Management and Professional Employees and Limited Hourly groups; and Adoption of Side letters for the International Association of Fire Fighters, Fire Chiefs‘ Association, and Palo Alto Police Officers‘ Association and Amendments to the FY 2027 Table of Organization to Reclassify 1.0 Economic Development Manager and 1.0 Treasury Manager - CEQA Status - Not A Project. 9. Approval of Construction Contract Number C26197272 with O’Grady Paving, Inc. in the Amount of $3,802,573 for the Fiscal Year 2026 Street Resurfacing Project, Capital Improvement Program Projects PE-86070, PO-12001, PG-06001, PO-11001, and OS- 09001; and Authorization for the City Manager or Their Designee to Execute Change Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 12  Packet Pg. 20 of 412  DRAFT ACTION MINUTES Page 7 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 Orders in an Amount Not-to-Exceed $910,258 for Related, Additional but Unforeseen Work Which May Develop During the Project; CEQA Status – Exempt under CEQA Guidelines Section 15301(c) 10. Approval of Amendment Number 1 to Purchase Order C26195416 with Carahsoft in the Amount of $375,246 for Additional SAP Business Data Cloud Capacity Units and Related Non-Productive Memory Extension; CEQA Status - Not a Project 11. Approval of a First Amendment to Lease With 1900 Embarcadero Property Owner, LP, to Continue Occupying an Approximate 5,469 Square Foot Portion of the Office Building at 1900 Embarcadero Road, Through June 30, 2031, at a Total Base Rent of $1,306,605; CEQA Status – Exempt under CEQA Guidelines Section 15301 12. Approval of Amendment No. 4 to Contract Number C23184827 with Nomad Transit, LLC (Via) in the Amount of $152,000 for a total not to exceed $5,053,550 to Extend the City of Palo Alto On-Demand Transit Service for Four Months through October 31, 2026; Approval of Amendment No. 3 to extend the Cost Sharing Agreement with Stanford University to Partially Fund Palo Alto Link Service up to $200,000 in FY 2027 through October 31, 2026; and Approval of a three-year Contract with the Palo Alto Transportation Management Association (PATMA), in the Amount of $500,000; CEQA status – not a project. 13. Approval of Contract Amendment Number 5 to Contract S20178065 with OIR Group, in the Amount of $40,000 and for a one-year extension to continue Independent Police Auditing Services in Palo Alto. CEQA Status – Not a Project. 14. Approval of Professional Services Contract Number C26195541 with HDA Architects, Inc. in an Amount Not-to-Exceed $221,650 to Provide Architectural Design Services for the Animal Shelter Renovation – Capital Improvement Program Project PE-19002; CEQA Status – Exempt under CEQA Guidelines Section 15301(e) 15. Approval of Professional Services Contract Number C26196545 with Michael Baker International (MBI) for $116,000 in FY 2027 and a Not-to Exceed Amount of $464,000 to Provide Administration and Consulting Services for the City’s Community Development Block Grant (CDBG) Program for a Term of Four-Years Through June 2030. CEQA Status: Exempt in Accordance with CEQA Guidelines Section 15061(b)(3). 16. PUBLIC HEARING / QUASI-JUDICIAL. 929 Laurel Glenn Dr [25PLN-00005]: Adoption of a Record of Land Use Action Approving a Major Site and Design Application for the Construction of a New 6,581-Square-Foot Single-Family Residence and Associated Site Improvements on a Vacant 4.23-Acre Site. CEQA Status: Exempt Per CEQA Guidelines Section 15303. Zoning District: Open Space (OS). 17. QUASI-JUDICIAL. Approval of a Record of Land Use Action to Add the Property Located at 855 Hamilton Avenue to the City’s Historic Resources Inventory as a Category 2 Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 13  Packet Pg. 21 of 412  DRAFT ACTION MINUTES Page 8 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 Resource Based on Owner Interest Identified Through the 2023 Reconnaissance Survey. CEQA Status: Not a Project. 18. QUASI-JUDICIAL. 3200 Park/340 Portage: Final Map and Street Naming [26PLN-00009]: Request for a Final Map to Subdivide One Existing 3.92-Acre Parcel for Condominium Purposes, Consistent with the Approved Development Agreement, and to Name the New Private Streets. Zone District: PC 5597. CEQA Status: Council Adopted Resolution 10123 Certifying the EIR for the Project on September 12, 2023 (SCH # 2021120444). Item Number 18 Removed Off Agenda 19. FIRST READ: Adopt an Ordinance to Amend College Terrace Residential Preferential Parking Program Fixed Permit Terms, Sale and Grace Periods in PAMC 10.46.060; CEQA status: categorically exempt. 20. FIRST READING: Adoption of an Ordinance to Amend Palo Alto Municipal Code Title 18 (Zoning) Section 18.18.120 (Noncomplying Uses and Facilities) to Allow Existing Floor Area to be Replaced in New Buildings Without Increasing the Degree of Existing Non- Compliance as Recommended by the Economic Development Committee. CEQA Status: Exempt from CEQA per Section 15061(b)(3) (Common Sense Exemption). 21. FIRST READING: Adoption of an Ordinance to Amend Various Sections of Title 16 (Building Regulations) and Title 18 (Zoning) of the Palo Alto Municipal Code to Implement Retail Vitality Policies in the Comprehensive Plan, Including Changes to the Zoning Map for Parcels Zoned CN(GF) as Recommended by the Economic Development Committee. CEQA Status: The Ordinance is Consistent with and Represents Implementation of Adopted Policies in the Comprehensive Plan, for Which an Environmental Impact Report (Comprehensive Plan EIR) was Certified on February 5, 2016. 22. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending the Sign Code (PAMC section 16.20.160) to Allow Certain Signs in Conjunction with Parklets (FIRST READING: June 1, 2025; PASSED: 6-1, Lu no) 23. SECOND READING and Adoption of Temporary Ordinances Implementing Senate Bill (SB) 79, and Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Historic Resource Sites and Transit-Oriented Development (TOD) Eligible Sites from Government Code Section 65912.157 and Authorizing Corresponding Zoning Map Updates. CEQA Status: Exempt Under Government Code Section 65912.160(c)(2). a. SECOND READING and Adoption of Temporary Ordinances Implementing SB 79 (Staff Recommendations 1 & 2) b. Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Historic Resource Sites from Government Code Section 65912.157 (Staff Recommendation 3) c. Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Transit- Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 14  Packet Pg. 22 of 412  DRAFT ACTION MINUTES Page 9 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 Oriented Development (TOD) Eligible Sites from Government Code Section 65912.157 (Staff Recommendation 4) Action Item 23c. Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Transit- Oriented Development (TOD) Eligible Sites from Government Code Section 65912.157 MOTION: Mayor Veenker moved, seconded by Councilmember Lythcott-Haims to direct staff not to proceed with adopting the interim urgency ordinance of 23C. MOTION PASSED: 5-0-2, Lu, Reckdahl recused MOTION SPLIT FOR THE PURPOSE OF VOTING MOTION: Mayor Veenker moved, seconded by Councilmember Lythcott-Haims to direct staff to explore opportunities to accelerate housing production on California Avenue and adjacent areas of El Camino Real and bring back to Council a proposal for zoning revisions to effectuate such production within the next 6 to 12 months. MOTION PASSED: 4-1-2, Burt no, Lu, Reckdahl recused Closed Session AA1. CONFERENCE WITH LEGAL COUNSEL—POTENTIAL LITIGATION (one case) Subject: Initiation of litigation in one case Authority: Government Code Section 54956.9(d)(4) New Item Added MOTION: Councilmember Lu moved, seconded by Councilmember Reckdahl to go into Closed Session. MOTION PASSED: 5-0-2, Lauing, Stone absent for vote Council went into Closed Session at 9:46 P.M. Council returned from Closed Session at 10:18 P.M. Mayor Veenker announced that the City Council authorized the City Attorney to join an amicus brief in support of the plaintiff's position in County of Santa Clara versus U.S. Immigrations and Customs Enforcement, case number 26CV5604. Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 15  Packet Pg. 23 of 412  DRAFT ACTION MINUTES Page 10 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 City Manager Comments Ed Shikada, City Manager Action Items 24. Adopt a Resolution Approving the 2026 Bicycle and Pedestrian Transportation Plan (BPTP); CEQA Status: Exempt Pursuant to Public Resources Code Section 21080.20. MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to adopt a Resolution Approving the Final 2026 Bicycle and Pedestrian Transportation Plan (BPTP) (Attachment A), including staff-recommended changes from the Pedestrian and Bicycle Advisory Committee (PABAC) (Attachment B) with the following amendments and additions: a) Evaluate extension of the two-way bike track on Middlefield between California Avenue and Garland, b) Look at safety improvements for Newell/Embarcadero intersection, c) Add language from public commenter on access to the San Antonio station, d) Add PABAC language or equivalent to it, that clarifies what staff is already embraced on the interpretation of T- 4.1 regarding filters not being closures, e) Evaluate stop signs or other protections when roadways cross bike boulevards and bike routes, f) Complete Streets policy within the bike plan including bicycle-friendly street design and the PABAC recommendation on bicycle-friendly street design, g) Refer staff the evaluation of reconciling bike access along car-free portion California Avenue particularly for school and other commutes with pedestrian safety during peak use hours including the possibility of time-of-day restrictions, h) Council supports PAUSD pursuing restrictions of class two and three e-bikes. MOTION PASSED: 7-0 Adjournment: The meeting was adjourned at 11:44 P.M. Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 16  Packet Pg. 24 of 412  DRAFT ACTION MINUTES Page 11 of 11 City Council Meeting Draft Action Minutes: 06/15/2026 ATTEST: APPROVED: ____________________ ____________________ City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website. Item 1 Attachment B - June 15, 2026 Draft Action Minutes        Item 1: Staff Report Pg. 17  Packet Pg. 25 of 412  1 0 1 8 4 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: City Auditor Meeting Date: August 10, 2026 Report #:2606-6475 TITLE Recommend City Council Approval to Extend Certain FY 2026 City Auditor Task Orders with No Impact to Task Order Budgets RECOMMENDATION The City Auditor recommends that the City Council approve timeline extensions for the following FY 2026 task orders with a net zero impact to the Office of the City Auditor’s (OCA) contracted budget: Task Order 4.35 – Below Market Rate Housing Task Order 4.36 – Fleet Resources & Sustainability & Climate Action Plan (SCAP) Task Order 4.37 – Traffic Safety Improvements Task Order 4.38 – CPAU Utility Program Reserves Advisory Project: this audit was presented to P&S in April 2026 and will be presented to the Utility Advisory Commission in September 2026 and later to the Finance Committee. Task Order 4.41 – Follow-up Activities FY26 Task 6 – Evaluation & Benchmarking BACKGROUND In accordance with our agreement with the City, Baker Tilly is required to conduct recurring activities each year. Task 4 – Execute the Annual Audit Plan comprises the majority of OCA’s budget and time. Specific audit task orders are approved annually by the City Council and executed by the Policy & Services Committee (P&S) Chair as the Project Manager for the Baker Tilly contract as stipulated in the contract terms. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 1  Packet Pg. 26 of 412  1 0 1 8 4 ANALYSIS OCA is seeking to extend task order timelines for the first five task orders which are all associated with Audit Plan projects that are underway and at various stages of either fieldwork or reporting. All reports should be completed by the end of the calendar year. Work on both the CPAU Utility Program Reserves Advisory Project and the Audit Follow-Up Activities Project are complete and in final stages of reporting expected in August/September 2026. The three remaining audits are in various stages of fieldwork and reporting. The Below Market Rate Housing Audit is with management for their review and response and is scheduled for presentation at the September P&S meeting. The Fleet Resources & SCAP and Traffic Safety Improvement Audits both experienced delays due to audit staff turnover. New teams have been assigned and both audits are in fieldwork. No additional funds are anticipated to complete this work. For Task 6 – Evaluation & Benchmarking, Baker Tilly is in the process of initiating a third-party assessment of the City’s Audit function through the Institute of Internal Auditor. Extension of these Tasks and Task Orders will not impact the approved scope or compensation for these audits and audit activities included in the FY26 Baker Tilly contract’s operating budget for the OCA. Council action on this item is not a project as defined by CEQA because the audit activities do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQ Guidelines section 15378(b)(4). Attachment A: Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6 : Kate Murdock, City Auditor Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 2  Packet Pg. 27 of 412  7 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY26-4.35 Below Market Housing Rate Program Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340A OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340A 1B. TASK O RDER NO.: FY26-4.35 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: May 31, 2026 4.TOTAL TASK ORDER PRICE: $97,575 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Vicki Veenker, Chair of the City Council’s Policy and Services Committee 7.DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8.ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB 8/7/2025 Senior Manager Kate Murdock 9/5/2025 Council Member Council Member Vicki Veenker Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 3  Packet Pg. 28 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the Below Market Rate Housing Program involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Assess the audit risk • Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the Below Market Rate Housing Program maximizes the creation and retention of affordable housing stock in comparison to similar programs, and (2) determining whether services are provided to low- and moderate-income households in a timely manner that meets the needs of the community. Finally, the audit will evaluate the administration of the Below Market Rate Housing Program for adequate internal controls to safeguard the City from fraud, waste, and abuse. Procedures include, but are not limited to: • Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Program Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 4  Packet Pg. 29 of 412  • Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness • Select samples of applications and projects to determine if in compliance with rules and regulations • Compare processes and controls against best practices Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: July 1, 2025 Anticipated End Date: May 31, 2026 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $97,575. The not-to-exceed budget is based on an estimate of 475 total project hours, of which a minimum of 70 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 5  Packet Pg. 30 of 412  10 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY26-4.36 Fleet Resources & Sustainability / Climate Action Plan Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY26-4.36 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: May 31, 2026 4.TOTAL TASK ORDER PRICE: $90,255 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Vicki Veenker, Chair of the City Council’s Policy and Services Committee 7.DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8.ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Senior Manager 8/7/2025 Kate Murdock Council Member Vicki Veenker Council Member 9/5/2025 Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 6  Packet Pg. 31 of 412  11 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: •Services and Deliverables To Be Provided •Schedule of Performance •Maximum Compensation Amount and Rate Schedule (As Applicable) •Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the Building Permit and Inspection Fees involves three (3) primary steps: •Step 1: Audit Planning •Step 2: Fieldwork and Testing •Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: •Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary •Assess the audit risk •Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the City is effectively and efficiently managing fleet resources; and (2) if the City is on track to achieve City Fleet Sustainability and Climate Action Plan goals established for 2030. Procedures include, but are not limited to: •Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Fleet & S/CAP Programs •Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness •Gather data on fleet vehicles, including maintenance, disposal, driver training and safety programs •Analyze fleet utilization to identify underused or overused vehicles Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 7  Packet Pg. 32 of 412  • Analyze maintenance and repair records • Assess progress in achieving S/CAP goals • Other steps as identified during planning • Compare processes and controls against best practices Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: July 1, 2025 Anticipated End Date: May 31, 2026 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $90,255. The not-to-exceed budget is based on an estimate of 440 total project hours, of which a minimum of 60 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete some fieldwork steps for this audit on-site if the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 8  Packet Pg. 33 of 412  13 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY26-4.37 Traffic Safety Improvements Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340A OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE):C21179340A A 1B. TASK ORDER NO.: FY25-4.37 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: April 30, 2026 4.TOTAL TASK ORDER PRICE: $97,575 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Vicki Veenker Chair of the City Council’s Policy and Services Committee 7.DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8.ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Kate Murdock 8/7/2025 Senior Manager Council Member 9/5/2025 Council Member Vicki Veenker Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 9  Packet Pg. 34 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the Building Permit and Inspection Fees involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Assess the audit risk • Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine if the City is effectively and efficiently designing and implementing improvements to ensure traffic safety for residents. Procedures include, but are not limited to: • Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Office of Transportation and Public Works Departments as they relate to the design and implementation of traffic safety improvements • Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness • Gather data on traffic safety programs and initiatives including calming measures, engineering design and implementation, data collection, performance measurement and public education Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 10  Packet Pg. 35 of 412  • Analyze project plans and justification and evaluate design criteria • Analyze cost estimates and budgeting • Assess stakeholder input and engagement • Assess installation/implementation of traffic safety features • Assess performance data • Compare processes and controls against best practices Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: July 1, 2025 Anticipated End Date: April 30, 2026 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $97,575. The not-to-exceed budget is based on an estimate of 475 total project hours, of which a minimum of 70 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete some fieldwork steps for this audit on-site if the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 11  Packet Pg. 36 of 412  16 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY26-4.38 City of Palo Alto Utilities Reserves Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 A OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 A 1B. TASK ORDER NO.: FY26-4.38 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: December 31, 2025 4.TOTAL TASK ORDER PRICE: $70,815 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Vicki Veenker, Chair of the City Council’s Policy and Services Committee 7.DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8.ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Senior Manager 8/7/2025 Kate Murdock Council Member Vicki Veenker Council Member 9/5/2025 Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 12  Packet Pg. 37 of 412  17 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: •Services and Deliverables To Be Provided •Schedule of Performance •Maximum Compensation Amount and Rate Schedule (As Applicable) •Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the City of Palo Alto Utilities Reserves (3) primary steps: •Step 1: Assessment Planning •Step 2: Fieldwork and Testing •Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: •Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary •Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to assess the City of Palo Alto Utilities supply, operating, and capital expenditure reserve policies and provide related benchmarking and best practices information: •Interviewing the appropriate individuals to gain an understanding of current procedures including how the Utility projects peak demand, calculates reserve margins, models demand growth, etc. •Analyze policies and procedures related to reserves •Assess compliance with regulatory reserve margin requirements and other relevant standards •Compare processes and controls against best practices Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 13  Packet Pg. 38 of 412  25 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY26-4.41 Follow-Up Audit Activities Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340A OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 A 1B. TASK ORDER NO.: FY26-4.34 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: June 30, 2026 4.TOTAL TASK ORDER PRICE: $59,390 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Vicki Veenker, Chair of the City Council’s Policy and Services Committee 7.DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8.ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB 8/7/2025 Kate Murdock Senior Manager Council Member Vicki Veenker Council Member 9/5/2025 Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 14  Packet Pg. 39 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly will provide the following services in conducting Follow-Up Audit Activities:: • Track and monitor progress on all audit recommendations • Obtain sufficient evidence to support conclusions regarding the status of audit recommendations • Annually report on the status of recommendations Deliverables: The following deliverables will be prepared as part of this engagement: • Annual Status of Audit Recommendations Report • Policy & Services Committee Report Presentation Schedule of Performance Anticipated Start Date: July 1, 2025 Anticipated End Date: June 30, 2026 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $18,255. The not-to-exceed budget is based on an estimate of 90 total project hours, of which a minimum of 10 are estimated to be completed by the City Auditor. Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 15  Packet Pg. 40 of 412  PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY26-06 Evaluation and Benchmarking Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340A OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340A 1B. TASK O RDER NO.: FY26 – Task 6 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: November 20, 2025 COMPLETION: June 30, 2026 4 TOTAL TASK ORDER PRICE: $45,450 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Vicki Veenker, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: ▪ SERVICES AND DELIVERABLES TO BE PROVIDED ▪ SCHEDULE OF PERFORMANCE ▪ MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) ▪ REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Docusign Envelope ID: FF6B5C7D-F637-4C0B-9098-EA017A266973 Manager 8/1/2025 Kate MurdockCouncil Member Vicki Veenker 8/7/2025 Council Member Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 16  Packet Pg. 41 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to undergoing a peer review involves three (3) primary steps: • Step 1: Preparation for a peer review • Step 2: A peer review by and independent auditor • Step 3: Cost per audit analysis Step I – Preparation for a peer review The Office of the City Auditor (OCA) will conduct a self-assessment before a peer review. Step 2 – A peer review by a qualified organization OCA will undergo a peer review conducted by an independent evaluator. In order to accomplish this task, OCA will: • Request a peer review from the Association of Local Government Auditors (ALGA) • Provide documents and answer questions as requested by ALGA • Obtain a peer review report from ALGA Step 3 – Cost per audit analysis OCA will prepare a cost per audit analysis. Deliverables: Legislative documents will be prepared to present a peer review report from an independent evaluator: Schedule of Performance Anticipated Start Date: November 20, 2025 Anticipated End Date: June 30, 2026 Docusign Envelope ID: FF6B5C7D-F637-4C0B-9098-EA017A266973 Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 17  Packet Pg. 42 of 412  Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $45,450. The not-to-exceed budget is based on an estimate of 100 total project hours, of which 80 are estimated to be completed by the City Auditor. Reimbursable Expenses As part of the peer review process, the City Auditor’s Office will be paying the peer review teams’ travel expenses should the peer review agency determine that the peer review will require an onsite visit. The City Auditor’s Office will have a better estimate of these expenses in the Fall of 2025, but a rough estimate is $10,000. This will cover airline, hotel, uber, and meal expenses for the peer review team (typically 2 to 3 individuals for 4 days). At this time, it is not anticipated that there will be other costs associated with the peer review if conducted through the Association of Local Government Auditors. Docusign Envelope ID: FF6B5C7D-F637-4C0B-9098-EA017A266973 Item 2 Attachment A - Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6        Item 2: Staff Report Pg. 18  Packet Pg. 43 of 412  1 0 1 7 2 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: City Auditor Meeting Date: August 10, 2026 Report #:2606-6469 TITLE Recommend City Council Approval of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders. CEQA Status: Not a Project. RECOMMENDATION The Policy & Services Committee (P&S) and the Office of the City Auditor recommend City Council approve the Citywide Risk Assessment and FY 2027 Audit Plan. BACKGROUND The Palo Alto Municipal Code (Section 2.08.1301) requires the City auditor prepare and submit an annual audit plan to the City Council for review and approval. Baker Tilly, in its capacity as the City Auditor, and in accordance with its agreement with the City, performed a citywide risk assessment (Task 1 of the agreement2). The purpose of the assessment was to identify and prioritize risks to develop the annual audit plan (Task 2). During the risk assessment, Baker Tilly assessed a wide range of risk areas, including strategic, financial, technological, human capital, operational, reputational, economic, and including compliance risk categories. ANALYSIS Baker Tilly surveyed and interviewed City Council members and executive leadership across all departments within the City regarding risks to the City and individual departments. As part of this process, Baker Tilly also piloted a new risk assessment tool that enabled participants to engage in discussion around key risks to the City. Baker Tilly analyzed the results of all these inputs and other City documents, news articles, as well as information gathered from industry associations and publications. Identified risks were scored on their potential impact to the City 1 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-60361 2 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020-2/id-11624.pdf?t=64761.15 Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 1  Packet Pg. 44 of 412  1 0 1 7 2 and the likelihood that they might occur. The FY2027 Audit Plan was prepared based on the results of the FY2026 risk assessment. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 2  Packet Pg. 45 of 412  May 29, 2026 City of Palo Alto Office of the City Auditor Citywide Annual Risk Assessment and FY 2027 Audit Plan Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 3  Packet Pg. 46 of 412  Contents network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. INTRODUCTION ............................................................................................................... 1 RISK ASSESSMENT APPROACH .................................................................................. 4 RISK ASSESSMENT RESULTS ...................................................................................... 5 PROPOSED AUDIT PLAN FOR FY 2027 ........................................................................ 9 APPENDICES ................................................................................................................. 11 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 4  Packet Pg. 47 of 412  Introduction Overview According to the Palo Alto Municipal Code (Section 2.08.130) the mission of the Office of the City Auditor (OCA) is to promote honest, efficient, effective, economical, accountable, and transparent city government. To support this mission, the OCA conducts performance audits and financial and operational analyses of City departments, programs, services, and activities, and is responsible for preparing an annual audit plan for City Council approval. As the City’s outsourced Office of the City Auditor, Baker Tilly Advisory Group, LP (Baker Tilly) conducted the Fiscal Year (FY) 2026 citywide risk assessment in accordance with Baker Tilly’s agreement with the City. The purpose of the risk assessment was to develop the FY 2027 Annual Audit Plan by identifying and prioritizing areas of greatest risk and opportunity across the City. The resulting audit plan is designed to direct limited audit resources toward activities that provide the greatest value to the City and support effective stewardship of financial, physical, and informational resources. The City Auditor has the following responsibilities related to the planning and scope of internal audit activities: Palo Alto City Charter Article IV Sec. 12 requires the City Auditor to perform the following: • Conduct audits in accordance with a schedule approved by the City Council and may conduct unscheduled audits from time to time. • Conducts internal audits of all the fiscal transactions of the City. Title 2 Administrative Code Section 2.08.130 requires the City Auditor to perform the following: • Prepare an annual audit plan for City Council approval. • Identify the preliminary objectives of each audit to be performed, reflecting the purpose of the engagement and a preliminary description of the areas that may be addressed. • Conduct performance audits and perform non-audit services of any City department, program, service, or activity as approved by the City Council. California Government Code Section 1236 requires cities that conduct audit activities to perform their work in accordance with the standards prescribed by the Institute of Internal Auditors (IIA) or the Government Auditing Standards (GAO), as appropriate. Consistent with IIA Standard 2010, which requires the chief audit executive to establish a risk-based plan aligned with organizational objectives and informed by senior management and governing board input, Baker Tilly conducted a comprehensive assessment of the City’s audit universe, including departments, functions, processes, programs, and activities that may be subject to audit. Risk Assessment Process Considerations The annual risk assessment serves as the foundation for developing a risk-based internal audit plan. While risk assessment is a core component of the internal audit process, its scope and complexity vary based on factors such as the maturity of the internal audit function, the organization's risk management practices, coordination with other oversight functions, and stakeholder expectations. Because organizational risks and priorities Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 5  Packet Pg. 48 of 412  INTRODUCTION continue to evolve, the results of the annual risk assessment reflect conditions and information available at the time of the assessment. The risk assessment process involved identifying, evaluating, and prioritizing risks that could affect the City's ability to achieve its strategic and operational objectives. To gather input, the Office of the City Auditor (OCA) surveyed members of the City Council, the Executive Leadership Team, and key management personnel across the organization. Responses were received from 15 departments and were supplemented by interviews, document reviews, and professional judgment. The results of this process were used to identify areas of elevated risk and develop the proposed FY 2027 Annual Audit Plan. Consistent with Institute of Internal Auditors (IIA) Standards, the annual risk assessment represents a high-level evaluation of risk across the City's audit universe. In addition, before the commencement of each audit included in the approved audit plan, the internal audit function will perform an engagement-level risk assessment to further define the audit objectives, scope, timing, and resource requirements. This process helps ensure that each engagement addresses the most relevant risks and remains aligned with the City's priorities and operating environment. Throughout the assessment, several organizational strengths were consistently observed, including: • A strong commitment to public service demonstrated by a dedicated and highly professional management team • A culture that values efficient and effective government operations • A focus on strategic planning and execution • Continued investment in innovation and sustainability initiatives • A commitment to continuous improvement and organizational excellence This report summarizes the risk assessment methodology, analysis, and results and presents the proposed FY 2027 Annual Audit Plan developed from those results. Audit Planning Considerations While maintaining its independence and objectivity in accordance with standards, the City Auditor considers a variety of matters when developing the Annual Audit Plan, including but not limited to: • Risk Assessment – the OCA performed a risk assessment and summarized the results in a separate report (Task #1). Generally speaking, audit activities target high(er) risk areas. The results are shown on the following page. • Ability to Add Value – audit and advisory projects seek to add value through independent and objective analysis. • City Council – the City Auditor reports to the City Council and seeks input on audit priorities. • Coverage and Prior Audits – the City Auditor considers prior audits conducted by the OCA, the financial audit, and other audit and consulting reports recently issued. • “Ripeness” and On-Going Initiatives – certain risk areas may be addressed through operational activities, which could mean they are not ripe for audit to add value. • Scheduling – the City Auditor takes into consideration the timing of an audit and other on-going initiatives that directly relate. Putting an undue burden on City staff may exacerbate the risk at hand or other interrelated risks. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 6  Packet Pg. 49 of 412  INTRODUCTION Audit Activity Type The OCA will conduct performance audits and perform financial/operational analyses of any City department, program, service, or activity as approved by the City Council in accordance with the Baker Tilly agreement. Performance Audits According to the Government Auditing Standards (GAO-24-206786) Section 1.21 and 1.22, page 11-12), performance audits provide objective analysis, findings, and conclusions to assist management and those charged with governance and oversight with, among other things, improving program performance and operations, reducing costs, facilitating decision making by parties responsible for overseeing or initiating corrective action, and contributing to public accountability. Performance audits may include the following four (4) audit objectives: • Program effectiveness and results • Internal control design and effectiveness • Compliance with laws, regulations, and policies • Prospective analysis Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 7  Packet Pg. 50 of 412  Risk Assessment Approach Baker Tilly’s risk assessment approach this year focused on gathering information from the following inputs: • Surveying and/or interviewing City Council, Executive Leadership Team members and other key management staff • Analyzing key documents such as City Council Priorities, budget documents, the annual comprehensive financial report, news articles, and other relevant documents • Updating the risk assessment matrix with the gathered information • Scoring the auditable units (listed in Appendix A) in the risk assessment matrix based on the likelihood and impact of potential adverse events • Identifying potential internal audit topics for the auditable units with high-risk scores • Summarizing the approach and results for presentation At the start of our contract with the City, Baker Tilly conducted an initial comprehensive risk assessment in FY 2021 by interviewing all Council Members and Executive Leadership Team (ELT) members to create a risk assessment matrix. Each year, this matrix is updated to redevelop a comprehensive picture of the risk landscape which is continuously changing. For FY 2026, ELT members were asked to evaluate the functions under departments and identify any changes. Members then assessed these functional areas for key risks that could impact operations. While the risk assessment primarily measures inherent risk (the risk without mitigating controls/factors) for each risk factor, it also considers specific risks based on the above information and the City’s processes, controls, and other factors surfaced through internal audit activities. Using the information gathered, OCA identified risks and determined the likelihood and impact of those risks. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 8  Packet Pg. 51 of 412  Risk Assessment Results Department Descriptions and Key Risk Areas When identifying risk areas throughout the City, Baker Tilly worked with City management to identify each department’s key functions and potential risk areas. Based on this input, Baker Tilly identified the auditable risk areas for each department. Below is an overview of the City’s departments and their key risk areas. Administrative Services The Administrative Services Department provides financial and analytical support to the City. Departmental functions include finance and accounting, purchasing, administration, budget, real estate, and others. Key Risk Areas ­ Financial Management & Reporting ­ Procurement & Purchasing Controls ­ Asset & Property Management ­ Contract, Grants, & Consultant Oversight ­ Governance, Compliance & Operational Oversight City Attorney’s Office The City Attorney’s Office provides legal services to the City, including providing legal advice and training to City leaders, negotiating on behalf of the City, drafting contracts and other legal documents, investigating claims, and defending the City in litigation Key Risk Areas ­ Identification of Legal Risks ­ Contracts & Legal Documents Oversight & Advisory City Clerk’s Office The City Clerk serves as a liaison between the public and City Council. Office functions include Public Records Act requests, public hearings, local elections, board and commission recruitments, record management, and others. Key Risk Areas ­ Election Administration ­ Record Retention & Management ­ Council Meeting Management ­ Board and Commission Recruitment ­ Public Records Request City Manager’s Office The City Manager’s Office provides leadership to the City departments and is responsible for facilitating City Council legislative actions, managing special interdepartmental projects, and more. The Communications Office is housed under the City Manager’s Office and is the primary correspondent between the City and the public. Key Risk Areas ­ Citywide Risk Management ­ Government Efficiency ­ Community & Economic Initiatives ­ Strategic Planning & Governance Office of Transportation The Office of Transportation works to enhance quality of life and improve the safety of the users of all modes of transportation. The Office is responsible for sustainable transportation systems, managing parking, and oversees the City’s traffic and transportation capital improvement projects. Key Risk Areas ­ Transportation Safety Improvements ­ Parking Management ­ Operations & Capital Project Oversight ­ Signals & Traffic Engineering Community Services Department The Community Services Departments offers a variety of services administered through the following three divisions and the Office of Human Services: Arts and Sciences; Open Spaces, Parks, and Golf; and Recreation. Key Risk Areas ­ Parks, Facilities & Asset Management ­ Recreation & Community Programming ­ Arts, Culture & Education Programs ­ Contract & Vendor Compliance Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 9  Packet Pg. 52 of 412  RISK ASSESSMENT RESULTS Fire The Fire Department oversees emergency response such as ambulance transports and fire response/rescue, emergency protection services such as fire prevention, and hazardous materials planning. The department highlights safeguarding the community and compassionate care. Key Risk Areas ­ Emergency Response & Fire Operations ­ Fire Prevention & Hazardous Materials Management ­ Emergency Preparedness Human Resources The Human Resources (HR) Department is responsible for recruiting, developing, and retaining a well-qualified and professional workforce. The Department ensures compliance with relevant labor laws, adheres to record keeping practices, and serves as a strategic partner for executive decision making. Key Risk Areas ­ Talent Acquisition & Workforce Planning ­ Compensation, Benefits & Employee Support ­ HR Compliance, Safety & Risk Management ­ Human Resource Information System Information Technology The Information Technology Department's provides innovative technology solutions that support City departments. The department oversees IT project management, operations, enterprise systems, and security services. Key Risk Areas ­ IT Governance, Strategy & Project Management ­ Enterprise Systems & Technology Operations ­ Cybersecurity & Regulatory Compliance ­ Infrastructure & Network Services ­ Geographic Information System (GIS) Library The Library Department operates five libraries throughout the City, each offering unique resources. The Library provides educational programming, multi-cultural events, and large and diverse book, information and technology resources. Key Risk Areas ­ Library Operations & Resource Management ­ Community Programs, Events & Cultural Services ­ Volunteer & Public Engagement Office of Emergency Services The Office of Emergency Services is designed to prevent, prepare for, and recover from various hazards. The Office is responsible for overseeing various risk management programs. Key Risk Areas ­ Emergency Preparedness, Continuity & Risk Management ­ Educational Programming ­ Training & Compliance Administration ­ Intergovernmental & Interlocal Coordination Planning and Development Services The Planning Department supports the City in land use development, planning, transportation, housing and environmental policies, and plans and programs that “maintain and enhance the City as a safe, vital, and attractive community”. Key Risk Areas ­ Planning, Development & Land Use Services ­ Building Review, Inspection & Code Enforcement ­ Long-Range Planning & Housing Compliance ­ Development Services Administration Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 10  Packet Pg. 53 of 412  RISK ASSESSMENT RESULTS Overall Risk Scoring Distribution Baker Tilly structured the audit universe based on the department/division/program from the budget document and management’s feedback, which resulted in 108 auditable units (Appendix A). We scored them based on the information gathered for each risk factor related to the likelihood, impact, or fraud. Appendix B lists the risk factors, definitions, and scoring method. The maximum score for an auditable unit is 20. The following chart shows the distribution of overall risk scoring. The Police Department oversees technical services such as dispatch and record management, field services such as patrol and emergency response, and animal control. The Police Department also places a high value on community relations. Key Risk Areas ­ Police Operations & Emergency Response ­ Investigations, Crime Reduction & Specialized Response Programs ­ Communications, Records & Dispatch Services ­ Traffic, Animal Control & Community Safety ­ Public Works The Public Works Department is broken into four divisions: Engineering, Airport, Public Services, and Environmental Services. The Divisions are responsible for a variety of tasks including design and implementation of capital projects, maintenance of City-owned and leased structures, and management of the solid waste programs. Key Risk Areas ­ Engineering, Infrastructure & Capital Project Management ­ Airport Operations & Transportation Services ­ Environmental Services, Sustainability & Climate Action ­ Public Services, Facilities & Infrastructure Maintenance ­ Fleet Operations, Regulatory Compliance & Accessibility Programs Utilities The Utilities Department owns and operates electric, gas, water, wastewater and fiber optic services to the City. The City purchases all their power from external sources. The mission of the Department is to “provide safe, reliable, environmentally sustainable and cost-effective services.” Key Risk Areas ­ Water, Wastewater & Utility Operations ­ Gas Utility Operations ­ Financial Management, Rates & Reserves ­ Billing & Customer Account Services ­ Infrastructure & Asset Management ­ Workforce Planning & Staffing Management Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 11  Packet Pg. 54 of 412  Baker Tilly rated the auditable units as follows: • High Risk – Scores 16 and above • Moderate Risk – Scores from 11 to 15 • Low Risk – Scores 10 and below Appendix C of this report lists the risk rated auditable units with a score of 12 or over (out of 20) based on our scoring. The list includes 36 functions rated as High risk (with a score between 16 and 20) and 58 functions rated as Moderate risk (with a score between 11 and 15). In determining the audit activities to be performed in FY 2027, we further evaluated specific risks and functional areas and considered risk-based priorities as well as other factors such as requirements by law or regulation, timing of activities, special projects, and requests from City Council and management. The proposed audit plan for FY 2027 is on the following page. 0 10 20 30 40 50 60 70 2 to 10 (LOW)11 to 15 (MEDIUM)16 to 20 (HIGH) Risk Scoring Distribution Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 12  Packet Pg. 55 of 412  PROPOSED AUDIT PLAN FOR FY 2027 Proposed Audit Plan for FY 2027 The proposed audits and special advisory projects for FY 2027 are listed in the table below. These projects were selected from the auditable units assessed as having High or Moderate risk based on the results of the citywide risk assessment. As mentioned in the previous section, in addition to risk ratings, project selection considered factors such as the significance and pervasiveness of underlying processes and controls, prior audit coverage, the timing of related initiatives or non-audit activities, and the potential for the engagement to provide meaningful value to the City through enhanced risk management, accountability, operational efficiency, and effectiveness. Preliminary objectives have been developed for each proposed project; however, the final scope and objectives will be refined through an engagement-level risk assessment conducted at the outset of each project. The annual audit plan is intended to remain flexible and may be modified during FY 2027 to address changes in the City's operating environment, organizational structure, strategic priorities, risks, systems, or control processes. Consistent with the City Auditor's established process, task orders will be submitted to the City Council for approval before each project begins. To facilitate timely execution of the FY 2027 audit plan, six task orders have been prepared and are included in Appendix D. The Office of the City Auditor is requesting City Council approval to initiate all six projects during the first half of FY 2027, with work commencing as resources and scheduling permit. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 13  Packet Pg. 56 of 412  PROPOSED AUDIT PLAN FOR FY 2027 Proposed FY 2027 Audit Plan Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 14  Packet Pg. 57 of 412  Appendix A: Resumes Appendices Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 15  Packet Pg. 58 of 412  Appendix A: Audit Universe City Attorney’s Office Contracts & Legal Documents Legal Risk & Identification City Clerk’s Office Board & Commission Recruitment Council Meeting Management Election Administration Public Records Requests City Manager’s Office Citywide Communications & Community Engagement Citywide Risk Management Consultant Management Coordination of Citywide Housing and Homelessness Efforts Economic Development Ensures Execution of Council Priorities Government Efficiency Human Services Administrative Services Department Accounting Budgeting Contract and Consultant Oversight Grant Management Long-Range Financial Planning Procurement Property Management Purchasing Cards Community Services Department Arts Children’s Theater Community Centers Equipment & Materials Management Golf Junior Museum & Zoo Parks Fire Department Emergency Response Emergency Medical Services (EMS) Fire Prevention Fire Response/Rescue Fire Suppression Human Resources Department Compliance with Labor Laws Employee Benefits & Workers Compensation Employee Retention Human Resources Information System (HRIS) Professional Development Recruitment Succession Planning Information Technology Department Adoption & Integration of New Technology Enterprise Systems Geographic Information Systems (GIS) Fiber Internet Services IT Project Management Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 16  Packet Pg. 59 of 412  Library Department Collection Education Programming Library Branch Operations Information Resources Multi-Cultural Events Office of Emergency Services Continuity of Operations Plans Disaster & Emergency Preparedness Disaster Mitigation Planning Education Programming Interlocal Agreements Risk Management Office of Transportation Parking Management Safe Routes to School Signals & Traffic Engineering Transportation Capital Projects Transportation Contracts, Grants & Administration Planning and Development Services Department Code Enforcement Current Planning Development Center Long Range Planning Inspection Services Plan Review Services Police Department Animal Control Dispatch Emergency Response Investigations Patrol Public Safety Records Management Department of Public Works Airport Design & Implementation of Capital Projects Engineering Environmental Services Fleet Operations Infrastructure Maintenance Public Services Stormwater Utilities Department Billing Electric Fiber Gas Power Purchase Agreements Rate Setting & Adjustments Utility Asset Management Utility Reserves Wastewater Water Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 17  Packet Pg. 60 of 412  Appendix B: Risk Factor Definitions Impact Score Description & Operational Resource Impact Reputational Legal, Regulatory & Political Impact 1 - Negligible No discernible impact or very minor, easily absorbed. Minor inconvenience; no disruption to core services. Minimal financial waste (e.g., < $10,000); no impact on budget. No public notice; minimal internal concern. No breach of law/policy; minor administrative error. 2 - Low Minor impact, manageable with existing resources, minimal disruption. Minor disruption to non-critical services; easily rectified. Low financial impact (e.g., $10,000 - $100,000); minor budget reallocation. Limited negative perception internally or among immediate stakeholders. Minor non- compliance with internal policies or less significant regulations. 3 - Medium Moderate impact, requiring additional resources to manage, some disruption. Moderate disruption to some core services; short-term delays or reduced quality. Moderate financial impact (e.g., $100,001 - $1,000,000); potential for budget shortfall requiring minor adjustments. Potential for negative local media attention or stakeholder concern; moderate erosion of trust. Non-compliance with significant policies or minor statutory requirements; potential for low- level public inquiry. 4 - High Significant impact, major disruption, significant resources required to manage. Significant disruption or failure of critical services; inability to meet key mandates. High financial impact (e.g., $1,000,001 - $10,000,000); significant budget deficit, requiring major financial intervention. Widespread negative media attention; significant loss of public trust; political scrutiny. Breach of significant laws, regulations, or constitutional mandates; potential for large fines, sanctions, or widespread public outcry. 5 - Critical Catastrophic impact, existential threat to an agency/program, severe and long- lasting consequences. Complete failure or sustained inability to deliver essential services; poses a threat to public safety or welfare. Catastrophic financial impact (e.g., > $10,000,000); severe budget crisis, jeopardizing long-term financial stability. Widespread public outrage, severe reputational damage, potential for loss of mandates, political fallout, loss of public confidence in government function. Major legal action, criminal charges, legislative intervention, loss of delegated authority, impeachment proceedings. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 18  Packet Pg. 61 of 412  Likelihood Score Description Probability/Frequency (Public Sector Context) 1 - Rare May occur only in exceptional circumstances. < 5% Has never happened in this or similar public entities; highly unlikely given current environment. 2 - Unlikely Could occur at some time. 5% - 20% sector entities, or there are very limited indicators it could happen here. 3 - Possible Might occur or is likely to occur at some time. 21% - 50% within this entity, or there are known, albeit manageable, conditions that could lead to it (e.g., pending legislative changes). 4 - Likely Will probably occur in most circumstances. 51% - 80% within this entity or sector; strong indicators or trends suggest it will occur (e.g., identified recurring audit findings, persistent capacity issues). 5 - Almost Certain Is expected to occur in most circumstances. > 80% Is a recurring event or a known systemic issue within the entity; current conditions make it highly probable or inevitable (e.g., critical staffing shortages, outdated systems, consistent public complaints). Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 19  Packet Pg. 62 of 412  Appendix C: Possible Risks Rated1 1 Only risks rated 12 or higher are included in this report. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 20  Packet Pg. 63 of 412  Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 21  Packet Pg. 64 of 412  Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 22  Packet Pg. 65 of 412  Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 23  Packet Pg. 66 of 412  Appendix D: Audit Plan Task Orders PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.42 City’s Capital Improvement Project (CIP) Management Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.42 2. CONSULTANT NAME: Baker Tilly Advisory Group, LP 3. PERIOD OF PERFORMANCE: START: September 1, 2026 COMPLETION: May 31, 2027 4. TOTAL TASK ORDER PRICE: $98,160 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 24  Packet Pg. 67 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the City’s Capital Improvement Project (CIP) Management involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Assess the audit risk • Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the City’s Capital Improvement Project management provides adequate oversight to support the timely, coordinated, and cost-effective delivery of capital projects, and (2) determining whether projects are delivered operationally ready. Finally, the audit will evaluate the administration of CIP projects for adequate internal controls to safeguard the City from fraud, waste, and abuse. Procedures include, but are not limited to: • Obtain and review CIP policies, procedures, governance structures, project management standards, and reporting protocols. • Assess whether roles, responsibilities, approval authorities, and accountability mechanisms are clearly defined. • Select a risk-based sample of completed and active CIP projects. • Compare planned versus actual schedules, budgets, scope, and deliverables to evaluate whether projects were completed timely and cost-effectively. • Review project status reports, budget tracking tools, change orders, risk logs, and escalation procedures. • Determine whether management receives accurate, timely, and sufficient information to monitor project performance and address issues. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 25  Packet Pg. 68 of 412  • Examine whether projects included operational readiness activities such as staff training, testing/commissioning, documentation handoff, maintenance planning, and stakeholder acceptance prior to project closeout. • Verify whether completed projects were fully functional and capable of achieving intended operational objectives Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: September 1, 2026 Anticipated End Date: May 31, 2026 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $98,160. The not- to-exceed budget is based on an estimate of 500 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 26  Packet Pg. 69 of 412  PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.44 Models/Approaches for Improving Outcomes for Individuals and Families Experiencing Homelessness Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.44 2. CONSULTANT NAME: Baker Tilly Advisory Group, LP 3. PERIOD OF PERFORMANCE: START: September 1, 2026 COMPLETION: May 31, 2027 4. TOTAL TASK ORDER PRICE: $60,455 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 27  Packet Pg. 70 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an assessment of Models/Approaches for Improving Outcomes for Individuals and Families Experiencing Homelessness involves three (3) primary steps: • Step 1: Assessment Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective for this advisory project is to assess what models in smaller cities have been most successful and sustainable in supporting and improving outcomes for individuals experiencing homelessness. Steps may include: • Obtain and review homelessness response plans, strategic initiatives, program documentation, and performance reports from selected smaller cities. • Identify and document homelessness intervention models implemented in comparable cities, including program design, target populations, governance structures, and service delivery approaches. • Collect and analyze outcome data, such as housing placement rates, housing retention, reductions in unsheltered homelessness, returns to homelessness, and other relevant performance measures. • Review funding sources, program costs, staffing requirements, and partnership structures to assess the financial and operational sustainability of selected models. • Conduct interviews with local officials, service providers, community organizations, and individuals with lived experience to identify perceived strengths, challenges, and lessons learned. • Compare models across selected cities and evaluate which approaches have demonstrated the most effective and sustainable outcomes, as well as the factors contributing to their success. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 28  Packet Pg. 71 of 412  Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the assessment results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Assessment Report • Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: September 1, 2025 Anticipated End Date: May 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $60,455. The not- to-exceed budget is based on an estimate of 300 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete some fieldwork steps for this audit on-site if the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 29  Packet Pg. 72 of 412  PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.43 City and Departmental Performance Measures Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.43 2. CONSULTANT NAME: Baker Tilly Advisory Group, LP 3. PERIOD OF PERFORMANCE: START: August 1, 2026 COMPLETION: February 28, 2027 4. TOTAL TASK ORDER PRICE: $85,755 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 30  Packet Pg. 73 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the City and Departmental Performance Measures involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Assess the audit risk • Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine if the City tracks meaningful performance measures to ensure efficiency of operations and that processes are actively monitored and managed. Procedures include, but are not limited to: • Obtain and review policies, strategic plans, dashboards, and departmental performance management practices. • Assess whether performance measures are clearly defined, aligned with organizational objectives, and focused on operational efficiency and effectiveness. • Analyze a sample of departmental performance metrics to determine whether measures are meaningful, measurable, reliable, and outcome-oriented. • Assess whether management uses appropriate benchmarks, targets, and trend analysis to evaluate performance. • Review processes for collecting, validating, and reporting performance data. • Test a sample of reported metrics for accuracy, completeness, consistency, and supporting documentation. • Review management reports, dashboards, meeting minutes, and corrective action processes to determine whether performance information is routinely monitored and discussed. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 31  Packet Pg. 74 of 412  • Assess whether management takes timely action to address underperformance or operational inefficiencies. • Interview department leadership and staff to determine how performance results are used in decision- making, resource allocation, operational planning, and process improvement initiatives. • Assess whether departments establish accountability for achieving performance targets and implementing corrective actions. • Compare the City’s performance management processes and metrics to industry standards, peer municipalities, or recognized best practices. • Identify opportunities to improve operational efficiency, reporting transparency, and management oversight. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: August 1, 2026 Anticipated End Date: April 30, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $85,755. The not- to-exceed budget is based on an estimate of 445 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. We don’t plan to complete any on-site work for this engagement. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 32  Packet Pg. 75 of 412  PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.45 Council Meeting Management Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.45 2. CONSULTANT NAME: Baker Tilly Advisory Group, LP 3. PERIOD OF PERFORMANCE: START: October 1, 2026 COMPLETION: March 31, 2027 4. TOTAL TASK ORDER PRICE: $53,885 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 33  Packet Pg. 76 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the City’s Council Meeting Management Processes includes three (3) primary steps: • Step 1: Assessment Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective for this advisory project is to assess what council meeting planning and agenda management processes best support efficient and timely execution of council business and policy direction. Steps include: • Review and map the City’s council meeting planning and agenda development processes, including roles, timelines, approvals, and coordination workflows. • Interview council members, City staff, and other stakeholders to identify challenges affecting meeting efficiency, agenda management, and execution of council priorities. • Analyze historical agendas, meeting schedules, deferred items, and supporting materials to evaluate the efficiency and effectiveness of current practices. • Assess interdepartmental coordination, communication processes, and agenda preparation procedures to determine whether they support timely and accurate council decision-making. • Benchmark the City’s council meeting and agenda management practices against peer municipalities and governance best practices to identify improvement opportunities. • Evaluate the effectiveness of agenda management tools and develop recommendations to improve meeting efficiency, transparency, prioritization, and execution of council business. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 34  Packet Pg. 77 of 412  Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing observations and recommendations based on the supporting evidence gathered • Validating observations with appropriate individuals • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the observations and recommendations o Discuss management responses • Obtain written management responses if appropriate and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Assessment Report • Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: July 1, 2026 Anticipated End Date: January 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $53,885. The not- to-exceed budget is based on an estimate of 280 total project hours, of which a minimum of 35 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remotely including all interviews and documentation review. However, during the planning and fieldwork phases of this assessment, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 35  Packet Pg. 78 of 412  PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.46 AI Governance & Usage Best Practices & Pit Falls Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.46 2. CONSULTANT NAME: Baker Tilly Advisory Group, LP 3. PERIOD OF PERFORMANCE: START: August 1, 2026 COMPLETION: January 31, 2027 4. TOTAL TASK ORDER PRICE: $63,815 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 36  Packet Pg. 79 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the AI Governance & Usage Best Practices & Pit Falls includes three (3) primary steps: • Step 1: Assessment Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to determine what AI governance, usage, and training policies and practices should the City adopt to best leverage AI and what are the biggest risks the City should be aware of. Steps include • Review existing City policies, procedures, and governance structures related to AI, data management, cybersecurity, privacy, procurement, and technology oversight. • Interview City leadership, IT staff, legal counsel, department representatives, and other stakeholders to understand current and planned AI usage, operational needs, and governance concerns. • Assess how AI technologies are currently being used or evaluated across departments, including controls related to data privacy, security, transparency, accuracy, and human oversight. • Evaluate employee training, awareness, and acceptable use practices to determine whether staff are adequately prepared to responsibly and effectively use AI tools. • Benchmark the City’s AI governance, risk management, and training practices against peer municipalities, industry standards, and emerging regulatory guidance to identify leading practices and gaps. • Identify key risks associated with AI adoption—including cybersecurity, data privacy, bias, legal liability, misinformation, and operational dependency—and develop recommendations to support responsible AI governance and implementation. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 37  Packet Pg. 80 of 412  Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing observations and recommendations based on the supporting evidence gathered • Validating observations with appropriate individuals • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the observations and recommendations o Discuss management responses • Obtain written management responses if appropriate and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Assessment Report • Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: August 1, 2026 Anticipated End Date: January 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $63,815. The not- to-exceed budget is based on an estimate of 315 total project hours, of which a minimum of 35 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this assessment, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 38  Packet Pg. 81 of 412  PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.47 Employee Mental Health & Wellness Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.47 2. CONSULTANT NAME: Baker Tilly Advisory Group, LP 3. PERIOD OF PERFORMANCE: START: October 1, 2026 COMPLETION: May 31, 2027 4. TOTAL TASK ORDER PRICE: $60,455 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 39  Packet Pg. 82 of 412  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the Employee Mental Health & Wellness includes three (3) primary steps: • Step 1: Assessment Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to determine what are the most effective processes and programs to support employee mental health, wellness, and resilience in high-stress work environments. Steps include • Review existing City policies, programs, and resources related to employee mental health, wellness, resilience, critical incident support, and workplace safety. • Interview employees, supervisors, Human Resources staff, union representatives, and department leadership to identify workforce stressors, program needs, utilization barriers, and organizational culture concerns. • Assess the availability, accessibility, and effectiveness of wellness resources such as employee assistance programs, peer support, counseling services, wellness training, and stress management initiatives. • Evaluate how the City supports employees in high-stress work environments through workload management, supervisor training, incident response protocols, leave practices, and return-to-work processes. • Benchmark the City’s employee wellness and resilience practices against peer municipalities, public safety organizations, and industry best practices to identify effective strategies and program gaps. • Identify opportunities to improve employee mental health support, reduce burnout and turnover risks, strengthen organizational resilience, and promote a healthy and sustainable work environment. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 40  Packet Pg. 83 of 412  Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing observations and recommendations based on the supporting evidence gathered • Validating observations with appropriate individuals • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the observations and recommendations o Discuss management responses • Obtain written management responses if appropriate and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Assessment Report • Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: October 1, 2026 Anticipated End Date: May 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $60,455. The not- to-exceed budget is based on an estimate of 300 total project hours, of which a minimum of 40 are estimated to be completed by the City Auditor. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 41  Packet Pg. 84 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Public Works Meeting Date: August 10, 2026 Report #:2606-6486 TITLE Approve Program Guidelines for a Public Agency Electric Vehicle Charging Hub Grant Program; CEQA Status - Under CEQA Guidelines Section 15183, Projects Consistent with an Existing General or Comprehensive Plan do not Require Additional CEQA Review RECOMMENDATION The Climate Action and Sustainability Committee (CASC) and staff recommend that the City Council approve the proposed Program Guidelines to authorize a Public Agency Electric Vehicle Charging Hub Grant Program. EXECUTIVE SUMMARY The CASC and staff are recommending adoption of a set of guidelines for the program that ensures sites are close to multi-family housing, particularly dedicated affordable housing, that ensures charging rates are at cost and that chargers are accessible overnight, and that provides some cost recovery to the City in exchange for the grant. The City has already identified various City, PAUSD, and other public agency sites with high potential for these charging hubs. Transportation emission reductions is a primary goal for emissions reductions in the S/CAP Goals and Key Actions, with increased access to electric vehicle (EV) charging for multi-family residents being a key approach to achieving that goal. One strategy for enabling access is siting EV charging and mobility hubs in locations near multi-family buildings. Public agencies have parking facilities spread throughout residential areas that are high potential locations for such hubs. Staff is recommending a grant program to public agencies to use in conjunction with external grant funding or their own funding streams to encourage more EV charging on these sites. The City Council’s CASC unanimously recommended approval of these design guidelines (Attachment A) at its June 12, 2026 meeting.1 Staff is seeking City Council approval with the goal of making the program available on a short timeline compatible with timelines for a large 1 Climate Action and Sustainability Committee, June 12, 2026, Agenda Item 2, Recommendation to Approve Design Guidelines for a Public Agency EV Charging Hub Grant Program, https://recordsportal.paloalto.gov/WebLink/DocVi ew.aspx?id=887115&dbid=0&repo=PaloAlto Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 1  Packet Pg. 85 of 412  Metropolitan Transportation Commission (MTC) grant that could facilitate some of these public agency charging hubs. BACKGROUND In April 2016, the City Council formally adopted the goal of an 80% reduction in GHG emissions relative to a 1990 baseline by 2030 (“80 x 30”) as a key climate target. A significant area for emissions reduction is EV adoption to reduce transportation emissions, and access to charging is a common barrier for multi-family households, which make up about 40% of households in Palo Alto. The City Council adopted an E-Mobility Strategic Roadmap on August 18, 20253 that included a variety of strategies for facilitating access to charging, such as Strategy 2, Action 1, which addressed active facilitation of EV charging for multi-family complexes, and Strategy 3, Action 2 and Action 3, which talked about facilitating access to e-mobility hubs that included EV charging and other amenities and partnerships to add EV charging for overnight charging near multi-family residences. On March 2, 2026 the City Council adopted the 2026-2027 Sustainability and Climate Action (S/CAP) Work Plan4 that included work item CA4 (Launch Enhanced Multi-Family EV Charging Infrastructure Program) consisting of multiple components, including publicly accessible charging at neighborhood e-mobility hubs. This program would partially implement this work item. ANALYSIS Publicly-owned amenities like parks, schools, public parking garages, and transit centers tend to be located in residential areas, many near concentrations of multi-family housing. The parking lots at these locations are primarily used during the day, leaving opportunities for overnight EV charging for nearby multi-family buildings in addition to EV charging during the day for people who use these locations. The City’s garages are an example of this type of model. Most City garages with EV chargers see some amount of overnight charging every month. The City is looking at EV charging and mobility hubs in a variety of locations, including nonprofit and private properties near multi-family housing. But starting with public agency sites provides advantages because public agencies provide long-term, dependable, publicly accessible locations for EV charging. Operating without a profit motive, public agencies can be depended on to provide low-cost charging to residents and visitors. Public agencies often have competing priorities for limited funding, sometimes even having difficulties finding local match funding for grants to enlarge charging access. This program will 3 City Council, August 18, 2025, Agenda Item 6, Staff Report 2507-4943, Staff and the Climate Action and , https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83554&dbid=0&repo=PaloAlto 4 City Council, March 2, 2026, Agenda Item 9, Staff Report 2602-5985 (Attachment G), 2026-2027 Sustainability and Climate Action Work Plan, https://www.paloalto.gov/files/assets/public/v/2/sustainability/policies- andplans/final-2026-2027-scap-work-plan.pdf Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 2  Packet Pg. 86 of 412  help public agencies deploy public EV charging, either using their own funds or leveraging the City grant program as matching funds to take advantage of third-party grants. The City has, for example, obtained approval of a grant from the MTC for public EV charging hubs in Palo Alto. The proposed City public agency EV charging hub grant program could provide local match funding for this grant. The same model could be used for additional grants pursued by the City and other public agencies with suitable parking lots in Palo Alto. Staff recommends the program guidelines in Attachment A. These program guidelines: Focus the program on public agency sites near multi-family buildings State a preference for EV charging near dedicated affordable housing Ensure a distance of at least ¼ mile between public agency EV charging hubs, with the goal of minimizing walking distance for residents (ideally 1/8 of a mile) Ensure overnight charging is provided at cost and charging is accessible to the public at all times Provide for some cost recovery for the City in exchange for City grant assistance funding Allow and encourage City grant funding to be used to leverage other grant funding sources. If the City Council approves these guidelines, staff would launch the program quickly after City Council approval. FISCAL/RESOURCE IMPACT The total funding for the Public Agency EV Charging Hub Grant Program is $550,000, funded from Low Carbon Fuel Standard (LCFS) and Electric Cap and Invest revenues within the FY 2027 Budget authority. Staff is tentatively considering a $5,500 to $6,900 grant per charger installed, which is sufficient to cover a portion of the cost, with the expectation that the remainder would be funded through external grants or other agency funding sources. At this level of funding this budget would be enough to fund 80 to 100 chargers, with more potentially funded if parties are able to leverage external grant funding and efficient designs to maximize the number of charger heads per site, minimizing site preparation costs as a share of total costs. Staff is projecting that a City project would utilize about $70,000 in funding, depending on the number of chargers installed, enabling leveraging an external MTC grant or other grants. Remaining funds would be reserved for future public agency sites. To preserve public funds, the City would not provide grant funding for a project that was not ultimately completed. Staff anticipates that the grant rules would enable payments related to design costs, but no grant funding would be provided unless projects were completed (or grant funding would need to be repaid if projects were not completed, if a progress payment were allowed). Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 3  Packet Pg. 87 of 412  Staff also intends to incorporate a long-term cost recovery model through an electric charging adder (not to exceed $0.05 per kWh). STAKEHOLDER ENGAGEMENT 7 ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: 7 Climate Action and Sustainability Committee, June 12, 2026, Agenda Item 2, Recommendation to Approve Design Guidelines for a Public Agency EV Charging Hub Grant Program, https://recordsportal.paloalto.gov/WebLink/DocVi ew.aspx?id=887115&dbid=0&repo=PaloAlto Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 4  Packet Pg. 88 of 412  1 1 6 4 3 Guidelines for Public Agency EV Charging Hub Grant Program These guidelines are meant to guide development of an electric vehicle (EV) charging program designed to expand community access to publicly-owned EV charging located near concentrations of multi-family buildings, with a focus on locations near dedicated affordable housing. Program goals and scope The program should: 1. Enable convenient, affordable, and accessible overnight EV charging for multi-family residents at publicly-owned locations 2. Enable public agencies to leverage additional grant funding to expand the number of chargers installed and number of sites with EV chargers. Program design The Public Agency EV Charging Hub Grant Program will prioritize available funding for sites that meet the following conditions: Charging hubs must be at locations owned by a public agency Charging hubs must be within ¼ mile of multi-family buildings, with a preference for dedicated affordable housing Must be accessible to the public for overnight charging Includes cost recovery for City grant funding contributions through charging an adder and/or by receiving the Low Carbon Fuel Standard credits for charging delivered through chargers funded by City grant. Cost recovery should be designed so as not to make charging rates unattractive Charging must be provided at cost, including the cost of electricity, operation, charger head replacement, and any additional City charges such as a cost recovery adder Must be at least ¼ mile away from other publicly owned EV charging hubs City funding may be used to leverage other grant funding to provide additional publicly accessible chargers at other locations, so long as the original locations approved for City grant funds are built. Item 4 Attachment A - Guidelines for Public Agency EV Charging Hub Grant Program        Item 4: Staff Report Pg. 5  Packet Pg. 89 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Administrative Services Meeting Date: August 10, 2026 Report #:2512-5700 TITLE Adoption of a Resolution Establishing the FY 2027 Property Tax Levy for City of Palo Alto General Obligation Bonds (2008 Measure N Library Projects); CEQA Status: Not a Project RECOMMENDATION Staff recommends that the City Council approve a resolution approving the establishment of the Fiscal Year 2027 property tax levy of $6.92 per $100,000 in Assessed Value for the secured and utility tax roll and $7.45 per $100,000 in Assessed Value for the unsecured tax roll for the City of Palo Alto’s Measure N General Obligation Library Bonds BACKGROUND On November 4, 2008, Palo Alto voters passed Measure N which gave the City authority to issue a maximum amount of $76 million of General Obligation bonds (the “Bonds”) for capital improvements to the Mitchell Park, Downtown, and Rinconada libraries and to construct the Mitchell Park community center. The City successfully sold the Bonds in two series to provide $76 million in funds for design and construction costs. Standard & Poor’s (S&P) and Moody’s awarded their highest credit ratings, Triple A, to both series of Bonds and these ratings were affirmed by S&P in May, 2022 and Moody’s in November, 2022. Annually, a property tax levy sufficient to pay debt service on the Bonds must be approved by the City Council and submitted to the County of Santa Clara for collection with property taxes. On March 1, 2016, Council approved the decommissioning of the Library Bond Oversight Committee and accepted a financial report showing approximately $3.0 million in project savings1. In addition, bond premium of $3.1 million could be used to redeem and/or defease bonds. 1 Finance Committee, March 1, 2016: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=63617&dbid=0&repo=PaloAlto Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 1  Packet Pg. 90 of 412  On June 6, 2016, Council authorized the use of $6.1 million of the Series 2010A and 2013A Bonds to defease and/or retire a portion of outstanding bonds and to pay associated redemption costs3. To maximize savings to property owners the longest bonds were paid off; total savings of $11 million were realized which includes $4.9 million in interest savings over time. Of the $11 million, $5.4 million will be saved through FY 2040, while $5.6 million will be saved from FY 2041 through FY 2044. 4, Council approved the refinancing of the Series 2010A and 2013A Bonds. Respectively, the outstanding principal of the 2010A Bonds and the 2013A Bonds was $40.6 million and $13.6 million. The call protection period for the Series 2010A Bonds had lapsed and were refinanced with tax-exempt bonds (Series 2022A) while the call protection period for the Series 2013A Bonds had not lapsed and therefore were partially refinanced as taxable bonds (Series 2022B). Portions of the Series 2013A bonds, or $2.1 million in principal, that had realized savings were refinanced. In total, net present value savings of $4.5 million or 10.6% were realized. The cash savings was $6.4 million and the average annual debt service savings over 18 years is $356 thousand. Table 1: General Obligation Bonds Outstanding (in millions) Bond Issuance Principal Outstanding as of 6/30/2026 FY 2027 Debt Service Totals $42.8 $4.1 3 City Council, June 6, 2016: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=79555&dbid=0&repo=PaloAlto&cr=1 4 City Council, May 2, 2022: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81684&dbid=0&repo=PaloAlto&searchid=b673baf8 -cb40-4946-967b-842961e1f7fd&cr=1 Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 2  Packet Pg. 91 of 412  ANALYSIS Debt service payments of these Bonds are paid through ad valorem taxes on all taxable land and improvements (both secured and unsecured assessment roll) within the City. Staff is seeking Council approval of the attached resolution (Attachment A) which authorizes the placement of an ad valorem property tax levy in the amount of $0.00692 per $100 or $6.92 per $100,000 in assessed value for the secured tax roll; and $0.00745 per $100 or $7.45 per $100,000 in assessed value for the unsecured tax roll. In comparison, prior year’s secured and unsecured tax levy was $7.45 and $7.61 respectively, per $100,000 of assessed value. The assessment rate for FY 2027 decreased for both the secured and unsecured property taxes. The rate decreases are attributable to the rise in the secured assessed value for properties throughout Palo Alto by 5.47%, an increase of $3.0 billion. For unsecured property tax, per the County of Santa Clara’s methodology, the prior year secured tax rate becomes the current year unsecured tax rate. As a result the unsecured rate won’t benefit from the current year’s assessed value increase until FY 2028. However, unsecured rate did benefit from the increase in secured assessed value that occurred in FY 2026. As of the end of July 2026, the average sales price for a single-family household is $3.6 million. Based on this, the annual assessment for FY 2027 is estimated to be $249 on their property tax bill. In comparison, in FY 2026, a $3.6 million single-family home had an assessment of $268. FY 2027 Debt service for the three outstanding Bonds totals $4.1 million. The attached resolution will result in ad valorem tax levy revenue totaling $4.0 million, with the difference attributable to available funds on hand. Staff works with the County of Santa Clara, who provides the property assessed value for the coming fiscal year that is used to calculate the property tax levy to pay debt service of these Bonds. Measure N was approved by Palo Alto voters in 2008 with 69% support. Expenditures of bond proceeds were monitored by the Library Bond Oversight Committee, which was decommissioned in 2016. Council action on this item is not a project as defined by the California Environmental Quality Act because approval of the Measure N property tax levy is a government funding mechanisms or fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4). Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 3  Packet Pg. 92 of 412  ATTACHMENTS Attachment A: Resolution Establishing the FY 2027 Property Tax Levy APPROVED BY: Lauren Lai, Administrative Services Director Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 4  Packet Pg. 93 of 412  1 ATTACHMENT A NOT YET APPROVED Resolution No. Resolution of the Council of the City of Palo Alto Establishing Fiscal Year 2027 Property Tax Levy of $6.92 Per $100,000 of Secured and $7.45 Per $100,000 of Unsecured Assessed Valuations for the City’s General Obligation Bond Indebtedness (Measure N Library Projects) R E C I T A L S A. At the City of Palo Alto’s (“City”) general election held on November 4, 2008, more than two-thirds of voters approved Measure N, authorizing the issuance of general obligation bonds in the amount not to exceed $76,000,000 (the “Authorization”) to fund construction of a new Mitchell Park Library and Community center and renovation and improvements to Downtown and Main libraries. B. Pursuant to the Authorization, the City issued two series (Series 2010A and 2013A) of general obligation bonds in June 2010 and June 2013 that yielded $75.8 million for project needs. In June 2022, the Series 2010A was refinanced with a tax-exempt Series 2022A and the Series 2013A was partially refinanced with a taxable Series 2022B. As a result, there are three general obligation bonds series outstanding, the Series 2013A portion that wasn’t refinanced and the refinanced Series 2022A and 2022B bonds. C. The City is obligated to levy ad valorem taxes on all property within the City subject to taxation by the City, without limitation on rate or amount (except with respect to certain personal property which is taxed at limited rates), for the payment of the debt service on the Bonds. D. The City is obligated to direct the County of Santa Clara to collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service on the Bonds. E. The amount of the annual ad valorem tax levied by the City to repay the Bonds is determined by the relationship between the assessed valuation of taxable property in the City and the amount of debt service due on the bonds. The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Pursuant to the Authorization, an ad valorem property tax is hereby established to be levied on all land and improvements in the City of Palo Alto during Fiscal Year 2027 in the amount of $0.00692 per $100 in assessed value for the secured and utility tax roll and $0.00745 per $100 in assessed value for the unsecured tax roll based Item 5 Attachment A - Resolution Establishing the FY 2027 Property Tax Levy        Item 5: Staff Report Pg. 5  Packet Pg. 94 of 412  2 ATTACHMENT A NOT YET APPROVED on the calculations set forth in the attached Exhibit "A". SECTION 2. The City’s Director of Administrative Services shall cause a certified copy of this Resolution to be delivered to the County of Santa Clara for entry in the assessment book of the respective sums in dollars and cents, to be paid as established by this Resolution. 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: Assistant City Attorney City Manager Director of Administrative Services Item 5 Attachment A - Resolution Establishing the FY 2027 Property Tax Levy        Item 5: Staff Report Pg. 6  Packet Pg. 95 of 412  City of Palo Alto General Obligation Bonds, Election of 2008, Series 2010 Tax Rate Calculation Based on Assessed Values A) Assessed Valuations (AV) 1 ) Taxable Secured Assessed Valuation (AV) $54,387,073,467.00 2 ) Taxable Unsecured AV $2,691,820,156.00 3 ) Less: Estimated Delinquency 0.65% ($17,496,831.01) 4 ) Net Taxable Unsecured AV $2,674,323,324.99 B) Tax Levy Requirement 5 ) 2027 Calendar Year Debt Service Payments 2013 (Tax-Exempt) GO Bonds - February 1,2027 $211,425.00 2013 (Tax-Exempt) GO Bonds - August 1, 2027 $211,425.00 $422,850.00 2022A (Tax-Exempt) GO Bonds - February 1,2027 $724,625.00 2022A (Tax-Exempt) GO Bonds - August 1, 2027 $2,324,625.00 $3,049,250.00 2022B (Taxable) GO Bonds - February 1,2027 $21,900.00 2022B (Taxable) GO Bonds - August 1, 2027 $556,900.00 $578,800.00 Total Calendar Year 2027 Debt Service Payments $4,050,900.00 6 ) Excess Funds on Hand Applied Toward Debt Service ($100,000.00) 7 ) Sub-total $3,950,900.00 8 ) Santa Clara County Administration Fee (0.25% of Principal & Interest) & Consultant Fees $13,377.25 9 )Total Annual Debt Service Requirement $3,964,277.25 C) Secured and Unsecured Tax Rate 10 ) Unsecured Tax Rate per $100 of Unsecured AV (Prior Year's Secured Tax Rate) 0.007450$ 11 ) Unsecured Tax Rate per $100,000 of Unsecured AV 7.45$ 12 ) Estimated Revenue from Unsecured AV (line 4 divide by 100 times by line 12) 199,237.09$ 13 ) Estimated Revenue from Secured AV (line 11 minus line 13) 3,765,040.16 14 ) Total Annual Debt Service Requirement 3,964,277.25$ 15 ) Secured Tax Rate per $100 of Secured AV (line 14 divided by line 1*100) 0.00692$ 16 ) Secured Tax Rate per $100,000 of Secured AV (line 14 divided by line 1 times 100,000) 6.92$ Exhibit A Item 5 Attachment A - Exhibit A - General Obligation Bonds, Election of 2008, Series 20        Item 5: Staff Report Pg. 7  Packet Pg. 96 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Transportation Meeting Date: August 10, 2026 Report #:2607-6522 TITLE Adopt a Resolution Making Required Findings in Support of Acceptance of Funding from Vehicle Registration Fee-Intelligent Transportation Systems (VRF-ITS) Cycle 5 Grant Program; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301b Existing Facilities). RECOMMENDATION Staff recommends that Council: 1. Adopt a Resolution making required findings in support of the City’s application and award for VRF-ITS Cycle 5 funds in the amount of $500,000 for the Embarcadero Road Traffic Signal Operations and ITS Upgrade Project. 2. Approve and Authorize the City Manager or their designee to execute a Funding Agreement with the Valley Transportation Authority (VTA) to accept a $500,000 grant as part of the 2010 Measure B Vehicle Registration Fee (VRF) Countywide Program Cycle Five. 3. Amend the Fiscal Year Budget Appropriation for the Capital Improvement Fund (requires a 2/3 vote) to: a. Increase the Traffic Signal and Intelligent Transportation Systems project (PL-05030) in the amount of $500,000; and b. Increase revenue from Other Agencies (2010 Measure B Vehicle Registration Fees Cycle 5 in PL-05030) in the amount of $500,000. EXECUTIVE SUMMARY Embarcadero Road between U.S. 101 and Palo Alto High School/Town & Country intersection 700 feet east of El Camino Real in Palo Alto is a residential arterial that serves both local and regional traffic. This roadway segment consists of eight signalized intersections with aging traffic signal hardware. This project will replace the older traffic signal cabinets, implement video detection and accessible pedestrian signals, and implement Automated Traffic Signal Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 1  Packet Pg. 97 of 412  Performance Measures (ATSPM) to develop optimal signal operations. This VRF-ITS grant award would provide $500,000 of the $697,000 project cost. BACKGROUND ANALYSIS Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 2  Packet Pg. 98 of 412  of as-built plans, and other costs in excess of a potential award amount would be considered as part of the City’s contribution toward the total project costs. There is no local match requirement associated with the VRF grant award. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 3  Packet Pg. 99 of 412  May 19, 2026 Dear Ria Hutabarat Lo, This letter confirms that, on May 7, 2026, the VTA Board of Directors approved the Vehicle Registration Fee – Intelligent Transportation System Funds (VRF-ITS), Cycle 5 project list, as shown in Table 1 below. Attachment A is the VTA Board-adopted memo and related materials, for your reference. Table 1: VRF-ITS Cycle 5 – Approved List of Projects Project Name Agency Name Funding Amount Campbell ITS Mobility and Safety Improvements- Phase 1 Campbell $500,000 Stevens Creek Boulevard & De Anza Boulevard Traffic Signal Synchronization Project Cupertino $231,000 Grant Road Corridor Optimization with Artificial Intelligence (AI) Detection Mountain View $218,000 Embarcadero Road ITS Upgrade and Optimization Palo Alto $500,000 San José Arterial Management – Adaptive Traffic Control System Deployment San Jose $450,000 Mathilda Avenue/Sunnyvale-Saratoga Road and Homestead Road Smart Corridor ITS Upgrade Sunnyvale $499,664 Santa Teresa & Tenth Traffic Signal Upgrades Gilroy $101,336 Next Steps We will provide a draft Funding Agreement for your review shortly. If you have any questions, you can contact me at 408-321-5804 or larissa.sanderfer@vta.org. Sincerely, Larissa Sanderfer Transportation Planner III CC: Rafael Rius Item 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 4  Packet Pg. 100 of 412  Date:April 30, 2026 Current Meeting:May 7, 2026 Board Meeting:May 7, 2026 BOARD MEMORANDUM TO:Santa Clara Valley Transportation Authority Board of Directors THROUGH:General Manager/CEO, Carolyn M. Gonot FROM:Chief Engineering & Prog Delivery Officer, Casey Emoto SUBJECT:Vehicle Registration Fee - Intelligent Transportation System Funds -Cycle 5: Project Selections Policy-Related Action: No Government Code Section 84308 Applies: No ACTION ITEM RECOMMENDATION: Approve the recommended list of projects to receive$2.5 million in funding from the Vehicle Registration Feefor Intelligent TransportationSystems (VRF-ITS)-Cycle 5 competitivegrant program. EXECUTIVE SUMMARY: x Thepurpose of this item is to seek approval from the Santa Clara Valley Transportation Authority (VTA)Board of Directors(Board) on the recommended list of projectsto receive funding from the VRF-ITS-Cycle5 competitive grant program. x Therecommendedlist of projects forfunding award was evaluated by a committee composed of volunteer local agencystafffrom thecitiesofCampbell,Mountain View, San Jose, andSunnyvale. x Thecommitteeevaluatedthe grant submissions based on scoring criteriaapproved by the VTA Board at its October2, 2025 meeting. STRATEGIC PLAN/GOALS: The award of VRF-ITS funds align with VTA's goal to create and support an integrated multimodal transportation system that serves all Santa Clara County residents efficiently. In addition, this action advances the goal to pursue, develop, and implement new technologies on Santa Clara County's transportation system. 7.12 BY: DATE: SSAANTAA C L A R A VAALLEY T R A N S PORTATTION A U T H OO RITTYY CA L I F O R NIA N A H OO R APPROVED ACCEPTED ADOPTED AMENDED DEFERRED REVIEWED ^ĂŶƚĂůĂƌĂsĂůůĞLJdƌĂŶƐƉŽƌƚĂƟŽŶƵƚŚŽƌŝƚLJ ŽĂƌĚŽĨŝƌĞĐƚŽƌƐ ůĂŝŶĞ&͘ĂůƚĂŽ͕ŽĂƌĚ^ĞĐƌĞƚĂƌLJ 5/7/2026 Item 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 5  Packet Pg. 101 of 412  Page 2 of 5 FISCAL IMPACT: The requested action in this memorandum would result in awarding funds to projects from the VRF-ITS grant program funds totaling $2.5 million that were allocated to the program by the VTA Board at its October 2, 2025 meeting. BACKGROUND: The source of funding for this grant program is the 2010 Measure B VRF Program that levies a $10 annual vehicle registration fee on motor vehicles owned/registered by Santa Clara County residents. The fees collected must be used to pay for programs and projects that have a relationship or benefit to owners of motor vehicles paying the fee; and the programs and projects must be consistent with the regional transportation plan. The VTA Board adopted an expenditure plan that divides these funds with 80 percent proportionally directed back to Santa Clara County local agencies based on population, 15 percent directed to countywide programs, and five percent for VTA’s administration of the funds. The eligible countywide programs are environmental mitigations, local match for grants and ITS projects. Since the inception of the VRF program, the countywide program has had four three-year funding cycles and is now on its fifth cycle. The VTA Board approved at its October 2, 2025 meeting an allocation of $2.5 million to fund the fifth cycle of VRF-ITS projects. The competitive grant process was developed through the VTA’s ITS Working Group (ITSWG), a working group of VTA’s Technical Advisory Committee (TAC). VTA staff along with a subset of the ITSWG composed of volunteer staff from the cities of Campbell, Mountain View, San Jose, and Sunnyvale developed the project selection criteria. The scoring criteria were also approved by the VTA Board at its October 2, 2025 meeting. The following sections provide a summary of the scoring criteria. Scoring Criteria: Proposed projects will be evaluated based on six criteria: Mobility & Operations, Resilience & Reliability, CostǦeffectiveness, Responsiveness, Identified Community Need, and Project Readiness. xMobility & Operations: Measure the improvement of the movement of people and goods and enhance corridor performance, including traffic signal operations. xResilience & Reliability: Evaluate how the project strengthens the consistency and dependability of the County’s transportation network, including improvements in travel times, traffic flow, and system performance. xCostǦeffectiveness: Assess how efficiently project funds are used and prioritize projects that deliver substantial benefits relative to their cost. xResponsiveness: Project alignment with the goals and priorities identified in the current funding guidelines, Valley Transportation Plan (VTP), and VTA’s Transportation Technology Strategic Plan (TTSP), as well as the clarity and feasibility of the proposed approach. xIdentified Community Need: Documentation of community transportation need identified in an adopted plan or study, and how clearly the benefits are described. xProject Readiness: Evaluate project readiness for implementation, require no 7.12Item 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 6  Packet Pg. 102 of 412  Page 3 of 5 environmental clearance, and ability to implement within two years. A detailed scope of work and schedule (including a Gantt chart) are required for maximum points. Total possible points for each criteria are listed in Exhibit A. Exhibit A: VRF-ITS Funding Cycle 5: Scoring Areas Criteria Maximum Possible Points Total Points: Attachment A provides additional details on the scoring criteria. DISCUSSION: On October 16, 2025, VTA staff issued a call for projects for the VRF-ITS Cycle 5 with an end date of January 16, 2026. Staff received 16 project proposals that were evaluated by a selection committee comprised of volunteer local agency staff using the Board approved criteria. Members of the selection committee did not score projects from their own agency. The following are the seven projects recommended for funding: 7.12Item 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 7  Packet Pg. 103 of 412  Page 4 of 5 Table 1: VRF -ITS Cycle 5 - Recommended List of Projects Project Name Agency Name Project Description Funding Amount - Phase 1 Ġ Arterial Management Ͳ Adaptive Traffic Control System Deployment City of San Jose  City of Sunnyvale Install video detection equipment and procure and implement adaptive traffic control system. $499,664 Santa Teresa & Tenth Traffic Signal Upgrades City of Gilroy * City of Gilroy Santa Teresa & Tenth Traffic Signal Upgrades Project recommended to receive partial funding after fully funding the other 6 projects. Attachment B provides a summary of the grant submissions and overall scores of each. 7.12Item 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 8  Packet Pg. 104 of 412  Page 5 of 5 ALTERNATIVES: The VTA Board could choose to not award the VRF-ITS funds as recommended by staff. This would delay the implementation of the recommended ITS projects. CLIMATE IMPACT: The funding awarded to projects through this program involve improving mobility and traffic operations that could lead to reductions in greenhouse gas emissions. ADVISORY COMMITTEE DISCUSSION/RECOMMENDATION: The Technical Advisory Committee considered this item as part of its April 2026 Consent Agenda and recommended Board approval without comment. STANDING COMMITTEE DISCUSSION/RECOMMENDATION: The Mobility Management & Capital Programs Committee, meeting as a committee of the whole in April 2026, considered this item on its regular agenda. Committee members asked whether debriefs were provided to unsuccessful applicants, what regional goals the awarded projects support, and whether cost variability would continue. Staff confirmed that debriefs were provided, that the funded projects align with the Transportation Technology Strategic Plan’s focus on interoperability and improved traffic management, and that cost variability is expected to persist due to economic uncertainty. The Committee requested that this item be forwarded to the Board of Directors' consent agenda for May 7, 2026. Prepared by: David Kobayashi, Traffic Engineer Memo No. 9923 ATTACHMENTS: x Attachment A_Scoring Criteria Memo (PDF) x Attachment B_Scoring Summary (PDF) x 4.16.26_MMCP_VRF-ITS Cycle 5 (PDF) 7.12Item 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 9  Packet Pg. 105 of 412  Attachment A Scoring Criteria Memo Excerpt for the Vehicle Registration Fee Intelligent Transportation Systems (VRF-ITS) Cycle 5 Competitive grant program. 7.12.aItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 10  Packet Pg. 106 of 412  This page left intentionally blank 7.12.aItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 11  Packet Pg. 107 of 412  3331 N. First Street Administration 408-321-5555 San Jose, CA 95134-1927 Customer Service 408-321-2300 Solutions that move you 5 Scoring Areas Submitted project proposals will be scored on how well the proposal meets each of the scoring areas shown in Table 2. The total maximum points for any project proposal shall be 100 points. Table 2 - VRF-ITS Funding Cycle 5: Scoring Areas Scoring Areas Possible Points Mobility & Operations 40 & Reliability 20 15 5 5 15 Total Points: 100 DESCRIPTION OF SCORING AREAS & SCORING OF PROJECTS Submitted project proposals receiving the maximum score in that area will clearly describe how the proposed project meets an identified user need(s) in these areas. Mobility & Operations projects encompass the improved movement of people and goods and the ability to get from one place to another using one or more modes of transport to meet daily needs on a corridor. An operations project seeks to improve the efficiency and performance of a group of traffic signals on a corridor, and this could be an identified significant daily need on a corridor. Resilience & Reliability scoring was introduced in this cycle of VRF-ITS funding to ensure that proposed projects enhance the consistency and dependability of Santa Clara County's transportation network. Over the past two decades, Santa Clara County has emerged as a major employment hub, leading to a significant rise in traffic demand. Consequently, key arterial roadways have become increasingly unreliable for motorists. This scoring criterion is designed to incentivize project proponents to improve roadway reliability. Projects that earn the highest 7.12.aItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 12  Packet Pg. 108 of 412  3331 N. First Street Administration 408-321-5555 San Jose, CA 95134-1927 Customer Service 408-321-2300 Solutions that move you 6 scores in this category will demonstrate measurable benefits, such as reduced travel times, improved traffic flow, or the integration of advanced traffic management systems over an extended period of time, under various weather conditions. Cost-effectiveness scoring was introduced in this cycle of VRF-ITS funding to ensure that limited resources are directed toward projects that deliver the highest impact with the most efficient use of funds. This criterion encourages project proponents to optimize their budgets and pursue innovative, cost-conscious solutions that yield measurable transportation improvements. Projects that demonstrate a strong return on investment by delivering substantial benefits relative to their cost will be prioritized, as they exemplify fiscal responsibility and maximize the overall value to the community. Responsiveness scoring was introduced in this cycle of the VRF-ITS funding to assess how effectively the applicant’s proposed project aligns with the specific goals and objectives outlined in the funding guidelines in the latest VTP and TTSP. This criterion ensures that proposed projects directly address this cycle’s priorities while also evaluating the clarity, feasibility, and practicality of the applicant’s approach. The identified community need scoring area was included in this cycle of VRF-ITS funds to address identified community needs. This need must be identified in a transportation plan or study. The objective of this scoring area is to encourage project proponents to deliver transportation improvements that address challenges faced in their communities, such as limited mobility, and air pollution. Submitted project must clearly describe how the community will benefit from the proposed project will receive a maximum score. The final scoring area is project readiness. As described in the general requirements, projects must be substantially ready and not require any environmental clearance, including a completion within two years after receiving these funds. Submitted projects will receive the maximum score in this area if the project provides a sufficiently detailed scope of work and schedule, including meeting the requirements. The project proponent must submit a detailed scope of work, including Gantt chart showing the duration of each work tasks. VTA as the grantor and its selection committee seeks a concise and cohesive application that demonstrates how the project follows up on the recommendation from the TTSP and clearly meets the immediate needs of the roadway users in the following areas: improves mobility and operations, improves accessibility, enhances safety, and addresses the needs of EPCs. The above listed are key considerations in the scoring of submissions, including an inclusion of a realistic schedule for the project completion meeting the general requirements. Another final key component in the consideration of the submissions is the inclusion of an approach to measure performance and an evaluation how well the project meets the needs of the roadway users. 7.12.aItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 13  Packet Pg. 109 of 412   Attachment B Scoring summary for the Vehicle Registration Fee Intelligent Transportation Systems (VRF-ITS) Cycle 5 Competitive grant program.  7.12.bItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 14  Packet Pg. 110 of 412  This page left intentionally blank 7.12.bItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 15  Packet Pg. 111 of 412  3URMHFW1DPH 7RWDO6FRUH )XQGLQJ5HFRPPHQGDWLRQ &LW\RI6DQ-RVp$UWHULDO0DQDJHPHQW±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p&RVW(IIHFWLYH(GJH$,$QDO\WLFVIRU'27 $SSOLFDWLRQV  1RW5HFRPPHQGHG 6DQWD&ODUD9DOOH\7UDQVSRUWDWLRQ$XWKRULW\7UDIILF 2SHUDWLRQV0RGHOLQJ7RRO  1RW5HFRPPHQGHG &RXQW\RI6DQWD&ODUD6LJQDO7LPLQJ&RRUGLQDWLRQRQ&HQWUDO 2UHJRQDQG3DJH0LOO([SUHVVZD\V  1RW5HFRPPHQGHG &RXQW\RI6DQWD&ODUD5HSODFHPHQWRI'DPDJHG)LEHU2SWLF &DEOHVDW0XOWLSOH/RFDWLRQV  1RW5HFRPPHQGHG &RXQW\RI6DQWD&ODUD&RXQW\ZLGH&ROOLVLRQ'DWDEDVHDQG 6DIHW\$QDO\VLV6RIWZDUH3URMHFW  1RW5HFRPPHQGHG &LW\RI6DQ-RVp9LGHR'HWHFWLRQ8SJUDGHVDW%LF\FOHDQG 7UDQVLW,QWHUVHFWLRQV  1RW5HFRPPHQGHG &LW\RI6DQ-RVp9LGHR'HWHFWLRQSURMHFWZDVZLWKGUDZQIURPFRQVLGHUDWLRQIRUIXQGLQJLQRUGHUWRDOORZIRUUHJLRQLPSDUWLDOLW\ 95),76&\FOH&RPSHWLWLYH*UDQW6HOHFWLRQ&RPPLWWHH6FRULQJ6XPPDU\ 7.12.bItem 6 Attachment A - VRF-ITS Cycle 5- Award Notification Letter        Item 6: Staff Report Pg. 16  Packet Pg. 112 of 412  9 4 5 0 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: August 10, 2026 Report #:2602-6016 TITLE Adoption of a Resolution Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements; CEQA Status: Not a Project, CEQA Guidelines 15378(b)(5) RECOMMENDATION Staff recommends that the City Council adopt a resolution (Attachment A): 1. Approving the NAESB Base Contract for Sale and Purchase of Natural Gas combined with the Special Provisions and Credit Support Addendum (“Master Agreement”) (Attachment B) with JPMorgan Chase Bank, N.A. (“JPMorgan”); and 2. Authorizing the City Manager, or their designee, to transact under the Master Agreement for a portion of the City’s natural gas requirements under specified terms and conditions during calendar years 2026 through 2035, inclusive, subject to the following limitations: a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed; b. The delivery date for any transaction shall not extend beyond December 2035; c. The maximum aggregate of all transactions executed under this Master Agreement shall be $150 million; d. All transactions shall be subject to the Palo Alto Municipal Code; and e. All transactions shall be subject to the City’s Energy Risk Management Policy, Guidelines, and Procedures. EXECUTIVE SUMMARY Approval of the recommended Master Agreement with JPMorgan provides the City with an additional natural gas supplier with which to transact in a timely and competitive manner ensuring that the City’s objectives are met efficiently. An active set of creditworthy Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 1  Packet Pg. 113 of 412  9 4 5 0 counterparties is essential to ensure that the City of Palo Alto (“City”) meets its obligations to meet customers’ natural gas demands. Executing the Master Agreement does not commit the City to any transactions with JPMorgan, but it allows for transactions to be executed efficiently in the future. The recommended Master Agreement was negotiated under terms and conditions acceptable to the City and has been reviewed and approved by the City Attorney’s Office. BACKGROUND 1 modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services and to allow for a Council-approved standard form master agreement. The ordinance modified Municipal Code Section 2.30.140 clarifying the process to enable suppliers by specifically allowing the use of a standard form master agreement that contains the City’s minimum contract terms and conditions. Execution of standard form master agreements and delegation of authority to transact under the standard form master agreements with specific suppliers is subject to Council approval. This process is used when contracting for the City’s natural gas requirements. 2 approving the natural gas standard form master agreement that is now available to all financially strong natural gas suppliers for execution with non-substantive changes. The Master Agreement with JPMorgan (Attachment B) is the standard form master agreement with non-substantive negotiated changes. The attached proposed resolution (Attachment A) authorizes the City Manager, or their designee, to transact natural gas under the Master Agreement with JPMorgan within maximum expenditure and transaction term limits. The Master Agreement will enable potential future natural gas transactions between the City and JPMorgan. ANALYSIS 1 Ordinance 5387: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=47269&dbid=0&repo=PaloAlto 2 Resolution 9628: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=54434&dbid=0&repo=PaloAlto Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 2  Packet Pg. 114 of 412  9 4 5 0 With the approval of Resolution 100745 in October 2022, Council delegated authority to the City Manager or their designee to transact under the Master Agreements subject to certain conditions and restrictions including a $150 million expenditure limit applied to all transactions in aggregate under each Master Agreement. The cost of natural gas purchased under the Master Agreements is a function of market prices and the City’s actual natural gas use. Most of the city’s natural gas needs are purchased based on a monthly index price; retail natural gas commodity rates are based on that same monthly market price index. The City’s expected natural gas commodity cost is $11 million to $12 million annually; however, natural gas prices are volatile and unpredictable and actual costs incurred and passed through to ratepayers could be different. 6 and has been approved as to form by the City Attorney’s Office. JPMorgan recently had its investment-grade issuer credit ratings affirmed by both Standard & Poor’s (AA-) and Moody’s Investors Services (Aa2), which meet the City’s minimum credit rating requirements. suppliers￿, staff is requesting, via this Council action, that JPMorgan be approved as one of the prequalified suppliers the City can transact with for natural gas supplies. In addition, because the transaction term authorized by Resolution 10074 only extends through the end of 2028, staff plans to return next year with another resolution replacing Resolution 10074 that will update the aggregate transaction volume limits and duration of transactions for all approved counterparties. 5 Resolution 10074: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887680&dbid=0&repo=PaloAlto 6 PAMC Section 2.30.340(c) requires that utilities contracts incorporate the following contract terms and conditions: (1) governing law shall be the laws of the State of California; (2) choice of venue shall be the County of Santa Clara; and (3) a counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody’s Investors Services. Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 3  Packet Pg. 115 of 412  9 4 5 0 FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 4  Packet Pg. 116 of 412  NOT YET APPROVED Attachment A 6059776 Resolution No. Resolution of the Council of the City of Palo Alto Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements RECITALS A. On April 23, 2012, the Council adopted Resolution 9244 amending the Gas Utility Long-Term Plan (GULP) Objectives, Strategies, and Implementation Plan to discontinue the laddering purchase strategy and implement gas supply rates that change monthly according to market prices. B. In accordance with GULP, the City must purchase and, incidental to purchases, sell gas to meet the needs of its gas customers by contracting for terms varying from less than one month to one month. The City's Energy Risk Management Policy provides that the City will transact in accordance with that Policy and the City’s Municipal Code, and in a manner consistent with authority granted by Council to the City Manager. C. By Ordinance No. 5387, adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form master agreements. D. The natural gas standard form master agreement is based on the North American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural Gas 2006 version and includes Special Provisions and a Credit Support Addendum (Master Agreement). E. By Resolution 10074 adopted October 3, 2022, Council Authorized the City Manager to purchase a portion of the City’s natural gas requirements from certain prequalified natural gas suppliers under specified terms and conditions during calendar years 2023 through 2028, inclusive. F. JPMorgan Chase Bank, N.A. (JPMorgan) desires to execute a Master Agreement with the City in order to be a supplier for delivery during calendar years, 2026 through 2035, inclusive, so long as JPMorgan continues to be qualified and otherwise eligible to transact with the City. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. The Council hereby approves the NAESB Base Contract for Sale and Item 7 Attachment A - Resolution        Item 7: Staff Report Pg. 5  Packet Pg. 117 of 412  NOT YET APPROVED Attachment A 6059776 Purchase of Natural Gas combined with the Special Provisions and Credit Support Addendum (“Master Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), attached as Exhibit A. SECTION 2. The Council hereby authorizes the City Manager or their designee to transact under the Master Agreement for a portion of the City’s natural gas requirements from JPMorgan by negotiating one or more individual transactions under the Master Agreement, including, but not limited to, contracts, addenda, confirmations, and transactions, subject to Section 3. SECTION 3 . The transactions negotiated under the Master Agreement shall conform to the following requirements: a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed; b. The delivery date for any transaction shall not extend beyond December 2035; c. The maximum aggregate of all transactions executed under this Master Agreement = shall be $150 million; d. All transactions shall be subject to the Palo Alto Municipal Code; and e. All transactions shall be subject to the City’s Energy Risk Management Policy, Guidelines, and Procedures. SECTION 4. The Council delegates to the City Manager, or their designee, the authority to execute on behalf of the City the Master Agreement with JPMorgan, as well as any related documents or agreements necessary to administer the Master Agreement that are consistent with the requirements in Section 3 and approved by the City Attorney. // // // // Item 7 Attachment A - Resolution        Item 7: Staff Report Pg. 6  Packet Pg. 118 of 412  NOT YET APPROVED Attachment A 6059776 SECTION 5. Adoption of this resolution is not subject to California Environmental Quality Act (CEQA) review as it is an administrative governmental activity that will not result in any direct or indirect physical change to the environment (CEQA Guidelines 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Administrative Services Director of Utilities Item 7 Attachment A - Resolution        Item 7: Staff Report Pg. 7  Packet Pg. 119 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: ____________________________________________, 2026 The parties to this Base Contract are the following: PARTY A PARTY NAME PARTY B Attention: Markets Legal Group 270 Park Avenue ADDRESS 250 Hamilton Avenue www.jpmorgan.com BUSINESS WEBSITE www. CONTRACT NUMBER __________ D-U-N-S® NUMBER 17-892-8479  US FEDERAL: 13-4994650  OTHER: TAX ID NUMBERS √ US FEDERAL:  OTHER: United States of America JURISDICTION OF ORGANIZATION California  Corporation  LLC  Limited Partnership  Partnership  LLP  Other: National Association COMPANY TYPE  Corporation  LLC  Limited Partnership  Partnership  LLP √ Other: N/A GUARANTOR (IF APPLICABLE) N/A Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract:  PARTY CFTC CLASSIFICATION Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract: √ CONTACT INFORMATION 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Lauren Pombar TEL#: (212)834-4532 FAX#: EMAIL: lauren.a.pombar@jpmorgan.com  COMMERCIAL City of Palo Alto ATTN: Jason Huang TEL#: 650-329-2592 FAX#: EMAIL: jason.huang@paloalto.gov 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Physical Gas Team TEL#: (713)750-2033 FAX#: EMAIL: Physical_Gas_Trading@jpmorgan.com  SCHEDULING City of Palo Alto ATTN: Jason Huang TEL#: 650-329-2592 FAX#: EMAIL: jason.huang@paloalto.gov 270 Park Avenue, New York, New York 10017 ATTN: Markets Legal Group______________________________ TEL#: FAX#: 1-(866)-338-8347 EMAIL: physical.oil.group@jpmorgan.com  CONTRACT AND LEGAL NOTICES City of Palo Alto ATTN: Assistant City Attorney TEL#: 650-329-2171 FAX#: EMAIL: amy.bartell@paloalto.gov 383 Madison Avenue, Floor 24, New York, New York 10017 ATTN: Credit Department TEL#: FAX#: EMAIL: Commodities_Credit_-_Americas@jpmchase.com  CREDIT City of Palo Alto ATTN: Kelly-Louis Poggetti TEL#: 650-329-2677 FAX#: EMAIL: kelly.poggetti@paloalto.gov 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Physical Natural Gas Confirms Team TEL#: (212)834-7442 FAX#: 1-(866)338-8347 EMAIL: physical.naturalgas.group@jpmorgan.com  TRANSACTION CONFIRMATIONS City of Palo Alto ATTN: Jason Huang TEL#: 650-329-2592 FAX#: EMAIL: jason.huang@paloalto.gov 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Physical Natural Gas Settlements Team TEL#: (212)834-7442 FAX#: 1-(866)338-8347 EMAIL: physical.naturalgas.group@jpmorgan.com  INVOICES  PAYMENTS  SETTLEMENTS City of Palo Alto ATTN: Timothy Denterlein TEL#: 650-617-3105 FAX#: EMAIL: timothy.denterlein@paloalto.gov BANK: JPMorgan Chase Bank, N.A.________________________ ABA: ACCT: OTHER DETAILS: WIRE TRANSFER NUMBERS (IF APPLICABLE) BANK: US Bank, NA ABA: ACCT: OTHER DETAILS: BANK: ABA: ACCT: OTHER DETAILS: ACH NUMBERS (IF APPLICABLE) BANK: ABA: ACCT: OTHER DETAILS: ATTN: ADDRESS: CHECKS (IF APPLICABLE) ATTN: ADDRESS: Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 8  Packet Pg. 120 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas (Continued) This Base Contract incorporates by reference for all purposes the General Terms and Conditions for Sale and Purchase of Natural Gas published by the North American Energy Standards Board. The parties hereby agree to the following provisions offered in said General Terms and Conditions. In the event the parties fail to check a box, the specified default provision shall apply. Select the appropriate box(es) from each section: Section 1.2 Transaction √ Oral (default) OR  Section 10.2 Additional Events of Default  No Additional Events of Default (default) √ Indebtedness Cross Default √ Party A: 3% of Party A’s shareholders’ equity √ Party B: $50,000,000  Transactional Cross Default Specified Transactions: Section 2.7 Confirm Deadline √ 2 Business Days after receipt (default) OR  Business Days after receipt Section 2.8 Confirming Party  Seller (default) OR  Buyer √ Either Party Section 3.2 Performance Obligation √ Cover Standard (default) OR  Spot Price Standard Section 10.3.1 Early Termination Damages √ Early Termination Damages Apply (default) OR  Early Termination Damages Do Not Apply Note: The following Spot Price Publication applies to both of the immediately preceding. Section 10.3.2 Other Agreement Setoffs √ Other Agreement Setoffs Apply (default) √ Bilateral (default)  Triangular OR  Other Agreement Setoffs Do Not Apply Section 2.31 Spot Price Publication √ Gas Daily Midpoint (default) OR  Section 6 Taxes √ Buyer Pays At and After Delivery Point (default) OR  Seller Pays Before and At Delivery Point Section 7.2 Payment Date √ 25th Day of Month following Month of delivery (default) OR  Day of Month following Month of delivery Section 15.5 Choice Of Law California Section 7.2 Method of Payment √ Wire transfer (default)  Automated Clearinghouse Credit (ACH)  Section 15.10 Confidentiality  Confidentiality applies (default) OR √ Confidentiality does not apply Section 7.7 Netting √ Netting applies (default) OR  √ Special Provisions √Addendum(s): Credit Support Addendum [SIGNATURES ON NEXT PAGE] Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 9  Packet Pg. 121 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 3 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate. JPMORGAN CHASE BANK, N.A. PARTY NAME CITY OF PALO ALTO SIGNATURE PRINTED NAME Ed Shikada Title: TITLE City Manager, for Mayor ______________________, 2026 DATE ______________________, 2026 CITY OF PALO ALTO Amy Bartell Assistant City Attorney ______________________, 2026 CITY OF PALO ALTO Ed Shikada City Manager ______________________, 2026 CITY OF PALO ALTO Lauren Lai Administrative Services Director ______________________, 2026 Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 10  Packet Pg. 122 of 412  Copyright © 2006North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) General Terms and Conditions Base Contract for Sale and Purchase of Natural Gas SECTION 1. PURPOSE AND PROCEDURES 1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to the party receiving Gas and "Seller" refers to the party delivering Gas. The entire agreement between the parties shall be the Contract as defined in Section 2.9. The parties have selected either the “Oral Transaction Procedure” or the “Written Transaction Procedure” as indicated 1.2. The parties will use the following Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission or telephone conversation with the offer and acceptance constituting the agreement of the parties. The parties shall be legally bound from the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered a “writing” and to have been “signed”. Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modify or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not Written Transaction Procedure: 1.2. The parties will use the following Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, record that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the 1.3. If a sending party's Transaction Confirmation is materially different from the receiving party's understanding of the agreement referred to in Section 1.2, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving party's agreement to the terms of the transaction described in the sending party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence. 1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with the requirements of this Base Contract. SECTION 2. DEFINITIONS The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contract and shall have the meanings ascribed to them herein. 2.1. “Additional Event of Default” shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract. 2.2. “Affiliate” shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of at least 50 percent of the voting power of the entity or person. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 11  Packet Pg. 123 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 2.3. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer. 2.4. "Base Contract" shall mean a contract executed by the parties that incorporates these General Terms and Conditions by reference; that specifies the agreed selections of provisions contained herein; and that sets forth other information required herein and any Special Provisions and addendum(s) as identified on page one. 2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT). 2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S. 2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving party's time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m. in the receiving party's time zone, it shall be deemed received at the opening of the next Business Day. 2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "Contract" shall mean the legally-binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into through an EDI transmission or by telephone, but that have not been confirmed in a binding Transaction Confirmation, all of which shall form a single integrated agreement between the parties. 2.10. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction. 2.11. "Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.12. "Cover Standard", as referred to in Section 3.2, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Seller is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, consistent with: the amount of notice provided by the nonperforming party; the immediacy of the Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party. 2.13. "Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit support for, or on behalf of, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a security interest in an asset, guaranty, or other good and sufficient security of a continuing nature. 2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction. 2.15. "Delivery Period" shall be the period during which deliveries are to be made as agreed to by the parties in a transaction. 2.16. "Delivery Point(s)" shall mean such point(s) as are agreed to by the parties in a transaction. 2.17. "EDI" shall mean an electronic data interchange pursuant to an agreement entered into by the parties, specifically relating to the communication of Transaction Confirmations under this Contract. 2.18. "EFP" shall mean the purchase, sale or exchange of natural Gas as the "physical" side of an exchange for physical transaction involving gas futures contracts. EFP shall incorporate the meaning and remedies of "Firm", provided that a party’s excuse for nonperformance of its obligations to deliver or receive Gas will be governed by the rules of the relevant futures exchange regulated under the Commodity Exchange Act. 2.19. "Firm" shall mean that either party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure; provided, however, that during Force Majeure interruptions, the party invoking Force Majeure may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by the Transporter. 2.20. "Gas" shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane. 2.21. “Guarantor” shall mean any entity that has provided a guaranty of the obligations of a party hereunder. 2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements. 2.23. “Indebtedness Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it or its Guarantor, if any, experiences a default, or similar condition or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 12  Packet Pg. 124 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 6 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 2.24. "Interruptible" shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability, except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter. 2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm. 2.26. "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. 2.27. "Payment Date" shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month. 2.28. "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point. 2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management. 2.30. “Specified Transaction(s)” shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract. 2.31. "Spot Price " as referred to in Section 3.2 shall mean the price listed in the publication indicated on the Base Contract, under the listing applicable to the geographic location closest in proximity to the Delivery Point(s) for the relevant Day; provided, if there is no single price published for such location for such Day, but there is published a range of prices, then the Spot Price shall be the average of such high and low prices. If no price or range of prices is published for such Day, then the Spot Price shall be the average of the following: (i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published that next follows the relevant Day. 2.32. "Transaction Confirmation" shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period. 2.33. “Transactional Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction. 2.34. “Termination Option” shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation. 2.35. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction. SECTION 3. PERFORMANCE OBLIGATION 3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction. The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract. Cover Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which no replacement is available; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which no sale is available; and (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available for all or any portion of the Contract Quantity of Gas, then in addition to (i) or (ii) above, as applicable, the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 13  Packet Pg. 125 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 7 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Spot Price Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which 3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties. 3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated. SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES 4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s). 4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party. 4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer. SECTION 5. QUALITY AND MEASUREMENT All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter. SECTION 6. TAXES The parties have selected either “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery Point” as Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled Seller Pays Before and At Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled SECTION 7. BILLING, PAYMENT, AND AUDIT 7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 14  Packet Pg. 126 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 8 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day, payment is due on the next Business Day following that date. In the event any payments are due Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2. 7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming party for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Payment from the nonperforming party will be due five Business Days after receipt of invoice. 7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however, if the invoiced party disputes the amount due, it must provide supporting documentation acceptable in industry practice to support the amount paid or disputed without undue delay. In the event the parties are unable to resolve such dispute, either party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section. 7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate. 7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy. 7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided that no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 8. TITLE, WARRANTY, AND INDEMNITY 8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s). 8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 15.8, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED. 8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including reasonable attorneys' fees and costs of court ("Claims"), from any and all persons, arising from or out of claims of title, personal injury (including death) or property damage from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer. 8.4. The parties agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States 19 U.S.C. §1202, General Notes, page 3); provided, however, that in the event Seller took title to the Gas outside the Customs Territory of the United States, Seller represents and warrants that it is the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry and entry summary filings as well as the payment of duties, taxes and fees, if any, and all applicable record keeping requirements. 8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5. SECTION 9. NOTICES 9.1. All Transaction Confirmations, invoices, payment instructions, and other communications made pursuant to the Base Contract ("Notices") shall be made to the addresses specified in writing by the respective parties from time to time. 9.2. All Notices required hereunder shall be in writing and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered. 9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 15  Packet Pg. 127 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered delivered five Business Days after mailing. 9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice. SECTION 10. FINANCIAL RESPONSIBILITY 10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (“Y”) (including, without limitation, the occurrence of a material change in the creditworthiness of Y or its Guarantor, if applicable), X may demand Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient security in the form, amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first priority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the extent possible, without any further action by either party. 10.2. In the event (each an "Event of Default") either party (the "Defaulting Party") or its Guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors; (ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall due; (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default; then the other party (the "Non-Defaulting Party") shall have the right, at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contract, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder. 10.3. If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a “Terminated Transaction”. On the Early Termination Date, all transactions will terminate, other than those transactions, if any, that may not be liquidated and terminated under applicable law (“Excluded Transactions”), which Excluded Transactions must be liquidated and terminated as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual termination date shall be the Early Termination Date for purposes of Section 10.3.1. The parties have selected either “Early Termination Damages Apply” or “Early Termination Damages Do Not Apply” as 10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (i) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non-Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions). For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third-party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to “evergreen provisions”) shall not be considered in determining Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 16  Packet Pg. 128 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 10 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) the term of a transaction shall be considered in determining Contract Values and Market Values. The rate of interest used in calculating net present value shall be determined by the Non-Defaulting Party in a commercially reasonable manner. Early Termination Damages Do Not Apply: 10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section The parties have selected either “Other Agreement Setoffs Apply” or “Other Agreement Setoffs Do Not Apply” as 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff any Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the party that is entitled to the Net Settlement Amount under any other agreement or arrangement Triangular Setoff Option: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option, and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff (i) any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; (ii) any Net Settlement Amount against any amount(s) (including any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to the Non-Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non-Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (iv) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party to the Non-Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non-Defaulting Other Agreement Setoffs Do Not Apply: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support 10.3.3. If any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by the Non-Defaulting Party. 10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non-Defaulting Party. The Net Settlement Amount as well as any setoffs applied against such amount pursuant to Section 10.3.2, shall be paid by the close of business on the second Business Day following such Notice, which date shall not be earlier than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate. 10.5. The parties agree that the transactions hereunder constitute a "forward contract" within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each "forward contract merchants" within the meaning of the United States Bankruptcy Code. 10.6. The Non-Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 17  Packet Pg. 129 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 11 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close-out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 11. FORCE MAJEURE 11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term "Force Majeure" as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2. 11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections or wars, or acts of terror; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. 11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as provided in Section 11.2. The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges. 11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance. 11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event. 11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties. SECTION 12. TERM This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the expiration of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction. SECTION 13. LIMITATIONS FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 18  Packet Pg. 130 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non-affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party’s two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged. SECTION 15. MISCELLANEOUS 15.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract. No assignment of this Contract, in whole or in part, will be made without the prior written consent of the non-assigning party (and shall not relieve the assigning party from liability hereunder), which consent will not be unreasonably withheld or delayed; provided, either party may (i) transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally liable for and shall not be relieved of or discharged from any obligations hereunder. 15.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Contract. 15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent breach. 15.4. This Contract sets forth all understandings between the parties respecting each transaction subject hereto, and any prior contracts, understandings and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective transaction(s). This Contract may be amended only by a writing executed by both parties. 15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction. 15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof. 15.7. There is no third party beneficiary to this Contract. 15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract. Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby. 15.9. The headings and subheadings contained in this Contract are used solely for convenience and do not constitute a part of this Contract between the parties and shall not be used to construe or interpret the provisions of this Contract. 15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 applicable to this Contract, neither party shall disclose directly or indirectly without the prior written consent of the other party the terms of any transaction to a third party (other than the employees, lenders, royalty owners, counsel, accountants and other agents of the party, or prospective purchasers of all or substantially all of a party’s assets or of any rights under this Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any transaction, (iv) to the extent necessary to comply with a regulatory agency’s reporting requirements including but not limited to gas cost recovery proceedings; or (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index. Each party shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction. In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclosure, and shall cooperate (consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain protective orders or similar restraints with respect to such disclosure at the expense of the other party. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 19  Packet Pg. 131 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 13 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties. 15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence. DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid misunderstandings and make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF The copyright in this Contract is owned by NAESB, and market participants are encouraged to review NAESB Copyright Policy and Companies with Access to NAESB Standards under the Copyright Policy posted by NAESB on its website at https://www.naesb.org/pdf2/copyright.pdf. Please review this posting and if your company’s name is not listed as having access, please obtain access by contacting the NAESB Office per the contact information in Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 20  Packet Pg. 132 of 412  Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 14 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) TRANSACTION CONFIRMATION EXHIBIT A FOR IMMEDIATE DELIVERY Letterhead/Logo Date: ____________________________, _____ Transaction Confirmation #: _______________ This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated ______________________. The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract. SELLER: _______________________________________________ _______________________________________________ _______________________________________________ Attn: ___________________________________________ Phone: _________________________________________ Fax: ___________________________________________ Base Contract No. ________________________________ Transporter: _____________________________________ Transporter Contract Number: _______________________ BUYER: _______________________________________________ _______________________________________________ _______________________________________________ Attn: ___________________________________________ Phone: _________________________________________ Fax: ___________________________________________ Base Contract No. ________________________________ Transporter: _____________________________________ Transporter Contract Number: _______________________ Contract Price: $ /MMBtu or ______________________________________________________________________ Delivery Period: Begin: , ___ End: , ___ Performance Obligation and Contract Quantity: (Select One) Firm (Fixed Quantity): Firm (Variable Quantity): Interruptible: MMBtus/day MMBtus/day Minimum Up to MMBtus/day  EFP MMBtus/day Maximum subject to Section 4.2. at election of  Buyer or  Seller Delivery Point(s): ________________________ (If a pooling point is used, list a specific geographic and pipeline location): Special Conditions: Seller: __________________________________________ By: ____________________________________________ Title: ___________________________________________ Date: __________________________________________ Buyer: __________________________________________ By: ____________________________________________ Title: ___________________________________________ Date: __________________________________________ Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 21  Packet Pg. 133 of 412  Execution Version - 1 - EXHIBIT B SPECIAL PROVISIONS TO BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS - GENERAL TERMS AND CONDITIONS (FORM NAESB Standard 6.3.1-9/5/06 (Revised by R15003/R15007, 4/4/16) BY AND BETWEEN CITY OF PALO ALTO AND JPMORGAN CHASE BANK, N.A. DATED: ___________, 2026 SECTION 1.2 [Oral Transaction Procedure], line 13: after “agree to” add “, in writing,”. The second sentence of Section 1.2 Oral Transaction Procedure is amended by deleting the words “effectuated in an EDI transmission or telephone conversation with the offer and acceptance” and replacing them with “effectuated in an EDI transmission, telephone conversation or other electronic means of communication indicating the offer and acceptance” and by adding the following sentence to the end of Section 1.2: “All Transactions are entered into in reliance of the fact that this Base Contract (including any Special Provisions and any Addenda hereto agreed upon by the parties) and all Transactions hereunder form a single integrated agreement between the parties and the parties would not otherwise enter into any Gas transactions.” SECTION 1.3 shall be amended by deleting subsections (iii) and (iv) of the last sentence and replacing them with the following new subsections: “(iii) the Special Provisions, (iv) the Base Contract, and (v) these General Terms and Conditions”. SECTION 1.4 is amended by adding the following after the third sentence: “If there is a dispute, upon reasonable request by a party, the other party shall provide a copy of such recording to the party making the request.” SECTION 1.4 is amended by adding the following sentence between the second and third sentences in that section: “No party may knowingly destroy or erase a recording once the possessing party becomes aware of an actual dispute in which the recording may reasonably be anticipated to be discoverable.” SECTION 1.5 is added to SECTION 1, as follows: “City is a municipal utility governed by the City of Palo Alto, by and through its Council, which has all powers necessary and appropriate to a municipal corporation, including but not limited to the authority granted by the City Charter (https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-59239), Article XI, Section 9(a) of the California Constitution, California Government Code Section 39732 and California Public Utilities Code Section 10002, to establish, purchase, and operate public works to furnish its inhabitants with natural gas. Under this authority, City is engaged in the business of delivering natural gas to its residential and commercial customers in Palo Alto, California.” SECTION 2.4, line 1: after “incorporates” add “the Cover Sheet and”. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 22  Packet Pg. 134 of 412  SECTION 2.6 is amended and restated in its entirety, as follows: “’Business Day’ shall mean any Day except Saturday, Sunday, a Day that is a regular holiday declared by City pursuant to Palo Alto Municipal Code Section 2.08.100 or a Day that is a Federal Reserve Bank holiday.” SECTION 2.13 is amended to (i) replace the words “to provide or establish” with the words, “to provide, maintain, or establish”. SECTION 2.23, at the end of the sentence after the words, “immediately due and payable”, the following: “(after giving effect to any applicable notice requirement or grace period)”. SECTION 3.1, line 3: add a third sentence, as follows: “If a transaction is not designated as Firm or Interruptible, the transaction shall be deemed to be Firm.” SECTION 3.2 [Cover Standard], in the last sentence: after “payable” add “within”, and delete “presentation” and replace with “receipt”. SECTION 3.5 is added to SECTION 3, as follows: “Notwithstanding any other provision of this SECTION 3, if a party fails to deliver or receive Gas for three or more consecutive Business Days and such failure is not excused by the terms of the Transaction Confirmation, by Force Majeure, or by the other party’s failure of performance, then upon one Business Day’s prior written Notice and for so long as the non-performing party fails to deliver or receive Gas, the performing party may suspend its performance under such Transaction Confirmation and shall not be obligated to resume its performance until the non-performing party provides two Business Days’ prior written Notice of its intention to perform such obligation (“Notice to Resume Contractual Performance”); provided, however, if the performing party has entered into a replacement contract for a term of 31 Days or less during the suspension period, such performing party may defer its obligation to resume delivering or receiving Gas until after the expiration of the term of the replacement contract; provided further, that the performing party provides written Notice of its execution of such replacement contract to the non-performing party within two Business Days of the performing party’s receipt of the Notice to Resume Contractual Performance.” SECTION 7.1, line 3: after “actual quantity” add “delivered”. SECTION 7.4, line 2: after “it must provide,” add “within 60 Days”; and line 3: delete “without undue delay”. SECTION 7.5, line 3: delete “, plus two percent per annum”. SECTION 8.3 is hereby amended by adding the following sentence to the end of this paragraph: “Neither party shall be obligated to indemnify, defend, or hold the other party harmless to the extent any liability, suit, action, damage, loss or expense arises out of or in connection with any gross negligence or willful misconduct on the part of the other party, its officers, agents, or employees.” SECTION 10.1 is amended and restated in its entirety, as follows: “During the term of this Contract, the parties shall comply with the requirements of the Credit Support Addendum to Base Contract for Sale and Purchase of Natural Gas and any subsequent amendments thereto.” Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 23  Packet Pg. 135 of 412  SECTION 10.2 is amended by: a.) Inserting “repudiate, withdraw or” immediately following “(vi)” in the sixth line; and b.) Deleting the word “or” before (ix) in the ninth line, and adding the following as new Sections 10.2(x) and (xi), respectively, after the word “Default;” in the tenth line: “(x) have made any representation or warranty which is false or misleading in any material respect when made or when deemed made or repeated; or”; “(xi) during any 90 Day period on a rolling basis, fail to perform any material covenant or obligation set forth in this Contract (except to the extent constituting a separate Event of Default, and except for such party’s obligations to deliver or receive Gas, the exclusive remedy for which is provided in Section 3) if such failure is not remedied within thirty (30) Days after written notice;”; SECTION 10.3: Insert the following at the end of Section 10.3: “Failure by the Non-Defaulting Party to promptly exercise its rights to terminate and liquidate all transactions upon the occurrence of an Event of Default shall not be deemed to be a waiver of such right.” SECTION 10.3.1 [Early Termination Damages Apply], add a third paragraph, as follows: “The Non-Defaulting Party shall aggregate the costs that the Non-Defaulting party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non-Defaulting Party, including costs associated with hedging its obligations, transaction costs associated with obtaining replacement supplies or markets (e.g., brokerage fees, or other such payments), additional transportation balancing or hub services costs, and similar costs incurred in transporting the replacement Gas to or from the replacement Gas seller or buyer, and reasonable attorneys’ fees (at trial and on appeal) and other reasonable litigation and administrative fees and costs incurred in connection with recovering any such costs owed to it by the Defaulting Party under this Contract (collectively ‘Costs’). Notwithstanding the limitation of liability set forth in Section 13, such Costs shall be due and payable by the Defaulting Party to the Non-Defaulting Party within 10 Business Days after receipt by the Defaulting Party of the Non-Defaulting Party’s statement of Costs.” SECTION 10.3.2 [Other Agreement Setoffs Apply; Bilateral Setoff Option], line 3: after the first sentence, add: “Notwithstanding any provision to the contrary herein, any Net Settlement Amount that the Non-Defaulting Party may owe the Defaulting Party shall be equal to zero dollars.”; at the end of the section add: “The obligations of the Non-Defaulting Party and the Defaulting Party under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. The Non-Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 24  Packet Pg. 136 of 412  be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a party may be entitled (whether by operation of law, contract or otherwise). ‘setoff’ as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non-Defaulting Party is entitled or subject (whether arising under this Contract, another contract, and applicable law or otherwise) that is exercised by, or imposed on, the Non-Defaulting Party.” SECTION 10.4, line 2: delete “, and whether the Net Settlement Amount is due to or due from the Non- Defaulting Party.”; line 8: delete “, plus two percent per annum;”. SECTION 10.8 is added to SECTION 10, as follows: “Upon request, each Party shall deliver to the other Party documentation reasonably requested to evidence the authority and power of such Party and/or its Guarantor, as the case may be, to enter into this Base Contract or any guaranty, as the case may be, which may include, without limitation, certified resolutions and certification of the signature and authority of the individual(s) executing this Contract or such guaranty, as the case may be and to the extent applicable and requested certificates, documents or other evidence sufficient to confirm the sales exempt status of such Party for each jurisdiction in which the purchase, sale and/or delivery of any physical commodity takes place under this Contract, such that the other party will bear no obligation in relation to such purchase, sale and/or delivery for charging, collecting or remitting sales, uses or other excise taxes to any local, municipal, state or federal taxing authority or agency.” SECTION 11.5, line 1: after “the other party” add “of the dates on which Force Majeure commenced and terminated; line 3: after “Upon providing” add “such timely”; line 6: add a new sentence, as follows: “If the affected party fails to provide written notice of the event or occurrence to the other party as soon as reasonably possible, the affected party will not be relieved of its obligation to make or accept delivery of Gas to the extent and for the duration of Force Majeure.” SECTION 15.1, line 4: after “either party may” add “without the prior approval of the other party”; line 6: delete clause (ii) and replace with the following through the end of that sentence: “transfer or assign its interest to any Affiliate of such party, so long as such Affiliate’s creditworthiness equals or exceeds that of such assigning party or its Credit Support Provider, as applicable, as of the date the Base Contract is entered into by such party; provided, however, that in each of (i) and (ii), before any such assignment, transfer and assumption becomes effective, any such assignee shall agree, in writing, to be bound by the terms and conditions of this Contract and the assigning party shall agree, in writing, to remain liable for the obligations of the assignee hereof and shall deliver such tax and enforceability assurance as the non- assigning party may reasonably request. Notwithstanding any provision to the contrary, any direct or indirect change of control of either party (whether voluntary or by operation of law) shall be deemed an assignment and shall require the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. Upon request, the party subject to a change of control shall promptly deliver financial statements, information and other evidence satisfactory to the requesting party regarding the proposed change of control and, among other things, creditworthiness of the other party after such change. For purposes of this section, change of control shall mean any change in the ownership of Party A greater than 51% of the then ownership of Party A prior to the transfer or assignment.” SECTION 15.5 is hereby deleted in its entirety and replaced with the following provision in lieu thereof: Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 25  Packet Pg. 137 of 412  “This Base Contract, all transactions and Transaction Confirmations and the rights and duties of the parties arising therefrom shall be governed by, interpreted and construed in accordance with the laws of the State of California (without reference to choice of law doctrine). With respect to any suit, action or proceedings relating to the foregoing (“Proceedings”) each party irrevocably submits to the non-exclusive jurisdiction of the federal and state courts located in the County of Santa Clara, State of California, waives any objection which it may have to the laying of venue of any Proceedings brought in any such court, and waives any claim that any such Proceedings have been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS BASE CONTRACT OR ANY TRANSACTION AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S ENTERING INTO THIS BASE CONTRACT. SECTION 15.8 is hereby amended by inserting at the end thereof the following: “Each party will be deemed to represent to the other party on the date on which it enters into a transaction or Transaction Confirmation that (absent a written agreement between the Parties that expressly imposes affirmative obligations to the contrary for that transaction or Transaction Confirmation): (i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that transaction and Transaction Confirmation and as to whether that transaction and Transaction Confirmation is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as recommendation to enter into that transaction or Transaction Confirmation; it being understood that information and explanation related to the terms and conditions of a transaction and Transaction Confirmation shall not be considered investment advice or a recommendation to enter into that transaction or Transaction Confirmation. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that transaction or Transaction Confirmation. (ii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts the terms, conditions and risks of that transaction and Transaction Confirmation. It is also capable of assuming, and assumes, the risks of that transaction and Transaction Confirmation. (iii) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that transaction or Transaction Confirmation. Each party understands and acknowledges that the other party may, either in connection with entering into a transaction or from time to time thereafter, engage in open market transactions that are designed to hedge or reduce the risks incurred by it in connection with such transaction and that the effect of such open market transactions may be to affect or reduce the value of such transaction. (iv) Eligible Contract Participant. It is an “eligible contract participant” as such term is defined in Section §1(a)(18) of the Commodities Exchange Act, as Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 26  Packet Pg. 138 of 412  amended.” SECTION 15.13 is added to SECTION 15, as follows: “If requested by either party, to the extent not publicly available, the other party shall deliver (i) within 180 days following the end of each fiscal year, a copy of its (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) certified financial statements or its (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) annual report containing that party’s audited consolidated financial statements for such fiscal year and (ii) within 45 days after the end of each of its first three fiscal quarters of each fiscal year, a copy of that party’s (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) quarterly report containing unaudited consolidated financial statements for such fiscal quarter. In all cases the statements shall be for the most recent accounting period and prepared in accordance with generally accepted accounting principles, provided, however, that should any such statements not be available on a timely basis due to delay in preparation or certification, such delay shall not be an Event of Default so long as the party diligently pursues the preparation, certification and delivery of the statements.” SECTION 15.14 is added to SECTION 15, as follows: “Scheduling. For all physical gas transactions, J.P. Morgan Ventures Energy Corporation is the agent/contracted marketer for JPMorgan Chase Bank, N.A.; therefore, all nominations will face J.P. Morgan Ventures Energy Corporation.” SECTION 15.15 is added to SECTION 15, as follows: “With respect to any proceeding in connection with any claim, counterclaim, demand, cause of action, dispute and controversy arising out of or relating to this Contract, the parties hereby consent to the exclusive jurisdiction of the federal courts for the Northern District of the State of California; provided, however, that if such federal courts sitting in the Northern District of the State of California refuse jurisdiction, the parties agree to the exclusive jurisdiction of the state courts sitting in the County of Santa, Clara, State of California, wherever venue may properly be laid.” SECTION 15.16 is added to SECTION 15, as follows: “Mobile-Sierra. To the extent, if any, that a transaction does not qualify as a “first sale” as defined by the Natural Gas Act and § 2(21) of the Natural Gas Policy Act (‘‘NGPA”) and is not exempt from the provisions of the Natural Gas Act (‘‘NGA”) pursuant to § 601 of the NGPA, each party irrevocably waives its rights, including its rights under §§ 4 and 5 of the NGA, unilaterally to seek or support a change in the rate(s), charges, classifications, terms or conditions of this Contract, any transaction hereunder or any other agreements entered into in connection with this Contract (collectively, the “Covered Agreements”). By this provision, each party expressly waives its right to seek or support: (i) an order from the U.S. Federal Energy Regulatory Commission (“FERC”) finding that the market-based rate(s), charges, classifications, terms or conditions agreed to by the parties under the Covered Agreements are unjust and unreasonable; or (ii) any refund with respect thereto. Each party agrees not to make or support such a filing or request, and each party agrees that these covenants and waivers shall be binding notwithstanding any regulatory or market changes that may occur hereafter. Absent the agreement of both parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of the Covered Agreements, whether proposed by a party to a non-party or FERC acting sua sponte, shall be the “public interest” standard of review set forth in United Gas Pipe Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 27  Packet Pg. 139 of 412  Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the “Mobile-Sierra” doctrine).” SECTION 15.17 is added to SECTION 15, as follows: “Qualified Financial Contracts. The parties acknowledge and agree that (i) to the extent that prior to the date hereof both parties have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a Protocol Covered Agreement, the J.P. Morgan entity that is a party to this Contract (“J.P. Morgan”) shall be deemed a Regulated Entity and the other entity that is a party to this Contract (“Counterparty”) shall be deemed an Adhering Party; (ii) to the extent that prior to the date hereof the parties have executed a separate agreement the effect of which is to amend the qualified financial contracts between them to conform with the requirements of the QFC Stay Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a Covered Agreement, J.P. Morgan shall be deemed a Covered Entity and Counterparty shall be deemed a Counterparty Entity; or (iii) if clause (i) and clause (ii) do not apply, the terms of Section 1 and Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral template entitled “Full-Length Omnibus (for use between U.S. G-SIBs and Corporate Groups)” published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org and, a copy of which is available upon request), the effect of which is to amend the qualified financial contracts between the parties thereto to conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a “Covered Agreement,” J.P. Morgan shall be deemed a “Covered Entity” and Counterparty shall be deemed a “Counterparty Entity.” In the event that, after the date of this Contract, both parties hereto become adhering parties to the Protocol, the terms of the Protocol will replace the terms of this paragraph. In the event of any inconsistencies between this Contract and the terms of the Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as applicable, the QFC Stay Terms will govern. Terms used in this paragraph without definition shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this paragraph, references to “this Contract” include any related credit enhancements entered into between the parties or provided by one to the other. In addition, the parties agree that the terms of this paragraph shall be incorporated into any related covered affiliate credit enhancements, with all references to J.P. Morgan replaced by references to the covered affiliate support provider. “QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81–8, 12 C.F.R. 382.1-7 and 12 C.F.R. 47.1-8, which, subject to limited exceptions, require an express recognition of the stay-and- transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation Authority under Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act and the override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency proceedings and any restrictions on the transfer of any covered affiliate credit enhancements.” SECTION 15.18 is added to SECTION 15, as follows: “The parties do hereby represent and warrant that the General Terms and Conditions of the Base Contract have not been modified, altered, or amended in any respect except for these Special Provisions which are attached to and made a part of the Base Contract.” [SIGNATURES ON NEXT PAGE] Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 28  Packet Pg. 140 of 412  IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate. CITY OF PALO ALTO Approval by Mayor: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approved as to form: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by City Manager: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by Administrative Services Director: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 29  Packet Pg. 141 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 1 Adopted October 9, 2003 Credit Support Addendum to the Base Contract for Sale and Purchase of Natural Gas This Credit Support Addendum (“CSA”) is entered into as of this ______ day of _________, 2026. The parties to this CSA are the following: Party A Party B JPMorgan Chase Bank, N.A. and CITY OF PALO ALTO Base Contract Date: [ ], 2026 Base Contract Date: [ ], 2026 Base Contract Number: Base Contract Number: Address for Demands and Notices under Paragraphs 4,5 and 6 of the CSA: Address: JPM Collateral Services Address: 500 Stanton Christiana Road NCC5/FL1 DE3-4184 Newark, Delaware 19713 Group Telephone No.: (302) 634-4607 Telephone: Facsimile No.: (302) 552-6930 Fax: Email: collateral_services@jpmorgan.com Email: Wire Transfer or ACH Numbers (if applicable): Bank: JPMorgan Chase Bank, N.A. Bank: ABA: ABA: ACCT: ACCT: Other Details: Other Details: This CSA is published by the North American Energy Standards Board, Inc. The parties hereby agree to the following provisions offered in said CSA Elections. Provider Party A : _______________________ Party B : ______________________ as the Secured Overnight Financing Rate (SOFR) that appears on Bloomberg Page SOFRRATE for such day, or as published in another source mutually agreed Collateral Valuation Percentage Party A:  Cash 100% Letters of Credit 100%* Other _____________ ___% Party B:  Cash 100%  Letters of Credit 100%* Other _____________ ___% * - See Definition of Valuation Percentage. Minimum Transfer Amount Event of Default has occurred and is continuing with respect to Party A, the Minimum Transfer Amount with respect to Party A shall be US$0. Party B: US$100,000; provided, however, that if an Event of Default has occurred and is continuing with respect to Party B, the Minimum Transfer Amount with respect to Party B shall be US$0. Credit Issuer Requirements of a major foreign bank which in either case has a Credit Rating of at least “A” by S&P or “A2” by Moody’s and which is satisfactory to Secured Party in Secured Party’s reasonable discretion Method for Other Eligible Collateral Party A: _________________________ Party B: _________________________ Time Close of Business 1 p.m. Eastern Prevailing Time  Other: 12:00 noon, Eastern Prevailing Time  5 p.m. Eastern Prevailing Time Other __________________ Prevailing Time Threshold  Flat amounts Party A: __________________________ Party B: __________________________ Amount Party B: US$10,000 Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 30  Packet Pg. 142 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 2 Adopted October 9, 2003 Eligibility Requirements to Hold Cash Party A: An Event of Default has not occurred with respect to Party A. Party B: N/A Requirements The Custodian is a Bank (as defined in the Federal Deposit Insurance Act) whose rating with respect to its long term unsecured, unsubordinated indebtedness is at least A- by S&P or A3 by Moody's. As used herein: “Moody’s” shall mean Moody’s Investors Service, Inc., or its successor. “S&P” shall mean Standard & Poor’s Ratings Group, or  OPTION A for CSA Paragraphs 4, 5 and 6 – OR – OPTION B for CSA Paragraphs 4, 5 and 6 (Exhibit A for elections is attached.) Special Provisions IN WITNESS WHEREOF, the parties hereto have executed the first page of this CSA in duplicate. JPMORGAN CHASE BANK, N.A. PARTY NAME CITY OF PALO ALTO SIGNATURE PRINTED NAME TITLE DATE CITY OF PALO ALTO CITY OF PALO ALTO CITY OF PALO ALTO Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 31  Packet Pg. 143 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 3 Adopted October 9, 2003 GENERAL TERMS AND CONDITIONS of the CREDIT SUPPORT ADDENDUM to the BASE CONTRACT FOR PURCHASE AND SALE OF NATURAL GAS Paragraph 1. Purpose This CSA constitutes an Addendum to that certain Base Contract for Sale and Purchase of Natural Gas, as identified on the front page herein, between the parties (“Base Contract”), and supplements, forms part of, and amends the Base Contract affecting transactions thereunder. Capitalized terms used in this CSA that are not herein defined will have the meanings ascribed to them in the Base Contract. In the event of a conflict between the terms of this CSA and the Base Contract, the terms of this CSA shall apply for the purposes of this CSA. The terms set forth below shall have the meanings ascribed to them below. Other terms are also defined elsewhere in the Base Contract and shall have the meanings ascribed to them therein. Paragraph 2. Definitions. As used in this CSA: “Cash” shall mean United States Dollars. “Close of Business” shall have the meaning set forth in the elections on Page 1 herein. "Collateral Requirement" shall have the meaning set forth in Paragraph 3 herein. "Collateral Threshold" shall mean, with respect to a party, the amount, if any, set forth in the elections on Page 1 herein for such party; provided, however, that the Collateral Threshold for a party that is a Defaulting Party shall be zero (0) upon the occurrence and during the continuance of an Event of Default. "Credit Support Default" shall have the meaning set forth in Paragraph 10 herein. “Credit Support Provider”, if applicable, shall mean the entity set forth in the elections on Page 1 herein. “Custodian” shall mean an entity that meets the Custodian Requirements set forth in the elections on Page 1 herein. "Defaulting Party" shall have the meaning set forth in Paragraph 10 herein. "Demand Date" shall mean, with respect to a party's (i) demand for the Transfer of Eligible Collateral pursuant to Paragraph 4 herein, (ii) demand for Reduction or Substitution of Posted Collateral pursuant to Paragraph 5 herein, and/or (iii) demand for Disputed Calculations pursuant to Paragraph 6 herein: (a) the date on which a demand is made, if such demand is received prior to the Notification Time on a Business Day; or (b) the following Business Day if a demand is made on a non-Business Day or after the Notification Time on a Business Day. "Eligible Collateral" shall have the meaning set forth in the elections on Page 1 herein. "Exposure" shall mean the Net Settlement Amount, as calculated by the Secured Party in good faith and in a commercially reasonable manner, that the Pledging Party would owe to the Secured Party if an Early Termination Date had been designated as of the date of such calculation as provided for in Section 10 of the Base Contract; provided that such calculations shall be at the mid point between the bid price and the offer price. "Interest Amount" shall mean the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Cash held by the Secured Party on that day, determined for each such day as follows: (x) the amount of Cash on that day; multiplied by (y) the Interest Rate for that day: divided by (z) 360. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 32  Packet Pg. 144 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 4 Adopted October 9, 2003 "Interest Period" shall mean the period from (and including) the last Business Day on which an Interest Amount was Transferred (or if no Interest Amount has yet been Transferred, the Business Day on which Cash was Transferred to the Secured Party) to (but excluding) the Business Day on which the current Interest Amount is to be Transferred. "Interest Rate" shall have the meaning set forth in the elections on Page 1 herein. "Letter of Credit" shall have the meaning set forth in Paragraph 7 (a) herein. “Letter of Credit Default” shall have the meaning set forth in Paragraph 7(b) herein. “Minimum Transfer Amount” shall mean the amount set forth in the elections on Page 1 herein for a party. “Notification Time” shall have the meaning set forth in the elections on Page 1 herein. “Notice” shall have the meaning set forth in Paragraph 9 herein. “Pledging Party” shall have the meaning set forth in Paragraph 3 herein. "Posted Collateral" shall mean (1) all Eligible Collateral and all proceeds thereof that have been Transferred to or received by the Secured Party hereunder and not Transferred to the Pledging Party pursuant to Paragraph 4 or released by the Secured Party, (2) any Interest Amount or portion thereof held by the Secured Party and not Transferred pursuant to Paragraph 8(c), and (3) any Cash received and held by the Secured Party after drawing on any Letter of Credit. "Reference Market Maker" shall mean a leading dealer in the relevant market that is not an affiliate of either party selected by a party determining any disputed calculations pursuant to Paragraph 6 herein in a commercially reasonable manner from among dealers which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit. “Rounding Amount” shall mean the amount set forth in the elections on Page 1 herein for a party. “Secured Party” shall have the meaning set forth in Paragraph 3(b) herein. "Letter of Credit Issuer Requirements" shall have the meaning set forth in the elections on Page 1 herein. "Transfer” or “Transferred" shall mean, with respect to any Eligible Collateral, Posted Collateral, or Interest Amount, and in accordance with the instructions of the appropriate party: (i) in the case of Cash, payment or delivery by wire transfer in immediately available federal funds into one or more bank accounts set forth on Page 1 herein (or as otherwise specified in a demand Notice); (ii) in the case of Letters of Credit, delivery of the Letter of Credit by the Pledging Party to the Secured Party at the address specified in this CSA (or as otherwise specified in a demand Notice) or delivery of an executed amendment to such Letter of Credit (extending the term or increasing the amount available to the Secured Party thereunder) by the Pledging Party, to the Secured Party; and for purposes of Paragraph 5, return of the Letter of Credit by the Secured Party to the Pledging Party or delivery of an executed amendment (which amendment shall be given by the Pledging Party to the Secured Party) to the Letter of Credit in form and substance satisfactory to the Secured Party, reducing the amount available to the Secured Party thereunder, in each case to the address specified in the applicable demand letter or this CSA; and (iii) in the case of any other Eligible Collateral, the Transfer methodology specified by the parties in the elections on Page 1 herein. (iv) in any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit, the deadlines set forth in Paragraph 7 (h). (v) In connection with each Transfer of any Eligible Collateral to the Secured Party pursuant to this CSA, the Secured Party will, upon request of the Pledging Party, provide a receipt in form and substance reasonably satisfactory to the Pledging Party showing the Eligible Collateral Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 33  Packet Pg. 145 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 5 Adopted October 9, 2003 Transferred to it. In connection with each Transfer of any Posted Collateral to the Pledging Party pursuant to this CSA, the Pledging Party will, upon request of the Secured Party, provide a receipt in form and substance reasonably satisfactory to the Secured Party showing the Posted Collateral Transferred to it. “Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit Default shall apply with respect to such Letter of Credit or (ii) 20 or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0). "Value" shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn under the Letter of Credit held by the Secured Party. Paragraph 3. Calculation of Collateral Requirement. On any Business Day, the "Collateral Requirement" for a party (the “Pledging Party”) means the Secured Party’s Exposure minus the sum of: (a) the Pledging Party's Collateral Threshold; plus (b) the Value of all Posted Collateral then held by the party other than the Pledging Party (the “Secured Party”), and any accrued Interest Amount that has not yet been Transferred to the Pledging Party; provided, however, that, the Collateral Requirement of the Pledging Party will be deemed to be zero (0) whenever the calculation of such Pledging Party’s Collateral Requirement yields a number less than zero (0). OPTION A: Paragraphs 4, 5, and 6 If the parties select Option A of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 shall apply. Paragraph 4. Transfer of Eligible Collateral. On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date has occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default or an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer exists prior to the time that such Eligible Collateral is required to be provided hereunder. Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving effect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral, (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing, (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing, and (iv) no Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 34  Packet Pg. 146 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 6 Adopted October 9, 2003 Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction. (b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party of the substitute Eligible Collateral, the Secured Party shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the second Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party prior to, the release of the Posted Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, warranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Posted Collateral by the Secured Party to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Posted Collateral. Paragraph 6. Disputed Calculations. (a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secured Party of the existence and nature of the dispute not later than the Close of Business on the Demand Date, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement as determined, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the second Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the third (3rd) Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Time on the third (3rd) Business Day following the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4th) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5th) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as originally demanded by the Secured Party. (b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 35  Packet Pg. 147 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 7 Adopted October 9, 2003 with Paragraph 5 and in an amount equal to the Secured Party's own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement as determined in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the second (2nd) Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the third (3rd) Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Time on the third (3rd) Business Day after the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4th) Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5th) Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party's demanded reduction. OPTION B: Paragraphs 4, 5, and 6 If the parties select Option B of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 and the related timing requirements and party information set forth in the Exhibit A to this CSA shall apply. Paragraph 4. Transfer of Eligible Collateral. On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date has occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the (‘A’) Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default or an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer exists prior to the time that such Eligible Collateral is required to be provided hereunder. Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving effect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral; (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing; (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing; and (iv) no Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the (‘B’) Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 36  Packet Pg. 148 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 8 Adopted October 9, 2003 the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction. (b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value on the (‘C’) Business Day following the Demand Date thereof (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party and/or its Custodian of the substitute Eligible Collateral, the Secured Party and/or its Custodian shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the (‘D’) Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party and/or its Custodian simultaneously with, or has been Transferred to the Secured Party and/or its Custodian prior to, the release of the Eligible Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, warranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Eligible Collateral by the Secured Party and/or its Custodian to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Eligible Collateral. Paragraph 6. Disputed Calculations. (a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secured Party of the existence and nature of the dispute not later than the Close of Business on the (‘A’) Business Day following the Demand Date that the demand for Eligible Collateral is made by the Secured Party pursuant to Paragraph 4, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the (‘E’) Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the (‘F’) Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The (‘A1’) Party shall inform the (‘A2’) Party of the quotation it has obtained, if any, by the Notification Time on the (‘G’) Business Day following the Demand Date. The (‘A3’) Party shall inform the (‘A4’) Party of the results of such recalculation in reasonable detail by the Notification Time on the (‘H’) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the (‘I’) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as demanded by the Secured Party. (b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the (‘J’) Business Day following the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance with Paragraph 5 and in an amount equal to the Secured Party's own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 37  Packet Pg. 149 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 9 Adopted October 9, 2003 two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the (‘K’) Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the (‘L’) Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Pledging Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The (‘A5’) Party shall inform the (‘A6’) Party of the quotation it has obtained, if any, by the Notification Time on the (‘M’) Business Day after the Demand Date. The (‘A7’) Party shall inform the (‘A8’) Party of the results of such recalculation in reasonable detail by the Notification Time on the (‘N’) Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the (‘O’) Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party's demanded reduction. Paragraph 7. Letters of Credit. Eligible Collateral provided in the form of a Letter of Credit shall be subject to the following provisions. (a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the requirements of a Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein in a form reasonably acceptable to the Secured Party. (b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein, (ii) the issuer of such Letter of Credit goes bankrupt; (iii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effect (other than in accordance with its terms) prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Letter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA. Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof (or the fifth (5) Business Day after the occurrence thereof if and only if clause (i) under the definition of Letter of Credit Default applies). (c) Unless otherwise agreed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit, (ii) Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the expiration of the outstanding Letter of Credit, and (iii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), (ii), or (iii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0). (d) As one method of providing Posted Collateral, the Pledging Party may increase the amount of an outstanding Letter of Credit or establish one or more additional Letters of Credit. (e) Upon or at any time after the occurrence of an Event of Default with respect to the Pledging Party and/or the designation of an Early Termination Date by the Secured Party, the Secured Party may draw on the entire undrawn portion of any outstanding Letter(s) of Credit upon submission to the bank issuing such Letter of Credit in accordance with the specific requirements of the Letter of Credit. Cash proceeds received from drawing upon the Letter of Credit shall be deemed Posted Collateral as security for the Pledging Party’s obligations to the Secured Party and the Secured Party shall have the rights and remedies set forth in this CSA with respect to such Cash proceeds. Notwithstanding the Secured Party’s receipt of Cash under the Letter of Credit, the Pledging Party shall remain liable (i) for any failure to Transfer sufficient Posted Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 38  Packet Pg. 150 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 10 Adopted October 9, 2003 Collateral, and (ii) for any amounts owing to the Secured Party and remaining unpaid after the application of the amounts so drawn by the Secured Party. (f) A Pledging Party may substitute a Letter of Credit for one or more other outstanding Letter(s) of Credit issued for the benefit of the Secured Party, provided that the Value of such substitute Letter of Credit shall be at least equal to the Value of the Letter(s) of Credit being replaced, and provided further that no Letter of Credit shall be canceled unless and until the Letter of Credit to be substituted therefor shall have been validly executed, issued and Transferred for the benefit of the Secured Party in accordance with applicable law. (g) In all cases, the costs and expenses incurred by the Pledging Party to establish, renew, substitute, cancel, and/or increase the amount of (as the case may be) a Letter of Credit shall be borne by the Pledging Party. (h) In any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit (which permits draws based on a facsimile copy), the deadlines set forth in this CSA for providing such collateral to the other party may be met by providing a facsimile copy of the Letter of Credit with an original transmitted by overnight courier for delivery on the next Business Day. Paragraph 8. Care and Use of Cash. Eligible Collateral provided in the form of Cash shall be subject to the following provisions. (a) Eligibility to Hold Cash. (i) If a party is not eligible to hold Cash as set forth in the elections on Page 1 herein, then such Cash shall be held in a Collateral Account in accordance with the provisions of Paragraph 8(e). (ii) The Secured Party or its Custodian will be entitled to hold Cash provided that the following conditions, as applicable, are satisfied: (1) the Secured Party is not a Defaulting Party, (2) the Secured Party or its Credit Support Provider, if applicable, meets the Eligibility Requirements to Hold Cash requirements set forth in the elections on Page 1 herein, (3) Cash shall be held only in any jurisdiction within the United States, and (4) the Custodian meets the Custodian Requirements set forth in the elections on Page 1 herein. If a party or its Custodian is not eligible, or subsequently becomes ineligible, to hold Posted Collateral pursuant to this Section, then it shall be considered a “Downgraded Party” or a “Downgraded Custodian”, as the case may be, and Posted Collateral shall be maintained in accordance with Paragraph 8(e). (iii) Upon Notice by the Secured Party to the Pledging Party of the appointment of a Custodian, the Pledging Party’s obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Cash by a Custodian will be deemed to be the holding of Cash by the Secured Party for which the Custodian is acting. The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions. (b) Use of Cash. Notwithstanding the provisions of applicable law, if the Secured Party is eligible to hold cash in accordance with Paragraph 8(a), is not a Defaulting Party and no Early Termination Date has occurred or been designated by the Pledging Party as a result of an Event of Default with respect to the Secured Party, then the Secured Party shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Cash it holds, free from any claim or right of any nature whatsoever of the Pledging Party, including any equity or right of redemption by the Pledging Party. (c) Interest Payments on Cash. So long as no Event of Default with respect to the Pledging Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Pledging Party exist) has occurred or been designated as the result of an Event of Default with respect to the Pledging Party and to the extent that an obligation to Transfer Posted Collateral would not be created or increased by the Transfer, the Secured Party will upon written request Transfer to the Pledging Party, in lieu of any interest or other amounts paid or deemed to have been paid with respect to the Cash (all of which may be retained by the Secured Party), the Interest Amount on the third Business Day of each calendar month. On or after the occurrence of an Event of Default with respect to the Pledging Party or an Early Termination Date as a result of an Event of Default with respect to the Pledging Party, the Secured Party shall retain any such Interest Amount as additional Eligible Collateral hereunder until the obligations of the Pledging Party under the Base Contract have been satisfied. (d) Care of Cash. Without limiting the Secured Party’s rights under Paragraph 8(b), the Secured Party will exercise reasonable care to assure the safe custody of all Cash held by it as Posted Collateral to the extent Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 39  Packet Pg. 151 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 11 Adopted October 9, 2003 required by applicable law, and in any event the Secured Party will be deemed to have exercised reasonable care if it exercises at least the same degree of care as it would exercise with respect to its own property. Except as specified in the preceding sentence, the Secured Party will have no duty with respect to Cash, including, without limitation, any duty to enforce or preserve any rights pertaining thereto. (e) Holding of Cash by a Custodian. The provisions of Paragraph 8(b) will apply to the parties; provided, however, that if a party or its Custodian is not eligible to hold Cash pursuant to Paragraph 8(a) (the event that caused it or its Custodian, if any, to be ineligible to hold Cash shall be a “Credit Rating Event”; if such Credit Rating Event occurs with respect to a party, such party shall be the “Downgraded Party”; and if such Credit Rating Event occurs with respect to a party’s Custodian, such Custodian shall be the “Downgraded Custodian”), then: (1) the provisions of Paragraph 8(b) will not apply with respect to the Downgraded Party as the Secured Party for so long as either the Secured Party or its Custodian, if any, remain a Downgraded Party or a Downgraded Custodian, respectively, and (2) the Downgraded Party shall be required to deliver (or cause the Downgraded Custodian to deliver, as the case may be) by the Close of Business on the second (2nd) Business Day following such Credit Rating Event all Cash in its possession or held on its behalf (i) to a Custodian that meets the Custodian Requirements, and (ii) to a segregated, safekeeping or custody account (“Collateral Account”) within such Custodian with the title of the Collateral Account indicating that the property contained therein is being held as Posted Collateral for the Downgraded Party; provided, that, if the Credit Rating Event occurs with respect to a party’s Custodian that is holding Posted Collateral on behalf of such party, then such Downgraded Custodian may also deliver such Posted Collateral to such party if such party is not a Downgraded Party, and (iii) the parties agree to enter into a control agreement (“Control Agreement”) with the Custodian maintaining the Collateral Account. The Control Agreement shall be in such form as shall be reasonably acceptable to each of the parties and shall provide for such items as the timing and release of the funds in the Collateral Account and the investment and reinvestment of Cash held in the Collateral Account. The Control Agreement shall further provide that Custodian shall serve as Custodian with respect to the Posted Collateral in the Collateral Account, and shall hold such Posted Collateral in accordance with the terms of this CSA and for the security interest of the Downgraded Party and, subject to such security interest, for the ownership of the non-Downgraded Party. The parties further agree that notwithstanding the fact that Cash is being held by a Custodian in a Collateral Account pursuant to a Control Agreement, the Downgraded Party shall be required to make interest payments to the non-Downgraded Party in an amount equal to the Interest Amount in accordance with the provisions of Paragraph 8(c). Paragraph 9. Notices (a) “Notice” shall mean a notice or other communication in respect of this CSA. Notice may be given in any manner set forth below to the address or number or in accordance with the electronic messaging system details provided on Page 1 of this CSA and will be deemed effective as indicated: (i) if in writing and delivered in person or by courier, on the Business Day it is delivered; (ii) if sent by facsimile transmission, on the date that transmission is received by the recipient in legible form (which may be evidenced by a transmission report generated by the sender's facsimile machine) unless such facsimile transmission is received on a non-Business Day or after the Close of Business then such facsimile shall be deemed to have been received on the next following Business Day. (iii) if sent by certified or registered mail or the equivalent (return receipt requested), on the Business Day that mail is delivered or its delivery is attempted; or (iv) if sent by electronic messaging system, on the date that electronic message is received, unless such electronic message is received on a non-Business Day or after the Close of Business, then such electronic message shall be deemed to have been received on the next following Business Day. (b) Any other Notice, including but not limited to, Notice of an Event of Default, must be given pursuant to Section 9 of the Base Contract. Paragraph 10. Credit Support Default (a) A “Credit Support Default" shall exist with respect to a party (the "Defaulting Party") if: (i) a party fails (or fails to cause its Custodian, as applicable) to make, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to be made by it, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 40  Packet Pg. 152 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 12 Adopted October 9, 2003 (ii) a party fails to comply with or perform any material agreement or obligation provided for in this CSA, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or (iii) a party or its Custodian fails to comply with any of the obligations under Paragraph 8 herein and the failure continues for one (1) Business Day after notice of the failure is given to that party. (b) Credit Support Default shall constitute and have the effect of an Event of Default set forth in Section 10.2 (vi) of the Base Contract. Paragraph 11. Representations and Warranties. Each party continuously represents and warrants to the other party that: (a) it has the power and authority under the law of the jurisdiction of its organization or incorporation and under its organizational and constituent documents to grant to the Secured Party a valid, enforceable, first-priority security interest in, and lien on, all Posted Collateral (other than Letters of Credit) that it Transfers as the Pledging Party, and has taken all necessary actions to authorize the granting and perfection of that security interest and lien; (b) as of each date on which it, as the Pledging Party, Transfers Eligible Collateral to the Secured Party or to any agent of the Secured Party for the benefit of the Secured Party (or, in the case of after-acquired Posted Collateral, at the time the Secured Party or its agent acquires rights therein), it has title to, and will be the sole owner of such Eligible Collateral, free and clear of any security interest, lien, pledge, charge, encumbrance, or other interests or restrictions other than the security interest granted to the Secured Party hereby; (c) the Secured Party will have a valid and perfected first-priority security interest in, and lien on, all Posted Collateral (other than Letters of Credit) upon receipt thereof; (d) the performance by it of its obligations under this CSA will not result in the creation of any security interest, lien or other encumbrance on any Posted Collateral other than the security interest and lien granted pursuant to this CSA; and (e) in connection with the delivery, issuance, renewal, substitution, or increase (as the case may be) which constitutes a Transfer of a Letter of Credit, such Letter of Credit is the legal, valid and binding obligation of the Issuer thereof, enforceable in accordance with its terms. Paragraph 12. Certain Rights and Remedies. (a) Secured Party’s Rights and Remedies. If at any time (i) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Early Termination Date has occurred or been designated as a result of an Event of Default with respect to the Pledging Party, then the Secured Party may do any one or more of the following: (x) exercise any of the rights and remedies of a secured party with respect to the Posted Collateral, including any such rights and remedies under law then in effect; (y) exercise its rights of setoff against any and all property of the Pledging Party in the possession of the Secured Party or its agent; and (z) draw on any outstanding Letter of Credit issued for its benefit under its terms and this CSA. The Secured Party shall either (y) apply the proceeds of the Posted Collateral realized upon the exercise of any such rights or remedies to reduce the Pledging Party's obligations under the Base Contract or this CSA (the Pledging Party remaining liable for any amounts owing to the Secured Party after such application), subject to the Secured Party’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full and/or (z) hold such proceeds as collateral security for the Pledging Party's obligations under the Base Contract or this CSA, subject to the Secured Party’s obligation to return the proceeds after such obligations are satisfied in full. (b) Pledging Party's Rights and Remedies. If at any time an Early Termination Date has occurred or been designated as the result of an Event of Default with respect to the Secured Party, then: (i) the Secured Party will be obligated immediately to Transfer all Posted Collateral and the Interest Amount, if any, to the Pledging Party; and (ii) the Pledging Party may do any one or more of the following: (x) exercise any of the rights and remedies of a pledgor with respect to the Posted Collateral, including any such rights and remedies under law then in effect; (y) to the extent that the Posted Collateral or the Interest Amount is not Transferred to the Pledging Party as required in (i) above, setoff amounts payable by the Pledging Party to the Secured Party against the Posted Collateral held by the Secured Party or to the extent its rights to setoff are not exercised, withhold payment of any remaining amounts payable by the Pledging Party, up to the value of any remaining Posted Collateral held by the Secured Party, until the Posted Collateral is Transferred to the Pledging Party; and/or (z) exercise rights and remedies available to the Pledging Party under the terms of any Letter of Credit. Paragraph 13. General. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 41  Packet Pg. 153 of 412  ___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 13 Adopted October 9, 2003 (a) To secure its obligations under the Base Contract and all outstanding transactions, each party, as the Pledging Party, hereby grants to the other party, as the Secured Party, a present and continuing first-priority security interest in, and lien on (and right of setoff against), all Posted Collateral (other than Letters of Credit) Transferred to the Secured Party hereunder. Each party agrees to take such action as the other party reasonably requires in order to perfect or maintain the other party’s first-priority continuing security interest in, and lien on (and right of setoff against), such Posted Collateral. (b) Each party will pay its own costs and expenses in connection with performing its obligations under this CSA and neither party will be liable for any costs or expenses incurred by the other party in connection herewith. (c) This CSA has been and is made solely for the benefit of the parties and their permitted successors and assigns, and no other entity shall acquire or have any right under or by virtue of this CSA. (d) No failure or delay by either party hereto in exercising any right, power, privilege, or remedy hereunder shall operate as a waiver thereof. (e) The headings in this CSA are for convenience of reference only, and shall not affect the meaning or construction of any provision thereof. DISCLAIMER: The purposes of this CSA are to facilitate trade, avoid misunderstandings and make more definite the terms of margining arrangements related to contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this CSA by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CSA ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CSA OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CSA ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CSA. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 42  Packet Pg. 154 of 412  Execution Version SPECIAL PROVISIONS TO CREDIT SUPPORT ADDENDUM DATED AS OF [ ], 2026 TO THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BETWEEN JPMORGAN CHASE BANK, N.A. (“Party A”) AND CITY OF PALO ALTO (“Party B”) DATED AS OF [ ], 2026 These Special Provisions amend and form part of the Credit Support Addendum (“CSA”) dated as of [ ], 2026 to that certain Base Contract for Sale and Purchase of Natural Gas (“Base Contract”) published by the North American Energy Standards Board, Inc. (“NAESB”) effective between the parties as of [ ], 2026. In the event of any inconsistency between the CSA and these Special Provisions, these Special Provisions shall govern. Except as amended herein, the Base Contract, the General Terms and Conditions thereto, and any Special Provisions to the Base Contract shall remain in full force and effect. All capitalized terms used in these Special Provisions not otherwise defined herein shall have the meaning set forth in the Base Contract. References to sections not included herein shall be to those sections set forth in the Base Contract. Elections on Page 1 of CSA [X]. The following shall be the “Rating Matrix” for each party or, if applicable, its Credit Support Provider and shall define each party’s Collateral Threshold: “Collateral Threshold” means, with respect to a party, the amounts determined on the basis of the lower of the Credit Ratings set forth in the following table, provided, however, that if (i) a party has no Credit Rating, or (ii) an Event of Default or Potential Event of Default has occurred and is continuing with respect to such party, such party’s Collateral Threshold shall be U.S.$0: (S&P ) RATING (Moody’s) Party A Party B Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 43  Packet Pg. 155 of 412  Paragraph 2 – Definitions 1. The definition of “Interest Period” shall be amended and restated in its entirety as follows: “Interest Period” means each calendar month, provided that (i) if this CSA is not entered into on the first day of a calendar month, the first interest period will be the period from (and including) the day on which this CSA is entered into to (and including) the last day of such calendar month and (ii) if an Early Termination Date has been designated or deemed to occur in relation to a party, the Interest Period shall mean the period from (and including) the first day of the calendar month in which such Early Termination Date occurred to (but excluding) such Early Termination Date. 2. The definition of “Posted Collateral” shall be amended by replacing the phrase “Paragraph 8(c)” in the fourth line thereof with the phrase “Paragraph 8(c)(i)”. 3. The definition of “Transfer” shall be amended by replacing the words “or Interest Amount” in the first and second lines thereof with “positive Interest Amount, or AV Negative Interest Amount”. 4. The definition of “Valuation Percentage” shall be amended and restated in its entirety as follows: “Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided that with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit Default shall apply with respect to such Letter of Credit or (ii) twenty (20) or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0). 5. The definition of “Value” shall be amended and restated in its entirety as follows: “Value” shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided that with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn by the Secured Party under the Letter Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 44  Packet Pg. 156 of 412  of Credit held by the Secured Party; provided, however, that the Value of a Letter of Credit shall be zero if a Letter of Credit Default exists with respect to such Letter of Credit or twenty (20) or fewer Business Days remain prior to the expiration of such Letter of Credit. 6. The following definitions shall be added to the CSA: “AV Negative Interest Amount” means, in respect of any negative Interest Amount, the absolute value of such negative Interest Amount. “Credit Rating” means, with respect to a party, the rating assigned by either S&P or Moody’s to the long term, unsecured and unsubordinated indebtedness of such party, or, if applicable, the Credit Support Provider of such party. “Moody’s” means Moody’s Investors Service, Inc. or its successor. “Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. “S&P” means S&P Global Ratings or its successor. Paragraph 3 – Calculation of Collateral Requirement 1. Paragraph 3 of the CSA shall be amended and restated in its entirety as follows: “On any Business Day, the “Collateral Requirement” for a party (the “Pledging Party”) means the Secured Party’s Exposure minus the sum of: (a) the Pledging Party’s Collateral Threshold; plus (b) the Value of all Posted Collateral (as adjusted for any accrued positive Interest Amount or AV Negative Interest Amount that has not yet been Transferred to the Pledging Party or Secured Party, respectively) then held by the party other than the Pledging Party (the “Secured Party”); provided, however, that, the Collateral Requirement of the Pledging Party will be deemed to be zero (0) whenever the calculation of such Pledging Party’s Collateral Requirement yields a number less than zero (0).” Option A, Paragraph 4 – Transfer of Eligible Collateral 1. The second line of Paragraph 4 is amended by inserting the words “or Potential Event of Default” between “no Event of Default” and “with respect to the Secured Party”. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 45  Packet Pg. 157 of 412  Option A, Paragraph 5 – Reduction and Substitution of Posted Collateral 2. The sixth line of Paragraph 5(a) is amended by inserting the words “or Potential Event of Default” between “no Event of Default” and “with respect to the Pledging Party”. 3. The second line of Paragraph 5(b) is amended by inserting the words “or Potential Event of Default” between “an Event of Default” and “with respect to the Pledging Party”. 4. The word “will” in the fifteenth line of Paragraph 5(b) shall be replaced with the word “with”. Option A, Paragraph 6 – Disputed Calculations 5. Paragraph 6(a) shall be deleted and replaced in its entirety with the following: (a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secured Party of the existence and nature of the dispute not later than the Close of Business on the Business Day following the Demand Date, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party’s own calculation of its Collateral Requirement as determined, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the date of notification of the dispute (the “Resolution Time”), then the amount of the Exposure shall be recalculated with the Secured Party requesting quotations from four (4) Reference Market-Makers (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s original calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Resolution Time. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, upon demand. If the Pledging Party fails to dispute the amount of the Collateral Requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement, as originally demanded by the Secured Party. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 46  Packet Pg. 158 of 412  6. Paragraph 6(b) shall be deleted and replaced in its entirety with the following: (b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the Business Day following the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance with Paragraph 5 and in an amount equal to the Secured Party’s own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement as determined in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the date of notification of the dispute (the “Resolution Time”), then the Secured Party’s Exposure shall be recalculated by Pledging Party requesting quotations from four (4) Reference Market-Maker (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Pledging Party’s original calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Resolution Time. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, upon demand. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party’s demanded reduction. Paragraph 7 – Letters of Credit 1. Paragraph 7(a) shall be amended and restated in its entirety as follows: (a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the Letter of Credit Issuer Requirements set forth in the elections in Page 1 herein utilizing the form set forth in Schedule 1 attached to the Special Provisions hereto, with such changes to the terms in that form as the issuing bank may require and as may be acceptable to the party in whose favor the letter of credit is issued, in its reasonable discretion. 2. Paragraph 7(b) shall be amended and restated in its entirety as follows: Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 47  Packet Pg. 159 of 412  (b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein; (ii) any event analogous to an event specified in Paragraph 10.2(i)-(v) of the Base Contract shall occur with respect to the issuer of such Letter of Credit; (iii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effect prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Letter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA. Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof. 3. Paragraph 7(c) shall be amended and restated in its entirety as follows: (c) Unless otherwise agreed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) either (a) at least thirty (30) Business Days prior to the then-current expiration date (the “Rollover Date”), renew or cause the renewal of each outstanding Letter of Credit for a period of at least one year from the Rollover Date or (b) if each such Letter of Credit is not renewed prior to the date that is thirty (30) Business Days prior to the Rollover Date, Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the Rollover Date, and (ii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), or (ii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0). Any change to an outstanding Letter of Credit other than an increase in amount or extension thereof will become effective only upon the written consent of the Secured Party. 4. The second line of Paragraph 7(e) shall be amended by adding the words “and/or in the event that an outstanding Letter of Credit is not renewed or substituted at least twenty (20) Business Days prior to the Rollover Date” between “by the Secured Party” and “,”. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 48  Packet Pg. 160 of 412  5. The fourth line of Paragraph 7(e) shall be amended by adding the words “by the Secured Party” between “received” and “from drawing”. 6. Paragraph 7(g) shall be amended and restated in its entirety as follows: (g) In all cases, all costs and expenses relating to a Letter of Credit shall be borne by the Pledging Party. Paragraph 8 – Care and Use of Cash 1. The second line of Paragraph 8(b) is amended by inserting the words “, no Event of Default or Potential Event of Default has occurred and is continuing with respect to the Secured Party” between “not a Defaulting Party” and “and no Early Termination Date”. 2. Paragraph 8(c) is deleted and replaced in its entirety with the following: (c) Interest Payments on Cash. (i) If the Interest Amount for an Interest Period is a positive number, then so long as no Event of Default or Potential Event of Default with respect to the Pledging Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Pledging Party exist) has occurred or been designated as the result of an Event of Default with respect to the Pledging Party and to the extent that an obligation to Transfer Posted Collateral would not be created or increased by the Transfer, the Secured Party will Transfer to the Pledging Party on or prior to the third Business Day of each calendar month, in lieu of any interest or other amounts paid or deemed to have been paid with respect to the Cash (all of which may be retained by the Secured Party), the Interest Amount as calculated by the Secured Party on the first Business Day of each calendar month with respect to the immediately preceding Interest Period. On or after the occurrence of an Event of Default or Potential Event of Default with respect to the Pledging Party or an Early Termination Date as a result of an Event of Default with respect to the Pledging Party, the Secured Party shall retain any such Interest Amount as additional Eligible Collateral hereunder until the obligations of the Pledging Party under the Base Contract have been satisfied. (ii) If the Interest Amount for an Interest Period is a negative number, then so long as no Event of Default or Potential Event of Default with respect to the Secured Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 49  Packet Pg. 161 of 412  Secured Party exist) has occurred or been designated as the result of an Event of Default with respect to the Secured Party, the Secured Party will calculate the AV Negative Interest Amount on the first Business Day of each calendar month with respect to the immediately preceding Interest Period and shall provide Notice of such AV Negative Interest Amount to the Pledging Party on the same Business Day. The Pledging Party will Transfer to the Secured Party such AV Negative Interest Amount on or prior to the second Business Day following such Notice. If any Posted Collateral is in the form of Cash in the same currency as the AV Negative Interest Amount, any AV Negative Interest Amount or portion thereof not Transferred pursuant to this subsection (ii) of this Paragraph 8(c) (the “Untransferred Interest Amount”) will constitute a reduction of Posted Collateral in the form of such Cash; provided that if the amount of Posted Collateral which is comprised of such Cash is less than the Untransferred Interest Amount, such reduction shall only be to the extent of the amount of such Cash which is Posted Collateral and the Pledging Party shall remain obligated to Transfer the remainder of the Untransferred Interest Amount to the Secured Party. Any reduction of Posted Collateral in the form of Cash shall be deemed to be a Transfer and shall fulfill the Pledgor’s obligation to Transfer the AV Negative Interest Amount or related portion thereof to the Secured Party. 3. Paragraph 8(e) is deleted and replaced in its entirety with the following: (e) Holding of Cash by a Custodian. The provisions of Paragraph 8(b) will apply to the parties; provided, however, that if a party or its Custodian is not eligible to hold Cash pursuant to Paragraph 8(a) (the event that caused it or its Custodian, if any, to be ineligible to hold Cash shall be a “Credit Rating Event”; if such Credit Rating Event occurs with respect to a party, such party shall be the “Downgraded Party”; and if such Credit Rating Event occurs with respect to a party’s Custodian, such Custodian shall be the “Downgraded Custodian”), then: (1) the provisions of Paragraph 8(b) will not apply with respect to the Downgraded Party as the Secured Party for so long as either the Secured Party or its Custodian, if any, remain a Downgraded Party or a Downgraded Custodian, respectively, and (2) the Downgraded Party shall be required to deliver (or cause the Downgraded Custodian to deliver, as the case may be) by the Close of Business on the fifth (5th) Business Day following such Credit Rating Event all Cash in its possession or held on its behalf (i) to a Custodian that meets the Custodian Requirements, and (ii) to a segregated, safekeeping or custody account (“Collateral Account”) within such Custodian with the title of the Collateral Account indicating that the property contained therein is being held as Posted Collateral for the Downgraded Party; provided, that, if the Credit Rating Event occurs with respect to a party’s Custodian that is holding Posted Collateral on behalf of such party, then such Downgraded Custodian may also deliver such Posted Collateral to such party if such party is not a Downgraded Party. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 50  Packet Pg. 162 of 412  Paragraph 10 – Credit Support Default 1. Paragraph 10(a) is amended and restated in its entirety as follows: (a) A “Credit Support Default” shall exist with respect to a party (the “Defaulting Party”) if: (i) a party fails (or fails to cause its Custodian, as applicable) to make, when due, any Transfer of Eligible Collateral, Posted Collateral, positive Interest Amount or AV Negative Interest Amount, as applicable, required to be made by it, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or (ii) a party or its Custodian fails to comply with any of the obligations under Paragraph 8 herein and the failure continues for five (5) Business Day after notice of the failure is given to that party; or (iii) a party fails to comply with or perform any material agreement or obligation provided for in this CSA (other than those specified in Paragraphs 10(a)(i) and (ii)), and such failure continues for thirty (30) days after Notice of that failure is provided to that party; or (iv) a Letter of Credit Default occurs with respect to the Letter of Credit provided by such party as Pledging Party. Paragraph 12 – Certain Rights and Remedies 1. Paragraph 12(a) is amended to insert the words “(including any obligation of the Pledging Party to Transfer any AV Negative Interest Amount to the Secured Party)” in the eleventh line thereof between the words “after such obligations” and “are satisfied in full”. 2. Paragraph 12(b) is amended to replace the words “Interest Amount” in the third and sixth lines thereof with the words “amount of any positive Interest Amount”. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 51  Packet Pg. 163 of 412  IN WITNESS WHEREOF, the parties hereto have executed this Credit Support Addendum in duplicate, as of the effective date written above. CITY OF PALO ALTO Approval by Mayor: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approved as to form: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by City Manager: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by Administrative Services Director: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 52  Packet Pg. 164 of 412  SCHEDULE 1 [THIS TEMPLATE IS FOR ISSUANCES OF LETTERS OF CREDIT IN PAPER FORM. ALTERNATIVELY, THE PARTIES MAY AGREE TO ISSUANCE VIA SWIFT MT760, IN WHICH CASE STANDARD SWIFT FIELDS AND CODES MAY BE USED AND COMMUNICATIONS, DRAWINGS AND TRANSFERS WILL BE VIA AUTHENTICATED SWIFT MESSAGES THROUGH JPMORGAN CHASE BANK, N.A. AS ADVISING BANK WITHOUT ANY REQUIREMENT TO PRESENT THE ORIGINAL LETTER OF CREDIT OR RELATED DOCUMENTS IN PAPER FORM] FORM OF LETTER OF CREDIT [BANK NAME and ADDRESS] Irrevocable Standby Letter of Credit No: [INSERT REFERENCE] Beneficiary: JPMorgan Chase Bank, N.A. DATE] Initial Expiration Date: [ one year after date of issuance] Applicant: City of Palo Alto As the Issuing Bank (“Issuer”), we, [Bank Name], hereby establish this irrevocable Standby Letter of Credit No. [INSERT REFERENCE] (this "Letter of Credit") in favor of the above- named beneficiary (“Beneficiary”) for the account of the above-named applicant (“Applicant”) in the amount of US$__________ (_________________ Million U.S. Dollars). Beneficiary may draw all or any portion of this Letter of Credit at any time and from time to time, and Issuer will make funds immediately available to Beneficiary upon presentation of Beneficiary’s draft(s) at sight in substantially the form attached hereto as Exhibit “A” (“Sight Draft”), drawn on Issuer and accompanied by this Letter of Credit. All Sight Drafts must be purportedly signed on behalf of Beneficiary, and the signator must indicate his or her title or other official capacity. No other documents will be required to be presented. Issuer will effect payment under this Letter of Credit within twenty-four (24) hours after presentment of any Sight Draft. Payment shall be made in U.S. Dollars with Issuer’s own funds in immediately available funds. Issuer will honor any Sight Draft presented in substantial compliance with the terms of this Letter of Credit at the Issuer’s letterhead office, the office located at [Bank Address], or any other full service office of the Issuer on or before the above-stated expiration date, as such Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 53  Packet Pg. 165 of 412  expiration date may be extended hereunder. Partial and multiple draws and presentations are permitted on any number of occasions. Following any partial draw, Issuer will endorse this Letter of Credit and return the original to Beneficiary. FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE TO BENEFICIARY BY PRESENTATION IN STRICT COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT ON OR BEFORE 5:00 P.M., NEW YORK TIME, ON OR BEFORE A BUSINESS DATE OF THE EXPIRATION DATE. FOR THE PURPOSES OF THIS LETTER OF CREDIT, “BUSINESS DAY” MEANS ANY DAY OTHER THAN A SATURDAY, SUNDAY, OR OTHER DAY ON WHICH COMMERCIAL BANKS ARE AUTHORIZED OR REQUIRED TO CLOSE IN THE STATE OF NEW YORK. This Letter of Credit is issued pursuant to the provisions of that certain NAESB Base Contract for Sale and Purchase of Natural Gas between Beneficiary and Applicant dated as of _______________, 20__ (as the same may have been or may be amended from time to time, the “Agreement”). Notwithstanding any reference in this Letter of Credit to the Agreement or any other documents, instruments or agreements, or references in the Agreement or any other documents, instruments or agreements to this Letter of Credit, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder. This Letter of Credit will be automatically extended each year without amendment for a successive period of one (1) year from the expiration date hereof, as extended, unless at least thirty (30) days prior to the expiration date, Issuer notifies Beneficiary by registered mail that it elects not to extend this Letter of Credit for such additional period. Notice of non-extension will be given by Issuer to Beneficiary at Beneficiary’s address set forth herein or at such other address as Beneficiary may designate to Issuer in writing at Issuer’s letterhead address. This Letter of Credit is freely transferable by Beneficiary in whole or in part, and the number of transfers is unlimited. Issuer shall effect any transfers immediately upon presentation to Issuer of this Letter of Credit and a completed written transfer request substantially in the form attached hereto as Exhibit "B." Such transfer will be effected at no cost to Beneficiary. Any transfer fees assessed by Issuer will be payable solely by Applicant, and the payment of any transfer fees will not be a condition to the validity or effectiveness of the transfer of this Letter of Credit. If the original Letter of Credit shall be lost or destroyed, this Letter of Credit may be transferred, in lieu of the original Letter of Credit, by you or one of your affiliates (reasonably acceptable to us) providing us with a commercially reasonable indemnity. THIS LETTER OF CREDIT MAY NOT BE TRANSFERRED TO ANY PERSON WITH WHICH U.S. PERSONS ARE PROHIBITED FROM DOING BUSINESS UNDER U.S. FOREIGN ASSETS CONTROL REGULATIONS OR OTHER APPLICABLE U.S. LAWS AND REGULATIONS Issuer waives any rights it may have, at law or otherwise, to subrogate to any claims which Beneficiary may have against Applicant or Applicant may have against Beneficiary. All commissions, expenses, and charges incurred with this Letter of Credit are for the account of the Applicant. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 54  Packet Pg. 166 of 412  This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LETTER OF CREDIT, BENEFICIARY SHALL HAVE THE OPTION TO PRESENT TO US EACH DOCUMENT REQUIRED UNDER THIS LETTER OF CREDIT AS AN ELECTRONIC OR PORTABLE DOCUMENT FORMAT (".PDF") ATTACHMENT TO AN EMAIL. TRANSMISSION MADE FROM BENEFICIARY'S EMAIL ADDRESS TO US AT OUR EMAIL ADDRESS [INSERT]; PROVIDED THAT SUCH EMAIL TRANSMISSION MUST CONTAIN THE FOLLOWING CERTIFICATION “(I) WE CERTIFY THAT WE ARE THE BENEFICIARY OF THE LETTER OF CREDIT INDICATED IN THE .PDF ATTACHMENT(S) AND (II) EACH DOCUMENT WE HAVE TRANSMITTED TO YOU VIA ELECTRONIC MEANS RATHER THAN IN THE FORM OF A PHYSICAL DOCUMENT REPRODUCES ALL TEST, IMAGES AND OTHER FEATURES OF TH ORIGINAL DOCUMENT (INCLUDING ANY SIGNATURES AND ANY UNIVERSALLY UNIQUE IDENTIFIER OR OTHER UNIQUE STRING OF CHARACTERS, MARKS OR OTHER IDENTIFYING INFORMATION APPEARING ON SUCH DOCUMENT) AND HAS NOT BEEN ALTERED." ANY SUCH EMAIL TRANSMISSION SHALL BE DEEMED A SITE DRAFT. THIS PRESENTATION MAY BE DELIVERED TO US IN ELECTRONIC FORM, AND SUCH ELECTRONIC COPY SHALL BE DEEMED TO BE THE ORIGINAL AND VALID FOR PURPOSES OF PRESENTATION HEREUNDER. IN THE EVENT A REQUEST IS PRESENTED VIA EMAIL TO THE ISSUER, IT IS UNDERSTOOD AND AGREED THAT THE ISSUER MAY ACT ON SUCH REQUEST WITHOUT THE NEED OR THE OBLIGATION TO SECURE THE ORIGINAL. IN ANY EVENT, THE ISSUER SHALL NOT BE LIABLE FOR ANY DISCREPANCY THAT MAY ARISE BETWEEN THE REQUEST TRANSMITTED BY EMAIL AND THE ORIGINAL REQUEST DELIVERED AS PROVIDED HEREIN. THIS LETTER OF CREDIT IS SUBJECT TO AND GOVERNED BY THE INTERNATIONAL STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590 ("ISP98"). AS TO MATTERS NOT GOVERNED BY ISP98, THIS LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICT OF LAW PROVISIONS THEREOF THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. VERY TRULY YOURS, [BANK NAME] Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 55  Packet Pg. 167 of 412  (CONFIDENTIAL) EXHIBIT “A” TO LETTER OF CREDIT SIGHT DRAFT Draft Number __________________ $____________________________ At sight (or electronic format as authorized in the Letter of Credit), pay to the order of [Name of Beneficiary to be inserted], the amount of USD $____________ (__________________ and 00/100ths U.S. Dollars). Value received and charged to the account of: [BANK NAME and ADRESS]. Drawn under [BANK NAME] Standby Letter of Credit No. [INSERT REFERENCE] Dated: _____________ JPMorgan Chase Bank, N.A. By: ________________________ [name and title] Account: [Applicant to be inserted] Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 56  Packet Pg. 168 of 412  EXHIBIT “B” TO LETTER OF CREDIT FORM OF TRANSFER REQUEST Irrevocable Standby Letter of Credit No. ____________________ Current Beneficiary: Applicant: __________________________ ____________________________ __________________________ ____________________________ __________________________ ____________________________ __________________________ ____________________________ To: [Name of Issuer] ("Issuer") The undersigned, as the current "Beneficiary" of the above-referenced Letter of Credit, hereby requests that you reissue the Letter of Credit in favor of the transferee named below [insert transferee name and address below]: _____________________________ _____________________________ _____________________________ _____________________________ Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 57  Packet Pg. 169 of 412  From and after the date this transfer request is delivered to Issuer, the transferee shall be the "Beneficiary" under the Letter of Credit for all purposes and shall be entitled to exercise and enjoy all of the rights, privileges and benefits thereof. Dated: ________________ JPMorgan Chase Bank, N.A. By: ______________________ Name: ______________ Title: ______________ [Notary Acknowledgement] To be signed by a person purporting to be an authorized representative of Beneficiary and indicating his or her title or other official capacity, and acknowledged by a notary public. Item 7 Attachment B - Master Agreement, Special Provisions and Credit Support Addendum        Item 7: Staff Report Pg. 58  Packet Pg. 170 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Administrative Services Meeting Date: August 10, 2026 Report #:2601-5863 TITLE Adoption of an Ordinance Amending Section 2.38.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code, as accepted by the Policy and Services Committee, to increase the thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make other technical changes. RECOMMENDATION Staff recommends that Council adopt an ordinance to amend Palo Alto Municipal Code Section 2.28.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures], as recommended by the Policy and Services Committee, to increase thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make technical changes. EXECUTIVE SUMMARY In January 2026 the City Council approved the City’s Auditor’s advisory report on contract solicitation and authority levels. The report recommended adjusting purchasing levels to keep up with inflation since they were last adjusted in 2016 and to reflect current market conditions and best practices in peer cities. A working group made up of city departments proposed changes to the municipal code to implement appropriate adjustments in accordance with the advisory report. Additional changes are proposed to increase operational efficiencies, ensure consistency in the code, and clarify existing provisions. If approved, these changes would go into effect thirty days after the second reading of the ordinance, which is expected to be in the September timeframe. Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 1  Packet Pg. 171 of 412  BACKGROUND On January 20, 2026, the City Council, as recommended by the Policy and Services Committee, approved the City Auditor’s advisory report on contract solicitation and authority levels1. Overall, the advisory report recommended that the City review the solicitation requirements and authority levels as contained in the purchasing procedures of the municipal code. The report noted that procurement procedures were last amended in 20162 and compared to 15 benchmarked jurisdictions, Palo Alto’s solicitation and contract authority thresholds are among the lowest in the region. Moreover, costs have increased significantly while the purchasing thresholds have remained the same over this period. The auditor concludes in their report that “updating the City’s procurement procedures will improve purchasing processes, eliminate administrative inefficiencies and better align the City with peer and industry best practices.” Management’s response to the advisory report showed concurrence with the auditor’s observations and conclusion. Furthermore, staff believes that updating these levels is another step in the effort to improve the procurement process by implementing additional streamlining changes. Earlier steps have included updating the operational purchasing handbook, implementing a new procurement software system for greater administrative ease, standardizing contract templates for faster contract development, provision of citywide training on the purchasing process to improve effectiveness, and the automation of the intake process for solicitations. Staff collaborated with the City Attorney's Office in reviewing and recommending adjustments to the municipal code and procurement policies. Additional review and input were solicited from departments to ensure that changes would be comprehensive and inclusive of input from across the organization. Staff considered inflation since the last municipal code changes and applied a factor from the Consumer Price Index (CPI) for the San Francisco Bay Area along with comparing to the peer cities shown in Appendix B of the City Auditor’s report to adjust the purchasing thresholds to align with current market buying power. As a result, staff is recommending adjustments to the purchasing thresholds based on the above factors; changes are summarized in the tables 1 and 2 below. 1 2512-5773 Approval of the Advisory Report: Contract Solicitation and Authority Levels and Subsequent Management Responses as recommended by the Policy and Services Committee; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85260&dbid=0&repo=PaloAlto&searchid=c95c7248 -de48-4652-8992-ad4896787207 2 Finance Committee Recommends Adoption of an Ordinance Amending Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code to Establish Contracting and Purchasing Procedures and to Define the Contracting Authority of City Officers and Employees; http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=53378 Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 2  Packet Pg. 172 of 412  By increasing the purchasing thresholds and making other changes outlined, this will improve government efficiencies by reducing the time incurred for solicitation and contract processing. Administrative time supporting staff report writing, formal RFP processes for minor activities will be repurposed to ensuring solicitations will be more effective as the thresholds will be better aligned with the rigorous and more time-consuming nature of formal solicitations. Semi- annual reports will continue to maintain transparency to the Council summarizing all contracts approved by the City Manager and Chief Procurement Officer. Table 1: Solicitation Process Levels Table 2: Contract Approval Authority Levels Increased settlement authority for City Attorney from $35,000 to $50,000. Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 3  Packet Pg. 173 of 412  Exemptions from competitive solicitation for recreation instructors and other service providers with unique talents (e.g., performers, speakers, trainers) and government-to- government purchases. This will streamline the hiring of independent contractors, such as class instructor and other instructor led activities wherein often only one or a limited number of appropriate providers are available. Exemption for agreements with other agencies and government entities such as joint powers authorities and nearby cities. This will streamline the process for contracting with public agencies since such contracts are not the result of solicitations and currently require multiple steps to approve by staff in several departments. This will eliminate most of the steps for these contracts, which are infrequent. A new purchasing category for information technology (IT) contracts has been created to better reflect the broad array of technology products and services that have evolved over the past decade. This will increase efficiency for staff when formulating contracts and solicitation strategies. IT solicitation threshold reasonably aligns with professional services and contract authority threshold aligns with general and professional services. This is also a more conservative response to the advisory report which recommended an exemption from competitive solicitations for information technology related purchases, which was cited in several peer cities. City Manager authority to increase the amount of a contract previously approved by Council. This will allow the City Manager to make a one-time extension to a Council approved contract up to the amount of 10 percent or $100,000, whichever is lower. This will reduce some of the low dollar contract amendments that go to Council simply to add a relatively small portion to a contract by providing flexibility and address the operational inefficiencies noted in the City’s Auditor’s advisory report. After City Council approval of the vehicle replacement budget annually, the City Manager may award fleet vehicle purchase/retrofit contracts up to the Council authorized level. This will reduce the number of individual vehicle purchases that must be approved by Council and enable staff to execute more expeditiously on high demand vehicles. All purchases will continue to be reviewed by the multi-departmental Fleet Review Committee per vehicle policies. Council will still see the vehicle purchases in the semi-annual report to Council on City Manager approved contracts. FISCAL/RESOURCE IMPACT Impacts of increasing solicitation and signature authority level thresholds include improved and more efficient processes, better solicitation outcomes and continued transparency to the City Council. The timing of these proposed changes to the municipal code Chapter 2.30 aligns with the FY2027 budget balancing strategies and reductions which focused on harnessing more administrative efficiencies. Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 4  Packet Pg. 174 of 412  STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 5  Packet Pg. 175 of 412  *NOT YET APPROVED* 1 0015_20260720_mv30 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 2.38.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code to increase the thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make other technical changes. The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Section 2.28.240 (Settlement of claims and actions) of Chapter 2.28 (Fiscal Procedures*) of Title 2 (Administrative Code*) of the Palo Alto Municipal Code is amended to read as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses): 2.28.240 Settlement of claims and actions. As provided in Section 935.4 of the Government Code of California, the city attorney is designated to perform the functions of the city council relative to claims and actions against the city or any of its officers or employees under the provisions of Division 3.6 of the Government Code, as follows: (a) Where the city has insured itself against liability for the claimed injury, the city attorney shall forward to the insurance carrier without prior council approval a written recommendation as to acceptance, settlement, or rejection of such claim, provided that the amount of any recommended allowance, compromise or settlement does not exceed $35,000.00; (b) Where the city is uninsured, the city attorney shall be authorized to accept, settle or reject without prior approval of the council, claims against the city, provided that no allowance, compromise or settlement shall exceed $35,000.0050,000.00. Upon the written order from the city attorney, the director of administrative services shall cause to be issued a warrant upon the treasury of the city in the amount for which a claim has been allowed, compromised or settled; (c) The city attorney is further authorized to compromise or settle, without prior approval of the council, except on a matter of policy, any actions which the city is either plaintiff or defendant and which are not covered by insurance, provided that the amount of such compromise or settlement shall not exceed $35,000.0050,000.00; (d) The city attorney shall make biannual reports to the council on action taken on claims and actions against the city; (e) A recommendation under subsection (a) above shall constitute "action" upon such claim within the meaning of Government Code Section 945.4. Attachment A A - 1 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 6  Packet Pg. 176 of 412  *NOT YET APPROVED* 2 0015_20260720_mv30 SECTION 2. Chapter 2.30 (Contracts and Purchasing Procedures*) of Title 2 (Administrative Code*) of the Palo Alto Municipal Code is amended to read as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses): Chapter 2.30 CONTRACTS AND PURCHASING PROCEDURES* Sections: […] PART 2 -- CONTRACT TYPES 2.30.100 Public works contract. 2.30.110 Contract for goods. 2.30.120 General services contract. 2.30.130 Professional services contract. 2.30.140 Contracts for wholesale utility commodities and services. 2.30.150 Contracts for dark fiber optics licensing services. 2.30.155 Information Technology services contracts. 2.30.160 Emergency contracts. PART 3 -- CONTRACTING AUTHORITY 2.30.200 Procurement officer contract award authority. 2.30.210 City Manager contract award authority. 2.30.220 City Attorney contract award authority. 2.30.221 Periodic automatic adjustments to contract award authority. 2.30.225 Wholesale utility commodity transactions. 2.30.230 Designated employee purchases of $10,000.0015,000.00 or less. 2.30.240 Designated employees’ use of petty cash, P-card or other credit card. 2.30.250 Council approval or award of contracts. 2.30.260 Contracts with terms exceeding one year — Appropriation. Attachment A A - 2 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 7  Packet Pg. 177 of 412  *NOT YET APPROVED* 3 0015_20260720_mv30 2.30.270 Delegations of authority to contract. 2.30.280 Authority to modify and terminate contracts not approved or awarded by the Council. 2.30.290 Authority to modify contracts awarded by the Council. 2.30.295 Limitations on contract authority; authority otherwise conferred. PART 4 — COMPETITIVE SOLICITATION REQUIREMENTS 2.30.300 Public works contracts. 2.30.310 Contracts for goods. 2.30.320 General services contracts. 2.30.330 Professional services contracts. 2.30.335 Information Technology services contracts. 2.30.340 Contracts for wholesale utility commodities and services. 2.30.345 Periodic automatic adjustments to solicitation thresholds. 2.30.350 Contract splitting prohibited. 2.30.360 Exemptions from competitive solicitation requirements. PART 5 – COMPETITIVE SOLICITATION PROCEDURES 2.30.400 Informal invitation for bids, request for quotes or requests for proposals. 2.30.410 Formal request for proposals. 2.30.420 Formal invitation for bids or request for quotes – Notice, submittal, opening. 2.30.430 Combined request for proposals and invitation for bids. 2.30.440 Determination of lowest responsive/responsible bidder. 2.30.450 Tie bids. 2.30.460 Correction or withdrawal of bids or proposals. 2.30.470 Cancellation of solicitations -- Rejections of bids/proposals. 2.30.480 Waiver of minor irregularities, defects and informalities. Attachment A A - 3 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 8  Packet Pg. 178 of 412  *NOT YET APPROVED* 4 0015_20260720_mv30 2.30.485 Delegation of awarding authority determinations. 2.30.490 Design-build contract procurement procedures. […] PART 1 — GENERAL […] 2.30.040 Centralized purchasing. All acquisitions and purchases shall be made by and through the Procurement Officer, except: (a) Purchases of goods and services made from petty cash funds made in conformance with this chapter and pursuant to control procedures approved by the City Manager and contained in the administrative policies and procedures manual maintained by the City Manager; (b) Emergency purchases made in conformance with this chapter and Federal Emergency Management Agency (“FEMA”) Public Assistance Program’s procurement orders, or other similar rules, regulations, guidelines and control procedures for cost reimbursement purposes approved by the City Manager and contained in the purchasing manual; (c) Contracts for legal services; (d) Purchases of goods and services, and payment of public works services, by city procurement card (“P-card”) or other credit card, made in conformance with this chapter and pursuant to control procedures approved by the City Manager and contained in the purchasing manual; (e) Purchases where the total expenditure by the city does not exceed $10,000.0015,000.00, made in conformance with this chapter and pursuant to control procedures approved by the City Manager and contained in the purchasing manual; (f) Transactions negotiated under master contracts for wholesale utility commodities and services, as described in Section 2.30.140 made in conformance with Section 2.30.340; (g) Mutual aid agreements; and (h) Delegations made according to Section 2.30.230. […] Attachment A A - 4 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 9  Packet Pg. 179 of 412  *NOT YET APPROVED* 5 0015_20260720_mv30 2.30.110 Contract for goods. (a) A contract for goods includes a contract or purchase order for the purchase of supplies, materials or equipment, including, without limitation, office supplies, janitorial supplies, furnishings, equipment, machinery, tools, vehicles, computer hardware and software and other personal property, materials, or goods. A contract for goods includes a blanket purchase order contract, where a specified quantity of units to be purchased is not established at the time the contract is executed. A blanket purchase order contract must establish a maximum dollar amount of expenditure for the contract and set forth pricing terms for the items to be purchased. A contract for goods may include labor incidental to the purchase of goods, including any set-up, installation, and testing services. (b) A contract for goods includes a contract or purchase order for the purchase of information technology equipment and computer hardware including, without limitation, desktop computers, laptops, mobile devices, tablets, peripherals, servers, and physical data storage infrastructure. This definition includes bundled service contracts that provide for the installation, support, and maintenance with the acquisition of computer hardware. Standalone maintenance and service agreements for computer hardware are excluded under this definition and are governed under Section 2.30.155. 2.30.120 General services contract. A general services contract includes a contract providing for work, labor or services not requiring specialized experience, knowledge or training with or without the furnishing of goods, materials, supplies or equipment, including, without limitation: (a) Maintenance of public buildings, streets, parks and playgrounds and other public improvements; (b) Repair, modification and maintenance of equipment or other goods; (c) Licensing, installation and maintenance of or relating to information technology property, goods and services, including, without limitation, computer hardware and software, and data storage services, unless the information technology services would require specialized certification, knowledge, expertise, or training are needed and provided; (dc) Janitorial services, uniform cleaning, tree trimming, street sweeping, power washing and landscape maintenance; (ed) Leasing or licensing of goods and other personal property for use by the city; and (fe) General class instruction, including, without limitation, recreation class instruction services. 2.30.130 Professional services contract. Attachment A A - 5 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 10  Packet Pg. 180 of 412  *NOT YET APPROVED* 6 0015_20260720_mv30 A professional services contract includes a contract for services which involves the exercise of professional discretion and independent judgment based on specialized certification, knowledge, expertise or training. These services may include, without limitation, those provided by accountants, actuaries, auditors, appraisers, architects, attorneys, engineers, financial advisors, information technology experts, instructors, and environmental and land use planners. […] 2.30.155 Information technology services contracts. (a) An information technology services contract includes a contract for information technology experts and the acquisition, licensing, installation, maintenance, or support of computer software. (b) For the purposes of this Section, computer software includes, without limitation: (1) cloud-based, hosted, or managed subscription software; (2) electronic data storage and processing services; (3) telecommunications and network services; (4) vendor-provided standard-form agreements for software purchase or licensing; and (5) standalone computer hardware maintenance or service contracts. (c) This Section does not apply to the purchase of computer hardware as defined under Section 2.30.110(b) or public works contract as defined under Section 2.30.100. (d) The contracts referred to herein shall be subject to the City's information security policies, terms, conditions and other requirements established by the chief information officer with the concurrence and approval of the City Attorney. […] PART 3 – CONTRACTING AUTHORITY 2.30.200 Procurement officer contract award authority. The Procurement Officer may award and sign the following contracts: (a) Public Works Contracts. Public works contracts, where the term does not exceed three years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first contract year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. Attachment A A - 6 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 11  Packet Pg. 181 of 412  *NOT YET APPROVED* 7 0015_20260720_mv30 (b) Contracts for Goods. Contracts to purchase goods, where the term does not exceed three years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. (c) General Services Contracts. General services contracts, where the term does not exceed three years, and the contract price and any price contingency established for change orders or additional services, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first contract year, and do not exceed $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. (d) Professional Services Contracts. Professional services contracts, where the term does not exceed three years, and the contract price, and any price contingency established for additional services, but excluding sales tax or use tax, do not exceed the sum of $85,000.00150,000.00 in the first contract year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. (e) Software and Hardware Purchase, Licensing, Maintenance and Support Information Technology Services Contracts. Notwithstanding Subsection 2.30.200(c), the. The Procurement Officer may award and sign Information Technology services contracts other than general services agreements, including, without limitation, vendor-based standard form hardware and software purchase and licensing contracts, for the purchase of hardware and software, the licensing of software, and the maintenance and support of hardware and software where the term of licensing or maintenance and support services does not exceed five years and the contract price, excluding sales tax or use tax, does not exceed $85,000.00150,000.00 per year in the first contract year and does not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. The contracts referred to herein may include contracts for data storage services, which shall be subject to the city's information security policies, terms, conditions and other requirements established by the chief information officer with the concurrence and approval of the City Attorney. 2.30.210 City Manager contract award authority. The City Manager may award and sign the following contracts: (a) Public Works Contracts. Public works contracts, where the term does not exceed three years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $250,000.00350,000.00 in the first contract year, and do not exceed the sum of $250,000.00350,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. Attachment A A - 7 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 12  Packet Pg. 182 of 412  *NOT YET APPROVED* 8 0015_20260720_mv30 (b) Contracts for Goods. Contracts to purchase goods, where the term does not exceed three years and the contract price and any contingency established for change orders, but excluding sales tax or use tax, do not exceed $250,000.00350,000.00 in the first contact year, and do not exceed the sum of $250,000.00350,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. (c) General Services Contracts. Contracts for services associated with the leasing or licensing of personal property other than hardware or software, where the term does not exceed seven years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first contract year, and do not exceed the sum of $85,000.00150,000.00 plus any unexpended monies carried forward from a prior contract year, in any subsequent contract year. […] (g) Contracts to Rent, Lease, License, Acquire, Transfer or Purchase Interests in Real Property from Other Parties. Contracts for the rental, leasing, licensing, or purchase by installment interests in real property from other parties for a term of seven years or less, where the contract price does not exceed $85,000.00150,000.00 per year, or to encumber or transfer any interest in real property from other parties for any term of years. The City Manager may enter into and sign a contract to acquire or purchase an interest in real property, where the contract price does not exceed $85,000.00150,000.00. […] (l) Software and Hardware Purchase, Licensing, Maintenance and Support Information Technology Contracts Services Contracts. Notwithstanding Subsection 2.30.210(c), Information Technology service contracts the City Manager may award and sign contracts other than general services agreements, including, without limitation, vendor-based standard form hardware and software purchase and licensing contracts, for the purchase of hardware and software, the licensing of software, and the maintenance and support of hardware and software, where the term of licensing or maintenance and support services does not exceed seven years and the contract price, excluding sales tax or use tax, does not exceed $85,000.00150,000.00 per year in the first contract or fiscal year and does not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior fiscal year, in any subsequent contract or fiscal year. The contracts referred to herein may include contracts for data storage services, which shall be subject to the city's information security policies, terms, conditions and other requirements established by the chief information officer with the concurrence and approval of the City Attorney. (m) Contracts with a business operator implementing business tax offsets under Section 2.37.080. (n) Other Contracts. All other types of contracts for which the contract term does not exceed three years and the total expenditure by the city does not exceed $85,000.00150,000.00 Attachment A A - 8 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 13  Packet Pg. 183 of 412  *NOT YET APPROVED* 9 0015_20260720_mv30 in the first contract or fiscal year, and does not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior fiscal year, in any subsequent contract or fiscal year. (o) Fleet Vehicles. Contracts for the purchase or retrofitting of fleet vehicles within the amount appropriated for such purchases by the Council. 2.30.220 City Attorney contract award authority. The City Attorney may award and sign contracts for legal services, including, without limitation, services provided by outside counsel, investigators, consultants and other experts needed for litigation or other administrative and legal proceedings, to be provided to the city for any time period, where the contract price and any contingency established for additional services, but excluding sales tax or use tax, do not exceed the sum of $85,000.00150,000.00 in the first contract or fiscal year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior fiscal year, in any subsequent contract or fiscal year. In addition to the authority described herein, the City Attorney may sign contracts, where the contract price exceeds the amounts set forth above, provided the Council has first approved the use of such services. (a) Notwithstanding the foregoing, the City Attorney may use any funds under a legal services contract when necessary to pay for services related to active litigation or administrative proceedings. (b) The City Attorney is authorized to enter into and execute on behalf of the city, without the prior approval of the Council, any amendment or change order to a contract, previously approved by the Council, that does not increase the compensation payable under the contract and to accomplish the following: (1) To extend the term of the contract for a period not to exceed twelve consecutive months from the last Council-approved contract expiration date; (2) To make minor revisions to the scope of services or delivery schedule; (3) To reduce the scope of services, the term, or the compensation of a contract; or (4) To make clerical corrections. 2.30.221. Periodic automatic adjustments to contract award authority. (a) For the purposes of this Section, "CPI" means the Consumer Price Index, All Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics for the San Francisco-Oakland-Hayward area, with all items included. In the event the CPI is no longer published, the Procurement Officer shall use another index published by either the State of California or a federal department or agency that is charged with the Attachment A A - 9 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 14  Packet Pg. 184 of 412  *NOT YET APPROVED* 10 0015_20260720_mv30 responsibility of measuring the cost of living in the geographical area that includes the City of Palo Alto. (b) For the purposes of this Section, “Contract Award Authority Thresholds” means the monetary amounts set forth in Sections 2.30.200, 2.30.210, and 2.30.220. (c) Beginning on July 1, 2031, and continuing every five years thereafter on July 1st, the Contract Award Authority Thresholds will increase based on the percentage increase from the CPI published most recently preceding July 1st of the applicable adjustment year. The increase in the Contract Award Authority Thresholds shall be rounded to the nearest ten thousand and this amount will serve as the Contract Award Authority Thresholds for the next five years. If there is no increase in the CPI, then the Contract Award Authority Thresholds are unchanged. (d) The Procurement Officer shall perform the foregoing calculations and report the adjusted Contract Award Authority Thresholds to the Council as soon as practical. […] 2.30.230 Designated employee purchases of $10,000.0015,000.00 or less. Employees authorized, in writing, by their department heads may award and sign contracts for the purchase of goods and the procurement of general services, where the contract price does not exceed $10,000.0015,000.00 and the contract term does not exceed one year. All purchases and procurements shall be made in accordance with the contracting procedures and requirements contained in this chapter and in the purchasing manual. The written authorizations of department heads shall be kept on file by the Procurement Officer. […] 2.30.270 Delegations of authority to contract. This Section establishes the exclusive source of authority to delegate any authority to contract granted by this chapter. The authority to delegate contracting authority shall not be implied from any other provision of this municipal code. (a) Procurement Officer Delegations. The Procurement Officer may delegate the authority granted under Section 2.30.200, as follows: a city employee holding the position of contract manager administrator or senior buyer may be authorized to award and sign any contract in an amount of $50,000.0075,000.00 or less per year with a term not to exceed three years; and a city employee holding the position of buyer may be authorized to award and sign any contract in an amount of $25,000.00 or less per year with a term not to exceed three years. […] Attachment A A - 10 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 15  Packet Pg. 185 of 412  *NOT YET APPROVED* 11 0015_20260720_mv30 2.30.280 Authority to modify and terminate contracts not approved or awarded by the Council. (a) Each employee with contracting authority conferred by this chapter may authorize and sign amendments or change orders to contracts he or she they awarded under the authority granted in this chapter subject to the following: (1) All modifications to contracts, including, without limitation, changes to the scope of work, quantity of goods, price or term shall be made in writing and accomplished executed in accordance with the terms of the original contract; (2) The amendment or change order to a contract shall not cause the contract, as modified, to exceed the monetary or term limits of that city employee's contracting authority, as described in this chapter, except that the city employee may extend the term of a contract, with no increase in the compensation payable, for a period not to exceed six twelve consecutive months beyond the term limits of his or her contracting authority; and […] 2.30.290 Authority to modify contracts awarded by the Council. […] (b) The City Manager is authorized to enter into and execute on behalf of the city, without the prior approval of the Council, any amendment or change order to a contract, previously approved by the Council, that does not increase the compensation payable under the contract or and to accomplish the following: (1) To extend the term of the contract for a period not to exceed six twelve consecutive months from the last Council-approved contract expiration date; (2) To make minor revisions to the scope of services or delivery schedule; (3) To reduce the scope of services, the term, or the compensation of a contract; or (3 4) To make clerical corrections. (c) The City Manager may approve and sign assignments of contracts, including, without limitation, leases and licenses, previously approved by the Council when he or she the City Manager has determined that the proposed assignee has the ability, capacity, experience and skill and is otherwise qualified to perform the contract. (d) Notwithstanding any other provision in this Section, the City Manager is authorized to enter into and execute on behalf of the city, without prior approval of the Council, a one- Attachment A A - 11 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 16  Packet Pg. 186 of 412  *NOT YET APPROVED* 12 0015_20260720_mv30 time amendment or change order to a professional services, information technology services, or general services contract, previously approved by Council, provided that: (1) The change does not to exceed ten percent (10%) of the amount of the original contract amount or $100,000, whichever is lower; (2) the change is reasonably related to the scope of the work authorized under the original contract; and (3) funding is available and appropriated for the work. […] PART 4 – COMPETITIVE SOLICITATION REQUIREMENTS 2.30.300 Public works contracts. Public works contracts that are not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action shall be solicited, as follows: (a) In addition to any exemption under Section 2.30.360, public works contracts providing for an estimated expenditure less than the limit set forth in California Public Contract Code Section 22032(a), as may be amended, and not otherwise required to be formally bid by the Charter, may be performed without undergoing a competitive solicitation. (ab) Public works contracts, providing for an estimated expenditure less than the limit set forth in California Public Contract Code Section 22032(b), as may be amended of $85,000.00 or less, and not otherwise required to be formally bid by the Charter, shall be solicited by informal invitation for bids in accordance with Section 2.30.400. (1) In lieu of the solicitation requirements set forth in this subsection (b), public works contracts may be awarded from a list of qualified contractors, identified according to categories of work, to be created and maintained by the Procurement Officer, so long as the list is created and the award of contract to a contractor on the list is in compliance with procedures contained in this chapter and in the purchasing manual. (b c) Public works contracts, providing for an estimated expenditure exceeding the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00, shall be solicited by formal invitation for bids in accordance with Section 2.30.420. (c d) Article VII, Section 6 of the City Charter requires formal bidding for public works contracts funded by bonded indebtedness of the city or by assessment against particular property in Palo Alto. Section 2.30.300 requires the formal bidding of all public works Attachment A A - 12 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 17  Packet Pg. 187 of 412  *NOT YET APPROVED* 13 0015_20260720_mv30 contracts exceeding $85,000.00, unless an exemption is provided by Section 2.30.360 or is otherwise authorized by Council under Section 2.30.300(d). (d e) Design-build contracts, to the extent debt financing limitations do not apply, that provide for an expenditure of more than the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00, shall be solicited by requests for proposals in accordance with Section 2.30.490. Despite any law to the contrary, the design-build method of delivery may be used for any public works contract, including, without limitation, any design-build-operate contracts, where the City Manager determines, in writing, the delivery method will best fulfill the requirements of the public works project. (e f) The Council may determine that a particular public works project may be solicited and contracted for by using alternate project delivery methods, including, without limitation, construction manager at risk or competitive negotiation. Any Council action authorizing an alternate project delivery method shall set forth the reasons and factual basis supporting the use of the alternate project delivery method for the project and describe the solicitation method to be used and the criteria for determining the successful bidder, to whom the public works contract should be awarded. 2.30.310 Contracts for goods. Contracts for goods, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited, as follows: (a) Contracts for goods, providing for an estimated expenditure by the city of $50,000.00100,000.00 or less, shall be solicited by informal request for quotes informal invitation for bids in accordance with the provisions of Section 2.30.400; and (b) Contracts for goods, providing for an estimated expenditure by the city exceeding $50,000.00100,000.00, shall be solicited by formal request for quotes formal invitation for bids in accordance with the provision of Section 2.30.420. 2.30.320 General services contracts. General services contracts, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited, as follows: (a) General services contracts, providing for an estimated expenditure by the city not exceeding $50,000.00100,000.00, shall be solicited by informal request for quotes invitation for bids or informal request for proposals in accordance with Section 2.30.400. Attachment A A - 13 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 18  Packet Pg. 188 of 412  *NOT YET APPROVED* 14 0015_20260720_mv30 (b) General services contracts, providing for an estimated expenditure by the city exceeding $50,000.00100,000.00 shall be solicited by formal invitation for bids request for quotes in accordance with Section 2.30.420 or by formal request for proposals in accordance with Section 2.30.410. (c) The Procurement Officer shall determine, after consideration of whether the needs of the city or the circumstances require that a contract should be awarded based on significant factors in addition to price, whether the services subject to a general services contract shall be solicited by request for quotes bid or request for proposals. 2.30.330 Professional services contracts. Professional services contracts, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited, as follows: (a) Professional services contracts, providing for an estimated expenditure by the city not exceeding $85,000.00150,000.00, shall be solicited by informal request for proposals in accordance with Section 2.30.400. (b) Professional services contracts, providing for an estimated expenditure by the city exceeding $85,000.00150,000.00, shall be solicited by formal request for proposals in accordance with Section 2.30.410. […] 2.30.335 Information Technology services contracts. Information technology services contracts, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited as follows: (a) Information technology services contracts, providing for an estimated expenditure by the city not exceeding $150,000.00, shall be solicited by informal request for proposals in accordance with Section 2.30.400. (b) Information technology services contracts, providing for an estimated expenditure by the city exceeding $150,000.00, shall be solicited by formal request for proposals in accordance with Section 2.30.410. (c) In lieu of the solicitation requirements set forth in Subsections (a) and (b), Information Technology services contracts in any amount may be awarded from a list of qualified professionals to be created and maintained by the Procurement Officer, so long as the list is created and the award of contract to an entity on the list is in compliance with procedures contained in this chapter and in the purchasing manual. 2.30.340 Contracts for wholesale utility commodities and services. Attachment A A - 14 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 19  Packet Pg. 189 of 412  *NOT YET APPROVED* 15 0015_20260720_mv30 (a) Solicitation of Contracts. (1) Contracts for the purchase or sale-incidental-to-purchase of wholesale utility commodities and services, providing for an estimated expenditure not exceeding $85,000.00150,000.00, shall be solicited by informal invitation for bids or informal request for proposals in accordance with Section 2.30.400. Contracts for the purchase or sale-incidental-to-purchase of wholesale utility commodities and services, providing for an estimated expenditure exceeding $85,000.00150,000.00, shall be solicited by formal invitation for bids, formal request for proposals or combination thereof, in accordance with Section 2.30.410, 2.30.420 or 2.30.430 or through solicitation of counterparties enabled to transact under a Council-approved master agreement in accordance with Section 2.30.340(a)(3). […] 2.30.345 Periodic automatic adjustments to solicitation thresholds. (a) For the purposes of this Section, "CPI" means the Consumer Price Index, All Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics for the San Francisco-Oakland-Hayward area, with all items included. In the event the CPI is no longer published, the Procurement Officer shall use another index published by either the State of California or a federal department or agency that is charged with the responsibility of measuring the cost of living in the geographical area that includes the City of Palo Alto. (b) For the purposes of this Section, “Solicitation Thresholds” means the monetary amounts set forth in Sections 2.30.310, 2.30.320, 2.30.330, 2.30.335, and 2.30.340. (c) Beginning on July 1, 2031 and continuing every five years thereafter on July 1st, the Solicitation Thresholds will increase based on the percentage increase from the CPI published most recently preceding July 1st of the applicable adjustment year. The increase in the Solicitation Thresholds shall be rounded to the nearest ten thousand and this amount will serve as the Solicitation Thresholds for the next five years. If there is no increase in the CPI, then the Solicitation Thresholds are unchanged. (d) The Procurement Officer shall perform the foregoing calculations and report the adjusted Solicitation Thresholds to the Council as soon as practical. […] 2.30.360 Exemptions from competitive solicitation requirements. […] Attachment A A - 15 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 20  Packet Pg. 190 of 412  *NOT YET APPROVED* 16 0015_20260720_mv30 (b) Whenever solicitations of bids or proposals would for any reason be impracticable, unavailing or impossible, provided that in the case of a public works project, the project is not otherwise required by the charter to be formally bid. These situations are those where solicitations of bids or proposals would not be useful or produce any operational or financial advantage for the city. Situations where solicitations of bids or proposals would be impracticable, unavailing or impossible, include, without limitation, the following: (1) Contract specifications cannot be drawn in a way that would enable more than one vendor, consultant or contractor to meet them; (2) Due to circumstances beyond the control of the city, the time necessary to use the competitive solicitation process, procedures and requirements would result in a substantial economic loss to the city or the substantial interference with a required city operation; (3) Special conditions attached to a grant, donation or gift requires the use of particular goods and/or services. (4) A vendor, consultant or contractor possesses specialized knowledge, experience or familiarity with a city project, operation, or ongoing matter such that a competitive solicitation would not produce a materially better result or would result in added cost, delay, or disruption to city operations. […] (e) Contracts for goods where, pursuant to Section 2.30.900, the City Manager has determined that standardization of the supplies, materials, services, or equipment is permissible. […] (i) Professional services and Information Technology services contracts, where the estimated total expenditure by the city, regardless of term, does not exceed $50,000.00100,000.00. The dollar threshold in this subsection shall be adjusted in accordance with Section 2.30.345. (j) Cooperative purchases, with one or more other public agencies or through a cooperative purchasing agency, provided: (i) the services are solicited using methods substantially similar to those required by this chapter, as determined by the Procurement Officer the underlying purchase was made through a competitive solicitation; and (ii) the contract is consistent with the requirements specified in this municipal code. (k) The use of another governmental or public agency's contract or substantially the same contract terms provided: (i) the agency uses a solicitation method substantially similar to the method required by this chapter the underlying purchase was made through a competitive solicitation ; (ii) the contract is consistent with the requirements specified in Attachment A A - 16 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 21  Packet Pg. 191 of 412  *NOT YET APPROVED* 17 0015_20260720_mv30 this municipal code; and (iii) the Procurement Officer determines that the city will realize overall value to utilizing the other agency's contract or contract terms compared to the city performing its own solicitation. […] (r) Contracts, where the estimated total expenditure by the city does not exceed $10,000.0050,000.00. The dollar threshold in this subsection shall be adjusted in accordance with Section 2.30.345. […] (u) Contracts for services where selection is based on a unique personal accomplishment or characteristic such as guest speakers, performers, artists, recreation instructors, trainers, and facilitators. (v) Contracts with another government agency, including a joint powers authority, to purchase goods or services. PART 5 – COMPETITIVE SOLICITATION PROCEDURES 2.30.400 Informal invitation for bids, request for quotes or requests for proposals. (a) An informal invitation for bids, request for quotes, or requests for proposals may be solicited by any reasonable means, including, without limitation, mail, telephone, facsimile transmission, e-mail or posting to the city's web site. Quotations shall be solicited from a minimum of three bidders or proposers; if quotations from three bidders or proposers cannot be obtained by the exercise of due diligence, quotations shall be solicited from less than three bidders or proposers, as practicable. The Procurement Officer shall maintain a record of all informal invitations for bids, informal request for quotes, and informal requests for proposals received by the city for a period of time in compliance with California law and the city's records retention schedule. (b) An informal invitation for bids and informal request for quotes shall be awarded to the lowest responsive and responsible bidders, as described in Section 2.30.440. […] 2.30.420 Formal invitation for bids or request for quotes – Notice, submittal, opening. (a) Advertising. Contracts that must be solicited by formal invitation for bids or request for quotes shall be solicited by notices inviting bids by advertising the notices inviting bids on the City's website for no fewer than five days prior to the date set for receiving bids. As practicable, bids shall be solicited from a minimum of three bidders. Attachment A A - 17 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 22  Packet Pg. 192 of 412  *NOT YET APPROVED* 18 0015_20260720_mv30 (b) Notice. The notices inviting bids shall generally describe the goods and/or services to be purchased or acquired or the public works to be constructed, identify the place where the bid proposal form, specifications and other contract documents may be obtained, and specify the date, time and place when and where bids will be opened. (c) Bid Submittal. All bids shall be sealed. All bids shall be submitted at the place, and at or before the date and time, specified in the notice inviting bids. Bids received after the specified date and time shall not be accepted and shall be returned to the bidder unopened unless the opening is necessary for identification purposes. (d) Bid Opening. Bids timely received shall be opened in public, at the date, time and place specified in the notice inviting bids, and the aggregate bid of each bidder shall be announced. […] PART 6 – CONTRACT TERMS AND CONDITIONS 2.30.500 Bid security, bonds and insurance. […] (b) Bid Security. Bid security shall be submitted with the bid and shall be in the form of a certified check, cashier’s check or surety bond. Any surety bond shall be issued by an admitted surety authorized to conduct business in the State of California and shall be in a form acceptable to the City Attorney and as specified in the solicitation for bids document. If a bidder fails to submit the required bid security with the bid, the bid shall be deemed nonresponsive. After bids are opened, bid security shall be irrevocable for the period specified in the invitation for bids. If the successful bidder fails to execute the contract within the time specified, the total amount of the bid security shall be forfeited to the city. The bid security of an unsuccessful bidder shall be returned to the bidder by no later than sixty days from the date of contract award. Bids for public works projects costing in excess of the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00 shall require the submission of bid security in an amount equal to at least ten percent of the bid. On public works projects costing less than the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00, and all other procurements of goods and services without regard to price, the Procurement Officer is authorized to determine whether any bid security in any amount shall be required on a project-by-project basis. […] PART 10 – STANDARDIZATION 2.30.900 Standardization. Attachment A A - 18 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 23  Packet Pg. 193 of 412  *NOT YET APPROVED* 19 0015_20260720_mv30 Where the City Manager has determined that it is required by the health, safety or welfare of the people or employees of the city, or that significant costs savings have been demonstrated, the standardization of supplies, materials, services, or equipment, including, without limitation, information technology property or services, for purchase or to be used in a public works project is permitted and the supplies, materials or equipment specifications may specify a single brand or trade name. The City Manager may consider the following factors in determining to standardize on a single brand or trade name: (a) Repair and maintenance costs would be minimized; (b) User personnel training would be facilitated thereby; (c) Supplies or spare parts would be minimized; (d) Modifications to existing equipment would not be necessary; (e) Training of repair and maintenance personnel would be minimized; and (f) Matching existing services, supplies, materials or equipment is required for proper operation of a function or program. SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 4. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment. // // // // // // Attachment A A - 19 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 24  Packet Pg. 194 of 412  *NOT YET APPROVED* 20 0015_20260720_mv30 SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Administrative Services Attachment A A - 20 Item 8 Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30        Item 8: Staff Report Pg. 25  Packet Pg. 195 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Transportation Meeting Date: August 10, 2026 Report #:2607-6524 TITLE Approval of Purchase Order with JAM Services, Inc. for the purchase of Traffic Signal Network Switches for a Total Not-To-Exceed Amount of $714,639 for 2 years; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301). RECOMMENDATION Staff recommends that City Council: 1. Approve and authorize the City Manager or designee execute a Purchase Order with JAM Services, Inc. to procure traffic signal network switches and associated hardware for a total not-to-exceed amount of $714,639 (Attachment A). 2. Amend the Fiscal Year Budget Appropriation for the Capital Improvement Fund (requires a 2/3 vote) to: a. Increase the Traffic Signal Cabinet Upgrades project (TR-27005) in the amount of $220,000; b. Decrease the Traffic Signal and Intelligent Transportation Systems project (PL- 05030) in the amount of $220,000; c. Increase revenue from Other Agencies (2016 Measure B Local Streets and Roads (LSR)) in TR-27005 in the amount of $220,000; and d. Decrease revenue from Other Agencies (2016 Measure B Local Streets and Roads (LSR)) in PL-05030 in the amount of $220,000. BACKGROUND On November 13, 2017, City Council adopted the 2030 Comprehensive Plan, which directed staff to use appropriate technology to improve circulation safety in the City (Policy T6.7) and improve efficiency and effectiveness (Policy S1-9.1). In this context, staff identified a need to replace existing traffic signal network switches due to their age and industry best practices. Staff developed needs and requirements for replacing existing traffic signal and core switches Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 1  Packet Pg. 196 of 412  and released an RFQ with detailed specifications and requirements that would satisfy existing requirements as well as allow for growth to accommodate developing ITS and network communications needs that may develop in the near future (approximately ten to 15 years). City Staff (Office of Transportation and Electric Utilities) maintains and operates 102 signalized intersections throughout the City, including one on the Stanford University campus, through a centralized traffic management system. At each individual traffic signal, a traffic signal cabinet contains necessary hardware essential to its operations, including a network switch which allows communications and operational management via a centralized traffic signal management system server. Network switches currently in use were procured in 2014 as part of complete citywide traffic signal controller and management system overhaul. Based on industry best practices as well as recommendations from the City’s Information and Technology Department, network switches should be replaced every six to 12 years, and thus the City’s Office of Transportation and Electric Utilities Department began development of a replacement plan in 2025 to replace all traffic signal related switches. ANALYSIS 105 Traffic Signal Edge Switches, including power supplies, which provide connection between the traffic signal controllers and the City’s fiber optic communications network Three (3) Core Switches, which connect the fiber optic communications network for the traffic signals to the centralized traffic management system servers and staff terminals 210 SFP (small form-factor pluggable) Transceivers, which are pluggable network interface modules used to connect fiber strands to the network switch ports to transmit and receive data related to the City‘s traffic signal operations Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 2  Packet Pg. 197 of 412  FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 3  Packet Pg. 198 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: August 10, 2026 Report #:2605-6359 TITLE Approval of Contract C27197195 with High Point Power Systems in the Amount of $286,660 for the Repair and Refurbishment of a Load Tap Changer Located at Adobe Creek Substation; and Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed $28,666, for a Total Contract Not-to-Exceed Amount of $315,326. CEQA Status – Categorically Exempt Under CEQA Guidelines Sections 15301 and 51302. RECOMMENDATION Staff recommends that the City Council: 1. Approve and authorize the City Manager or their designee to execute contract C271971951 with High Point Power Systems in the amount of $286,660 for the repair and refurbishment of a load tap changer at Adobe Creek Substation; and 2.Authorize the City Manager or their designee to negotiate and execute change orders for related, additional, and unforeseen work which may develop during the contract term, the total value of which shall not exceed $28,666 or 10% of total contract; for a total not-to-exceed contract amount of $315,326. BACKGROUND Adobe Creek Substation is vital to the City of Palo Alto Utilities’ (CPAU) electric distribution network. The subject transformer is currently off-line and unable to serve customers. This creates a reliability risk for customers served by the substation and those served by adjacent substations (Colorado & Maybell). ANALYSIS A 15MVA transformer has a long-lead item of 36-48 months for a new replacement. By performing these targeted repairs, CPAU defers a multi-million-dollar capital outlay of a new 1 Contract C27197195 with High Point Power Systems https://www.paloalto.gov/files/assets/public/v/2/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2026/august/c27197195-adobe-creek- transformer-final.pdf Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 1  Packet Pg. 199 of 412  unit while addressing the failure modes. The repair specifically addresses “moisture ingress”, which shortens the life of the paper insulation contained inside the transformers. By re- gasketing the bushings and seals, we maintain the dielectric strength of the insulating oil, preserve the life of paper insulation and lower the risk of internal flashovers that could lead to extended power outages. Project Scope of Work Bid Details Adobe Creek Transformer-21; 15 MVA OLTC Refurbishment & Radiator Flange Repair/Re-gasket (IFB-197195) Proposed Length of Project 120 Days Number of Bid Packages downloaded by Contractors 27 Total Days to Respond to Bid 15 Pre-Bid Meeting No Number of Company Attendees at Pre-Bid Meeting N/A Number of Bids Received:4 Public Link to Solicitation https://procurement.opengov.com/portal/palo-alto- ca/projects/248855 Bid Price Range $234,165 to $456,116 FISCAL/RESOURCE IMPACT POLICY IMPLICATIONS Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 2  Packet Pg. 200 of 412  infrastructure replacement program, based on planned replacement before failure to support reliability and resiliency.” STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW CONTRACT LINK: Contract C27197195 with High Point Power Systems APPROVED BY: Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 3  Packet Pg. 201 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: August 10, 2026 Report #:2601-5844 TITLE Approval of Contract No. C27196740 with Blackhawk Painting Inc. in the Amount of $735,500 Over a Period of 18 Months for Electric Substations Equipment and Mechanical Structures Painting Services; Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed of $73,550, for a Total Not-to-Exceed Contract Amount of $809,050; and Approval of a Budget Amendment in the Electric Fund; CEQA Status: Categorically Exempt Under CEQA Guidelines Section 15301. RECOMMENDATION Staff recommend that Council: 1. Approve and authorize the City Manager or their designee to execute contract No. C27196740 with Blackhawk Painting Inc.1 (Blackhawk) for surface preparation and painting of substation electric equipment and mechanical structures in an amount not to exceed $735,500; 2. Authorize the City Manager or their designee to negotiate and execute one or more change orders to the contract with Blackhawk for related but unforeseen work which may develop during the contract term, the total value of which shall not exceed $73,550 or 10% of the contract amount, for a total contract not-to-exceed amount of $809,050; and 3. Amend the Fiscal Year 2027 Budget Appropriation for the Electric Operating and Capital budgets (requires a two-thirds approval by the Council) by: a. Increasing the contract services operating budget in the Electric Fund by $809,050; and b. Decreasing capital improvement budget EL-89044 (Substation Facility Improvements) in the Electric Fund by $809,050. 1 Contract No. C27196740 with Blackhawk Painting Inc. https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2026/august/c27196740-electric-substation- painting-contract.pdf Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 1  Packet Pg. 202 of 412  BACKGROUND Structural Integrity Loss: weakening of mechanical supports and lattice towers due to corrosion. Increased Outage Risk: Advanced rust can compromise the seals and dielectric integrity of energized equipment. Reduced Equipment Life: rust and corrosion can lead to early replacement of major equipment, causing increased operating costs and higher utility rates. ANALYSIS Pressure washing and mechanical cleaning of surfaces. Containment of debris in accordance with BAAQMD (Bay Area Air Quality Management District) requirements. Painting of Transformers, Switchgear Enclosures, and Lattice Structures. Work at various sites including the Colorado Power Station (COP) and several neighborhood distribution substations Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 2  Packet Pg. 203 of 412  Bid Details Electric Substation Equipment & Mechanical Structures Painting Work (IFB-196740) Proposed Length of Project 18 Months Number of Bid Packages downloaded by Contractors 39 Total Days to Respond to Bid 27 Pre-Bid Meeting Yes Number of Company Attendees at Pre-Bid Meeting 5 Number of Bids Received:8 Public Link to Solicitation https://procurement.opengov.com/portal/palo- alto-ca/projects/253002 Bid Price Range $735,500 - $1,379,415 Staff have reviewed the bid provided by Blackhawk and found it be responsive to the bid requirements and as providing the lowest cost to the City. Staff are recommending Council approve awarding a contract to Blackhawk for the amount of $735,500 and authorize the City Manager to approve change orders up to 10% of the originally submitted bid amount. FISCAL/RESOURCE IMPACT Funding for the maintenance work is available in the FY 2027 Electric Fund budget. Staff recommends transferring $809,050 from Electric Fund CIP EL-89044, Substation Facility Improvements to the Electric Fund Operations budget and increasing the Electric Operations Contract Services budget by $809,050. This will reduce available funding for EL-89044 from $1,591,000 to $781,950. EL-89044 originally had anticipated funding the repainting of this equipment. However, the minor nature of work is more appropriately funded as a maintenance project rather than a capital improvement project. ENVIRONMENTAL REVIEW This project is Categorically Exempt from the California Environmental Quality Act (CEQA) under CEQA Guidelines Section 15301(b) (Existing Facilities), as it involves the maintenance of existing utility facilities involving negligible or no expansion of use. POLICY IMPLICATIONS This recommendation is consistent with the City’s Utilities Strategic Plan to invest in infrastructure maintenance to ensure high levels of system reliability and safety. Link: Contract No. C27196740 with Blackhawk Painting Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 3  Packet Pg. 204 of 412  APPROVED BY: Alan Kurotori, Director of Utilities Staff: Terry Crowley, Utilities Chief Operating Officer Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 4  Packet Pg. 205 of 412  City Council Staff Report From: City Attorney Report Type: CONSENT CALENDAR Lead Department: City Attorney Meeting Date: August 10, 2026 Report #:2607-6525 TITLE Authorization to Execute Amendment to Legal Services Contract S25194587 with Atkinson Andelson Loya Ruud & Romo to Increase Amount by $100,000 for Total Not-to-Exceed Amount of $285,000; CEQA Status – Not a Project. RECOMMENDATION Authorize the City Attorney or designee to amend the contract for litigation defense services with the law firm of Atkinson Andelson Loya Ruud & Romo (Contract S25194587) to increase the contract amount by $100,000 for a total not-to-exceed amount of $285,000. BACKGROUND/ANALYSIS Atkinson Andelson Loya Ruud & Romo is a law firm representing cities in a variety of areas, including an emphasis in employment and labor matters. In March 2025, the City entered into a three-year agreement (S25194587) in the amount of $85,000 with Atkinson Andelson Loya Ruud & Romo for litigation defense services in Government Claim No. C25-0059 filed by Thomas Haxton and related litigation. In September 2025, an amendment was authorized to add $100,000 for continuing litigation defense1. Staff now seeks authority to increase the contract amount by an additional $100,000 which will bring the new not to exceed amount to $285,000. Litigation is continuing in the Haxton matter. Legal service contracts are exempt from solicitation requirements per Section 2.30.360(g) of the Municipal Code. FISCAL/RESOURCE IMPACT Funding for this amendment is within existing appropriations adopted in the City Attorney’s Office as part of the FY 2027 Adopted Operating Budget. 1 City Council, September 29, 2025, Item 2507-5011 https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=75d1d024-f9ab-46cf-a6fe-11ce6a102b55 Item 12 Item 12 Staff Report        Item 12: Staff Report Pg. 1  Packet Pg. 206 of 412  STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW APPROVED BY: Item 12 Item 12 Staff Report        Item 12: Staff Report Pg. 2  Packet Pg. 207 of 412  1 0 2 3 6 1 0 2 3 6 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Public Works Meeting Date: August 10, 2026 Report #:2606-6505 TITLE Approval of Amendment No. 1 to Contract No. C24189086 with Carollo Engineers, Inc., to Increase the Contract Amount by $551,755 for a Revised Total Not-to-Exceed Amount of $3,294,529, and to Extend the Contract Term by Six Months through December 2027, for the Long Range Facilities Plan Update for the Regional Water Quality Control Plant (WQ-19002); CEQA Status – Not a Project RECOMMENDATION Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 1 to Contract No. C24189086 with Carollo Engineers, Inc. to increase the contract amount by $551,755 for the Long Range Facilities Plan Update supported by the Plant Repair, Retrofit, and Equipment Replacement project (WQ-19002), and to extend the term through December 2027. The revised total contract amount is not-to-exceed $3,294,529, including $2,995,026 for Basic Services and $299,503 for Additional Services. BACKGROUND The City owns and operates the Regional Water Quality Control Plant (RWQCP), which provides wastewater treatment and disposal services to Palo Alto, Mountain View, Los Altos, Los Altos Hills, the East Palo Alto Sanitary District, and Stanford University. The RWQCP is currently implementing major capital projects recommended in the 2012 Long Range Facility Plan (LRFP)1 following Council’s acceptance of the LRFP on July 2, 2012.2 These capital projects are in various stages of design and construction. On June 10, 2024, the City Council approved a $2,742,774 contract (No. C24189086) with Carollo Engineers, Inc., to prepare an LRFP Update (LRFP-U) to guide RWQCP infrastructure 1 Long Range Facilities Plan for the Regional Water Quality Control Plant, 2012; 2 City Council, July 2, 2012; Agenda Item #7; SR# 2914, Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 1  Packet Pg. 208 of 412  1 0 2 3 6 1 0 2 3 6 investments and process improvements over the next 50 years.5 The LRFP-U also evaluates potential use of a portion of the adjacent Measure E site for future biosolids facilities, as directed by City Council on April 3, 2023.6 The existing contract term runs through June 30, 2027, and the original contract includes $2,493,431 for Basic Services and $249,343 for Additional Services. Key tasks include: 50-year treatment capacity evaluation and process modeling; update to the Biosolids Facilities Plan, including Measure E site analysis; RWQCP workspace planning; facility condition assessments; development of a 50-year capital improvement program; cost-of-service analysis; and a final LRFP-U report. ANALYSIS Since the City Council approved the original contract in June 2024, the scope of work for LRFP-U has expanded beyond what was anticipated. The RWQCP is concurrently undergoing or planning several major capital projects, including the Secondary Treatment Upgrades, the Advanced Water Purification System, the Headworks Replacement, and the Gravity Thickener Improvements. Coordinating the LRFP-U with these ongoing projects required substantially more review of project documentation, as well as supplementary biological process modeling to forecast how the future upgrade of the secondary treatment process would affect the resulting solids projections and process capacity evaluations for the 50-year planning horizon. Staff recommends that City Council approve Amendment No. 1 (Attachment A) to add funds to the contract to address the following additional efforts: Expanded facility condition assessments covering several additional onsite and offsite facilities not included in the original scope. Additional effort to compile and verify equipment and piping information to support the facility condition assessment, including extensive review of historical design documents, O&M manuals, facility plans, and as-built records to confirm equipment capacities. Additional feasibility analysis for biosolids management alternatives at the RWQCP or the Byxbee Park site, including site layouts, life-cycle costs, evaluation criteria scores, and sensitivity analysis to test the robustness of the results. Additional alternatives analysis, prioritization, and documentation associated with a substantially greater volume of recommended capital improvement projects across the 50-year planning horizon than originally anticipated. 5 City Council, June 10, 2024; Agenda Item #6, SR#2405-2993, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82887&dbid=0&repo=PaloAlto 6 City Council, April 3, 2023; Agenda Item #12; SR #2302-0942, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82279&dbid=0&repo=PaloAlto&searchid=ead8a87e 302-0942 Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 2  Packet Pg. 209 of 412  1 0 2 3 6 1 0 2 3 6 Expanded public and partner agency engagement, including consultant support for biosolids public meetings held in May 2025, July 2025, and February 2026. This level of presentation support was not anticipated in the original scope and requires additional consultant services reflected in the amendment. The amendment would increase the Basic Services budget by $501,595, from $2,493,431 to $2,995,026, and the Additional Services budget by $50,160 (10% contingency), from $249,343 to $299,503. The revised total contract amount is not to exceed $3,294,529. FISCAL/RESOURCE IMPACT This project is funded through the RWQCP partner-funded structure, with costs shared by the City and its regional partners consistent with established partner agreements and related amendments. Palo Alto’s share of this project is approximately 38%, with the remaining 62% funded by the partners based on wastewater flows and strength contributions. Funding for this contract is included in the Fiscal Year 2027 Adopted Capital Budget for the Wastewater Treatment Fund Plant Repair, Retrofit, and Equipment Replacement Project (WQ- 19002). No additional budget appropriation is required at this time. Use of this professional services contract is more efficient than performing the work with City staff because the work requires specialized expertise in wastewater treatment and biosolids technologies, and advanced biological process modeling that is not available within existing staff capacity. STAKEHOLDER ENGAGEMENT City management has been kept informed through the RWQCP Monthly Strategies and Challenges Meetings, and partner agencies receive updates through quarterly meetings. Public and partner-agency engagement for the LRFP-U includes public workshops/meetings, Finance Committee meetings,9 City Council meetings, and partner-agency presentations. Project updates and public involvement opportunities are also shared through the RWQCP Capital Improvement Program website, Uplift Local, and the Sustainability e-Newsletter. ENVIRONMENTAL REVIEW Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because the LRFP-U is an administrative planning activity that will not result in direct or indirect physical changes to the environment (CEQA Guidelines section 15378(b)(4)). The LRFP-U will inform planning for future facilities at the RWQCP, and environmental review will be performed during the development of resulting projects, as necessary. ATTACHMENTS Attachment A: Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc. APPROVED BY: Brad Eggleston, Director Public Works/City Engineer 9 Finance Committee, Nov 4, 2025; Agenda Item #1, SR#2508-5132, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83790&dbid=0&repo=PaloAltoff Report 2508-5132 Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 3  Packet Pg. 210 of 412  Vers.: Aug. 5, 2019 Page 1 of 41 AMENDMENT NO. 1 TO CONTRACT NO. C24189086 BETWEEN THE CITY OF PALO ALTO AND CAROLLO ENGINEERS, INC. This Amendment No. 1 (this “Amendment”) to Contract No. C24189086 (the “Contract” as defined below) is entered into as of August 10, 2026, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CAROLLO ENGINEERS, INC., located at 2795 Mitchell Drive, Walnut Creek, CA 94598-1601 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment. R E C I T A L S A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of updating the Long-Range Facilities Plan for the Regional Water Quality Control Plant (RWQCP), as detailed therein. B. The Parties now wish to amend the Contract in order to (1) extend the contract term by 6 months, from June 30, 2027 to Dec 31, 2027; (2) expand the scope of service to include additional engineering services for biosolids management analysis, infrastructure condition assessments, coordination with concurrent capital improvement projects, and stakeholder engagement activities; and (3) increase the total not-to-exceed compensation by $551,755, including $501,595 for basic services and $50,160 for additional services, for a new total not -to- exceed amount of $3,294,529. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree: SECTION 1. Definitions. The following definitions shall apply to this Amendment: a. Contract. The term “Contract” shall mean Contract No. C24189086 between CONSULTANT and CITY, dated June 10, 2024. b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract. SECTION 2. Section 2 “TERM” of the Contract is hereby amended to read as follows: The term of this Agreement shall be from the date of its full execution through December 31, 2027, unless terminated earlier pursuant to Section 19 (Termination) of this Agreement. SECTION 3. Section 4 “NOT TO EXCEED COMPENSATION” of the Contract is hereby amended to read as follows: Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 4  Packet Pg. 211 of 412  Vers.: Aug. 5, 2019 Page 2 of 41 SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Two Million Nine Hundred Ninety-Five Thousand Twenty-Six Dollars ($2,995,026). The hourly schedule of rates, if applicable, is set out in Exhibit C- 1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY. Optional Additional Services Provision In addition to the not-to-exceed compensation specified above, CITY has set aside the not-to- exceed compensation amount of Two Hundred Ninety-Nine Thousand Five Hundred Three Dollars ($299,503) for the performance of Additional Services (as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C, shall not exceed Three Million Two Hundred Ninety-Four Thousand Five Hundred Twenty-Nine Dollars ($3,294,529), as detailed in Exhibit C. “Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A. CITY may elect to, but is not required to, authorize Additional Services up to the maximum amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this Section. Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum. To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall only be compensated for Additional Services performed under an authorized Task Order and only up to the maximum amount of compensation set forth for Additional Services in this Section 4. Performance of and payment for any Additional Services are subject to all requirements and restrictions in this Agreement. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 5  Packet Pg. 212 of 412  Vers.: Aug. 5, 2019 Page 3 of 41 SECTION 4. The following exhibit(s) to the Contract is/are her eby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference: a. Exhibit “A” entitled “SCOPE OF SERVICES”, AMENDED, REPLACES PREVIOUS. b. Exhibit “B” entitled “SCHEDULE OF PERFORMANCE”, AMENDED, REPLACES PREVIOUS. c. Exhibit “C” entitled “COMPENSATION”, AMENDED, REPLACES PREVIOUS. d. Exhibit “C-1” entitled “SCHEDULE OF RATES”, AMENDED, REPLACES PREVIOUS. SECTION 5. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect. SECTION 6. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference. (SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.) Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 6  Packet Pg. 213 of 412  Vers.: Aug. 5, 2019 Page 4 of 41 SIGNATURES OF THE PARTIES IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written. CITY OF PALO ALTO __________________________ City Manager APPROVED AS TO FORM: ___________________________ City Attorney or designee CAROLLO ENGINEERS, INC. By:________________________ Name: Rick Chan Title: Senior Vice President By:________________________ Name: Anne E. Prudhel Title: Executive Vice President Attachments: EXHIBIT A, “SCOPE OF SERVICES”, AMENDED, REPLACES PREVIOUS EXHIBIT B, “SCHEDULE OF PERFORMANCE”, AMENDED, REPLACES PREVIOUS EXHIBIT C, “COMPENSTATION”, AMENDED, REPLACES PREVIOUS EXHIBIT C-1, “SCHEDULE OF RATES”, AMENDED, REPLACES PREVIOUS Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 7  Packet Pg. 214 of 412  Vers.: Aug. 5, 2019 Page 5 of 41 EXHIBIT A SCOPE OF SERVICES (AMENDED, REPLACES PREVIOUS) CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF SERVICES”. Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. CONSULTANT’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services. I. INTRODUCTION The City of Palo Alto (City) is requesting proposals from consultants to perform an update to their Long Range Facilities Plan (2012) for the Regional Water Quality Control Plant (RWQCP; Plant). The update will be known as the Long Range Facilities Plan Update (the Project). For this Project, the CONSULTANT shall provide engineering and other required services during all phases of the Project, as authorized by the City. II. BACKGROUND General The City owns and operates the RWQCP, which treats wastewater from a total of six partner agencies (Partners), including the City. The RWQCP has a permitted dry weather capacity of 39 million gallons per day (MGD), annual average treated flow of 16 to 18 MGD, and a wet weather capacity of 80 MGD. In 2012, a Long Range Facilities Plan (LRFP) was completed to identify the needs at the RWQCP for continued, compliant operations. To date, several of the needs identified in the 2012 LRFP have resulted in projects that have either been completed or are underway. They are as follows: • Sludge Dewatering and Loadout Facility (completed in 2019) • Primary Sedimentation Tank Rehabilitation and Electrical Room Upgrade (in construction and expected to be completed in June 2024) • Secondary Treatment Upgrades (in construction and expect to be completed in June 2028) • 12kV Power Distribution Upgrades – Phase 1 (in construction and expect to be completed in June 2024) Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 8  Packet Pg. 215 of 412  Vers.: Aug. 5, 2019 Page 6 of 41 • 12kV Power Distribution Upgrades – Phases 2-7 (expect to issue NTP for construction in August 2024) • Advanced Water Purification System (in design) • Joint Interceptor Sewer Rehabilitation - Phase 1 (design completed; construction scheduled for summer 2024) • Outfall Project (on hold) • Headworks Replacement Project (in advanced planning) Space Planning The existing Administration Building was originally constructed in 1975 as a recycled water process and pumping facility and subsequently expanded in 1992, 1995, and 1998 as a staff building and pretreatment lab. The existing Operations Building was originally constructed in 1972 and houses laboratory testing stations and equipment, offices, a large lunchroom, and locker rooms. Per the LRFP, the need for a new building was identified to house Operations, Administration, Engineering, Watershed Protection, IT, and Solid waste staff, as well as to provide a new laboratory. Subsequently, in 2017, RWQCP staff revisited the LRFP siting analysis which resulted in the identification of the project as a new, 2 story building which would house the laboratory, environmental services staff, and be located along the western periphery of the RWQCP (adjacent to the secondary clarifiers). Building costs were higher than budgeted and the Plant canceled the project to reevaluate alternatives. The City also intends to construct and/or repurpose workspaces for RWQCP staff to meet future staffing levels, workspace upgrades and safety/code updates. There are several predefined workspace alternatives to be used independently or in aggregate to meet the Plant’s workspace needs, including: • Buy 1900 Embarcadero Road and remodel for some or all groups. • Buy 2415-17 and/or 2425 Embarcadero Way, demolish existing structure and a build tech services building for some or all groups. • Renovate and repurpose the Administration Building. • Renovate the Operations Building for at least the Operations group. • Build a technical services building, that includes a lab function, engineering, technology, and watershed protection groups • Construct a “lab only” building, that includes the laboratory, laboratory appurtenant spaces, and lab staff workspaces. • Build a “mothership” adjacent to new lab only building, consisting of Operations, Engineering, Technology, and Watershed Protection groups. • Build a tech services building next to new lab only building, consisting of Engineering, Information Technology, and Watershed Protection Group. The Plant’s preference is for the Operations Group to remain in the existing Operations Building, provided that alternative is favorable or similar in comparison to other alternatives costs. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 9  Packet Pg. 216 of 412  Vers.: Aug. 5, 2019 Page 7 of 41 The workspaces need to include the programmed areas defined in Attachment B – Exhibit A (Space Needs Analysis), including: • A primary point of entry of Plant visitors; • An Operations staff and control room, equipped with SCADA monitoring and control system; • Sufficient exterior space for motor vehicle parking and bike storage; • Integrated security systems; and • Sufficient common areas for large conferences, small meetings, meals (preparation and dining); note that the Admin Building has been repurposed for conference, training, job walk meetings with a large number of attendees, and all-hands meetings and meals; the repurposed Admin Building seems to be meeting the space planning needs the large gathering space needs without the need for these larger spaces to be placed in a more expensive new building (e.g., the former mothership concept of the prior staff building planning). Biosolids Facilities Plan In 2014, the City developed a Biosolids Facility Plan (BFP) to evaluate and recommend a biosolids technology to replace incineration and a biosolids disposal plan for review and approval by City Council. The 2014 BFP can be found at link below1. The BFP recommendation was to construct a Phase I sludge dewatering and truck loadout facility which is now in operation. A future Phase II facility was to include anaerobic digestion facilities including thermal hydrolysis processing (THP) of biosolids followed by mesophilic anaerobic digestion (MAD) with a combined heat and power (CHP) facility to utilize the biogas. This recommendation was based on a combination of economic and non-economic factors emphasizing energy production, greenhouse gas reduction, capital cost, and life-cycle cost. The THP/MAD/CHP alternative was further developed in a Preliminary Design Report in 2015. This report can be found at link below2. With further project definition and design development, the estimated capital cost for the selected alternative increased from $57M to $71M. This revised cost estimate, coupled with the complexity of operating a new THP facility, led to the decision to abandon the THP/MAD/CHP project in early 2015. The design of the dewatering and truck loading facilities proceeded in 2015 and the new facility was operational in early 2019. Since completion of the BFP and Sludge Dewatering and Loadout Facility, there have been several new developments in the industry that warrant revisiting the previous recommendations and updating the BFP. These include: 1 City of Palo Alto https://www.cityofpaloalto.org/files/assets/public/public-works/environmental- compliance/water-quality/2010-rwqcp-master-planning/parwqcp-biosolids-facility-plan-final.pdf 2 City of Palo Alto https://www.cityofpaloalto.org/civicax/filebank/documents/61625 Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 10  Packet Pg. 217 of 412  Vers.: Aug. 5, 2019 Page 8 of 41 • The City has completed the new sludge dewatering and truck load -out facility and the incinerators have been decommissioned. • Recent legislation in California is driving new regulations that impact biosolids disposal options, organic waste management options, as well as short-lived climate pollutants (including methane) and other air emissions from wastewater treatment facilities. • Several technologies that were nascent at the time of the BFP have advanced with recent installations and operational history in California. These include the Lystek low-temperature alkaline hydrolysis process and the Bioforcetech drying and pyrolysis process. • A BFP 2019 update that re-evaluated long-term biosolids management and energy recovery alternatives. The ultimate outcome for the near-term was to continue hauling and treating dewatered sludge at regional treatment facilities which would handle beneficial reuse. This update can be found at link below3. • The City has awarded a five-year contract for offsite biosolids processing. A new five-year contract will be in place by April 1, 2024 for a term of April 1, 2024 to March 31, 2029. • The Regional Water Quality Control Board (RWQCB) has adopted a Nutrient Watershed Permit and is moving toward regulating total nitrogen in effluent discharged to the San Francisco Bay. This has led to a reassessment of the recommendations of the LRFP and the City has decided to replace the aging Fixed Film Reactor (FFR) facilities with a biological nutrient removal (BNR) process. This will result in a change in solids production rate (about 34% more WAS and 10% more total sludge) and solids quality and potential future dewatering side-stream treatment requirements. • Wastewater flows have decreased and waste strength has increased due to water conservation measures and a drop in infiltration and inflow into sewers over the long-term. The Biosolids Facility Plan needs to identify a layout and siting concept for near- and long-term solutions, within the Plant fence line and/or at the Measure E site, adjacent to the Plant’s southeast boundary. The Measure E site is owned by the General Fund and is former parkland. If authorized by Council, the Measure E site could be used by the Wastewater Treatment Fund for a biosolids facilities process (i.e., “an environmental technology” as defined in the Measure E language). City Council has the option to rededicate some or all of the Measure E site as parkland at any time. However, this LRFP Update is an important study to help City Council decide whether it is beneficial for the City to use the Measure E site for use for a future biosolids technology, and Council is likely to defer any decisions on park rededication until completion of this study. The 2019 Biosolids Facilities Plan update only analyzed biosolids technology facilities inside the plant fenceline because the technology evaluation did not dictate the need for supplemental land. This study, at the direction of Council, will be evaluating the Measure E site in addition to land inside the plant fenceline. 3 City of Palo Alto https://www.cityofpaloalto.org/files/assets/public/public-works/water-quality-control- plant/sludge-dewatering-building/finaldraft_palo_alto_bfp_update.pdf?t=47012.05 Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 11  Packet Pg. 218 of 412  Vers.: Aug. 5, 2019 Page 9 of 41 III. INITIAL PROJECT DEFINITION A successful Long Range Facilities Plant Update will address the RWQCP key issues and meet the RWQCP long term goals. Key Issues (in no particular order): Schedule o The City needs to make RWQCP layout and space planning decisions as soon as possible. The Biosolids Facility Plan Update and the Workspace Planning tasks need to occur first and findings from these tasks need to be used by the City before the conclusion of the complete Long Range Facility Plan Update. • Existing Conditions and Capital Improvements: o Project Location: The RWQCP is located within a flood plain, adjacent to the San Francisco Bay, a baylands park, a closed landfill, and an active airport. Associated conditions, including but not limited to, flooding, sea level rise and related rising shallow groundwater conditions (see City of Palo Alto Sea Level Rise Vulnerab ility Assessment section 8.2.5.2 for anticipated inundation and depth to groundwater changes in future decades, and Sea Level Rise Adaptation Policy at www.cityofpaloalto.org/sealevelrise), miscellaneous fill, young bay mud, and temporary and permanent facility height restrictions need to be considered. ▪ The RWQCP is located adjacent to light-industrial and commercial properties. Temporary and permanent aspects of the Project implementation, including traffic, noise, dust and odors need to be anticipated and mitigated. ▪ The RWQCP is located over “bay mud” and miscellaneous fill. Geotechnical investigations are required to understand soil conditions and seismic criteria. All current Capital Improvement Plans (CIPs) utilize deep, drilled piles as part of the foundation system for structures, including equipment pads. o Reliability: The RWQCP is critical infrastructure, required to be staffed and operate through extreme events and future conditions (including anticipated sea level rise, changing shallow groundwater conditions, and potential 100-year flood event; seismic events, and mechanical and power failures) with minimal impacts. o Costs: The Plant needs to understand the initial and long-term costs associated with proposed improvements and the costs/risks of no improvement alternatives to ensure the best value for the Partners is programmed. o Project Prioritization and Sequencing: To the greatest extent possible, the City needs to understand its infrastructure’s risk of failure and consequence of failure. Capital improvement projects need to be developed to minimize infrastructure failure harming public health, property, and the environment. Consideration also needs to be given to the space and resources available to complete projects and the logical sequencing of related projects (related by process or related by area). Projects should be phased as needed to align with resources, including funding. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 12  Packet Pg. 219 of 412  Vers.: Aug. 5, 2019 Page 10 of 41 o CIP Constructability: Staging, laydown, and parking constraints need to be considered when defining projects. • Identification and Allocation of Costs o Operations and Maintenance Costs: To ensure fair cost allocations to the Partners of the Plant based on flow and strength components of the wastewater, the City needs to understand the total cost components of its reoccurring services, including administration, operations, maintenance, and contractor/vender services. o Capital Cost (Debt) Shares: The City assigns to each Partner a proportion of the capital costs associated with each major project. The City needs to review their existing methodology for assigning costs and to evaluate alternative methodologies. The City favors a methodology that is fair, transparent, and appropriately detailed. • Spatial Considerations: The Plant has had the same property line and footprint since 1972. Over that time, the Plant has utilized the available footprint to adapt to its operations and infrastructure to meet community and regulatory drivers; the Plant has expanded its wastewater treatment capacity and recycled water production, reduced its ons ite air emissions, and improved effluent water quality. The fixed footprint has made it challenging to implement capital improvement projects and major maintenance activities while meeting all the Plant’s high standards and regulatory requirements (e.g., issues with staging, laydown, parking, and maintenance of screening and buffer lands). The Plant may have the opportunity to acquire adjacent properties and relocate some Plant staff groups outside the existing Plant footprint. The Plant needs to understand and quantify the benefits/opportunities of acquiring a new property. A significant part of the consideration is the planning-level costs for the several building construction and renovation alternatives, listed in Task 3. • Biosolids Facilities and Management: Due to the changing disposal requirements and evolving opportunities and technologies, the City needs to again update their Biosolids Facility Plan (BFP). The plan, Biosolids Facility Plan Update, needs to: evaluate biosolids disposal options, onsite treatment opportunities, and opportunities for regional partnerships; identify improvement projects required at the Plant and associated estimated costs and greenhouse gas emissions; and identify planning level layout(s) and space requirements. The BFP Update needs to include a 30-year planning horizon. Long Term Goals (in no particular order): Prior to the 2012 Long Range Facility Plan, a long-term Goals Study was conducted with extensive input from the community, other stakeholders, and Plant staff. That effort identified 18 goals to guide RWQCP activities. Fundamentally, the long-term goals remain the same and are the basis for the Long Range Facilities Plan Update. The long-term goals for the RWQCP are listed below. • Meet Future Capacity Needs • Meet or Exceed Regulatory Requirements • Minimize or Eliminate Toxins in the Influent Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 13  Packet Pg. 220 of 412  Vers.: Aug. 5, 2019 Page 11 of 41 • Minimize Energy Consumption and Maximize Energy Life Cycle Efficiency • Minimize or Eliminate Potentially Hazardous Chemical Usage • Minimize or Eliminate Total Release of Toxins to the Environment • Minimize Impact on Ecosystem • Minimize Impacts on Community, Including Neighboring Communities • Minimize or Justify Financial Impacts on Ratepayer • Involve Stakeholders in the Decision-Making Process • Immobilize or Beneficially Reuse Persistent Toxins • Take Leadership Role in Promoting Beneficial Reuse and Environmental Enhancement • Maximize Worker Safety • Maximize Recycled Water as a Supplemental Water Source • Minimize the Plant’s Lifecycle Greenhouse Gas Emissions • Address Climate Change, Sea Level Rise and Changing Shallow Groundwater Conditions • Minimize Recycled Water Salinity IV. CONSULTANT SCOPE OF SERVICES (BASIC SERVICES) The CONSULTANT’s scope of work shall include the tasks described in the following sections. The CONSULTANT shall not perform work on a task prior to an explicit approval by the City to proceed with work for that specific task. City anticipates the CONSULTANT’s work to proceed as follows with adjustments as needed by the CONSULTANT where mutually agreed to with the City: Step 1: Update population and load projections for new planning horizon (50 -year) (Task 4) Step 2: After Step 1, Specific Facilities Plans for Workspaces and Biosolids 1. Workspace Planning Facilities Plan (Task 3) 2. Biosolids Facility Plan Update (Task 2) Step 3: In parallel with Step 2 1. Cost of Service Assessment for Operating and Capital Cost Allocations (Task 7) Step 4: After Step 1 and parallel or after Steps 2 & 3, investigate existing RWQCP condition and process needs (Task 5) Step 5: After Step 4, Key assessments of capital assets and site planning (Task 6) Step 6: After Step 5, Updating recommended projects and prioritization list with new Association for the Advancement of Cost Engineering (AACE) Class 5 estimates (Task 8) Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 14  Packet Pg. 221 of 412  Vers.: Aug. 5, 2019 Page 12 of 41 Task 1 – Project Management Task 1.1 – Invoicing/Project Controls Provide necessary administration, project controls, quality assurance and professional oversight of the Project and the CONSULTANT's subconsultants to ensure the Project remains on schedule, remains within budget, maintains continuity of information, and satisfies the requirements of the CONTRACT. Prepare and distribute a Project Management Plan (PMP) for City’s record. Within the PMP, include the baseline schedule, budget, spending projection, contacts/subcontracts and procedures. Include a Project Directory with roles and contact information and a Quality Assurance and Quality Control Plan. Prepare and submit monthly invoice packages to the City. Billing period shall include the full calendar month and not overlapping two separate Fiscal years (i.e., not to combine June and July invoices). If reimbursable incurred, include a summary table listing the subject matter/ personnel name, date, purpose and associated expenses; label each receipt with a numerical number. Include a progress report with invoices to document progress. Progress reports shall include, for each task, a summary of work and budget status, including authorized amount, current billing, billed to date, amount remaining, and percent spent. Provide monthly progress updates specifying, for each task, work accomplished, key action items, key decisions, upcoming workshops and deliverables, workshops and deliverables to date , outstanding issues, potential changes, and schedule updates. Identify and mitigate potential budget overruns. Prepare, maintain, and update the status of Project schedule for City’s review and comments. Identify and mitigate schedule changes. Task 1.2 – Kick-Off Meeting Facilitate a hybrid (in-person/virtual) meeting at the initiation of the Project (Kick-Off Meeting), with the City Project Manager and City staff to discuss overall project coordination, data collection, and project schedule. Walk the Project site. Provide meeting attendees with an agenda seven (7) calendar days in advance of the date of the meeting. Provide meeting attendees with summary minutes and electronic copies of any supplemental materials used during the meeting no later than fourteen (14) calendar days from the date of the meeting. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 15  Packet Pg. 222 of 412  Vers.: Aug. 5, 2019 Page 13 of 41 Task 1.3 – Project Progress Meetings Conduct virtual (via phone or web conference services) Project Progress Meetings with City Project Manager, twice a month. The frequency of Project Progress Meetings can be decreased at the City’s discretion. Deliverables: • Draft and final Project Management Plan. • Baseline project schedule with milestones. • Agenda and minutes for kick-off meeting. • Monthly invoices, including monthly Progress Reports. • Monthly Progress Updates. • Periodic updates on Project Schedule. Assumptions: • The kick-off meeting will be attended by up to five Carollo staff and up to two Jacobs staff. The kick-off meeting will be a hybrid meeting, with some staff attending in person an d others attending virtually and will have a 2-hour duration. In-person attendees will walk the project site after the kick-off meeting. • Monthly progress updates will be provided before the monthly project progress meetings. • Project progress meetings will be attended by up to two Carollo staff and one Jacobs staff. Meetings will be virtual and have a 1-hour duration. • Quality assurance and professional oversight of Project tasks will be performed under individual task budgets. • All deliverables will be provided in electronic format. Task 2 - Biosolids Facility Plan (BFP) Update Task 2.1 - Update Background Information The RWQCP currently co-thickens primary sludge and WAS in gravity thickeners and dewaters thickened sludge in belt filter presses. Dewatered cake is hauled for offsite processing by Synagro and Lystek. Collect up to 5 years of available data on current solids (primary sludge, WAS, thickened WAS and primary sludge, and dewatered cake) quantities and characteristics (flow, total solids concentration, volatile solids concentration). Assess gravity thickener and belt filter press current operations (operating schedule, duty/standby units), process performance (hydraulic and solids loading rates, polymer dose, solids capture rate, and thickened and dewatered solids concentration). Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 16  Packet Pg. 223 of 412  Vers.: Aug. 5, 2019 Page 14 of 41 Assess current solids handling operating costs (power use, polymer use, operations and maintenance labor, equipment maintenance) and end-use costs to establish the baseline “do- nothing” solids processing alternative. Review previous biosolids evaluations including the 2012 Long Range Facilities Plan, the 2014 Biosolids Facility Plan, and the 2019 Biosolids Facility Plan Update. Develop draft BFP update priorities and evaluation criteria and methodology to be used in the biosolids alternatives screening and evaluation. The evaluation criteria and methodology used in the 2019 Biosolids Facility Plan Update will be used as a starting point for this BFP Update; CONSULTANT will review and modify as needed, with input from the City. Conduct a kickoff workshop with Plant staff to review and confirm the draft BFP Update priorities, evaluation criteria and methodology, the current solids quantities, the current solids processes performance, and current solids handling and end-use costs. Draft a BFP Update Background and Introduction Technical Memorandum (TM) for the City’s review and comment. Incorporate City’s comments in the final BFP Update Background and Introduction TM. Task 2.2 – Develop Baseline Solids Projections The BNR/MABR secondary treatment upgrades, projected to be in service in 2028, are expected to result in a substantial change in solids production rate (about 34% more WAS and 10% more total sludge). This change in solids production rate and primary sludge to WAS ratio is expected to affect the gravity thickening and belt filter press dewatering performance. The BFP Update will be based on a 30-year planning horizon. CONSULTANT will use the primary sludge and WAS loading projections (pounds per day) and volatiles solids concentrations (%VS) from the BioWin model developed in Task 4.3 and thickening and dewatering process performance assumptions to develop annual average and maximum month solids projections (primary sludge, WAS, thickened primary sludge and WAS, and dewatered cake) for use as the basis of sizing potential future solids processing facilities and off-site management options. CONSULTANT will use the existing thickening and dewatering performance criteria from Task 2.1 as a baseline and modify them based on expected changes in performance criteria from the BNR/MABR upgrades. Task 2.3 – Regulatory Requirements and Trends Review regulatory review chapters of previous biosolids evaluations including the 2012 Long Range Facilities Plan, the 2014 Biosolids Facility Plan, and the 2019 Biosolids Facility Plan Update. Review current and expected future regulations, including: • Federal, state, and local regulations applicable to existing and potential future solids processing and beneficial reuse. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 17  Packet Pg. 224 of 412  Vers.: Aug. 5, 2019 Page 15 of 41 • Regulations on short-lived climate pollutants (Senate Bill 1383) and emerging contaminants of concern: plastics/microplastics and PFAS. • Regulations relating to air emissions from digester gas treatment, flares, boilers, cogeneration, drying, and gasification/pyrolysis (since alternatives to be evaluated in Tasks 2.4 and 2.5 may include anaerobic digestion and thermal processes). • Regulations on sea level rise and related shallow groundwater change adaptation, as applicable. Conduct a Basis of Planning workshop with Plant staff to review the solids projections developed in Task 2.2 and the regulatory requirements and trends developed in Task 2.3. Draft a Regulatory Requirements and Trends TM for the City’s review and comment. Incorporate City’s comments in the final Regulatory Requirements and Trends TM. Task 2.4 - On-Site Solids Processing and Off-site Management Alternatives Screening Evaluate potential on-site solids processing and off-site management alternatives. CONSULTANT will review the alternatives developed in the previous biosolids evaluations including the 2012 Long Range Facilities Plan, the 2014 Biosolids Facility Plan, and the 2019 Biosolids Facility Plan Update. On-site solids processing alternatives may be sited at the Measure E site, immediately adjacent to RWQCP (see staff report below for more information)4. The City Council has authorized that the Measure E site can be used as a potential future biosolids processing facility. Evaluate the latest developments for established and emerging technologies. Potential on-site solids processing alternatives include: • MAD (mesophilic anaerobic digestion) with recuperative thickening • TAD (thermophilic anaerobic digestion) • TPAD (Two-Phase Anaerobic Digestion) • MAD with THP (Thermal Hydrolysis Process) • Low Temperature Alkaline Hydrolysis (Lystek International, Inc.) • Drying / Pyrolysis (Bioforcetech Corporation; Aqualine) • Gasification (this alternative is expected to be eliminated due to need for wood chip addition) • Thermal Drying • Greenhouse Solar Drying CONSULTANT will take into consideration the possibility of using mechanical thickeners (such as rotary drum thickeners) immediately downstream of the gravity thickeners or blend tank to increase the solids concentration and reduce the required downstream biosolids facility footprint. CONSULTANT will evaluate expected impact of digestion on downstream dewatering performance. 4 City of Palo Alto, April 3rd, 2023, SR 2303-1145 https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/reports/city-manager-reports-cmrs/2023/sr-2302-0942.pdf Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 18  Packet Pg. 225 of 412  Vers.: Aug. 5, 2019 Page 16 of 41 Coordinate with the City to develop a list of up to five (5) off-site management alternatives for the City of Palo Alto. Off-site alternatives may be speculative. Potential off-site management alternatives include: • San Jose WPCP Public Private Partnership (P3) imported feedstock opportunity For each on-site and off-site alternative, evaluate high-level advantages, disadvantages, recent installations, relative greenhouse gas (GHG) emissions (including for the processes and required trucking/hauling), and relative capital and operations and maintenance (O&M) costs. For greenhouse solar drying and other large footprint alternatives, estimate footprint requirements to determine if there is sufficient space at the RWQCP and Measure E site for these processes. Conduct an On-Site and Off-Site Solids Alternatives Screening Workshop with City staff. At the workshop, use the screening evaluation criteria and methodology established in Task 2.1 to screen the options down to up to five (5) alternatives for alternatives development and analysis (“selected alternatives”). Task 2.5 - Alternatives Development and Evaluation Develop the selected alternatives identified under Task 2.4. Focus on a comparative evaluation and identify major differences between alternatives that align with the evaluation criteria identified in Task 2.1. Develop planning-level capital and life-cycle cost estimates and non-economic evaluations. Incorporate input from stakeholders, including input obtained in public meetings, in development of evaluation criteria and weights. Evaluate compliance with and flexibility to meet anticipated future regulatory requirements. Develop quantitative GHG emissions. Include in the GHG analysis the changing regulatory landscape that requires future sludge hauling trucks to be electric by 2036; evaluate hauling GHG emissions for two scenarios: current diesel trucks and future electric trucks. Consider the spatial requirements of the selected alternatives and prepare a preliminary site layout plan for each, including trucking routes. Include required appurtenances for each alternative. Provide key parameters for each alternative, including height, area, and operations and maintenance areas. Assess the feasibility of siting each alternative within the existing RWQCP site boundary or at the Measure E site, including development of site layouts, capital and life-cycle cost estimates, and evaluation criteria scores for each siting option. Conduct a sensitivity analysis to test the robustness of the alternatives evaluation findings under varying future biosolids market conditions, regulatory scenarios, and evaluation criteria weights . Draft an Alternatives Development and Evaluation TM for the City’s review and comment. In addition to documenting the findings of this task, include a description of the solids projections Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 19  Packet Pg. 226 of 412  Vers.: Aug. 5, 2019 Page 17 of 41 developed in Task 2.2 and of all alternatives considered and the basis for the initial screening conducted in Task 2.4. Conduct an Alternatives Development and Evaluation workshop. Incorporate City’s comments in the final Alternatives Development and Evaluation TM. The City has determined that alternatives involving food waste receiving, microturbines, fuel cells, compressed biogas vehicle fueling and compressed biogas for pipeline injection will not be included in the evaluation. Task 2.6 - Recommended Biosolids Alternatives(s) Collaborate with the City to identify a recommended biosolids alternative. If the preferred alternative is speculative, also provide a non-speculative recommended biosolids alterative. For the recommended biosolids alternative(s), develop: • Process flow diagram • Nutrient removal strategy (including struvite, side-stream treatment) • Ancillary facility requirements • Preliminary site layout and square footage / acreage requirements • Constructability issues • Beneficial reuse and final disposition of residuals • Estimated capital costs • Estimated operations and maintenance (O&M) costs • Estimated GHG emissions o For trucking alternatives, consider emissions for both diesel and electric vehicles • Risk management and mitigation strategy Develop a draft Recommended Biosolids Alternative(s) TM detailing the recommended alternative(s). Conduct a Recommended Biosolids Alternative(s) Workshop. City’s review comments on the draft Recommended Biosolids Alternatives TM will be incorporated into the final Recommended Biosolids Alternatives TM. Prepare a slide deck of technical support materials and exhibits for future City Council and partner agency presentations, detailing the BFP Update findings and recommendations. Target a 20-minute length of presentation. Incorporate two cycles of City’s review comments. Task 2.7 - Biosolids Facility Plan Update Provide a draft Biosolids Facility Plan Update, compiling the TMs developed in the preceding subtasks. The BFP Update will include an Executive Summary of the findings, conclusions, and recommendations. Conduct a workshop to review and discuss the draft BFP Update with City Staff. Incorporate City’s comments and provide a final BFP Update. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 20  Packet Pg. 227 of 412  Vers.: Aug. 5, 2019 Page 18 of 41 Deliverables: • Agenda, materials, and minutes for all workshops: o BFP Kickoff o Basis of Planning Workshop (covering solids projections and regulatory requirements and trends) o Biosolids Alternatives Screening Workshop o Alternatives Evaluation Workshop o Recommended Alternative(s) Workshop o BFP Update Review Workshop • BFP Background and Introduction TM, draft and final versions. • Regulatory Requirements and Trends TM, draft and final versions. • Alternatives Screening and Evaluation TM, draft and final versions and comment log. • Recommended Biosolids Facilities Alternative(s) TM, draft and final versions and comment log. • Biosolids Facility Plan Update, draft and final versions, and comment log • Recommended Biosolids Facilities Alternative(s) presentation materials for future City Council and partner Agency presentations, two drafts and one final version. Assumptions: • Workshops will be attended by up to five Carollo staff and up to three Jacobs staff. Workshops will be virtual and have a 2-hour duration. • Cost estimates will be developed consistent with AACE Class 5. • All deliverables will be provided in electronic format. Task 3 - Workspace Planning Task 3.1 – Confirmation of RWQCP’s Workspace Vision, Needs and Constraints Review background information including preliminary design documents, record drawings, LRFP and other available documentation to understand site constraints and initial space and area requirements for Plant staff. Review of the background information will focus on the following: • Sites for new or leased buildings located off the Plant site that were identified in the RFP. • Existing Administration building. • Existing Operations Building Conduct a kickoff meeting and up to two follow-up meetings to confirm and finalize the vision/purpose/uses, the requirements/restrictions for siting the facilities, by Group (up to three meetings total). Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 21  Packet Pg. 228 of 412  Vers.: Aug. 5, 2019 Page 19 of 41 CONSULTANT will summarize the updated vision/purpose/uses, space and needs requirements in a TM (Vision, Needs and Constraints TM, draft and final) to define the program requirements for the Plant’s workspaces and related facilities. Task 3.2 – Workspace Concept Development and Evaluation Develop a series of initial workspace concepts for Plant workgroups, excluding Operations and Maintenance workgroups. Each concept will either be a standalone predefined workspace alternative or a combination of the predefined workspace alternatives. Provide a short narrative describing the concept and planning level capital cost estimates. Conduct a workshop to review the initial concepts with the City, characterize the potential advantages and disadvantages, and screen the series of initial concepts to result in up to three favorable concepts. Develop the three favorable concepts, as determined by the City, including site layout schematics, schematic building elevations, other graphical representations (e.g., adjacencies), and planning level costs. Conduct a workshop to present the two favorable concepts, refine the associated advantages and disadvantages, and solicit City feedback to select one preferred concept. Develop a draft Workshop Concept Development and Evaluation TM detailing the initial workshop concept screening, the three favorable concepts, the planning-level project life-cycle costs, key long-lead considerations (e.g., land acquisition, permit requirements) and findings (the preferred concept). Provide a discussion on the possible ways to phase alternatives to incrementally meet the City’s needs over the planning horizon. Collaborate with the City to identify a recommended alternative. Incorporate the City’s comments on the draft TM, workshop, and presentations in the final Workshop Concept Development and Evaluation TM. Prepare technical support materials and exhibits for City Council and partner agency presentations. Target a 20-minute length of presentation. Incorporate two cycles of City’s review comments. Task 3.3 – Preliminary (10%) Design for Rehabilitation of Existing Buildings Reference record drawings, visit the site, and review available documentation to understand site constraints, existing building layout, and geotechnical conditions for the existing (1) Administration Building and (2) Operations Building. • Operations Building: o Develop two layout alternatives drawings to accommodate the Operations Group, SCADA/Control room, SCADA Development Cubicle/Area, and upgraded Server room on second floor, bathroom/change room/mud room and locker room on first floor, and a kitchen/lunchroom. o In collaboration with the City, select a layout for the 10% design of the rehabilitation. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 22  Packet Pg. 229 of 412  Vers.: Aug. 5, 2019 Page 20 of 41 • Administration Building: o Develop two layout alternatives to accommodate a multipurpose space that can be utilized as a large meeting/gathering area for all-hands meetings, project pre-bid or pre-proposal conferences, trainings, community outreach meetings, as well as a private office, SCADA Development work area and miscellaneous training and tour sessions. o Note that the Administration Building will be for common spaces only (no programmed workgroup areas). o In collaboration with the City, select a layout for the 10% design of the rehabilitation. • For both buildings, develop a 10% Design Package: o Develop the design criteria for the building and identify major elements of the rehabilitation required to meet applicable codes (e.g., seismic upgrades, sea level rise adaptation). o Identify major building support systems requiring upgrades (e.g., HVAC) during buildings’ design life. o Update the project life cycle costs and project implementation schedule. o Identify any data gaps that will require additional, future investigations. o Develop 10% design drawings. Conduct a workshop to present the 10% Design Package and solicit City feedback. Incorporate City’s comments from the draft design package and workshop in the final design package. Deliverables: • Agenda, materials, and minutes for all workshops and meetings: o Vision, Needs and Constraints Kickoff Meeting. o Up to two additional Vision, Needs and Constraints Meetings. o Workspace Concepts Screening Workshop. o 10% Design Review Workshop. • Vision, Needs, and Constraints TM, draft and final versions. • Workshop Concept Development and Evaluation TM, draft and final versions and comment log. • Workspace Planning presentation materials for future City Council and partner agency presentations, two drafts and one final version. • 10% Design Package for Operations Building and Administration Building rehabilitations, draft and final versions and comment log. Assumptions: • Workshops will be hybrid (in person and virtual) and attended by up to three Jacobs staff (in person) and one Carollo staff (virtually). Workshops will have a 2-hour duration. • All deliverables will be provided in electronic format. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 23  Packet Pg. 230 of 412  Vers.: Aug. 5, 2019 Page 21 of 41 • Cost estimates will be developed consistent with AACE Class 5. • New workspace construction should have a minimum design life of 50 years. • Renovated workspaces need to include life-cycle costs to have comparable useful life as new workspace construction. Task 4 – Background and Baseline Information Task 4.1 – Wastewater Flow and Load Projections Collect and summarize up to 5 consecutive years of Plant influent wastewater flows and characteristics. Determine the historical Average Day Dry Weather, Average Day Wet Weather, Maximum Month, and Peak Day Wet Weather flow and load conditions. Develop population forecasts and expected per capita wastewater flows and loads for each Partner Agency in coordination with Partners’ planning efforts. These forecasts will consider the following information from the Partners: • urban water management plans • census data • ABAG projections • sewer master plans • planning department projections • other population projections formally adopted by each Partner Agency Population forecasts and per capita wastewater flow and load projections will also be informed by a questionnaire developed by the CONSULTANT to determine each Partner Agency’s expected 2075 flow and load projections for City’s review and distribution. CONSULTANT will compile and analyze questionnaire responses, attend up to six (6) City coordinated meetings with each Partner Agency, and compile meeting information. Based on historical flows and loads, population forecasts, and expected flow and load projections for each Partner Agency, develop Average Day Dry Weather, Average Day Wet Weather, Maximum Month, and Peak Day Wet Weather flows and loads for the year 2075. Task 4.2 – Recent and Ongoing Plant Improvements Summarize the major and minor capital improvements completed and underway at the Plant since the 2012 Long Range Facilities Plant. Perform one (1) site visit and meet with Plant staff to verify equipment rating of critical equipment, as needed. CONSULTANT shall not rely solely on record information. Based on record information and site verification of critical equipment rating, CONSULTANT will summarize the design criteria of the current and planned facilities, to be used in Task 4.3. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 24  Packet Pg. 231 of 412  Vers.: Aug. 5, 2019 Page 22 of 41 Task 4.3 – Process Modeling, Capacity Assessment, and Solids Projections The City will provide the EnviroSim Associates BioWin process model to the CONSULTANT to use. The process model was developed by Brown & Caldwell after completion of the Secondary Treatment Upgrade project design. The CONSULTANT will use the wastewater flow and load projections developed in Task 4.1 and the design criteria for recent and ongoing plant improvements developed in Task 4.2 to update the process model, as needed. CONSULTANT will use the model to develop primary sludge and waste activated sludge (WAS) loading projections for the 30-year planning horizon to be used in Task 2 (Biosolids Facility Plan Update). These primary sludge and WAS load projections will be based on the Plant’s planned treatment process. CONSULTANT will conduct a capacity assessment of existing Plant processes based on the 2075 projections developed in Task 4.1 and the design criteria determined in Task 4.2. CONSULTANT will compile a matrix of all major treatment processes and their capacities. Based on the capacity assessment, CONSULTANT will identify capacity limitations and capacity-driven expansion needs over the next 50 years. CONSULTANT will allocate capacities by Partner Agency allocation, according to the information tabulated in Task 7.2 and compare allocated Partner capacities with future projections to identify exceedances. The updated BioWin simulator inputs and results will be shared with the City for future use. Task 4.4 – Regulatory, Environmental and Community Constraints Review Plant’s current NPDES permit. Conduct a workshop with the Plant’s Regulatory Group staff to discuss current and potential future regulatory requirements. This task will include the following topics: • Current and Potential Future Regulatory Requirements o Monitoring and Effluent Water Quality o Air Emissions Quality (except for potential future biosolids processes, which will be covered in Task 2.3) o Environmental Compliance Laboratory TNI Requirements o Pretreatment • Community Goals and Concerns • Regional Trends, Studies, and Opportunities • Emerging Contaminants of Concern (specifically, ones that could require a project or change in Plant operations during the planning horizon) Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 25  Packet Pg. 232 of 412  Vers.: Aug. 5, 2019 Page 23 of 41 Task 4.5 - Development of Evaluation Criteria and Methodology Develop the criteria for the evaluation of existing infrastructure and potential improvements. The evaluation criteria and methodology used in the 2012 LRFP will be used as a starting point for this LRFP Update; CONSULTANT will review and modify as needed, with input from the City. Evaluation criteria may include: • Planning-level capital, operational, and maintenance cost (including life cycle costs) • Estimated staffing requirements/costs • Redundancy, reliability, and longevity • Ease of operation and safety • Ease of maintenance • Modifiable – to increase capacity, link with a process change, etc. • Environmental considerations: e.g., release of nitrogen to the bay, etc. • Carbon footprint minimization, especially through in-plant energy use reduction and energy recovery • Impacts on adjacent land uses (e.g., visual, odors, height, noise, traffic, etc.) • Treatment capacity and physical size, layout, footprint, and elevation impacts • Performance and usage history • Risk Factor (determined by Risk of Failure and Consequence of Failure) • Constructability Recommend a weighting/prioritization of criteria, or an alternative evaluation methodology. City to approve of final methodology. Draft a Basis of Planning TM summarizing the findings from Tasks 4.1 to 4.5 for the City’s review and comment. Incorporate City’s comments in the final Basis of Planning TM. Deliverables: • Partner Agency’s flow and load questionnaire, draft and final versions. • Agenda, materials, and minutes for all workshops/ meetings: o Flow and Load Projections, Recent Plant Improvements, and Regulatory and Community Constraints Workshop. o Evaluation Criteria and Methodology Workshop. o Capacity Limitations and Recommended Projects Workshop. • Basis of Planning TM, draft and final versions. Assumptions: • The site visit to confirm capacity information will be attended by up to three Carollo staff. • Workshops will be attended by up to four Carollo staff. Workshops will be virtual and have a 2-hour duration. • All deliverables will be provided in electronic format. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 26  Packet Pg. 233 of 412  Vers.: Aug. 5, 2019 Page 24 of 41 Task 5 – Existing Plant Infrastructure and Process Assessment Task 5.1 – Desktop Analysis Perform a desktop analysis of existing Plant infrastructure and assess the current processes (including but not limited to the list below). Use industry guidelines, project team experience, and City staff input to establish expected useful life estimates by classification. Install date and equipment and asset size/capacity information to be provided by the City to support the desktop calculation. Where data is lacking or insufficient, approximate install date from record drawings for original construction and from upgrade/expansion projects. Note th e age, capacity, and estimated remaining useful life of the subject infrastructure in a TM. Identify data gaps in the desktop analysis, make recommendations for infrastructure in need of field condition assessment (investigations), and prepare a draft Field Investigations Plan. • Onsite Infrastructure o Dual Media Filters o Secondary Clarifiers o Primary Sedimentation Tanks o UV Disinfection o Sludge Dewatering and Truck Loadout (including Sludge Blend Tank) o Effluent Outfall o Chemical Storage o Yard Piping o Recycled Water Facilities o W4 (Plant Water) Pumps and Power Distribution o Electrical Facilities o Hazardous Material Storage Facility o Compressed Air System (compressors and lines) o Gravity Thickeners o Equipment Room o Warehouse o Chlorine Building • Offsite Infrastructure o Renzel Marsh and Appurtenances o Matadero Creek saltmarsh pump o Golf course recycled water pipeline and pump station o Joint Intercepting Sewer (60” / 72” diameter) ▪ Pipeline Analyses ▪ Metering Station ▪ Approximately 2,364 feet out of 9,000 linear feet of the joint intercepting sewer closest to the Plant will be rehabilitated (via CIPP) in summer 2024. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 27  Packet Pg. 234 of 412  Vers.: Aug. 5, 2019 Page 25 of 41 ▪ Future rehabilitation of the remaining and upstream portions of the Joint Intercepting Sewer. ▪ Flow Meters o Partner Agency Flowmeters o CPA/MV recycled water pipeline Conduct a workshop with Plant staff to review the draft Desktop Analysis TM and the draft Field Investigations Plan and to coordinate investigations with Operators. Incorporate the City’s comments from the workshop and the draft Field Investigations Plan in the final Desktop Analysis TM and Field Investigation Plan. Task 5.2 – Sea Level Rise and 100-Year Flood Adaptation The CONSULTANT will review the following reference documents to identify paths forward to improve plant’s resiliency against sea level rise and 100-year flood events: • City of Palo Alto Sea Level Rise Adaptation Policy (March 2019)5 • City of Palo Alto Sea Level Rise Vulnerability Assessment (June 2022)6 • The Plant’s LiDAR topography. Based on the references, the Consultant will identify the projected flood elevation in the short‐term (2030), mid‐term (2050), and long‐term (2100). The consultant will identify key sea level rise and flood criteria, including sea level rise elevation, flood depth, and inundation duration with City staff. The Consultant will interview staff and analyze previous Plant CIP projects to understand the current timeline of equipment replacement and the cost premium of raising assets as they reach the end of their useful life, as well as the potential long-term impacts to site access under this strategy. The CONSULTANT will develop at least three alternatives for adaptation of the RWQCP over the planning horizon. Adaptation strategies included in these alternatives shall consider the feasibility, economic impacts, and environmental consequences of various mitigations that may include both natural and engineered adaptation alternatives and/or operational changes, including raising the foundation of critical equipment as they reach the end of their useful life; installing flood doors for existing building; and/or constructing a perimeter flood wall. The Project study area shall focus on City-owned infrastructure located within the boundaries of the RWQCP but shall also consider site access routes under future conditions. The CONSULTANT will collaborate with City staff through workshop(s) to review and finalize the measures to be included in each alternative. 5 City of Palo Alto. 2019. Sea Level Rise Adaptation. https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/sea-level-rise/slr-adaptation- policy_web.pdf?t=71340.78 6 City of Palo Alto. 2022. Sea Level Rise Vulnerability Assessment. https://www.cityofpaloalto.org/files/assets/public/v/1/public-works/environmental-compliance/sea-level- rise/palo-alto-sea-level-rise-vulnerability-assessment-june-2022-062822-linked-final.pdf Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 28  Packet Pg. 235 of 412  Vers.: Aug. 5, 2019 Page 26 of 41 Based on the final alternative concepts, the CONSULTANT will then develop a cost estimate and qualitative cost‐benefit analysis of each potential alternative, highlighting the recommended alternative, based on long-term costs of implementation, assuming no outside funding. The CONSULTANT will develop a reasonable implementation schedule for each alternative. Develop a 50-year timeline for each alternative, indicating the percentage of the Plant’s assets that would be protected each year, based on the projected flood elevations. As sume that no regional solutions (regional levee) are implemented during the subject period. For all alternatives: • Estimate the conditions and assumptions that would be required to operate the Plant during an inundation event (if operation is possible). • Estimate the impact inundation would have on the Plant’s ability to receive, treat, and properly discharge the Plant influent. • Estimate the extent of damage, including cost impact, to City’s asset for baseline condition (do nothing) and for each alternative. • Estimate the requirements to bring the Plant back to fully operational following an inundation event. • Estimate the cost to implement each alternative using a present worth analysis. Facilitate a workshop to present the analysis to City staff. Based on the results of the workshop, the CONSULTANT will prepare a Climate Adaptation Plan TM. The TM will summarize the recommended climate adaptation requirements, detail the potential alternatives for meeting the Plant’s requirements, and include graphics/figures for each alternative, including mapping of projected inundation areas at the planning horizons and the alignment and elevation of any protective measures considered. Provide the City staff two drafts for comments. For each draft log and respond to comments. Prepare a final TM. Task 5.3 – Field Investigations Following the City’s explicit approval, execute the Field Investigations Plan. Coordinate, oversee, manage, and provide the services required to assess the condition and capacity of existing infrastructure. Based on the findings from the desktop analysis (Task 5.1) and the field investigation results, develop a list of recommended improvements to be implemented over the next 50 years. Submit a draft TM describing the field investigation methods, findings, and recommended improvements from the field investigation results. Conduct a workshop with Plant staff to review the findings from the field investigations and associated recommended improvements. Incorporate the City’s comments from the workshop and the draft Field Investigation Findings TM in the final Field Investigation Findings TM. Deliverables: • Agenda, materials, and minutes for all workshops: o Sea Level Rise and Flood Criteria Workshop o Climate Adaptation Alternatives Screening Workshop Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 29  Packet Pg. 236 of 412  Vers.: Aug. 5, 2019 Page 27 of 41 o Climate Adaptation Alternatives Evaluation and Recommended Alternative(s) Workshop o Desktop Analysis Findings and Field Investigations Plan Workshop. o Field Investigations Plan Findings and Recommended Improvements Workshop. • Climate Adaptation Plan TM, two drafts and final versions. • Desktop Analysis TM, draft and final versions. • Field Investigations Plan, draft and final versions. • Field Investigation Findings TM, draft and final versions and comment log. Assumptions: • Field investigations will be performed by up to five Carollo staff and up to five Jacobs staff. • Workshops will be attended by up to five Carollo staff and up to three Jacobs staff. Workshops will be virtual and have a 2-hour duration. • All deliverables will be provided in electronic format. Task 6 – Identification, Evaluation, and Recommendation of Alternatives/Improvements Task 6.1 – Draft Recommended Improvements Compile the recommended improvements from Tasks 2, 3, 4, and 5 into a comprehensive draft list of foreseeable capital improvement projects to be implemented over the next 50 years. For reference, below is an initial list of anticipated projects. Additional projects shall be identified by the CONSULTANT based on their findings from Tasks 2, 3, 4, and 5. • Primary Sedimentation Tanks • Secondary Process o Clarifier Equipment Enhancements (e.g., Passavant hydrograv Adapt System; flocculation) o Clarifier Reconfiguration (e.g., square to round; deeper) o 7th Clarifier (planning) o Selective WAS Thickening o RAS Lines o MABR (second phase of implementation) • Filtration Process o Dual Media Filter Rehabilitation or Replacement • UV Disinfection • Sludge Dewatering and Truck Loadout (including Sludge Blend Tank) • Effluent Outfall • Chemical Storage • Electrical Distribution o Arc Flash Study Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 30  Packet Pg. 237 of 412  Vers.: Aug. 5, 2019 Page 28 of 41 • Recycled Water System • Warehouse o Expansion (Identify whether additional storage space is needed for projected future construction projects.) o Improvements (e.g., controlled facility, security, climate controls) • Workspaces o Align with conclusions from Task 3, as applicable • Repurposing and Recovery of Retired Process Area o Fixed Film Reactors (Superstructure will be decommissioned following completion of Secondary Treatment Upgrades Project in 2028. Note that City is interested in evaluating whether the decommissioned fixed film reactors’ structure can be used as warehouse storage or as space for future treatment process.) o Incineration Building o Chlorine Building • Gravity Thickeners • Biosolids Facilities o Align with conclusions from Task 2, as applicable • Miscellaneous o Recycle water line replacement o Hypochlorite tank and appurtenances replacement o Low voltage and communication system improvements (including fiberoptic network and public address system improvements) Conduct at least two workshops with Plant staff to review and amend the project list. For each project, determine with the City if an evaluation of alternatives (e.g., technologies; location; capacity) is appropriate at this stage and if future alternatives analyses are required. Coordinate with the regulatory group, including conducting a workshop as needed, to determine applicable regulatory requirements for air quality and water quality compliance. Determine if additional projects are needed based on the regulatory review. For each of the capital improvement projects, determine which projects sho uld be grouped, develop capital cost estimates, and prioritize projects to develop a reasonable implementation plan. Compile these projects into a draft 50-year Capital Improvements Plan (CIP). For each project, provide the following details: • Name • Description, capacity, and estimated useful life of the facility and major assets • Project development/definition steps • LRFP Update to implementation schedule • Estimated capital cost • Estimated operations and maintenance cost • Regulatory requirements • Necessary sea level rise and changing shallow groundwater adaptations Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 31  Packet Pg. 238 of 412  Vers.: Aug. 5, 2019 Page 29 of 41 • Projected start of construction (year) and construction duration CONSULTANT will review Plant data, metered utility data, chemical costs, trucking costs, etc. and consult with Plant staff to estimate the O&M costs associated with each process (including recycled water facilities). Develop a draft Recommended Improvements TM. Task 6.2 – Final Recommended Improvements Conduct at least one workshop with Plant staff to review the draft Recommended Improvements. Incorporate City’s comments from the draft Recommended Improvements TM and the workshop comments in the final Recommended Improvements TM. Deliverables: • Agenda, materials, and minutes for all workshops: o Project Identification Workshop. o Project Prioritization and Sequencing Workshop. o Recommended Improvements and 50-year CIP Workshop. • Recommended Improvements TM, draft and final versions and comment log. • Schematic of recommended improvement projects overlaid on an aerial image of the Plant with keynotes and legend. • 50-year CIP Excel Model. Assumptions: • Workshops will be attended by up to five Carollo staff and up to three Jacobs staff. Workshops will be virtual and have a 2-hour duration. • Cost estimates will be developed consistent with AACE Class 5. • All deliverables will be provided in electronic format. Task 7 – Cost of Service Analysis Task 7.1 – Operations and Maintenance Cost Allocation Perform a Cost of Service Analysis for the Plant’s Operations and Maintenance (O&M) costs. Allocate/proportion the estimated O&M costs from Task 6 based on each Partner Agency’s respective flows, loads, or other identified allocation parameters (as applicable). Identify the share of O&M expenses for each process allocable for cost recovery from wastewater flow, BOD, suspended solids (SS), ammonia (NH3), and other parameters as warranted (e.g. some Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 32  Packet Pg. 239 of 412  Vers.: Aug. 5, 2019 Page 30 of 41 O&M costs may be equitably recovered based on the share of capacity owned by each member agency). The goal will be to determine cost recovery allocations for each Plant process for equitably recovering O&M costs from the City and its partner agencies. Review how flow and load data is currently sampled and analyzed. Identify and evaluate options for establishing a consistent basis for measuring and determining wastewater flow and loadings for future O&M cost allocation. Consult with Plant staff and partner agencies to gain input and facilitate agreement regarding future flow and loading measurement. Identify alternative approaches for using the flow and loading data for O&M cost allocation. For example, use of rolling multi-year data to help smooth annual changes in cost allocations, or evaluation of cost allocation based on the number of Equivalent Dwelling Units (EDUs) assigned to each agency. Conduct a survey of other regional and comparable multi-agency wastewater treatment plants for purposes of identifying how other agencies a) measure flows and loadings for allocating costs to member agencies, and b) apportion O&M and capital cost to their member agencies. Discuss how other comparable regional wastewater treatment facilities collect data and allocate O&M costs. As warranted, develop up to three alternative methods each for allocating O&M costs based on different combinations of allocation factors and assumptions of data availability for relevant allocation factors and assumptions of data availability for relevant allocation factors, which could include flow information, loading information, number of customers or other allocation factors identified as relevant to developing an efficient and equitable allocation approach. The following background context will be used to guide selection of appropriate allocation factors to include in the alternative methods: Partners like Palo Alto, Mountain View, and Los Altos began using strength components in the cost of service by agreement on January 14, 1980 with an effective start date of July 1, 1980. This approach was formalized with EPASD in 1989 and Stanford and Los Altos Hills in 1986. The cost components are set at 34% flow, 22% ammonia (NH3), 22% total suspended solids (TSS), and 22% chemical oxygen demand (COD). The allocations may be altered “based upon actual cost data derived in accordance with generally accepted accounting principles and upon agreement of all parties hereto.” The City will use the results of this task to establish the cost data per generally accepted accounting principles to potentially change the allocation of total costs to be billed on annual basis for each of the six agencies and to potentially alter how data is collected for support of this calculation. City staff will handle Partner agreement changes and be supported by the CONSULTANT. Compare the existing and alternative methods, including the impact of the various options on costs allocated to the partner agencies for O&M costs during a future budget year, such as FY 2025, that would be selected in collaboration with the City. Evaluate alternatives to current sampling practices used to generate load data. Make preliminary recommendation on cost allocation approach. Finalize recommended approach after discussion with the City of advantages and disadvantages of the approaches evaluated. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 33  Packet Pg. 240 of 412  Vers.: Aug. 5, 2019 Page 31 of 41 Draft an Operations and Maintenance Cost of Service TM Section. Facilitate a workshop to present the findings. Incorporate City’s comments from the draft Operations and Maintenance Cost of Service TM Section and the workshop comments in the final Cost of Service Analysis TM. Task 7.2 – Capital Cost Allocation Perform a Cost-of-Service Analysis for the Plant’s Capital Costs. Review the Plant’s current allocation of capital costs (debt) to the Partner Agencies as capacity shares. Partners established current fixed capacity shares in about April 1985 as follows: MAXIMUM FLOW CAPACITY RIGHTS EXPRESSED IN ANNUAL AVERAGE FLOW MILLION GALLONS PER DAY Los Altos Mountain View East Palo Alto Sanitary District Stanford University Los Altos Hills Palo Alto Total 3.80 15.10 3.06 2.11 0.63 15.30 40.00 FIXED CAPACITY SHARE OF CAPITAL ASSETS FOR DEBT SERVICE SHARE Los Altos Mountain View East Palo Alto Sanitary District Stanford University Los Altos Hills Palo Alto Total 9.47% 37.89% 7.64% 5.26% 1.58% 38.16% 100% Provide examples of capital cost allocations by other, comparable regional wastewater treatment plants. Evaluate alternative capital cost allocation approaches, such as different mixes of allocation factors. Estimate the share of capital costs that would be allocated to the partner agencies in up to three alternative allocation approaches. The alternative approaches will use different combinations of allocation factors, such as capacity ownership, current and/or projected future wastewater flow, BOD, SS and NH3 and other factors such as number of customers, as warranted, to allocate costs of the major capital projects to the partner agencies. Incorporate input from Plant staff. The goal will be to determine an equitable approach for allocating the costs of the major capital improvement projects to each partner agency. After consultation with Plant staff, make recom mendation for capital cost allocation approach from among the ones evaluated, and identify the resulting costs for each partner for currently identified capital projects based on the recommended allocation approach. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 34  Packet Pg. 241 of 412  Vers.: Aug. 5, 2019 Page 32 of 41 Draft a Capital Cost of Service TM Section. Incorporate City’s comments from the draft Capital Cost of Service TM Section and the workshop comments in the final Cost of Service Analysis TM. Provide the City with a user-friendly Excel model of the proposed O&M and Capital cost allocation tables and projections. The model will be developed with input from Plant staff and will be designed to be easy to modify and update. Task 7.3 – Presentation Materials Prepare a slide deck of technical support materials and exhibits for future City Council and Partner agency presentations, detailing the Plant’s cost of service analysis method and Partner allocations. Provide each agency with a projection of its allocated O&M costs for the future budget year selected for the cost of service analysis in Task 7.2. and its allocated share of capital projects based on the selected methodology for capital cost allocation. Make content suitable for general audience understanding. Target a 20-minute length of presentation. Incorporate two cycles of City’s review comments. Deliverables: • Agenda, materials, and minutes for all workshops: o Operations and Maintenance Cost of Service Allocation Workshop. o Capital Cost of Service Allocation Workshop. • Draft Operations and Maintenance Cost of Service TM Section. • Draft Capital Cost of Service TM Section. • Final Cost of Service TM. • Cost of Service presentation materials for future City Council and partner agency presentations, two drafts and one final version. • Cost Allocation Excel Model. Assumptions: • Workshops will be attended by up to one BWA staff, up to one Jacobs staff, and up to one Carollo staff. Workshops will be virtual and have a 2-hour duration. • All deliverables will be provided in electronic format. Task 8 – Long Range Facilities Plan Update Report Task 8.1 – LRFP Update Report Prepare a draft and a final Long Range Facilities Plan Update report that incorporates the findings from Tasks 2 through 8. Clearly note assumptions and append calculations. Submit a draft table of contents to the City for approval. The following shall be included in the report: Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 35  Packet Pg. 242 of 412  Vers.: Aug. 5, 2019 Page 33 of 41 • Executive Summary • Summary of the planning process in general (including evaluation criteria and methods) • Characterize the existing conditions, including: o Characterization of waste streams o Existing plant assessment and deficiencies o Environmental setting and land uses o Regulatory, Environmental, Financial, and Community Opportunities and Challenges • Project Development o Present and future requirements, needs, and opportunities o Selection of most promising alternatives o Evaluation of alternatives o Life cycle costs • Recommended Projects o Identify each Partner’s capacities by project, as applicable. o Present tables and figures that show projects by type (e.g., driver (increased capacity, regulatory, and/or rehabilitation); flow, load, or flow and load), assumed construction start year, assumed midpoint of construction, assumed useful life, preliminary size and location, etc. • Financial plan o Identify costs in aggregate and by Partner allocation. o Present project costs in both present value and in the assumed dollar value in the year of the construction start. As directed by the City, prioritize the completion of Task 2 and Task 3 and summarize those findings prior to completion of the LRFP Update report. All project recommendations, including recommended capital projects from Tasks 2 and 3, shall be ultimately incorporated into the report’s recommended projects and finance plan. As needed, reorganize and restructure the TMs developed in Tasks 2 to 7 to develop a cohesive and streamlined LRFP Update report. Task 8.2 – Presentation Materials Prepare technical support materials and exhibits for City Council and partner agency presentations. This presentation will compile previous presentation sections developed in Tasks 2, 3, and 6. Make content suitable for a general public audience. Incorporate two cycles of City’s review comments. Task 8.3 – Presentation Support Support City staff with presentations to each partner agency, including an overview of the Long Range Facilities Plan Update, the cost of service methodology, and the capital cost allocated share methodology. Support City staff with presentations for public workshops on topics related to this scope of work. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 36  Packet Pg. 243 of 412  Vers.: Aug. 5, 2019 Page 34 of 41 • Presentation for public workshops (2 day and 1 night meetings, in-person) • Presentation to Utilities Advisory Commission, Finance Committee, and Palo Alto City Council (3 night meetings, in-person) • Presentation to Mountain View Council (1 night meeting, in-person) • Presentation to East Palo Alto Sanitary District, Engineering Committee and Board of Directors (1 day meeting and 1 night meeting, in-person) • Presentation to Los Altos City Council (1 night meeting, in-person) • Presentation to Los Altos Hills Town Council (1 night meeting, in-person) • Presentation to Stanford University staff (1 day meeting - virtual) • Presentation to all partners (3 day meetings - virtual) In-person support at a presentation shall include a member of the CONSULTANT’s project management team. Other staff or subconsultants may support the presentation of the LRFP Update through virtual technology. Deliverables: • Draft Table of Contents for Long Range Facilities Plan Update Report. • Long Range Facilities Plan Update Report, draft and final versions and comment log. • Presentation materials for City Council and partner agency presentations, two drafts and one final version. Assumptions: • Presentations will be attended by up to one Carollo staff in person, up to two Carollo staff virtually, up to two Jacobs staff virtually, and up to one BWA staff virtually. Presentations and Q&A will have a 2-hour duration. • All deliverables will be provided in electronic format. Task 9 – Additional Stakeholder Engagement & Presentation Support Prepare technical support materials and provide presentation support for stakeholder engagement activities beyond those identified in Task 8. This task addresses expanded public and stakeholder engagement needs that may arise as the project progresses, including but not limited to preparation and coordination of presentation materials responsive to partner agency requests for additional stakeholder or commission meetings. Deliverables: • Presentation materials for additional stakeholder engagement meetings, one draft and one final version per meeting Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 37  Packet Pg. 244 of 412  Vers.: Aug. 5, 2019 Page 35 of 41 Assumptions: • Presentations will be attended by up to two Carollo staff in person or virtually, as applicable; presentations and Q&A will have a 2-hour duration • All deliverables will be provided in electronic format Consultant shall not charge to this Task without prior authorization from the City's Project Manager. V. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the City. The CONSULTANT, at the City 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. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the City Project Manager and CONSULTANT prior to commencement of the of the services. The additional services include, but not limited to, the following: • Additional technical supports associated with unforeseen conditions encountered during construction. • Any additional work related to this Project, as requested by the City Project Manager, which is not in Basic Services. VI. TIME OF COMPLETION The project is budgeted for an estimated start date in the third quarter 2024, with a total duration (Task 1 – 9) of 36 months. VII. OTHER PROVISIONS Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. CONSULTANT’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services. END OF SCOPE OF SERVICES Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 38  Packet Pg. 245 of 412  Vers.: Aug. 5, 2019 Page 36 of 41 EXHIBIT B SCHEDULE OF PERFORMANCE (AMENDED, REPLACES PREVIOUS) CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed (“NTP”) from the CITY. Milestones Completion Number of Days/Weeks (as specified below) from NTP 1. Task 1 – Project Management 155 weeks 2. Task 2 – Biosolids Facility Plan (BFP) Update 123 weeks 3. Task 3 – Workspace Planning 74 weeks 4. Task 4 – Background and Baseline Information 50 weeks 5. Task 5 – Existing Plant Infrastructure and Process Assessment 50 weeks 6. Task 6 – Identification, Evaluation, and Recommendation of Alternatives/Improvements 140 weeks 7. Task 7 – Cost of Service Analysis 149 weeks 8. Task 8 – Long Range Facilities Plan Update Report 155 weeks 9. Task 9 –Additional Stakeholder Engagement & Presentation Support 155 weeks Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on-call agreements per Section 1 or agreements with Additional Services per Section 4.) The schedule of performance shall be as provided in the approved Task Order, as detailed in Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case of Additional Services, provided in all cases that the schedule of performance shall fall within the term as provided in Section 2 (Term) of this Agreement. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 39  Packet Pg. 246 of 412  Vers.: Aug. 5, 2019 Page 37 of 41 EXHIBIT C COMPENSATION (AMENDED, REPLACES PREVIOUS) CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below. CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below, provided that the total compensation for the Services, including any specified reimbursable expenses, and the total compensation for Additional Services (if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this Agreement. CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY. BUDGET SCHEDULE TASK NOT TO EXCEED AMOUNT Task 1 (Project Management) $153,810 Task 2 (Biosolids Facility Plan Update) $555,462 Task 3 (Workspace Planning) $656,665 Task 4 (Background and Baseline Information) $264,826 Task 5 (Existing Plant Infrastructure and Process Assessment) $391,906 Task 6 (Identification, Evaluation, and Recommendation of Alternatives/Improvements) $415,125 Task 7 (Cost of Service Analysis) $139,364 Task 8 (Long Range Facilities Plan Update Report) $262,668 Task 9 (Additional Stakeholder Engagement & Presentation Support) $150,000 Sub-total for Services $2,989,826 Reimbursable Expenses (if any) $5,200 Total for Services and Reimbursable Expenses $2,995,026 Additional Services (if any, per Section 4) $299,503 Maximum Total Compensation $3,294,529 Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 40  Packet Pg. 247 of 412  Vers.: Aug. 5, 2019 Page 38 of 41 REIMBURSABLE EXPENSES CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time/overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in-house printing, insurance and other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder. Reimbursable expenses, if any are specified as reimbursable under this section, will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: Travel/Mileage up to the not-to-exceed amount of: $5,200. A. Travel outside the San Francisco Bay Area, including transportation and meals, if specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges, if specified as reimbursable, will be reimbursed at actual cost. All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate backup documentation and information. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 41  Packet Pg. 248 of 412  Vers.: Aug. 5, 2019 Page 39 of 41 EXHIBIT C-1 SCHEDULE OF RATES (AMENDED, REPLACES PREVIOUS) CONSULTANT’s schedule of rates is as follows: Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 42  Packet Pg. 249 of 412  Vers.: Aug. 5, 2019 Page 40 of 41 Subconsultant: Jacobs Engineering, Inc. Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 43  Packet Pg. 250 of 412  Vers.: Aug. 5, 2019 Page 41 of 41 Subconsultant: Bartle Wells Associates Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13 Attachment A - Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.        Item 13: Staff Report Pg. 44  Packet Pg. 251 of 412  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Transportation Meeting Date: August 10, 2026 Report #:2607-6535 TITLE Approval of Contract Amendment No. 1 to Contract No. C25191297 with Kittelson & Associates to Extend the Term through September 9, 2028, and Update the Scope of Services and Schedule of Rates for the South Palo Alto Bike/Ped Connectivity Project (Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study), with No Increase to the Previously Approved Not-to- Exceed Compensation; CEQA Status – Categorically Exempt RECOMMENDATION Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 1 to Contract No. C25191297 with Kittelson & Associates for professional consultant services for the South Palo Alto Bike/Ped Connectivity Project (project) to extend the contract term through September 9, 2028, update the Scope of Services, Schedule of Performance, Schedule of Rates, and Compensation schedule to align with the current project work plan, and make these updates with no increase to the previously approved not-to-exceed compensation amount. EXECUTIVE SUMMARY The City entered into Contract No. C25191297 with Kittelson & Associates on September 9, 2024, for transportation planning and engineering services in support of the Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study, also referred to as the South Palo Alto Bike/Ped Connectivity Project. The consultant team is assisting the City with community outreach and engagement, existing conditions analysis, development and evaluation of crossing alternatives, preparation of a report, implementation planning, and grant application support. Staff recommends approval of Amendment No. 1 to extend the contract term two years through September 9, 2028, and to update the scope of services so that the contract documents accurately reflect the remaining work needed to complete the project. The amendment is needed in response to community input requesting additional engagement and to align the project schedule with preferred community engagement periods in the spring and Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 1  Packet Pg. 252 of 412  fall and scheduled Rail Committee and City Council meetings. The updated scope also aligns the contract with the proposed work plan based on what staff, the consultant team, and the community have learned through the project to date. BACKGROUND 1 2 Alternative A involves two variants: Alternative A1 with a signalized crossing of Alma Street at El Dorado Avenue. Alternative A2 with a tunnel under both Alma Street and the Caltrain tracks in the vicinity of El Dorado Avenue. 1 City Council, September 9, 2024; Consent Calendar Item #7; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=6496&dbid=0&repo=PaloAlto&searchid=5ceb3b7e- 41e9-4bf1-9ad4-fb0749407a24 2 City Council, December 1, 2025: Action Item #18; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83952&dbid=0&repo=PaloAlto&searchid=d9f09a55 -fa77-4887-8005-bb508af17995 Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 2  Packet Pg. 253 of 412  To reflect these developments, staff is bringing forward Amendment No. 1 to update the contract term, scope, and schedule so the contract accurately matches the remaining work necessary to complete the project. ANALYSIS additional and more clearly sequenced community engagement; continued coordination with advisory bodies, including the Rail Committee and the City Council at key milestones; refinements to evaluation criteria and alternatives analysis based on input received during the project; updated reporting and documentation deliverables, including public draft and final study materials and responses to public comments; and continued implementation and grant support to position the City for future project delivery. Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 3  Packet Pg. 254 of 412  This amendment does not request any increase to the previously approved not-to-exceed compensation amount. The amendment updates the compensation schedule and schedule of rates to align with the revised scope and timing of work. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Special Joint Meeting with Palo Alto Pedestrian and Bicycle Advisory Committee and Mountain View Bicycle/Pedestrian Advisory Committee: August 28, 2024 City Council Meeting: September 9, 2024 (Contract Authorization, Consent Calendar Item 7)5 Small Group Discussions: November 2024 to December 2024 Online Survey: April 1, 2025, to May 22, 20256 Transportation Planning Workshop: April 2, 2025 California Ave Third Thursday Pop-Up Event: April 17, 2025 Earth Day Festival Pop-Up Event: April 27, 2025 Pedestrian and Bicycle Advisory Committee Meeting: May 6, 20257 5 City Council, September 9, 2024; Consent Calendar Item #7; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=6496&dbid=0&repo=PaloAlto&searchid=5ceb3b7e- 41e9-4bf1-9ad4-fb0749407a24 6 South Palo Alto Bike/Ped Connectivity Survey; https://communityfeedback.opengov.com/portals/paloalto/Issue_14352 7 Pedestrian and Bicycle Advisory Committee, May 6, 2025; Discussion Item #7.a.; https://www.paloalto.gov/PABAC Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 4  Packet Pg. 255 of 412  Planning and Transportation Commission Meeting: May 14, 202511 Bike to Work Day Pop-Up Event: May 15, 2025 Rail Committee Meeting: May 20, 202512 City/School Transportation Safety Committee Meeting: May 22, 2025 Parks and Recreation Commission Meeting: May 27, 202513 Phase 2 Community Engagement: Feedback on Alternatives (Fall 2025) – Completed Online Survey: August 15, 2025, to October 12, 202514 Bike/Ped Rail Crossings Workshop: September 9, 2025 Planning and Transportation Commission Meeting: September 10, 202515 Bike Palo Alto Pop-Up Event: October 5, 2025 California Ave Third Thursday Pop-Up Event: October 16, 2025 City/School Transportation Safety Committee Meeting: October 23, 2025 Pedestrian and Bicycle Advisory Committee (PABAC) Meeting: November 4, 202516 Rail Committee Meeting: November 18, 202517 City Council Meeting: December 1, 202518 A third round of engagement will occur in fall 2026 and will allow the community to review and provide feedback on the two shortlisted grade-separated bicycle and pedestrian rail crossings documented in the Public Draft Report. A Final Report will be shared in spring 2027 in Phase 4 for community review and potential adoption by the City Council. 11 Planning and Transportation Commission, May 14, 2025; Study Session Item #4; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=7648&dbid=0&repo=PaloAlto&searchid=953eac3d- 214a-4cea-a77b-5cfa3921c24f 12 Rail Committee, May 20, 2025; Study Session Item #2; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=9269&dbid=0&repo=PaloAlto&searchid=d661c2c2- 51aa-4f56-bdc3-9882fb61d4e3 13 Parks and Recreation Commission, May 27, 2025; Business Items Item #5; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=7060&dbid=0&repo=PaloAlto&searchid=b91d0517- cedc-4099-8940-84b874c6ccd0 14 South Palo Alto Bike/Ped Connectivity Preliminary Design Concept Survey; https://communityfeedback.opengov.com/portals/paloalto/Issue_14594 15 Planning and Transportation Commission, September 10, 2025; Study Session Item #4; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=7671&dbid=0&repo=PaloAlto&searchid=cc55f36b- 8916-4c57-a84c-1aa231dab86e 16 Pedestrian and Bicycle Advisory Committee, November 4, 2025; https://www.paloalto.gov/PABAC 17 Rail Committee, November 18, 2025; Action Item #1; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83878&dbid=0&repo=PaloAlto&searchid=e5ce0fb7 -ff7e-4ddf-aa36-356d39a32b5b 18 City Council, December 1, 2025: Action Item #18; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83952&dbid=0&repo=PaloAlto&searchid=d9f09a55 -fa77-4887-8005-bb508af17995 Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 5  Packet Pg. 256 of 412  Because the project is intended to identify feasible bicycle and pedestrian grade-separated crossings of the rail corridor in a complex and sensitive area, public input is critical to understanding community priorities, concerns, and desired outcomes. Input received to date has indicated a desire for additional opportunities for community engagement and review before key project decisions are brought forward. ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 6  Packet Pg. 257 of 412  Vers.: Aug. 5, 2019 Page 1 of 24 AMENDMENT NO. 1 TO CONTRACT NO. C25191297 BETWEEN THE CITY OF PALO ALTO AND KITTELSON & ASSOCIATES This Amendment No. 1 (this “Amendment”) to Contract No. C25191297 (the “Contract” as defined below) is entered into as of August 10, 2026, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and KITTELSON & ASSOCIATES, a California corporation, located at 155 Grand Ave, Suite 505, Oakland, CA 94612 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment. R E C I T A L S A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of transportation planning and engineering services in support of the Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study, as detailed therein. B. The Parties now wish to amend the Contract in order to extend the contract term through September 9, 2028, update the Scope of Services, update Schedule of Rates and update compensation schedule with no increase to the Not To Exceed compensation. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree: SECTION 1. Definitions. The following definitions shall apply to this Amendment: a.Contract. The term “Contract” shall mean Contract No. C25191297 between CONSULTANT and CITY, dated September 9, 2024. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract. SECTION 2. Section 2. TERM of the Contract is hereby amended to read as follows: The term of this Agreement shall be from the date of its full execution through September 9, 2028, unless terminated earlier pursuant to Section 19 (Termination) of this Agreement. SECTION 3. Section 4. NOT TO EXCEED COMPENSATION. COMPENSATION of the Contract is hereby amended to read as follows: “The compensation to be paid to CONSULTANT for performance of the Services shall be based Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 7  Packet Pg. 258 of 412  Vers.: Aug. 5, 2019 Page 2 of 24 on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Four Hundred Eighty-Seven Thousand, Ninety-Four Dollars ($487,094.00). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY.” Optional Additional Services Provision (This provision applies only if checked and a not-to-exceed compensation amount for Additional Services is allocated below under this Section 4.) In addition to the not-to-exceed compensation specified above, CITY has set aside the not-to-exceed compensation amount of Twelve Thousand Three Hundred Ninety-Six Dollars and Twenty cents($12,396.20) for the performance of Additional Services (as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C, shall not exceed Four Hundred Ninety-Nine Thousand, Four Hundred Ninety Dollars, and Twenty Cents ($499,490.20), as detailed in Exhibit C. “Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A. CITY may elect to, but is not required to, authorize Additional Services up to the maximum amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this Section. Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum. To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 8  Packet Pg. 259 of 412  Vers.: Aug. 5, 2019 Page 3 of 24 Section 4. CONSULTANT shall only be compensated for Additional Services performed under an authorized Task Order and only up to the maximum amount of compensation set forth for Additional Services in this Section 4. Performance of and payment for any Additional Services are subject to all requirements and restrictions in this Agreement. SECTION 3. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference: a. Exhibit “A” entitled “SCOPE OF SERVICES, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. b. Exhibit “A-1” entitled “PROFESSIONAL SERVICES TASK ORDER, AMENDMENT NO. 1”, ADDED. c. Exhibit “B” entitled “SCHEDULE OF PERFORMANCE, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. d. Exhibit “C” entitled “NOT TO EXCEED COMPENSATON, AMENDMENT NO. 1, AMENDED, REPLACES PREVIOUS. e. Exhibit “C-1” entitled “SCHEDULE OF RATES, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. SECTION 4. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect. SECTION 5. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference. (SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.) Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 9  Packet Pg. 260 of 412  Vers.: Aug. 5, 2019 Page 4 of 24 SIGNATURES OF THE PARTIES IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written. CITY OF PALO ALTO City Manager APPROVED AS TO FORM: City Attorney or designee KITTELSON & ASSOCIATES Officer 1 By: Name: Title: Officer 2 By: Name: Title: Attachments: Exhibit A “SCOPE OF SERVICES, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. Exhibit B “SCHEDULE OF PERFORMANCE, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. Exhibit A-1 “PROFESSIONAL SERVICES TASK ORDER, AMENDMENT NO. 1”, ADDED. Exhibit C “NOT TO EXCEED COMPENSATON, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. Exhibit C -1“SCHEDULE OF RATES, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS. Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 10  Packet Pg. 261 of 412  Vers.: Aug. 5, 2019 Page 5 of 24 EXHIBIT A SCOPE OF SERVICES, AMENDMENT NO. 1 (AMENDED, REPLACES PREVIOUS) CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF SERVICES”. Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. CONSULTANT’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services. Task 1. Project Management and Coordination Throughout the study duration, Kittelson’s project manager and members of the consultant team will be available for conference calls and in-person meetings with the City. Based on the proposed scope of work, we anticipate the schedule would be about 32 months. We assume one 1.5-hour in-person kick-off meeting plus a total of 75 30-minute check-in calls and 10 additional 1-hour work sessions to prepare for engagement activities or to review analysis findings at key project milestones. Kittelson’s project manager will prepare a detailed project schedule in coordination with City staff showing key milestones by subtask. This schedule is included as Appendix A. Kittelson’s project manager will prepare meeting materials for distribution prior to the meeting and provide a list of action items and status after each meeting. Meeting materials before each meeting and action items/status after each meeting will be distributed via email. Notes will be recorded and shared through OneNote or a similar collaborative method. Task 1 Deliverables: - Kick off meeting - Project schedule (included as Appendix A) - Coordination meetings/calls and materials - Monthly invoices, progress, reports Task 2. Community Outreach and Engagement Task 2.1. Community Outreach and Engagement Plan The Kittelson team will develop a Community Outreach and Engagement Plan that identifies target audiences, includes messaging that are designed to explain the project purpose and need in layperson- friendly language, as well as tailored messaging that is customized to resonate with specific target audiences. This includes the identification of disadvantaged groups and organizations that serve them as Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 11  Packet Pg. 262 of 412  Vers.: Aug. 5, 2019 Page 6 of 24 well as communications methods and forums for reaching them, such as pop-up events, outreach at local schools, community and senior centers, food pantries, health-care centers, job and unemployment centers, and other venues. The Kittelson team will also prepare a detailed implementation plan, which aligns with key project milestones and serves as an actional distillation of the Community Outreach and Engagement Plan. This will include target audiences, messages & communications mechanisms for engaging and informing them, timelines, roles & responsibilities and desired outcomes for each phase and touchpoint of engagement, as well as a process for recording who we reached out to. The Community Outreach and Engagement Plan will also further define the City’s Goals & Objectives for Community Outreach and Engagement, including desired outcomes. The Goals & Objectives will help to inform qualitative and quantitative metrics that will be used at key intervals of the Study to determine the effectiveness of Outreach and Engagement activities. The Community Outreach and Engagement Plan will undergo a max of two consolidated rounds of revisions. Task 2.2. Implementation of Community Outreach and Engagement Plan Community outreach and engagement will be conducted in four phases: Phase 1. Establish design priorities Phase 2. Feedback on Alternatives Phase 3. Review public draft report Phase 4. Council adopt final report Engagement will be conducted using the methods and mechanisms described in detail in the Community Outreach and Engagement Plan. Specific details on implementation will be determined as part of Task 2.1 and are expected to include the following subtasks. 2.2.1 Project webpage. We will support the City-hosted project website, which will serve as a public- friendly repository for the Study, including a Project Timeline and Opportunities for Public Engagement, Public Notification and Informational Materials, and Project Documents. We will work closely with the City to develop content based on the City’s web and design templates and ensure that all materials are ADA-compliant and accessible. - Our support may include the development of a webpage mockup, if needed, and simple graphic designs to illustrate project information, including a timeline graphic, and funding graphic and one or two other simple graphics. - The webpage will also feature up to two online public surveys, which will be linked to the City’s OpenGov platform, which provides automated methods for tallying and graphically displaying survey results. Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 12  Packet Pg. 263 of 412  Vers.: Aug. 5, 2019 Page 7 of 24 2.2.2 Social media content.We will work with the City’s Communications Team to develop social media content for the City’s social media platforms. We will provide web content in plain text (non-html) for posting by the City’s web manager and up to three updates at key intervals of the Study: Project Initiation; Draft Alternatives; Draft Study. To facilitate coordination with the communications team, we will prepare an editorial calendar with content for up to three rounds of social media via Facebook, Twitter, Instagram and Medium/Next Door. Concept renderings and technical analysis from subsequent tasks will be incorporated and up to three additional jpeg graphics will be prepared for social media. 2.2.3 Community Workshops. The Kittelson team will plan, coordinate and implement up to three community workshops at key intervals of the study. Our services will include detailed annotated meeting agendas that further define desired meeting outcomes and formats; logistical coordination with vendors, including translation, interpretation and meeting materials; and consensus-focused meeting facilitation, as needed. We will also provide written summaries (up to five pages each) of each community meeting highlighting key topics and questions. Language interpretation will be provided in Mandarin and Spanish as needed. Public notification materials will include verbiage requiring 72-hour notice to accommodate language interpretation needs. These workshops are anticipated to occur during Phase 1, Phase 2, and Phase 3. 2.2.4 Community Surveys. We will host up to two online public surveys. The online surveys will be hosted on OpenGov, or a similar tool, which provides automated methods for tallying and graphically displaying survey results and will be mobile-friendly. Each online survey will include between 5-7 questions, or less, not including demographic questions and will be promoted via emails created by the Kittelson team and distributed by the City in Task 2.2. We assume one round of consolidated revisions per survey. These surveys are anticipated to be conducted during Phase 1 and Phase 2. 2.2.5 Advisory Committee Meetings. Kittelson’s project manager will work with the City’s PM to co- create materials for each of the four phases of engagement, including draft presentation and staff report content.. Meeting materials will be developed once for each phase and reused, with minor updates to tailor content to the specific audiences based oninformation that is most relevant and requests for feedback that are concrete and actionable. Kittelson’s project manager and BKF’s engineering lead will provide virtual support for up to 15 advisory committee meetings over the course of the project. These meetings supported by consultant staff are expected to include: Phase 1. Planning and Transportation Commission, Rail Committee Phase 2. Pedestrian and Bicycle Advisory Committee, Planning and Transportation Commission, Rail Committee, City Council Phase 3. Planning and Transportation Commission, Rail Committee (two meetings), City Council (two meetings) Phase 4. Rail Committee, City Council Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 13  Packet Pg. 264 of 412  Vers.: Aug. 5, 2019 Page 8 of 24 The cost for Kittelson team virtual support at two additional meetings is included in Task 2.2.5 as an optional task. 2.2.6 Reaching Disadvantaged Groups. We will work closely with the City to identify disadvantaged organizations and groups in the community and to identify the most effective communications methods and forums to reach them “where they are.” These groups may include youth, senior citizens, the unhoused or recently unhoused, non-English speaking communities, transit- dependent and paratransit riders, as well as households with limited mobility, and essential workers and day laborers. This task will be executed in sync with Task 2.1 Community Outreach and Engagement Plan. 2.2.7 Local Business Engagement. We will coordinate with the City to conduct one-on-one and small group outreach to business owners to further define their specific interests and needs related to grade separation. We assume up to three meetings with key business owners via Palo Alto’s Chamber of Commerce and the local business district. We assume that the City will distribute all flyers and doorhangers to local businesses, and implement the tracking process outlined in the Community Outreach and Engagement Plan to record who has received outreach materials. 2.2.8 Informational Materials & Pop-up Events. Specific informational materials and pop-up events will be further defined in the Community Outreach and Engagement Plan. Materials include a Study Fact sheet for each phase of engagement and Flyer which may be updated for the second and third phases of outreach. The Kittelson team will also prepare informational boards and handouts to support public workshops and tabling at events during each phase of outreach. Pop- up events would be staffed by the City. 2.2.1 Documentation. Kittelson team will develop a summary of community engagement activities completed for each phase and prepare a summary report for the first two phases of engagement. The Kittelson team will update the draft summaries with one round of consolidated comments and prepare final summary reports for Phase 1 and Phase 2. The Kittelson team will then prepare a draft report section outline compiling findings from Phase 1 and Phase 2 with Phases 3 and 4. The Kittelson team will update the draft section of the report with one round of consolidated comments, and finalize the draft report section after a second set of consolidated comments. Task 2 Deliverables - Draft and final community outreach and engagement plan - Webpage mockup and draft/final content for three updates - Up to three social media or website graphics - Social media content Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 14  Packet Pg. 265 of 412  Vers.: Aug. 5, 2019 Page 9 of 24 -Community workshops (2), including meeting annotated meeting agendas, meeting logistical plans, dry runs of 60 minutes, vendor coordination, including room and equipment, meeting facilitation, meeting summaries - Online surveys (2), draft and final survey tool and survey findings memo - Advisory Committee Meetings (15), including draft and final presentation and meeting materials/staff reports, virtual participation at meeting, meeting notes, and follow-ups - Draft and final target audience engagement plan, including coordination with community based organizations and school groups - Local business engagement, including development of a contact list and support with targeted outreach through specific to business owners and supporting informational materials, such as doorhangers or flyers for reaching local businesses - Draft and final Phase 1 engagement summary report - Draft and final Phase 2 engagement summary report -Draft and final engagement summary section for inclusion in study report (Task 6) Task 3. Data Collection and Analysis of Existing Conditions Task 3.1. Review of Existing Plans, Policies, and Projects Kittelson will review the documents identified to develop an understanding of the planning context and prior efforts completed within the study area. We will supplement this review with the review conducted for the BPTP Update, which included a review of 53 documents, including those identified by the Rail Corridor Study Task Force and most of those identified in the RFP. In addition to gathering relevant information from these documents, we will conduct up to eight one-on- one or small group interviews with select staff, committee members, and community members to learn their perspectives firsthand and get input in real time at the onset of the project. We will work with the City to identify appropriate interview participants. These interviews will support a holistic quantitative and qualitative analysis that reflects viewpoints and needs of those most knowledgeable about and most affected by the project. Task 3.2. Technical Data Collection and Analysis Kittelson will compile and review qualitative and quantitative data inputs from prior tasks and combine these with data Kittelson has gathered for BPTP Update, including multimodal intersection turning movement and ADT speed and volume counts collected in June 2024 and existing and proposed bicycle and pedestrian infrastructure. Kittelson will conduct a large-scale desktop review of existing conditions within the study area, considering things like bicycle facility width, pavement condition, sidewalk presence, ADA treatments, driveway presence, curb radii, and other elements which may affect the experience of people walking and biking throughout the area. As we collect and review satellite imagery data, we will identify items to field verify on a site visit. As part of this task, we will conduct a field visit with up to three staff from the consultant team. Kittelson will coordinate with City staff to select a day and time period that would be most informative for the analysis and understanding of existing conditions (e.g., morning school commute period). According to the initial project schedule, the field visit would be conducted in October Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 15  Packet Pg. 266 of 412  Vers.: Aug. 5, 2019 Page 10 of 24 when school is in session and the weather and daylight conditions continue to be conducive to walking and biking. Kittelson will use these inputs to complete the analysis of baseline conditions, which may include information related to demographics of residents within the study area, commuting and travel to school characteristics, vehicle, bicycle, and pedestrian counts, access to transit stations, walk and roll routes to school, comfort, safety, and network connectivity, characteristics of existing railroad crossings and future potential alignments. Considering the analysis approach and methodology for the evaluation criteria identified in Task 4 to analyze and compare alternatives, the Kittelson team will identify gaps in current data that may hinder comprehensive understanding of the study area or prevent the ability to design or analyze the alternatives using the proposed evaluation criteria. After identifying data gaps and needs, Kittelson will work with the city to formulate a plan to overcome these challenges, e.g., collect additional counts, conduct field observations, purchase data, hold additional interviews, select an alternative performance measure. Task 3.3. Existing Conditions Report Kittelson will prepare a draft, revised draft, and final technical report summarizing input from the community needs assessment (Task 2), findings from the literature review (Task 3.1), and the technical data and analysis (Task 3.2). In an effort to keep the document succinct and to the point, the topics covered in the memorandum will be chosen for their relevance and usefulness in supporting selection of preferred alternatives. Kittelson will prepare a report outline and collaborate with the City on the topics and level of detail to be conducted for the analyses. The memorandum will be visual, relying on maps and graphics more than narrative to convey concepts and information. Supporting materials (e.g., historic traffic volumes, collision records) will be provided in a technical appendix. We will respond to one consolidated set of comments on the draft technical report and prepare a revised draft technical report for City review. We will respond to one consolidated set of comments on the revised draft technical report and prepare a final report for publication. This document will serve as the baseline against which the alternatives are evaluated and compared in Task 5, using the evaluation framework and criteria developed in Task 4. Task 3 Deliverables: - Draft Existing Conditions Report Outline - Final Existing Conditions Report and Appendix - Interview Guide and Notes from up to eight interviews with staff, committee members, and community members Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 16  Packet Pg. 267 of 412  Vers.: Aug. 5, 2019 Page 11 of 24 Task 4. Goals and Evaluation Criteria Task 4.1. Goals and Priorities Using inputs from prior tasks (e.g., literature review, interviews) and information shared by City staff and heard from community members, Kittelson will draft goals and identify an initial list of project priorities to inform the development of the alignment and subsequent concept design options, which may include: Sustainability: Expand transportation options and access to critical destinations and limit impacts on the environment Connectivity: Strengthen active transportation linkages in Southern Palo Alto Safety and Health: Enhance safety and comfort of people walking and biking to school Constructability: Minimize potential for disruption during construction Funding and Implementation: Leverage partnerships between the City, Caltrain, and other project partners to position the project for implementation These goals and priorities will be co-created with community members in the first round of outreach. The resulting goals and objectives will directly inform the criteria against which the alternatives will be evaluated. Task 4.2. Evaluation Framework and Criteria Kittelson proposes a two-stage evaluation to streamline the evaluation process and first filter concepts (preliminary evaluation criteria) that don’t meet established criteria and then evaluate and compare concepts (secondary evaluation criteria) that show more promise. As part of this task, Kittelson will work with the City and relevant stakeholders to determine the appropriate evaluation criteria to include at each stage of the analysis based on available data, keeping in mind the level of information needed to support decision making. The evaluation criteria would be determined based on the goals established in Task 4.1 and would include quantitative and qualitative metrics that could be scored individually and compared in a scoring matrix. Potential criteria will consider challenges and opportunities, which may include those listed in the RFP: Walking and biking connectivity to destinations Safety for people walking, biking, driving, and taking transit Distance to key destinations and existing/planned bicycle and pedestrian facilities Travel patterns and potential for traffic diversion Right-of-way acquisitions and easements Environmental impacts, including aesthetic and visual impacts Community benefits and opportunity sites Construction phasing and impacts during construction Construction and maintenance costs Task 4.3. Goals and Evaluation Criteria Memorandum Kittelson will prepare a draft and final technical memorandum presenting the project goals and priorities (Task 4.1), and the evaluation framework and criteria (Task 4.2). The document will provide clear and transparent description of the performance measures and documentation and use plain language and Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 17  Packet Pg. 268 of 412  Vers.: Aug. 5, 2019 Page 12 of 24 graphics as well as straightforward narrative illustrating how the evaluation criteria will be analyzed and scored. We will respond to one consolidated set of comments from the City on the draft technical memorandum and prepare a final memorandum. We will respond to one additional consolidated set of comments from advisory committee members and prepare an Updated Design Priorities and Evaluation Criteria Memorandum that will be the basis for the alternatives analysis conducted in Task 5. Task 4 Deliverables: - Project goals and priorities - Evaluation Framework and Criteria - Draft Design Priorities and Evaluation Criteria Memorandum - Final Design Priorities and Evaluation Criteria Memorandum - Updated Design Priorities and Evaluation Criteria Memorandum Task 5. Alternatives Development and Selection of Preferred Alternatives Task 5.1. Identify Crossing Locations and Develop Design Concepts Working with City staff and community members, the Kittelson team will develop alignment alternatives with the primary aim of improving pedestrian/bicycle connectivity over the railroad in Palo Alto south of Oregon Expressway. Guided by the project’s goals and priorities, the team will apply a two-stage evaluation process to determine up to two preferred alignments and their concept design features. The process consists of: - Identify the full range of alignments and potential design options o The team will consider alignments considered as part of prior plans and supplement this list with additional alignments based on baseline conditions analysis, public input, and feedback from City staff - Evaluate the alignment alternatives with a set of preliminary evaluation criteria o This qualitative “scorecard” exercise will narrow the initial universe of options to a handful of promising alternatives. This initial step enables subsequent concept design work to focus on the most viable alignments. - Develop concept design options for a subset of up to eight promising alignment alternatives o Concepts will be developed at a sketch level with sufficient detail to establish preliminary cross-sections, landing/touchdown points, on-street treatments and intersection modifications, and key design elements of the alignment (e.g., underpass, overcrossing, structural elements) o Up to eight graphics (e.g., cross sections, plan views, renderings) will be prepared to illustrate the alignment options The selected alignment alternatives will be evaluated with a set of secondary evaluation criteria as part of Task 5.2. Kittelson will prepare a Draft Initial Screening Memorandum documenting the work completed in this task. We will respond to one consolidated set of comments on the draft technical memorandum and prepare a revised draft memorandum. We will respond to one consolidated set of comments on the Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 18  Packet Pg. 269 of 412  Vers.: Aug. 5, 2019 Page 13 of 24 revised draft memorandum and prepare a final memorandum. Task 5.2. Alternatives Analysis The Kittelson team will analyze up to eight alignment alternatives against the set of secondary evaluation criteria established in Task 4, which are based on the project goals and priorities developed under Task 3. The criteria will be a mix of quantitative and qualitative measurements or assessments depending on the criterion under focus and availability of information to support the evaluation. Evaluation of each alternative will be in relation to other alternatives, rather than against an absolute scale. All criteria will be weighted equally for the purposes of the evaluation. Kittelson will prepare a draft, revised draft, and final analysis summary matrix for use in public engagement and the Alternatives Analysis Report. Information will be presented in a summary matrix with supporting narrative. Materials prepared for this task will be public-facing for use in community engagement. Kittelson will prepare a draft, revised draft, and final analysis summary matrix for use in public engagement and the Alternatives Analysis Report. The Kittelson team will prepare graphics to visualize the alternatives in plan view with annotated call outs to describe key features. Illustrative sections and example renderings may also be provided to illustrate specific features. We will prepare graphics for eight alternatives. We will respond to one consolidated set of comments on the draft and prepare a revised draft. We will respond to one consolidated set of comments on the revised draft and prepare a final set of graphics for public engagement and use in the Alternatives Analysis Report. Kittelson will prepare a Draft Alternatives Analysis Outline for City review. Kittelson will respond to one consolidated set of comments on the draft outline and prepare a Draft Alternatives Analysis Report documenting the work completed in this task. We will respond to one consolidated set of comments on the draft report and prepare a revised draft report. We will respond to one consolidated set of comments on the revised draft report and prepare a final report. Up to two alternatives will be carried forward from this task for refinement as part of Task 5.3. Task 5.3. Preferred Alternatives This task includes: Refinement of one alternative (Alternative A1) based on feedback from community engagement efforts conducted in Phase 1 and Phase 2 Development of a new alternative (Alternative A2) at a conceptual level, similar to that prepared for the eight alternatives analyzed in Task 5.2 Preparation of a traffic study to evaluate neighborhood circulation impacts and support development of accompanying transportation network enhancements Preparation of concept level exhibits (plan view and cross-section) to illustrate accompanying bicycle and pedestrian network enhancements Revisions to the two concept alternatives 15 percent design plan and profile drawings to Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 19  Packet Pg. 270 of 412  Vers.: Aug. 5, 2019 Page 14 of 24 incorporate Phase 3 feedback Revisions to the recommended network enhancements conceptual plan view graphics to incorporate Phase 3 feedback The Kittelson team will prepare draft and final graphics illustrating the refinements to Alternative A1 and new Alternative A2 and recommended network enhancements. These four graphics will be prepared at a conceptual level, similar to that prepared for the eight alternatives analyzed in Task 5.2 and will be used during engagement activities during Phase 3. The Kittelson team will use feedback gathered during Phase 3 to inform refinements to Alternatives A1 and A2 and network enhancements. Incorporating this feedback, the team will prepare a draft, revised draft, and final plan view and profile at the 15 percent concept design level. The team will also prepare a final concept-level exhibit (plan view and cross- section) illustrating the recommended network enhancements accompanying the crossing for each alternative. Improvements along side streets and parallel routes will be considered to account for potential traffic diversion. The Kittelson team will evaluate the two preferred concept alternatives against a subset of the evaluation criteria established in Task 4: cost, personal security, property impacts, and neighborhood traffic impacts. The Kittelson team will prepare rough order of magnitude cost estimates and an accompanying traffic study to evaluate the alternatives. The results will be presented alongside a narrative documenting the inputs and assumptions and methodology used in the analyses and an assessment of the potential benefits, challenges, and recommendations to minimize traffic impacts, minimize property impacts, maximize safety and personal security, and improve conditions for all users. The analysis and findings will be documented in the report prepared as part of Task 6. Kittelson will coordinate with the City to define the traffic study area and count locations, focusing on streets, intersections, and parallel routes near the crossing with potential circulation impacts. The Kittelson team will develop a simplified, off-model analysis methodology appropriate for a planning-level assessment of vehicular, bicyclist, and pedestrian diversion under future year conditions. The Kittelson team will use the off-model tool to calculate and summarize redistribution of trips and assess neighborhood and circulation impacts to support identification of accompanying transportation network enhancements. Work completed in this task will be completed keeping in mind the project implementation process and requirements outlined in the Caltrain Corridor Crossings Delivery Guide, as well as future funding sources, such as competitiveness for grant applications. The narrative and exhibits prepared will speak to evaluation criteria from relevant grant programs and be readily transferrable to grant applications, including ATP, ATIIP, RCN, and HSIP. The preferred alternative and selection process will be documented in the report prepared as part of Task 6. Task 5.4. Implementation Plan The Kittelson team will prepare an implementation plan consistent with the project implementation process and requirements outlined in the Caltrain Corridor Crossings Delivery Guide, including the next steps needed to complete the Preliminary (15%) Design Submittal Checklist. The document will provide clear and transparent description of the project timeline, including estimated costs and funding opportunities for each phase of project delivery. The plan will also identify key considerations for implementation, along with recommendations for environmental documentation and preparation of the Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 20  Packet Pg. 271 of 412  Vers.: Aug. 5, 2019 Page 15 of 24 required analyses to support CEQA/NEPA clearance. The implementation plan will be documented in the report prepared as part of Task 6. Task 5 Deliverables: - Draft, Revised Draft, and Final Initial Screening Memorandum - Eight concept alternatives (description and graphics - plan view, section, and/or renderings) - Draft, Revised Draft, and Final Alternatives Analysis Methodology Memo - Draft, Revised Draft, Final Alternatives Analysis Matrix - Draft Alternatives Analysis Report Outline - Draft, Revised Draft, and Final Alternatives Analysis Report - Draft, Revised Draft, and Final 5% and 15% Design Exhibits (Plan View, Profile) for two Alternatives - Draft, Revised Draft, and Final Concept Exhibits (Plan View, Cross Section) for Accompanying Network Enhancements Task 6. Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study Report Task 6.1. Administrative Draft Study Report Kittelson will prepare an outline of the draft study report for City and Caltrain review. The report will document selection of the preferred alternative and next steps toward implementation based on work completed in Task 5.3 and Task 5.4. Kittelson will incorporate one set of consolidated comments on the outline and prepare an administrative draft study report. The document will be formatted as an ADA accessible and interactive pdf for posting on the project website. Task 6.2. Public Draft Study Report Kittelson will address one set of consolidated comments from the City on the administrative draft study report and prepare a public draft study report for posting on the project website. Task 6.3. Final Study Report Kittelson will compile and summarize public comments received on the public draft study report. Kittelson will address and incorporate comments received into the final study report and prepare a comment response matrix to share back with the public indicating how the comments were incorporated and addressed. Task 6 Deliverables: - Draft Report Outline - Administrative Draft Study Report - Public Draft Study Report - Response to public comments - Final Study Report Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 21  Packet Pg. 272 of 412  Vers.: Aug. 5, 2019 Page 16 of 24 Task 7. Grant Application Support Kittelson will work with the city to advance implementation of the preferred alternative(s) by identifying relevant grants and funding opportunities and supporting the development of grant applications and other requests for funding. Kittelson will leverage extensive experience preparing successful grant applications to set the city up for success with implementation. As part of this task, Kittelson will prepare and maintain a grant tracker that identifies relevant grant and funding opportunities, and highlights key elements of the application process, including, for example: schedule, project eligibility requirements, application criteria, and funding amounts. Kittelson will also support the City preparing materials for grant applications, including maps, graphics, and narrative. Task 7 Deliverables: - Preparing and maintaining grant tracker - Support preparing grant applications Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 22  Packet Pg. 273 of 412  Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 23  Packet Pg. 274 of 412  Vers.: Aug. 5, 2019 Page 17 of 24 EXHIBIT A-1 PROFESSIONAL SERVICES TASK ORDER, AMENDMENT NO. 1 (ADDED) CONSULTANT shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 are incorporated into this Task Order by this reference. CONSULTANT shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): 1B. TASK ORDER NO.: 2. CONSULTANT NAME: 3. PERIOD OF PERFORMANCE: START: COMPLETION: 4 TOTAL TASK ORDER PRICE: $__________________ BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT $_______________ 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:_____________________________________ 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): _____________________________ I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 24  Packet Pg. 275 of 412  Vers.: Aug. 5, 2019 Page 18 of 24 EXHIBIT B SCHEDULE OF PERFORMANCE. AMENDMENT NO. 1 (AMENDED, REPLACES PREVIOUS) CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed (“NTP”) from the CITY. Milestones Completion Number of Days/Weeks (as specified below) from NTP 1. Task 1. Project Management and Coordination Projected 775 working days, or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. 2. Task 2. Community Outreach and Engagement Projected 775 working days, or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. 3. Task 3. Data Collection and Analysis of Existing Conditions Projected 140 working days or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. 4. Task 4. Goals and Evaluation Criteria Projected 85 working days or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. 5. Task 5. Alternatives Development and Selection of Preferred Alternatives Projected 390 working days or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. 6. Task 6. Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study Report Projected 330 working days or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. 7. Task 7. Grant Application Support Projected 400 working days or to be determined by CONSULTANT and CITY’S Project Manager within terms of Agreement. Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on-call agreements per Section 1 or agreements with Additional Services per Section 4.) The schedule of performance shall be as provided in the approved Task Order, as detailed in Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 25  Packet Pg. 276 of 412  Vers.: Aug. 5, 2019 Page 19 of 24 Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case of Additional Services, provided in all cases that the schedule of performance shall fall within the term as provided in Section 2 (Term) of this Agreement. Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 26  Packet Pg. 277 of 412  Vers.: Aug. 5, 2019 Page 20 of 24 EXHIBIT C COMPENSATION, AMENDMENT NO. 1 (AMENDED, REPLACES PREVIOUS) CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below. CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below, provided that the total compensation for the Services, including any specified reimbursable expenses, and the total compensation for Additional Services (if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this Agreement. CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY. BUDGET SCHEDULE TASK NOT TO EXCEED AMOUNT Task 1 (Project Management & Coordination) $37,950.88 Task 2 (Community Outreach) $130,172.99 Task 3 (Existing Conditions) $69,782.50 Task 4 (Goals and Priorities) $37,072.00 Task 5 (Alternatives Development and Analysis ) $163,860.75 Task 6 (Study Report) $22,000 Task 7 (Grant Application Support) $11,600 Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 27  Packet Pg. 278 of 412  Vers.: Aug. 5, 2019 Page 21 of 24 Sub-total for Services $472,439.12 Reimbursable Expenses (if any)$14,654.88 Total for Services and Reimbursable Expenses $487,094.00 Additional Services (if any, per Section 4) $12,396.20 Maximum Total Compensation $499,490.20 REIMBURSABLE EXPENSES CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time/overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in-house printing, insurance and other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder. Reimbursable expenses, if any are specified as reimbursable under this section, will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: up to the not-to-exceed amount of:$14,654.88. A. Travel outside the San Francisco Bay Area, including transportation and meals, if specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses. B. Long-distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges, if specified as reimbursable, will be reimbursed at actual cost. All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate backup documentation and information. Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 28  Packet Pg. 279 of 412  Vers.: Aug. 5, 2019 Page 22 of 24 EXHIBIT C-1 SCHEDULE OF RATES, AMENDMENT NO. 1 (AMENDED, REPLACES PREVIOUS) CONSULTANT’s schedule of rates is as follows, subject to the terms and conditions of Exhibit C regarding Reimbursable Expenses: Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 29  Packet Pg. 280 of 412  Vers.: Aug. 5, 2019 Page 23 of 24 KITTELSON & ASSOCIATES, INC. BILLING RATE SCHEDULE Effective July 1, 2026 The current billing rates for Kittelson & Associates, Inc., staff are as follows and are subject to change: Staff Billing Rate Senior Principal Engineer/Planner $348 Principal Engineer/Planner $313 Associate Engineer/Planner $265 Senior Engineer/Planner $238 Engineer/Planner $203 Transportation Analyst $183 Principal Data Scientist/Developer $283 Senior Data Scientist/Developer $263 Data Scientist/Developer $243 Data Analyst/Software Developer $188 Software Technician $133 Associate Technician $213 Senior Technician $193 Technician II $168 Technician I $143 Office Support $123 Service & Other Direct Costs Billing Rate Mileage Current IRS mileage rate Travel & Other Direct Costs Actual Costs Subconsultants Actual Costs Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 30  Packet Pg. 281 of 412  Vers.: Aug. 5, 2019 Page 24 of 24 Item 14 Attachment A - Kittelson & Associates Contract; C25191297 Amendment No. 1        Item 14: Staff Report Pg. 31  Packet Pg. 282 of 412  City Council Staff Report Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: August 10, 2026 Report #:2606-6507 TITLE SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District (FIRST READING: June 15, 2026; PASSED: 7-0) BACKGROUND The City Council heard this item on June 15, 2026 for a first reading and approved it on a 7-0 vote. No changes were made to the ordinance, and it is now before the City Council for a second reading. ATTACHMENTS Attachment A: Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District APPROVED BY: Mahealani Ah Yun, City Clerk Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 1  Packet Pg. 283 of 412  *NOT YET APPROVED* 1 0160189_20260528_ay16 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Section 18.18.120 (Noncomplying (Grandfathered) Uses and Facilities) of Chapter 18.18 (Downtown Commercial (CD) District) of Title 18 (Zoning) of the Palo Alto Municipal Code is amended as follows (additions underlined; deletions struck-through): 18.18.120 Noncomplying (Grandfathered) Uses and Facilities (a) Noncomplying (Grandfathered) Uses (1) The following uses and facilities may remain as legal noncomplying (grandfathered) uses, and shall not require a conditional use permit or be subject to the provisions of Chapter 18.70: (A) Any use which was being conducted on August 28, 1986; or (B) A use not being conducted on August 28, 1986, if the use was temporarily discontinued due to a vacancy of 6 months or less before August 28, 1986; or (C) Any office use existing on April 16, 1990 on a property zoned CD and GF combining, which also existed as a lawful conforming use prior to August 28, 1986, notwithstanding any intervening conforming use. (2) The legal noncomplying uses in subsection (1) shall be permitted to remodel, improve, or replace site improvements on the same site, for continual use and occupancy by the same use, provided such remodeling, improvement, or replacement complies with all of the following: (A) shall not result in increased floor area; (B) shall not relocate below grade floor area to above grade portions of the building; (C) shall not result in an increase of the height, length, building envelope, building footprint or any other increase in the size of the improvement. For purposes of this section, “building envelope” shall mean the three dimensional shape and size occupied by an existing building. It is not the maximum, buildable potential of the site; (D)(C) shall not increase the degree of noncompliance, except pursuant to the exceptions to floor area ratio regulations set forth in Section 18.18.070; or Item 15 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District        Item 15: Staff Report Pg. 2  Packet Pg. 284 of 412  *NOT YET APPROVED* 2 0160189_20260528_ay16 (E)(D) in the case of medical, professional, general business or administrative office uses of a size exceeding 5,000 square feet in the CD-S or CD-N district that are deemed legal noncomplying pursuant to subsection (1), such remodeling, improvement, or replacement shall not result in increased floor area devoted to such office uses. (F)(E) The Director may approve minor changes to the building’s footprint, height, length, and the building envelope through Architectural Review of minor aesthetic architectural improvements and to improve pedestrian orientation provided there is no increase to the degree of any non- complying feature. (3) If a legal noncomplying use deemed existing pursuant to subsection (1) ceases and thereafter remains discontinued for 12 consecutive months, it shall be considered abandoned and may be replaced only by a conforming use. (4) A use deemed legal noncomplying pursuant to subsection (1) which is changed to or replaced by a conforming use shall not be reestablished, and any portion of a site or any portion of a building, the use of which changes from a legal noncomplying use to a conforming use, shall not thereafter be used except to accommodate a conforming use. (b) Noncomplying (Grandfathered) Facilities (1) Any noncomplying (grandfathered) facility existing on August 28, 1986 and which, when built, was a complying facility, may remain as a legal noncomplying facility and shall not be subject to the provisions of Chapter 18.70. (2) The legal noncomplying facilities in subsection (1) shall be permitted to remodel, improve, or replace site improvements on the same site, provided such remodeling, improvement, or replacement complies with all of the following: (A) shall not result in increased floor area; (B) shall not relocate below grade floor area to above grade portions of the building; (C) shall not result in an increase of the height, length, building envelope, building footprint, or any other increase in the size of the improvement; (D)(C) shall not increase the degree of noncompliance, except pursuant to the exceptions to floor area ratio regulations set forth in Section 18.18.070; (E)(D) The Director may approve minor changes to the building’s footprint, height, length, and the building envelope through Architectural Review of minor aesthetic architectural improvements and to improve pedestrian-orientation provided there is no increase to the degree of any non- complying feature, except as provided for rooftop access and amenities in Section 18.18.060(e). (F)(E) The residential portion of any legal noncomplying facility shall not be converted to a non- residential land use or reduced in gross floor area or number of units. An applicant asserting that the operation of this subsection (F) is preempted by state or federal law Item 15 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District        Item 15: Staff Report Pg. 3  Packet Pg. 285 of 412  *NOT YET APPROVED* 3 0160189_20260528_ay16 shall submit a statement of its position with all claims and all supporting documentary evidence at the time it applies for a change of use. The City Council shall hold at least one noticed public hearing in accordance with the procedures set forth in PAMC 18.77.080 to consider whether to waive or adjust the requirements of one or more provisions of Titles 18 or 21. The City Council may seek additional information including, without limitation, third party peer review paid for at the applicant’s expense. SECTION 2. The Council finds that this Ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that it will have a significant effect on the environment. SECTION 3. This Ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Development Services Item 15 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Section 18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District        Item 15: Staff Report Pg. 4  Packet Pg. 286 of 412  City Council Staff Report Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: August 10, 2026 Report #:2606-6508 TITLE SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures (FIRST READING: June 15, 2026; PASSED: 7-0) BACKGROUND The City Council heard this item on June 15, 2026 for a first reading and approved it on a 7-0 vote. No changes were made to the ordinance, and it is now before the City Council for a second reading. ATTACHMENTS Attachment A: Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures APPROVED BY: Mahealani Ah Yun, City Clerk Item 16 Item 16 Staff Report        Item 16: Staff Report Pg. 1  Packet Pg. 287 of 412  ***NOT YET APPROVED*** 1 0160198_20260604_ay16 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Like many communities, the City of Palo Alto has experienced high vacancy rates in retail districts, which have been compounded by challenges associated with the COVID-19 pandemic as well as ongoing retail trends. Accordingly, the City Council has included retail vitality as a Council priority for the past several years. B. Throughout 2023 and 2024, City staff, the Planning and Transportation Commission (PTC), and the City’s consultant Michael Baker International (MBI) worked together to develop a Retail Study Report intended to inform a citywide retail zoning strategy. C. On September 18, 2024, the City Council Retail Committee reviewed the Final Draft Retail Study Report and provided direction to staff on several zoning amendments should be implemented immediately to support retail and retail-like uses in the City. D. The PTC held six hearings on the Retail Study (in addition to four meetings of the PTC retail ad hoc committee). E. In December 16, 2024, the City Council adopted interim ordinance no. 5642, temporarily implementing some of the recommendations of the Retail Study, while directing further work by staff and the PTC on a permanent ordinance. F. On October 29, 2025, the PTC reviewed additional analysis and recommendations prepared by staff and the City’s consultant Lexington Planning. G. On March 25, 2026, the PTC reviewed issues and options to encourage ground-floor retail, provided comments, and recommended that the City Council adopt an ordinance. H. On June 3, 2026, the City Council Economic Development Committee provided comments and recommended unanimously that the City Council adopt a retail vitality ordinance. I. The City Council now desires to adopt a retail vitality ordinance to replace interim ordinance no. 5642. SECTION 2. All references in the Palo Alto Municipal Code to “Conditional Use Permit” shall be amended to read “Administrative Use Permit.” All references in the Palo Alto Municipal Code to “CUP” shall be amended to read “AUP.” All references in the Palo Alto Municipal Code to “conditionally permitted” shall be amended to read “administratively Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 2  Packet Pg. 288 of 412  ***NOT YET APPROVED*** 2 0160198_20260604_ay16 permitted.” SECTION 3. Section 18.04.030 (Definitions) of Chapter 18.04 (Definitions) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses; unannotated text indicates prior, temporary amendments that would expire if not restated herein): 18.04.030 Definitions (a) Throughout this title the following words and phrases shall have the meanings ascribed in this section. (12) “Animal care” means a use providing grooming, housing, medical care, or other services to animals, including veterinary services, animal hospitals, overnight or short-term boarding ancillary to veterinary care, indoor or outdoor kennels, and similar services. (12) “Animal care, daytime” means a use providing care and services during the daytime only, including grooming, socializing, housing, veterinary services, and animal hospitals that do not provide overnight care. (12.1) “Animal care, overnight” means a use providing care and services that includes overnight or short-term boarding, such as kennels and animal hospitals with overnight care. [. . .] (12.6) “Automobile showroom” means a use primarily engaged in the sale of new and used automobiles and trucks, or the display and demonstration of automobiles and trucks for the purpose of facilitating sales, but which does not involve on-site storage of inventory, except as incidental to the showroom use. Automobile showroom serves primarily pedestrian clientele and is distinct from automobile dealership. [. . .] (47) “Eating and drinking service” means uses primarily engaged in serving prepared food and/or beverages for consumption on or off the premises. Related definitions are provided in subsections (45) (Drive-in/drive- through service). (47) (A) “Eating and drinking service, full service” means a use providing preparation and retail sale of food and beverages with a full menu and providing indoor seating area. Eating and drinking service This use typically includes presence of a full commercial kitchen, and commercial dishwasher, and table service. For establishments with incidental sale alcoholic beverages, a minimum of 50% of revenues from an “eating and drinking service” must be derived from the sale of food. Related definitions are provided in subsections (45) (Drive-in/drive- through service, and (125)(B) (Intensive retail service) and (136) (Take-out service). (B) “Eating and drinking, limited service” means a use where food and beverages are ready to consume within approximately 15 minutes of the time of sale whether on the premises, taken out, or delivered. Typically, limited seating area and no commercial Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 3  Packet Pg. 289 of 412  ***NOT YET APPROVED*** 3 0160198_20260604_ay16 kitchen are provided. Examples may include delis, bakeries, frozen dessert shops, pizza shops, counter service restaurants, and coffee shops. For establishments with incidental sale alcoholic beverages, a minimum of 50% of revenues must be derived from the sale of food. (C) “Bars” mean establishments devoted to serving alcoholic beverages and for which the serving of food is incidental to the consumption of such beverages, with less than 50% of revenues derived from the sale of food. [. . .] (56) “Financial service” means a use providing financial services to individuals, firms, or other entities. The term “financial service” includes banks, savings and loan institutions, loan and lending institutions, credit unions and similar services. (A) “Retail finance service” means a financial service use operating in a retail-oriented manner, offering face-to-face interactions, and convenient in-person transactions in locations designed for public access. These services includes retail banks, savings and loan institutions, loan and lending offices, credit unions, and similar services that prioritize walk-in customers with access to immediate financial solutions or combined with a publicly accessible retail component. [. . .] (57.6) “Formula retail business” means a retail, personal, or eating and drinking service that is one of fifty (50) or more business locations in the State of California required by contractual or other arrangement to maintain any of the following standardized characteristics: merchandise, menu, services, decor, uniforms, architecture, facade, color scheme, signs, trademark, or servicemark. For purposes of this definition: (A) “Standardized merchandise, menu and/or services” means 50% or more of in- stock merchandise from a single distributor bearing the same or similar markings; 50% or more of menu items identical in name and presentation with other locations; or 50% or more of services offered identical in name or presentation with other locations. (B) “Decor” means the style of interior furnishings, which may include but is not limited to, style of furniture, wall coverings or permanent fixtures. (C) “Color Scheme” means the selection of colors used throughout, such as on the furnishings, permanent fixtures, and wall coverings, or as used on the facade. (D) “Uniforms” means standardized items of clothing including but not limited to standardized aprons, pants, shirts, smocks or dresses, hats, and pins (other than name tags) as well as standardized colors of clothing. (E) “Facade” means the face or front of a building, including awnings, looking onto a street or an open space. (F) “Trademark” means a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that identifies and distinguishes the source of the goods from one party from those of others. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 4  Packet Pg. 290 of 412  ***NOT YET APPROVED*** 4 0160198_20260604_ay16 (G) “Servicemark” means a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that identifies and distinguishes the source of a service from one party from those of others. [. . .] (102.6) "Neighborhood-serving offices" are medical offices, professional offices, travel agencies, and insurance agencies that fit the definition of a neighborhood-serving use. (102.7) A "Neighborhood Serving Use" is not a separate use classification, but describes the class of uses that primarily serve individual consumers and households, not businesses, are generally pedestrian oriented in design, and do not generate noise, fumes or truck traffic greater than that typically expected for uses with a local customer base. A neighborhood- serving use is also one to which a significant number of customers and clients travel, rather than the provider of the goods or services traveling off-site. [. . .] (114) “Personal service” means a use providing services of a personal convenience nature, and cleaning, repair or sales incidental thereto, including: (A) Beauty shops, nail salons, day spas, and barbershops; (B) Self-service laundry and cleaning services; laundry and cleaning pick-up stations where all cleaning or servicing for the particular station is done elsewhere; and laundry and cleaning stations where the cleaning or servicing for the particular station is done on site, utilizing equipment meeting any applicable Bay Area Air Quality Management District requirements, so long as no cleaning for any other station is done on the same site, provided that the amount of hazardous materials stored does not at any time exceed the threshold which would require a permit under Title 17 (Hazardous Materials Storage) of this code; (C) Repair and fitting of clothes, shoes, and personal accessories; (D) Quick printing and copying services where printing or copying for the particular service is done on site, so long as no quick printing or copying for any off-site printing or copying service is done on the same site; (E) Internet and other consumer electronics services; (F) Film, data and video processing shops, including shops where processing for the particular shop is done on site, so long as no processing for any other shop is done on the same site; (G) Art, dance or music studios intended for an individual or small group of persons in a class (see “commercial recreation” for other activities); and (H) Fitness and exercise studios, or similar uses, in a space having 5,000 square feet or fewer of gross floor area (see “commercial recreation” for uses exceeding 5,000 square feet). Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 5  Packet Pg. 291 of 412  ***NOT YET APPROVED*** 5 0160198_20260604_ay16 (I) Learning centers intended for individual or small group settings, including tutoring, standardized test preparation, language classes, after-school programs, cooking classes, and similar uses. (J) Health screening, including biometric body scanning, imaging, or other health testing services directly serving the public, so long as no medical treatment is provided and the service is not intended to fulfill outside medical orders. [. . .] (125) “Retail service” means a use open to the public during typical business hours and predominantly engaged in providing retail sale, rental, service, processing, or repair of items primarily intended for consumer or household use. (A) “Extensive retail service,” as used with respect to parking requirements, means a retail sales use having more than seventy-five percent of the gross floor area used for display, sales, and related storage of bulky commodities, including household furniture and appliances, lumber and building materials, carpeting and floor covering, air conditioning and heating equipment, and similar goods, which uses have demonstrably low parking demand generation per square foot of gross floor area. (B) “Intensive retail service” as used with respect to parking requirements, means any retail service use not defined as extensive retail service, such as boutiques, bookstores, and small goods retail shops. and including limited food service (i.e. ‘ready-to-eat’ food and/or beverage shops without a full commercial kitchen, where food and/or beverages are ready to consume at the time of sale and any seating area is limited; examples include sandwiches, frozen desserts, non-alcoholic beverages, and baked items). (125.1) “Retail-like use” means a use generally open to the public during typical business hours and predominantly engaged in providing services closely related to, but distinct from, retail services, including but not limited to: (A) Eating and drinking services, as defined in subsection (47); (B) Hotels, as defined in subsection (73); (C) Personal services, as defined in subsection (114); (D) Theaters; (E) Travel agencies; (F) Commercial recreation, as defined in subsection (33); (G) Commercial nurseries; (H) Automobile showrooms, as defined in subsection (12.6); (I) Day care centers, as defined in subsection (42); (J) Retail financial services, as defined in subsection (56)(A); and (K) Other commercial uses, services, or activities determined by the Director of Planning and Development Services to be accessible to the general public, generate walk-in pedestrian clientele, and contribute substantially to a high level of pedestrian activity, and meet the intent of the 18.30(B).040 (Pedestrian Shopping) design standards. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 6  Packet Pg. 292 of 412  ***NOT YET APPROVED*** 6 0160198_20260604_ay16 Not all retail-like uses are permitted in zoning districts that allow retail-like uses. Refer to use tables within each zoning district for specific permitted retail-like uses. [. . .] (136) “Take-out service” means a characteristic of an eating or drinking service which encourages, on a regular basis, consumption of food or beverages, such as prepared or prepackaged items, outside of a building, in outdoor seating areas where regular table service is not provided, in vehicles parked on the premises, or off-site. Take-out service does not include intensive retail service uses, as defined in subsection (125)(B). [. . .] SECTION 4. Section 18.08.040 of the Palo Alto Municipal Code, the “Zoning Map,” is hereby amended by changing the zoning of the properties identified in Exhibit A by removing the Ground Floor (GF) combining district. SECTION 5. Sections 18.16.030 (Definitions), 18.16.040 (Land Uses), 18.16.050 (Office Use Restrictions), and 18.16.060 (Development Standards) of Chapter 18.16 (Neighborhood, Community, and Service Commercial (CN, CC and CS) Districts) of Title 18 (Zoning) of the Palo Alto Municipal Code are hereby amended as follows (additions underlined; deletions struck- through; text omitted but unchanged noted by bracketed ellipses): 18.16.030 Definitions [. . .] (e) "Neighborhood-serving offices" are medical offices, professional offices, travel agencies, and insurance agencies that fit the definition of a neighborhood-serving use. (f) A "Neighborhood Serving Use" is a use that primarily serves individual consumers and households, not businesses, is generally pedestrian oriented in design, and does not generate noise, fumes or truck traffic greater than that typically expected for uses with a local customer base. A neighborhood-serving use is also one to which a significant number of customers and clients travel, rather than the provider of the goods or services traveling off-site. [. . .] 18.16.040 Land Uses The uses of land allowed by this chapter in each commercial zoning district are identified in the following tables. Land uses that are not listed on the tables are not allowed, except where otherwise noted. Where the last column on the following tables (“Subject to Regulations in”) includes a section number, specific regulations in the referenced section also apply to the use; Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 7  Packet Pg. 293 of 412  ***NOT YET APPROVED*** 7 0160198_20260604_ay16 however, provisions in other sections may apply as well. For properties with combining district zoning designations, refer to combining district use regulations for additional or superseding requirements. (a) Commercial Zones and Land Uses Permitted and conditionally permitted land uses for each commercial zone are shown in Table 1: TABLE 1 PERMITTED AND CONDITIONALLY PERMITTED USES P = Permitted Use CUP = Conditional Use Permit Required LAND USE CN (4) CC, CC(2) CS (4) Subject to Regulations In: ACCESSORY AND SUPPORT USES Accessory facilities and activities customarily associated with or essential to permitted uses, and operated incidental to the principal use. P P P 18.42 Drive-in services or take-out services associated with permitted uses(3) CUP CUP CUP 18.42 Tire, battery, and automotive service facilities, when operated incidental to a permitted retail service or shopping center having a gross floor area of more than 30,000 square feet. CUP 18.42, 18.40.160 Safe Parking 18.42.160 EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Business and Trade Schools CUP P P Churches and Religious Institutions P P P Private Educational Facilities CUP P P Private Clubs, Lodges, or Fraternal Organizations CUP P P MANUFACTURING AND PROCESSING USES Recycling Centers CUP CUP CUP Warehousing and Distribution CUP OFFICE USES Administrative Office Services P 18.16.050 Medical Offices PCUP(5)(7) PCUP(5) PCUP(5) 18.16.050 Professional and General Business Offices P(7) P P 18.16.050 PUBLIC/QUASI-PUBLIC USES Utility Facilities essential to provision of utility services but excluding construction or storage yards, maintenance facilities, or corporation yards. CUP CUP CUP Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 8  Packet Pg. 294 of 412  ***NOT YET APPROVED*** 8 0160198_20260604_ay16 LAND USE CN (4) CC, CC(2) CS (4) Subject to Regulations In: RECREATION USES Commercial Recreation CUPP(5) CUPP(5) CUPP(5) 18.40.160 Outdoor Recreation Services CUP CUP CUP RESIDENTIAL USES Multiple-Family P(1) P(1) P(1) 18.16.060(b) and (c) Home Occupations P P P Residential Care Homes P P P RETAIL USES Automobile Showroom P P P Bars CUP CUP 18.42.090 Eating and Drinking Services, excluding drive-through drive-in and take-out services P(8) P P 18.40.160 18.42.090 Retail Services, excluding liquor stores P(8) P P 18.40.160 Liquor stores CUP P P 18.40.160 Shopping Centers P 18.16.060(c), 18.40.160 SERVICE USES Ambulance Services CUP CUP CUP Animal Care, daytime excluding boarding and kennels P P P 18.42.130 Animal Care, overnight CUP CUP CUP 18.42.130 Automobile Service Stations CUP CUP CUP 18.30(G) Automotive Services CUP Convalescent Facilities CUP P P Day Care Centers P P P 18.40.160 Small Family Day Care Homes P P P Large Family Day Care Homes P P P Small Adult Day Care Homes P P P Large Adult Day Care Homes CUP P P Banks and Financial Services V CUP P(2) P(2) P(2) General Business Services CUP CUP P Hotels P P 18.16.060(d), 18.40.160 Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 9  Packet Pg. 295 of 412  ***NOT YET APPROVED*** 9 0160198_20260604_ay16 LAND USE CN (4) CC, CC(2) CS (4) Subject to Regulations In: Mortuaries CUP P P Neighborhood Business Services P 18.16.060(f) Personal Services P P(6) P 18.16.060(f), 18.40.160 Reverse Vending Machines P P P TEMPORARY USES Farmer’s Markets CUP CUP CUP Temporary Parking Facilities, provided that such facilities shall remain no more than five years. CUP CUP CUP TRANSPORTATION USES Parking as a principal use CUP CUP Transportation Terminals CUP CUP P = Permitted Use CUP = Conditional Use Permit Required (1) Residential is only permitted in the following instances and pursuant to 18.16.060(b) and (c): (i) Aas part of a mixed use development, except on CN sites in the Midtown Shopping District and Charleston Shopping Center; or pursuant to the provisions of Section 18.16.060(b), or (ii) Oon sites designated as housing inventory sites in the Housing Element of the Comprehensive Plan; or (iii) Oon CN or CS sites on El Camino Real; or (iv) Oon CC(2) sites. (2) Except drive-through drive-in services. (3) So long as drive up facilities, excluding car washes, provide full access to pedestrians and bicyclists. A maximum of two such services shall be permitted within 1,000 feet, and each use shall not be less than 150 feet from one another. (4) For properties in the CN and CS zone districts, businesses that operate or have associated activities at any time between the hours of 10:00 p.m. and 6:00 a.m. require a conditional use permit. (5) Except, a A conditional use permit is not required for medical office or commercial recreation uses up to 5,000 square feet of gross floor area, with the following exceptions, for which a conditional use permit is always required for: (A) ground-floor medical office fronting on California Avenue and, in the Charleston Shopping Center, in the Midtown Shopping District, and Town and Country Shopping Center; (B) commercial recreation uses fronting on California Avenue and in the Town and Country Village Shopping Center. (6) A conditional use permit is required for the following uses when fronting on California Avenue: (A) Fitness or exercise studios, and similar uses exceeding 1,800 square feet in gross floor area; and (B) Learning centers intended for individual or small group settings. A conditional use permit is required for fitness or exercise studios, and similar uses exceeding 1,800 square feet in gross floor Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 10  Packet Pg. 296 of 412  ***NOT YET APPROVED*** 10 0160198_20260604_ay16 area in Town and Country Village Shopping Center. (7) In the Midtown Shopping District and Charleston Shopping Center, only “neighborhood serving office” uses are permitted, and a CUP is required for office uses exceeding 2,500 sq. ft. (8) In the Midtown Shopping District and Charleston Shopping Center, a conditional use permit is required for eating and drinking services above 5,000 sq. ft and for other retail uses above 20,000 sq. ft. [. . .] (c) CN District: Special Use Requirements in the Charleston and Midtown Shopping Centers The following regulations shall apply to areas of Charleston Center and the Midtown Shopping Center as defined in Section 18.16.030. Table 2 shows the uses permitted and conditionally permitted on the ground floor of the applicable areas of the Charleston Center and Midtown Shopping Center. Permitted and conditional uses specified in subsection (a) of this section shall only apply to the ground floor of the areas of the Charleston and Midtown Shopping Centers as listed in Table 2. Uses lawfully existing on January 16, 2001 may be continued as non-conforming uses but may only be replaced with uses permitted or conditionally permitted under this subsection. TABLE 2 CHARLESTON AND MIDTOWN SHOPPING CENTERS GROUND FLOOR USES P = Permitted Use CUP = Conditional Use Permit Required X = Prohibited Use LAND USES Charleston Shopping Center Midtown Shopping Center Subject to Regulations in: ACCESSORY AND SUPPORT USES Accessory facilities and uses customarily incidental to permitted uses. P P EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Churches and Religious Institutions CUP CUP Private Educational Facilities CUP CUP MANUFACTURING AND PROCESSING USES Recycling Centers CUP CUP OFFICE USES Neighborhood-serving offices that do not exceed 2,500 square feet in floor area. P 18.16.050 Neighborhood-serving offices exceeding 2,500 square feet in floor area. CUP 18.16.050 Administrative office uses and general business office uses (other than neighborhood-serving travel agencies and insurance agencies) other than those legally in existence on January 16,2001 X X 18.16.050 Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 11  Packet Pg. 297 of 412  ***NOT YET APPROVED*** 11 0160198_20260604_ay16 LAND USES Charleston Shopping Center Midtown Shopping Center Subject to Regulations in: Medical offices not exceeding 2,500 square feet in area, professional offices, travel agencies, and insurance agencies CUP 18.16.050 PUBLIC/QUASI-PUBLIC USES Utility Facilities essential to provision of utility services but excluding construction or storage yards, maintenance facilities, or corporation yards. CUP CUP RECREATION USES Commercial Recreation CUP CUP 18.40.160 Outdoor Recreation Services CUP CUP Private Clubs, Lodges, or Fraternal Organizations CUP CUP RESIDENTIAL USES Residential uses of any nature X X RETAIL USES Eating and Drinking Services, excluding drive-in and take-out services P P 18.40.160 Retail Services, excluding liquor stores P P 18.40.160 Liquor stores CUP CUP 18.40.160 SERVICE USES Ambulance Services CUP CUP Animal Care, excluding boarding and kennels P P Automobile Service Stations CUP CUP 18.30(G) Convalescent Facilities CUP CUP Day Care Centers P P 18.40.160 Financial Services CUP CUP Mortuaries CUP CUP Neighborhood Business Services P P Personal Services P P 18.40.160 Reverse Vending Machines P P TEMPORARY USES Farmers’ Markets CUP CUP Temporary Parking Facilities, provided that such facilities shall remain no more than five years. CUP CUP P = Permitted Use CUP = Conditional Use Permit Required X = Prohibited Use (d) Charleston Shopping Center Additional Use Restrictions (1) Any office use first occupying space at the Center on or after January 16, 2001, shall obtain a written determination from the director of planning and development services that it qualifies as a neighborhood serving use, as defined in this chapter, before occupying its Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 12  Packet Pg. 298 of 412  ***NOT YET APPROVED*** 12 0160198_20260604_ay16 premises. The applicant shall submit such information as the director shall reasonably require in order to make the determination, and the director shall issue the determination within 30 days of receiving a complete application. Failure to submit the required information shall be grounds for determining that a business is not neighborhood-serving. (2) No more than 7,850 square feet of total floor area at the Center shall be occupied by office uses at any time. (3) Prior to approving a conditional use permit for neighborhood-serving offices larger than 2,500 square feet in total floor area, the city shall find that the proposed use will be neighborhood-serving, that it will be conducted in a manner that will enhance and strengthen the Center as a neighborhood resource, and that it will not diminish the retail strength of the center. (e) Midtown Shopping Center: Additional Use Restrictions (1) An existing ground floor office may be replaced with another office if (a) the new tenant or owner will continue the existing business or practice; or (b) a conditional use permit is issued for the new office use. (2) No conditional use permit shall be issued for any new office use on the ground floor unless, in addition to the findings required for a conditional use permit as specified in Section 18.76.010, the city finds that the proposed use will be neighborhood serving, that it will be conducted in a manner that will enhance and strengthen the Midtown Shopping District as a neighborhood resource, and that it will not diminish the retail strength of the District. (3) For properties at 711, 719, and 721 Colorado Avenue, and 689 Bryson Avenue , buildings not fronting on Middlefield Avenue, designed and used for office purposes, and not well suited to other uses are exempt from the provisions of this subsection (b). 18.16.050 Office Use Restrictions The following restrictions shall apply to office uses: (a) Conversion of Ground Floor Housing and Non-Office Commercial to Office Medical, Professional, and Business offices shall not be located on the ground floor, unless any of the following apply to such offices: (1) Have been continuously in existence in that space since March 19, 2001, and as of such date, were neither non-conforming nor in the process of being amortized pursuant to Chapter 18.30(I); (2) Occupy a space that was not occupied by housing, neighborhood business service, retail services, personal services, eating and drinking services, or automotive service on March 19, 2001 or thereafter; (3) Occupy a space that was vacant on March 19, 2001; (4) Are located in new or remodeled ground floor area built on or after March 19, 2001 if the ground floor area devoted to housing, retail services, eating and drinking services, personal services, and automobile services does not decrease; (5) Are on a site located in an area subject to a specific plan or coordinated area plan, which specifically allows for such ground floor medical, professional, and general business offices; or (6) Are located anywhere in Building E or in the rear 50% of Building C or D of the property Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 13  Packet Pg. 299 of 412  ***NOT YET APPROVED*** 13 0160198_20260604_ay16 at the southeast corner of the intersection of Park Boulevard and California Avenue, as shown on sheet A2 of the plans titled “101 California Avenue Townhouse/Commercial/Office, Palo Alto, CA” by Crosby, Thornton, Marshall Associates, Architects, dated June 14, 1982, revised November 23, 1982, and on file with the Department of Planning and Development Services. (a) The following office use restrictions shall apply in the Midtown Shopping District and Charleston Shopping Center: (1) The only office uses permitted are “neighborhood serving office” uses. (2) Prior to approving a conditional use permit for neighborhood-serving offices larger than 2,500 square feet in total floor area, the city shall find that the proposed use will be neighborhood-serving and consistent with the purposes of the zoning district (3) In the Midtown Shopping District, buildings at 711, 719, and 721 Colorado Avenue, and 689 Bryson Avenue, which do not front on Middlefield Avenue and are designed and used for office purposes, are exempt from the provisions of this subsection. (b) Size Restrictions on Office Uses in the CN and CS Districts (other than Midtown Shopping District and Charleston Shopping Center): (1) In the CN district, office uses shall be governed by the following regulations: (A) Total floor area of permitted office uses on a lot shall not exceed 25% of the lot area, provided: (i) A lot shall be permitted to have at least a total floor area of 2,500 square feet of office uses, provided the uses meet all other zoning regulations. (ii) No lot shall be permitted to have more than a total floor area of 5,000 square feet of office uses. (B) Such uses may be allowed to exceed the maximum size, subject to issuance of a conditional use permit in accord with the provisions of Chapter 18.76. The maximum size for any conditional use shall be established by the director and specified in the conditional use permit for such use. (2) In the CS district, office uses shall be governed by the following regulations: (A) No lot shall be permitted to have more than a total floor area of 5,000 square feet of office uses. (B) Such uses may be allowed to exceed the maximum size, subject to issuance of a conditional use permit in accord with the provisions of Chapter 18.76. The maximum size for any conditional use shall be established by the director and specified in the conditional use permit for such use. 18.16.060 Development Standards [. . .] (f) Size of Establishments in the CN District In the CN district, permitted commercial uses shall not exceed the floor area per individual use or business establishment shown in Table 5. Such uses may be allowed to exceed the maximum establishment size, subject to issuance of a conditional use permit in accord with Section 18.76.010. The maximum establishment size for any conditional use shall be established by the director and specified in the conditional use permit for such use. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 14  Packet Pg. 300 of 412  ***NOT YET APPROVED*** 14 0160198_20260604_ay16 TABLE 5 MAXIMUM SIZE OF ESTABLISHMENT Type of Establishment Maximum Size (ft 2 ) Personal Services 3,000 Retail services, except grocery stores 15,000 Grocery stores 20,000 Eating and drinking services 5,000 Neighborhood business services 3,000 [. . .] SECTION 6. Sections 18.18.050 (Land Uses) and 18.18.060 (Development Standards) of Chapter 18.18 (Downtown Commercial (CD) District) of Title 18 (Zoning) of the Palo Alto Municipal Code are hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): 18.18.050 Land Uses The uses of land allowed by this chapter in each commercial zoning district are identified in the following table. Land uses that are not listed on the tables are not allowed, except where otherwise noted. Where the last column on the following tables (“Subject to Regulations in”) includes a section number, specific regulations in the referenced section also apply to the use; however, provisions in other sections may apply as well. For parcels designed with the -GF combining district, refer to 18.30(C) for ground-floor use regulations. Permitted and conditionally permitted land uses for the CD district are shown in Table 1: Table 1 CD Permitted and Conditionally Permitted Uses P Permitted Use • CUP Conditional Use Permit Required CD-C CD-S CD-N Subject to regulations in: ACCESSORY USES Accessory facilities and activities associated with or essential to permitted uses, and operated incidental to the principal use P P P Drive-in or Take-out Services associated with permitted uses (2) CUP CUP CUP Tire, battery, and automotive service facilities, when operated incidental to a permitted retail service or shopping center having a gross floor area of more than 30,000 square feet CUP 18.40.160 Safe Parking 18.42.160 EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Business and Trade Schools P P Churches and Religious Institutions P P P Private Educational Facilities P P CUP Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 15  Packet Pg. 301 of 412  ***NOT YET APPROVED*** 15 0160198_20260604_ay16 Table 1 CD Permitted and Conditionally Permitted Uses P Permitted Use • CUP Conditional Use Permit Required CD-C CD-S CD-N Subject to regulations in: Private Clubs, Lodges, or Fraternal Organizations P P CUP MANUFACTURING AND PROCESSING USES Recycling Centers CUP CUP CUP Warehousing and Distribution CUP OFFICE USES Administrative Office Services P 18.18.060(f) Medical, Professional, and General Business Offices P P P 18.18.060(f) PUBLIC/QUASI-PUBLIC FACILITY USES Utility Facilities essential to provision of utility services but excluding construction or storage yards, maintenance facilities, or corporation yards CUP CUP RECREATION USES Commercial Recreation CUP(3) CUP(3) CUP(3) Outdoor Recreation Services CUP CUP CUP RESIDENTIAL USES Multiple-Family P (1) P (1) P (1) 18.18.060(b) Home Occupations P P P Residential Care Homes P P P RETAIL USES Automobile Showrooms P P P Bars CUP 18.42.090 Eating and Drinking Services, except drive-through drive-in or take-out services P P P 18.18.060(g) , 18.40.160 18.42.090 Retail Services, excluding liquor stores P P P 18.18.060(g) , 18.40.160 Shopping Centers P 18.18.060(g) , 18.40.160 Liquor Stores P P CUP 18.40.160 SERVICE USES Animal Care, excluding boarding and kennels daytime P P P 18.42.130 Ambulance Services CUP CUP CUP 18.30(G) Automobile Service Stations CUP CUP CUP Automobile Services CUP Convalescent Facilities P P CUP Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 16  Packet Pg. 302 of 412  ***NOT YET APPROVED*** 16 0160198_20260604_ay16 Table 1 CD Permitted and Conditionally Permitted Uses P Permitted Use • CUP Conditional Use Permit Required CD-C CD-S CD-N Subject to regulations in: Day Care Centers P P P 18.40.160 Small Family Day Care Homes P P P Large Family Day Care Homes P P P Small Adult Day Care Homes P P P Large Adult Day Care Homes Financial Services, except drive-up services P P CUP General Business Services CUP P P Hotels P P P 18.18.060(d) , 18.40.160 Mortuaries P P CUP Personal Services P(4) P(4) P(3)(4) 18.18.060(g) , 18.40.160 Reverse Vending Machines P P P TRANSPORTATION USES Parking as a principal use CUP CUP Passenger Transportation Terminals CUP TEMPORARY USES Indoor Farmers’ Markets CUP CUP CUP Temporary Parking Facilities, provided that such facilities shall remain no more than five years CUP CUP CUP P Permitted Use CUP Conditional Use Permit Required (1) Residential is only permitted as part of a mixed use development, pursuant to the provisions of Section 18.18.060(b), or on sites designated as Housing Opportunity Sites in the Housing Element of the Comprehensive Plan, pursuant to the provisions of Section 18.18.060(c). (2) Drive-up facilities, excluding car washes, provide full access to pedestrians and bicyclists. A maximum of two such services shall be permitted within 1,000 feet and each use shall not be less than 150 ft from one another. (3) A conditional use permit is required for personal services over 5,000 sq. ft. (3) A conditional use permit is not required for commercial recreation uses up to 5,000 square feet of gross floor area, with the following exceptions, for which a conditional use permit is always required: (A) medical office fronting on University Avenue; (B) commercial recreation uses fronting on University Avenue. (4) A conditional use permit is required for the following uses when fronting on University Avenue: (A) Fitness or exercise studios, and similar uses; and (B) Learning centers intended for individual or small group settings. 18.18.060 Development Standards [. . .] Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 17  Packet Pg. 303 of 412  ***NOT YET APPROVED*** 17 0160198_20260604_ay16 (g) Restrictions on Size of Commercial Establishments in CD-N Subdistrict In the CD-N subdistrict, permitted commercial uses shall not exceed the floor area per individual use or business establishment shown in Table 4. Such uses may be allowed to exceed the maximum establishment size, subject to the issuance of a conditional use permit in accordance with Chapter 18.76. The maximum establishment size for any conditional use shall be established by the director and specified in the conditional use permit for such use. TABLE 4 MAXIMUM SIZE OF ESTABLISHMENT Type of Establishment Maximum Size (ft 2 ) Personal Services 3,000 Retail services, except grocery stores 15,000 Grocery stores 20,000 Eating and drinking services 5,000 [. . .] SECTION 7. Section 18.29.050 (Permitted Uses) of Chapter 18.29 (North Ventura (NV) District Regulations) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): 18.29.050 Permitted Uses The uses of land allowed by this chapter in each zoning district are identified in the following tables. Land uses that are not listed in the tables are not allowed, except where otherwise noted. Where the last column on the following tables ("Subject to Regulations in") includes a section number, specific regulations in the referenced section also apply to the use; however, provisions in other sections not specifically referenced may apply as well. TABLE 1: PERMITTED AND CONDITIONALLY PERMITTED USES P = Permitted Use CUP = Conditional Use Permit Required TUP = Temporary Use Permit Required — = Not Permitted LAND USE NV-R1 NV-R2 NV-R3 NV-R4 NV-MXL (1)(5) NV-MXM (5) NV-MXH NV-PF Subject to Regulations In: ACCESSORY AND SUPPORT USES 18.40 Accessory facilities and activities customarily incidental to the P P P P P P P - 18.10.080 permitted use 18.12.080 Accessory Dwelling Unit & Junior Accessory Dwelling Unit when accessory to primary and permitted residential use P P P P P P P - 18.09 Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 18  Packet Pg. 304 of 412  ***NOT YET APPROVED*** 18 0160198_20260604_ay16 TABLE 1: PERMITTED AND CONDITIONALLY PERMITTED USES P = Permitted Use CUP = Conditional Use Permit Required TUP = Temporary Use Permit Required — = Not Permitted LAND USE NV-R1 NV-R2 NV-R3 NV-R4 NV-MXL (1)(5) NV-MXM (5) NV-MXH NV-PF Subject to Regulations In: Home Occupations, when accessory to permitted residential use P P P P P P P P 18.42 Horticulture, Gardening, and Growing of food products for consumption by occupants of a site P P P P P P P - EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Private Clubs, Lodges, or Fraternal Organizations, excluding any such facility operated as a business for profit - - - CUP CUP - - - Private Educational Facilities CUP CUP CUP CUP CUP P P - Religious Institutions CUP CUP CUP CUP P P P - OFFICE USES(2) Administrative Office Services - - - - P P P - 18.29.050(a) Medical Offices - - - - P P P - 18.29.050(a) Professional and General Business Offices - - - - P P P - 18.29.050(a) PUBLIC/QUASI-PUBLIC USES Community Centers CUP CUP CUP CUP - - - CUP (3) Utility Facilities essential to provision of utility services but excluding construction or storage yards, maintenance facilities, or corporation yards. CUP CUP CUP CUP CUP CUP CUP - RECREATION USES Neighborhood Recreational Centers - - CUP CUP - - - CUP(3) Commercial Recreation - - - - CUP CUP CUP CUP(3) Outdoor Recreation Services CUP CUP CUP CUP - CUP CUP CUP(3) Youth Clubs - - - - - - - CUP(3) RESIDENTIAL USES Single-Family P P - - - - - - Two-Family P P - - - - - - 18.42.180 Multiple-Family - - P P P P P P (4) Residential Care Homes P P P P P P P - Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 19  Packet Pg. 305 of 412  ***NOT YET APPROVED*** 19 0160198_20260604_ay16 TABLE 1: PERMITTED AND CONDITIONALLY PERMITTED USES P = Permitted Use CUP = Conditional Use Permit Required TUP = Temporary Use Permit Required — = Not Permitted LAND USE NV-R1 NV-R2 NV-R3 NV-R4 NV-MXL (1)(5) NV-MXM (5) NV-MXH NV-PF Subject to Regulations In: RETAIL USES Automobile Showroom P Bars CUP 18.42.090 Eating and Drinking Services, except drive-through drive-in and takeout services - - P P P P P CUP (3) 18.40.160, 18.29.050(c) Personal Services and Retail Services of a neighborhood- serving nature - - P P P P P CUP (3) 18.40.160, 18.29.050(c) Liquor stores - - - - - P P - 18.40.160, 18.29.050(c) SERVICE USES Animal Care, daytime excluding boarding and kennels - - - - P P P - 18.29.050(c) 18.42.130 Animal Care, overnight CUP CUP CUP 18.42.130 Convalescent Facilities - - - CUP P P P - Day Care Centers CUP CUP CUP P P P P - 18.40.160 Large Family Day Care Homes P P P P P P P P(3) Small Family Day Care Homes P P P P P P P P(3) Large Adult Day Care Homes CUP CUP P P P P P P(3) Small Adult Day Care Homes P P P P P P P P(3) Financial Services - - - - P P P - 18.29.050(a), 18.29.060(b) General Business Services - - - - P P P - 18.29.050(a), 18.29.060(b) Hotels - - - - - P P - 18.40.160, 18.16.060(d) Personal Services and Retail Services defined as a neighborhood- serving use - - P P P P P CUP (3) 18.40.160, 18.29.050(c) Other Personal Services - - - - P P P - 18.40.160, 18.29.050(c), 18.29.060(b) AGRICULTURAL AND OPEN SPACE USES Park uses and uses incidental to park operation - - - - - - - P Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 20  Packet Pg. 306 of 412  ***NOT YET APPROVED*** 20 0160198_20260604_ay16 TABLE 1: PERMITTED AND CONDITIONALLY PERMITTED USES P = Permitted Use CUP = Conditional Use Permit Required TUP = Temporary Use Permit Required — = Not Permitted LAND USE NV-R1 NV-R2 NV-R3 NV-R4 NV-MXL (1)(5) NV-MXM (5) NV-MXH NV-PF Subject to Regulations In: All facilities owned or leased, and operated or used, by the City of Palo Alto, the County of Santa Clara, the State of California, the government of the United States, the Palo Alto Unified School District, or any other governmental agency, or leased by any such agency to another party - - - - - - - P Utility Facilities - - - - - - - CUP TEMPORARY USES Temporary Uses - - TUP TUP - - - - 18.42.050 Farmer’s Markets - - - - - CUP CUP - Temporary Parking Facilities, provided that such facilities shall remain no more than five years - - - - - CUP CUP CUP (3) Notes: For NV-MXL zoning district, the total floor area of non-residential uses permitted and conditionally permitted on a lot shall not exceed 5,000 square feet. For office uses, total floor area of permitted office uses on a lot shall not exceed 5,000 square feet. Provided such use is conducted on property owned by the City of Palo Alto, the County of Santa Clara, the State of California , the government of the United States, the Palo Alto Unified School District, or any other governmental agency, and leased for said uses. Only a 100% Affordable Housing Project is permitted. Development shall follow NV-R4 standards. Ground floor uses shall comply with the ground floor edge framework set forth in NVCAP section 2.3. … SECTION 8. Chapter 18.30(A) (Retail Shopping (R) Combining District Regulations) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): 18.30(A).010 Specific Purposes The retail shopping combining district is intended to modify the uses allowed in a commercial district, where applied in combination with such district, to allow only retail, eating, and service- oriented, and neighborhood-serving office commercial development on the ground floors [. . .] 18.30(A).040 Permitted Uses Land Uses Except to the extent a conditional use permit is required pursuant to Section 18.30(A).050, the Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 21  Packet Pg. 307 of 412  ***NOT YET APPROVED*** 21 0160198_20260604_ay16 following uses shall be permitted in an R district: (a) Eating and drinking services, except drive-in and take-out services. (b) Personal services, except the following on California Avenue: fitness or exercise studios exceeding 1,800 square feet in gross floor area (c) Retail services. (d) Financial services, except drive-in services. (e) Pet grooming services. (f) Automobile showroom. (g) All other uses permitted in the underlying commercial district, provided they are not located on a ground floor. Permitted and conditionally permitted land uses in the combining district are identified in Table 1. Where the last column on the following tables ("Subject to Regulations in") includes a section number, specific regulations in the referenced section also apply to the use. Conditional use permits shall be issued in accordance with Chapter 18.76 (Permits and Approvals), subject to restrictions in Section 18.40.160. Table 1 P Permitted Use • CUP Conditional Use Permit Required (R) Subject to regulations in: OFFICE USES Medical offices, that include retail services, fronting California Avenue CUP 18.30(A).050(b) Neighborhood-serving offices, except fronting California Avenue. P 18.30(A).050(c) RECREATION USES Commercial recreation, fronting California Avenue CUP Commercial recreation, other locations P RETAIL USES Automobile showrooms P Bars CUP 18.42.090 Eating and drinking services, except drive-through services P 18.42.090 Formula retail businesses on California Avenue CUP Retail financial services, except drive-through services. P Retail services P SERVICE USES Animal care, daytime P 18.42.130 Personal services P OTHER All other uses permitted in the underlying commercial district, provided they are not located on a ground floor. CUP See underlying district regulations 18.30(A).050 Conditional Uses Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 22  Packet Pg. 308 of 412  ***NOT YET APPROVED*** 22 0160198_20260604_ay16 The following uses may be conditionally permitted in an R district, subject to the issuance of a conditional use permit in accord with Chapter 18.76 (Permits and Approval): (a) All other conditional uses allowed in the underlying commercial district provided they are not located on a ground floor. (b) Formula retail businesses on California Avenue. (c)Fitness or exercise studios exceeding 1,800 square feet in gross floor area on California Avenue. 18.30(A).055050 Design Standards (a) The following design standards shall apply in the R combining district: (a) (1) Window Transparency. Exterior windows on the ground floor shall use transparent glazing to the extent feasible. Low-e glass or minimal tinting to achieve sun control is permitted, so long as the glazing appears transparent when viewed from the ground level. (b) (2) Visual Access. Window coverings are not permitted on the ground floor during typical business hours. Where operations preclude transparency (e.g., theaters) or where privacy requires window coverings, sidewalk-facing frontage shall include items of visual interest including displays of merchandise or artwork; visual access shall be provided to a minimum depth of 3 feet. (b) Medical Office Uses. For ground-floor medical office uses located within 40 feet of the back of sidewalk on California Avenue, such uses shall include a retail services component that occupies a minimum 15-foot depth, as measured from the California Avenue ground floor building frontage. (c) Neighborhood-Serving Office Uses. Ground-floor neighborhood-serving office uses may be located in the rear of lots with frontage on California Avenue or fronting on side streets, if retail or retail-like uses occupy a minimum 40-foot depth of the ground floor, as measured from the back of sidewalk on California Avenue, and occupy the full extent of the California Avenue building frontage, excluding required utilities, driveways, pedestrian access and residential lobby. [. . .] 18.30(A).070 Waivers and adjustments. (a) The following shall be grounds for a request for waiver or adjustment of this Chapter: (1) Economic Hardship. An applicant may request that the requirements of this Chapter be adjusted or waived upon a showing that strict application would result in an unreasonable financial burden on the property. (2) Alternative Viable Use. An applicant may request that the requirements of this Chapter 18.30(A) be adjusted or waived based on a showing that: the permitted retail or retail-like use is not viable; the proposed alternative use will support the purposes of the combining district and Comprehensive Plan land use designation; and the proposed use will encourage active pedestrian-oriented activity and connections. (b) Documentation. The applicant shall bear the burden of presenting substantial evidence to support a waiver Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 23  Packet Pg. 309 of 412  ***NOT YET APPROVED*** 23 0160198_20260604_ay16 or modification request under this section and shall set forth in detail the factual and/or legal basis for the claim, including all supporting technical documentation. Any request under this section shall be submitted to the Planning and Development Services Director together with the fee specified in the municipal fee schedule and an economic analysis or other supporting documentation. A request under this section shall be acted upon by the City Council. SECTION 9. Chapter 18.30(C) (Ground Floor (GF) Combining District Regulations) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): [. . .] 18.30(C).020 Permitted Uses Land Uses (a) The following uses shall be permitted in the GF combining district, subject to restrictions in Section 18.40.180: (1) Eating and drinking; (2) Hotels; (3) Personal services, except for the following on parcels with frontage on University Avenue: fitness and exercise studios exceeding 3,000 square feet in gross floor area; (4) Retail services; (5) Theaters; (6) Travel agencies; (7) Commercial recreation up to 5,000 square feet in gross floor area, except for parcels with frontage on University Avenue; (8) Financial services, except drive-in services. (9) Pet grooming services. (10) Automobile showroom; (11) All other uses permitted in the underlying district, provided such uses are not on the ground floor. (a) Permitted and conditionally permitted land uses in the combining district are identified in Table 1 and, subject to restrictions in Section 18.40.180. Where the last column on the following tables ("Subject to Regulations in") includes a section number, specific regulations in the referenced section also apply to the use. (b) Elimination or conversion of basement space currently in retail or retail-like use or related support purposes is prohibited. (c) Entrance, lobby, or reception areas serving non-ground floor uses may be located on the ground floor to the extent reasonably necessary, provided they do not interfere with the ground floor use(s), and subject to the approval of the Director. 18.30(C).030 Conditional Uses (a) The following uses may be conditionally allowed on the ground floor in the GF ground floor combining district, subject to issuance of a conditional use permit in accord with Chapter 18.76 (Permits and Approvals) and with the additional finding required by subsection (b), subject to restrictions in Section 18.40.160: Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 24  Packet Pg. 310 of 412  ***NOT YET APPROVED*** 24 0160198_20260604_ay16 (1) Business or trade school; (2) Commercial recreation over 5,000 square feet in gross floor area or with frontage on University Avenue; (3) Day care; (4) General business service; (5) All other uses conditionally permitted in the applicable underlying district, provided such uses are not on the ground floor. (b a) The director may grant a conditional use permit under this section only if he or she makes the following findings in addition to the subject to the findings required by Chapter 18.76 (Permits and Approvals) and a finding that: (1) The location, access or design of the ground floor space of the existing building housing the proposed use, creates exceptional or extraordinary circumstances or conditions applicable to the property involved that do not apply generally to property in the same district. (2) Tthe proposed use will not be determined to the retail environment or the pedestrian-oriented design support the objectives of the GF combining district. (c b) Any use conditionally permitted pursuant to this section shall be effective only during the existence of the building that created the exceptional circumstance upon which present when the finding set forth in subsection (b) was made. Table 1 P Permitted Use • CUP Conditional Use Permit Required (GF) Subject to regulations in: EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Business or trade school CUP OFFICE USES Neighborhood-serving offices, except fronting University Avenue. P 18.30(C).030(b) RECREATION USES Commercial recreation, up to 5,000 sq. ft. P Commercial recreation, more than 5,000 sq. ft. CUP Commercial recreation, fronting University Avenue CUP RETAIL USES Automobile showrooms P Bars CUP 18.42.090 Eating and drinking services, except drive-through services P 18.42.090 Retail financial services, except drive-through services. P Retail services P SERVICE USES Animal care, daytime P Day care centers CUP Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 25  Packet Pg. 311 of 412  ***NOT YET APPROVED*** 25 0160198_20260604_ay16 General business service CUP Personal services P Theaters P Travel Agencies P OTHER All other uses permitted in the underlying commercial district, provided they are not located on a ground floor. CUP See underlying district regulations 18.30(C).035030 Design Standards (a) Where the GF combining district is combined with the CD-C subdistrict, the following design standards shall apply: (a) (1) Window Transparency. Exterior windows on the ground floor shall use transparent glazing to the extent feasible. Low-e glass or minimal tinting to achieve sun control is permitted, so long as the glazing appears transparent when viewed from the ground level. (b) (2) Visual Access. Window coverings are not permitted on the ground floor during typical business hours. Where operations preclude transparency (e.g., theaters) or where privacy requires window coverings, sidewalk-facing frontage shall include items of visual interest including displays of merchandise or artwork; visual access shall be provided to a minimum depth of 3 feet. (b) Neighborhood-Serving Office Uses on University Avenue. Ground-floor neighborhood- serving office uses may be located in the rear of lots with frontage on University Avenue or fronting on side streets, if one of the following conditions are met: (1) Retail or retail-like uses occupy a minimum 50-foot depth of the ground floor, as measured from the back of sidewalk on University Avenue, and occupy the full extent of the University Avenue building frontage, excluding required utilities, driveways, pedestrian access and residential lobby; or (2) For buildings that do not have tenant spaces within 50 feet of University Avenue (e.g., flag lots, deep setbacks), neighborhood-serving offices are located a minimum of 50 feet from University Avenue, as measured from the back of sidewalk. [. . .] 18.30(C).050 Waivers and adjustments. (a) The following shall be grounds for a request for waiver or adjustment of this Chapter: (1) Economic Hardship. An applicant may request that the requirements of this Chapter be adjusted or waived upon a showing that strict application would result in an unreasonable financial impact on the property. (2) Alternative Viable Use. An applicant may request that the requirements of this Chapter 18.30(A) be adjusted or waived based on a showing that: the permitted retail or retail-like use is not viable; the proposed alternative use will support the purposes of the combining Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 26  Packet Pg. 312 of 412  ***NOT YET APPROVED*** 26 0160198_20260604_ay16 district and Comprehensive Plan land use designation; and the proposed use will encourage active pedestrian-oriented activity and connections. (b) Documentation. The applicant shall bear the burden of presenting substantial evidence to support a waiver or modification request under this section and shall set forth in detail the factual and/or legal basis for the claim, including all supporting technical documentation. Any request under this section shall be submitted to the Planning and Development Services Director together with the fee specified in the municipal fee schedule and an economic analysis or other supporting documentation. A request under this section shall be acted upon by the City Council. SECTION 10. Section 18.38.030 (Permitted Uses) of Chapter 18.38 (PC Planned Community District Regulations) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through): 18.38.030 Permitted uses. Any use may be permitted in any specific PC district; provided: (a) Such such use is shall be specifically listed as a permitted use and shall be located and conducted in accord with the approved development plan and other applicable regulations adopted pursuant to this chapter to govern each specific PC district; or (b) Except for uses identified as being part of a PC community benefit, the Director may determine that an unlisted use is materially similar to a listed use in the specific PC district and may be allowed in the same extent and subject to the same standards as a listed permitted use, if it has: (1) Similar impacts on the neighborhood such as traffic generation, deliveries, noise and lighting as listed uses; and (2) Similar characteristics such as building type, site arrangement, floor area, number of employees, indoor and/or outdoor uses, customer traffic, equipment use, hours of operation, parking, vehicle trips and signage as listed uses. SECTION 11. Section 18.40.180 (Retail Preservation) of Chapter 18.40 (General Standards and Exceptions) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; text omitted but unchanged noted by bracketed ellipses): 18.40.180 Retail Preservation (a) Conversion of Retail and Retail-Like Uses Prohibited. (1) Any ground floor Retail or Retail-Like use permitted or operating as of March 2, 2015 may be replaced only by another Retail or Retail-Like use, as permitted in the applicable district. (A) A ground floor Retail or Retail-Like use in the RT-35 district on properties with frontage on Alma Street between Channing Avenue and Lincoln Avenue may additionally be replaced by a Private Educational Facility use, provided that such use shall not be thereafter replaced by an Office use. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 27  Packet Pg. 313 of 412  ***NOT YET APPROVED*** 27 0160198_20260604_ay16 (B) This subsection shall not apply to the following zoning districts: (I) Residential zones: RM-30, RM-40, NV-R3, NV-R4 (II) Office/manufacturing zones, except within the San Antonio Road Area Plan area: ROLM, ROLM(E), RP, RP(5), GM [. . .] SECTION 12. Section 18.42.090 (Alcoholic Beverages) of Chapter 18.42 (Standards for Special Uses) of Title 18 (Zoning) of the Palo Alto Municipal Code are hereby amended and Section 18.42.130 (Animal Care) is hereby added as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): 18.42.090 Alcoholic Beverages (a) Purpose This subsection establishes permit requirements and standards for establishments with alcoholic beverage sales or service. (b) Licensing Establishments with alcoholic beverage sales or service shall comply with all applicable regulations of the California Department of Alcoholic Beverage Control. (c) Permits Required Table 1 shows permits required for alcoholic beverage service depending on the use classification and type of alcohol service. Table 1 Permits Required for Alcoholic Beverage Services Use Classification Beer and Wine Distilled Spirits Eating and Drinking Service P P Bar CUP CUP (a) Conditional Use Permit Required in Tandem with On-Sale License In any district where otherwise permitted by this title, any eating and drinking establishment or other use having any part of its operation subject to an on-sale license required by the State of California shall be subject to securing a conditional use permit. (b) Conditional Use Permit Required with New On-Sale License A conditional use permit shall be obtained in the case of premises for which no conditional use permit is in force, whenever a new on-sale license is required by the State of California. (c)(d) Amendment to Conditional Use Permit Required with Expansion In the case of premises for which a conditional use permit is in force, which permits the sale of alcohol, but Table 1 permits less restrictive requirements, an administrative amendment to such permit shall be required whenever such use is intensified or is expanded in square footage. (d)(e) Amendment to Conditional Use Permit Required with New On-Sale License In the case of premises for which a conditional use permit is in force, but such use permit does not permit sales of alcohol, compliance with the permit level identified in Table 1 an amendment to such permit shall be required whenever a new on-sale license is required by the State of California. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 28  Packet Pg. 314 of 412  ***NOT YET APPROVED*** 28 0160198_20260604_ay16 (e)(f) Alcohol Service in Parklets on Rights-of-Way Establishments that are allowed by the city to serve alcohol for onsite consumption by issuance of a conditional use permit (“CUP”) as required in pursuant to this section or as a legal nonconforming use, and that have both an on-sale license from the California Department of Alcoholic Beverage Control (“ABC”) and are duly authorized by ABC to serve alcohol in outdoor areas, shall be allowed to serve alcohol for onsite consumption without an amendment of the CUP in parklets on public property approved via permit per PAMC Chapter 12.11 or other outdoor uses approved via permit per any other relevant section of the PAMC. Outdoor alcohol service shall be in full compliance with all applicable regulations, including ABC regulations, as may be amended. (g) Findings. To approve a CUP for alcoholic beverage sales or service, the decision-making body must make the following findings: (1) The applicant has not operated a licensed establishment that has been the subject of violations regarding alcohol, or violations of public safety or nuisance statutes or regulations in Palo Alto. In making this finding, the decision-making body may consider the number, frequency, and severity of prior violations, the time elapsed since the last violation, and other relevant factors; and (2) At least one of the following: (A) The proposed establishment will promote the City’s economic health, contribute to Comprehensive Plan or area plan policies, or further the zoning district purpose; or (B) The economic benefits associated with the establishment could not reasonably be achieved without the proposed alcohol sales or service. (h) Operational Conditions. Owners and operators of Bars or Eating and Drinking Services with alcohol beverage service must meet the following performance standards: (1) Hours. Hours of operation are subject to review and amendment by the review authority as necessary to avoid detriment to the neighborhood or to achieve conformance with revised City of Palo Alto standards or policies. (2) Preventing Disturbances. The owner or operator of the establishment shall take reasonable measures to prevent disturbances by patrons in the immediate vicinity. Such measures shall include: (A) Signs reminding patrons of nearby sensitive receptors, such as residences, and requests not to congregate or loiter near such residences nor operate vehicles in a noisy manner on public streets; and (B) Sightlines to public areas near the establishment, keeping public areas free of trash and litter, providing lighting, and otherwise preventing conduct that might disturb the peace and quiet of residences in the vicinity. (C) The operator shall assume reasonable responsibility for ensuring that patrons do not block the entrance or interfere with pedestrian activity on the adjacent public sidewalk. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 29  Packet Pg. 315 of 412  ***NOT YET APPROVED*** 29 0160198_20260604_ay16 (3) Training. All employees selling and/or serving alcoholic beverages, or directly supervising such sales and/or service, shall finish the Licensee Education on Alcohol and Drugs program, or another equivalent program offered or certified by the California Department of Alcoholic Beverage Control within 90 days of employment at the establishment. Employees who have finished the course within the last 12 months are exempt from this requirement. [. . .] 18.42.130 Animal Care (a) Purpose Conform with State licensing requirements and City regulations, regulate operations, and ensure compatibility with other allowed uses in the applicable zoning district. (b) Performance Standards Animal Care uses shall be subject to the following standards. Animal care uses subject to a conditional use permit may be required to meet additional standards such as hours of operation, drop-off and pick-up regulations, fencing and privacy standards, in particular for businesses with outdoor uses when adjacent to residential or other sensitive uses. (1) Animal Control Permit. The facility shall maintain a valid permit with Animal Control at all times, if required, and follow the guidelines of said permit all times. (2) Nuisances and noise. The business shall be operated in a manner to protect any nearby properties from excessive noise, odors, lighting or other nuisances from any sources during the business hours. Noise levels emanating from the use shall not exceed the maximum level established in Chapter 9.10. (3) Interior materials. The interior building surfaces of indoor housing facilities shall be constructed and maintained so that they are substantially impervious to moisture and may be readily sanitized. (4) Drainage. Adequate drainage facilities shall be installed and maintained to facilitate proper sanitation and disposal of natural precipitation and water used to clean the facility. (5) Ventilation. Indoor housing facilities shall be adequately ventilated to provide for the health and comfort of the animals at all times. Such facilities shall be provided with fresh air either by means of windows, doors, vents, or air conditioning and shall be ventilated so as to minimize drafts, odors, and moisture condensation. (6) Waste. Provision shall be made for the removal and disposal of animal and food wastes, bedding, dead animals, and debris, in accordance with applicable laws. Disposal facilities shall be covered and operated as to minimize odors and disease hazards. SECTION 13. Sections 18.52.030 (Basic Parking Requirements), 18.52.040 (Off-Street Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 30  Packet Pg. 316 of 412  ***NOT YET APPROVED*** 30 0160198_20260604_ay16 Parking, Loading and Bicycle Facility Requirements), and 18.52.050 (Adjustments by the Director) of Chapter 18.52 (Parking and Loading Requirements) of Title 18 (Zoning) of the Palo Alto Municipal Code are hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): 18.52.030 Basic Parking Regulations [. . .] (i) Transportation Demand Management Plan (1) Requirement for TDM Plan: A Transportation Demand Management (TDM) Plan to reduce and manage the number of single-occupant motor vehicle trips generated by the project shall be prepared and submitted by the applicant in the following circumstances: A. For all projects that generate 50 or more net new weekday (AM or PM peak hour) or weekend peak hour trips; or B. For all projects claiming a reduction in net new trips due to proximity to public transit, exclusive of subsection (D); or the implementation of a TDM plan; and C. For all projects requesting a parking reduction, except a retail or retail-like use proposing an addition of less than 1,500 sq. ft. or change of use to other retail or retail-like; or D. For all projects with reduced parking pursuant to California Government Code Section 65863.2 (AB 2097, 2022), except a retail or retail-like use proposing an addition of less than 1,500 sq. ft. or change of use to other retail or retail-like. (2) The Director shall have the authority to adopt guidelines for preparing TDM plans and when applicable shall coordinate such guidelines with the Transportation Management Association. [. . .] 18.52.040 Off-Street Parking, Loading and Bicycle Facility Requirements [. . .] (c) Tables 1, 2, 3 and 34: Parking, Bicycle, and Loading Requirements Tables 1, 2 and 23 below outline vehicle and bicycle parking requirements in general and for Parking Assessment Districts, respectively. Where bicycle parking standards differ from California Green Building Standards for bicycle parking, the more stringent standards shall apply. Table 34 outlines loading requirements for each land use. For mixed-use projects, the requirements for each land use shall be applied and required for the overall project. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 31  Packet Pg. 317 of 412  ***NOT YET APPROVED*** 31 0160198_20260604_ay16 Table 1 Minimum Off-Street Parking Requirements Use Vehicle Parking Requirement (# of spaces) Bicycle Parking Requirement Spaces Class 1 Long Term (LT) and Short Term (ST) … Eating and Drinking Services: (a) With drive-through drive-in or take-out facilities 1 per 200 sq. ft. of gross floor area, plus minimum queue line for 10 cars, subject to further evaluation for higher demand drive- through uses. 3 per 100 sq. ft. of gross floor area 3 per 400 sf 40% - LT 60% - ST (b) All othersFull Service 1 space for each 15060 sq. ft. gross floor area sq. ft. of public service area, plus 1 space for each 200 gross sq. ft. for all other areas. 1 per 600 sf of public service area, plus 1 per 2,000 sf for other areas 40% - LT 60% - ST (c) Limited Service 1 space for each 250 sq. ft. gross floor area 1 per 2,000 sf 40% - LT 60% - ST (d) Bars 1 space for each 150 sq. ft. gross floor area 1 per 1,000 sf 40% - LT 60% - ST [. . .] 4. For residential mixed-use developments in the CD-C zone, CC(2) zone, on CN and CS zoned sites abutting El Camino Real, and on CS zoned sites abutting San Antonio Antonia Road between Middlefield Road and East Charleston Road, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle parking requirement. [. . .] Table 2 Minimum Off-Street Parking Requirements for Parking Assessment Districts Use Vehicle Parking Requirement (# of spaces) 1 For Downtown University Avenue Parking Assessment District: Residential Uses See Table 1 All Other Uses 1 per 250 square feet For California Avenue Parking Assessment District: Residential Uses See Table 1 Hotel/Motel/Inn See Table 1 All Other Uses 1 per 250 square feet 1. For residential mixed-use developments in the CD-C zone, CC(2) zone, and on CN and CS zoned sites abutting El Camino Real, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle parking requirement. Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 32  Packet Pg. 318 of 412  ***NOT YET APPROVED*** 32 0160198_20260604_ay16 [. . .] Table 23 Minimum Off-Street Bicycle Parking Requirements for Parking Assessment Districts (IF USE IS NOT LISTED, REFER TO TABLE 1 FOR REQUIREMENTS) Use Vehicle Parking Requirement (# of spaces) Bicycle Parking Requirement Class1 Spaces For Downtown University Avenue Parking Assessment District: All uses (except residential) 2 1 per 250 square feet 1 per 2,500 square feet 40% - LT 60% - ST Residential Uses See Table 1 For California Avenue Parking Assessment District: Automobile Service Stations 1 per 310 square feet of gross enclosed floor area, plus queue capacity equivalent to the service capacity of gasoline pumps 1 per 10 employees 100%-ST Automotive Services 1 per 150 square feet of gross floor area, display, or storage on site 1 per 10 employees 100%-ST Eating and Drinking Services: (a) With drive-through drive-in or take-out facilities 3 per 100 sf of gross floor area 3 per 400 sf 40% - LT 60%-ST (b) All others 1 per 155 sf of gross floor area 1 per 1,550 sf Financial services: (a) Bank, savings and loan offices with 7,500 square feet of floor area or less: 1 per 180 sf of gross floor area 1 per 1,800 sf 40%-LT 60% - ST (b) Banks, savings and loan offices with more than 7,500 square feet of floor area: 1 per 310 sf of gross floor area (c) Others 1 per 180 sf of gross floor area 1 per 1,800 sf General Business Services: (a) Enclosed 1 per 360 sf of gross floor area 1 per 3,600 sf 80%- LT 20%- ST (b) Open lot 1 per 500 sf of sales, display or storage site area 1 per 5,000 sf 100%- ST Medical, professional, and general business offices 1 per 310 sf of gross floor area 1 per 3,100 sf 60%-LT 40% - ST Personal Services 1 per 450 sf of gross floor area 1 per 4,500 sf 20% - LT 80% - ST Retail: Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 33  Packet Pg. 319 of 412  ***NOT YET APPROVED*** 33 0160198_20260604_ay16 (a) Intensive 1 per 240 sf of gross floor area 1 per 2,400 sf 20%-LT 80% -ST (b) Extensive 1 per 350 sf of gross floor area 1 per 3,500 sf (c) Open lot 1 for each 500 square feet of sales, display, or storage site area. 1 per 5,000 sf 100%-ST OTHER USES Any use not specified See Table 1 1. Long Term (LT) and Short Term (ST) bicycle spaces as described in Section 18.54.060 . 2. For residential mixed-use developments in the CD-C zone, CC(2) zone, and on CN and CS zoned sites abutting El Camino Real, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle parking requirement. Table 34 Minimum Off-Street Loading Requirements [. . .] 18.52.050 Adjustments by the Director Automobile parking and off-street loading requirements prescribed by this chapter may be adjusted by the director in the following instances and in accord with the prescribed limitations in Table 4, when in his/her opinion such adjustment will be consistent with the purposes of this chapter, will not create undue impact on existing or potential uses adjoining the site or in the general vicinity, and will be commensurate with the reduced parking demand created by the development, including for visitors and accessory facilities where appropriate. No reductions may be granted that would result in provision of less than ten (10) spaces on a site. The following are adjustments that apply to developments not located within a parking assessment district. Adjustments within the parking assessment districts are contained in Section 18.52.080. The decision of the regarding parking adjustments may be appealed as set forth in Chapter 18.78 (Appeals). Table 4 Allowable Parking Adjustments Purpose of Adjustment Amount of Adjustment Maximum Reduction 2 [. . .] [. . .] [. . .] Combined Parking Adjustments Parking reductions may be granted for any combination of the above circumstances as prescribed by this chapter, subject to limitations on the combined total reduction allowed. 3060% reduction of the total parking demand otherwise required 40% reduction for affordable housing projects [. . .] [. . .] [. . .] Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 34  Packet Pg. 320 of 412  ***NOT YET APPROVED*** 34 0160198_20260604_ay16 1. See Section 18.52.050(d) below regarding requirements for TDM programs. 2. No parking reductions may be granted that would result in provision of less than ten (10) parking spaces on site. 2. 3. No parking reductions may be granted for projects that are entitled to the reduced parking standards in Table 1 of Section 18.52.040 for senior housing. 3. 4. Applies to 100% affordable housing projects and the residential component of 100% affordable housing mixed-use projects. "100% affordable housing" as used herein means a multiple-family housing project consisting entirely of affordable units, as defined in Section 16.65.020 of this code, available only to households with income levels at or below 120% of the area median income, as defined in Chapter 16.65, except for a building manager's unit. (a) Combining Parking Adjustments Parking reduc ons may be granted for any combina on of circumstances, prescribed by this chapter, so long as in total no more than a 3060% reduc on of the total parking demand otherwise required occurs, or no less than a 40% reduc on for affordable housing projects (including Single Room Occupancy (SRO) units). [. . .] SECTION 14. Section 18.76.015 (Additional Findings for Specified Retail Uses) of Chapter 18.76 (Permits and Approvals) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby deleted in its entirety. SECTION 15. Section 16.59.040 (Exemptions) of Chapter 16.59 (Citywide Transportation Impact Fee) of Title 16 (Building Regulations) of the Palo Alto Municipal Code are hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses): 16.59.040 Exemptions. The provisions of this chapter shall not apply to: (a) City buildings or structures. (b) Public school buildings or structures. (c) Affordable units, either for sale or rental, that exceed the minimum number required for projects under the city's below market rate (BMR) housing program or other provisions of this code, which units are, by recordable means, obligated to be and remain affordable units for a period consistent with the requirements of Section 16.65.075(c) of this code. (d) Day care centers used for childcare, nursery school or preschool education. (e) Accessory dwelling units (ADU). (f) Junior accessory dwelling units (JADU). (g) Retail service, eating and drinking service, personal service, or automotive service when the total additional square footage is 1,500 square feet or less. This exemption shall apply only when the additional square footage of new development does not exceed 1,500 Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 35  Packet Pg. 321 of 412  ***NOT YET APPROVED*** 35 0160198_20260604_ay16 square feet. New development that is larger than 1,500 square feet shall pay a fee for all square footage, including the first 1,500 square feet. (h) (g) New development which is exempt from the fee by virtue of the Constitution of the United States or California or by virtue of other applicable state or federal law. SECTION 16. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 17. The Council finds that the Ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the foregoing amendments to reduce retail vacancies will have a significant effect on the environment. // // // // // // // // // // // // // // Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 36  Packet Pg. 322 of 412  ***NOT YET APPROVED*** 36 0160198_20260604_ay16 SECTION 18. This Ordinance shall be effective from the thirty-first day after the date of its adoption. Once effective, this Ordinance shall repeal Ordinance no. 5642. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: __________________________ City Clerk APPROVED AS TO FORM: __________________________ Assistant City Attorney _________________________ Mayor _________________________ City Manager __________________________ Director of Planning and Development Services Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 37  Packet Pg. 323 of 412  ***NOT YET APPROVED*** 37 0160198_20260604_ay16 Exhibit A (Remove Ground Floor (GF) Combining District) Charleston Shopping Center Midtown Shopping District Item 16 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures        Item 16: Staff Report Pg. 38  Packet Pg. 324 of 412  City Council Staff Report Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: August 10, 2026 Report #:2606-6503 TITLE SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations (FIRST READING: June 8, 2026; PASSED: 7-0) BACKGROUND The City Council heard this item on June 8, 2026 for a first reading and approved it on a 7-0 vote. No changes were made to the ordinance, and it is now before the City Council for a second reading. ATTACHMENTS Attachment A: Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations APPROVED BY: Mahealani Ah Yun, City Clerk Item 17 Item 17 Staff Report        Item 17: Staff Report Pg. 1  Packet Pg. 325 of 412  *NOT YET ADOPTED* 1 0290193_20260422_ms29 Ordinance No. Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Article 10, Section 2 of the California Constitution declares that waters of the State are to be put to beneficial use, that waste, unreasonable use, or unreasonable method of use of water be prevented, and that water be conserved for the public welfare. B. The State of California is prone to drought conditions, which result in water supply shortages. C. The City of Palo Alto recognizes the continuing need to manage water resources under its jurisdiction and control in a constitutionally compliant manner. D. Section 12.32.010 of the Palo Alto Municipal Code sets forth permanent water use restrictions applicable to all City water customers in order to responsibly manage the City’s water resources. E. City regulation of the time and manner of water use, rate design, the method of application of water for certain uses, and establishment of enforcement procedures in support of water use management is an effective and immediately available means of conserving water and is authorized by Palo Alto Municipal Code Section 12.20.010. F. California Assembly Bill (AB) 1572 (2023) prohibits the use of potable water to irrigate nonfunctional turf at most commercial, industrial, and institutional properties, including common areas managed by homeowner associations, and requires the City of Palo Alto to update its regulations to enforce the State-mandated prohibitions. G. In 2024, the State Water Resources Control Board adopted the “Making Conservation as a Way of Life” regulation (23 CCR § 965 et seq.), which establishes urban water use objectives and performance measures for retail water suppliers like the City. H. The Council wishes to make minor changes to existing water use restrictions and adopt additional permanent water use restrictions in order to responsibly manage the City’s water resources, meet its urban water use objectives, and comply with AB 1572. SECTION 2. Section 12.32.010 (Water Use Regulations) of Chapter 12.32 (Water Use Item 17 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations        Item 17: Staff Report Pg. 2  Packet Pg. 326 of 412  *NOT YET ADOPTED* 2 0290193_20260422_ms29 Regulations) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined, deletions struck through): 12.32.010 Water use regulations. No purchaser of water from the city of Palo Alto, nor any customers of the water utility of the city of Palo Alto, shall use water or allow any other person to use water under the control of such customer or purchaser in the following ways: (a) Potable water shall not be allowed to flood or run off into gutters: driveways, sidewalks, streets or other unlandscaped areas. (b) By means of a hose to wash cars, boats, trailers, buses or other vehicles or to wash sidewalks, building structures, other hard-surfaced areas or parts thereof without an operating automatic shut-off valve. Use of a hose for such purposes should be avoided whenever possible. (c) Potable water for consolidation of backfill and other nondomestic uses in construction shall not be used if other water sources such as reclaimed water are available, as determined by the director of utilities or his or her designee. Applicants for hydrant permits from the city of Palo Alto shall be deemed to have consented to restrictions on water use which may be imposed by the director of utilities or his or her designee. (d) Any broken or defective plumbing, sprinklers, watering or irrigation systems which permit the escape or leakage of water shall be repaired or replaced as soon as possible, but no later than the date established by the director of utilities, or his or her designee, as reasonable after observation of the broken or defective system. (e) The irrigation of turf or ornamental landscapes, which serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provide more than a purely aesthetic function, with potable water shall not be allowed between 910:00 a.m. and 6:00 p.m., except via hand watering with a bucket or a hose with an operating shut- off valve. (f) The use of potable water in a fountain or other decorative water feature is prohibited, except where the water is part of a recirculating system. (g) The use of potable water for street sweepers and washers is prohibited if non-potable water is available, as determined by the Director of Utilities, or his or her designee. (h) Commercial car washes must use recycled water systems, if recycled water is available, as determined by the Director of Utilities, or his or her designee, and economically feasible. (i) The use of potable water for the irrigation of nonfunctional turf located on commercial, industrial, and institutional properties, other than a cemetery, and on properties of homeowners’ associations, common interest developments, and community service Item 17 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations        Item 17: Staff Report Pg. 3  Packet Pg. 327 of 412  *NOT YET ADOPTED* 3 0290193_20260422_ms29 organizations or similar entities is prohibited as of the following dates: (i) All properties owned by local governments, local or regional public agencies, and public water systems, beginning January 1, 2027. (ii) All other institutional properties and all commercial and industrial properties, beginning January 1, 2028. (iii) All common areas of properties of homeowners’ associations, common interest developments, and community service organizations or similar entities, beginning January 1, 2029. Notwithstanding the provisions of this subdivision (i), the use of potable water is not prohibited to the extent necessary to ensure the health of trees and other perennial nonturf plantings, or to the extent necessary to address an immediate health and safety need. For the purposes of this subdivision (i), relevant terms have the same meaning as in Section 10608.12 of the Water Code. SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it would have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 4. The Council finds that this ordinance is categorically exempt from review under the California Environmental Quality Act (CEQA) pursuant to Section 15307 and 15308 of the CEQA Guidelines (actions taken by regulatory agencies for the protection of natural resources and the environment). // // // // // // // // Item 17 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations        Item 17: Staff Report Pg. 4  Packet Pg. 328 of 412  *NOT YET ADOPTED* 4 0290193_20260422_ms29 SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED AS TO CONTENT: City Attorney or Designee City Manager Director of Utilities Item 17 Attachment A - Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations        Item 17: Staff Report Pg. 5  Packet Pg. 329 of 412  City Council Staff Report Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: August 10, 2026 Report #:2606-6504 TITLE SECOND READING: Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods (FIRST READING: June 15, 2026; PASSED: 7-0) BACKGROUND The City Council heard this item on June 15, 2026 for a first reading and approved it on a 7-0 vote. No changes were made to the ordinance, and it is now before the City Council for a second reading. ATTACHMENTS Attachment A: Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods APPROVED BY: Mahealani Ah Yun, City Clerk Item 18 Item 18 Staff Report        Item 18: Staff Report Pg. 1  Packet Pg. 330 of 412  ***NOT YET APPROVED*** 1 157_20260519_ts24 Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Findings and Declarations. The City Council of the City of Palo Alto finds and declares as follows: A. The City has a residential parking permit program in the College Terrace neighborhood (College Terrace RPP) as codified in PAMC Chapter 10.46. B. The City Council now desires to increase flexibility for the City to issue parking permits in the College Terrace RPP program by removing provisions that fix the term and duration of permits, as well as provisions that fix the sale period and grace period for enforcement. Staff will continue to implement the RPP program under its authority in PAMC section 10.46.120. SECTION 2. Subsection (b) is hereby deleted from section 10.46.060 (Issuance of residential parking permits) of Chapter 10.46 (College Terrace Residential Parking Permit Program) of Title 10 (Vehicles and Traffic) of the Palo Alto Municipal Code to read as follows (deleted text in strikethrough, new text underlined): 10.46.060 Issuance of residential parking permits. (a) Residential parking permits shall be issued by the city in accordance with requirements set forth in this chapter. Each such permit shall be designed to state or reflect thereon the identification of the particular residential permit parking area (i.e., College Terrace) as well as the license number of the motor vehicle for which it is issued. The city may also issue virtual permits in combination with or instead of physical permits. No more than one residential parking permit shall be issued to each motor vehicle owned or leased for which application is made. (b) Reserved. The city shall issue residential parking permits with a term of one year from September 1 to August 31 regardless of when during the year a resident purchases the parking permit, to motor vehicles which comply with the requirements setforth in this chapter. Purchase of permits will be available starting thirty days prior to the beginning of thenext RPPP year. A grace period will be recognized from September 1 to September 30 for residents with a permit from the previous year. Vehicles displaying a permit from the previous year will not be cited during the grace period. (c) Residents applying for a permit will be required to provide proof of vehicle ownership and residency. A vehicle registration form as well as one of the following shall be required at the time of registration showing College Terrace residency: • Driver’s license – indicating College Terrace Address Item 18 Attachment A - Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods        Item 18: Staff Report Pg. 2  Packet Pg. 331 of 412  ***NOT YET APPROVED*** 2 157_20260519_ts24 • Rental agreement – with name of resident • Current (i.e., not more than sixty days old) utility bill with street address noted (d) One residential parking permit may be issued for each vehicle owned, leased or any person who can demonstrate that they are currently a resident of the area for which the permit is to be issued. (e) A residential parking permit may be issued for any vehicle owned, leased or any person who is employed by or a representative of a neighborhood-serving establishment located within the particular residential permit parking area. Each employee or representative of a neighborhood-serving establishment will be allowed to obtain one permit for each vehicle they own or lease subject to the following criteria which shall be used to establish the eligibility of a neighborhood-serving establishment and the maximum number of permits to be issued: (1) An establishment for which there is no off-street parking and no financially feasible way of creating adequate off-street parking on the site of the establishment; (2) In areas where it appears that the number of permits sold per block would exceed the number of legal on-street parking spaces per block the initial sale would be limited to two or possibly one permit per neighborhood-serving establishment; (3) Distribution of permits shall be through a designated representative of the establishment who will be responsible for allocation of the permits to employees. (f) Renewal of residential parking permits shall be subject to the same conditions imposed on new permits. (g) The residential parking permit shall be displayed as directed by the city. The city may issue a residential parking permit in any form, including as a virtual permit. (h) The Director of the Office of Transportation is authorized to issue such rules and regulations, not inconsistent with this chapter, governing the issuance and display of residential parking permits. (i) Any person to whom a residential parking permit has been issued pursuant to this section shall be deemed a parking permit holder. SECTION 3. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this Ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this Ordinance are hereby declared to be severable. SECTION 4. Effective Date. This ordinance shall be effective on the 31st day after adoption. // // // // // // Item 18 Attachment A - Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods        Item 18: Staff Report Pg. 3  Packet Pg. 332 of 412  ***NOT YET APPROVED*** 3 157_20260519_ts24 SECTION 5. CEQA. The City Council finds and determines that this categorically exempt under CEQA regulation 15301 (existing facilities). INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Chief Transportation Official Item 18 Attachment A - Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods        Item 18: Staff Report Pg. 4  Packet Pg. 333 of 412  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Fire Meeting Date: August 10, 2026 Report #:2605-6402 TITLE PUBLIC HEARING: Consideration of Objections for Weed Abatement Assessments; and Adoption of Resolution Confirming the Weed Abatement Report and Ordering Abatement Costs to be a Special Assessment on the Properties Specified in the Report; CEQA status – categorically exempt. RECOMMENDATION Staff recommends City Council: 1) Hold a public hearing to hear and consider objections from affected property owners of proposed assessments related to completed weed abatement work, and 2) Adopt a resolution confirming the report and ordering abatement costs to be a special assessment on the properties specified in the report (Attachment A) EXECUTIVE SUMMARY The Santa Clara County Department of Agriculture and Environmental Management and the City of Palo Alto work together to protect our community from fire. One of the purposes of the Weed Abatement Program is to prevent fire hazards posed by vegetative overgrowth and the accumulation of combustible materials. Adoption of the resolution will result in the total of $30,333.20 imposed as liens on the properties listed in the attachment for the cost of weed abatement work performed. BACKGROUND The Weed Abatement Division of Santa Clara County Agriculture and Environmental Management administers the contract for weed abatement within the City of Palo Alto, in accordance with an agreement first established on April 18, 1977, as most recently amended in December 2016, between the City and County. On December 8, 2025, in accordance with Palo Alto Municipal Code Chapter 8.08, the City Council declared weeds to be a nuisance and Item 19 Item 19 Staff Report        Item 19: Staff Report Pg. 1  Packet Pg. 334 of 412  ordered that the nuisance be abated. A public hearing was held on February 9, 2026, to consider objections to the proposed destruction or removal of the weeds. ANALYSIS FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW Item 19 Item 19 Staff Report        Item 19: Staff Report Pg. 2  Packet Pg. 335 of 412  ATTACHMENTS APPROVED BY: Item 19 Item 19 Staff Report        Item 19: Staff Report Pg. 3  Packet Pg. 336 of 412  NOT YET APPROVED Attachment A Resolution No. Resolution Confirming Weed Abatement Report and Ordering Abatement Costs to be a Special Assessment on the Properties Described in the Report R E C I T A L S A.The Council of the City of Palo Alto declared weeds growing on certain properties within the City to be a public nuisance by Resolution No. 10268, dated December 8, 2025, and B.The Council on February 9th, 2026, held a public hearing for objections to the proposed destruction and removal of weeds at the properties indicated in the County’s list for weed abatement. C.The Fire Chief, through his Administrator, the Weed Abatement Division of Santa Clara County Department of Agriculture and Environmental Management, has caused the weeds to be abated on the properties described in the County’s list for weed abatement; and D.The Fire Chief, through his Administrator, the Weed Abatement Division of Santa Clara County Department of Agriculture and Environmental Management, has filed the 2026 report and assessment list for weed abatement as provided by law and a hearing has been duly set and noticed, for objections to that report and assessment list and for confirmation; and E.The Council has duly considered the 2026 weed abatement report and assessment list and any objections from affected property owners. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The report and assessment list is in all respects complete and correct and is hereby confirmed. The amounts of the cost for abating the nuisance are confirmed and those remaining unpaid, as shown on Exhibit “A” attached and incorporated to this Resolution, shall constitute special assessments against the respective parcels of land and are a lien on the property for the amount of the assessment. SECTION 2. All further written or oral protests or objections to the 2026 report and assessment list are overruled or denied. 027072226 1 Item 19 Attachment A - Resolution Confirming 2026 Weed Abatement Program Assessment Report        Item 19: Staff Report Pg. 4  Packet Pg. 337 of 412  NOT YET APPROVED Attachment A SECTION 3. The unpaid assessments shown on Exhibit “A” shall be entered upon the 2026- 2027 tax roll against the parcels of land and shall be collected at the same time and in the same manner as general City taxes, subject to the same interest and penalties, and subject to the same procedure and sale in case of delinquency. All laws and ordinances applicable to the levy, collection, and enforcement of City taxes are hereby made applicable to this special assessment. SECTION 4. Santa Clara County has determined the weed abatement program to be categorically exempt from CEQA pursuant to CEQA Guidelines Section 15308. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Fire Chief Director of Administrative Services 2 Item 19 Attachment A - Resolution Confirming 2026 Weed Abatement Program Assessment Report        Item 19: Staff Report Pg. 5  Packet Pg. 338 of 412  Situs APN Owner Name Tax Roll Amount 1 1605 EDGEWOOD DR, PALO ALTO, CA 94303-2821 003-12-002 MIAO NINA YANTI 931 CLARA DR PALO ALTO CA 94303-4002 6,453.94 2 782 GREER RD, PALO ALTO, CA 94303-3022 003-41-065 DENG JINGJING AND JIANG LIJUN TRUSTEE 20653 CHERYL DR CUPERTINO CA 95014 506.00 3 1071 EMBARCADERO RD, PALO ALTO, CA 94303-3149 003-42-055 KOTHARY NISHITA N AND SHAH NIRAJ A 1071 EMBARCADERO RD PALO ALTO CA 94303-3149 296.00 4 2385 ST FRANCIS DR, PALO ALTO, CA 94303-3136 003-48-021 ZADIK YAIR AND LINDA 2385 ST FRANCIS DR PALO ALTO CA 94303-3136 401.00 5 2075 LOUIS RD, PALO ALTO, CA 94303-3452 003-50-021 KELLER JEFFREY R 2075 LOUIS RD PALO ALTO CA 94303-3452 401.00 6 742 SOUTHAMPTON DR, PALO ALTO, CA 94303-3437 003-59-041 AGRAWAL PARAG AND AGARWALA VINEETA 1725 NEWELL RD PALO ALTO CA 94303-2951 2,539.26 7 260 BYRON ST, PALO ALTO, CA 94301-1307 120-02-030 LIVERIGHT MICHAEL 260 BYRON ST PALO ALTO CA 94301-1307 401.00 8 655 EMBARCADERO RD, PALO ALTO, CA 94301-3628 120-08-023 L S & CO PARTNERSHIP 555 BYRON ST UNIT 105 PALO ALTO CA 94301-1303 296.00 9 2220 BRYANT ST, PALO ALTO, CA 94301-3908 124-14-024 L S & CO. 555 BYRON ST UNIT #105 PALO ALTO CA 94301 296.00 10 1001 COLORADO AV, PALO ALTO, CA 94303-3806 127-04-091 TSUNODA ROLAND T 1001 COLORADO AVE PALO ALTO CA 94303-3806 401.00 11 1020 COLORADO AV, PALO ALTO, CA 94303-3805 127-07-040 1020-MODERNVILLA LLC 908 INDUSTRIAL AVE PALO ALTO CA 94303-4911 296.00 12 4102 SUTHERLAND DR, PALO ALTO, CA 94303-4730 127-16-005 YURCHENCO JAMES R 4102 SUTHERLAND DR PALO ALTO CA 94303-4730 296.00 13 3189 LOUIS RD, PALO ALTO, CA 94303-3955 127-24-031 KATO TAKASHI AND AYANO 3189 LOUIS RD PALO ALTO CA 94303-3955 296.00 14 0 MIDDLEFIELD RD, PALO ALTO, CA 94306 127-33-064 E & R INV PROPERTIES LLC ET AL PO BOX 500 BURLINGAME CA 94011 401.00 15 924 COLORADO AV, PALO ALTO, CA 94303-3801 127-40-006 LIN STANLEY B AND JEAN LAI TRUSTEE 1037 HIGH ST PALO ALTO CA 94301-2425 296.00 16 2629 COWPER ST, PALO ALTO, CA 94306-2446 132-02-078 CHRISTENSON KAREN I ET AL 2629 COWPER ST PALO ALTO CA 94306-2446 296.00 17 454 COLORADO AV, PALO ALTO, CA 94306-2414 132-08-118 RAMCHANDRAN ASISH AND KAVITHA TRUSTEE & ET 2657 KIPLING ST PALO ALTO CA 94306 296.00 18 2689 BRYANT ST, PALO ALTO, CA 94306-2307 132-13-055 CHOU LYNN H L PO BOX 60416 PALO ALTO CA 94306 296.00 19 2858 WAVERLEY ST, PALO ALTO, CA 94306-2442 132-14-005 CHUNG TIEN-WEN 2858 WAVERLEY ST PALO ALTO CA 94306-2442 296.00 20 3166 KIPLING ST, PALO ALTO, CA 94306-3008 132-15-002 PAO JOY J AND KE SHIAN-REN 67 ORCHARD HILLS ST ATHERTON CA 94027 506.00 21 354 EL VERANO AV, PALO ALTO, CA 94306-2952 132-16-088 ZHOU ZHENG TRUSTEE 354 EL VERANO AVE PALO ALTO CA 94306-2952 296.00 22 3120 COWPER ST, PALO ALTO, CA 94306-3001 132-20-155 VALENTINE MARY E 3120 COWPER ST PALO ALTO CA 94306-3001 296.00 23 339 EL VERANO AV, PALO ALTO, CA 94306-2940 132-21-022 MIZOTE HARUMI TRUSTEE 907 MUSCOVY CT SUISUN CITY CA 94585 506.00 24 309 EL VERANO AV, PALO ALTO, CA 94306-2940 132-21-023 ZHANG QIANLI AND QIU YUNFENG 309 EL VERANO AVE PALO ALTO CA 94306-2940 296.00 25 3271 BRYANT ST, PALO ALTO, CA 94306-2928 132-21-027 CONLIN CHARLENE M TRUSTEE 25210 JAKE ST VENETA OR 97487 296.00 26 3535 BRYANT ST, PALO ALTO, CA 94306-4263 132-22-034 DARDEN RUTHIE L TRUSTEE 3535 BRYANT ST PALO ALTO CA 94306-4263 401.00 27 3358 BRYANT ST, PALO ALTO, CA 94306-3524 132-22-070 BEESON DONALD H TRUSTEE PO BOX 60458 PALO ALTO CA 94306 296.00 28 3541 BRYANT ST, PALO ALTO, CA 94306-4207 132-23-033 KAPOSHILIN NICHOLAS TRUSTEE 936 N CALIFORNIA AVE PALO ALTO CA 94303-3405 296.00 29 84 ROOSEVELT CL, PALO ALTO, CA 94306-4218 132-23-055 LEUNG JOHN KA YU AND JOANNA KONG TRUSTEE PO BOX 5358 SAN MATEO CA 94402-0358 296.00 30 34 ROOSEVELT CL, PALO ALTO, CA 94306-4216 132-29-061 LYONS CHARLES P TRUSTEE & ET AL 34 ROOSEVELT CIR PALO ALTO CA 94306-4216 296.00 31 18 ROOSEVELT CL, PALO ALTO, CA 94306-4216 132-29-069 BERNSTEIN AMIR D TRUSTEE 18 ROOSEVELT CIR PALO ALTO CA 94306 401.00 32 3830 CARLSON CL, PALO ALTO, CA 94306-4224 132-30-058 CHENG JING 4521 CAMPUS DR UNIT 363 IRVINE CA 92612 296.00 33 BIRCH ST, PALO ALTO, CA 94306 132-33-060 PACIFIC BELL TELEPHONE COMPANY 600 E GREEN ST RM 300 PASADENA CA 91101 296.00 34 451 WILTON AV, PALO ALTO, CA 94306-2859 132-35-025 SONG ZHIQIANG AND CHEN WEIWEI 451 WILTON AVE PALO ALTO CA 94306-2859 401.00 35 365 WILTON AV, PALO ALTO, CA 94306-2857 132-35-033 TONG PETER AND PAO CHUNG CHIAN 18444 FOREST CROSSING CT OLNEY MD 20832 506.00 36 421 FERNANDO AV, PALO ALTO, CA 94306-2820 132-39-037 WILLIGER EDWARD M P O BOX 20089 STANFORD CA 94309-0089 296.00 37 474 MATADERO AV, PALO ALTO, CA 94306-2837 132-40-011 XIE RONG TRUSTEE 20 BLACK FOX WAY REDWOOD CITY CA 94062 296.00 38 3585 EL CAMINO REAL, PALO ALTO, CA 94306-2806 132-40-058 2060 BIRCH LLC 42840 CHRISTY ST UNIT 209 FREMONT CA 94538 401.00 39 3545 EL CAMINO REAL, PALO ALTO, CA 94306-2806 132-40-063 SOUTH EAST TRAVEL SERVICE (USA) CO 3545 EL CAMINO REAL PALO ALTO CA 94306 401.00 40 2740 BYRON ST, PALO ALTO, CA 94306-2505 132-55-020 RV CONSTRUCTIONS.COM LLC 2791 COWPER ST PALO ALTO CA 94306-2448 296.00 41 613 STANFORD AV, PALO ALTO, CA 94306-1412 137-01-059 BAUMANN JOHN R TRUSTEE 613 STANFORD AVE PALO ALTO CA 94306-1412 296.00 42 2150 YALE ST, PALO ALTO, CA 94306-1424 137-01-134 LIANG KE 33206 FALCON DR FREMONT CA 94555 296.00 43 2175 OBERLIN ST, PALO ALTO, CA 94306-1340 137-03-036 YU SHUPING AND DAI XIAOJIE 2175 OBERLIN ST PALO ALTO CA 94306-1340 296.00 44 2153 OBERLIN ST, PALO ALTO, CA 94306-1318 137-03-037 MENDELOWITZ LOUIS I 2153 OBERLIN ST PALO ALTO CA 94306-1318 296.00 45 2120 COLUMBIA ST, PALO ALTO, CA 94306-1232 137-06-088 MARSHALL RUSSELL TRUSTEE PO BOX 1942 CAMPBELL CA 95008 296.00 46 788 LOS ROBLES AV, PALO ALTO, CA 94306-3159 137-13-112 BLOOMQUIST LYNDA L TRUSTEE 788 LOS ROBLES AVE PALO ALTO CA 94306-3159 401.00 47 883 ILIMA CT, PALO ALTO, CA 94306-2616 137-14-054 XIE XINMIN AND LI XIAOSU TRUSTEE 2633 MARTINEZ DR BURLINGAME CA 94010 296.00 48 4023 ORME ST, PALO ALTO, CA 94306 137-20-063 ZHU JAY JIABI TRUSTEE & ET AL 827 RICHARDSON CT PALO ALTO CA 94303-4152 296.00 49 4027 ORME ST, PALO ALTO, CA 94306-3137 137-20-064 ZHANG HANG AND YANG XIAOQIAN 4025 ORME ST PALO ALTO CA 94306-3137 296.00 50 4146 EL CAMINO REAL, PALO ALTO, CA 94306-4003 137-24-034 JUAN CHUNG-CHIUNG AND SU CHEN TRUSTEE 6 ATHERTON OAKS LN ATHERTON CA 94027 296.00 51 3500 DEER CREEK RD, PALO ALTO, CA 94304-1317 142-16-066 LELAND STANFORD JR UNIVERSITY BOARD OF TR 12832 S FRONTRUNNER BLVD STE 100 DRAPER UT 84020 296.00 Owner Address 2026 WEED ABATEMENT PROGRAM JURISDICTION NAME ASSESSMENT REPORT Item 19Attachment B - 2026 WeedAbatement AssessmentReport       Item 19: Staff Report Pg. 6  Packet Pg. 339 of 412  52 4208 RUTHELMA AV, PALO ALTO, CA 94306-4109 148-02-002 SHIU BOON W AND CHOI KEEHYUN 4208 RUTHELMA AVE PALO ALTO CA 94306-4109 401.00 53 4236 DARLINGTON CT, PALO ALTO, CA 94306-4129 148-03-044 WANG YOUXIANG AND LI ZHENGQI TRUSTEE 4236 DARLINGTON CT PALO ALTO CA 94306-4129 296.00 54 4346 SILVA AV, PALO ALTO, CA 94306-4421 148-12-014 JIANG WEI AND HAN QIUXIA TRUSTEE 4346 SILVA AVE PALO ALTO CA 94306-4421 296.00 55 4350 SILVA CT, PALO ALTO, CA 94306-4422 148-12-016 HU ZHE AND MA YINGLAN 591 SIERRA AVE MOUNTAIN VIEW CA 94041-2144 296.00 56 4179 OAK HILL AV, PALO ALTO, CA 94306-3721 175-01-025 BACHRACH SYLVIA RASHMI TRUSTEE & ET AL 12 STAR WAY MOUNTAIN VIEW CA 94040 296.00 57 4243 MANUELA CT, PALO ALTO, CA 94306-3731 175-02-053 WEAKLAND ALAN TRUSTEE & ET AL 515 S FLOWER ST FLOOR 25 LOS ANGELES CA 90071 296.00 58 4100 OLD ADOBE RD, PALO ALTO, CA 94306-3723 175-20-074 ASWATHANARAYANA TEJASVI AND SESHANNA PRATHI 4100 OLD ADOBE RD PALO ALTO CA 94306-3723 296.00 59 4103 OLD TRACE RD, PALO ALTO, CA 94306-3728 175-20-078 STEEL BRIDGE HOMES PALO ALTO LP 205 GARDEN HILL DR LOS GATOS CA 95032 296.00 60 4186 OLD ADOBE RD, PALO ALTO, CA 94306 175-20-092 WATERS CHRISTOPHER J TRUSTEE & ET AL 609 ARBOLEDA DR LOS ALTOS CA 94024 296.00 61 3000 ALEXIS DR, PALO ALTO, CA 94304-1303 182-35-035 PALO ALTO HILLS GOLF AND COUNTRY CLUB INC 3000 ALEXIS DR PALO ALTO CA 94304-1303 296.00 62 3130 ALEXIS DR, PALO ALTO, CA 94304-1305 182-43-024 VON CLEMM PETER F AND JENNIFER J 3130 ALEXIS DR PALO ALTO CA 94304-1305 296.00 63 966 LAUREL GLEN DR, PALO ALTO, CA 94304-1322 182-43-038 JACOBSEN RUTH E TRUSTEE 966 LAUREL GLEN DR PALO ALTO CA 94304-1322 296.00 64 951 LAUREL GLEN DR, PALO ALTO, CA 94304-1323 182-49-004 KHALIL KARIM AND MAWLA PAULINE 951 LAUREL GLEN DR PALO ALTO CA 94304-1323 296.00 65 930 LAUREL GLEN DR, PALO ALTO, CA 94304-1322 182-54-006 LIN YISHU AND WANG YANG 930 LAUREL GLEN DR PALO ALTO CA 94304-1322 296.00 66 931 LAUREL GLEN DR, PALO ALTO, CA 94304-1323 182-54-012 SHETH BEERUD TRUSTEE & ET AL 931 LAUREL GLEN DR PALO ALTO CA 94304-1323 296.00 67 929 LAUREL GLEN DR, PALO ALTO, CA 94304 182-54-013 NGAI KENNETH S TRUSTEE & ET AL 3121 BANDERA DR PALO ALTO CA 94304-1341 296.00 TOTAL 30,333.20 Item 19Attachment B - 2026 WeedAbatement AssessmentReport       Item 19: Staff Report Pg. 7  Packet Pg. 340 of 412  1 2 0 7 1 Attachment C City of Palo Alto Weed Abatement The Santa Clara County Weed Abatement Program th for Palo Alto parcels. Item 19 Attachment C - Weed Abatement Summary and Timeline        Item 19: Staff Report Pg. 8  Packet Pg. 341 of 412  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Transportation Meeting Date: August 10, 2026 Report #:2511-5563 TITLE Approval to Proceed with Final Design for the Permanent Installation of the Crescent Park Traffic Calming Project including a Bulb-out on Southwood Drive and East Crescent Drive; CEQA status – categorically exempt. RECOMMENDATION Staff evaluated three options in response to recent discussions with the Planning and Transportation Commission in order to address concerns raised by adjacent property owners: Option 1: Permanent Traffic Calming. Proceed with the proposed modified bulb-out including further reduction in size where feasible, drought tolerant landscaping, new ADA-compliant curb ramps, and stop signs (Attachment A) in alignment with the November 2023 Council direction. Option 2: Stop Signs. Remove the interim bulb-out and retain and relocate the existing (pilot) stop signs along the pre-pilot curb location, including upgrading the existing curb ramp to meet ADA requirements (Attachment B). Option 3: No Traffic Calming. Remove traffic calming features including both the pilot bulb-out and stop signs. Upgrade the existing non-standard curb ramp to meet ADA requirements. Based on the effectiveness of each of the options in addressing access and safety concerns and the level of neighborhood support indicated in the project survey, staff recommends that the City Council approve the final concept design and proceed with Option 1: Permanent Traffic Calming, which includes the permanent installation of the bulb-out at Southwood Drive and East Crescent Drive as part of the Crescent Park Traffic Calming Project. EXECUTIVE SUMMARY Staff is returning to Council to confirm direction in relation to traffic calming design concepts at the intersection of Southwood Drive and E. Crescent Drive in response to a request from Planning Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 1  Packet Pg. 342 of 412  and Transportation Commission (PTC) members who expressed concerns about a mismatch between their prior communications and the PTC motion communicated to Council on November 6, 2023 (Attachment A). BACKGROUND 1 and, on November 9, 2020, City Council approved the concepts for pilot installation.2 Treatments included: a three-way stop with a curb extension (also known as a bulbout) at the intersection of Southwood Drive and E. Crescent Drive, and an oval-shaped traffic circle and channelizers at the five-legged intersection of Southwood Drive, Center Drive and Hamilton Avenue. Features such as roundabouts, bulbouts and channelizers are horizontal deflections that reduce the number and area of conflict points within an intersection, reduce turning speeds, and reduce the collision angle (which reduces the potential for head on collisions). The bulbout concept also squares up the Southwood/E Crescent intersection, which in turn reduces vehicle turning speeds, pedestrian crossing distances and pedestrian exposure to traffic. These features have been identified by the Federal Highway Administration as safety countermeasures, and were implemented in the summer of 2021. 1 Planning & Transportation Commission, September 9, 2020; Item 2, Action Item, SR# 11517 2 City Council, November 9, 2020; Item 5, Action Item, SR# 11603 Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 2  Packet Pg. 343 of 412  traffic, and vehicle speeds, which suggested that the pilot was likely effective (with the caveat that ambient travel patterns had also changed due to the pandemic). Additionally, 74% of Crescent Park residents who responded to the neighborhood survey supported making the traffic calming improvements permanent, voting “YES” to permanently installing the traffic calming measures. For residents along Southwood Drive and E. Crescent Drive in the immediate vicinity of the bulbout, 75% of respondents supported proceeding with the permanent improvements at this location. 5 At this meeting, PTC approved a motion which was reflected in the following way in the meeting minutes: “to make permanent [traffic calming improvements at location] number one [University Avenue/W Crescent Drive] and number three [Southwood/Center/Hamilton], but number three [Southwood/E Crescent] only with a condition that it be landscaped. Also, PTC recommended that number two needed more work and that the bulbout be made more suitable with direct input from adjacent property owners.” 6 As part of this consent item, staff indicated that they would engage the community to seek feedback while ensuring that the permanent improvements align with planning and engineering standards. 5 Planning & Transportation Commission, June 14, 2023; Item 3, Action, SR# 2304-1381 6 City Council, November 6, 2023; Item 4, Consent, SR# 2307-1777 Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 3  Packet Pg. 344 of 412  Corner Daylighting Law). Under AB 413, parking would be prohibited at this location in the pre-pilot condition. 4. The bulbout surface was changed from undefined or concrete, to drought tolerant, low height landscaping to improve aesthetics and alignment with neighborhood character. On April 9, 2025, PTC reviewed the refined conceptual design.9 The resident and/or owners at 590 E. Crescent Drive provided public comment regarding the aesthetics and size of the bulbout, and its effect on their ability to park adjacent to the existing non-standard curb ramp. Following committee discussion, PTC voted to unanimously support the Council’s direction from November 6, 2023 to move forward with final design of the traffic circle at Southwood/Center/Hamilton/Center intersection. PTC members also suggested that staff meet again with the resident and/or owners at 590 E Crescent Drive to hear their remaining concerns regarding the access ramp and on street parking, and to return to PTC with an update. On April 16, 2025, staff conducted another follow-up field meeting with resident and/or owners at 590 E. Crescent Drive. During the meeting, the resident and/or owners reiterated their dislike of the traffic calming treatments, and requested removal of the bulbout and retention of the existing non-standard curb ramp. As suggested by PTC, staff requested that the resident demonstrate their preferred method for accessing their property, however, the resident declined. On September 24, 2025, staff returned to PTC10 and recommended proceeding to final design for the bulbout and stop signs at Southwood/E. Crescent intersection. At this meeting, PTC members expressed dismay that the resident at 590 E Crescent Drive remained unsatisfied with the design, and recommended full redesign of traffic calming treatments at Southwood/Crescent including consideration of channelizers, a new slip lane (not a traffic calming device), bulbout removal, and relocation of the curb ramp to the west. PTC did not support the staff recommendation to proceed with engineering design of the refined bulbout concept. PTC members also expressed concern that their recommendations from July 14, 2023 had not been accurately communicated to Council on November 6, 2023 (Attachment A) ANALYSIS Given concerns expressed by PTC, staff is returning to Council to confirm direction before moving forward with the final design of traffic calming treatments at Southwood/E. Crescent. Key concerns expressed by PTC include: Questions about community engagement; 9 Planning & Transportation Commission, April 9, 2025; Item 2, Action, SR# 2503-5344 10 Planning & Transportation Commission, September 24, 2025; Item 2, Action, SR# 2508-5607 Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 4  Packet Pg. 345 of 412  Aesthetic concerns regarding the bulbout size and landscaping; Accessibility concerns related to curb ramps and property access; Concerns about dissatisfaction of the abutting resident; and Accuracy of feedback from PTC conveyed to Council. Questions about Community Engagement For this project, a range of traffic calming measures, such as speed humps, were evaluated in the pilot planning process and determined to be not appropriate for addressing intersection related safety issues. Pilot improvements were selected after consideration of various traffic calming measures and the improvements that were installed as the pilot project received support from a supermajority of neighborhood residents. In total, the design process for this project has incorporated multiple opportunities for community input including two community meetings, multiple PTC presentations and individual meetings with the resident and/or owners of 590 E Crescent Drive. This engagement has helped staff to incrementally refine draft concepts for potential permanent installation (see Attachment A). Aesthetic Concerns Related to Bulbout Size and Landscaping In response to PTC feedback, the project team modified the concept design to add drought tolerant landscaping and reduce the bulbout size. During engineering design, staff will assess whether the bulbout footprint can be further reduced by another two feet, beyond the current reduction of five feet, without compromising its effectiveness. In addition, the proposed platform could be widened to provided additional landing space for the resident’s access. While traffic calming treatments may change the appearance of an intersection, many people consider this change to be positive, particularly where landscaping is added. In addition to potential aesthetic benefits, landscaped bulbouts slow traffic, increase permeable surface area, provide a buffer between motor vehicles and pedestrians and reduce the potential for vehicle incursion into pedestrian space or even private property. Figure 1: Before (left) and After (right) Bulbout Installation at Kellog and Middlefield Accessibility Concerns Related to Curb Ramps and Property Access Following PTC feedback, staff reassessed accessibility conditions and consulted with the City’s Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 5  Packet Pg. 346 of 412  Chief Building Official / ADA Coordinator regarding concept plan design for the bulbout at Southwood/E. Crescent. Under the proposed concept design, there are at least two accessible means of accessing the property at 590 E. Crescent Drive from the public right-of-way. These include an ADA-compliant pedestrian ramp that would lead to the crosswalk, and a standard concrete platform (creating a break in the landscaped parkway) for stepping into a motor vehicle. In additional, the property has a residential driveway. Concerns about Satisfaction of the Abutting Resident Accuracy of Feedback from PTC Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 6  Packet Pg. 347 of 412  Prior to the motion, one commissioner supported the bulbout design due to safety benefits, another expressed hesitation about second guessing engineering analysis, and other commissioners expressed strong dissatisfaction with the design of the bulbout. Some critiques identified actionable concerns regarding the size of the bulbout, accessibility of pedestrian ramps and a preference for landscaping instead of concrete. Other critiques were more general, describing the current temporary pilot or the design as ugly, awful, bizarre and not acceptable. Option 2: Remove the bulbout and keep existing stop signs; and Option 3: Remove the bulbout and stop signs. Comparison of Options Table 1: Comparison of Options 1.Modified bulbout 2.Bulbout removal with stop signs 3.Bulbout and stop sign removal Description Accessibility considerations Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 7  Packet Pg. 348 of 412  Table 1: Comparison of Options Option 1.Modified bulbout 2.Bulbout removal with stop signs 3.Bulbout and stop sign removal Effect on traffic calming goals Lower speed and less cut through traffic than pre-pilot, highly visible stop sign Likely lower speed and cut through traffic than pre-pilot but non-self- enforcing i.e. drivers may roll through or not notice the stop sign Similar to pre-pilot i.e. concerns about speeding and cut through traffic Aesthetic considerations Landscaping with permanent installation Large, concrete intersection Large, concrete intersection On-street parking adjacent to 590 E Crescent Permitted (>15’ from crosswalk with curb extension) Prohibited under AB 413 (<20’ of crosswalk) Prohibited under AB 413 (<20’ of crosswalk) California’s Daylighting law (AB 413) prohibits parking within 20 feet of a crosswalk approach or 15 feet of a crosswalk approach where there is a curb extension or bulbout. Under the revised concept design, the approach alignment has been modified to increase the available curb distance. This adjustment allows for parking or short-term stopping behind the concrete path, which may accommodate the resident’s request to park near the former curb ramp. Staff Recommendation Staff recommends that Council approve the concept bulbout design (Option 1), with the design modifications indicated above. This option reconfigures E. Crescent Drive to intersect Southwood Drive at a right angle, converting the existing three-legged intersection into a T- intersection and adding a three-way stop control. This realignment has been shown to reduce cut-through traffic and lower unsafe vehicle speeds for right and left turn movements to and from E. Crescent Drive. This option aligns with similar installations throughout Palo Alto and reflects a good faith effort to balance resident input with access, engineering best practices and neighborhood concerns regarding speed, cut through traffic and safety. NEXT STEPS Pending Council approval of the conceptual designs, staff will prepare final construction drawings for both the traffic circle at Hamilton and Center and the approved design features, which might include the landscaped bulbout, ADA-compliant curb ramps, concrete pad and stop signs, at Southwood/E. Crescent (or changes indicated under Options 2 or 3 if one of those is selected by Council) and initiate the construction phase for permanent installation. Staff will return to Council for review and approval of the construction contract. Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 8  Packet Pg. 349 of 412  FISCAL/RESOURCE IMPACT The project is funded through the existing Transportation and Parking Improvement Capital Improvement Project (PL-12000), which supports neighborhood traffic calming projects. Staff will be requesting dedicated funding in the next fiscal year budget process for the construction of the permanent improvements Staff has held three neighborhood-level community meetings, two meetings with residents at 590 East Crescent Drive and four PTC meetings, to provide residents an opportunity to share their comments on this project Residents have also provided feedback through a survey card that was sent to every household in the Crescent Park neighborhood. Additionally, a dedicated website has been established for the project, aiming to provide information and seek feedback from residents. Furthermore, all households were notified by mail of previous PTC and City Council meetings informing them that this item is being discussed and the availability of the staff report. The modifications involve minor upgrades to an existing residential street right-of-way and will not introduce any new environmental impacts. This project qualifies as a minor alteration to the existing street system and is therefore categorically exempt under Class 1 Exemption, Section 15301 of the California Environmental Quality Act (CEQA). Attachment A: Letter to Council from PTC Chair Attachment B: Option 1- Modified Bulbout Design Attachment C: Option 2 – Remove Bulbout and Retain Stop Signs : Ria Hutabarat Lo, Chief Transportation Official Item 20 Item 20 Staff Report        Item 20: Staff Report Pg. 9  Packet Pg. 350 of 412  Mayor Lauing, Vice Mayor Veenker, Honorable Council Members: At the Planning and Transportation Commission’s request, we write to make you aware that the Crescent Park Traffic Calming Project suffered from miscommunications that affected City Council, PTC, City Staff, and residents (especially Mr. Girand, the resident nearest the East Crescent bulb-out). As we see it: 1.PTC intent was miscommunicated to Council, which then approved the item prematurely as part of the consent calendar. In June 2023, PTC reviewed the results of pilot installations for the Project. As stated in the PTC Summary Minutes for June 14, 2023, PTC made the following recommendation to Council regarding the three components of the project, and notably did not recommend the East Cres- cent bulb-out for permanent installation without change: “To make permanent number one [bollards for University Ave bike lane] and number three [traffic circle at Center]... Also, PTC recommended that number two [bulb-out at East Crescent] needed more work and that the bulb out be made more suitable with di- rect input from adjacent property owners. “Commissioner Lu understood that location two would remain in place during the re- design and that Council would evaluate the proposal” … “Vice-Chair Chang noted part of the motion was that location two would return to PTC for review if approved by Council to pursue permanent installation. “[Office of Transportation Senior Engineer] Mr. Bhatia announced all three locations would come back to PTC for review.” In November 2023 when the item was brought to Council, it was placed on the consent calendar as “Approval to Proceed with Design of Improvements for Permanent Installation of the Traffic Calming Pilot Project in the Crescent Park Neighborhood” and Council approved the item. The Staff Report on the consent calendar item did not accurately represent PTC’s motion, and instead stated: “The PTC members unanimously endorsed the project and recommended to the City Council that the staff be authorized to proceed with the design of permanent improve- ments. However, in response to concerns raised by the fronting property owners, the PTC further recommended that the staff work with the adjacent property owners to gather their input for the concerns of those directly affected in designing the permanent improvements.” 2.There was not a shared understanding of the project review and approval process. After the pilot installations were analyzed to create final designs, a review was placed on the PTC agenda as an Action Item. PTC recommended approval of the traffic circle at Hamilton and Center, but did not recommend approval of the bulb-out at East Crescent. PTC requested that Transportation Staff interview Mr. Girand and refine or redesign the treatment on East Item 20 Attachment A - Letter to Council from PTC Chair        Item 20: Staff Report Pg. 10  Packet Pg. 351 of 412  Crescent before PTC could recommend approval, then continued the item. When the item returned to PTC on September 24th it had been reclassified as a Study Session, implying PTC approval was no longer needed. From Transportation Staff’s point of view, the design had been approved by Council on the consent calendar and no additional PTC recommendation was expected or required. Therefore from Planning Staff’s point of view, the original classification as an Action Item had been in error. As a consequence, though, both PTC and Mr. Girand felt that a design known to be unacceptable had been forced through. 3.There was not a shared understanding of the implications of a pilot project. The informal concept of a pilot project is that it can be undone if determined to be unacceptable. PTC suggested on September 24th that a straightforward resolution for Mr. Girand’s concerns would be to undo the pilot bulb-out at East Crescent. However, simply implementing the pilot project triggered a permanent consequence: All modified intersections must be brought into compliance with the ADA, and the pilot itself is considered a modification. As a result, the non-ADA-compliant access ramp that Mr. Girand has depended upon must be removed and replaced with a curb-height concrete pad, even if the piloted modifications were not approved and the temporary bulb-out and stop signs were uninstalled. 4.Two separate pieces of the traffic calming project, the traffic circle at Hamilton and Center and the bulb-out at East Crescent, were linked in a way they should not have been. The traffic circle has enthusiastic community support and the PTC also gave its endorsement of the circle in June 2023. However, installation of the traffic circle cannot proceed until the controversy over the bulb-out is resolved because both parts of the project were quoted in a single engineering consultant contract. According to Transportation Staff, obtaining new, separate contracts for each piece of the project would result in substantial cost increases because so much time has elapsed and construction has become more expensive. We are considering process improvements to prevent similar situations in the future: 1.PTC believes that projects of this type are in its purview, and final designs should be subject to review and recommendation. 2.Council Staff Reports should be reviewed early by the PTC liaison so that miscommunications can be resolved, ideally before the Reports are distributed to Council. 3.During hearings PTC should produce more formal summaries of conclusions that Staff can convey to Council. 4.PTC Liaisons should speak to Council more frequently. Item 20 Attachment A - Letter to Council from PTC Chair        Item 20: Staff Report Pg. 11  Packet Pg. 352 of 412  We hope this summary has clarified matters. As always, we are available to answer your questions and we are grateful for your advice. Allen Akin Chair Bryna Chang Vice-Chair Item 20 Attachment A - Letter to Council from PTC Chair        Item 20: Staff Report Pg. 12  Packet Pg. 353 of 412  Item 20Attachment B - Option 1-Modified Bulbout Design       Item 20: Staff Report Pg. 13  Packet Pg. 354 of 412  E C R E S C E N T D R SOUTHWOOD DRIVE Install 10' Crosswalk Add detectable warning surface to existing curb ramp Existing Stop Sign to Remain Red Curb 20' from proposed crosswalk Stop Sign Reconstruct Existing Curb Ramp for ADA Existing Driveway to Remain Existing Driveway to Remain Install delineators 10' apart along Southwood Existing stop sign to remain Item 20 Attachment C - Option 2 - Remove Bulbout and Retain Stop Signs        Item 20: Staff Report Pg. 14  Packet Pg. 355 of 412  9 4 1 4 City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: August 10, 2026 Report #:2605-6413 TITLE Adoption of a Resolution Authorizing the Borrowing of Funds on an Interim Basis for Improvements to the City's Regional Water Quality Control Plant and Authorizing the Execution and Delivery of a Revolving Credit Agreement, Fee Letter and Related Note; CEQA Status - Not a Project RECOMMENDATION Staff recommend that the City Council adopt the attached resolution (Attachment A) authorizing the borrowing of funds on an interim basis for improvements to the City's Regional Water Quality Control Plant and authorize the execution and delivery of a Revolving Credit Agreement and related Note for a total not to exceed $31 million for five years and a Fee Letter. EXECUTIVE SUMMARY The City of Palo Alto and its partner agencies are advancing more than $460 million in essential capital improvements at the Regional Water Quality Control Plant, and staff recommend approval of a $31 million Line of Credit (LOC) agreement with US Bank National Association (US Bank) to ensure efficient project delivery and maintain flexible cash flow. Debt service obligations have been incorporated into the City’s financial forecast and upcoming utility rate planning, with all partner agencies—except the City of Mountain View, which will cash-fund its portion—participating in the LOC. The LOC is secured by net revenues of the City’s Wastewater Treatment Fund and the Wastewater Collection Fund. BACKGROUND The Regional Water Quality Control Plant (RWQCP), originally constructed in 1934 and substantially expanded in 1972 with funding from the Federal Clean Water Act, is an advanced tertiary treatment facility that provides wastewater treatment for Palo Alto, Mountain View, Los Altos, Los Altos Hills, East Palo Alto Sanitary District, and Stanford University. Palo Alto owns the RWQCP infrastructure and administers the Wastewater Treatment Fund on behalf of all the Item 21 Item 21 Staff Report        Item 21: Staff Report Pg. 1  Packet Pg. 356 of 412  9 4 1 4 partner agencies under the Basic Agreement between the Cities of Palo Alto, Mountain View, and Los Altos executed in 1968 and subsequent agreements with the minor partner agencies (hereby collectively referred to as the “partner agreements”). Payments received from all partner agencies are deposited in the Wastewater Treatment Fund, including payments received from the City of Palo Alto. 1. The LRFP Update, currently underway, will reassess and reprioritize capital improvement needs over the next 50 years, incorporating consideration of updated regulatory requirements, emerging contaminants, and the current condition and performance of existing RWQCP infrastructure. The update will refine project scopes and cost estimates for remaining projects from the 2012 LRFP and identify additional capital improvements necessary to maintain reliable and compliant plant operations. The LRFP Update is expected to significantly increase RWQCP’s overall capital needs, highlighting the importance of flexible financing tools such as the proposed LOC. 2. Staff’s funding strategies include the following sources: State Revolving Fund (SRF) loans administered by the State Water Resources Control Board U.S. Environmental Protection Agency Water Infrastructure Finance and Innovation Act (WIFIA) loans Utility revenue bonds issued through capital markets Line of Credit (LOC) Capital budget for smaller or shorter-term projects. 1 City Council, June 10, 2024; Agenda Item #6; SR# 2405-2993, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82887&dbid=0&repo=PaloAlto 2 Finance Committee, November 4, 2025: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83790&dbid=0&repo=PaloAlto Item 21 Item 21 Staff Report        Item 21: Staff Report Pg. 2  Packet Pg. 357 of 412  9 4 1 4 The selection of the funding source for each project depends on program eligibility (for SRF and WIFIA), prevailing interest rates at the time of the loan or bond issuance, repayment terms, and cash flow needs. Annual debt service payments are shared among all RWQCP partner agencies, with the exception of the City of Mountain View, through amendments to their partner agreements. Partner amendments are scheduled to be presented to the City Council in the fall. Palo Alto is responsible for 38.16% share of debt-financed costs. These obligations directly affect the City’s Wastewater Collection Fund and are the primary driver for projected rate adjustments. 2 includes an LOC cost analysis. In June 2024, Council authorized staff to obtain a $31 million Line of Credit for the Wastewater Treatment Fund5; this authority allows the City Manager to negotiate and execute the LOC however per Palo Alto Municipal Code (PAMC) section 12.28, the LOCs must be approved by Council via resolution (Attachment A). ANALYSIS Table 1: Pricing and Fee Comparison BMO US Bank (Recommended) Pricing Tax-Exempt Rate: 82% 1M SOFR + 1.45% Taxable Rate: 1M SOFR + 1.20% Undrawn Fee: 0.30% of unutilized amount 5 Year Tax-Exempt Rate: 80% 1M SOFR + 1.19% Taxable Rate: 1M SOFR + 1.19% Undrawn Fee: 0.25% of unutilized amount Terms & Conditions Rate Covenant - 125% of Debt Service Additional Bonds Test - 125% of Debt Service Rate Covenant - 125% of Maximum Annual Debt Service* Additional Bonds Test - 125% of Debt Service Minimum Ratings of A3/A- for City's GO Debt 5 City Council, June 17, 2024: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82897&dbid=0&repo=PaloAlto&searchid=a71833e6 -80d5-4688-8ab4-cd9a7edc4503 and Supplemental Memo: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82929&dbid=0&repo=PaloAlto&searchid=a71833e6 -80d5-4688-8ab4-cd9a7edc4503 Item 21 Item 21 Staff Report        Item 21: Staff Report Pg. 3  Packet Pg. 358 of 412  9 4 1 4 Table 1: Pricing and Fee Comparison BMO US Bank (Recommended) Bank Ratings Long-Term (S/M/F): A+/A1/AA- Short-Term (S/M/F): A-1/P-1/F1+ Outlook (S/M/F): Stable/Stable/Stable Long-Term (S/M/F): A+/A2/A+ Short-Term (S/M/F): A-1/P-1/F1 Term Out Provisions Base Rate + 2.00% fixed for 3 years Base Rate + 3.00% fixed for 3 years Relevant Experience Los Angeles County Metropolitan Transportation Authority, City of Pasadena, City of Modesto, Chicago Housing Authority, and Citizens Energy Group Santa Clara Valley Water District, SFPUC - Water Enterprise, SFPUC Wastewater Enterprise, Gainesville Regional Utilities, CO, Lower Colorado River Authority Fees Legal Expenses Capped at $35,000 Estimated at $45,000; Capped at $50,000 Upfront Fee $0 $0 Termination Fee $0 One-year make whole termination provision *The Wastewater Treatment Fund compiles with the 125% of Maximum Annual Debt Service. Under both proposals, security for the LOC is net revenues of the Wastewater Collection Fund and Wastewater Treatment Fund, on parity with the existing State Revolving Fund (SRF) installment sale agreements. Regarding the City’s Debt Policy7, the Enterprise Funds have a debt service limit of 15% of operating expense. The estimated debt service limit for FY 2026 is 7.6%. Conservatively assuming a fixed $21 million drawn amount, with $10 million unutilized, issuance of a $31 million LOC would increase the fund’s debt service limit by approximately 2.2 to 2.6 percentage points between FY 2027 and FY 2028. The City Council approved an exception to the debt limit on December 5, 2022 upon approving the budget amendment to fund the Secondary Treatment Upgrade (STU) project using the 2022 SRF loan. Based on the estimated interest and cost forecast budget, the WWT Fund is estimated to exceed the 15% debt limit due in FY 2028 due to repayment of the 2022 SRF loan. FISCAL/RESOURCE IMPACT Amendments to the agreements with partner agencies to incorporate fiscal impacts of this LOC are scheduled for Palo Alto City Council consideration in fall 2026. The annual partner cost is approximately $0.8 to $1.0 million, which is lower than the $1.3 to $1.5 million range previously communicated to the City Council and partners in fall 2025. 7 City Debt Policy, Adopted by City Council on April 11, 2017: https://www.paloalto.gov/files/assets/public/v/1/administrative-services/adopted-debt-policy-2017-04-11.pdf Item 21 Item 21 Staff Report        Item 21: Staff Report Pg. 4  Packet Pg. 359 of 412  9 4 1 4 The City of Palo Alto, as a partner to the RWQCP, has assumed the impact of the LOC in its Financial Forecast and utility rates for FY 2027, as presented to the Finance Committee on March 17, 20269. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: 9 Finance Committee, March 17, 2026: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=86854&dbid=0&repo=PaloAlto&searchid=da736b0 9-2d2f-4bc1-ac2c-38a18f34577e Item 21 Item 21 Staff Report        Item 21: Staff Report Pg. 5  Packet Pg. 360 of 412  Resolution No. __ Resolution of the Council of the City of Palo Alto Authorizing the Borrowing of Funds Pursuant to Chapter 12.28 of the Palo Alto Municipal Code to Finance on an Interim Basis Improvements that Benefit the City’s Wastewater Treatment Enterprise and Wastewater Collection Enterprise, Authorizing the Execution and Delivery of a Revolving Credit Agreement, a Fee Letter and Related Notes, Authorizing and Ratifying Execution and Delivery of Related Documents, and Authorizing Related Actions RECITALS A. The City of Palo Alto (the "City"), acting under and pursuant to the powers reserved to the City under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California and Article II of the Charter of the City, operates and maintains facilities for the collection, pumping, transport, treatment, storage and disposal of wastewater (the "Wastewater System") B. The City is empowered pursuant to Chapter 12.28 of the Palo Alto Municipal Code to issue bonds, notes and other obligations, to provide funds for the acquisition, construction, improvement or financing of the Wastewater System. C. Chapter 12.28 authorizes the City Council to exercise all of the powers set forth in the Revenue Bond Law of 1941, being Chapter 6, commencing with Section 54300, of Part 1 of Division 2 of Title 5 of the California Government Code, subject to the restrictions set forth therein, except as provided in Chapter 12.28. D. The City previously issued or incurred the following outstanding obligations for the purpose of financing and refinancing, as applicable, certain improvements to the Wastewater System (the “Outstanding Obligations”): (i) a Project Finance Agreement No. 07-814-550-0 between the City and the California State Water Resources Control Board (“State Water Board”), as amended, (ii) a Project Finance Agreement No. 09-814-550 between the City and the State Water Board, as amended, (iii) an Installment Sale Agreement No. D16-01034, dated as of March 20, 2017 by and between the City and the State Water Board, as amended, (iv) an Installment Sale Agreement No. SWRCB0000000000D2001009, executed as of July 12, 2021 by and between the City and the State Water Board, as amended, (v) an Installment Sale Agreement No. D2101050, executed as of May 9, 2022 by and between the City and the State Water Board, as amended, and (vi) an Installment Sale Agreement No. D2401001, executed as of March 27, 2025 by and between the City and the State Water Board. E. The Outstanding Obligations are secured by a first priority pledge of and payable from net revenues of the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise. F. The City has determined that it is a necessary and proper municipal affair to finance on an interim basis certain additions, betterments, extensions and improvements to the City’s Item 21 Attachment A - Resolution Authorizing the Borrowing of Funds on an Interim Basis for the RWQCP        Item 21: Staff Report Pg. 6  Packet Pg. 361 of 412  -2- Regional Water Quality Control Plant and other improvements that benefit the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise (the “Project”). G. The City wishes to secure such financing by a first priority pledge of net revenues of the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise. H. Pursuant to Government Code Section 5852.1, certain information relating to the revenue bonds is set forth in Appendix A attached to this Resolution, and such information is hereby disclosed and made public. I. United States Income Tax Regulations section 1.150-2 provides generally that proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, one of which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer declares an intention to reimburse such expenditure. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. Findings and Determinations. The City Council hereby finds, determines and declares that the Recitals are true and correct. SECTION 2. Approval of Credit Agreement, Fee Letter and Notes; Terms of the Credit Agreement, Fee Letter and Notes; Security. The Council is adopting this resolution under the powers reserved to the City under Sections 3, 5 and 7 of Article XI of the Constitution and Article II of the Charter. Pursuant to Chapter 12.28, and for the purpose of financing the Projecton an interim basis, the City Council hereby approves the borrowing of funds by the City in the form of a revolving credit agreement (the “Credit Agreement”), a letter confirming certain terms related to the calculation of the interest rate payable by the City under the Credit Agreement and related fees (the “Fee Letter”) and one or more notes to evidence the City’s obligations under the Credit Agreement (the “Notes”). The maximum principal amount outstanding under each of the Credit Agreement and the Notes at any time shall not exceed $31,000,000. The interest rate under the Credit Agreement, the Fee Letter and the Notes shall not exceed the maximum rate of interest authorized by law. The interest rate under the Credit Agreement, the Fee Letter and the Notes may be fixed, variable, exempt from federal income taxation or subject to federal income taxation, in each case, as determined by the City Manager, Administrative Services Director or a designee appointed in writing by any such officer (each, an “Authorized Officer”) in consultation with Jones Hall LLP, the City’s bond counsel, and PFM Financial Advisors LLC, the City’s municipal advisor. The initial term of the Credit Agreement and the Notes shall not exceed five years, but the Credit Agreement and the Notes may have a succeeding term that shall not exceed three years. The City’s payment obligation under the Credit Agreement, the Fee Letter and the Notes shall be secured by a first priority pledge of and payable solely from the net revenues of the City’s Wastewater Treatment enterprise and its Wastewater Collection enterprise. The pledge shall be on a parity basis with the pledge securing the Outstanding Obligations, as determined Item 21 Attachment A - Resolution Authorizing the Borrowing of Funds on an Interim Basis for the RWQCP        Item 21: Staff Report Pg. 7  Packet Pg. 362 of 412  -3- by an Authorized Officer. To the extent the Credit Agreement is used to finance improvements that only partially benefit the City’s Wastewater Treatment enterprise and Wastewater Collection enterprise, the City will ensure that the financing costs are paid or reimbursed in a manner that complies with applicable law, including Articles XIII C and D of the California Constitution. The general fund of the City is not liable for the payment of the City’s obligations under the Credit Agreement, the Fee Letter or the Notes. The credit or taxing power of the City is not pledged for the payment of the City’s obligations under the Credit Agreement, the Fee Letter or the Notes. The Lenders (as defined in the Credit Agreement) may not compel the exercise of the taxing power of the City or the forfeiture of its property. The City Council hereby determines that the Credit Agreement, the Fee Letter and the Notes are conclusively deemed valid and executed, delivered and issued, as applicable, in conformity with Chapter 12.28. SECTION 3. Selection of U.S. Bank. The City Council hereby approves U.S. Bank National Association as Agent (as defined in the Credit Agreement) and the initial sole Lender, which staff has recommended following a competitive selection process. SECTION 4. Approval of Credit Agreement, Fee Letter and Notes. The City Council hereby approves the Credit Agreement, the Fee Letter and the Notes in substantially the forms on file with the City Clerk, with such changes approved by an Authorized Officer, acting alone, after consultation with City staff, bond counsel and the municipal advisor. The Mayor or the City Manager, acting alone, is authorized and directed for and in the name and on behalf of the City to execute and the City Clerk is hereby authorized and directed to attest the final form of the Credit Agreement, the Fee Letter and the Notes, and the execution of the Credit Agreement, the Fee Letter and the Notes by the Mayor or the City Manager shall be conclusive evidence of their approval by this City Council. SECTION 5. Authorization and Ratification of Amendments to the Outstanding Obligations. The City Council hereby authorizes and ratifies the execution and delivery of amendments to the Outstanding Obligations as may be required to facilitate the proposed interim financing. The execution of such amendments by an Mayor or the City Manager shall be conclusive evidence of such approval and ratification. SECTION 6. Official Actions. Each Authorized Officer, the Mayor, the City Attorney, the City Clerk and all other officers of the City are each authorized and directed in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants, promissory notes and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution. Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable. Any and all acts of each Authorized Officer, the City Attorney, the Mayor, the City Clerk and all other officers of the City in furtherance of the transactions contemplated by the foregoing resolutions that were taken prior to the adoption of these resolutions, are hereby ratified, confirmed, approved, and adopted. Item 21 Attachment A - Resolution Authorizing the Borrowing of Funds on an Interim Basis for the RWQCP        Item 21: Staff Report Pg. 8  Packet Pg. 363 of 412  -4- SECTION 7. Reimbursement Intent. The City hereby declares that it reasonably expects (i) to pay certain costs of the Project prior to the execution and delivery of the Credit Agreement and (ii) to use a portion of the proceeds of the Credit Agreement for reimbursement of expenditures for the Project that are paid before the execution and delivery of the Credit Agreement. SECTION 8. California Environmental Quality Act. The foregoing resolutions and the execution and delivery of the Credit Agreement, the Fee Letter and the Notes are not a project for purposes of the California Environmental Quality Act because the additions, betterments, extensions and improvements to the City’s Regional Water Quality Control Plant to be financed as described herein are categorically exempt under CEQA Guidelines Section 15301. SECTION 9. Effective Date. This Resolution shall take effect immediately upon its adoption. * * * * * * INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: APPROVED Jones Hall LLP By: Christopher K. Lynch, City Manager Jones Hall LLP Bond Counsel Director of Administrative Services City Attorney Item 21 Attachment A - Resolution Authorizing the Borrowing of Funds on an Interim Basis for the RWQCP        Item 21: Staff Report Pg. 9  Packet Pg. 364 of 412  APPENDIX A Government Code Section 5852.1 Disclosure The following information consists of estimates that have been provided by the City’s municipal advisor which has been represented by such party to have been provided in good faith. The information assumes that the City will borrow funds in the form of a revolving line of credit in the principal amount not to exceed $31,000,000 at any time with a five-year maturity date. (A) True Interest Cost of the Financing: 3.416% (B) Finance Charge of the Financing (Sum of all fees/charges paid to third parties): $127,000 (C) Net Proceeds to be Received (net of finance charges, reserves and capitalized interest, if any): $30,873,000 (D) Total Payment Amount Through Maturity: $33,943,027 The foregoing estimates constitute good faith estimates only. The principal amount, the true interest cost, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the financing being different than the date assumed for purposes of such estimates, (b) the actual principal amount being different from the estimated amount used for purposes of such estimates, (c) the actual amortization of the principal being different than the amortization assumed for purposes of such estimates, (d) the actual interest rate being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City’s financing plan (including the mix of tax-exempt and taxable obligations), or a combination of such factors. The actual timing of the financing and the actual principal amount of the financing will be determined by the City based on the timing of the need for proceeds and other factors. The actual interest rates paid by the City will depend on market interest rates and the terms of the financing. The actual amortization of the principal will also depend, in part, on market interest rates. Market interest rates are affected by economic and other factors beyond the control of the City. Item 21 Attachment A - Resolution Authorizing the Borrowing of Funds on an Interim Basis for the RWQCP        Item 21: Staff Report Pg. 10  Packet Pg. 365 of 412  City Council Staff Report From: City Clerk & City Manager Report Type: ACTION ITEMS Lead Department: City Clerk Meeting Date: August 10, 2026 Report #:2607-6526 TITLE Adoption of a Resolution to Reduce the Membership of the Stormwater Management Oversight Committee and Direction Related to an Amendment to the Palo Alto Municipal Code to Streamline the Functions of the Historic Resources Board; CEQA Status - Not a Project RECOMMENDATION Staff recommends that the City Council: 1. Adopt a Resolution to reduce the membership of the Stormwater Management Oversight Committee from seven (7) members to five (5) members. 2. Discuss and provide staff direction regarding adoption of an Ordinance amending the Palo Alto Municipal Code to authorize the Planning and Development Services Director to designate a Historic Preservation Officer to perform certain Historic Resources Board functions. EXECUTIVE SUMMARY Despite extensive recruiting efforts, the City’s Historic Resources Board and Stormwater Management Oversight Committee have experienced difficulties in attracting a sufficient number of qualified community volunteers to meet each body’s established responsibilities. Staff recommends adoption of a resolution and targeted amendments to the Palo Alto Municipal Code intended to improve administrative efficiency and ensure continuity of City operations. The resolution would reduce the membership of the Stormwater Management Oversight Committee (SMOC) from seven members to five members. Staff has experienced ongoing challenges recruiting and maintaining seven active members and continuing to satisfy quorum requirements. Reducing committee membership will improve the Committee's ability to conduct regular business while maintaining diverse community representation. Item 22 Item 22 Staff Report        Item 22: Staff Report Pg. 1  Packet Pg. 366 of 412  An ordinance amendment would authorize the Planning and Development Services Director to designate a Historic Preservation Officer to carry out specific administrative responsibilities currently assigned to the Historic Resources Board (HRB) to reduce delays in the event of a lack of quorum due to vacancies, recusals, or other circumstances that prevent the Board from taking action under the Ralph M. Brown Act. BACKGROUND Stormwater Management Oversight Committee: The Stormwater Management Oversight Committee currently consists of seven members. Over several recruitment cycles, staff has experienced difficulty recruiting and retaining sufficient qualified applicants to consistently fill all seven seats. Vacancies increase the likelihood that meetings cannot achieve quorum, limiting the Committee's ability to conduct business. Historic Resources Board: The Historic Resources Board is responsible for performing various duties established within the Municipal Code, including certain administrative actions delegated by ordinance. In limited circumstances, the Board has been unable to establish a quorum because of vacancies, recusals due to conflicts of interest, or other attendance limitations. When this occurs, required project reviews may be delayed, even when minor in nature. ANALYSIS Stormwater Management Oversight Committee Reducing committee membership to five members would better align with current recruitment realities while maintaining effective community oversight and participation. Staff believes reducing committee membership from seven to five members provides several benefits. These include: Improved ability to establish quorum Reduced recruitment challenges Item 22 Item 22 Staff Report        Item 22: Staff Report Pg. 2  Packet Pg. 367 of 412  Increased operational efficiency Continued effective public representation Five-member advisory bodies are common throughout the City's board and commission structure and continue to provide robust community participation while improving meeting reliability. No changes are proposed to the Committee's responsibilities, authority, or reporting relationship. Historic Resources Board The proposed amendment would authorize the Planning and Development Services Director to designate a Historic Preservation Officer to perform administrative functions similar to the staff level minor architectural review process to reduce the frequency of project review delays due to lack of quorum. Staff recommends that some projects that would currently go to the Historic Resources Board for review to be processed at the staff level including but not limited to: (1) signs, (2) minor changes to previously approved projects, and (3) landscape plans, fences, exterior remodeling, parking design, and removal of inappropriate additions or alterations to historic structures. The Historic Resources Board would still be charged with recommendations on designating historic buildings and applications that would affect the historic integrity of listed resources. The draft amendment would be developed to align the City's Historic Preservation Program with the streamlined administrative processes recently adopted by a number of Certified Local Governments (CLGs). These efforts of communities across the state have delegated routine administrative tasks and reviews previously assigned to historic preservation commissions to staff through Director designation or delegation. The proposed amendment reduces process delays caused by limited situations where the Historic Resources Board is unable to legally act. Examples include: Multiple vacancies Required recusals resulting from conflicts of interest Extended absences Without this amendment, routine administrative matters may remain pending until sufficient Board members are available. The California Office of Historic Preservation (OHP) must review and comment on ordinance changes before adoption, and staff will update the City Council on any OHP feedback when returning with the draft ordinance. FISCAL/RESOURCE IMPACT The proposed Municipal Code amendments have no direct fiscal impact. Item 22 Item 22 Staff Report        Item 22: Staff Report Pg. 3  Packet Pg. 368 of 412  The Historic Resources Board amendment is expected to improve administrative efficiency by reducing delays associated with quorum limitations. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 22 Item 22 Staff Report        Item 22: Staff Report Pg. 4  Packet Pg. 369 of 412  *NOT YET APPROVED* 1 072926_jf Resolution No. ____ Resolution of the Council of the City of Palo Alto Amending and Restating Resolution 10246 for the Storm Water Management Oversight Committee to Reduce Membership from Seven Members to Five Members R E C I T A L S A. On November 14, 2005, the City Council adopted Resolution No. 8573, establishing the Storm Drain Oversight Committee to review the proposed operating and capital budget of the Storm Drainage Fund and the year-end financial report documenting the expenditures of the Storm Drainage Fund in the previous fiscal year. B. On August 29, 2016, the City Council adopted Resolution No. 9624, calling a Mail Ballot Election in connection with the City’s proposed Storm Water Management Fee. C. On October 24, 2016, the City Council adopted Resolution No. 9635, proposing a Storm Water Management Fee to replace the Storm Drainage Fee, calling a Public Hearing for October 24, 2016 with respect to such Fee and adopting Procedures relating to the conduct of a Protest Hearing and Mail Ballot Election. D. On May 1, 2017, the City Council adopted Resolution 9677, which replaced the Storm Drain Oversight Committee with the Storm Water Management Oversight Committee. E. On June 21, 2021, the City Council adopted Resolution 9969, which imposed term limits on members of the Storm Water Management Oversight Committee by amending and restating Resolution 9677. The City Council also moved the recruitment period to March from the past practice of May appointments. F. On December 2, 2024, the City Council adopted Resolution 10200 to move the recruitment period to November to coincide with other boards and commissions with the same recruitment period. Existing terms will be extended to October 31. Going forward, terms begin on November 1. G. On August 11, 2025, the City Council adopted Resolution 10246 to require the election of a chairperson and vice chairperson by adding Section 2.5 to the existing provisions, consistent with existing practice and other boards and commissions of the City. H. The City Council now intends to reduce the membership of the Storm Water Management Oversight Committee from seven members to five members. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: Item 22 Attachment A - Resolution Amending and Restating Stormwater Management Committee to Reduce Membership from Seven Members to Five Members        Item 22: Staff Report Pg. 5  Packet Pg. 370 of 412  *NOT YET APPROVED* 2 072926_jf SECTION 1. The Storm Drain Oversight Committee is decommissioned effective May 31, 2017. SECTION 2. Committee Established. The City of Palo Alto Storm Water Management Oversight Committee is hereby created to review proposed storm water management capital improvements and operating programs to be funded from the Storm Water Management Fees and to monitor expenditures of the fund. SECTION 2.5. Chairperson and Vice Chairperson. The Committee shall elect a chairperson and a vice chairperson from its membership who shall serve in such capacity for one year each, or until a successor is elected, unless his or her term as a member of the Committee sooner expires. SECTION 3. Committee Membership and Appointment. The Committee shall consist of five members who are selected and appointed by the City Council for a term of four years. Committee members shall serve without compensation. Each Committee member shall be a resident of Palo Alto, an employee of a business located in Palo Alto or an owner of real property within the City. No member shall be a council member, officer or employee of the City. Effective January 1, 2022, terms of office due to expire on May 31 of each year shall be extended to expire on March 14 of the following year, and thereafter terms of office shall commence on March 15. Effective January 1, 2025, terms of office due to expire on March 14 of each year shall be extended to expire on October 31 of the same year, and thereafter terms of office shall commence on November 1. SECTION 4. Term limits. Effective January 1, 2022, no person may serve more than two consecutive terms of office as a member of the Committee. (a) For the purposes of this section, a member will be considered to have served a term of office if he or she serves more than two years within one term. (b) A member’s service that began on or before January 1, 2022 shall count under the provisions of this section only for those members who served for at least one day on the Committee between January 1, 2021 and January 1, 2022. Notwithstanding the previous sentence, members on Committee as of January 1, 2022 shall be permitted to complete their term. (c) A member who has served two consecutive terms of office may remain as a member of the Committee for up to six months past the end of the term if no replacement is appointed or until a replacement is appointed, whichever comes first. (d) A member who has served two consecutive terms of office shall not be appointed to the Committee within one year of the last date of service. SECTION 5. Committee Duties. The Committee shall discharge its oversight duties by: (a) Meeting at least once a year to review the proposed operating and capital budgets of the Storm Water Management Fund for the next fiscal year. The Committee shall prepare a report documenting its findings with respect to the proposed Item 22 Attachment A - Resolution Amending and Restating Stormwater Management Committee to Reduce Membership from Seven Members to Five Members        Item 22: Staff Report Pg. 6  Packet Pg. 371 of 412  *NOT YET APPROVED* 3 072926_jf budget and submit the report to the Finance Committee of the City Council prior to June 30th each year. (b) Meeting at least once a year to review the year-end financial report documenting the expenditures of the Storm Water Management Fund in the previous fiscal year. The Committee shall prepare a report documenting its findings with respect to the expenditures and submit the report to the City Council prior to May 31st each year. SECTION 6. Meeting Procedures. The Committee shall conduct open public meetings, duly noticed in accordance with the Ralph M. Brown Act. The Committee may establish rules and procedures governing the conduct of its meetings. SECTION 7. The City Clerk is directed to place advertisements announcing Committee vacancies in a newspaper of general circulation in the City, two times within a two week period. SECTION 8. This resolution supersedes Resolution 10246. SECTION 9. This resolution shall be effective upon adoption. SECTION 10. This amendment to Resolution 10246 is categorically exempt under CEQA regulation 15320 because it is a change in the organization of a local government agency that does not affect the geographical area in which previously existing powers are exercised. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________________ ____________________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________________ ____________________________________ Deputy City Attorney City Manager ____________________________________ Director of Public Works Item 22 Attachment A - Resolution Amending and Restating Stormwater Management Committee to Reduce Membership from Seven Members to Five Members        Item 22: Staff Report Pg. 7  Packet Pg. 372 of 412  City Council Staff Report Report Type: INFORMATION REPORTS Lead Department: Administrative Services Meeting Date: August 10, 2026 Report #:2606-6458 TITLE Monthly Investment Report - May 2026 (Unaudited) RECOMMENDATION This is an Information Report. No Council action is required. ANALYSIS The City’s Investment Policy (Policy)1 and California Government Code Section 53607 requires that a report of transactions (investments, reinvestment, sold, and exchanged securities) be made available to the Council on a monthly basis. This reporting requirement is separate and distinct from the quarterly investment report submitted under California Government Code Section 53646 that includes portfolio composition, a detailed list of all securities, performance compared to the Policy, overall compliance with the Policy, and the City’s ability to meet expenditure requirements over the next six months. ATTACHMENTS Attachment A: Investment Portfolio Transaction Ledger – May 2026 APPROVED BY: Lauren Lai, Administrative Services Director 1 Investment Policy Fiscal Year 2025-2026 (Adopted February 9, 2026); Item A Item A Staff Report        Item A: Staff Report Pg. 1  Packet Pg. 373 of 412  Buy Maturity Summary CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 89236TQB4 TOYOTA MOTOR CREDIT CORP 4.55 05/14/2031 CORP Buy 05/14/2026 3,910,000.00 99.797 4.596 -3,902,062.70 0.00 -3,902,062.70 58769MAD2 MBART 261 A3 4.36 10/15/2030 ABS Buy 05/20/2026 3,775,000.00 99.978 4.603 -3,774,177.81 0.00 -3,774,177.81 532457DL9 ELI LILLY AND CO 4.375 05/20/2031 CORP Buy 05/20/2026 1,795,000.00 99.893 4.399 -1,793,079.35 0.00 -1,793,079.35 532457DL9 ELI LILLY AND CO 4.375 05/20/2031 CORP Buy 05/20/2026 705,000.00 99.751 4.431 -703,244.55 0.00 -703,244.55 43814YAD3 HAROT 2026-2 A3 4.3 11/15/2030 ABS Buy 05/13/2026 3,900,000.00 99.997 3.020 -3,899,887.29 0.00 -3,899,887.29 36275AAD1 GMALT 2026-2 A3 4.3 03/20/2029 ABS Buy 05/14/2026 1,715,000.00 99.989 4.396 -1,714,814.44 0.00 -1,714,814.44 ---------Buy 05/16/2026 15,800,000.00 ---4.157 -15,787,266.14 0.00 -15,787,266.14 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 977100AC0 WISCONSIN ST GEN FD ANNUAL APPROPRIATION REV 5.7 05/01/2026 MUNI Maturity 05/01/2026 -305,000.00 100.000 5.108 305,000.00 0.00 305,000.00 97705MNP6 WISCONSIN ST 2.089 05/01/2026 MUNI Maturity 05/01/2026 -2,500,000.00 100.000 0.761 2,500,000.00 0.00 2,500,000.00 912797QN0 UNITED STATES TREASURY 05/14/2026 T-BILL Maturity 05/14/2026 -5,000,000.00 100.000 3.693 5,000,000.00 0.00 5,000,000.00 797412DN0 SAN DIEGO CNTY CALIF WTR AUTH WTR REV 0.971 05/01/2026 MUNI Maturity 05/01/2026 -2,320,000.00 100.000 1.777 2,320,000.00 0.00 2,320,000.00 70227RBM1 PASADENA CALIF PENSION OBLIG 1.984 05/01/2026 MUNI Maturity 05/01/2026 -120,000.00 100.000 0.915 120,000.00 0.00 120,000.00 59013KPS9 Merrick Bank 1.1 05/19/2026 CD Maturity 05/19/2026 -249,000.00 100.000 1.169 249,000.00 0.00 249,000.00 45950VPY6 INTERNATIONAL FINANCE CORP 3.5 05/15/2026 SUPRANATIONAL Maturity 05/15/2026 -1,500,000.00 100.000 1.500 1,500,000.00 0.00 1,500,000.00 4581X0EK0 INTER-AMERICAN DEVELOPMENT BANK 4.5 05/15/2026 SUPRANATIONAL Maturity 05/15/2026 -1,000,000.00 100.000 4.273 1,000,000.00 0.00 1,000,000.00 ---------Maturity 05/09/2026 -12,994,000.00 100.000 2.538 12,994,000.00 0.00 12,994,000.00 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount ------------05/13/2026 2,806,000.00 ---3.426 -2,793,266.14 0.00 -2,793,266.14 Palo Alto Monthly Transactions 05/01/2026 - 05/31/2026 1 ATTACHMENT A Item AAttachment A - InvestmentPortfolio TransactionLedger - May 2026       Item A: Staff Report Pg. 2  Packet Pg. 374 of 412  City Council Staff Report Report Type: INFORMATION REPORTS Lead Department: Administrative Services Meeting Date: August 10, 2026 Report #:2602-6001 TITLE Monthly Investment Report - June 2026 (Unaudited) RECOMMENDATION This is an Information Report. No Council action is required. ANALYSIS The City’s Investment Policy (Policy)1 and California Government Code Section 53607 requires that a report of transactions (investments, reinvestment, sold, and exchanged securities) be made available to the Council on a monthly basis. This reporting requirement is separate and distinct from the quarterly investment report submitted under California Government Code Section 53646 that includes portfolio composition, a detailed list of all securities, performance compared to the Policy, overall compliance with the Policy, and the City’s ability to meet expenditure requirements over the next six months. ATTACHMENTS Attachment A: Investment Portfolio Transaction Ledger – June 2026 APPROVED BY: Lauren Lai, Administrative Services Director 1 Investment Policy Fiscal Year 2025-2026 (Adopted February 9, 2026); https://www.paloalto.gov/files/assets/public/v/1/administrative-services/investment-policies/1-39-asd- investment-policy.pdf Item B Item B Staff Report        Item B: Staff Report Pg. 1  Packet Pg. 375 of 412  Buy Call Redemption Maturity CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 912797UF2 UNITED STATES TREASURY 09/10/2026 T-BILL Buy 06/30/2026 7,500,000.00 99.268 3.739 -7,445,085.00 0.00 -7,445,085.00 912797TN7 UNITED STATES TREASURY 07/16/2026 T-BILL Buy 06/30/2026 5,000,000.00 99.840 3.654 -4,992,003.56 0.00 -4,992,003.56 44935KAD5 HART 26B A3 4.81 02/18/2031 ABS Buy 06/17/2026 2,955,000.00 99.988 4.863 -2,954,643.33 0.00 -2,954,643.33 06051GJB6 BANK OF AMERICA CORP 2.592 04/29/2031 CORP Buy 06/05/2026 2,500,000.00 92.390 4.953 -2,309,750.00 6,480.00 -2,316,230.00 05594YAD8 BMWLT 2026-1 A3 4.15 05/25/2029 ABS Buy 06/26/2026 1,000,000.00 99.609 4.444 -996,093.75 115.28 -996,209.03 ---------Buy 06/25/2026 18,955,000.00 ---4.082 -18,697,575.64 6,595.28 -18,704,170.92 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 45906M4E8 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPM 4.5 06/26/2028 SUPRANATIONAL Call Redemption 06/26/2026 -3,463,000.00 100.000 4.073 3,463,000.00 0.00 3,463,000.00 45906M4E8 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPM 4.5 06/26/2028 SUPRANATIONAL Call Redemption 06/26/2026 -3,463,000.00 100.000 4.073 3,463,000.00 0.00 3,463,000.00 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 80181PCV7 SANTA CRUZ CNTY CALIF CAP FING AUTH LEASE REV 3.0 06/01/2026 MUNI Maturity 06/01/2026 -465,000.00 100.000 3.150 465,000.00 0.00 465,000.00 798153NF5 SAN JOSE CALIF FING AUTH LEASE REV 1.311 06/01/2026 MUNI Maturity 06/01/2026 -345,000.00 100.000 1.480 345,000.00 0.00 345,000.00 797646T55 SAN FRANCISCO CALIF CITY & CNTY 2.39 06/15/2026 MUNI Maturity 06/15/2026 -245,000.00 100.000 2.410 245,000.00 0.00 245,000.00 797646ND4 SAN FRANCISCO CALIF CITY & CNTY 5.6 06/15/2026 MUNI Maturity 06/15/2026 -1,420,000.00 100.000 3.349 1,420,000.00 0.00 1,420,000.00 69511AAT1 PACIFICA CALIF PENSION OBLIG 2.663 06/01/2026 MUNI Maturity 06/01/2026 -580,000.00 100.000 2.648 580,000.00 0.00 580,000.00 45818WDH6 INTER-AMERICAN DEVELOPMENT BANK 0.8 06/17/2026 SOVEREIGN GOV Maturity 06/17/2026 -2,000,000.00 100.000 0.927 2,000,000.00 0.00 2,000,000.00 446201AE5 HUNTINGTON BEACH CALIF PENSION OBLIG 1.344 06/15/2026 MUNI Maturity 06/15/2026 -2,175,000.00 100.000 1.292 2,175,000.00 0.00 2,175,000.00 378612AJ4 GLENDORA CALIF PENSION OBLIG 2.108 06/01/2026 MUNI Maturity 06/01/2026 -1,365,000.00 100.000 1.089 1,365,000.00 0.00 1,365,000.00 3130AWGR5 FEDERAL HOME LOAN BANKS 4.375 06/12/2026 AGCY BOND Maturity 06/12/2026 -1,000,000.00 100.000 3.629 1,000,000.00 0.00 1,000,000.00 17131RAU0 CHULA VISTA CALIF PENSION OBLIG 0.84 06/01/2026 MUNI Maturity 06/01/2026 -1,000,000.00 100.000 1.701 1,000,000.00 0.00 1,000,000.00 Palo Alto Monthly Transactions 06/01/2026 - 06/30/2026 1 ATTACHMENT A Item BAttachment A - InvestmentPortfolio TransactionLedger - June 2026       Item B: Staff Report Pg. 2  Packet Pg. 376 of 412  Principal Paydown Summary CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 088006KA8 BEVERLY HILLS CALIF PUB FING AUTH LEASE REV 1.147 06/01/2026 MUNI Maturity 06/01/2026 -350,000.00 100.000 1.200 350,000.00 0.00 350,000.00 010831DT9 ALAMEDA CNTY CALIF JT PWRS AUTH LEASE REV 3.395 06/01/2026 MUNI Maturity 06/01/2026 -110,000.00 100.000 0.932 110,000.00 0.00 110,000.00 ---------Maturity 06/10/2026 -11,055,000.00 100.000 1.887 11,055,000.00 0.00 11,055,000.00 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 68607LXQ5 OREGON ST 5.892 06/01/2027 MUNI Principal Paydown 06/02/2026 0.00 ---3.115 1,163,162.12 0.00 1,163,162.12 68607LXQ5 OREGON ST 5.892 06/01/2027 MUNI Principal Paydown 06/02/2026 0.00 ---3.115 1,163,162.12 0.00 1,163,162.12 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount ------------06/19/2026 4,437,000.00 ---3.342 -3,016,413.52 6,595.28 -3,023,008.80 Palo Alto Monthly Transactions ) 06/01/2026 - 06/30/2026 2 ATTACHMENT A Item BAttachment A - InvestmentPortfolio TransactionLedger - June 2026       Item B: Staff Report Pg. 3  Packet Pg. 377 of 412  City Council Staff Report From: City Manager Report Type: INFORMATION REPORTS Lead Department: Administrative Services Meeting Date: August 10, 2026 Report #:2512-5701 TITLE Sales Tax Digest Summary for Q1 2026 (January - March). CEQA Status - Not a project. ANALYSIS This report transmits information regarding the City of Palo Alto’s sales tax receipts for the first quarter (January - March) of 2026. Highlights from the report are included below. Detailed discussion and data can be found in the Sales Tax Digest (Attachment A). Regional and statewide sales tax - Benchmark Year (Attachment A, pg. 2): Palo Alto: increased by 0.2% San Francisco Bay Area: increased by 0.5% California statewide: decreased by 2.7% City’s most significant activity – Benchmark Year (Attachment A, pg. 1): Business Services: increased by $1.8 million, or 422.0%; represents 8.0% of sales tax revenue (excluding county pool). Miscellaneous Retail: increased by $0.8 million, or 29.7%; represents 11.7% of sales tax revenue (excluding county pool). Overall, the benchmark year results reflect mixed performance across industry segments rather than broad-based growth. Strong performance in the Business Services and General Retail segments helped offset declines in the Leasing and New Auto Sales segments, resulting in relatively flat overall local sales tax performance. The Business Services segment includes a diverse range of industries, and year-over-year results may fluctuate as the mix of taxable business activity changes. County Pool – 2026Q1 compared to 2025Q1 (Attachment A, pg. 4) Total County Pool: Increased by 8.8% or $2.4 million, from $27.3 million to $29.7 million Total Jurisdiction Share: o Percent of County Pool increased by 60 basis points, from 6.1% to 6.7% Item C Item C Staff Report        Item C: Staff Report Pg. 1  Packet Pg. 378 of 412  o Total share increased $0.3 million, from $1.7 million to $2.0 million Over the most recent four quarters, the City received approximately $8.1 million from the County Pool, representing about 22% of the City’s total sales tax revenue of $36.6 million during that period. Preliminary review indicates that recent growth may be attributable, in part, to the reallocation of certain large online retailer transactions into the county pool and other allocation adjustments. County Pool details are limited, making it difficult to determine the extent to which these factors contributed to the increase or whether the higher allocation levels represent a one-time occurrence or an ongoing trend. Staff will continue to monitor future allocations and trends. ENVIRONMENTAL REVIEW This item is not a project as defined by the California Environmental Quality Act (CEQA) because the sales tax digest summary report is for informational purposes only with no action required by the Council. ATTACHMENTS Attachment A: 2026 Q1 Sales Tax Digest Summary APPROVED BY: Lauren Lai, Administrative Services Director Item C Item C Staff Report        Item C: Staff Report Pg. 2  Packet Pg. 379 of 412  City of Palo Alto Sales Tax Digest Summary Collections through May 2026 Sales January through March 2026 (2026Q1) neumo.com (800) 800-8181 Page 1 California Overview For the year ending in the first quarter of 2026, cash receipts increased 2.7% statewide and S.F. Bay Area increased 5.0% in the same period. However, when adjusted for non-period-related payments, the overall economic sales tax activity for the year ending in the first quarter of 2026 decreased by 2.7% statewide and increased by 0.5% in S.F. Bay Area. City of Palo Alto For the year ending in the first quarter of 2026, sales tax cash receipts for the city increased by 7.1% from the prior year. However, when adjusted for non-period related payments, the overall economic sales tax activity in Palo Alto for the year ending in the first quarter of 2026 increased by 0.2%. The primary drivers of Palo Alto's sales tax increase were Business Services and Miscellaneous Retail. On an economic basis, Business Services sales tax revenue increased by 422.0%, representing 8.0% of the city's total sales tax for the year ending in the first quarter of 2026. Miscellaneous Retail increased by 29.7% over the same period, contributing 11.7% to the total sales tax revenue. Same quarter sales tax cash receipts increased by 1.9% in California from Q1 2025 to Q1 2026. Palo Alto citywide sales tax cash receipts increased by 11.0% over the Q1 2025 to Q1 2026 period. The key contributor to the Palo Alto increase on a cash basis during this period was the Business Services segment. According to the California New Car Dealers Association, registrations are projected to decline to around 1.74 million units in 2026, with first quarter registrations decreasing by 8.9% compared to Q1 2025. Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 3  Packet Pg. 380 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 2 Regional Overview The chart on page two shows adjusted economic benchmark year amounts, which shows the year ended first quarter of 2026 compared to the year ended first quarter of 2025 (benchmark years are rolling annual comparisons through the current quarter). The divergence in growth rates between California and Palo Alto is attributed to the stronger overall performance of sales tax generating businesses statewide compared to those operating in Palo Alto. Regional Overview Chart (Economic) BENCHMARK YEAR 2026Q1 COMPARED TO BENCHMARK YEAR 2025Q1 35.2 / 12.8 30.1 / -0.2 27.0 / 2.7 31.9 / 1.7 38.4 / -19.2 28.4 / 3.9 36.9 / 1.8 28.0 / 1.4 25.8 / -61.7 Food Products 21.3 / 6.8 22.4 / -0.5 24.2 / 3.5 15.0 / -18.9 15.1 / -13.4 24.2 / 0.9 18.8 / 1.1 19.9 / 2.0 30.1 / -51.6 Transportation 14.8 / -7.6 21.2 / -7.4 21.6 / -6.2 24.4 / -12.6 20.6 / -21.9 15.7 / -0.2 21.8 / -3.8 27.1 / -5.1 24.1 / -62.1 Business to Business 23.2 / -17.0 15.8 / -2.2 17.6 / -4.7 13.7 / -9.8 16.1 / -10.0 21.8 / -5.0 10.5 / 0.3 10.5 / 3.6 8.1 / -54.0 Misc/Other 4.7 / 16.6 10.5 / -4.5 11.3 / 1.7 12.2 / 0.0 9.9 / -21.1 9.9 / -1.2 12.0 / -6.6 15.0 / -2.9 11.8 / -37.2 Total 100.0 / 0.2 100.0 / -2.7 100.0 / 0.5 100.0 / -6.6 100.0 / -18.6 100.0/ 0.0 100.0 / -0.8 100.0/ -1.0 100.0 / -56.5 % of Total / % Change % of Total / % Change % of Total / % Change Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 4  Packet Pg. 381 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 3 Leasing 3.5% Restaurants 19.4% Auto Sales -New 11.4% Office Equipment 8.0% Apparel Stores 8.7% All Other 49.0% Net Pools & Adjustments 28.3% Gross Historical Sales Tax Cash Receipts by Benchmark Year and Quarter (Before Adjustments) Net Cash Receipts for Benchmark Year First Quarter 2026: $36,577,575 *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2026Q1 BMY is sum of 2026 Q1, 2025 Q4, 2025 Q3, 2025 Q2) $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 Quarterly Benchmark Year Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 5  Packet Pg. 382 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 4 County Pool Results The California sales tax system is known as a "sales and use tax" system. County Pool revenues primarily reflect the use tax generated from transactions that do not involve a physical point of sale within California. Businesses report their use tax quarterly, based on activity conducted throughout the county. The County Pool is distributed each quarter based on a proportional formula. A jurisdiction's quarterly percentage is determined by dividing its total gross sales tax receipts for the quarter by the total gross sales tax receipts of all jurisdictions within the county. Consequently, if Palo Alto's gross sales tax receipts increase relative to the rest of the county during a quarter, the city's share of the total County Pool will also increase. This quarterly percentage is multiplied by the total countywide pool to determine the jurisdiction's quarterly County pool revenue. In the first quarter of 2026, cash receipts for the overall County Pool increased by 8.8% from the same quarter in the prior year. The City’s share of the Countywide Pool increased to 6.7%. The City’s revenues from the County Pool increased from $1,673,551 in 2025Q1 to $1,995,583 in 2026Q1. 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 in the first quarter of 2026. The Top 25 Sales/Use Tax contributors generate 51.4% of Palo Alto’s total sales and use tax revenue. Anderson Honda Lucile Packard Children's Hospital Shreve & Co. Apple Stores Macy's Department Store Stanford Health Care Audi Palo Alto Magnussen Toyota Tesla Cartier Mercedes Benz of Palo Alto Tesla Lease Trust Govberg Neiman Marcus Tiffany & Company Hermes Nordstrom Department Store Varian Medical Systems HP Enterprise Services Restoration Hardware Volvo Cars Palo Alto JP Morgan Chase Bank Shell Service Stations Wilkes Bashford Louis Vuitton 2023Q2 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 2024Q4 2025Q1 2025Q2 2025Q3 2025Q4 2026Q1 Quarter Over Quarter Total County Pool 27,690,772 22,345,960 24,427,230 25,411,165 25,387,888 23,265,567 31,312,972 27,268,380 27,503,817 28,287,141 38,540,707 29,657,590 8.8% Jurisdiction Share 1,755,562 1,489,193 1,638,965 1,523,986 1,611,681 1,377,891 1,834,044 1,673,551 1,685,234 1,595,260 2,571,498 1,995,583 19.2% Jurisdiction % of Total 6.3% 6.7% 6.7% 6.0% 6.3% 5.9% 5.9% 6.1% 6.1% 5.6% 6.7% 6.7% Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 6  Packet Pg. 383 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 5 Sales Tax from Largest Non-Confidential Sales Tax Segments (Economic) $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Benchmark Year 2026Q1 Benchmark Year 2025Q1 Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 7  Packet Pg. 384 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 6 Historical Analysis by Calendar Quarter The chart above shows the categories and segments in quarterly economic-based amounts. The total amount is the net cash receipts, and it was obtained by adding up the categories/segments with the “Net Pools & Adjustments” amount. Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 8  Packet Pg. 385 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 7 Historical Analysis by Calendar BMY from 2017Q1 to 2026Q1 The chart above shows the categories and segments in benchmark year economic basis amounts. The total amount is the net cash receipts, and it was obtained by adding up the categories/segments with the “Net Pools & Adjustments” amount. Benchmark year (BMY) is the sum of the current and 3 previous quarters (2026Q1 BMY is sum of 2026 Q1, 2025 Q4, 2025 Q3, 2025 Q2). Economic Category % 2026Q1 2025Q1 2024Q1 2023Q1 2022Q1 2021Q1 2020Q1 2019Q1 2018Q1 2017Q1 Business To Business 18.1% 6,620,097 7,974,492 10,028,952 9,522,565 7,585,836 7,569,553 8,136,987 6,870,341 5,718,987 4,986,753 Miscellaneous/Other 15.8% 5,765,393 5,868,298 7,241,369 6,021,645 6,585,297 5,930,718 6,873,241 8,280,213 6,550,120 6,321,980 General Retail 27.5% 10,041,136 8,899,929 7,960,731 7,780,875 7,457,250 4,379,589 7,424,879 8,201,828 8,138,165 8,656,005 Food Products 16.6% 6,072,518 5,687,346 5,312,541 4,971,875 4,076,087 2,409,718 4,778,562 4,869,761 4,709,078 4,644,442 Subtotal Economic (Local Business)77.9% 28,499,144 28,430,065 30,543,592 28,296,960 25,704,470 20,289,578 27,213,669 28,222,144 25,116,350 24,609,180 Net Pools & Adjustments 22.1% 8,078,431 5,710,811 6,498,742 5,710,235 5,648,197 6,191,100 5,598,849 6,935,015 3,727,133 4,721,113 Total 100.0% 36,577,575 34,140,876 37,042,335 34,007,195 31,352,667 26,480,678 32,812,518 35,157,159 28,843,483 29,330,293 Economic Segment % 2026Q1 2025Q1 2024Q1 2023Q1 2022Q1 2021Q1 2020Q1 2019Q1 2018Q1 2017Q1 Miscellaneous/Other 32.2% 11,782,259 14,932,885 18,016,302 16,570,065 14,919,631 14,209,804 16,004,647 16,156,028 13,941,770 12,614,827 Restaurants 15.1% 5,531,314 5,149,954 4,794,131 4,440,964 3,590,971 1,995,268 4,219,380 4,285,736 4,146,912 4,105,029 Miscellaneous Retail 9.1% 3,326,353 2,564,827 2,192,695 1,989,096 2,325,798 1,451,949 1,748,872 1,847,130 1,849,861 2,697,559 Apparel Stores 6.7% 2,467,174 2,150,907 2,012,709 1,830,782 1,511,507 807,464 1,700,695 1,910,114 1,822,843 1,752,315 Department Stores 5.3% 1,941,045 1,931,216 1,889,166 1,771,222 1,667,397 769,134 1,684,162 1,932,093 2,054,945 2,099,831 Service Stations 2.0% 721,565 806,702 863,509 899,601 724,684 412,493 691,181 693,763 136,028 132,110 Business Services 6.2% 2,270,903 435,044 332,072 370,375 581,689 319,054 717,710 940,162 682,192 738,701 Food Markets 1.3% 458,531 458,531 443,008 424,856 382,793 324,413 447,022 457,119 481,799 468,808 Subtotal Economic (Local Business)77.9% 28,499,144 28,430,065 30,543,592 28,296,960 25,704,470 20,289,578 27,213,669 28,222,144 25,116,350 24,609,180 Net Pools & Adjustments 22.1% 8,078,431 5,710,811 6,498,742 5,710,235 5,648,197 6,191,100 5,598,849 6,935,015 3,727,133 4,721,113 Total 100.0% 36,577,575 34,140,876 37,042,335 34,007,195 31,352,667 26,480,678 32,812,518 35,157,159 28,843,483 29,330,293 Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 9  Packet Pg. 386 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 8 Quarterly Analysis by Sales Tax Category: Change from 2025Q1 to 2026Q1 (Economic) Unlike the chart on page one which showed a ‘benchmark year’ through the first quarter of 2026, the chart above shows a comparison of one quarter only – first quarter of 2025 to first quarter of 2026. This chart is for local ‘brick and mortar’ businesses, and it excludes county pools and adjustments. Ge n e r a l R e t a i l Fo o d P r o d u c t s Tr a n s p o r t a t i o n Bu s i n e s s t o B u s i n e s s Mi s c / O t h e r 20 2 6 / 1 T o t a l 20 2 5 / 1 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 6.3% 3.7% 2.5% 0.2% -4.7% 2,380,777 2,340,349 1.7%Restaurants Florist/Nursery Health & Government Electronic Equipment Cupertino 5.2% 2.3% -11.5% -7.6% 4.0% 5,340,474 (5,290,228) -200.9%Office Equipment Electronic Equipment Department Stores Food Markets Gilroy -1.1% 4.6% -8.0% 0.3% 0.9% 3,857,666 3,693,647 4.4%Auto Sales - New Department Stores Heavy Industry Auto Sales - Used Los Altos 32.4% 3.8% -3.2% -35.5% 16.5% 565,604 547,040 3.4%Recreation Products Miscellaneous Retail Electronic Equipment Drug Stores Los Gatos 4.1% -5.0% -7.5% -29.3% 40.3% 1,287,080 1,395,748 -7.8%Miscellaneous Retail Service Stations Furniture/Appliance Auto Sales - New Milpitas 27.1% 8.1% -6.8% 22.3% 32.6% 6,330,197 5,874,739 7.8%Auto Sales - New Bldg.Matls-Whsle Electronic Equipment Leasing Morgan Hill -1.0% 3.9% -6.2% 3.4% 13.9% 2,353,877 2,268,025 3.8%Bldg.Matls-Whsle Restaurants Light Industry Business Services Mountain View 2.1% 4.2% 13.6% -4.2% 16.0% 4,167,277 4,054,455 2.8%Auto Sales - New Auto Parts/Repair Restaurants Auto Sales - Used Palo Alto 8.8% 4.8% 19.3% 11.2% -6.1% 6,784,665 6,179,799 9.8%Business Services Miscellaneous Retail Furniture/Appliance Auto Sales - New San Jose 7.3% 4.7% -3.9% -1.4% 5.6% 52,928,245 50,825,140 4.1%Office Equipment Light Industry Business Services Auto Sales - New Santa Clara 6.6% -3.4% 2.9% 42.0% 22.8% 16,229,019 15,824,474 2.6%I.T. Infrastructure Restaurants Light Industry Office Equipment County of Santa Clara 38.9% 0.9% -28.3% 6.4% 7.9% 1,026,795 966,601 6.2%Bldg.Matls-Whsle Light Industry Heavy Industry Health & Government Saratoga 18.9% 2.8% -3.7% -17.9% 4.9% 246,014 233,923 5.2%Restaurants Miscellaneous Retail Food Markets Food Processing Eqp Sunnyvale -11.0% 0.9% -25.0% 28.4% -5.8% 8,219,412 8,490,483 -3.2%Restaurants Heavy Industry Auto Sales - New Business Services Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 10  Packet Pg. 387 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 9 City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2025Q1 to 2026Q1 (Economic) FOOD PRODUCTS 9.0% 115,339 105,795 68.6%67.3% GENERAL RETAIL 13.5% 19,157 16,875 11.4%10.7% ALL OTHER -3.0% 33,598 34,637 20.0%22.0% TOTAL 6.9% 168,094 157,307 100.0% 100.0% El Camino Real and Midtown % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL ALL OTHER 1.2% 177,440 175,330 47.7%47.9% FOOD PRODUCTS 2.9% 160,466 155,970 43.1%42.6% GENERAL RETAIL -2.0% 34,166 34,869 9.2%9.5% TOTAL 1.6% 372,072 366,168 100.0% 100.0% Greater Downtown % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL FOOD PRODUCTS 9.0% 574,826 527,387 66.4%56.7% GENERAL RETAIL -33.6% 228,940 344,639 26.4%37.0% BUSINESS TO BUSINESS -14.0% 32,583 37,883 3.8%4.1% TRANSPORTATION 55.1% 13,079 8,432 1.5%0.9% CONSTRUCTION 63.9% 9,743 5,943 1.1%0.6% MISCELLANEOUS 7.6% 7,027 6,529 0.8%0.7% TOTAL -6.9% 866,199 930,813 100.0% 100.0% Stanford Shopping Center % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL GENERAL RETAIL -1.9% 1,425,538 1,453,095 87.9%88.5% FOOD PRODUCTS 3.6% 195,734 188,894 12.1%11.5% ALL OTHER -1.6% 421 428 0.0%0.0% TOTAL -1.3% 1,621,693 1,642,416 100.0% 100.0% Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 11  Packet Pg. 388 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 10 City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2025Q1 to 2026Q1 (Economic) Cont. Town And Country Shopping Center % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL FOOD PRODUCTS 16.2% 123,600 106,406 60.6%61.5% GENERAL RETAIL 10.4% 73,507 66,609 36.0%38.5% ALL OTHER 28749.4% 6,863 24 3.4%0.0% TOTAL 17.9% 203,970 173,039 100.0% 100.0% All Other Geos Combined % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL GENERAL RETAIL -6.9% 1,841,072 1,977,756 37.1%30.0% FOOD PRODUCTS 4.9% 1,268,421 1,208,930 25.5%18.3% TRANSPORTATION -14.8% 928,829 1,090,059 18.7%16.5% BUSINESS TO BUSINESS -64.4% 793,111 859,690 16.0%33.7% MISCELLANEOUS 1.4% 73,333 72,356 1.5%1.1% CONSTRUCTION 142.2% 61,466 25,383 1.2%0.4% TOTAL -24.8% 4,966,233 5,234,173 100.0% 100.0% All Other Geo Area Totals with Balance of Jurisdiction Comparison 26Q1 & 25Q1 % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL Balance of Jurisdiction -11.7% 1,734,206 1,964,429 34.9%37.5% Stanford Shopping Center -1.3% 1,621,693 1,642,416 32.7%31.4% Greater Downtown -6.9% 866,199 930,813 17.4%17.8% El Camino Real and Midtown 1.6% 372,072 366,168 7.5%7.0% Town And Country Shopping Center 17.9% 203,970 173,039 4.1%3.3% California Avenue 6.9% 168,094 157,307 3.4%3.0% TOTAL -5.1% 4,966,233 5,234,173 100.0% 100.0% Palo Alto citywide QE 26Q1 & 25Q1 % CHANGE QoQ 2026Q1 QE 2025Q1 QE 26Q1 % OF TOTAL 25Q1 % OF TOTAL GENERAL RETAIL 7.8% 2,312,415 2,145,621 34.1%34.7% BUSINESS TO BUSINESS 45.3% 1,657,595 1,140,997 24.4%18.5% FOOD PRODUCTS 7.2% 1,513,060 1,410,933 22.3%22.8% TRANSPORTATION -14.4% 936,669 1,093,645 13.8%17.7% MISCELLANEOUS -16.8% 295,492 355,330 4.4%5.7% CONSTRUCTION 108.7% 69,435 33,274 1.0%0.5% TOTAL 9.8% 6,784,665 6,179,799 100.0% 100.0% Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 12  Packet Pg. 389 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 11 City of Palo Alto Geo Area Pie Charts Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 13  Packet Pg. 390 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 12 FOOD PRODUCTS, 9.0%CHANGE, $574,826 66.4%TOTAL GENERAL RETAIL, -33.6% CHANGE, $228,940 , 26.4%TOTAL BUSINESS TO BUSINESS, -14.0% CHANGE, $32,583 , 3.8%TOTAL TRANSPORTATION 55.1% CHANGE, $13,079 , 1.5%TOTAL CONSTRUCTION, 63.9% CHANGE, $9,743 , 1.1%TOTAL MISCELLANEOUS, 7.6% CHANGE, $7,027 , 0.8%TOTAL Greater Downtown 2026Q1 SALES TAX AMOUNTS FOOD PRODUCTS, $527,387 , 56.7%TOTAL GENERAL RETAIL, $344,639 , 37.0%TOTAL BUSINESS TO BUSINESS, $37,883 , 4.1%TOTAL TRANSPORTATION $8,432 , 0.9%TOTAL CONSTRUCTION, $5,943 , 0.6%TOTAL MISCELLANEOUS, $6,529 , 0.7%TOTAL Greater Downtown 2025Q1 SALES TAX AMOUNTS GENERAL RETAIL $1,453,095 , 88.5%TOTAL FOOD PRODUCTS, $188,894 , 11.5%TOTAL ALL OTHER, $428 , 0.0%TOTAL Stanford Shopping Center 2025Q1 SALES TAX AMOUNTS GENERAL RETAIL, -1.9% CHANGE, $1,425,538 , 87.9%TOTALFOOD PRODUCTS, 3.6% CHANGE $195,734 , 12.1%TOTAL ALL OTHER, -1.6% CHANGE, $421 , 0.0%TOTAL Stanford Shopping Center 2026Q1 SALES TAX AMOUNTS City of Palo Alto Geo Area Pie Charts Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 14  Packet Pg. 391 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 13 FOOD PRODUCTS, 16.2%CHANGE, $123,600 , 60.6%TOTAL GENERAL RETAIL, 10.4% CHANGE, $73,507 , 36.0%TOTAL ALL OTHER, 28.7% CHANGE, $6,863 , 3.4%TOTAL Town And Country Shopping Center 2026Q1 SALES TAX AMOUNTS FOOD PRODUCTS, $106,406 , 61.5%TOTAL GENERAL RETAIL, $66,609 , 38.5%TOTAL ALL OTHER, $24 , 0.0%TOTAL Town And Country Shopping Center 2025Q1 SALES TAX AMOUNTS GENERAL RETAIL, -6.9%CHANGE $1,841,072 , 37.1%TOTAL FOOD PRODUCTS, 4.1% CHANGE, $1,268,421 25.5%TOTAL TRANSPORTATION, -14.8% CHANGE, $928,829 18.7%TOTAL BUSINESS TO BUSINESS, -64.4% CHANGE, $793,111 , 16.0% TOTAL MISCELLANEOUS, 1.4% CHANGE, $73,333 , 1.5%TOTAL CONSTRUCTION, 142.2% CHANGE, $61,466 , 1.2%TOTAL All Other Geos Combined 2026Q1 SALES TAX AMOUNTS GENERAL RETAIL, $1,977,756 , 30.0%TOTAL FOOD PRODUCTS, $1,208,930 , 18.3%TOTALTRANSPORTATION, $1,090,059 , 16.5%TOTAL BUSINESS TO BUSINESS, $2,225,704,33.7%TOTAL MISCELLANEOUS, $72,356 , 1.1%TOTAL CONSTRUCTION, $25,383 , 0.4%TOTAL All Other Geos Combined 2025Q1 SALES TAX AMOUNTS City of Palo Alto Geo Area Pie Charts Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 15  Packet Pg. 392 of 412  City of Palo Alto neumo.com (800) 800-8181 Page 14 Balance of Jurisdiction, -11.7% CHANGE, $1,734,206 , 34.9%TOTAL Stanford Shopping Center, -1.3% CHANGE, $1,621,693 , 32.7%TOTAL Greater Downtown, -6.9% CHANGE, $866,199 , 17.4%TOTAL El Camino Real and Midtown, 1.6% CHANGE, $372,072 , 7.5%TOTAL Town And Country Shopping Center, 18.0% CHANGE, $203,970 , 4.1%TOTAL California Avenue, 6.9% CHANGE, $168,094 , 3.4%TOTAL All Other Geo Area Totals with Balance of Jurisdiction Comparison 2026Q1 SALES TAX AMOUNTS Balance of Jurisdiction, $1,964,429 , 37.5%TOTAL Stanford Shopping Center, $1,642,416 , 31.4%TOTAL Greater Downtown, $930,813 , 17.8%TOTAL El Camino Real and Midtown, $366,168 , 7.0%TOTAL Town And Country Shopping Center, $173,039 , 3.3%TOTAL California Avenue, $157,307 , 3.0%TOTAL All Other Geo Area Totals with Balance of Jurisdiction Comparison 2025Q1 SALES TAX AMOUNTS GENERAL RETAIL, 7.8% CHANGE, $2,312,415 , 34.1%TOTAL BUSINESS TO BUSINESS, 45.3% CHANGE, $1,657,595 , 24.4%TOTAL FOOD PRODUCTS, 7.2% CHANGE, $1,513,060 , 22.3%TOTAL TRANSPORTATION, -14.4% CHANGE, $936,669 , 13.8%TOTAL MISCELLANEOUS, -16.8% CHANGE, $295,492 , 4.4%TOTAL CONSTRUCTION, 108.7% CHANGE, $69,435 , 1.0%TOTAL Palo Alto citywide 2026Q1 SALES TAX AMOUNTS GENERAL RETAIL, $2,145,621 , 34.7%TOTAL BUSINESS TO BUSINESS, $1,140,997 , 18.5%TOTAL FOOD PRODUCTS, $1,410,933 , 22.8%TOTAL TRANSPORTATION, $1,093,645 , 17.7%TOTAL MISCELLANEOUS, $355,330 , 5.7%TOTAL CONSTRUCTION, $33,274 , 0.5%TOTAL Palo Alto citywide 2025Q1 SALES TAX AMOUNTS City of Palo Alto Geo Area & Citywide Pie Charts Item C ​​Attachment A - 2026 Q1 Sales Tax Digest Summary​        Item C: Staff Report Pg. 16  Packet Pg. 393 of 412  City Council Staff Report From: City Manager Report Type: INFORMATION REPORTS Lead Department: City Manager Meeting Date: August 10, 2026 Report #:2607-6586 TITLE City Council Summer Recess Report RECOMMENDATION Informational Report Only. EXECUTIVE SUMMARY This informational report provides a brief update on notable activities and work throughout the City Council’s July 2026 recess. BACKGROUND The annual Summer Recess Report share updates, organized by department, on activities accomplished during the City Council recess. This report is not an exhaustive list of staff work. The updates are to inform the City Council and public about items completed since the last City Council meeting of the fiscal year and other efforts underway. ANALYSIS Administrative Service Department End of Fiscal Year and New Fiscal Year Activities Staff focused on transitioning into the next fiscal year. Closing FY 2026 is underway. The annual inventory of both warehouses, the Municipal Services Center and Regional Water Quality Control Plant, are complete. Revenue Collection Staff assisted permit customers with the transition to the new residential Parking Permit Program that launched in mid-June. Office of Management and Budget Staff kicked off the budget system upgrade project and worked towards publications in August of the FY 2027 Municipal Fee Schedule and both the FY 2027 Adopted Operating and Capital Budget books. Item D Item D Staff Report        Item D: Staff Report Pg. 1  Packet Pg. 394 of 412  Procurement Staff closed year-end purchase orders and began encumbrances for FY27. Staff continued efforts to update the Palo Alto Municipal Code, as recommended by the Policy and Services Committee, to increase the thresholds for solicitation of goods and services, increase contract approval and settlement authority and to make other technical changes. This will be considered by Council in August. Staff continued the inter-departmental partnership to advance the Cubberley Community Campus Project. In accordance with Council direction on November 17, 2025, Staff completed the acquisition of a 3.25-acre parcel from the Sobrato Organization by grant deed recorded on June 17. The site is adjacent to Matadero Creek, near the former Fry's building. Staff worked towards finalizing the Regional Water Quality Control Plant line of credit and refunding of the 2009 Water revenue bonds. Staff advocated to the State on behalf of the City for SB 762 to increase the sales tax cap by 0.5% or half-cent. Staff advocated to the State on behalf of the City to protect the parcel transfer tax revenues. Staff met with the Palo Alto Museum ("Museum") in June to continue addressing the water intrusion in the Roth Building. In addition, City staff collaborated with the Museum staff to review parameters that guide the planned basement repair work and address water flow from Heritage Park. Plans are being developed by the Museum for this work and the City will review plans once received. Staff made the $20 million disbursement from the Section 115 Trust to CalPERS for the pension ADP (additional discretionary payment), per Council FY 2027 Adopted Budget, which will reduce the City’s unfunded pension liability. Staff anticipate transmitting the June 30, 2025, CalPERS valuations of the City's pension plans to the Finance Committee this fall, along with a review of the Retiree Benefit Funding Policy. CalPERS completes valuations using member data two years in arrears and issues annual reporting each August. As of July 2026, CalPERS provided the following preliminary investment returns as compared to a 6.8% target: 14.8% for the period ending June 30, 2026 (impact in FY 2029) 11.6% for the period ending June 30, 2025 (impact in FY 2028) Item D Item D Staff Report        Item D: Staff Report Pg. 2  Packet Pg. 395 of 412  9.3% for the period ending June 30, 2024 (impact in FY 2027) Consistent with past practice, staff will incorporate these results in financial planning, including the Long-Range Financial Forecast (LRFF) and annual budget development. Additionally, staff continue to use a lower discount rate than the 6.8% used by CalPERS to calculate the employer's normal cost and transmit the difference as an additional contribution to the City's Pension Trust. As part of the FY 2027 Adopted Budget, the City Council approved continuing to use a discount rate of 5.3% in FY 2027. City Manager’s Office Palo Alto Homekey Progress Palo Alto Homekey reached an important operational milestone with staff and clients completing the move from the Sunnyvale hotel bridge program to the Palo Alto site over a four- day period in late June/early July. Families are settling into the new location, and children are participating in summer camp activities, helping provide structure, stability and a positive transition during the summer months. LifeMoves shared that the move was meaningful for many families, and described the site as offering a renewed sense of peace and safety. Additionally, Homekey clients shared with LifeMoves that the setting provides peace of mind as they continue to seek permanent housing, with nearby nature and open space contributing to a therapeutic environment. LifeMoves staff observed a growing sense of community and rapport unfolding with shared meals and 4th of July celebrations together. Oversized Vehicles Discussion Planned for Council in August Staff continue regular street sweeping, enforcement and responding to constituent concerns regarding oversized vehicles. A City Council discussion is anticipated on August 24, presenting two pilot programs intended to address ongoing neighborhood, business, public health and safety impacts associated with OSVs used for habitation while balancing and providing a more structured and humane response for individuals living in those vehicles. Human Services Human Services staff continued supporting community needs this summer through the FY 2026 Emerging Needs Fund and direct service coordination. The City received 11 Emerging Needs Fund applications and made 8 awards totaling $50,000, fully allocating the available funding. Awards supported vision and health services, food assistance, senior nutrition, equipment needs, youth mental health programming, outreach and referral coordination, community event support, seasonal operating costs and early intervention services for students. Staff also supported a resource fair for unhoused residents, attended by approximately 32 unhoused neighbors and 16 service providers and community partners, creating opportunities for direct Item D Item D Staff Report        Item D: Staff Report Pg. 3  Packet Pg. 396 of 412  service connections, meals, resource sharing and continued coordination among local organizations. Nobu License Agreement Thursday Live/Entertainment Zone FIFA World Cup Destination Marketing Annual Community Survey Item D Item D Staff Report        Item D: Staff Report Pg. 4  Packet Pg. 397 of 412  Community Services Department Summer Camps This summer, Community Services offered 320 camps with $1,846,301 in total revenue generated as of July 21, 2026. A total of 3,747 campers enrolled with 2,108 on waitlists. Summer Camp 2026 season ends August 8. The highest demand camps this year include Zoo Camp, Woodworking Camp, Two-Week Theatre Academy, Jurassic Camp, Camp Kinetic and Camp Palo Alto. Recreation Special Events This year’s Family Movie Night series has been a great success, with each movie night welcoming 300–400 attendees. The summer series ends on August 14 with “The Super Mario Galaxy Movie.” The continued success and strong attendance highlight the community’s support of family-oriented events throughout the summer. Eleven teams competed in this year’s 4th of July Chili Cook Off & Summer Festival, including four returning and seven new teams. Chili teams vied for several prizes including People’s Choice, Best Vegetarian Chili, Best Decorations and Most Spirit. First place went to Veterinary Emergency Group (VEG) E.R. for Pets and the Klemens Family won the People’s Choice award. Attendance was estimated at around 3,000. Aquatics Rinconada Aquatics continues to provide opportunities for residents of all ages to learn how to swim, stay active, enjoy recreational swimming and pursue employment through lifeguard certification. Throughout the summer, the facility welcomed numerous families and offered day camps. From June through mid-July, aquatic camps hosted 502 campers, a 25% increase over the same period last year. Staff have certified 109 lifeguards year-to-date, helping support both facility operations and the broader aquatics community. Summer certification activity has been particularly strong, with 57 certifications completed June through mid-July, a 63% increase compared to the same period in 2025. Public Art Program The Public Art Program hosted nine ArtLift events activating Downtown, California Avenue and Cubberley, engaging over 200 residents and visitors. The Public Art Commission approved the final design for a temporary artwork at the Sherman Avenue Garage, which is planned for installation in August. Cubberley Artist Studio Program Four of the artists from the Cubberley Artist Studio Program (CASP) held free workshops and events at the Cubberley campus engaging dozens of residents of all ages in art making. Item D Item D Staff Report        Item D: Staff Report Pg. 5  Packet Pg. 398 of 412  Palo Alto Art Center The Art Center sold 772 summer camp sessions, generating $262,732 in revenue with 95 teens participating in as either our Counselor in Training or Ceramics Apprentice teen leadership programs, with a revenue increase of 21% over last year. There were 89 teens who supported summer camps as Counselors in Training (CIT) and Lead CITs, serving almost 1,600 hours. Members of the Art Center Teen Leadership group are planning the Open Call Teen Art Exhibition, which will take place in September, showcasing local teen artwork. A new glaze washing station was installed in the adult ceramics studio to reduce the volume of Rinsate produced by keeping clay waste and glaze waste separate. Using funds from the Ceramics Program CIP, a down payment was made on a custom kiln, which is currently being fabricated with installation scheduled for summer 2027. Summer quarter is usually the quietest season for Adult Studios, but there are currently 339 people enrolled in classes and workshops, generating $79,294 in revenue, an 11% increase over last year. The year-long series “Centering: Clay and Community” celebrating the Art Center’s role as a resource for ceramic art and education, concluded. The Art Center hosted over 7,500 people at the annual Clay and Glass festival on July 11 and 12. This summer the Children’s Theatre welcomed 246 campers, generating $151,000 in revenue. Assisted by 14 interns, the camps were at capacity with 344 waitlisted. The Children Theatre produced the annual Summer Hot Dog Season, featuring “Tales of the Arabian Nights” and “Wheels on the Bus.” Performed before sold out audiences, the productions were seen by more than 6,000 community members and included Magical Series Spectrum Friendly and ASL-Interpreted performances. This summer, the theatre launched a new audio play series, featuring a June 2026 summer intensive class that recorded The Wizard of Oz (an original Children’s Theatre adaptation for young actors), and in July, the theatre took up residence at Cubberley Theatre for two weeks to record an audio book of their upcoming publication of Monologues for Young Actors. The Teen Arts Council closed out the school year with WaveFest, an outdoor music and art festival for teens. This year’s festival included teen bands, dance companies, student vendors and clubs, local community groups, plus Palo Alto’s Teen Library Advisory Board (TLAB) and Art Center Teen Leadership. The Twilight Concert Series kicked off in June, with the first three concerts attracting more than 3,000 community members. The lineup included “Heartless,” “Summer Night City” and “Fleetwood Mask.” The concert series concluded on August 8 with blues band “Legally Blue.” Item D Item D Staff Report        Item D: Staff Report Pg. 6  Packet Pg. 399 of 412  Palo Alto Junior Museum & Zoo (JMZ) The Palo Alto Junior Museum & Zoo hosted 937 campers in nine science camps. Thanks to donations from the Friends of the Palo Alto Junior Museum & Zoo, 43 campers received a full scholarship to cover the cost of participation. Forty-two (42) middle and high school interns supported JMZ summer camps through the JMZ Science Camp Assistant Program. The search for the next Executive Director began in June, attracting a highly competitive pool of candidates. The City is in the final stages of the recruitment process. A new flamingo chick was born on June 22 to parents Ruby and Sal. Remarkably, the chick hatched on the same date as Rio, the Zoo's flamingo chick born in 2025. The new arrival brings the flamingo flock to 8 birds. Producing chicks in consecutive years is a significant achievement for a flock of this size and reflects the exceptional care provided by the animal care team, as well as the health and well-being of the colony. The JMZ also introduced two new public programs this summer: a Teen Night and a World Snake Day celebration. Staff established a new partnership with the Stanford Autism Center to support future inclusive community events, including a "Meet the First Responder" event for individuals with disabilities and their families planned for late August. In preparation for summer camp season, camp staff across CSD received specialized training on supporting campers with disabilities. Staff provided accommodations for 13 summer camp/class participants, helping ensure inclusive access across CSD programs. In June, we hosted a Downtown Hangout for young adults with disabilities. Additional fall offerings are planned for all ages including cooking classes, gym time and family socials. Accessibility continued expanding with the addition of a sensory tent at the Fourth of July Chili Cook-Off. Rangers have increased their frequency of patrols in the Baylands Nature Preserve following the attack and robbery in the Baylands on July 23. Midpeninsula Regional Open Space District has also increased patrols of the section of the Bay Trail in Ravenswood Preserve. The Pearson-Arastradero Preserve Gateway exhibits were refreshed for the first time in nearly 20 years, including interpretive panels, updated exhibit elements, new display models, and enhancements to the visitor center experience. The Rangers have been performing annual fire fuel mitigation work totaling over 400 acres of fuel breaks and ignition prevention mowing and maintaining clearance on 25 miles of fire roads and trails. Item D Item D Staff Report        Item D: Staff Report Pg. 7  Packet Pg. 400 of 412  Staff presented the financial feasibility study to the Parks and Recreation Commission and are evaluating their input and determining appropriate next steps. Greer Park Skate Bowl Maintenance Park Sign Replacement Parks Asset Management Community Gardens Workdays Cubberley Community Center Project Fire Department Vegetation Fire Response Item D Item D Staff Report        Item D: Staff Report Pg. 8  Packet Pg. 401 of 412  Palo Alto experienced three significant vegetation fires this summer at Pearson-Arastradero Preserve (~3.5 acres) on June 22, Coyote Hill/Page Mill (~6.7 acres) on July 1, and Byxbee Park (~ 3 acres) on July 11. All are suspected to have been caused by illegal fireworks. Fleet Update Fire Station 8 Activation & Wildfire Prevention and Wildland-Urban Interface (WUI) Inspections Human Resources Department Library Department Item D Item D Staff Report        Item D: Staff Report Pg. 9  Packet Pg. 402 of 412  Summer Reading Program The Library hosted its annual Summer Reading Program June 1 – August 1. The theme, Oceans of Possibilities, invited participants to dive into new adventures and explore the depths of their imagination by reading and/or listening daily, whether it’s books, articles, audiobooks or storytimes. All-ages events took place all summer long, and participants tracked their reading online or on a paper log. Prize pickups will be at Children’s, Mitchell Park, and Rinconada Libraries through August 31, while supplies last. The Library thanks the Friends of the Palo Alto Library and all other donors. The Library hosted a series of Pride events in June and July, including an exciting performance by the SF Pride Band and a karaoke night; a new Tech Class series for basic computing needs and interests; and a Juneteenth storytime and craft. Staff tabled at the unhoused resource fair at the Opportunity Center and issued library cards and promoted library services. During summer recess, the Vintage Media Lab (VML) – which provides community access to tools that help residents preserve, digitize and share personal and family history – booked a total of 194 hours at Mitchell Park and Rinconada Libraries in 97 appointments. The Mitchell Park Library wall repair project began in July and is scheduled for completion by fall 2026. The Library and Public Works Department are working closely together to oversee the repairs. During this time, the Teen Space will remain closed for safety. Library staff are coordinating limited access to Teen Collection materials upon request when it is safe to access the area. Starting July 20, the Library closed the Children’s Library on Mondays as part of the impacts of the FY27 reductions to Library’s budget and the loss of 4.0 FTE positions. Office of Emergency Services Staff conducted numerous trainings for City staff, community members and Emergency Services Volunteer (ESV) program participants. OES continued participating in regional emergency planning, particularly around the FIFA soccer matches in our area. Item D Item D Staff Report        Item D: Staff Report Pg. 10  Packet Pg. 403 of 412  The City lead a multi-agency coordination and deployment for the 4th of July to facilitate rapid response in the event of a wildfire, terrorist event or other threat to safety. Some partners included the Midpeninsula Regional Open Space District, CAL FIRE, CHP, San Mateo County, Santa Clara County, Valley Water and other allied agencies. OES also deployed Emergency Services Volunteers at various locations to spot fires and other potentially unsafe conditions. Office of Transportation East Bayshore Repaving, Bike Facilities & Transportation Funds for Clean Air TFCA Grant for Citywide Bike Parking One Bay Area Grant Cycle 4 (OBAG 4) Application Railroad Safety and Quiet Zones Item D Item D Staff Report        Item D: Staff Report Pg. 11  Packet Pg. 404 of 412  enforcement and evaluate additional design options to encourage drivers to refrain from illegally stopping on the tracks in advance of FRA issuing the Notice of Establishment. The City has implemented additional Police enforcement, and continues to work closely with Caltrain, the CPUC, and the FRA to address these requests and advance implementation of the Quiet Zone at this crossing. These additional reviews and evaluations have extended the implementation timeline for the Quiet Zone while the City works collaboratively with the regulatory agencies to address the requested safety enhancements. Automated Parking Guidance System (APGS) Installation and Testing Embarcadero Road Improvements Churchill Avenue Enhanced Bikeways Planning & Development Services Department Accessory Dwelling Unit (ADU) Plans Gallery Automated Permitting System Federal Grant Item D Item D Staff Report        Item D: Staff Report Pg. 12  Packet Pg. 405 of 412  In July, Planning and Development Services applied for a U.S. Department of Housing and Urban Development (HUD) funding opportunity supporting jurisdictions to evaluate and deploy automated permitting technology. If awarded, the $620,000 grant would fund a 12- to 18- month subscription to AI plan review software to assess its effectiveness. The 36-month project would proceed in stages: software proposal solicitation, selection, prototyping and implementation. The evaluation would measure the technology's impact on consistency in applying codes and standards, plan review timelines and reliance on outside contractors and consultants. HUD will notify applicants of awards by August 31, 2026. Senate Bill (SB) 79 Applications Received SB 330 Pre-Applications Received July 1-15, 2026 PLN Address Units Floor Area (Sq Ft) Zoning District Ground Floor Commercial Proposed Community Development Block Grant (CDBG) Annual Action Plan Local Housing Trust Fund (LHTF) Report Item D Item D Staff Report        Item D: Staff Report Pg. 13  Packet Pg. 406 of 412  and 3001 El Camino Real projects to support the development of affordable multi-family housing. Recent Housing Development Application Resubmittals Transit Oriented Communities (TOC) Policy Compliance Certified Local Government (CLG) Grant Police Department Recruitment National Night Out Item D Item D Staff Report        Item D: Staff Report Pg. 14  Packet Pg. 407 of 412  Another Rivian Patrol Vehicle The Police Department added a second all-electric Rivian patrol vehicle, which will be driven by field supervisors, to its fleet. Public Works Services Department Even though the Newell Road Bridge work started three weeks late due to nesting birds, the contractor made great progress on the bridge work including demolition of the old bridge and installation of the new bridge piles and abutments. The project remains on target to complete the work in the creek by October 15. Fire Station #4 construction continues with the completion of structural steel, relocated temporary power and ongoing installation of the exterior metal studs. This project remains on schedule with completion anticipated in June 2027. Work started on Embarcadero Road Improvement Project – Phase 1 on June 8. Grading and storm drain work was completed, widened sidewalk work is underway. Work is anticipated to be completed prior to school starting on August 13. The staff team welcomed a record seven interns, and is excited to provide them with meaningful, hands-on experiences. Staff hopes they will carry their positive experiences into their careers and help strengthen the wastewater industry. Staff completed several major plant shutdowns to accommodate the two largest construction projects currently underway at the plant, the Secondary Treatment Upgrades and Local Advanced Water Purification System projects, both of which are on track for 2028 completion. The work completed without any major compliance issues. The plant continued providing public and private tours, and received positive feedback from attendees. Staff safely managed an unusual sea foam event during King Tides in early July, which did not result in any major compliance concerns. Sea foam began billowing out of the final effluent box—the structure where treated water leaves the plant and flows to the Bay. Staff believes seawater carried organic material into the effluent box during a period of low plant flow in the middle of the night. A subsequent high tide from the Bay, combined with increased flow from the plant mixing within the relatively small area of the effluent box, appears to have created the sea foam. Item D Item D Staff Report        Item D: Staff Report Pg. 15  Packet Pg. 408 of 412  A new project to build a local workforce pipeline by creating awareness and generating enthusiasm for career pathways in the wastewater industry began this summer. Work completed by this year’s summer intern includes a new careers webpage with employee interviews, development of a Wastewater Treatment Plant Careers Tour for teens and research on existing programs to inform a 3-year workplan. Zero Waste City Facility Audit Household Hazardous Waste Station Outreach and Video Youth Climate Advisory Board (YCAB) and E-Bike Training Utilities Department Fiber-to-the-Premises (FTTP) and Palo Alto Fiber Item D Item D Staff Report        Item D: Staff Report Pg. 16  Packet Pg. 409 of 412  installation processes, service activation, customer service workflows and network support. Staff will return to the Utilities Advisory Commission and Council with pilot data, financials and customer metrics by the end of 2026. Gas Main Replacement Project Summer Progress Foothills Wildfire Mitigation Project Annual Water Quality Report California Renewables Portfolio Standard Program FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item D Item D Staff Report        Item D: Staff Report Pg. 17  Packet Pg. 410 of 412  Foundation: Community Postvention Conversation (August 11) and It’s OK to Say Suicide (August 12). The annual State of the City address is scheduled for Wednesday, August 19 at the Palo Alto High School Performing Arts Theater. Later in August, there are two community meetings on the grade separation project (August 24 and 25) and one on the South Palo Alto Bike / Ped Connectivity project (August 26). Website Statistics for January – July 27, 2026 o Home page o Careers o Content search landing page o MyCPAU Account Login o Utilities Department o Meeting Agendas and Minutes o Register for Activities & Classes o Palo Alto Children’s Theatre o Creek Monitor & Camera o Palo Alto Art Center ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item D Item D Staff Report        Item D: Staff Report Pg. 18  Packet Pg. 411 of 412  CITY COUNCIL Special Report Sponsor(s): Ed Lauing, Greer Stone, Vicki Veenker Meeting Date: August 10, 2026 TITLE Removal of Planning and Transportation Commissioner Forest Olaf Peterson BACKGROUND At the request of Councilmember Lauing, Vice Mayor Stone, and Mayor Veenker this item has been agendized for City Council discussion. ATTACHMENTS None. Report #: 2608-6613 Item AA1 Item AA1 Special Report        Item AA1: Staff Report Pg. 1  Packet Pg. 412 of 412