Agenda packet, regular meeting — East Palo Alto City Council, March 15, 2022 (part 1 of 2)

East Palo Alto City Council March 15, 2022 Agenda Page 1 of 5

EAST PALO ALTO CITY COUNCIL

REGULAR MEETING AGENDA
March 15, 2022, 6:30 p.m.

EPA Government Center
2415 University Ave, First Floor
East Palo Alto, CA 94303
NOTICE
This City Council meeting will be conducted in accordance with City of East Palo Alto Resolution adopted in accordance with Assembly Bill 361. All members of the City Council will participate in the meeting by video conference, with no physical meeting location available to the public.

Community members may provide comments by emailing [email protected] or using the “RAISE HAND” feature when the Mayor or City Clerk call for public comment. Emailed comments should include the specific agenda item on which you are commenting.

Please click this URL to join
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International numbers available: https://zoom.us/u/aMWYF4KT East Palo Alto City Council March 15, 2022 Agenda Page 2 of 5

1. CALL TO ORDER AND ROLL CALL

2. APPROVAL OF THE AGENDA
(Government Code Section 54957.7(a))

3. APPROVAL OF CONSENT CALENDAR

1. Minutes of the November 10, 2021- December 22, 2021 Meetings Recommendation: Adopt the minutes of the November 10, 2021- December 22, 2021 Meetings

2. Water System Asset Management Plan
Recommendation: Approve the Water System Asset Management Plan

3. AB 361 Findings to Continue Virtual Public Meetings for the City Council and City Advisory Bodies
Recommendation: Adopt a resolution making the AB 361 findings necessary to continue virtual public meetings for the City Council and City Advisory Bodies for the month of April 2022.

4. January Cash Report
Recommendation: Accept and file the Cash Treasury Report for the month of January 2022.

5. Council consideration of extension of 90-day due diligence period of library site acquisition
Recommendation: Adopt a Resolution (Attachment 1) authorizing the City Manager to execute an amendment to the Purchase and Sale Agreement (“PSA”), in a form approved by the City Attorney, between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC for the potential acquisition of the property located near the corner of Bay Road and Pulgas Avenue (APN: 063-240-490) (“Site”) to extend the due diligence period by an additional 30-days.

6. 2021 Housing Element Annual Progress Report
Recommendation: Adopt a Resolution:

Accepting the following annual reports: 2021 Housing Element Annual Progress Report; 2021 General Plan Annual Progress Report; and Housing Successor to the Redevelopment Agency Annual Report;
Authorizing the City Manager to submit the above-referenced reports to the appropriate State authorities; and
Finding that the acceptance and submittal of the above-referenced reports are exempt from the California Environmental Quality Act (CEQA).

7. Application to the California State Library for the Building Forward Library Infrastructure Program
Recommendation: By motion, direct the City Manager to submit an application to the California State Library for the Building Forward Library Infrastructure Program (“Program”).

8. Approving an Amendment to the Amended and Restated Water Supply Agreement Recommendation:

That the City Council adopt a resolution to:

1. Approve the modifications included in the attached "2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County" dated January 2021 (2021 Amended and Restated Water Supply Agreement).

2. Authorize and direct the City Manager to sign the 2021 Amended and Restated Water Supply Agreement, in the form previously approved by the San Francisco Public Utilities Commission and attached hereto.

9. 12-Inch Transmission Water Main Project along University Avenue/Cooley Avenue funding strategy
Recommendation: Adopt a resolution approving a funding strategy for the 12-Inch Transmission Water Main Project along University Avenue/Cooley.

East Palo Alto City Council March 15, 2022 Agenda Page 3 of 5

10. Proclamation of the City of East Palo Alto Celebrating César E. Chavez Birthday, His Legacy and That of Farmworkers and the Work of the Chavez Family Vision Inc. Organization

11. Proclamation of the City of East Palo Alto Celebrating the Month of April as National Poetry Month

12. Proclamation Of the City of East Palo Alto Celebrating the Silver Jubilee of The Shree Sanatan Dharm Religious and Cultural Society of California and Congratulating Them for Their Work in The Community

13. Letter Supporting Extension of AB 832
Recommendation: Direct the City Manager to submit a letter to the Governor and State Legislature requesting emergency legislation to extend the provisions of AB 832 (AB 832, COVID-19: tenancy: federal rental assistance (Chapter 27, Stats 2021) by five months, through August 31, 2022.

4. CLOSED SESSION

1. Government Code 54956.8 CONFERENCE WITH REAL PROPERTY NEGOTIATORS Property: 1266 Beech Street, East Palo Alto
Agency negotiator: Jaime Fontes, Patrick Heisinger
Negotiating parties: County of San Mateo
Under negotiation: Terms
A. PUBLIC COMMENT ON CLOSED SESSION ITEMS
B. ADJOURNMENT INTO CLOSED SESSION
C. RECONVENE INTO OPEN SESSION
D. REPORT OUT OF CLOSED SESSION

5. PUBLIC COMMENT
Members of the public wishing to address the City Council on items not listed on the agenda may do so under this item. Each speaker is limited to two minutes. The Mayor has the discretion to adjust speaking times. In accordance with State Law, no action or discussion may take place on any item not appearing on the posted agenda. The Council may respond to statements made or questions asked or may request Staff to report back at a future meeting concerning the matter.

The exceptions under which the City Council may discuss and/or take action on items not appearing on the agenda are contained in Government Code Section 54954.2(b)(1)(2)(3).

6. INFORMATIONAL REPORTS- NONE

7. SPECIAL PRESENTATIONS - NONE

8. PUBLIC HEARINGS

1. First Source Hiring Ordinance
Recommendation: Waive the First Reading and introduce an Ordinance titled, “First Source Hiring for City-Funded Projects and Properties,” adding Chapter 5.11 to the East Palo Alto Municipal Code;
Direct the City Manager to draft and return with Administrative Guidelines; and Direct the City Manager to make comprehensive updates to the City’s procurement processes and construction documents, as necessary, to ensure the First Source Hiring Ordinance is administered correctly.

9. POLICY AND ACTION

1. Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto Sanitary District
Recommendation: It is recommended that the City Council:

1. Accept the report on the issues concerning the Light Tree affordable housing project and the East Palo Alto Sanitary District; and
East Palo Alto City Council March 15, 2022 Agenda Page 4 of 5

2. Reaffirm the City Council’s desire to enter into a Memorandum of Understanding with the East Palo Alto Sanitary District to ensure the Light Tree development is able to provide much needed affordable housing to the community by January 2023.

2. Council consideration of a MOU with the County regarding the Beech St. Property Recommendation: Adopt a Resolution (Attachment 1) directing the City Manager to enter into a Memorandum of Understanding (MOU), subject to minor modifications approved by the Interim City Attorney, between the County of San Mateo (County) and City of East Palo Alto (City) to explore a real property exchange as further described in the staff report.

3. Potential Ballot Measure for Affordable Housing Revenue Recommendation: Receive the report and provide staff direction on potential revenue sources for affordable housing.

4. CalPERS Prefunding
Recommendation: It is recommended that the City Council adopt a Resolution to:

1. Commit $3 million General Fund Balance to prefund CalPERS future contributions: and

2. Submit the funds to CalPERS in the form of a direct payment as further described in the staff report.

5. City Council consideration of partnership with County to explore options for 2415 University ($25,000)
Recommendation: It is recommended that the City Council adopt a resolution allocating $25,000 from the General Fund Reserve to partner with the County of San Mateo in jointly funding an analysis of potential development options for 2415 University Avenue as a City/County governmental center.

6. COVID-19 Vaccination Program Regular Update
Recommendation: Discuss the COVID-19 vaccination program update and provide direction to staff.

10. COUNCIL REPORTS

11. ADJOURNMENT
East Palo Alto City Council March 15, 2022 Agenda Page 5 of 5 This AGENDA is posted in accordance with Government Code Section 54954.2(a) This Notice of Availability of Public Records: All public records relating to an open session item which are not exempt from disclosure pursuant to the Public Records Act, that are distributed to the majority of the City Council will be available for public inspection at the City Clerk’s Office, 2415 University Avenue, East Palo Alto, CA at the same time that the public records are distributed or made available to the City Council. Such documents may also be available on the East Palo Alto website www.cityofepa.org subject to staff’s ability to post the documents prior to the meeting. Information may be obtained by calling (650) 853-3100.

The City Council meeting packet may be reviewed by the public in the Library or the City Clerk's Office. Any writings or documents pertaining to an open session item provided to a majority of the City Council less than 72 hours prior to the meeting, shall be made available for public inspection at the front counter at the City Clerk's Office, 2ND Floor, City Hall, 2415 University Avenue, East Palo Alto, California 94303 during normal business hours. Information distributed to the Council at the Council meeting becomes part of the public record. A copy of written material, pictures, etc. should be provided for this purpose.

East Palo Alto City Council Chambers is ADA compliant. Requests for disability related modifications or accommodations, aids or services may be made by a person with a disability to the City Clerk's office at (650) 853-3127 no less than 72 hours prior to the meeting as required by Section 202 of the Americans with Disabilities Act of 1990 and the federal rules and regulations adopted in implementation thereof.

DECLARATION OF POSTING
This Notice is posted in accordance with Government Code §54954.2(a) or §54956. Members of the public can view electronic agendas and staff reports by accessing the City website. Under penalty of perjury, this Agenda was posted to the public at least 72 hours prior to the meeting.

POSTED: March 11, 2022
ATTEST:

James Colin
Acting City Clerk
FUTURE MEETINGS:

Study Session March 22, 2022 at 6:00 p.m.

Regular Meeting April 5, 2022 at 6:30 p.m.

Regular Meeting April 19, 2022 at 6:30 p.m.

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Valerie J. Armento, Interim City Attorney
SUBJECT: Minutes of the November 10, 2021- December 22, 2021 Meetings Recommendation
Adopt the minutes of the November 10, 2021- December 22, 2021 Meetings Background
The City Council will consider adopting the minutes of the November 10, 2021- December 22, 2021 Meetings
Attachments

1. Draft Minutes 11-16-2021

2. Draft Minutes 11-18-2021

3. Draft Minutes 11-30-2021

4. Draft Minutes 12-7-2021

5. Draft Minutes 12-14-2021

6. Draft Minutes 12-21-2021

7. Draft Minutes 12-22-2021

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East Palo Alto City Council November 16, 2021 Minutes Page 1 of 5

EAST PALO ALTO CITY COUNCIL

REGULAR MEETING MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303

1. CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Carlos Romero at 6:30 p.m.

Attendee Name Title Status Arrived
Carlos Romero Mayor Remote
Ruben Abrica Vice Mayor Late 6:47 PM
Lisa Gauthier Councilor Remote
Antonio Lopez Councilor Remote
Regina Wallace-Jones Councilor Late 6:44 PM

2. APPROVAL OF THE AGENDA
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez
AYES: Romero, Gauthier, Lopez
ABSENT: Abrica, Wallace-Jones

3. APPROVAL OF CONSENT CALENDAR
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez
AYES: Romero, Gauthier, Lopez
ABSENT: Abrica, Wallace-Jones

1. Gift Acceptance to Provide added benefit in City Parks LG: Thanks Olivia Brown for her service with 'tiny libraries' RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

2. Purchase of a Police Vehicle and Installation of Emergency / Communications Equipment
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

3. Hazardous Waste and Biowaste Removal and Disposal Services Contract

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Attachment: Draft Minutes 11-16-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 16, 2021 Minutes Page 2 of 5 RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

4. Occupational Health & Safety Training Services Contract RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

5. AB 361 Findings to Continue Virtual Public Meetings for the City Council and City Advisory Bodies
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

6. Approval of the Terms of a Tentative Agreement and Memorandum of Understanding with SEIU
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

7. Adoption of Ordinances Related to SB1383 Short-Lived Climate Pollutants RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

8. Authorization to apply for the California Water and Wastewater Arrearage Payment Program
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

9. Authorization to apply for the TDA Article 3 Bicycle and Pedestrian Program for Improvements at University Avenue and Michigan Avenue
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

10. Consideration of a Donation from H & H Evergreen Foundation for the Police Department Traffic Safety Awareness Program and Annual Toy Distribution Program
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

11. San Mateo County Joint Powers Authority Agreement for Emergency Services

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Attachment: Draft Minutes 11-16-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 16, 2021 Minutes Page 3 of 5 RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

12. Adoption of the 2021 San Mateo County Multi jurisdictional Hazard Mitigation Plan RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

13. Letter to Superior Court of San Mateo County regarding the Proposed Placement of a Sexually Violent Predator in East Palo Alto
Mayor: Letter created and sent to judge.

Jeff Liu gave information and thanks for public response.

RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Lopez

4. CLOSED SESSION
A. PUBLIC COMMENT ON CLOSED SESSION ITEMS
B. ADJOURNMENT INTO CLOSED SESSION
C. RECONVENE INTO OPEN SESSION
D. REPORT OUT OF CLOSED SESSION

5. PUBLIC COMMENT
- Court Skinner
- Laura Rubio

6. INFORMATIONAL REPORTS
City Manager introduced.

Jeff Liu re: new management company to invest and improve Runnymede Gardens property.

7. SPECIAL PRESENTATIONS
Patrick Heinsinger introduced.

Olenka Villarreal provided a presentation on Magical Bridge

1. Magical Bridge Foundation Presentation
Council thanked presenter.

8. PUBLIC HEARINGS
Zaineb Wazqini
Gavena Gentry
Jennifer Lui
Martin
Mickie Lee

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Attachment: Draft Minutes 11-16-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 16, 2021 Minutes Page 4 of 5
Nina Helmer
Grace
Albert Xue
Sharifa Wilson
Domingo Huerta
Corie Calfee
Vivian Wehner
Fengy Ma
Chunchi Ma
Mark Dinan
Michael Henshaw
Duane Bay
Vanessa Smith
Dom
Dan Pan
Guliana Garcia
Haidar
Makoni
Laura Rubio
Randy Olsen
Samyuthka
Carol Lee
Federico Andrade
Phil
Jeanne
Ryan Carrigan
Sean Ripley
Stewart Hyland
Rhovy Lyn Antonio
Wilkerson
Scott Barrow
Christina
Iliana Nicholas
Sisilia Afungia
Court Skinner
Sean Yao
Ofelia
Marisela Ramos
Keith Ogden
Quan He

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Attachment: Draft Minutes 11-16-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 16, 2021 Minutes Page 5 of 5 Shanna
Mona
Jessica
Motion: Ruben Abrica
Second: Lisa Gauthier (To move to next meeting)

Aye:

Ruben Abrica
Lisa Gauthier
Regina Wallace-Jones
Antonio Lopez
Nay:

Carlos Romero

1. Introduction of East Palo Alto Opportunity to Purchase Act (“EPA OPA”) Ordinance
Presentation by Ms. Camacho
Council discussion.

9. POLICY AND ACTION

1. Updates to the Urban Forest Master Plan
Amy Chen
Megan Wheeler provided progress report/presentation
Council discussion.

Public Comment:
- Court Skinner
- Gail Wilkerson
- Shanna Uhila
Accept report and provide direction

2. COVID-19 Vaccination Program Regular Update
Update from City Manager on state-wide COVID news.

10. COUNCIL REPORTS

11. ADJOURNMENT
The meeting was adjourned at 12:03 a.m.

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Attachment: Draft Minutes 11-16-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 18, 2021 Minutes Page 1 of 3

EAST PALO ALTO CITY COUNCIL

STUDY SESSION MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303
I. CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Carlos Romero at 6:00 p.m.

Attendee Name Title Status Arrived
Carlos Romero Mayor Remote
Ruben Abrica Vice Mayor Late 6:09 PM
Lisa Gauthier Councilor Remote
Antonio Lopez Councilor Remote
Regina Wallace-Jones Councilor Remote
II. APPROVAL OF THE AGENDA
Motion: Lisa Gauthier Second: Regina Wallace-Jones
Unanimous motion pass
III. STUDY SESSION
Patrick Heisinger presented staff report along with Matt Raimi from Raimi and Associates.

Council discussed the project.

Public Comments:

Kenia Najar
Cristal Montes
Fili
Raquel Lima
Julisa
Cristina Becerra
Danita Churchill
Kim Diamond
Zaineb Qazwuni
Christopher Kao
Andrea Osgood
Nora Melendez
Rick Solis
Fabian Sanchez
Alok Gupta
Eileen McLaughlin
Alice Kaufman
Gail Wilkerson (2)

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Attachment: Draft Minutes 11-18-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 18, 2021 Minutes Page 2 of 3 Mario Mendoza
Moana K
Patricia Lopez
Cornelia Cathrine Fletcher (2)
Vignesh Swaminathan
Domingo Huerta (2)
Laura Rubio
Quynh (2)
Randy Olsen
Michelle Trejo Saldivar
Heather
Federico Andrade
Sergey Romanovsky
Julian
Blair Volckmann
Q Smith
Juan Estrada (2)
Adrienne Bryant (2)
Stewart Hyland (2)
Robert Jones
Uhila Makoni
Edwin Magana Lopez
Evelyn Stivers
Marisela Ramos
Sean Ripley (2)
Roomin Parikh
4 asked questions from public responded by Matt and Council.

Isaac Stevenson
Aline Jaminais-Grellier
Jeff Poetsch
Ofelia Bello (2)
Anna Romanovskaia
Mark Guinan
Annette
Gita Dev
Jennifer Chang Hetterly w/Sierra Club

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Attachment: Draft Minutes 11-18-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 18, 2021 Minutes Page 3 of 3

1. Actions Related to the Ravenswood Business District Specific Plan Update Motion: Carlos Romero Council Agree to study scenario 2.82, 3.35 Second: Ruben Abrica
RESULT: APPROVE [3 TO 2]
MOTION BY: Romero
SECOND: Abrica
AYES: Romero, Abrica, Gauthier
NAYS: Lopez, Wallace-Jones
IV. ADJOURNMENT
The meeting was adjourned at 10:18 p.m.

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Attachment: Draft Minutes 11-18-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 30, 2021 Minutes Page 1 of 2

EAST PALO ALTO CITY COUNCIL

STUDY SESSION MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303

1. CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Carlos Romero at 6:00 p.m.

Attendee Name Title Status Arrived
Carlos Romero Mayor Remote
Ruben Abrica Vice Mayor Remote
Lisa Gauthier Councilor Late 6:31 PM
Antonio Lopez Councilor Present
Regina Wallace-Jones Councilor Remote

2. APPROVAL OF THE AGENDA
Motion: Antonio Lopez
Second: Ruben Abrica
Passed unanimously.

3. STAFF REPORTS

1. Euclid Improvements (Woodland Park) Project Relocation Plan Patrick Heisinger Assistant City Manager introduction on the item and Amy Chen provided the presentation. Victor Ramirez and Rachel Forest, too. Council discussion.

Public Comment:

Mike Kramer
Ashley Coker
Fabian Sanchez
Teresa Morales
Lidia Garcia
Omar
Marisela Ramos
Gladis
Oleta Proctor
Josue
James Lee
Ofelia Bello
Maureen Larson
Follow-up with Staff Recommendation presentation from Amy Chen. and additional public comments.

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Attachment: Draft Minutes 11-30-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council November 30, 2021 Minutes Page 2 of 2

4. ADJOURNMENT
The meeting was adjourned at 8:25 pm.

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Attachment: Draft Minutes 11-30-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 1 of 8

EAST PALO ALTO CITY COUNCIL

REGULAR MEETING MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303

1. CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Carlos Romero at 6:00 p.m.

Attendee Name Title Status Arrived
Carlos Romero Mayor Remote 6:07 PM
Ruben Abrica Vice Mayor Remote
Lisa Gauthier Councilor Late 6:15 PM
Antonio Lopez Councilor Remote
Regina Wallace-Jones Councilor Remote

2. APPROVAL OF THE AGENDA
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Lopez
SECOND: Abrica
AYES: Romero, Abrica, Lopez, Wallace-Jones
ABSENT: Gauthier

3. APPROVAL OF CONSENT CALENDAR
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez
AYES: Romero, Abrica, Gauthier, Lopez, Wallace-Jones

1. HSIP Cycle 10 Grant and Design RFP
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

2. Addison Avenue Safe Route to School and Green Street Improvements Project RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

3. October 2021 Cash Report
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

4. Budget Calendar for FY2022-2023

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 2 of 8 RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

5. AB 1600 Report
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

6. Request for Proposals - Recruitment Firm for the Police Chief Position RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

7. Renewal of Peninsula Volunteers Agreement for Senior Nutrition Program for FY 2021-22
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

8. Acceptance of grant from San Mateo County's Office of Aging and Adult Services for Senior Programs
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

9. Peninsula Traffic Congestion Relief Alliance (Commute.org) JPA Amendment RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

10. Approval of the Jointly Prepared Memorandum of Understanding between the City of East Palo Alto and
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

11. Letter of Support for Solution to Property Tax in lieu of Vehicle License Fee Shortfall
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

12. 2021 Urban and Multi benefit Drought Relief Grant
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 3 of 8

13. Insurance Report Standards (Priority for Summer Activation) RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

14. AB 361 Findings to Continue Virtual Public Meetings for the City Council and City Advisory Bodies
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

15. Purchase of a Police Vehicle and Installation of Emergency / Communications Equipment
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Abrica
SECOND: Lopez

4. CLOSED SESSION
A. PUBLIC COMMENT ON CLOSED SESSION ITEMS
B. ADJOURNMENT INTO CLOSED SESSION
C. RECONVENE INTO OPEN SESSION
D. REPORT OUT OF CLOSED SESSION
Genevieve Ng reported out with respect to item #3 on the Closed Session, the City Council voted for the acceptance the resignation of City Clerk, and approved the execution settlement agreement by a vote of 3 to 2 with Councilmembers Gathier, Lopez, and Wallace-Jones voting in favor and Councilmembers Romero and Abrica voting against.

Rafael Alvarado no reportable action.

5. PUBLIC COMMENT
Note: Spanish translator is available for the public.

Laura Moya
Cornelia Fletcher
Donna Rutherford
Long Yang
Clarence Johnson
Kevin Johnson
Michael Mashack
Ofelia Bello
Gail Wilkerson
Li Zhang

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 4 of 8 851-4039-5393
vmatveye
Rashit
Drew
Kevin Keating

6. INFORMATIONAL REPORTS - NONE

7. SPECIAL PRESENTATIONS - NONE

8. PUBLIC HEARINGS

1. Introduction of an East Palo Alto Opportunity to Purchase Act ("EPA OPA") Ordinance
Rachel Horst presented.

Public Speakers:

Donna Rutherford
Dan Pan
Cristina
Jeanne Yu
Fili
Estela Guerrero
Thomas Maa
Angie Evans
Kenia Najar
Cristal Montes
John Montgomery
Carol Li
Rohin Gosh
Juian
Cristina
Nada Djomehri
Carol Cunningham
Cornelia Fletcher
Zaineb AlQazwini
Elena
Kimberly
Luella Parker
Juliette Steadman
Raquel Lima
Sione K
Gail Wilkerson

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 5 of 8
Abhay
Gene Gan
Court Skinner
Martin
David W.

Timothy Kim
Romain Taniere
Uhila Makoni
Shirley Morton
Laura Rubio
Izamar Moya
Federico Andrade
Varun Aggarwal
Michael Henshaw
Corie Calfee
Anna Romanovskiaa
Kath Franklin
Maria Cruz
Randy Olsen
Magnus Larsson
Lourdes
Simon Binns
Micky W
Jennifer
Jessica
Robert Jones
Cindy Liu
Nina Helmer
Moana
Daniel
Andy Wang
Anne Wang
Keith Ogden
Miguel Moreno
Mahesh
Stanley Jones
Long Yang
Fred Flamer
Mikolenko Ekaterina
Sean Ripley

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 6 of 8
Aaron Carter
Edwin Lopez
Domingo Huerta
Suruj Narayan
Darren Cunningham
Seina Wedlick
Li Zhang
Heather
Drake Diedrich
Christina
Damali
Al Jay
SK
Jay
Terri Vines
Grace Popple
A Chang
Samuktha
Stas Zvinyatskovsky
PC
Rhona Edgerton-Harris
Rhovy Lyn Antonio
Luis Guzman
Stewart Hyland
Gary Li
Mauricio
Oliver Zhang
Borys Senyk
Jose Pinon
Drhgf
Sui-Lin Li
Alex Sviridov
Suruj Narayan
Sean Yao
Maureen Larsson
Shanna
Valery Dolgashev
Webster Lincoln
Millie
Rashit

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 7 of 8 Marisela Ramos
Dom
Ofelia Bello (She/Her/Ella)
Meina Young
Jedd Bloom
Elena Savva
Natalia
Sergey Romanovsky
Irina
Winnie Hinckson
Jen
Item moved to Dec. 22nd, 6 pm
RESULT: CONTINUED [UNANIMOUS]
MOTION BY:

SECOND:

EXCUSED: Romero, Abrica, Gauthier, Lopez, Wallace-Jones

9. POLICY AND ACTION

1. Consideration of a Purchase and Sale Agreement for Acquisition of the Site on the Corner of Bay Road and Pulgas Avenue
Presentations by Patrick Heisinger with Rachel Horst and Victor Ramirez.

Council discussion.

Public Speakers:
- Cornelia Fletcher
- Rachel McDonnell
- Q. Smith
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Wallace-Jones
SECOND: Gauthier
AYES: Romero, Abrica, Gauthier, Lopez, Wallace-Jones

2. East Palo Alto Career Center’s Technical Advisory Committee Presentation by Patrick Heisinger.

Motion to continue meeting to 12:15 AM
Motion: Antonio Lopez
Second: Regina Wallace-Jones
Unanimously approved.

Motion to approve item

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 7, 2021 Minutes Page 8 of 8 Motion: Regina Wallace-Jones
Second: Antonio Lopez
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Wallace-Jones
SECOND: Lopez
AYES: Romero, Abrica, Gauthier, Lopez, Wallace-Jones

3. COVID-19 Vaccination Program Regular Update
Jaime M. Fontes provided an update.

10. COUNCIL REPORTS
AL: Thanks for Woodland tenants.

RWJ: Acknowledge and grateful for correspondence and Runnymede residents.

RA: Vaccinations this weekend.

LG: Echo's the Runnymede discussion.

CR: Thanks to staff for their help with the tree-lighting.

11. ADJOURNMENT
The meeting was adjourned at 12:13 a.m.

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Attachment: Draft Minutes 12-7-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 14, 2021 Minutes Page 1 of 2

EAST PALO ALTO CITY COUNCIL

SPECIAL MEETING MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303

1. CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Carlos Romero at 6:30 p.m.

Attendee Name Title Status Arrived
Carlos Romero Mayor Remote
Ruben Abrica Vice Mayor Remote
Lisa Gauthier Councilor Remote
Antonio Lopez Councilor Remote
Regina Wallace-Jones Councilor Remote

2. CITY COUNCIL RE-ORGANIZATION
'Thank you' to outgoing Mayor Carlos Romero.

Videos from:
- Congresswoman Jackie Speier's office.
- Father Goode from St. Francis of Assisi Church
- YCS Peer Leaders
Public Speakers:

Danita Churchill
Leif Erickson
Lisa Tealer
Maritza Leal
Maureen Larsson
Senator Josh Becker
Adrienne
Miriam
Luisa Buada
Stacey Wagner
Tim Ridley
Zachary Ross
Kala Mehta
Ofelia Bello
Sarahi Espinoza Salamanca
Fiorella
Bridget Grant
Stewart Hyland

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Attachment: Draft Minutes 12-14-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 14, 2021 Minutes Page 2 of 2 Mora Oomen
Jon Hazard

1. Selection of Mayor
Carlos Romero: Reads the rules for selection.

Nominations:

Carlos Romero: Nominates Ruben Abrica for Mayor.

Ruben Abrica: Accepts nomination.

Roll Call Vote: Unanimously

2. Selection of Vice Mayor
Open Floor for Nominations
Carlos Romero: Nominated Lisa Gauthier for Vice Mayor
Regina Wallace-Jones: Nominated Antonio Lopez for Vice Mayor Lisa Gauthier: Accepts Nomination
Unanimous vote for Lisa Gauthier for Vice Mayor
Plaque presented to outgoing Mayor to Carlos Romero.

3. ADJOURNMENT
The meeting was adjourned at 7:48 p.m.

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Attachment: Draft Minutes 12-14-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 21, 2021 Minutes Page 1 of 5

EAST PALO ALTO CITY COUNCIL

REGULAR MEETING MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303

1. CALL TO ORDER AND ROLL CALL
The meeting was called to order by at 6:30 p.m.

Attendee Name Title Status Arrived
Carlos Romero Councilor Remote
Ruben Abrica Mayor Remote
Lisa Gauthier Vice Mayor Remote
Antonio Lopez Councilor Absent
Regina Wallace-Jones Councilor Absent

2. APPROVAL OF THE AGENDA
RESULT: ADOPT [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Romero
AYES: Romero, Abrica, Gauthier
ABSENT: Lopez, Wallace-Jones

3. APPROVAL OF CONSENT CALENDAR
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier
AYES: Romero, Abrica, Gauthier
ABSENT: Lopez, Wallace-Jones

1. Best Practices for outreach and notification for public construction projects RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

2. Update on City Council Priorities for FY 2020-2021 & 2021-2022 RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

3. Proclamation Honoring Chief Albert Pardini for Her Years of Service to the City Councilmembers each gave their acknowledgment of Chief Pardini's service.

Public Speakers:

Chief Dave Norris, Menlo Park PD

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Attachment: Draft Minutes 12-21-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 21, 2021 Minutes Page 2 of 5 Brian Perkins
Q Smith
Chief Daniel Steidle
Danita Churchill
Susan E Manheimer
Stephen Wagstaffe Redwood City
Irene Camarena
Additional comments from Staff including Jeff Liu and Rafael Alvarado Also email from Senator Becker and Assemblyman Berman.

RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

4. Amendment Four with Youth Community Service for Distribution of Gift Cards to Encourage Vaccination
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

5. Reimbursement of Project WeHOPE for Sewer Improvements Associated with Manufactured Homes Installation at 1798 Bay Rd.

RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

6. Authorization to apply for the Clean California local grant program RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

7. Contract Amendment No. 1 with Teichert & Son, Inc. for the Bay Road Phase II and III Improvements Project
CR: Asked City Manager questions regarding this project.

RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

8. Actions Related to 2022 City Summer Programming Efforts LG: Acelea and Patrick brought onboard to talk about the programs.

RESULT: APPROVE [UNANIMOUS]
MOTION BY: Gauthier
SECOND: Romero

9. Amending Agreement with MRG, LLC Consulting Services

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Attachment: Draft Minutes 12-21-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 21, 2021 Minutes Page 3 of 5 RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

10. National Opioid Settlement Involving Distributors McKesson, Cardinal Health, and AmerisourceBergen and Manufacturers Janssen Pharmaceuticals, Inc. and Johnson & Johnson
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

11. Approval of the Jointly Prepared Memorandum of Understanding between the City of East Palo Alto and the Service Employees International Union Local 521 (SEIU) RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier

4. CLOSED SESSION
A. PUBLIC COMMENT ON CLOSED SESSION ITEMS
B. ADJOURNMENT INTO CLOSED SESSION
C. RECONVENE INTO OPEN SESSION
D. REPORT OUT OF CLOSED SESSION
Rafael Alvarado, City Attorney reported that there is no reportable action on three items

5. PUBLIC COMMENT
Public Comment:
-Ofelia Bello
-Jennifer L
-Kelly
-Court Skinner
-Michael Mashack
-Amit
-Anees Iqbal
-Elena
-Laura Rubio
-Parvin Bari
-Gail Wilkerson
- Q Smith
- Kenia Najar- Miranda
- Brenda
- Sean Ripley
- Patricia Lopez

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Attachment: Draft Minutes 12-21-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 21, 2021 Minutes Page 4 of 5 - Simon Binns
-Marisela Ramos
- Danita Churchill
-Elizabeth Jackson
-Miguel Moreno
-Mary Goodwin
-Webster Lincoln

6. INFORMATIONAL REPORTS

7. SPECIAL PRESENTATIONS

8. PUBLIC HEARINGS

9. POLICY AND ACTION

1. Annual Financial Reports for Fiscal Year 2020-21
Tomohito Oku, Finance Director and Mitesh Desai presented to council.

Councilmembers had questions.

Public Speakers:
-Patricia Lopez
-Adrienne Bryant
RESULT: APPROVE [UNANIMOUS]
MOTION BY: Romero
SECOND: Gauthier
AYES: Romero, Abrica, Gauthier
ABSENT: Lopez, Wallace-Jones

2. City Council’s Proposed Schedule for 2022
Introduced by City Manager: Patrick Heisinger provided presentation.

Councilmembers discussed meeting options.

3. Request for Proposals for Measure HH Job Training Programs Patrick Heisinger provided presentation.

Councilmembers discussed.

Public Speaker:
-Stewart Hyland
-Adrienne Bryant

4. COVID-19 Vaccination Program Regular Update
Jaime M. Fontes, City Manager provided a presentation.

Public Speakers:
'Mama' D

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Attachment: Draft Minutes 12-21-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 21, 2021 Minutes Page 5 of 5

10. COUNCIL REPORTS
Lisa Gauthier: Happy holidays and a wear mask
Other Councilmembers concur.

11. ADJOURNMENT
The meeting was adjourned at 11:08 p.m.

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Attachment: Draft Minutes 12-21-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings) East Palo Alto City Council December 22, 2021 Minutes Page 1 of 1

EAST PALO ALTO CITY COUNCIL

STUDY SESSION MINUTES
EPA Government Center
2415 University Ave, First Floor – City Council Chamber East Palo Alto, CA 94303

1. CALL TO ORDER
The meeting was called to order by at 6:00 p.m.

Attendee Name Title Status Arrived
Carlos Romero Mayor Remote
Ruben Abrica Vice Mayor Remote
Lisa Gauthier Councilor Remote
Antonio Lopez Councilor Remote
Regina Wallace-Jones Councilor Absent

2. APPROVAL OF CONSENT CALENDAR

1. AB 361 Findings to Continue Virtual Public Meetings for the City Council and City Advisory Bodies
Motion: Lisa Gauthier
Second: Ruben Abrica
RESULT: ADOPT [UNANIMOUS]
MOTION BY:

SECOND:

AYES: Romero, Abrica, Gauthier, Lopez
ABSENT: Wallace-Jones

3. PUBLIC HEARING

1. Introduction of an East Palo Alto Opportunity to Purchase Act ("EPA OPA") Ordinance
Mayor Abrica prompted council to ask questions regarding the Public Hearing:
-Carlos Romero, Lisa Gauthier, Antonio Lopez,
Victor Ramirez, Rent Stabilization program manager provided comments. - Nora LakeBrown provided comment
Item continues to 1/11 Regular Council Meeting

4. ADJOURNMENT
The meeting was adjourned at 7:57: p.m.

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Attachment: Draft Minutes 12-22-2021 (2154 : Minutes of the November 10, 2021- December 22, 2021 Meetings)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Adrian Biggs, Associate Engineer
Glen March, Senior Engineer
Humza Javed, City Engineer
SUBJECT: Water System Asset Management Plan
Recommendation
Approve the Water System Asset Management Plan
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 3: Increase Organizational Effectiveness and Efficiency Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 5: Improve Communication and Enhance Community Engagement Priority No. 6: Create a Healthy and Safe Community
Background
On January 30, 2020, the State Water Resources Control Board Division of Drinking Water (DDW) issued the City Permit No. 02-17-20p-4110024 for the operation of our water system.

This permit included a condition that the City prepare and submit to DDW an Asset Management Plan (AMP). This plan also will address the Corrective Action Plan (CAP) prepared by DDW. Some of the requirements of this CAP include increased water storage (water tanks), water system upgrades, and other physical improvements. Alongside the physical improvements, the CAP requested a Water System Asset Management Plan to address the City's maintenance and monitoring requirements.

Analysis
On November 17th, 2020, the City awarded a contract to Harris & Associates to prepare the City’s Asset Management Plan (AMP). The AMP is a strategic plan that combines multi3.2 Packet Pg. 33
disciplinary management techniques (including technical and financial) to determine best practices for operating, maintaining, and replacing assets over the life cycle of the assets in the most cost-effective manner to provide the agreed level of service (LOS).

The AMP describes the risk-based asset management approach to planning the replacement of existing assets. The approach considers the criticality of each asset and the condition of each asset. Those assets whose failure would have the greatest adverse consequences and that are in the poorest condition and more likely to fail are prioritized for replacement.

The implementation of the AMP provides a strong foundation for making wise financial decisions about how to operate, manage, and improve the water system. The implementation requires Veolia to collect and input a significant amount of data into their asset management software system. As the amount of asset information becomes available to staff, staff’s ability to prioritize investments in the water distribution system improves.

Staff worked with the Consultant, Harris & Associates, to develop an AMP that works as a “living” document that can be refined and updated as the plan is implemented. This was accomplished by preparing a core framework for the plan that references technical appendices. This will allow City, Veolia, and DDW staff to recommend changes to the Appendices without changing the core framework of the plan.

Staff intends to request the City Council approve a contract amendment to Harris & Associates’ existing contract in the near future to further define the data to be collected for each asset, work with Veolia to customize their software system for the required data, and audit the data collected and input by Veolia.

The AMP will initially be implemented in three ways:
1) Monthly audit meetings with Veolia Staff to audit performance and ensure compliance with the AMP
2) Work to develop a robust asset register by collecting asset data and ensure updates are added in a timely manner
3) Update the AMP as work continues.

A draft AMP was submitted to DDW for review. Their comments have been incorporated in the final plan. Upon City Council approval of the AMP, it will be forwarded to DDW for approval.

Fiscal Impact
No fiscal impact. The AMP does not make any budgetary requests. The AMP will be used alongside the Water System Master Plan to inform future budget requests.

Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo

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Alto.

Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Attachments

1. Resolution

2. EPA Water System AMP

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RESOLUTION NO. XX – 2022

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

APPROVING THE WATER SYSTEM ASSET MANAGEMENT PLAN
WHEREAS, the City of East Palo Alto is required to adopt a Water System Asset Management Plan as stated in its State Water Resources Control Board Permit; and WHEREAS, on November 17th, 2020, the City awarded a contract to Harris & Associates to prepare the City’s Asset Management Plan (AMP); and
WHEREAS, the AMP is a strategic plan that combines multi-disciplinary management techniques (including technical and financial) to determine best practices for operating, maintaining, and replacing assets over the life cycle of the assets in the most cost-effective manner to provide the agreed level of service (LOS); and
WHEREAS, staff worked with the consultant, Harris & Associates, to develop an AMP that works as a “living” document that can be refined and updated as the plan is implemented; and WHEREAS, staff recommends the approval of the Water System Asset Management Plan.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY approves the Water System Asset Management Plan.

PASSED AND ADOPTED this 15th day of March 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Rubin Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, Acting City Clerk Valerie J. Armento, Interim City Attorney

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Attachment: Resolution (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET

MANAGEMENT PLAN
February 2022

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 i

1.1 Water System Description........................................................................................................... 1

1.2 Purpose of the Asset Management Plan ..................................................................................... 1

1.3 Asset Management Plan Organization ........................................................................................ 2 2 Asset Register Management Plan......................................................................................................... 3

2.1 Purpose........................................................................................................................................ 3

2.2 Content....................................................................................................................................... 3

2.3 Asset Management Software System.......................................................................................... 3

2.4 Quality Control ............................................................................................................................ 4 3 Operational and Maintenance Requirements...................................................................................... 5

3.1 Purpose........................................................................................................................................ 5

3.2 Water Meters .............................................................................................................................. 5

3.2.1 Operational Requirements ............................................................................................ 6

3.2.2 Maintenance Requirements .......................................................................................... 6

3.2.3 Life Expectancy............................................................................................................... 7

3.3 Pipes and Fittings......................................................................................................................... 7

3.3.1 Operational Requirements ............................................................................................ 7

3.3.2 Maintenance Requirements .......................................................................................... 8

3.3.3 Life Expectancy............................................................................................................. 10

3.4 Valves......................................................................................................................................... 11

3.4.1 Operational Requirements .......................................................................................... 11

3.4.2 Maintenance Requirements ........................................................................................ 11

3.4.3 Life Expectancy............................................................................................................. 12

3.5 Backflow Devices....................................................................................................................... 12

3.5.1 Operational Requirements .......................................................................................... 13

3.5.2 Maintenance Requirements ........................................................................................ 13

3.5.3 Life Expectancy............................................................................................................. 14

3.6 Hydrants .................................................................................................................................... 14

3.6.1 Operational Requirements .......................................................................................... 14

3.6.2 Maintenance Requirements ........................................................................................ 14

3.6.3 Life Expectancy............................................................................................................. 15

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 ii

3.7 Treatment Works Including Well............................................................................................... 15

3.7.1 Operational Requirements .......................................................................................... 15

3.7.2 Maintenance Requirements ........................................................................................ 15

3.8 Water Sampling Station............................................................................................................. 16

3.8.1 Operational Requirements .......................................................................................... 16

3.8.2 Maintenance Requirements ........................................................................................ 17

3.8.3 Life Expectancy............................................................................................................. 17

3.9 Generators................................................................................................................................. 17

3.9.1 Operational Requirements .......................................................................................... 17

3.9.2 Maintenance Requirements ........................................................................................ 18

3.9.3 Life Expectancy............................................................................................................. 18

3.10 Pumps........................................................................................................................................ 18

3.10.1 Operational Requirements .......................................................................................... 19

3.10.2 Maintenance Requirements ........................................................................................ 19

3.10.3 Life Expectancy............................................................................................................. 19

3.11 Customers.................................................................................................................................. 19

3.11.1 Operational Requirements .......................................................................................... 19

3.11.2 Maintenance Requirements ........................................................................................ 20 4 Asset Replacement Planning .............................................................................................................. 21

4.1 Purpose...................................................................................................................................... 21

4.2 Asset Condition Assessment...................................................................................................... 22

4.3 Asset Criticality Assessment...................................................................................................... 22

4.4 Asset Risk Assessment............................................................................................................... 23 5 Level of Service ................................................................................................................................... 25

5.1 Purpose...................................................................................................................................... 25

5.2 Development Process................................................................................................................ 25 6 Capital Improvement Program ........................................................................................................... 29

6.1 Purpose...................................................................................................................................... 29

6.2 Water System Master Plan........................................................................................................ 29

6.3 Capital improvement Program.................................................................................................. 30 Figures
Figure 4-1. Risk-Based approach to asset replacement planning............................................................... 21 Figure 5-1. Development Cycle for Levels of Service.................................................................................. 26

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 iii
Tables
Table 3-1. Pipe Design Life .......................................................................................................................... 11 Table 4-1. Asset Criticality Table................................................................................................................. 24 Table 5-1. Community Outcomes, Core Values, Objectives, and Levels of Service.................................... 27 Appendices
Appendix A. Asset Register Management Plan
Appendix B. Asset Information and Asset Register Data Standard Format Appendix C. Collection of Asset Condition Data Standard Operating Procedures Appendix D. Asset Criticality Assessment Worksheet
Appendix E. Draft Asset Criticality Assessment
Appendix F. Asset Information and Asset Register Data by Asset Class (Under Development)

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 iv
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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 v

ACRONYMS AND ABBREVIATIONS
AC asbestos cement
AMP Asset Management Plan
AMSS Asset Management Software System
ARMP Asset Register Management Plan
CI cast iron
CIP Capital Improvement Program
City City of East Palo Alto
County San Mateo County
CU copper
DC double-check valve backflow prevention assembly
DCDA double-check detector backflow prevention assembly DDW California State Water Resources Control Board Division of Drinking Water GAL galvanized
GIS geographic information system
GPS Global Positioning System
KPI key performance indicator
LOS level of service
O&M operations and maintenance
PHD peak-hour demand
PL plastic
PRV pressure-regulating valve
PVB pressure vacuum breaker backsiphonage prevention assembly PVC polyvinyl chloride
RPBA reduced-pressure principle backflow prevention assembly RPDA reduced-pressure principle detector backflow prevention assembly SFPUC San Francisco Public Utilities Commission
SOP standard operating procedure
SVB spill-resistant pressure vacuum breaker backsiphonage prevention assembly USC University of Southern California
WSMP Water System Master Plan

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 vi
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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 1
1 INTRODUCTION

1.1 WATER SYSTEM DESCRIPTION
The City of East Palo Alto (City) is located in the San Francisco Bay Area on the San Francisco Peninsula. The City covers 2.5 square miles and has a population of over 25,000 residents.

The City is the primary water provider within the City limits. The City provides water to approximately 4,000 residential, commercial, industrial, and governmental customers. Small areas within the City boundaries are served by the O’Connor Tract Cooperative Water Company and the Palo Alto Park Mutual Water Company.

The City’s primary water source is treated water provided by the San Francisco Public Utilities Commission (SFPUC). The water is supplied via three connections to Hetch Hetchy Water System. A groundwater well located at the intersection of Bay Road and Gloria Way in the City is the only other source of water. Groundwater is treated at the well site. The City operates and maintains over 66 miles of pipe, as well as a groundwater well and a water treatment facility. The City does not currently have any water storage tanks.

The City operates the water system under State Water Resources Control Board, Division of Drinking Water (DDW) Permit Number 02-17-20P-4110024, dated January 30, 2020 (Permit).

The Permit addresses operating requirements categorized as General; Gloria Way Well Treatment Plant Operations, Monitoring, and Reporting; Distribution System Water Quality Monitoring; Operations and Maintenance (O&M); and Asset Management and Capital Improvement Planning.

This Asset Management Plan (AMP) addresses Requirement Number 26 under the last category.

1.2 PURPOSE OF THE ASSET MANAGEMENT PLAN
The AMP is a strategic plan that combines multi-disciplinary management techniques (including technical and financial) to determine best practices for operating, maintaining, and replacing assets over the life cycle of the asset in the most cost-effective manner to provide the agreed level of service (LOS).

The AMP provides visibility of the costs and benefits associated with providing the agreed LOS with the intent to minimize the whole life cycle cost for operating, maintaining, and replacing assets.

The City’s Capital Improvement Program (CIP) includes projects to replace existing assets and projects to construct new assets or upgrade existing assets.

The AMP describes the risk-based asset management approach to planning the replacement of existing assets. The approach considers the criticality of each asset and the condition of each asset.

Those assets whose failure would have the greatest adverse consequences and that are in the poorest condition and more likely to fail are prioritized for replacement.

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 2
The AMP describes the processes for determining and prioritizing new assets or upgrading existing assets to meet water demands of future development, as well as other requirements, including water storage, as part of a Water System Master Plan.

The implementation of the AMP provides a strong foundation for making wise financial decisions about how to operate, manage, and improve the water system. As the amount of asset information becomes available to staff, the staff’s ability to prioritize investments in the water distribution system improves.

1.3 ASSET MANAGEMENT PLAN ORGANIZATION
This AMP includes the following:
• Chapter 2: Asset Register Management Plan (ARMP). The chapter describes the process of identifying and collecting data for each asset (Appendix A, Asset Register Management Plan).
• Chapter 3: Operational and Maintenance Requirements. The chapter describes and documents the operational and maintenance requirements (including the requirements to comply with all permit requirements; federal, state, and local regulations; and industry best practices) necessary to provide the agreed LOS. It also describes the process for identifying the operational and maintenance data to be collected for each asset. • Chapters 4: Asset Replacement Planning. The chapter lays the foundation for collection of asset condition data and the analyses that will ultimately provide a more costeffective approach to planning for asset replacement. • Chapter 5: Level of Service: The chapter describes the process for developing the water utility’s LOS by examining the numerous services and activities performed for its stakeholders, including its customers and employees.
• Chapter 6: Capital Improvement Program. This chapter describes the development of the CIP, including the funding of projects.

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WATER SYSTEM ASSET MANAGEMENT PLAN
FEBRUARY 2022 3
2 ASSET REGISTER MANAGEMENT PLAN

2.1 PURPOSE
The chapter describes the plan to improve, maintain, and manage the asset register. The asset register is complete inventory of water system assets and all relevant information about each asset.

The asset register is maintained in a commercially available asset management software system.

Understanding the number, type, and condition of assets is a key building block to an overall AMP.

The asset register is the basis for gaining that understanding. It includes the entire data set related to the City’s water assets—a detailed list of all the City’s water assets and key data associated with each asset, including maintenance data.

2.2 CONTENT
The ARMP provides guidance to ensure the following is consistent throughout all facilities:
• Standard definitions for assets and the different ways they are handled • Standard format for the asset register, including descriptions for assets entered into the appropriate fields in the asset register
• Standard definitions for assets and hierarchical positions • Standard naming conventions and definitions for asset types, including a list of asset types provided by the City and implemented into the asset register • Standard definitions for the attribute information collected for each asset type • Standard process to develop and update the asset register

2.3 ASSET MANAGEMENT SOFTWARE SYSTEM
The asset register is maintained in a commercially available asset management software system. All data shall be transferrable to other commercially available asset management systems.

Multiple software systems may be used to maintain and operate the water system. For example, separate software may be used for asset management, a customer billing, and water quality reporting.

Data from all software systems shall be transferrable to the asset management software system. See Appendix B for Asset Register Standard Format.

The asset management software system shall be able to create custom reports. Reports allow the City to verify that assets are being operated and maintained in accordance with contract and permit requirements, as well as industry standards.

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2.4 QUALITY CONTROL
Quality control is a key component of the AMP. The asset register is only as good as the reliability of the information in the database. The quality control processes ensure they meet the following objectives:
• Verify current asset inventory information maintained by the City • Identify missing assets
• Identify assets no longer in service
• Collect missing relevant asset attributes

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FEBRUARY 2022 5
3 OPERATIONAL AND MAINTENANCE REQUIREMENTS

3.1 PURPOSE
The chapter describesthe operational and maintenance requirements for each asset class and type necessary to provide the agreed LOS in the most cost-effective manner. Those requirements shall never fall below the requirements required by federal, state, or local laws, regulations, codes, and permits.

The requirements determine the operational and maintenance activities of each asset class and/or type.

Each asset may have one or more operational requirement and maintenance requirement. As part of the asset management, the operational and maintenance requirements for each are identified.

The purpose of these operational and maintenance requirements is to communicate the expected approach and guidelines to manage specific water-related asset categories. For each asset type, the following information is provided:
• Operational Requirements: This provides minimum operating conditions for each type of asset to meet or exceed the agreed LOS. When an asset fails the operational requirements, it must be repaired or replaced.
• Maintenance Requirements: This provides minimum maintenance requirements for each type of asset to meet or exceed the agreed LOS.
• Life Expectancy: When an asset can no longer meet the operational requirements, it will be repaired and returned to operational effectiveness. If it cannot be repaired, it will be determined to have reached its end-of-life, either structurally or operationally, and will be replaced. If there are additional criteria for determining an asset is at its end-of-life, those criteria are included in the sections below.

3.2 WATER METERS
Water meters are an active asset meant to meter volumes of water over a wide range of flows. They are an essential element for the assessment and collection of water revenues, as well as rate making, loss control (leakage), and conservation. Unfortunately, meters are mechanical in nature and typically lose their sensitivity over time, thus failing to accurately monitor water consumption.

Meters that are not functioning properly tend to under-register water usage, although it is not unheard of for a meter to over-register water usage.

Although meters have been historically monitored through manual “readings” of the meters themselves, recent advances in technology have introduced meters that electronically communicate water usage. This saves significant labor resources with respect to meter reading. It also allows for real-time alerts where there are probably leaks. Thus, utilities can monitor customer usage more closely and detect issues that may be occurring on the system or on the customer’s property (on the customer side of the meter).

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A large part of utility revenue depends on meter accuracy. Small changes in meter accuracy can translate into thousands of dollars of revenue. Additionally, newer “smart” meters greatly improve the speed at which leaks can be detected, which is an important consideration in water conservation. Finally, smart meters save significant labor costs related to reading meters.

Due to these benefits, the City plans to replace all non-Neptune meters with Neptune meters over the next three years. The City also plans to enact a program to replace meters on a 15- to 20-year cycle, depending on the Neptune meter performance.

These operational and maintenance requirements provide the policy for maintenance, calibration, and analysis that will ultimately determine the replacement of water meters.

3.2.1 OPERATIONAL REQUIREMENTS
Minimum daily operational requirements of water meters are as follows:
• Remain structurally intact at maximum operating pressures and occasional pressure transients experienced on the system
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the water main
• Maintain accurate metering/measuring over a wide range of flows for the given size and type of meter in accordance with American Water Works Association Manual M6, Water Meters – Selection, Installation, Testing, and Maintenance

3.2.2 MAINTENANCE REQUIREMENTS
Water meters tend to wear and/or accumulate deposits and, thus, require regular maintenance to ensure that they meet daily operational requirements. Maintenance activities occur when data indicates that the meter has stopped working (zero read) or is inaccurately metering consumption (over-registering or under-registering). While large changes in meter readings may raise a red flag, periodic meter calibration/testing is also required to determine accuracy.

Record keeping of customer billing complaints, calibration/testing results, meter replacement, and O&M activities is integral to an effective maintenance program. The following records will be maintained:
• Customer complaints related to meter accuracy and billing issues. Each customer complaint will be associated with the water meter serving the customer. The complaint will also show actions taken to address the customer’s complaint. • Meter replacements. The asset data will also be updated with appropriate information about the new meter (e.g., date of replacement, manufacturer, account/meter number). • Maintenance actions performed on the meter to bring the meter into compliance with accuracy standards.

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Meter maintenance consists of finding meters that have stopped registering, have become highly inaccurate, or through a regular meter testing program have been found to be inaccurate. Per Neptune Technology:

The only way to determine whether a specific meter is operating efficiently is to test it.

Establishing a meter maintenance program is recommended for all utilities. In a utility, large meters move the most water, so they in turn generate the most revenue. Maintaining the accuracy of these meters means maintaining or improving revenue for the utility.1 The Bay Area Water Supply & Conservation Agency provides meter testing to member agencies. The American Water Works Association (Manual M6) recommends the following testing frequency:
• Intermediate Meters: Medium-sized meters measuring 1.5 and two inches should be tested for accuracy on a five-year rotating basis. When meters are removed based on age, 10 percent of removed meters will be tested for accuracy to validate the assumed meter life cycle.
• Large Meters: Large meters measuring greater than two inches should be tested for accuracy on an annual basis. When a significant statistical profile of meter accuracy is attained, the rate of testing per year can be adjusted.

All tested meters shall conform to the low-, medium-, and high-flow accuracy test limits given in the latest edition of American Water Works Association Manual M6.

3.2.3 LIFE EXPECTANCY
Small Meters: Small meters will be replaced on a 20-year cycle.

Intermediate Meters: Intermediate meters will be rebuilt or replaced on a 20-year cycle.

Large Meters: Large meters will be rebuilt or replaced when found to be metering outside of accepted metering accuracy.

3.3 PIPES AND FITTINGS
The City’s existing distribution system is a network of pipes and fittings connecting the pipes. The pipes and fittings are tracked as separate asset classes; however, the maintenance and operation requirements are similar.

3.3.1 OPERATIONAL REQUIREMENTS
Water mains are a passive type asset meant to convey safe water by maintaining sufficient dynamic pressure from the source elevation to the discharge elevations. Daily water main operational requirements are as follows:
1 Neptune Technology Group. 2016. HP Turbine Field Testing Guide. Accessed December 2021. https://www.neptunetg.com/globalassets/products/literature/publication_ft-hp-turbine-01.16.pdf.

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• Remain structurally intact at maximum operating pressures and occasional pressure transients experienced on the system
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the water main
• Meet minimum pressure requirements during peak-hour demand (PHD) and fire flow demand • Meet minimum flow requirements during PHD and fire flow demand • Do not degrade water quality in the daily conveyance of water

3.3.2 MAINTENANCE REQUIREMENTS
Although water mains are passive assets, they require regular maintenance to ensure that they meet daily operational requirements. Water quality flushing and, as appropriate, uni-directional flushing are performed as part of its regular maintenance program.

Water Quality Flushing: Flushing mains to eliminate taste and odor issues:
• Water mains with low flows and dead-end mains are susceptible to taste and odor issues. These issues generate customer complaints, which in time erode customer confidence in the provider and may also be precursor events to disinfection by-product violations or bacterial outbreaks. Water quality flushing on a regular basis to maintain a detectable chlorine residual will prevent these issues. • Monitoring known low-flow areas and dead-end mains for customer complaints of taste and odor, as well as areas of known and potential bacteriological issues, will be performed. Water quality flushing will be performed in low-flow areas and dead-end mains at intervals to minimize customer complaints, maintain detectable chlorine residuals, and prevent bacteriological issues from arising. Flushing intervals will depend on customer sensitivity, seasonal variations, water temperature, seasonal flow, and age and cleanliness of the water main. The City may consider the installation and use of automated flushing valves in lieu of manual flushing operations.

Uni-Directional Flushing: Flushing mains with high-velocity water scouring to remove sediment, biofilm, and rust:
• Uni-directional flushing creates a high-velocity scouring flow in a single length of pipe to remove sediment, biofilm, and rust that contribute heavily to long-term taste and odor issues and bacteriological issues. Conducting uni-directional flushing will reduce the number of customer complaints, improve the carrying capacity of the main, and cut down on the amount of water quality flushing that must be performed. Because unidirectional flushing requires isolation of lengthy sections of pipe, it can be coordinated with the City’s valve exercising program.
• Uni-directional flushing on all of its mains four inches and larger will be performed at an interval no greater than once every five years. The interval may be increased or

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decreased based on customer complaints, taste and odor issues, changes in bacteriological incidents, and rates of water quality flushing. • A no discharge elimination system may be used to return flush water to the system after filtering and disinfecting.

Record keeping of customer complaints, water quality sampling, O&M activities, and photographs of the pipe is integral to an effective maintenance program. The following records will be maintained:
• Customer complaints related to taste and odor, water quality, pressure, and flow. Each customer complaint will be associated with the service line and the water main serving the customer. The complaint will also show actions taken by the City to address the customer’s complaint.
• Water quality sampling. Samples will be associated with the water main from which each sample is collected, and the test results will become part of the water main record. Water quality samples will include those for following up on routine customer complaints, regulator-required water quality sampling, and routine chlorine residual testing. • All maintenance activities performed on the water main. This includes water quality flushing to address taste, odor, and low chlorine residuals in dead-end mains or lowdemand areas of the system, as well as uni-directional flushing for scouring water mains of accumulated sediment and biofilm. The City shall collect the following information when repairing a water main break:
o Location of the break
o Type of break – longitudinal, circumferential, joint separation, or construction o Pipe construction material
o Condition of exterior pipe coating, if present
o Pitting depth on exterior of pipe
o If interior of the pipe is visible:
 Condition of interior pipe lining, if present
 Visible pitting or corrosion
 Pipe wall thickness
• Pictures of the exterior and interior of the pipe and pipe break.

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3.3.3 LIFE EXPECTANCY
Operational Life Expectancy
Operational life expectancy of a water main is a factor of pipe size (diameter), length, internal roughness, and the demands placed on the water main. The water main in the City is assumed to be at the end of its operational life if it is unable to meet the following:
• Minimum pressure requirements for PHD or fire flow demand • Minimum flow requirements for PHD for fire flow demand Water mains falling into one or both of the above categories shall be added to the CIP for rehabilitation or replacement.

Structural Life Expectancy
Structural life expectancy of a water main highly depends on the pipe construction materials, pressures exerted on the pipe over its lifetime, corrosivity of soils, corrosivity of water, and original construction conditions (particularly underlayment). The following categories determine water main life expectancy in the City:
• Water Main Breaks: A water main break shall be considered a structural main break when the main experiences a longitudinal or circumferential break of the pipe wall or the joint between two sections of pipe has separated. Breaks as a result of tap failures or external construction activities (excavations, drilling, and borings) shall not be counted as breaks related to the structural life of the water main. • Water Main Leak: A water main leak shall be considered a structural leak when (1) the main experiences a leak through the side wall of the pipe as a result of failure of the seal at the joint between two sections of pipe, or (2) corrosion either internally or externally has compromised the wall of the pipe. Leaks as a result of tap failures or external construction activities (excavations, drilling, and borings) shall not be counted as leaks related to the structural life of the water main.

A water main shall be considered at its end of structural life and will receive an enhanced condition assessment to estimate the remaining life of the water main when it experiences either of the following:
• More than seven structural breaks per mile since installation • Five structural breaks per mile in the past 10 years
Design Life Expectancy
Pipe at its engineered end-of-life is at the end of its design life but may or may not be at operational or structural end-of-life. The typical design life of a pipe installed on the City’s water system is shown in Table 3-1.

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TABLE 3-1. PIPE DESIGN LIFE
Type Design Life (Years) 80% Life (Years)
CI 100 80
AC 75 60
PVC 125 100
Notes: AC = asbestos cement; CI = cast iron; PVC = polyvinyl chloride A water main at 80 percent of its design life shall receive an enhanced condition assessment to determine the remaining life of the water main.

3.4 VALVES
Valves are commonly used to direct flow, shut off water access, prevent backflow, and adjust water pressure within a system.

3.4.1 OPERATIONAL REQUIREMENTS
Valves are an active type asset meant to regulate the flow of water while containing the developed static head of the water. Daily operational requirements of valves are as follows:
• Remain structurally intact at maximum operating pressures and occasional pressure transients experienced on the system.
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the valve.
• Continue to operate through the full spectrum of its intended purpose:
o Gate valves are intended to be used in a fully open or fully closed position and very rarely as flow regulators for short durations. In the fully open position, a gate valve will not hinder water flow and, in the fully closed position, will remain watertight. o Pressure Reducing Valves reduce incoming water pressure to a lower predetermined water pressure.
o Butterfly, ball, and check valves will be added to these operational and maintenance requirements as they are added to or found to exist on the system. • Do not degrade water quality in the daily conveyance of water.

3.4.2 MAINTENANCE REQUIREMENTS
Valves are active assets that require regular maintenance to ensure that they meet operational requirements.

Valve Exercising Program
The role of a system isolation valve is to be in a standby ready position in the event of a water main break, maintenance, or other event requiring that a section of water main be isolated from the rest of the system. To ensure that all system isolation valves are available and in a standby ready

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position, each valve will be exercised at least once in a one-year period. All preventive maintenance data shall be collected when the valve is exercised.

The role of a PRV on the City’s system is to reduce the static water pressure from the City’s water system into two neighboring water districts. The valves can be expected to operate only when an emergency source of supply is needed from the City to the neighboring water districts. PRVs at the turnouts will be serviced weekly and at interties weekly, and interties will be exercised at least once per year. All preventive maintenance, which includes rebuilding the PRV, shall be performed every four years or as required.

Record Keeping
Record keeping of O&M activities is integral to an effective maintenance program. The following records will be maintained:
• All preventive maintenance activities performed on the valve. Typically, each system isolation valve is visited at least once during a set period to exercise the valve from a fully open position to a fully closed position and back to a fully open position. When preventive maintenance is performed, the City shall verify the asset location and note the condition of the valve box, any leakage from the stuffing box or valve body, the number of turns to close the valve, the direction of valve closure, and any other unusual conditions. • All corrective maintenance activities performed on the valve. When corrective maintenance is called for on a system isolation valve or a PRV, the City shall document the extent of the corrective maintenance, note the valve’s condition (internally and externally, when possible), collect a visual record, and collect or reaffirm asset attribute information.

3.4.3 LIFE EXPECTANCY
Life expectancy of a valve is based on the continuing ability of the valve to meet its expected role on the system. At any time, if a valve cannot meet its expected role and corrective maintenance is unlikely to address the issue, the valve shall be considered at its end-of-life and shall be replaced.

More specifically, a valve shall be replaced if:
• The valve cannot meet its expected role, and replacement parts are not available. • The valve has a damaged body or flanges.
• The water main adjacent to the valve is replaced.

3.5 BACKFLOW DEVICES
Chapter 15.44 of the City’s Municipal Code provides for the regulations for backflow prevention and cross-connection control. The City has a contract with the San Mateo County Environmental Health Services Division to implement a Cross-Connection Control Program, including compliance with required program personnel certifications; surveying of residential, industrial, and commercial use facilities for potential cross-connection hazards; designation of appropriate backflow preventers; requirements for testers and testing of backflow prevention assemblies; and maintenance of records.

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The State of California and the San Mateo County Health Department recognize the need to protect public health on a water system through implementation of a Cross-Connection Control Program.

Based on the degree of hazard to the premise being served, a backflow prevention assembly may be required. The state and the County regulate the following devices:
• Double-check valve backflow prevention assembly (DC)
• Double-check detector backflow prevention assembly (DCDA) • Pressure vacuum breaker backsiphonage prevention assembly (PVB) • Reduced-pressure principle backflow prevention assembly (RPBA) • Reduced-pressure principle detector backflow prevention assembly (RPDA) • Spill-resistant pressure vacuum breaker backsiphonage prevention assembly (SVB)

3.5.1 OPERATIONAL REQUIREMENTS
Backflow devices are an active type asset meant to prevent the entry of non-potable waters into the water system. Daily operational requirements of backflow devices are as follows:
• Prevent the entry of non-potable water into the water system via either backsiphonage or backpressure or both
• Provide water service to the customer up to the device’s rated flow with a minimum of static pressure head loss
At the time of a new water service connection, the City is required to determine if a backflow prevention assembly is required. This determination is made by a licensed cross-connection specialist either employed by or contracted to the City.

The premise owner is responsible for the ongoing O&M of the backflow prevention assembly. The San Mateo County Health Department will notify the premise owner of the need to test the device annually by a certified backflow prevention tester. Devices that fail a test have 30 days to be corrected and to pass the test. Devices that fail and are not on the University of Southern California (USC)-approved device list must be replaced.

3.5.2 MAINTENANCE REQUIREMENTS
The backflow device owner is responsible for maintaining the backflow device. The San Mateo County Health Department issues notices for device testing. The backflow device owner is responsible for repair or replacement when a device fails the annual test. Devices that fail the test and are no longer on the USC-approved device list must be replaced.

Backflow device data, including corresponding account/location data, device type, installation date, and testing results, will be collected and maintained, as well as a current list of the USC-approved device list. The City will work with the County when devices are out of compliance or need testing.

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3.5.3 LIFE EXPECTANCY
Backflow devices are considered to have reached their end-of-life when they fail certification and cannot be repaired or are not on the USC-approved device list. The premise owner is responsible for replacing these devices.

3.6 HYDRANTS
A fire hydrant is a connection point by which firefighters can tap into a water supply. A sufficient number of fire hydrants that are served by sufficient water pressure provide a critical component of fire protection to a community.

3.6.1 OPERATIONAL REQUIREMENTS
Hydrants are an active type asset meant to provide access points to the system for high volumes of water without significant static head loss. Daily operational requirements of hydrants are as follows:
• Remain structurally intact at maximum operating pressures and occasional pressure transients experienced on the system.
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the hydrant.
• Continue to operate through the full spectrum of its intended purpose. Most importantly, hydrants need to provide rapid and reliable water access points for firefighting equipment.

3.6.2 MAINTENANCE REQUIREMENTS
Hydrants require regular maintenance to ensure that they meet operational requirements. Hydrants will be exercised at least once per year. All preventive maintenance data shall be collected when the hydrant is exercised.

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o Notes on any leakage from the hydrant or auxiliary valve body o The number of ports, the size of the ports, and any other unusual conditions • All corrective maintenance activities performed on the hydrant. The City shall document the extent of the corrective maintenance, note the hydrant condition (internally and externally, when possible), collect a visual record, and collect or reaffirm hydrant asset attribute information.

3.6.3 LIFE EXPECTANCY
Any hydrant that has a damaged body or flanges shall be considered at its end-of-life and shall be replaced.

A fire hydrant shall be considered to be at the end-of-life if the hydrant needs repair and parts are no longer available.

If the water main serving the hydrant is replaced, the hydrant shall be replaced with a new hydrant at that time.

3.7 TREATMENT WORKS INCLUDING WELL
The Gloria Way Well produces water with relatively high levels of iron and manganese. Treatment consists of iron and manganese removal via chlorination and pyrolusite media filtration, chloramination using ammonia addition, corrosion control by means of sodium hydroxide addition for pH management, and blending of well water with purchased surface water.

3.7.1 OPERATIONAL REQUIREMENTS
Wells are a passive type asset meant to provide a conduit for the extraction of water from an aquifer. The water may meet drinking water standards or may require further treatment to meet drinking water standards. Daily operational requirements of wells are as follows:
• Remain structurally intact over its full length, holding back surrounding soil pressure while simultaneously allowing groundwater to flow in from the aquifer with minimum sand and sediment
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the well
• Continue to operate through the full spectrum of its intended purpose If, at any time, these conditions are not being met, the well will need additional maintenance or will be considered to have reached its end-of-life, either structurally or operationally.

3.7.2 MAINTENANCE REQUIREMENTS
Wells are passive assets that require regular maintenance to ensure that they meet operational requirements.

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Water Quality Station Maintenance Program
The role of a well is to provide a conduit from the ground surface to an aquifer for the extraction of groundwater.

The following maintenance shall be performed to ensure that a well continues to perform as intended:

Quarterly:
• Inspect the integrity of the sanitary seal of the well • Inspect the surrounding area around the well within a 100-foot radius for possible sources of contamination
Every 10 years:
• Inspect the full length of the well with a down-hole camera and perform a full well inspection
If, at any time, the well experiences the following, the well should be inspected and guidance should be sought from well drilling and maintenance experts:
• A 25 percent or more decrease in well yield
• A decreased pumping rate
• A decreased groundwater level
• A decreased specific capacity
• An increase in sand or sediment content in the water
• A decreased well water depth (recharge rate)

3.8 WATER SAMPLING STATION
The role of a water sampling station is a sampling station that is used to provide daily or weekly representative water samples from the water system.

3.8.1 OPERATIONAL REQUIREMENTS
Water sampling stations are a passive type asset meant to provide access points to the system for collecting water sampling samples. Daily operational requirements of water sampling stations are as follows:
• Remain structurally intact at maximum operating pressures and occasional pressure transients experienced on the system.
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the station.
• Continue to operate through the full spectrum of its intended purpose. Most importantly, water sampling stations need to provide representative water samples from the system.

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3.8.2 MAINTENANCE REQUIREMENTS
To ensure that stations are providing representative water samples, the stations will be maintained at intervals contingent on the water quality of the system. For example, the maintenance interval of a station depends on the biofilm accumulation on the service line; deposition of calcium, manganese, and rust; insect control; and a host of issues unique to each station. The stations will be maintained at an interval that will ensure that each station is providing samples representative of water in the main.

Record keeping of O&M activities is integral to an effective maintenance program. The following records will be maintained:
• All preventive maintenance activities performed on the water quality station. Typically, each station is visited at least once during a set period to flush the station, exercise valves, sanitize the station, and note any deficiencies. When preventive maintenance is performed, the City shall verify the location of the stations and note the condition of the station. • All corrective maintenance activities performed on the water quality station. When corrective maintenance is called for on water quality stations, the City shall document the extent of the corrective maintenance, note the stations’ condition (internally and externally, when possible), collect a visual record, and collect or reaffirm asset attribute information.

3.8.3 LIFE EXPECTANCY
In the event that the water main serving the station is replaced, the station shall be replaced with a new station at that time.

3.9 GENERATORS
Generators are used for emergency power. One emergency generator is located at the Gloria Way Well.

3.9.1 OPERATIONAL REQUIREMENTS
Generators are an active type asset meant to provide emergency backup power to essential equipment operating during periods of power outages. Daily operational requirements of generators are as follows:
• Provide ready standby power at rated voltage and amperage of the generator • While operating, meet air pollution requirements
• Continue to operate through the full spectrum of its intended purpose as a Type M, Class 48, Level 2, generator in accordance with National Fire Protection Association 110 Standard for Emergency and Standby Power Systems

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3.9.2 MAINTENANCE REQUIREMENTS
Maintenance activities will include the following:
• Operate the generator for at least one hour each week. • Load test the generator at least once per month and perform basic fuel, oil, power output, and general condition inspection.
• Annually, perform oil and oil filter change, coolant change, battery test and replacement (if necessary), transfer switch inspection, and fuel and air filter change. Perform this maintenance more often, as necessary, if manufacturer requirements are more stringent.

Record keeping of O&M activities is integral to an effective maintenance program. The following records will be maintained:
• All preventive maintenance activities performed on the generator. Typically, each generator is run once per week for a minimum of one hour. At least once per month, the generator is physically inspected for fuel quantities, oil levels, power output, and general condition. When preventive maintenance is performed, the City shall collect run time, fuel and oil usage, power output, and any other unusual conditions. • All corrective maintenance activities performed on the generator. When corrective maintenance is performed on a generator, the City shall document the extent of the corrective maintenance, note the generator’s condition (internally and externally, when possible), and collect or reaffirm asset attribute information.

3.9.3 LIFE EXPECTANCY
The typical life span of a diesel generator is between 12,000 hours and 20,000 hours. For most water systems, this in usually in the range of 25 to 30 years, and a generator will typically age out before reaching 12,000–20,000 hours of use.

Any generator that needs corrective maintenance that would cost over 60 percent of the remaining life of the generator shall be considered at its end-of-life and shall be replaced.

It is recommended that the automatic transfer switch be replaced when the emergency generator is replaced.

3.10 PUMPS
A pump is a mechanical device used for raising or circulating water. The City currently has three types of pumps at the Gloria Way Well. The well pump pumps water from the aquifer to the treatment facility. Two decanting pumps return backwash water through the filtration system to the blending tanks. Three variable frequency pumps pump water from the treatment facility into the distribution system.

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3.10.1 OPERATIONAL REQUIREMENTS
Pumps are an active type asset meant to move water in the treatment facility. Daily operational requirements of pumps are as follows:
• Remain structurally intact at maximum operating pressures and occasional pressure transients experienced on the system
• Remain structurally intact against the corrosive nature of water or against the corrosive nature of soils surrounding the pump, if applicable
• Continue to operate through the full spectrum of its intended purpose

3.10.2 MAINTENANCE REQUIREMENTS
Pumps are active assets that require regular maintenance to ensure that they meet operational requirements.

The role of a pump is to be available to move water at the treatment facility.

Record keeping of O&M activities is integral to an effective maintenance program. The following records will be maintained:
• All preventive maintenance activities performed on the pumps. Pumps can be operated on regular schedules or on an as-needed basis to move water at the treatment facility. • All corrective maintenance activities performed on the pumps. All corrective maintenance shall be documented.

3.10.3 LIFE EXPECTANCY
The life expectancy of a pump is dependent on its type and usage.

3.11 CUSTOMERS

3.11.1 OPERATIONAL REQUIREMENTS
Customers are endpoint users of water on the system. Customers withdraw (purchase) water from the system and use it for their own purposes. The water is then disposed of through sanitary means.

Daily operational requirements of customers are as follows:
• Provide adequate volumes of high-quality water to meet customers’ needs. • Allow customers to withdraw water from the system and do not allow water from the customers’ premises back into the water system. The City also provides adequate positive pressure on the system to ensure that water does not backflow from the customers’ premises to the water system.

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• Meter and bill customer water usage from the system.
• Monitor customer usage and promote efficient usage of water through conservation programs.

3.11.2 MAINTENANCE REQUIREMENTS
Customers are not assets in the physical sense of requiring repair or replacement. Maintenance as follows is required to ensure that services are provided to customers:
• A rate structure to adequately cover the cost of operating and maintaining the water system • Customer billing system to collect revenue from the sale of water to customers • Cross-Connection Control Program with its customers
• Water conservation program
• Program to monitor customer complaints with documentation of how the complaint was addressed
The following records will be maintained:
• Land use type for each customer, meter read data, billing data, customer complaints, and backflow prevention requirements

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4 ASSET REPLACEMENT PLANNING

4.1 PURPOSE
The chapter describes the risk-based approach to asset replacement planning. The approach focuses on the following: (1) the condition of an asset and its likelihood to fail and (2) the gravity of the consequences of the asset failure, referred to as criticality. Each asset receives a score for condition and criticality based on a scoring criterion. Those scores are combined to establish the asset risk profile score. With limited funding available, the replacement of assets with the greatest risk profile score are prioritized.

The process can be used to focus maintenance efforts, as well as prioritize capital improvement projects.

FIGURE 4-1. RISK-BASED APPROACH TO ASSET REPLACEMENT PLANNING Asset
Register
Condition
Assessment and
likelihood of
failure
Criticality and
Consequence of
Failure
Risk Profile
Capital
Improvement
Program
Operations and
Maintenance
Level of Service

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4.2 ASSET CONDITION ASSESSMENT
Asset condition assessment is an assessment of each asset’s likelihood to fail. The asset condition assessment results in an asset condition score for each asset.

A condition assessment scoring criteria are developed for each asset class or type. Assets that have failed or are in extremely poor condition receive higher scores.

Defining failure is an important part of the condition assessment process. Failure may be defined in terms of the asset’s physical integrity or failing to meet operational requirements.

Appendix C, Collection of Asset Condition Data Standard Operating Procedures (SOP), describes SOPs for collecting and storing asset condition data. The SOP lays out what data is to be collected by asset type. Remaining useful service life data may be indicative of when an asset may fail.

An asset may be replaced if the producer is no longer fabricating replacement parts or supporting the project.

4.3 ASSET CRITICALITY ASSESSMENT
Criticality looks at the consequences of an asset failure. Criticality is used to determine the relative importance of an asset in relation to other assets based on a set of criteria. The criteria are ranked in levels of consequence based on their impact. The following categories have been selected:
• Service: Does the asset or project meet, marginally meet, or fail to meet DDW requirements?
• Environmental: Does the asset or project create environmental issues that have little impact on relatively few people or, conversely, far-reaching consequences affecting the community for the long term?
• Safety: Does that asset or project have little bearing on safety and health, or could it kill or critically injury one or more people?
• Supply: Does the asset or project affect water supply to a very small group of customers, or does it affect a wide group of customers over the long term? As shown in Table 4-1, each category has three to five levels of consequence, with a minimum score of one for low consequence and a maximum score of five for high consequence. For example, within the Safety category, there are five levels of consequence. The levels rank from one, which is “no injury or illness,” to five, which is “fatal injury or illness to one or more persons.” To score an asset, its score in each category is determined (if unable to discern between two levels of consequence, the higher level would be selected). The scores in all categories are then summed to provide a total score.

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In the example in Table 4-1, the asset/project has received the following consequence scores:
• Service: This asset/project does not meet DDW requirements and a consequence score of five.
• Environmental: This asset/project will cause moderate environmental damage, public may be affected, and press will notice, <$10,000 fine score of three. • Safety: This asset/project will create minor injury or illness, can be treated with on-site first aid score of two.
• Supply: This asset/project supply to customers is affected to an extended area for a moderate period. Typically, a loss of a 12-inch looped water main or undersized main unable to meet peak-hour flows scores a three.

These scores are then summed (5+3+2+3) for a total score of 13 out of a possible 20.

The Asset Criticality Table is used to provide a total score for each asset based on the above categories. The scores are then used in conjunction with the condition assessment to create a risk assessment score.

An Asset Criticality Assessment Worksheet is provided in Appendix D. Results are provided in the Draft Asset Criticality Assessment in Appendix E.

4.4 ASSET RISK ASSESSMENT
Asset risk assessment results in an asset risk score, which is the combination of the asset condition score and the asset criticality score. The replacement of assets with higher risk scores in a given asset class should be prioritized over assets with lower scores.

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TABLE 4-1. ASSET CRITICALITY TABLE

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5 LEVEL OF SERVICE

5.1 PURPOSE
This chapter describes the process for developing the water utility’s LOS by examining the numerous services and activities performed for its stakeholders, including its customers and employees. The process results in a system for measuring the water utility’s performance of services and activities.

The International Infrastructure Management Manual defines LOS as “the defined service quality for a particular activity or service area against which service performance may be measured. Service levels usually relate to quality, quantity, reliability, responsiveness, environmental acceptability and cost.”

5.2 DEVELOPMENT PROCESS
The community outcomes and core values are defined. Community outcomes are based on the reasonable expectations of the community. Core values are principles that define and drive the success of the organization.

The services and activities to be measured to align with the community outcomes and core values are identified.

Key performance indicators (KPIs) used to measure the services or activity are defined. KPIs are measurable in the sense that they must be able to yield a number. Where possible, a numerical measure is preferable to a “Yes” or “No” answer. For instance, if the KPI is “no more than two outages/1,000 customers per month lasting four or more hours,” it is preferable to utilize a KPI that provides a measurement of the average number of outages per 1,000 customers, rather than a Yes/No answer to the KPI. A numerical figure is more likely to:
• Indicates if the performance is marginally better or significantly better. If the performance is only marginally better, the service or activity may require closer review.

If the performance is significantly better, the standard needs to be raised. • Demonstrates over time whether performance is improving or declining. • Supports a higher level of accountability. “What gets measured gets managed.” • May demonstrate that the KPI has become a poor indicator and needs to be revisited.

The AMP defines how KPIs are measured, including:
• Who is responsible for each KPI?
• How the measuring will be performed?

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• How often will KPI measurements be collected?
• How often will KPIs be reported and in what format?
KPIs should not be difficult to measure.

Over time, these elements of the process will be updated. The process is shown on Figure 5-1.

FIGURE 5-1. DEVELOPMENT CYCLE FOR LEVELS OF SERVICE
The LOSs defined in Table 5-1 are a result of the above process. As the City collects information on its KPIs, it may revise each element as appropriate.

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TABLE 5-1. COMMUNITY OUTCOMES, CORE VALUES, OBJECTIVES, AND LEVELS OF SERVICE Community Outcome: Sufficient Quantity of Water is Available (Water Supply) We provide water that is available to meet the needs of the Customers of East Palo Alto with minimal interruption.

Core Value: Reliable Water Service
Activity: Maintain adequate pressure on the water system.

KPI: Maintain a minimum of 20 psi pressure to all customers on a full-time basis (at PHD and at minimum demand).

Service: Provide timely service to customers.

LOS: New water services are approved or denied to customers within 6 weeks of application for service.

Activity: Consolidate and minimize scheduled outages.

KPI: Maintain number of scheduled outages of 12 hours or less at or below industry standard.

Service: Minimize unscheduled outages.

KPI: No more than 2 outages/1,000 customers a month lasting more than 4 hours.

Community Outcome: Drinking Water is Safe
We provide water to our customers that is in full compliance with federal, state, and local laws pertaining the quality of the water.

Core Value: Water Quality
Activity: Meet all regulatory requirements.

KPI: Meet regulatory requirements 100% of the time.

KPI: Cooperate with stakeholders as required by County Cross-Connection Program.

KPI: Maintain proper disinfection, per industry standards, in the distribution system 100% of the time.

Core Value: Customer Service
Service: Respond to customer complaints.

KPI: Respond to all customer complaints within 24 hours.

Community Outcome: Drinking Water is High Quality
We provide water to our customers that is desirable as a product.

Core Value: Water Quality
Service: Reduce customer water quality complaints.

KPI: 100% compliance with DDW regulation for source monitoring.

Objective: Provide customer service.

KPI: Respond to all customer complaints within 24 hours.

Community Outcome: Water System Operations are Transparent Our strategies, business, and actions are available for customer review and are driven to the City’s and Customers best interests.

Core Value: Transparency
Activity: Publish the annual budget.

KPI: Publish draft annual budget within 2 days of submitting to City Council for acceptance.

KPI: Publish accepted annual budget within 2 days of acceptance by City Council.

Service: Respond to public requests for information.

KPI: Respond to public requests for information within 10 days of receiving the request.

Core Value: Water Quality
Activity: Meet all regulatory requirements.

KPI: Make reports to DDW available to the public within 10 days of submitting to DDW.

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TABLE 5-1. COMMUNITY OUTCOMES, CORE VALUES, OBJECTIVES, AND LEVELS OF SERVICE Core Value: Customer Service
Service: Customers will be responded to.

KPI: Respond to customer phone calls (non-emergency) and emails before the close of business.

KPI: Customer emergency calls will be responded within one hour during normal business hours and during non-business hours.

Activity: Meet all regulatory requirements.

KPI: Publish Consumer Confidence Report by July 1 of every year.

Community Outcome: Drinking Water is Affordable
We provide water to our customers that is brings a high level of value and is affordable to a wide range of customers.

Core Value: Customer Service
Activity: Perform rate studies and cost of service studies.

KPI: Rate and cost of service studies every 5 years.

Service: Provide accurate and timely billing.

KPI: Annually less than 0.5% customer bills are in error.

Core Value: Fiscal Responsibility
Service: Provide cost-effective water service to customers.

KPI: Notify customer within 1 billing cycle of a possible leak on premise.

Activity: Meet bond requirements.

KPI: Maintain a bond rating of A+ for the water utility.

Community Outcome: Information is Secure
We maintain a safe information system to protect customer information as well as provide for the continued operation of the water system.

Core Value: System Security
Activity: Provide appropriate security measures (infrastructure, data).

KPI: Ensure customer data is secure.

KPI: Meet or exceed national standard for business network security for systems of City size and location.

KPI: Meet or exceed national standard for control system security for systems of City size and location.

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6 CAPITAL IMPROVEMENT PROGRAM

6.1 PURPOSE
The purpose of the chapter is to describe the process of developing the City’s Bi-Annual, 10-Year CIP.

The CIP identifies projects, as well as each project’s scope of work, budget, and funding source.

6.2 WATER SYSTEM MASTER PLAN
A Water System Master Plan (WSMP) identifies projects to be implemented over the next 20-year period. The WSMP is typically updated every five to 10 years.

As part of the WSMP, the capital improvement surcharge rates necessary to deliver the projects are calculated. In addition, a cashflow analysis is performed to determine when projects may be scheduled. This type of financial analysis is best performed over a longer period, as opposed to the two-year period associated with the CIP.

As the affordability of water rates and capital improvement surcharges is a concern of customers, the WSMP balances affordability of water fees with the need to improve and enhance the water system.

The WSMP typically addresses the following three types of projects: (1) asset replacement projects, as addressed above; (2) known, required studies and reports, such as updating the WSMP; and (3) water system upgrades.

The process of identifying water system upgrades projects is the significant effort and requires the consultant to perform the following tasks:
• Create a model of the existing water system
• Develop existing and future service area descriptions based on existing and future land uses to model existing and future water demands
• Evaluate the existing water system to determine if the infrastructure has capacity to meet existing and future water demands
• Modify the existing water system model (e.g., increasing pipe sizes or adding new waterlines) to determine what upgrades and/or enhancements are required to meet existing and future water demands
Other potential projects are related to (1) alternative water storage locations, (2) the resiliency and reliability the water supply, and (3) utilizing recycled water.

Concurrent with each comprehensive WSMP or periodic update, a Capital Funding Plan will be developed that incorporates the annual capital projects identified for the planning period, associated costs escalated to the year of anticipated construction, and the funding sources anticipated to fund the projects. Potential funding sources may include revenues generated from water capital surcharges, water capacity fees, grants and other outside contributions, debt issuance, and other resources applicable to water enterprise funds. Resulting rate requirements for funding the annual capital

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program will be identified to evaluate the sufficiency of water rates and fees over the planning period.

Customer bill impacts will be summarized and evaluated for adequacy and reasonableness.

WSMPs typically include a water rate analysis for funding the projects. The City will evaluate funding alternatives and water capital surcharge impacts for funding capital improvements identified in the WSMP. A 20-year water enterprise financial projection will detail the annual funding requirements for completing capital projects identified in the WSMP and the corresponding impacts on water capital rates over the planning period. Alternative capital funding and financing scenarios will be evaluated to identify their impacts on future water capital rates and finances.

Water system O&M costs and capital-related costs are recovered through water rates and charges.

The current water rate structure includes the following rate components and utility tax applied to customer bills:
• O&M Rates: Recovers O&M costs, emergency repairs, and replacement projects depending on the type of repair and dollar amount.
• Meter Replacement Surcharges: Funds the meter replacement program. • Capital Improvement Surcharges: Funds major repairs, replacements, and improvement projects.
• Utility Tax: Used for utility tax-related items.

6.3 CAPITAL IMPROVEMENT PROGRAM
A 10-year CIP is prepared every other year and is adopted by the City Council.

The CIP is typically focused on the first five years of the plan as projects identified in the first two years of the CIP should be completed by the fifth year of the CIP. Projects identified as starting after the two-year period are more likely to change for a variety of reasons.

Preparers of the CIP have a better understanding of the status of the water system and the financial status of the water utility. Some assets may have unanticipatedly failed and require replacement.

Also, the City may have receive grants to aid in the cost of implementing projects. CIP preparers may make adjustments to the projects identified in the WSMP.

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TABLE OF CONTENTS
Table of Contents........................................................................................................................................... i Acronyms and Abbreviations....................................................................................................................... iii 1 Purpose................................................................................................................................................. 1 2 Objectives ............................................................................................................................................. 3 3 Asset Register of Record....................................................................................................................... 5

3.1 Asset Register Interface with Other Entities............................................................................... 5 4 Assets.................................................................................................................................................... 7

4.1 Asset Defined .............................................................................................................................. 7

4.2 Asset Register.............................................................................................................................. 7

4.2.1 Asset Class...................................................................................................................... 7

4.2.2 Asset Type ...................................................................................................................... 7

4.2.3 Asset Attributes ............................................................................................................. 8

4.2.4 Planning Asset Attributes............................................................................................... 8 5 Asset Register Development and Updates........................................................................................... 9

5.1 Asset Register Maintenance ....................................................................................................... 9

5.1.1 Asset Manager ............................................................................................................... 9

5.1.2 Asset Replacement ...................................................................................................... 10

5.1.3 Asset Register Quality Control Program ...................................................................... 10

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ACRONYMS AND ABBREVIATIONS
ARMP Asset Register Management Plan
City City of East Palo Alto
GIS geographic information system
GPS Global Positioning System
OUL original useful life

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1 PURPOSE
The purpose of this Asset Register Management Plan (ARMP) is to provide standards for the development and ongoing maintenance of asset registers used by the City of East Palo Alto’s (City’s) Department of Public Works. In a utility, assets, as well as their relative positions/locations, are added to the water system to meet growth, removed from the water system as assets reach their end of life, and swapped out during routine maintenance activities. As field conditions change, and without a methodology to manage asset information, the accuracy of asset registers diminishes over time, and asset registers become useless for asset management activities. Complete and current asset registers will assist the City in the procurement, maintenance, renewal, and disposal of assets and will provide a foundation for asset management decision-making.

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2 OBJECTIVES
The objectives of this ARMP are as follows:
• Verify current asset inventory information maintained by the City • Identify missing assets
• Identify assets no longer in service
• Collect missing relevant asset attributes
This ARMP provides guidance to ensure the following is consistent throughout all facilities:
• Standard definitions for assets and the different ways they are handled • Standard format for the Asset Register of Record (Asset Register), including descriptions for assets entered into the appropriate fields in the Asset Register • Standard definitions for asset and hierarchical positions • Standard naming conventions and definitions for asset types, including a list of asset types provided by the City and implemented into the Asset Register • Standard definitions for the attribute information collected for each asset type • Standard process to develop and update the Asset Register

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3 ASSET REGISTER OF RECORD
The Asset Register for the City’s water system will be inputted and maintained in accordance with this ARMP.

The City will own all data contained in the Asset Register.

3.1 ASSET REGISTER INTERFACE WITH OTHER ENTITIES
The City will maintain the standards for the database. The City contracted with Veolia to operate and maintain the water system. Veolia uses the software applications SpryPoint (customer billing) and InfoAsset to track assets in the City’s water system. The City seeks to have the City and Veolia work simultaneously with the same Asset Register data. To accomplish this, Veolia will provide the City with regular updates of the database of record that the City will subsequently use to update their databases. The file location, file format, and interval of these data updates will be determined by the asset manager working in partnership with the City. Conversely, as the City completes Capital Improvement Program projects and other updates to the systems, its databases will be updated and must be provided to Veolia to update the database of record. The City will provide to Veolia regular updates to its databases that Veolia will subsequently review for conformance with this ARMP and GIS standards before updating the database of record.

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4 ASSETS

4.1 ASSET DEFINED
An asset is a physical item of a network that has value, performs a specific function to provide a service, and typically exists in a field setting rather than a treatment plant setting. It is the lowest level of detail managed by the utility’s maintenance strategy to maintain the item in accordance with its designed performance and to repair, rehabilitate, and assist in replacement decisions. Further definition of a qualified asset includes the following:
• The cost of replacement for the asset is greater than $5,000 and does not include a subcomponent of an asset. • A clear need exists to track preventive and predictive maintenance costs. • The asset has an estimated original useful life (OUL) of one year or greater. • A work order is written for preventive and/or corrective maintenance of the asset, such as equipment requiring extensive calibration or items that, because of their regulatory nature, require proof of maintenance, such as safety equipment.

4.2 ASSET REGISTER
The City’s Asset Register is a database that tracks static and dynamic objects required to complete the daily and long-term functions of the City’s water system. Assets can be water mains, isolation valves, fire hydrants, customer meters, water sample stations, backflow devices, pressure-reducing valves, etc. The CWOP tracks its assets in a commercially available asset management system. The AMSS shall have mapping features that allow assets to be displayed on a map. Asset data includes asset class, an asset type, asset attributes, including a unique identifier, and planning asset attributes, including estimated remaining useful life.

The water distribution system is relatively small and has one pressure zone. The City’s only treatment facility is located at the Gloria Way Well site. The Gloria Way Well site has approximately 20 assets compared with thousands of assets identified over the entire water system.

4.2.1 ASSET CLASS
The asset class identifies a general category of the asset in which several different configurations may occur. For example, assets classified as Valve can include different asset types, such as Gate, Butterfly, and Check. The water system assets are listed in the Class field. Class fields for the City’s Asset Register are listed in Appendix I – Asset Register.

4.2.2 ASSET TYPE
For each asset class, a corresponding asset type may exist. An asset type specifies a unique type or configuration of an asset within a single class of assets. For example, the water distribution system contains several types of valves, e.g., gate, butterfly, check, etc., that may be logged as an asset type

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within the AMSS. The asset types that fall under the asset class are identified in Appendix I.

4.2.3 ASSET ATTRIBUTES
Asset attributes are used for the unique identification of each asset. Attributes may include size, material, manufacturer, model, serial number. This information is primarily used for maintenance and repair decisions and stocking of spare parts. The attributes of each asset class and asset type are identified in Appendix I.

4.2.4 PLANNING ASSET ATTRIBUTES
Planning attributes are used for maintenance and renewal decisions for assets. Planning attributes are incorporated into the Asset Register after completing the data collection and migration of physical attributes. The planning asset attributes for each asset class are identified in Appendix I.

Planning asset attributes are defined as follows:

Condition Rating is a numerical rating that reflects the physical condition and performance of the asset. This field may be adjusted throughout the lifecycle of the asset.

Criticality is an assessment of the consequence of failure of the asset. It also reflects the potential of failure by factoring in installed redundancy, current operating demand, and/or condition rating. This field may be adjusted throughout the lifecycle of the asset.

Estimated Remaining Useful Life is the adjusted or forecasted remaining life of the asset based on condition assessments, condition monitoring, non-destructive testing, failure data, or other analytical assessments.

Install Date is the day the asset was placed into service. This information is used to determine a default replacement date based on OUL estimates. This attribute is also used to determine the effective and expiration dates of warranties.

Original Useful Life (OUL) is the expected useful life of the asset, including rehabilitation. The OUL is typically determined by asset type and assigned to the asset. The OUL is determined upon purchase of the asset and is not adjusted for the remaining lifecycle. The OUL field should be “locked” after the asset and its information are entered into the Asset Register. The OUL estimates can be adjusted at the asset level based on application, operating environment, manufacturer’s estimate, or industry failure and lifecycle data.

Replacement Cost is the estimated cost to replace the asset with like-kind equipment. This estimate should be based on equipment removal, purchase, and installation. This is not to be confused with installation cost.

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ASSET REGISTER MANAGEMENT PLAN
FEBRUARY 2022 9
5 ASSET REGISTER DEVELOPMENT AND UPDATES
An Asset Register is developed or updated through reviewing process and instrumentation diagrams, reviewing engineering drawings, interviewing staff, and performing on-site field investigations.

Interviews and on-site investigations are essential to determine which assets are currently in use and to obtain additional attribute information. Information will be updated based on the specific utilities facility and input from City staff. The Asset Register should contain assets for each class listed in Appendix I.

Each asset added or maintained in the Asset Register (maintained in GIS) requires the following minimum information:
• Asset ID: The asset ID is a unique identifier generated by the GIS. No two assets will have the same asset ID.
• Position Data: Position data will depend on the type of asset being added to the register.

Single-point assets (e.g., hydrants, blowoffs, valves) will require Global Positioning System (GPS) coordinates entered into the GIS interface to be added to the Asset Register. Water mains will require upstream and downstream node connections. These connections may be at valve locations or at locations where multiple water mains come together (crosses, tees, and bends). The GIS interface will be used to generate these assets into the register.

5.1 ASSET REGISTER MAINTENANCE
Keeping and maintaining an accurate and up-to-date list of assets is important for a utility to meet the required tasks to serve its customers. An Asset Register maintenance process ensures that new assets added to the Asset Register have the minimum required information, data is consistent with established standards, asset updates are made in a consistent format, assets are incorporated into the existing asset hierarchy, and assets are properly decommissioned from the register when removed from service.

5.1.1 ASSET MANAGER
The asset manager will be responsible for maintaining the integrity and accuracy of the Asset Register in accordance with this ARMP. Adding new assets, modifying existing assets, or decommissioning assets in accordance with the requirements of this ARMP will be completed by the asset manager or designated representative.

Changes outside the scope of this ARMP will require approval from the Public Works Director or designated representative. Items outside the scope of this ARMP include but are not limited to creating a new asset class, creating a new asset type, or modifying this ARMP. Final authority on all matters will rest with the Public Works Director or designated representative.

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ASSET REGISTER MANAGEMENT PLAN
FEBRUARY 2022 10

5.1.2 ASSET REPLACEMENT
Adding replacement assets (replacing assets in kind), updating asset attribute data, or decommissioning assets will be completed through the GIS interface. The asset manager or designated representative will review and accept, reject, or modify all changes.

New Assets
New assets (such as a new housing development or water main replacement) may be added to the Asset Register provided that the following occurs:
• All assets be placed in a planning status and cannot be placed into an active status until approved by the asset manager.
• Before placing assets in active status, all asset attribute information must be field verified (including verification of asset location), and additional assets that were found in the field but not on drawings must be added.

Existing Assets
Verification of current asset information must consist of the following:
• Incorporation of information from construction as-built drawings into Asset Register. • Identification of assets to be verified in the field before conducting the field verification. • In the field:
o Location of the asset and capture of its GPS location on a handheld device. o Review of the asset’s attribute information in the field and notation of any discrepancies.
• Upload asset information to AMSS. The asset manager will review the discrepancies and approve changes before updating the GIS Asset Register.

5.1.3 ASSET REGISTER QUALITY CONTROL PROGRAM
The asset manager will manage a quality control program to verify the quality and accuracy of the Asset Register. This program will be accomplished through a field verification process and include the following:
• A sampling of 10 percent of assets shall occur in the field every five years with assets in the Asset Register or more or less frequently based on the Strategic Asset Management Plan for each specific asset class and type.
• An asset technician shall carry the asset information with them into the field to compare with assets in the field. The asset technician shall identify assets and/or asset data that do not match with the Asset Register.

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ASSET REGISTER MANAGEMENT PLAN
FEBRUARY 2022 11
• The asset manager or designated representative shall review the field verification findings and determine the quality and accuracy of the Asset Register. This may result in additional field verification activities if deemed necessary. • The asset manager shall be responsible for updating the Asset Register as needed and conducting a wide-scale Asset Register update if deemed necessary.

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

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ASSET REGISTER MANAGEMENT PLAN
FEBRUARY 2022 12
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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) Appendix B. Asset Information and Asset Register Data Standard Format

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

ASSET INFORMATION AND ASSET REGISTER DATA STANDARD FORMAT Asset Description, Requirements, and Replacement Planning Information

1. Asset Class or Asset Type
a. Description
b. Operational Requirements
i. Requirements

1. Federal Requirements

2. State Requirements

3. Local Requirements

4. Permit Requirements
ii. Operating Manual(s)
iii. Reporting Requirements
iv. References
c. Maintenance Requirements
i. Requirements

1. Federal Requirements

2. State Requirements

3. Local Requirements

4. Permit Requirements
ii. Maintenance Activity Definitions

1. Inspect

2. Service

3. Repair

4. Rehabilitate

5. Paint

6. Flush

7. Other
iii. Required Spare Parts
iv. Maintenance Manual(s)
v. Reporting Requirements
vi. References
d. Testing Requirements
i. Requirements

1. Federal Requirements

2. State Requirements

3. Local Requirements

4. Permit Requirements
ii. Reporting Requirements
iii. References
e. Asset Replacement Planning
i. Condition Assessment

1. Definitions

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

2. Criteria

3. References
ii. Criticality Assessment

1. Definitions

2. Criteria

3. References
iii. Risk Profile

1. Definitions

2. Criteria

3. Reporting Requirements
f. Associated Level of Service(s) Requirements
i. Level of Service
g. Potential Future Projects
Asset Register Format

1. Asset Class
a. Asset Type
b. Asset Identification Number
c. Asset Location Data
d. Asset Physical Characteristics Data
i. Size
ii. Material
iii. Other
e. Asset Manufacturer Data
i. Manufacturer
ii. Model
iii. Serial Number
iv. Other
f. Associated Equipment or Devices
g. Operational Data
i. Operational Activity Date
ii. Operational Activity Type
iii. Performed by
iv. Description and Observations
v. Other
h. Maintenance Data
i. Maintenance Activity Date
ii. Maintenance Activity Type

1. Inspection

2. Service

3. Repair

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

4. Paint

5. Other
iii. Performed by

1. City Staff

2. City Contractor

3. Lessee Staff

4. Lessee Contractor

5. Name

6. Other
iv. Description and Observations
v. Other
i. Testing Data
i. Test Date
ii. Test Type
iii. Test Results
iv. Description and Observations
v. Other
j. Asset Replacement Planning Data
i. Condition Assessment

1. Failure
a. Failure Date
b. Failure Type
c. Description and Observations
d. Other

2. Remaining Service Life
a. Installation Date
b. Service Life

3. Parts Available (Yes/No)

4. Manufacturer Support Available (Yes/No)

5. Condition Assessment Score
ii. Criticality Assessment

1. Criticality Assessment Score

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Packet Pg. 102 Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

COLLECTION OF ASSET
CONDITION DATA –

STANDARD OPERATING

PROCEDURES
February 2022

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COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 i

TABLE OF CONTENTS
Table of Contents........................................................................................................................................... i 1 Background and Purpose...................................................................................................................... 1 2 Data Storage ......................................................................................................................................... 3 3 Condition Assessment – Data Collection .............................................................................................. 5

3.1 Water Meters ............................................................................................................................... 5

3.2 Water Main................................................................................................................................... 5

3.3 Valves............................................................................................................................................ 8

3.4 Backflow Devices.......................................................................................................................... 8

3.5 Hydrants ....................................................................................................................................... 9

3.6 Treatment Works Including Well.................................................................................................. 9

3.7 Generator ................................................................................................................................... 10

3.8 Pump........................................................................................................................................... 10

3.9 Customer .................................................................................................................................... 10

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COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 ii
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Packet Pg. 106 Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 1
1 BACKGROUND AND PURPOSE
The collection of water asset condition data allows a utility to collect vital information on the health and longevity of the assets in its system. With this information, a utility can leverage the data to determine the remaining life of the assets, develop a capital replacement program designed to replace assets at their end of life, and develop a rate structure that is sustainable at the level of service expected of the utility.

The purpose of this document is to develop standard operating procedures for collecting and storing asset condition data. This document will not provide methods to analyze the data once collected and stored. The COWP will regularly review the quality of the data being collected, make adjustments as necessary to maintain data quality, and analyze the data with more in-depth tools and techniques to make better asset management decisions.

The specific condition data to be collected varies by asset and is discussed by asset type in Section 3 below. Once the condition assessment data has been collected, it must be stored, as discussed below.

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COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 2
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CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 3
2 DATA STORAGE
All data that is required to be collected, as detailed in Section 3 below, shall be stored in the Asset Management Software System (AMSS), linked by a unique identifier to the specific asset.

All asset condition data shall be retained indefinitely or until the data is deemed unnecessary by the City.

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COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 4
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CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 5
3 CONDITION ASSESSMENT – DATA COLLECTION
Asset condition shall be collected on the following assets in the manner prescribed for each asset type.

3.1 WATER METERS
Water use data by meter shall be saved for a minimum of five years. Data intervals shall be no less than one month (consumption by month), or if a bill is generated on a bi-monthly or quarterly basis, no less than bi-monthly or quarterly.

Water Meter condition assessment data will be collected at the time the meter is tested. Meter testing intervals are given in the Water Meter SAMP. The following asset condition data shall be collected:

1. Date and time of test

2. Initial accuracy readings for the low, medium, and high flow ranges for the meter size given in the AWWA Manual M6

3. Final accuracy readings for the low, medium, and high flow ranges for the meter size given in the AWWA Manual M6

4. If the meter was repaired indicate repair. If the meter was rebuilt update the asset attribute information to the new rebuilt parts.

3.2 WATER MAIN
Water main condition assessment data will be collected at any time a water main is exposed. Water main can be exposed for the following reasons:
• Construction Activity – This can be as result of third-party contractors installing other utilities in the vicinity of the water main or the City installing or repairing service lines, valves, hydrants, or any other water system appurtenances. • Break or Leak Repairs – In the process of addressing breaks or leaks that occur on the water system, data will be collected about the break or leak, as well as the condition of the water main.

The following asset condition data shall be collected:

1. GPS location of the break, leak, install or repair of appurtenances, or contractor excavation.

2. Condition Assessment Action
• Break – Identify the break cause

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CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 6
o Structural water main break - The water main experiences a longitudinal or circumferential break of the pipe wall or the joint between two sections of pipe have separated. Categorize the break as:
 Longitudinal
 Circumferential
 Joint Separation
o Other water main break - A break as a result of tap failures or external construction activities such as excavations, drilling, and borings. Categorize the break as either:
 Tap failure
 Other construction activity
• Leak – Identify the leak cause
o Structural water main leak – The water main experiences a leak through the side wall of the pipe as a result of corrosion either internally or externally that has compromised the pipe side wall or a failure of the seal at the joint between two sections of pipe. Categorize the leak as either:
 Corrosion leak
 Joint leak
i. Other water main leak – A leak as a result of tap failures or external construction activities excavations, drilling, and borings. Categorize the leak as either:
 Tap failure
 Other construction activity
o Construction Excavation -- Identify the action as “Construction Excavation”

3. Identify the pipe construction material – Ductile, Cast, PVC, AC, Steel, Other

4. Determine pipe diameter – measure outside diameter of pipe in inches, measure inside diameter of pipe when the situation allows (typically a break).

5. Determine depth of bury from surface to top of pipe in inches

6. Exterior Pipe Assessment -- Isolate a one-foot section of pipe and collect the following information:
• For metal pipe:

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CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 7
o Record1 the amount of corrosion on the section of pipe  0 – 25%
 26% - 50%
 51% - 75%
 76% - 100%
o Wire brush the corrosion from the section of pipe to bare metal below. Using a pointed micrometer, ultrasonic metal fitness gauge, or a needle point depth gauge determine the depth of 5 of the most significant points of corrosion. o Note any weeping or leakage from the corrosion points. • For Asbestos Cement pipe:
o Note the amount of spalling on the section of pipe
 0 – 25%
 26% - 50%
 51% - 75%
 76% - 100%
o Using a pointed micrometer or a needle point depth gauge determine the depth of the most significant point of spalling.
o Note any weeping or leakage from the corrosion points and or the sidewall of the pipe.
• For PVC pipe:
o Note the amount of oxidation on the section of pipe
 0 – 25%
 26% - 50%
 51% - 75%
 76% - 100%
1 “Record” or “Note” denotes entering the data in the CMMS. In practice, field staff may enter directly in CMMS or may complete forms that are entered later into the CMMS.

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COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 8

7. During installation of service lines or other taps onto the main, collect the tap coupon and retain for the life of the main. Catalog the coupon to the location it was collected from.

8. For water main breaks inspect interior of the pipe. Note spalling of lining (if lining is present) and or tuberculation (if metal pipe). Provide narrative and supporting picture for database.

9. Photograph the exterior of the pipe sufficiently to give a reviewer at some future date enough information to make an assessment of the pipes exterior condition and possible causes for failure (as in the case of breaks or leaks). For breaks, photograph down the barrel of the pipe in both directions.

10. Make any other notes that may relate to the condition of the pipe such as misalignment of the pipe, recent construction in the area, land subsidence, corrosive soils, etc.

11. While conducting uni-directional flushing of water main, determine the C-factor of the pipe.

3.3 VALVES
Valve condition assessment data will be collected at the valve’s scheduled exercise. The following condition data will be collected:

1. Number of turns from full open to full closed

2. Note leakage at the stem packing

3. Note any difficulties in opening or closing the valve as well as seating the valve.

4. Listen at the stem of closed valve and note any sound of flow past closed valve.

3.4 BACKFLOW DEVICES
For accounts with backflow devices, condition assessments are performed annually by a licensed Backflow Device Tester and the data is sent to the County and the City. Per Chapter 15.44 of the City’s Municipal Code, the following data will be maintained:
• Assembly type, size, manufacturer, installation date, location, account number, customer or responsible party of record. Assembly records shall be kept for the life of the assembly.
• Testing records shall be kept for a minimum of three (3) years. • Backflow incident notification to the State Water Resources Control Board within 24 hours of the incident, and any follow up reports, public notifications, or other requirements of the SWRCB.

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CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 9

3.5 HYDRANTS
Hydrant condition assessment data will be collected at the time of the hydrant’s scheduled exercise.

The following condition data will be collected:

1. Collect auxiliary valve data in accordance with the Valves section of this document. • For wet barrel hydrants, note:
o Any leakage from the hydrant prior to exercising the hydrant. Note the location of the leak, e.g. “cap – leaking seat” or “exercising nut – leaking stem.” o Number of turns from full open to full closed for each valve o Any difficulties in opening or closing the valve as well as seating the valve. • For dry-barrel hydrants, note:
o Any leakage from the hydrant prior to exercising the hydrant. o Number of turns from full open to full closed for the main valve o Any difficulties in opening or closing the valve as well as seating the valve. o Operation of foot valve.

3.6 TREATMENT WORKS INCLUDING WELL
The following information will be collected monthly, or more often if required to meet State regulations:

1. Well level

2. Recharge rate

3. Yield

4. The well pump/motor is discussed in Section 3.11 below.

At the time of the well’s ten-year inspection, the following condition data will be collected:

5. A down-hole video inspection of the well and/or such other information collected by the well inspection specialist.

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CITY OF EAST PALO ALTO

COLLECTION OF ASSET CONDITION DATA SOP
FEBRUARY 2022 10

3.7 GENERATOR
The following generator condition data will be collected either monthly, annually, or at 2,000 hours of usage, as follows:

1. Monthly: track water and oil usage.

2. Annually: perform a generator load bank test and record output voltage and amperage for each phase of the generator.

3. Every 2,000 hours of operation:
• Record compression in pounds per square inch (PSI) of each cylinder of the engine. • Meggar test the generator

4. Vibration analysis

3.8 PUMP
Pump condition assessment data will be gathered when routine and predictive maintenance is performed. As appropriate, the following condition assessment data will be collected:

1. Bearing vibration

2. Bearing temperature

3. Meggar test results on motor

4. Motor amperage draw

5. Inlet and outlet pressure (performed annually – outsourced)

6. Pumping rate in gallons per minute (performed annually – outsourced)

3.9 CUSTOMER
Service order and complaint data will be collected by customer. When the complaint is related to water quality (pressure, color, odor, taste, etc.), detailed information about the type of water quality issue will be collected.

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Packet Pg. 118 Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
Asset/Project
Name
12 3 4 5 Score Score Score Score Score Score Score Score Score Score Score Service
Asset meets or
exceeds all DDW
requirements
Asset marginally
meets DDW
requirements and
may go out of
compliance from time
to time
Asset does not meet
DDW requirements
Environ‐
mental
Loss of Asset will
not cause
Environmental
damage
Loss of asset will
cause minimal
environment damage,
very little press or
public notice, <$1000
fine
Loss of asset wil cause
moderate
environmental
damage, public may
be affected, and press
will notice, <$10,000
fine
Loss of asset will
cause heavy
environmental
damage, public will be
heavily affected, press
will take notice for an
extended period,
<$100,000 fine
Loss of asset will
cause severe
environmental
damage, public will be
severely affecte over
a long term, press will
notice for long term,
>$100,000 fine,
possible prison
sentences
Safety No injury or illness
Minor injury or
illnesses, can be
treated with onsite
first aide
Moderate injury or
illness results in loss
time injury, injuries
and illness will require
from medical staff
Severe injury or illness
results in extend loss
time injuries, injuries
will require extended
in patient care by
medical staff
Fatal injury or illness
to one or more
persons.

Supply
Supply to all
customers is
unaffected
Supply to customers is
affected to a limited
area and a limited
time. Typically loss of
8" looped water main
Supply to customers is
affected to an
extended area for
moderate period.

Typically a loss of a 12
inch looped water
main or undersized
main unable to meet
peak hour flows.

Supply to customers is
affected to a wide
area for extended
periods, Typically a
loss of a transmission
water main (not
looped), or
undersized main
unable to meet daily
water demands or fire
flow
Supply to the entire
district is affected for
extended periods.

Typically in adequate
storage to meet peak
demands, loss of
supply from
wholesaler, or unable
to meet peak hour,
fire flow, or daily
demands for
extended periods
0 0000000000
Consequence
Category

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Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) Appendix E. Draft Asset Criticality Assessment

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Packet Pg. 122 Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) Water Supply CIP
WS‐01A ‐
Emergency
Water Connects
‐
City of
Palo Alto WS‐01B ‐
Emergency
Water Connects
‐
Palo
Alto Park Mutual WS‐01C ‐ Emergency Water Connects ‐ O'Conner Tract Co‐Op WS‐01D ‐ Emergency Water Connects ‐ O'Brien Kavanaugh WS‐03A ‐ New Storage Tank ‐ East of Highway 101 WS‐03B ‐ New Storage Tank ‐ East of Highway 101 Second Groundwater Well Martin Luther King Jr. Park Stormwater Capture and ReuseAsset/Project Name Asset/Project Name Asset/Project Name Consequence 1 2 3 4 5 Score Score Score Score Score Score Score Score Score Score Score Service
Asset meets or
exceeds all DDW
requirements
Asset marginally
meets DDW
requirements and may
go out of compliance
from time to time
Asset does not meet
DDW requirements 33 3 3 5551
Environmental
Loss of Asset will not
cause Environmental
damage
Loss of asset will cause
minimal environment
damage, very little
press or public notice,
<$1000 fine
Loss of asset wil cause
moderate
environmental
damage, public may
be affected, and press
will notice, <$10,000
fine
Loss of asset will cause
heavy environmental
damage, public will be
heavily affected, press
will take notice for an
extended period,
<$100,000 fine
Loss of asset will cause
severe environmental
damage, public will be
severely affecte over a
long term, press will
notice for long term,
>$100,000 fine,
possible prison
sentences
11 1 1 2213
Safety No injury or illness
Minor injury or
illnesses, can be
treated with onsite
first aide
Moderate injury or
illness results in loss
time injury, injuries
and illness will require
from medical staff
Severe injury or illness
results in extend loss
time injuries, injuries
will require extended in
patient care by medical
staff
Fatal injury or illness
to one or more
persons.
22 2 2 2222
Supply
Supply to all
customers is
unaffected
Supply to customers is
affected to a limited
area and a limited
time. Typically loss of
8" looped water main
Supply to customers is
affected to an
extended area for
moderate period.

Typically a loss of a 12
inch looped water
main or undersized
main unable to meet
peak hour flows.

Supply to customers is
affected to a wide area
for extended periods,
Typically a loss of a
transmission water
main (not looped), or
undersized main
unable to meet daily
water demands or fire
flow
Supply to the entire
district is affected for
extended periods.

Typically in adequate
storage to meet peak
demands, loss of
supply from
wholesaler, or unable
to meet peak hour,
fire flow, or daily
demands for extended
periods
55 5 5 3343
11 11 11 11 12 12 12 9 0 0 0
Category

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Packet Pg. 123
Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) Distribution CIP
WS‐08
‐
Water
Master Plan WD‐02 ‐ Urban Water Management Plan WD‐04A ‐ Water Main Replacement Plan WD‐04B ‐ University/Cooley Water Line WD‐04C ‐ Water Main Gap on University WD‐05 ‐ Water Meter Replacement Program WD‐06 _ Fire Hydrant Replacement Program WD‐07 ‐ Water Valve Replacement Program Consequence 1 2 3 4 5 Score Score Score Score Score Score Score Score Service
Asset meets or
exceeds all DDW
requirements
Asset marginally
meets DDW
requirements and may
go out of compliance
from time to time
Asset does not meet
DDW requirements 333 3 315 3
Environ‐
mental
Loss of Asset will not
cause Environmental
damage
Supply to customers is
affected to a limited
area and a limited
time. Typically loss of
8" looped water main
Loss of asset wil cause
moderate
environmental
damage, public may
be affected, and press
will notice, <$10,000
fine
Loss of asset will cause
heavy environmental
damage, public will beheavily affected, press
will take notice for an
extended period,
<$100,000 fine
Loss of asset will
cause severe
environmental
damage, public will be
severely affecte over a
long term, press will
notice for long term,
>$100,000 fine,
possible prison
sentences
33 3 2313 2
Safety No injury or illness
Minor injury or
illnesses, can be
treated with onsite
first aide
Moderate injury or
illness results in loss
time injury, injuries
and illness will require
from medical staff
Severe injury or illness
results in extend loss
time injuries, injuries
will require extended
in patient care by
medical staff
Fatal injury or illness
to one or more
persons.
113 1 113 1
Supply
Supply to all
customers is
unaffected
Supply to customers is
affected to a limited
area and a limited
time. Typically loss of
8" looped water main
Supply to customers is
affected to an
extended area for
moderate period.

Typically a loss of a 12
inch looped water
main or undersized
main unable to meet
peak hour flows.

Supply to customers is
affected to a wide area
for extended periods,
Typically a loss of a
transmission water
main (not looped), or
undersized main
unable to meet daily
water demands or fire
flow
Supply to the entire
district is affected for
extended periods.

Typically in adequate
storage to meet peak
demands, loss of
supply from
wholesaler, or unable
to meet peak hour,
fire flow, or daily
demands for extended
periods
11 1 4312 2
8 8 10 10 10 4 13 8
Category

3.2.b
Packet Pg. 124
Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) Appendix F. Asset Information and Asset Register Data by Asset Class (Under Development)

3.2.b
Packet Pg. 125 Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022) This page intentionally left blank.

3.2.b
Packet Pg. 126 Attachment: EPA Water System AMP (2132 : Water System Asset Management Plan 2022)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Valerie J. Armento, Interim City Attorney
BY: Valerie J. Armento, Interim City Attorney
SUBJECT: AB 361 Findings to Continue Virtual Public Meetings for the City Council and City Advisory Bodies
Recommendation
Adopt a resolution making the AB 361 findings necessary to continue virtual public meetings for the City Council and City Advisory Bodies for the month of April 2022.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 3: Increase Organizational Effectiveness and Efficiency Priority No. 6: Create a Healthy and Safe Community
Background
The California Brown Act has long-established requirements for local agencies to use teleconferencing to conduct meetings. It provides that if the local agency elects to use teleconferencing to conduct a public meeting, then it must identify each teleconference location in the public notice and agenda, and post agendas at all teleconference locations. All teleconference locations must be publicly accessible and there must be an opportunity for public comment at each teleconference location. Additionally, a quorum of the members of the legislative body must participate from locations physically within the jurisdictional boundaries of the agency.

In March 2020, Governor Newsom issued Executive Order N-29-20 authorizing exemptions to these Brown Act teleconferencing requirements. These requirements were suspended during the COVID-19 pandemic to promote social distancing and to facilitate remote work and meetings. Executive Order N-08-21 extended the previous order until September 30, 2021.

On September 16, 2021, the Governor signed AB 361 into law to allow the continued use of virtual public meetings during a declared state of emergency when certain conditions are met.

AB 361 took effect immediately as an urgency statute.

3.3 Packet Pg. 127
Analysis
AB 361 exempts local agencies from complying with the following teleconferencing requirements of the Brown Act:
· Ensuring that each teleconference location is physically accessible to the public; · Maintaining quorum with members physically within the jurisdiction; and · Providing an opportunity for public comment at each teleconference location.

The AB 361 exemptions only apply during a declared state of emergency - as defined under the California Emergency Services Act - and one of the following circumstances must apply:

1. State or local officials have imposed or recommended measures to promote social distancing.

2. The legislative body is meeting to determine whether, as a result of the emergency, meeting in person would present imminent risks to the health or safety of attendees.

3. The legislative body has determined that, as a result of the emergency, meeting in person presents imminent risks to the health or safety of attendees.

Under AB 361, when a local agency elects to hold a virtual meeting because the applicable criteria are met, an alternate set of requirements apply:
· No Action During Disruptions - Where there is a disruption in the public broadcast of the call-in or internet-based meeting service, the local agency must cease and take no further action on agenda items until public access is restored. · Public Comment Rights - A local agency is prohibited from requiring public comments to be submitted in advance of the meeting and cannot close the comment period or opportunity to register online until the timed public comment period has elapsed.

Lastly, at least every 30 days during the proclaimed state of emergency, the local agency acting under the teleconference exemptions must make findings about whether the circumstances explained above still apply. Therefore, to continue holding virtual meetings, the City Council must find that it reconsidered the circumstances of the state of emergency and that one of the following circumstances exist: “(i) the emergency continues to directly impact the ability of members to safely meet in person,” or “(ii) state or local officials continue to impose or recommend measures to propose social distancing.” Today’s action would allow the City Council and City advisory bodies to continue meeting virtually during the month of April 2022. The teleconferencing exemptions authorized by AB 361 will sunset on January 1, 2024.

Fiscal Impact
None
Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo County Library located at 2415 University Avenue, East

3.3 Packet Pg. 128
Palo Alto.

Attachments

1. Resolution

3.3 Packet Pg. 129
Resolution No. XX-2022 1 of 2
RESOLUTION NO. XX-2022

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO
ADOPTING THE AB 361 FINDINGS NECESSARY TO CONTINUE VIRTUAL

PUBLIC MEETINGS FOR THE CITY COUNCIL AND CITY ADVISORY BODIES DURING THE COVID-19 STATE OF EMERGENCY
WHEREAS, on January 31, 2020, the United States Department of Public Health and Human Services Secretary declared a public health emergency for the novel disease named “coronavirus disease 2019” or “COVID-19" by the World Health Organization and the Centers for Disease Control and Prevention ("CDC”) reiterates that COVID-19 is a serious public health threat based on current information; and
WHEREAS, on March 3, 2020, the San Mateo County Health Officer declared a local health emergency throughout San Mateo County and the County Manager, serving as the County Director of Emergency Services, proclaimed a local emergency throughout San Mateo County related to the novel coronavirus and on March 10, 2020, the San Mateo County Board of Supervisors ratified and extended the declaration and proclamation and this state of emergency remains in effect; and WHEREAS, on March 4, 2020, the Governor of California declared a State of Emergency due to the outbreak and spread of COVID-19, and the State of Emergency is still in effect; and WHEREAS, on March 17, 2020, the East Palo Alto City Council (“City Council”) proclaimed a local emergency due to COVID-19 and the local emergency is still in effect; and WHEREAS, in March 2020, the Governor’s Executive Order N-29-20 suspended Brown Act requirements related to teleconferencing during the COVID-19 pandemic provided that notice, accessibility, and other requirements were met, and the public was allowed to observe and address the legislative body at the meeting, and subsequently adopted Executive Order N-08-21 extending the previous order until September 30, 2021 and on September 16, 2021, the Governor signed into law AB 361 to allow the continued use of virtual public meetings during a declared state of emergency without conforming to the Brown Act teleconferencing rules during a declared state of emergency if certain findings were made; and
WHEREAS, since March 2020, the City Council and the City’s boards, commissions, and committees (“City Advisory Bodies”) have conducted their meetings virtually, as authorized by the Executive Order and since October 2021, the City Council has adopted resolutions, on a monthly basis, making the required AB 361 findings to continue virtual public meetings for the City Council and City advisory bodies; and
WHEREAS, throughout the world over 6 million people have succumbed to the coronavirus, which has morphed into several variants of concern, including Delta and Omicron; and WHEREAS, due to uncertainty and concerns about the Delta and Omicron variants and the fact that many people, particularly young children are unvaccinated and concerns remain regarding the return to regular in-person operations; and

3.3.a
Packet Pg. 130 Attachment: Resolution (2138 : AB 361 Authority for Virtual Public Meetings) Resolution No. XX-2022 2 of 2
WHEREAS, given the heightened risks of these variants of COVID-19 in the community, holding indoor meetings with all members of the City Council, staff, and the public in attendance would pose an unnecessary and immediate health and safety risk to the attendees.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY:

1. Adopts the recitals set forth herein as findings of fact;

2. Incorporates by this reference prior City Council resolutions making the AB 361 findings necessary to continue virtual public meetings for the City Council and City Advisory Bodies during the COVID-19 State of Emergency;

3. Determines that, after having reconsidered the circumstances of the state of emergency, finds that the emergency continues to directly impact the ability of members to safely meet in person; and

4. Suspends the Brown Act teleconferencing rules in accordance with AB 361, and based on the findings and determinations herein, thereby authorizing the use of virtual meetings of the City Council and City Advisory Bodies, during the month of April 2022.

PASSED AND ADOPTED this 15th day of March 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

City Clerk Valerie J. Armento, Interim City Attorney

3.3.a
Packet Pg. 131 Attachment: Resolution (2138 : AB 361 Authority for Virtual Public Meetings)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Tomohito Oku, Finance Director
Tomohito Oku, Finance Director
SUBJECT: January Cash Report
Recommendation
Accept and file the Cash Treasury Report for the month of January 2022.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Ø Priority #3: Increase Organizational Effectiveness and Efficiency Ø Priority #5: Improve Communication and Enhance Community Engagement Background
Pursuant to Section 53646 of the Government Code of the State of California, the City Treasurer may submit a quarterly report to the City Council regarding the funds and investments of the City. Further, City Investment Policy Section XVIII requires monthly reporting of investment transactions, as specified. Because the City participates in State and County investments pools and does not independently broker or engage outside investment advisors to transact investments; the monthly reporting provides a snapshot of overall cash receipting, transfers, and disbursements on a monthly basis.

Analysis
This report covers cash and investments of the City in the three cash and investment accounts: Wells Fargo Bank, San Mateo County Pool, and the California State Local Agency Investment Fund. The monthly report does not include petty cash, or the California State Community Infrastructure Program (SCIP) bond proceeds held by a trustee in the name of the City. For investment purposes, City cash is pooled, except for bond proceeds held by a trustee. The City does not have, nor is it legally required to have, separate bank accounts for each individual fund. However, all cash is segregated in the City’s accounting records.

Monthly cash transactions for the monthly period ending January 31, 2022, are as follows:

3.4 Packet Pg. 132
Account
Beginning
Balance Receipts Disbursements
Quarterly
Interest
Allocation
Inter-Account
Transfers Ending Balance
Wells Fargo Bank 2,682,644.04 4,173,894.96 (3,289,506.08) - - 3,567,032.92 LAIF 9,999,624.05 5,756.76 - 10,005,380.81
San Mateo County Pool 95,105,688.62 1,830,112.04 (50.00) 198,674.49 - 97,134,425.15 Total 107,787,956.71 6,004,007.00 (3,289,556.08) 204,431.25 - 110,706,838.88 The Wells Fargo cash balance reflects the book value balance (i.e., total outstanding checks not cashed are deducted from the account balance). The month-to-date cash and investment balance decreased approximately $0.9M compared to the balance as of December 31, 2021.

January receipts, a total of approximately $6.0M, primarily consist of Redevelopment Obligation Payment Schedule (ROPS) payment ($2.2M), Property tax distributions ($1.8M), Rent Stabilization program fees ($0.4M), Sales Tax ($0.4M), and various receipts including TOT and Veolia payments.

January disbursements total $3.3M and primarily consist of payroll costs ($1.1M), Recology related ($0.6M), Teichert Construction ($0.3M), and other recurring operating expenditures.

The table below reflects recent treasury yield comparisons up to five-year notes since that is the maximum maturity the City may invest:

Jan-22 Dec-21 Jan-21
6-month Treasury Bill 0.49 0.19 0.07
2-year Treasury Note 1.18 0.73 0.11
5-Year Treasury Note 1.62 1.26 0.45
LAIF average monthly effective yields were 0.234% in January which slightly increased for

0.03% from December 2021. San Mateo County monthly gross earnings for January were

0.885% compared to 0.962% in December 2021. The County Pool earnings estimates for FY 21-22 are at 0.98%.

Staff believes the City has investment liquidity and anticipated revenues to meet the City’s anticipated expenditure requirements for the ensuing six months.

Fiscal Impact
This report is informational.

3.4 Packet Pg. 133

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Patrick Heisinger, Assistant City Manager
Patrick Heisinger, Assistant City Manager
SUBJECT: Council consideration of extension of 90-day due diligence period of library site acquistion
Recommendation
Adopt a Resolution (Attachment 1) authorizing the City Manager to execute an amendment to the Purchase and Sale Agreement (“PSA”), in a form approved by the City Attorney, between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC for the potential acquisition of the property located near the corner of Bay Road and Pulgas Avenue (APN: 063-240-490) (“Site”) to extend the due diligence period by an additional 30-days.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 4: Improve Public Facilities and Infrastructure Background
On December 7, 2021, the City Council adopted a Resolution:

1. Authorizing the City Manager to execute a PSA between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC (an affiliate of the John and Marcia Goldman Foundation) for the potential acquisition of the Site for potential future development of a new public library; and

2. Appropriate $110,000 from the General Fund Reserve to provide funding for the acquisition deposit and any unforeseen costs incurred during the contract term, as further described in this staff report.

The PSA stipulated that the City is allowed a 90-day due-diligence period that would

3.5 Packet Pg. 134
commence when the PSA was fully executed. The PSA was fully executed on December 28, 2021, therefore all due-diligence items must be completed by the City by March 28, 2022.

To date, the City has commissioned a Phase 1 Environmental Site Analysis and is in the process of obtaining a Phase 2 report.

The purpose of this staff report is to seek City Council approval for a 30-day extension to the due-diligence period, to ensure ample time for completing additional necessary review activities.

Analysis
A 30-day extension of the PSA due-diligence timeline to April 28, 2022, will ensure that the City is allowed ample time to finalize all necessary due-diligence activities.

In response to staff communication, the Goldman Foundation has indication support for the extension.

Staff also seeks delegated authority to the City Manager to extend the due-diligence period and other deadlines in the PSA, as needed, with Owner agreement. This authority will allow staff to complete the required due diligence items prior to the final deadline, while being responsive to timeline shifts resulting from individual tasks, and not to impact the overall project schedule.

Fiscal Impact
At this time, there is no fiscal impact to the City associated with this report.

Attachments

1. Resolution

3.5 Packet Pg. 135
1 of 2
RESOLUTION NO. XX – 2022

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

AUTHORIZING THE CITY MANAGER TO AMEND THE PURCHASE AND SALE

AGREEMENT BETWEEN THE EAST PALO ALTO YOUTH ARTS & MUSIC CENTER

LLC FOR THE POTENTIAL ACQUISITION OF THE SITE LOCATED AT THE CORNER OF BAY ROAD AND PULGAS AVENUE (APN 063-240-490) FOR

POTENTIAL FUTURE DEVELOPMENT OF A NEW PUBLIC LIBRARY
WHEREAS, on December 7, 2021, the City Council adopted a Resolution Authorizing the City Manager to execute a Purchase and Sale Agreement (“PSA”) between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC (an affiliate of the John and Marcia Goldman Foundation) for the potential acquisition of the Site for potential future development of a new public library; and WHEREAS, the PSA stipulated that the City is allowed a 90-day due-diligence period commencing upon full execution of the PSA, which occurred on December 28, 2021; therefore, all due-diligence items must be completed by the City by March 28, 2022; and
WHEREAS, the City has commissioned a Phase 1 Environmental Site Analysis and is in the process of obtaining a Phase 2 report but desires to extend the PSA’s due diligence period by an additional 30-days to provide necessary time to complete additional analysis; and
WHEREAS, staff also seeks delegated authority to the City Manager to extend the time periods in the PSA, as needed, with Owner agreement.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY AUTHORIZES:

1. The City Manager to execute an amendment to the Purchase and Sale Agreement (“PSA”), in a form approved by the City Attorney, between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC for the potential acquisition of the property located near the corner of Bay Road and Pulgas Avenue (APN: 063-240-490) (“Site”) to extend the due diligence period by an additional 30-days; and

2. The City Manager to execute further amendments to the PSA to extend time periods, as needed, with Owner agreement subject to the approval of the City Attorney.

3.5.a
Packet Pg. 136 Attachment: Resolution (2135 : Council consideration of extension of 90-day due diligence period of library site acquistion) 2 of 2
PASSED AND ADOPTED this 15th day of March 2022 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, Interim City Clerk Valerie J. Armento, Interim City Attorney

3.5.a
Packet Pg. 137 Attachment: Resolution (2135 : Council consideration of extension of 90-day due diligence period of library site acquistion)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager Elena Lee, Planning Manager
Karen Camacho, Housing Project Manager
SUBJECT: 2021 Housing Element Annual Progress Report
Recommendation
Adopt a Resolution:

1. Accepting the following annual reports: 2021 Housing Element Annual Progress Report; 2021 General Plan Annual Progress Report; and Housing Successor to the Redevelopment Agency Annual Report;

2. Authorizing the City Manager to submit the above-referenced reports to the appropriate State authorities; and

3. Finding that the acceptance and submittal of the above-referenced reports are exempt from the California Environmental Quality Act (CEQA).

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 6: Create a Healthy and Safe Community
Background
This staff report combines three annual housing and planning progress reports, all of which must be submitted to the relevant State agencies by April 1 of each year:
· Housing Element Annual Progress Report (“Housing Element APR”) · General Plan Annual Progress Report (“General Plan APR”) · Housing Successor Annual Report
The Housing Element Annual Progress Report and the General Plan Annual Progress Report must be submitted to the California Department of Housing and Community Development

3.6 Packet Pg. 138
(“HCD”) and Governor’s Office of Planning and Research (“OPR”).

The Housing Successor Annual Report (Report) regarding the Successor Housing Low and Moderate Income Housing Asset Fund (“LMIHAF”) may be submitted as an accompanying document to the Housing Element APR.

These reports must be presented to the local legislative body for its review and acceptance prior to submittal to the relevant government entity. The Housing Element APR and General Plan APR were presented to the Planning Commission on March 14, 2022.

Housing Element Annual Progress Report
Government Code Section 65400 requires all jurisdictions to prepare a Housing Element APR (Attachment 2) to detail the implementation of their Housing Element. The report must be submitted to HCD and OPR by April 1 of each year for the immediate past calendar year. The Housing Element APR addresses the following topics:
· Progress on achieving the City’s Very-Low (“VLI”) and Low-Income (“LI”) housing goals. · Progress on achieving the City’s Moderate (“MOD”) and Above Moderate-Income housing goals.
· Progress on accomplishing the Housing Element workplan to increase, preserve, and improve the supply of affordable housing; invest in activities to end homelessness; promote equitable development; and create healthy, sustainable, communities and neighborhoods.

The Housing Element outlines the City’s plan to meet its affordable and market rate housing production goals, referred to as the Regional Housing Needs Allocation (“RHNA). This number is determined by HCD, DOF, and the regional Councils of Government (“COG”s). The State agencies calculate statewide housing needs based upon population projections and regional population forecasts used in preparing regional transportation plans.

The Association of Bay Area Governments (“ABAG”)/Metropolitan Transportation Commission (“MTC”) is then responsible for distributing the RHNA to the Bay Area local governments using an allocation methodology that is consistent with development and growth patterns. East Palo Alto’s RHNA for the current 8-year Housing Element is 467 housing units.

The RHNA is divided into four income categories that encompass all levels of housing need.

HCD publishes the income data for all counties each year. Please note that RHNA does not include Extremely Low Income (“ELI”) as a separate category; income levels up to 50% of the Area Median Income (“AMI”) are included in the VLI category. The State Income Limits for San Mateo County for 2021 are shown in Table 1 below:

TABLE 1
State Income Levels for San Mateo County, 2021
Income Level Number of Persons in Household
1 2 3 4 5 6
Extremely Low
(0% - 30% AMI)
$38,400 $48,850 $49,350 $54,800 $59,200 $63,600
Very Low (31% -
50% AMI)
$63,950 $73,100 $82,250 $91,350 $98,700 $106,000

3.6 Packet Pg. 139
Low (51% - 80%
AMI)
$102,450 $117,100 $131,750 $146,350 $158,100 $169,800
Moderate (81% -
120% AMI)
$125,650 $143,600 $161,550 $179,500 $193,850 $208,200
Above Moderate
(greater than 120%
AMI)

NA NA NA NA NA NA
See San Mateo County Department of Housing:
<https://www.smcgov.org/media/30286/download?inline=>
The East Palo Alto RHNA allocation for each income range is shown in Table 2 below:

TABLE 2
Regional Housing Needs Allocation (RHNA) for East Palo Alto Income Level # of Units % of Total
Extremely Low (0% - 30% AMI) n/a n/a
Very Low (31% - 50% AMI) 64 13.7%
Low (51% - 80% AMI) 54 11.6%
Moderate (81% - 120% AMI) 83 17.8%
Above Moderate (greater than
120% AMI)
266 57.0%
Total 467 100%
The City Council adopted the 2015-2023 Housing Element on January 17, 2017, and HCD certified the Housing Element on March 13, 2017. The Housing Element can be found on the City’s website at the following link: <https://www.cityofepa.org/housing>.

General Plan Annual Progress Report
Government Code Sections 65400 and 65700 mandate that all cities and counties submit an annual report to the Governor’s Office of Planning and Research (“OPR”) on the status of their General Plan. This report is submitted separately from the Housing Element APR and addresses all other components of the General Plan. It is intended to provide an OPR with an overview of statewide trends in land-use decision making and trends in planning and development.

The General Plan is the City’s “constitution” for future growth, providing a comprehensive guide for decision making on land use and other development and planning issues through established goals, policies, and programs. The City adopted its General Plan, VISTA 2035, on October 4, 2016. VISTA 2035 can be found on the City’s website at the following link:
<https://www.cityofepa.org/econdev/page/general-plan-update> The General Plan APR should demonstrate progress on the City’s implementation program, or specific measures associated with the implementation of each section of the General Plan.

The General Plan APR should also contain an overview of any major planning activities undertaken in 2021, such as: specific or master plans or master environmental assessments; General Plan amendments; and major development applications.

Housing Successor Agency Annual Report

3.6 Packet Pg. 140
The Housing Successor to the Redevelopment Agency Annual Report for Fiscal Year 2020- 2021 (Housing Successor Agency Report) is included as an accompanying document to the Housing Element Annual Progress Report, thus satisfying the requirements of Senate Bill 341, which took effect on January 1, 2014. This report describes how the City (as the Successor to the former Redevelopment Agency of the City of East Palo Alto) has utilized its former Redevelopment Agency funds for housing activities in conformance with the California State Health and Safety Code.

Analysis
Housing Element Progress in 2021
The Housing Element APR requires data reporting on new housing applications, permitting, and construction, but only projects that have received a building permit “count” towards the current RHNA, or reflected in the RHNA unit total shown in Table B of Attachment 2.

In 2021, the City issued building permits for 32 new residential units, including 30 Accessory Dwelling Units (“ADU”s) and 2 single family homes. The City’s overall progress in achieving its RHNA goals from 2015-present is shown in Table 3 below. Note that Extremely Low-Income units are not counted separately in the RHNA or on the Housing Element APR and so are included in the VLI Total.

TABLE 3
RHNA Progress, 2015-Present
Income Level 2015 2016 2017 2018 2019 2020 2021 Totals RHNA Deficit
Extremely Low (0% - 30%
AMI) 16 26 8 50 n/a
Very Low (31% - 49% AMI) 4 68 7 79 -65
Low (50% - 80% AMI) 24 2 3 6 35 19
Moderate (81% - 120%
AMI) 1 5 1 2 2 6 17 66
Above Moderate (greater
than 120% AMI) 50 2 5 3 1 4 5 70 196
Total 91 7 5 4 9 103 32 251 216
The City has met 53% of its cumulative RHNA. By income category, the City has met 27% of its market rate housing target and 88% of its affordable housing target to date.

Projects in the Pipeline - Entitled Units or Units with SB 35 Zoning Clearance While only projects that received a Building permit in 2021 will be counted towards the City’s RHNA progress, the Housing Element APR also accounts for projects at other stages of development, including entitled projects. These are shown in Table A2 of

3.6 Packet Pg. 141
Attachment 2. Please note that the SB 35 projects, as described below, are listed as “entitled” projects for the purposes of the APR.

A total of 88 units from three multifamily residential projects were entitled or received SB 35 Zoning Clearance throughout 2021. Each of these three projects included an inclusionary housing component, for a total of 13 deed-restricted inclusionary units ranging from 35-120% AMI.

SB 35 Projects
California Senate Bill 35 (SB 35) is a 2017 law intended to streamline housing construction to address the state housing crisis. It requires that cities approve housing projects that meet objective zoning standards through a ministerial process.

This requirement applies to jurisdictions that do not issue enough building permits to make progress on their VLI and LI or Above-Moderate RHNA, as determined by HCD. If the jurisdiction also has not made sufficient progress toward its Above-Moderate income RHNA, then it is required to streamline developments with at least 10% affordable units. East Palo Alto is subject to this requirement.

Since SB 35 projects receive ministerial, rather than discretionary, review, they are not “entitled.” Instead, projects are reviewed by the Planning Division for conformance with the City’s existing objective development standards and issued a Zoning Clearance before the project may proceed to the Building permit stage.

Two applications were subject to the streamlined, ministerial review process and received Zoning Clearance in 2021. Both of these projects met the affordability threshold (of 10%) under SB 35 because they complied with the City’s Inclusionary Housing Ordinance:
· 1804 Bay Rd. a 75-unit mixed-use project with 10 inclusionary units: 3 at 35% AMI; 5 units at 50% AMI; and 2 at 60% AMI. This project also utilized the state Density Bonus law to receive 50% additional density in the project and waivers to accommodate the additional units.
· 760 Weeks St., a 10-unit condominium project with 2 inclusionary units, restricted to 80% and 120% AMI. This project likewise utilized state Density Bonus law to utilize two concessions and a waiver for the project (though it did not receive additional density).

Projects in the Pipeline - Under Review
Projects are considered “pipeline” if there is an active Planning application under review, but the project has not been deemed complete and/or the project has not received any Planning approvals. These units are not yet reflected in the Housing Element APR but are important to contextualize the unit counts shown in this staff report and capture housing development trends.

Further progress on VLI, LI, and MOD units is anticipated from these developments due to

3.6 Packet Pg. 142
the City’s Inclusionary Housing program. All residential developments in East Palo Alto that create additional housing units are subject to the City’s Inclusionary Housing Ordinance, which requires 20% of units in any project of five or more units to be provided as deed-restricted affordable housing.

Table 4 below shows the additional housing units in the City’s development “pipeline” against the remaining RHNA. The chart captures the development projects that the Planning Division is most likely to be engaged with in 2022.

Please note that Table 4 includes projects in the pre-application phase, or for which the Inclusionary Housing obligation has yet to be finalized. For these projects, unit estimates are calculated from applying the 20% standard on-site Inclusionary Housing requirement and are only intended for reference. As these are preliminary estimates, they should be interpreted more as an illustration of potential RHNA progress than an exact estimate for 2022.

TABLE 4
Unit Pipeline Estimates by Development
Development Type of Project Status Mkt ELI VLI LI MOD Units Total
547 Runnymede Condominium Under Review 7 1 8
990 Garden Single Family Under Review 6 2 8
717 Donahoe Condominium Under Review 12 1 1 14
2340 Cooley Condominium Under Review 6 1 7
Woodland/ Euclid Rental Under Review TBD 445
EPA Waterfront Mixed use Under Review 208 13 26 13 260
Harvest: The
Landing
Commercial Under Review TBD 95
n/a ADUs Under Review 1 3 3 3 3 13
n/a Single Family Under Review 7 7
Four Corners Rental Under Review 144 9 27 180
Estimated Pipeline Unit Total 1,037
Large Development Projects in Concept Phase
Three large mixed-use or commercial projects listed in Table 4 have expressed an interest in providing housing: Four Corners, EPA Waterfront, and Harvest: The Landing. As reported in prior Housing Element APRs staff reports, the City has seen unprecedented development activity in its Ravenswood/4 Corners Specific Plan area, prompting the City to analyze targeted revisions to the specific plan.

These developments will be subject to the broader RBD Specific Plan update. Some parcels included in these proposals are not currently zoned for housing, and the combined unit count of these proposals would exceed the original housing maximum of 835 units originally studied for the RBD specific plan.

3.6 Packet Pg. 143
This high level of development interest and activity indicates that the City may be able to meet most of its RHNA goals by 2023, if the City is able to address its significant infrastructure challenges.

Key Impediments to Housing Production
The Housing Element requires that jurisdictions identify any significant impediments to the production of housing units. Prior to 2018, the key impediment in East Palo Alto was the Temporary Water Moratorium (Ordinance No. 399), which was adopted in July 2016 and ended in July 2018. This resulted in the suspension of progress on several housing related projects.

With several developments in the pipeline, the chief impediment to further housing development in East Palo Alto remains infrastructure-related. Pipeline projects are experiencing significant delay as the City and developers of affected projects work with the East Palo Alto Sanitary District to find a feasible solution to the system’s capacity.

In addition, while the City has largely met its water supply needs, water distribution with the current network of pipelines remains a challenge. The City is actively discussing the funding for major capital improvement projects to improve water distribution for the entire city.

The Missing Middle: Moderate-Income Units
Although progress is being made in developing more affordable housing (for ELI, VLI, and LI households) and market-rate housing, many jurisdictions are challenged to develop more housing units for Moderate-Income households, defined as those earning at or below 120% of the County’s Median Income. The City is required to develop 83 ModerateIncome units before the end of the current Housing Element cycle. However, the funding sources to develop Moderate-Income units are limited.

Given the number of market-rate, for-sale residential developments currently in the pipeline, the City’s Inclusionary Housing program is likely to add significantly to the production of Moderate-Income units. There have been several projects since adoption of the Inclusionary Housing Ordinance in 2019 that include for-sale units in the 80-120% AMI range.

In 2020 and 2021, the City implemented multiple initiatives to increase the production of ADUs, which can serve as a source of “naturally” affordable housing for Moderate-Income households. For example, the City and its partners completed their “ADU Streamlining” initiative, funded by an SB 2 Planning Grant, and the City adopted its updated ADU ordinance on November 17, 2020. Further ADU progress is discussed below.

Other Key Accomplishments & Initiatives That Will Increase Housing Production Accessory Dwelling Units (ADUs)
As noted above, the City has invested significant resources into encouraging the production of ADUs as a strategy for adding to the affordable housing stock in East Palo

3.6 Packet Pg. 144
Alto. City staff participate in monthly ADU Technical Working Group meetings with community partners and collaborate with these organizations on multiple ongoing ADU initiatives. This includes the launch of the CalHome grant of $2,000,000, received from HCD in 2020.

As part of the City’s efforts to streamline ADU applications and reflect changes to state ADU law, Planning staff developed a Zoning Clearance Form that has significantly reduced Planning review time. Through the SB 2-funded “ADU Streamlining” initiative, the City’s partners are leading a comprehensive analysis of the full ADU application process, including interviews with City staff and ADU applicants. They are further assisting Planning staff by creating an interactive East Palo Alto ADU website and updated handouts that reflect the City’s updated ADU ordinance.

The number of ADU applications continues to increase: as noted above, in 2021, 30 ADU applicants received a Building permit, while 26 received Zoning Clearance from the Planning Department. This compares to 13 Building permits and 12 Zoning Clearances for ADUs in 2020.

Progress on the City’s Five-Year Affordable Housing Strategy In October 2018, the City approved its Affordable Housing Strategy (“the Strategy”). The Strategy directs limited affordable housing funds into the development of new, deed-restricted affordable housing, with the goal of doubling the number of deed-restricted units and preserving 200 existing affordable units by 2023. The Strategy also outlines potential regulatory changes and other creative approaches that the City and community partners could utilize to increase the production of affordable housing.

The City has made significant progress towards the goals of the Strategy, completing the majority of the items on the workplan. In 2021, this included:
· 965 Weeks - Applied for Affordable Housing and Sustainable Communities (“AHSC”) grant and loan; awarded January 2022
· RV Safe Parking Program - Renewal of program through April 2022 and continued daytime operations due to COVID-19 pandemic
· Coordination on Homelessness - monthly meetings with County partners and service providers on homeless encampments in East Palo Alto
· Inclusionary Housing - processed two SB 35 projects with inclusionary requirement and one project with an alternative compliance option
· Light Tree Affordable Housing Development- Building permits issued for Buildings X, Y, and Z
2021 General Plan Progress
In addition to the Housing Element, the General Plan consists of several distinct sections: Land Use and Urban Design; Economic Development; Transportation, Health and Equity; Parks, Open Space, and Conservation; Infrastructure Services and Facilities; Safety and Noise; and the Westside Area Plan. The table in Attachment 3 shows the status of implementation of each individual section of the VISTA 2035 General Plan.

Key Progress Efforts in 2021

3.6 Packet Pg. 145
In spite of the challenges of the COVID-19 pandemic and staffing, the Planning Division made progress on a number of different projects in 2021 to address certain General Plan Programs, as identified in Chapter 12 of the General Plan, Implementation Programs. Currently, 20% of the programs are complete, 74% of the programs are in progress, 6% are ongoing, and 24% have not been started. In addition, there were no General Plan Amendments processed in 2021. State law allows General Plan Amendments up to four times a year.

Several of those projects are highlighted below:

Land Use and Urban Design Programs (Table 12-2)
Program 2- Specific Plan Consistency
Beginning in 2020, East Palo Alto has initiated an update to the Ravenswood/4 Corners TOD Specific Plan which is also known as the Ravenswood Business District (“RBD”) area, 350 acres of industrial, residential, commercial, and public uses. This update was initiated following an increase in interest in development in the RBD area, even with the location’s physical constraints, such as environmental contamination, lack of transit and physical isolation due to its location next to San Francisco Bay. This interest in development provides an opportunity to further realize the goals of both the General Plan and the original RBD specific plan for the City’s only Priority Development Area. Previous to this increase, there was little development activity partially due to the temporary water moratorium.

The City held multiple study sessions with Planning Commission and City Council and community meetings throughout 2021. On November 18, 2021, the City Council hosted a study session and provided direction on the growth scenarios to be studied under California Environmental Quality Act (“CEQA”) for the RBD Specific Plan Update and the additional requirements needed to accompany any increase in development capacity for the RBD/4 Corners area. City Council determined it was best to study the following scenarios:

3.6 Packet Pg. 146
· Scenario 1: 2.82 million sq ft of office and R&D uses · Scenario 2: 3.25 million sq ft of office and R&D uses At the most recent RBD study session held on February 1, 2022, the City Council directed staff to study the addition of up to 1,600 housing units in the area.

The RBD update is an ambitious multi-year effort that includes both in-depth planning and environmental analysis, as well as extensive community outreach. It is an opportunity for the City to capture a greater share of community benefits and to impose stronger design and character standards for the entire Specific Plan area.

Parks, Open Space and Conservation Physical Improvements (Table 12-10) Program 6 Park access
City staff obtained grant funding to improve the track/sports field at Costano Elementary School. This improvement will benefit both the students during school activities and the area residents for community use. Access will be improved for both students and the community, providing valuable recreational area in the neighborhood.

Program 10 Park improvements
City staff also obtained grant funding to improve Joel Davis Park. The improvements include adding benches, replacing playground equipment, installing a bathroom and add fitness equipment. This will enhance an existing park that is already well utilized.

Infrastructure, Services, Facilities Physical Improvements Programs (Table 12-11) Program 3 - Performing Arts Center
The EPA Center Arts project is a 23,815 square-foot building comprised of three components:
1) the Entry/Studio/Café Component, 2) the Theater/Rehearsal Space Component, and 3) the Digital Arts/Workshop Component. Center operations focus on providing educational opportunities for community youth ages 13 to 21 through group classes, private instruction, career training, mentoring, and performance. Programs will focus on three major areas: Visual Arts Training, Music and Performance (digital media production, audio engineering and recording, dance, voice and instrument training, band and ensemble, 2D and 3D visual arts training and production), and DIY (Do It Yourself) maker programs. EPACENTER Arts plans to employ approximately 10-14 core staff members, and part time teaching faculty of approximately 45 instructors. The café and other program areas will employ 15-20 youth and young adults in part time positions as part of leadership training and workforce development.

Special events will include productions in the theater, community festivals, open-mic performances, recitals, community films screening, and guest artist performances, among other events.

Safety and Noise Programs (Table 12-8)
Program 3 - Hazard Mitigation Planning
The Local Hazard Mitigation Plan (LHMP), part of a countywide effort known as the San Mateo County Multi-Jurisdictional Hazard Mitigation Plan, was adopted by City Council at the end of 2021. All participating local jurisdictions have been responsible for assisting in the development of the hazard and vulnerability assessments and the mitigation action strategies

3.6 Packet Pg. 147
for their respective jurisdictions and organizations. The LHMP presents the accumulated information in a unified framework to ensure a comprehensive and coordinated plan covering the entire San Mateo County planning area. Each jurisdiction has been responsible for the review and approval of their individual sections of the LHMP. A ten-member Steering Committee (SC) composed of representative stakeholders was formed to guide the development of the LHMP. In addition, residents were asked to contribute by sharing local knowledge of their individual area’s vulnerability to natural hazards based on past occurrences.

Public involvement has been solicited via a comprehensive public outreach campaign that included two rounds of public meetings, web-based information, a questionnaire, and multiple social media updates. The hazard identification and profiling in the LHMP addresses the following hazards of concern within the planning area:

1. Dam failure

2. Earthquake

3. Flood

4. Landslide

5. Severe weather

6. Tsunami

7. Wildfire
Community Rating System
The Community Rating System (CRS) program is a voluntary program established by the Federal Emergency Management Agency (FEMA) and managed by the Insurance Services Office (ISO) to reduce flood losses, facilitate accurate flood insurance rating and promote the awareness of flood insurance. Certification is required annually, with the most recent in 2021.

Communities participating in the CRS program, including the City of East Palo Alto, earn credit points by implementing floodplain management activities that exceed the minimum requirements established under the National Flood Insurance Program (NFIP). Every 500 credit points that a community earns under the program translates to a higher-class rating and an additional 5% discount on flood insurance premiums for properties in the Special Flood Hazard Area (SFHA), as illustrated in the table below. Currently, the residents of East Palo Alto receive a 15% reduction in flood insurance premiums. The City’s eventual aim is to reach and stay at a Class 6, which would mean a 20% reduction in resident’s flood insurance premiums and also represent the highest level ever achieved by the City of East Palo Alto.

Housing Successor to Redevelopment Agency Annual Report Staff has also attached the Housing Successor to Redevelopment Agency Annual Report (Attachment 4) for Fiscal Year 2020-2021 (“Housing Successor Report”). As mentioned previously, the Housing Successor Report is required to be submitted with the Annual Housing Element Progress Report. The Housing Successor Report provides information on the Successor Housing Low and Moderate Income Housing Asset Fund (LMIHAF). The Housing Successor Report is included as an attachment to the Housing Element Annual Progress Report.

The Successor Agency Report shows that the City had $11,299,418 LMIHAF assets at the end

3.6 Packet Pg. 148
of the fiscal year. Besides information on aggregate expenditures, the document includes several expenditure “tests” that the Successor Agency must meet.

The “Excess Surplus Test” requires that the Agency cannot have unencumbered funds that exceed the aggregate amount deposited into the fund during the preceding four fiscal years or a minimum of $1,000,000. The Report indicates that the aggregate amount during the four prior years is $1,800,042. The unencumbered amount is $2,122,139, which exceeds the maximum amount allowed by the amount of $322,097.

Redevelopment law also places a limit on the amount of funds that can be spent on affordable units for senior citizens. If this percentage exceeds 50% of units funded over the last ten years, the Housing Successor cannot expend future LMIHAF funds on new senior housing until the Housing Successor or City has reduced this percentage to 50% or below. The report indicates that 0% of expenditures over this period went to fund senior housing. Therefore, the Successor Agency meets the “Senior Housing Test”.

Next Steps
If approved, staff will submit these annual reports to the applicable State agencies by April 1, 2021.

Fiscal Impact
There is no fiscal impact to the City associated with this report.

Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Attachments

1. Resolution

2. Housing Element APR (excerpts)

3. 2021 General Plan Program Status Table

4. 2022 HSA Report

3.6 Packet Pg. 149
RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

ACCEPTING THE HOUSING ELEMENT ANNUAL PROGRESS REPORT, GENERAL PLAN

ANNUAL PROGRESS REPORT, AND HOUSING SUCCESSOR TO THE REDEVELOPMENT

AGENCY ANNUAL REPORT, AND DIRECTING THE CITY MANAGER TO FILE THE REPORTS

WITH THE APPROPRIATE STATE AUTHORITIES
WHEREAS, Government Code Section 65400 requires the City of East Palo Alto (“City”) to file an annual progress report (“Housing Element Annual Progress Report”) documenting the progress in the City’s implementation of housing programs, using forms and definitions recommended by the California Department of Housing and Community Development (“Department”), with the Department and the Governor’s Office of Planning and Research (“OPR”) by April 1st of each year; and WHEREAS, Government Code Sections 65400 and 65700 require that the City file an annual report (“General Plan Annual Progress Report”) documenting progress in the City’s implementation of its General Plan with OPR by April 1st of each year; and
WHEREAS, Health and Safety Code Section 34176 requires the City to file an annual report (“Housing Successor to the Redevelopment Agency Annual Report”) describing how the City, acting as Successor to the former Redevelopment Agency of the City of East Palo Alto, has utilized its former Redevelopment Agency funds for housing activities in conformance with the Health and Safety Code; and WHEREAS, on March 14, 2022, via Resolution No. PC _____, the City of East Palo Alto Planning Commission recommended that the City Council direct the City Manager to file the above-referenced reports with the appropriate State authorities.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY:

1. Accepts the following annual reports: 2021 Housing Element Annual Progress Report; 2021 General Plan Annual Progress Report; and Housing Successor to the Redevelopment Agency Annual Report;

2. Authorizes the City Manager to submit the above-referenced reports to the appropriate State authorities; and

3. Finds that the acceptance and submittal of the above-referenced reports are exempt from the California Environmental Quality Act (CEQA).

3.6.a
Packet Pg. 150 Attachment: Resolution (2149 : 2021 Housing Element Annual Progress Report) PASSED AND ADOPTED on this 15th day of March 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, Acting City Clerk Valerie J. Armento, Interim City Attorney

3.6.a
Packet Pg. 151 Attachment: Resolution (2149 : 2021 Housing Element Annual Progress Report) Jurisdiction
East Palo
Alto ANNUAL ELEMENT PROGRESS REPORT Note: "+" indicates an optional field Reporting Year 2021 (Jan. 1 - Dec. 31) Housing Element Implementation Planning
Period 5th Cycle 01/31/2015 - 01/31/2023
Date
Application
Submitted
Total
Approved
Units by
Project
Total
Disapproved
Units by
Project
Streamlining Application
Status Notes
2 3 4 6 7 8 9 11 12
Prior APN+ Current
APN Street Address Project Name+ Local Jurisdiction
Tracking ID+
Unit Category
(SFA,SFD,2 to
4,5+,ADU,MH)
Tenure
R=Renter
O=Owner
Date
Application
Submitted+
(see
instructions)
Very LowIncome Deed
Restricted
Very LowIncome Non
Deed
Restricted
Low-Income
Deed
Restricted
Low-Income
Non Deed
Restricted
ModerateIncome
Deed
Restricted
ModerateIncome
Non Deed
Restricted
Above
ModerateIncome
Total PROPOSED
Units by Project
Total

APPROVED
Units by project
Total

DISAPPROVED
Units by Project
Was APPLICATION

SUBMITTED
Pursuant to GC
65913.4(b)?
(SB 35
Streamlining)
Was a Density
Bonus requested
for this housing
development?
Was a Density
Bonus approved
for this housing
development?
Please indicate
the status of the
application.

Notes+
Summary Row: Start Data Entry Below 10 13 1 5 1 5 76 111 111 0 63172270 2381 OAKWOOD DR 2381 OAKWOOD DR ASU21-006 ADU R 3/2/2021 1 1 1 No No N/A Approved 62117050 1245 LAUREL AVE 1245 LAUREL AVEU21-007 / BLD2021-0105 ADU R 3/10/2021 1 1 1 No No N/A Approved 63185250 466 BELL ST 466 BELL STU21-012 / BLD2021-0084 ADU R 8/5/2021 1 1 1 No No N/A Approved 63153290 2196 RALMAR AVE 2196 RALMAR AVE U21-015 / BLD2022-0003 ADU R 5/11/2021 1 1 1 No No N/A Approved 63153290 2081 RALMAR AVE 2081 RALMAR AVEU21-017 / BLD2022-0003 ADU R 9/1/2021 1 1 1 No No N/A Approved 62197300 2315 GLEN WAY 2315 GLEN WAYU21-018 / BLD2021-0107 ADU R 9/14/2021 1 1 1 No No N/A Approved 63011010 1643 TULANE AVE 1643 TULANE AVEU21-020 / BLD2021-0152 ADU R 9/1/2021 1 1 1 No No N/A Approved 63521210 196 JASMINE WAY 196 JASMINE WAYU21-021 / BLD2021-0104 ADU R 8/26/2021 1 1 1 No No N/A Approved 63301060 2231 EUCLID AVE 2231 EUCLID AVE ADU R 9/2/2021 1 1 1 No No N/A Approved 62132320 1119 NEWBRIDGE ST 1119 NEWBRIDGE STU21-024 / BLD2022-0019 ADU R 9/8/2021 1 1 1 No No N/A Approved 63342330 2221 PULGAS AVE 2221 PULGAS AVEU21-025 / BLD2021-0099 ADU R 9/9/2021 1 1 1 No No N/A Approved 63402010 475 LARKSPUR DR 475 LARKSPUR DRU21-037 / BLD2021-0136 ADU R 11/12/2021 1 1 1 No No N/A Approved 62132010 1102 ALBERNI ST 1102 ALBERNI ST 1-039 / BLD2022-0010 ADU R 11/12/2021 1 1 1 No No N/A Approved 63194100 341 WEEKS ST 341 WEEKS ST DR20-015 ADU R 2/3/2021 1 1 1 No No N/A Approved 63322140 2194 CAPITOL AVE 2194 CAPITOL AVE U21-043 / BLD2022-0011 ADU R 12/7/2021 1 1 1 No No N/A Approved 63202190 535 SACRAMENTO ST 535 SACRAMENTO ST ADR20-007 ADU R 4/7/2021 1 1 1 No No N/A Approved 631741902387 DUMBARTON AVE 2387 DUMBARTON AVE ASU20-020 ADU R 2/1/2021 1 1 1 No No N/A Approved 631820502216 DUMBARTON AVE 2216 DUMBARTON AVE ASU21-002 ADU R 1/28/2021 1 1 1 No No N/A Approved 63181160 2159 LINCOLN ST 2159 LINCOLN ST ASU21-008 ADU R 11/11/2021 1 1 1 No No N/A Approved 63374500 2121 CLARKE AV 2121 CLARKE AVE ASU21-013 ADU R 7/11/2021 1 1 1 No No N/A Approved 631910302268 DUMBARTON AVE 2268 DUMBARTON AVE ASU21-014 ADU R 4/30/2021 1 1 1 No No N/A Approved 63341390 965 GARDEN ST 965 GARDEN ST ASU21-016 ADU R 6/28/2021 1 1 1 No No N/A Approved 63042230 2770 FORDHAM ST 2770 FORDHAM ST ASU21-029 ADU R 10/8/2021 1 1 1 No No N/A Approved 63533050 139 WISTERIA DR 139 WISTERIA DR ASU21-031 ADU R 10/22/2021 1 1 1 No No N/A Approved 63024010 2896 ILLINOIS ST 2896 ILLINOIS ST ASU21-034 ADU R 10/28/2021 1 1 1 No No N/A Approved 63083300 620 NOTRE DAME AVE 1620 NOTRE DAME AVE ASU21-035 ADU R 10/26/2021 1 1 1 No No N/A Approved 63231240 1804 BAY RD 1804 BAY RD PRE20-006 MH R 9/20/2021 10 65 75 75 Yes-Approved Yes Yes Approved 63252320 760 WEEKS ST 760 WEEKS ST DR20-007 MH O 2/19/2021 1 1 8 10 10 Yes-Approved Yes Yes Approved Table A
Housing Development Applications Submitted
Cells in grey contain auto-calculation formulas
1 5
Project Identifier Unit Types Proposed Units - Affordability by Household Incomes (CCR Title 25 §6202)
Density Bonus Applications
10 3.6.b
Packet Pg. 152 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Jurisdiction East Palo Alto ANNUAL ELEMENT PROGRESS REPORT Reporting Year 2021 (Jan. 1 - Dec. 31) Housing Element Implementation Cells in grey contain auto-calculation formulas Planning Period 5th Cycle 01/31/2015 - 01/31/2023
Table A2
Annual Building Activity Report Summary - New Construction, Entitled, Permits and Completed Units Streamlining Infill
Housing without Financial
Assistance or Deed
Restrictions
Term of Affordability
or Deed Restriction Notes
2 3 5 6 8 9 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Prior APN+ Current APN Street Address Project Name+ Local Jurisdiction Tracking ID+
Unit Category
(SFA,SFD,2 to
4,5+,ADU,MH)
Tenure
R=Renter
O=Owner
Very LowIncome Deed
Restricted
Very LowIncome Non
Deed
Restricted
Low- Income
Deed
Restricted
Low- Income
Non Deed
Restricted
ModerateIncome Deed
Restricted
ModerateIncome Non
Deed
Restricted
Above
ModerateIncome
Entitlement
Date Approved # of Units issued
Entitlements
Very LowIncome Deed
Restricted
Very LowIncome Non
Deed
Restricted
Low- Income
Deed
Restricted
Low- Income
Non Deed
Restricted
ModerateIncome Deed
Restricted
ModerateIncome Non
Deed
Restricted
Above
ModerateIncome
Building Permits
Date Issued
# of Units Issued
Building Permits
Very LowIncome Deed
Restricted
Very LowIncome Non
Deed
Restricted
Low- Income
Deed
Restricted
Low- Income
Non Deed
Restricted
ModerateIncome
Deed
Restricted
ModerateIncome Non
Deed
Restricted
Above
ModerateIncome
Certificates of
Occupancy or other
forms of readiness
(see instructions)
Date Issued
# of Units
issued
Certificates of
Occupancy or
other forms of
readiness
How many of
the units were
Extremely Low
Income?+
Was Project
APPROVED using
GC 65913.4(b)?
(SB 35
Streamlining)
Y/N
Infill Units?
Y/N+
Assistance Programs
for Each Development
(may select multiple -
see instructions)
Deed Restriction
Type
(may select
multiple - see
instructions)
For units affordable without
financial assistance or deed
restrictions, explain how the
locality determined the units
were affordable
(see instructions)
Term of Affordability or
Deed Restriction (years)
(if affordable in perpetuity
enter 1000)+
Number of
Demolished/Des
troyed Units
Demolished or
Destroyed Units
Demolished/De
stroyed Units
Owner or
Renter
Total Density Bonus Applied
to the Project (Percentage
Increase in Total Allowable
Units or Total Maximum
Allowable Residential Gross
Floor Area)
Number of Other
Incentives,
Concessions, Waivers,
or Other Modifications
Given to the Project
(Excluding Parking
Waivers or Parking
Reductions)
List the incentives,
concessions,
waivers, and
modifications
(Excluding Parking
Waivers or Parking
Modifications)
Did the project receive a
reduction or waiver of
parking standards? (Y/N)
Notes+
Summary Row: Start Data Entry Below 11 0 1 0 1 0 75 88 0 15 0 6 0 6 5 32 0 3 0 3 0 0 3 9 8 2 0 0 63374360 2118 COOLEY AVE 2118 COOLEY AVE BLD2020-0099 ADU R 0 1 1/5/2021 1 0 1 N Y Using Housing Element assumptions about ADUs: 25% ELI, 25% VLI, 20% LI, 20% MOD, 10% Above-Moderate. 63522120 1351 CAMELLIA DR 1351 CAMELLIA DR BLD2020-0086 ADU R 0 1 1/11/2021 1 0 1 N Y same as above 63085030 2579 FORDHAM ST 2579 FORDHAM ST BLD2020-0110 ADU R 0 1 1/14/2021 1 0 1 N Y same as above 63551300 140 GARDENIA WAY140 GARDENIA WAY BLD2020-0084 ADU R 0 1 2/25/2021 1 0 1 N Y same as above 63384180 1280 CYPRESS ST 1280 CYPRESS ST BLD2020-0090 ADU R 0 1 2/26/2021 1 0 1 N Y same as above 63384190 1290 CYPRESS ST 1290 CYPRESS ST BLD2020-0091 ADU R 0 1 2/26/2021 1 0 1 N Y same as above 63384230 1261 BEECH ST 1261 BEECH ST BLD2020-0085 ADU R 0 1 3/1/2021 1 0 1 N Y same as above 63341630 1001 GARDEN ST 1001 GARDEN ST BLD2020-0088 ADU R 0 1 3/5/2021 1 0 1 N Y same as above 63361060 875 SCHEMBRI LN 875 SCHEMBRI LN BLD2020-0109 ADU R 0 1 4/1/2021 1 0 N Y same as above 63532010 191 JASMINE WAY 191 JASMINE WAY BLD2021-0002 ADU R 0 1 5/14/2021 1 0 N Y same as above 63374360 2118 COOLEY AVE 2118 COOLEY AVE BLD2020-0100 ADU R 0 1 5/27/2021 1 0 N Y same as above 63402070 451 LARKSPUR DR 451 LARKSPUR DR BLD2020-0108 ADU R 0 1 6/3/2021 1 0 N Y same as above 63351480 10 DINES CT 10 DINES CT BLD2020-0094 ADU R 0 1 6/21/2021 1 0 N Y same as above 63062040 16 KIRKWOOD CT 16 KIRKWOOD CT BLD2021-0030 ADU R 0 1 7/28/2021 1 0 N Y same as above 63182050 216 DUMBARTON AV216 DUMBARTON AV BLD2021-0014 ADU R 0 1 8/3/2021 1 0 N Y same as above 63074060 2520 EMMETT WAY 2520 EMMETT WAY BLD2021-0048 ADU R 0 1 8/16/2021 1 0 N Y same as above 62133070 2361 RALMAR AVE 2361 RALMAR AVE BLD2021-0006 ADU R 0 1 9/10/2021 1 0 N Y same as above 63202180 543 SACRAMENTO S543 SACRAMENTO ST BLD2019-0194 ADU R 0 1 9/15/2021 1 0 N Y same as above 63322080 2142 CAPITOL AVE 2142 CAPITOL AVE BLD2020-0021 ADU R 0 1 9/29/2021 1 0 N Y same as above 63162060 2238 POPLAR AVE 2238 POPLAR AVE BLD2020-0126 ADU R 0 1 10/1/2021 1 0 N Y same as above 62243330 1036 BRADLEY WAY1036 BRADLEY WAY BLD2021-0013 ADU R 0 1 11/4/2021 1 0 N Y same as above 62222160 216 HOLLAND ST 216 HOLLAND ST BLD2021-0037 ADU R 0 1 11/19/2021 1 0 N Y same as above 63024090 2850 ILLINOIS ST 2850 ILLINOIS ST BLD2021-0070 ADU R 0 1 12/1/2021 1 0 N Y same as above 63032010 2709 FORDHAM ST 2709 FORDHAM ST BLD2021-0124 ADU R 0 1 12/20/2021 1 0 N Y same as above 63162220 1132 BAY RD 1132 BAY RD BLD2020-0134 ADU R 0 1 6/18/2021 1 0 N Y same as above 63194100 341 WEEKS ST 341 WEEKS ST BLD2021-0019 ADU R 0 1 7/26/2021 1 0 N Y same as above 62121240 173 SARATOGA AVE1173 SARATOGA AVE BLD2021-0021 ADU R 0 1 10/5/2021 1 0 N Y same as above 63074060 2520 EMMETT WAY2520 EMMETT WAY BLD2021-0048 ADU R 0 1 8/16/2021 1 0 N Y same as above 63062040 16 KIRKWOOD CT 16 KIRKWOOD CT BLD2021-0030 ADU R 0 1 7/28/2021 1 0 N Y same as above 63032010 2709 FORDHAM ST 2709 FORDHAM ST BLD2021-0124 ADU R 0 1 12/20/2021 1 0 N Y same as above 63155060 2140 OAKWOOD DR2140 OAKWOOD DR BLD2020-0071 ADU R 0 0 1 1/19/2021 1 N Y same as above 63023010 2895 ILLINOIS ST 2895 ILLINOIS ST BLD2019-0201 ADU R 0 0 1 1/21/2021 1 N Y same as above 63111040 1616 MICHIGAN AVE1616 MICHIGAN AVE BLD2020-0096 ADU R 0 0 1 2/2/2021 1 N Y same as above 63540150 161 DAPHNE WAY 161 DAPHNE WAY BLD2020-0156 ADU R 0 0 1 7/6/2021 1 N Y same as above 63345250 2251 TERRA VILLA ST2251 TERRA VILLA ST BLD2021-0003 ADU R 0 0 1 7/6/2021 1 N Y same as above 62116050 1245 JERVIS AVE 1245 JERVIS AVE BLD2020-0039 ADU R 0 0 1 7/20/2021 1 N Y same as above 63042160 2712 FORDHAM ST 2712 FORDHAM ST BLD2020-0049 ADU R 0 0 1 7/29/2021 1 N Y same as above 63221500 863 WEEKS ST 863 WEEKS ST BLD2020-0055 ADU R 0 0 1 12/28/2021 1 N Y same as above 63374420 2100 SALAS CT 2100 SALAS CT BLD2021-0001 ADU R 0 0 1 11/23/2021 1 N Y same as above 63265300 N/A Majd Residence DR19-021 ADU R 1 6/23/2021 1 0 0 N Y INC Inclusionary Housing Ordinance 1000 63344720 206 CLARKE AVENU206 CLARKE AVENU BLD2020-0158 SFA O 0 1 7/9/2021 1 0 N Y 63194100 341 WEEKS ST 341 WEEKS ST BLD2021-0019 SFA O 0 1 7/26/2021 1 0 N Y 63231240 1804 BAY RD 1804 BAY RD PRE20-006 MH R 10 65 9/20/2021 75 0 0 Y Y DB, INC Inclusionary Housing Ordinance 1000 50.0% 4 Development Standard Yes 63265300 N/A Majd Residence DR19-021 MH O 2 6/23/2021 2 0 0 N Y 63252320 760 Weeks St 760 Weeks St DR20-007 MH O 1 1 8 2/19/2021 10 0 0 Y Y DB, INC Inclusionary Housing Ordinance 1000 0.0% 3 Development Standard Yes 0 0 0
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Note: "+" indicates an optional field
Housing with Financial Assistance
and/or Deed Restrictions Project Identifier Demolished/Destroyed Units (CCR Title 25 §6202)
Density Bonus
1 Unit Types Affordability by Household Incomes - Completed Entitlement Affordability by Household Incomes - Building Permits Affordability by Household Incomes - Certificates of Occupancy 4 7 10

3.6.b
Packet Pg. 153 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Jurisdiction East Palo Alto ANNUAL ELEMENT PROGRESS REPORT Reporting Year 2021 (Jan. 1 - Dec. 31) Housing Element Implementation Planning Period 5th Cycle 01/31/2015 - 01/31/2023 (CCR Title 25 §6202) 1 3 4
RHNA Allocation
by Income Level 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total Units to Date (all years) Total Remaining
RHNA by Income
Level
Deed Restricted 16 - - - 89 - - -
Non-Deed Restricted - - - 4 5 15 - -
Deed Restricted 24 - - - - - - -
Non-Deed Restricted - - - - 2 3 6 - -
Deed Restricted - - - - - - - - -
Non-Deed Restricted 1 5 - 1 2 2 6 - -
Above Moderate 266 50 2 5 3 1 4 5 - - 70 196
467
91 7 5 4 9 103 32 - - 251 281
Note: units serving extremely low-income households are included in the very low-income permitted units totals and must be reported as very low-income units. 19 Please note: For the last year of the 5th cycle, Table B will only include units that were permitted during the portion of the year that was in the 5th cycle. For the first year of the 6th cycle, Table B will include units that were permitted since the start of the planning period.

Total RHNA
Total Units
Income Level
Very Low
Low
Please note: The APR form can only display data for one planning period. To view progress for a different planning period, you may login to HCD's online APR system, or contact HCD staff at [email protected]. 66 129
This table is auto-populated once you enter your jurisdiction name and current year data. Past year information comes from previous APRs.
17 Moderate
64 54
83 Please contact HCD if your data is different than the material supplied here 35 2
Table B
Regional Housing Needs Allocation Progress
Permitted Units Issued by Affordability
-

3.6.b
Packet Pg. 154 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Jurisdiction East Palo Alto
Reporting Year 2021 (Jan. 1 - Dec. 31)
1 2 3 4
Name of Program Objective Timeframe in H.E Status of Program Implementation Meet with local non-profit housing
developers Increase the availability of housing Annually City Staff continues to work with EPA CAN DO, Eden Housing, and MidPen to develop affordable housing (Light Tree Apartments, 965 Weeks) and preserve affordable housing (Nugent Square, Bay Oaks).

Support the continuation of a
consortium of non-profit affordable
housing developers to
acquire and maintain property as
affordable housing and to
redevelop property for the
purpose of preserving or
developing housing
Increase the availability of housing Annually No reportable actions in 2021.

Make loans to developers using setaside funds Increase the availability of housing Annually No loans committed in 2021.

Housing Programs Progress Report
Describe progress of all programs including local efforts to remove governmental constraints to the maintenance, improvement, and development of housing as identified in the housing element.

Table D
Program Implementation Status pursuant to GC Section 65583

ANNUAL ELEMENT PROGRESS REPORT
Housing Element Implementation
(CCR Title 25 §6202)

3.6.b
Packet Pg. 155 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Encourage the production of
second units as an affordable
housing alternative and achieve an
average of eight new secondary
units annually. Evaluate success of
recent
policy changes. Consider
implementing an amnesty program
for illegal second units
Increase the availability of housing Ongoing
ADU Working Group, which includes City staff and local nonprofits, continued to meet throughout 2021. The City and its partner, EPACANDO, prepared the launch of the CalHome ADU/JADU Loan Program (official launch January 2022).

Secure two-million dollars for
housing development Increase the availability of housing Ongoing City received $70,000 in Regional Early Action Planning (REAP) grant funds from ABAG/MTC to support planning and housing activities. City and MidPen Housing applied for an Affordable Housing and Sustainable Communities award (awarded February 2022).

Acquire development sites for
affordable housing, particularly for
large family households
Increase the availability of housing Ongoing No sites acquired in 2021.

Continue to support development
opportunities that allow for or
incorporate mobile homes and
manufactured homes within the
City as a low cost housing option.

Recognize mobile homes, manufactured
homes and factory built housing as a
source of affordable housing.

Ongoing
There is an ongoing effort to support this housing type. An application for temporary use of 2081 Bay Rd. and adjacent sites for production of manufactured housing is currently under review by the Planning Department.

Continue to permit manufactured
housing on permanent foundations
in single-family neighborhoods, and
treat them the same as traditional
single-family housing during the
design review process
Recognize mobile homes, manufactured
homes and factory built housing as a
source of affordable housing.

Ongoing
Staff processed applications containing manufactured housing units in 2021. Under the provisions of State Law, the Planning Division treats manufactured homes in the same manner as originally constructed single family homes.

Improve Earthquake Readiness
and Resilience
Ensure the housing stock can withstand a
natural disaster. Ongoing Work to renew the Multi-Jurisdictional Hazard Mitigation Plan Plan was completed in 2021. No other reportable actions were taken in 2021.

3.6.b
Packet Pg. 156 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Continue to implement
Government Code Section 65302,
which involves analysis and
policies regarding flood hazard and
management.

Ensure the housing stock can withstand a
natural disaster. Annually Staff continued to implement GC 65302 in 2021 and are using updated flood maps to inform sites selection for the upcoming Housing Element.

Multi-Family Rental Inspection Ensure multifamily housing is well-built and well maintained. Annually No reportable actions in 2021.

Ensure new Buildings follow Crime
Prevention through Environmental
Design
Ensure multifamily housing is well-built and
well maintained. Ongoing
City staff conducted CPTED analysis on all major projects. This is an ongoing endeavor as the city incorporates CPTED via the East Palo Alto Police Department review of projects.

Implement Ravenswood/Four
Corners TOD Specific Plan
Balanced development that links housing
and jobs Ongoing
The City is currently analyzing targeted updates to the Specific Plan area due to the amount of development interest. Multiple community meetings and City Council study sessions were held throughout 2021. At the most recent RBD study session held on February 1, 2022, the City Council directed staff to study the addition of up to 1,600 housing units in the area.

Evaluate development standards
and identify rezoning opportunities
along University Avenue’s
commercial nodes to increase
mixed-use development along the
corridor
Balanced development that links housing
and jobs Ongoing No reportable actions in 2021.

Review city ordinances and
policies to reduce barriers to
housing
Available residential sites for the
development of a range of housing types
and prices
Annually No reportable actions in 2021.

Ensure 965 Weeks Street is
redeveloped as affordable housing
Available residential sites for the
development of a range of housing types
and prices
Ongoing The City and MidPen Housing/EPACANDO applied for an Affordable Housing and Sustainable Communities award (awarded in February 2022).

Improve permit processing times
especially for affordable housing
projects
Reduce constraints and provide enhanced
incentives to housing Ongoing The City processed two SB 35 "streamlined" projects in 2021, both with a density bonus and an Inclusionary Housing requirement.

3.6.b
Packet Pg. 157 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Continue to implement Affordable
Housing Program
Require residential developers to pay into
an affordable housing fund to offset the
impacts associated with their development
Ongoing
This is an ongoing activity. For example, Housing staff maintain an Inclusionary Housing program, Commercial Linkage Fee program, and Local Preference program, and monitors its BMR portfolio through EPACANDO, in addition to taking on several projects related to affordable housing at the direction of City Council.

Provide low-interest loans and/ or
grants for affordable housing to
extremely low, very low, and low
income
Provide regulatory and financial incentives
to encourage affordable housing
development
Annually
The City created a $2M gap loan program for residents of the Palo Mobile Estates mobile home park, with EPACANDO as loan administrator, for residents to purchase their lots upon the park's conversion. Housing staff prepared for the launch of the $2M CalHome ADU/JADU loan program, which provides up to $80,000 to low-income households to build an ADU or JADU on their property.

Evaluate, improve, and promote
City ordinances that facilitate
affordable housing
Provide regulatory and financial incentives
to encourage affordable housing
development
Annually
The City is reviewing its Development Code to make necessary updates to align with state law, to ensure internal consistency, and as part of the Housing Element update process. The City Council approved an alternative compliance option under the Inclusionary Housing Ordinance in 2021, allowing for an ADU to be provided as an alternative to paying an In-Lieu Fee. Three projects with an Inclusionary Housing obligation were successfully processed in 2021.

Determine feasibility of forming a
local land trust
Reduce constraints and provide enhanced
incentives to housing Annually
The City and its partners implemented a 2-year Challenge Grant from the Partnership for the Bay's Future to establish a community land trust and potential TOPA/COPA (Tenant/Community Opportunity to Purchase Act) in East Palo Alto. The City Council was still considering an ordinance (EPA OPA) in fall and winter 2021.

Provide better information to the
public and policymakers about
housing issues
Provide adequate and timely information to
decision makers and the general public to
facilitate informed decision making
Biannual
City staff used the updated website to inform residents of the Housing Element update, development of an EPA Opportunity to Purchase Act Ordinance (EPA OPA), and other key housing policy developments in 2021.

Disseminate the design toolkit to
assist developers of small parcels.

This toolkit provides ideas and
examples of techniques to develop
small lots while providing usable
open
space, contributing to a pedestrian
environment, and enhancing
community character.

Encourage the development of singlefamily housing and small multi-family housing developments on small parcels
Ongoing No reportable actions in 2021.

Bring wells into operation at Gloria
Bay and Pad D
Ensure there is adequate water supply for
current and future needs Ongoing/ 2018 No reportable actions in 2021.

3.6.b
Packet Pg. 158 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Facilitate the development of
project(s) in the City to serve
special needs groups, with a goal
of assisting at least 30 persons
with special needs. Meet with
advocates and developers of
supportive housing, group homes,
licensed residential community
care facilities, and assisted living
facilities
Provide adequate housing to special need
groups Ongoing
As part of the Housing Element update, City staff participated in listening sessions with representatives of community members with disabilities to learn about how to improve access to housing and key design elements to promote "visitability," or ability of people of all abilities to access the housing of others. This information will be used in the upcoming Housing Element update.

Continue to support senior projects
by permitting smaller unit sizes,
parking requirement reduction, and
common dining facilities
Provide adequate housing to special need
groups Ongoing No reportable actions in 2021. No new applications have been submitted for senior housing projects in 2021.

Implement the reasonable
accommodation ordinance, which
provides zoning and land- use
exceptions for housing serving
persons with disabilities. This is a
ministerial process to receive minor
exemptions to land use, zoning and
building regulations.

Provide adequate housing to special need
groups Ongoing No reportable actions in 2021.

Provide financial assistance and
priority permitting for at least one
affordable housing development in
East Palo Alto where the project
devotes at least half of its units for
large extremely low-, very low- and
low-income families of five or more
persons
Provide adequate housing to special need
groups Annually No reportable actions in 2021.

Promote Emergency Shelters Provide adequate housing to special need groups Ongoing No reportable actions in 2021.

3.6.b
Packet Pg. 159 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Explore the feasibility of various
City policies/programs to reduce
overcrowding
Provide adequate housing to special need
groups Ongoing No repotable actions in 2021.

Continue to permit emergency
shelters in the Light Industrial (M-1)
zone without discretionary permits.

Within this zone, emergency
shelters are subject to the same
development and management
standards that apply to the other
permitted use
Facilitate the development of emergency
shelter and transitional housing for the
homeless, victims of domestic violence, or
the formerly incarcerated
Biannual
No reportable actions in 2021. However, staff provided informational updates on unhoused residents in East Palo Alto and were directed by City Council to return with recommendations in spring of 2022, including how the City can facilitate temporary housing.

Continue to permit transitional and
supportive housing as a residential
use and only subject to those
restrictions that apply to other
residential uses of the same type in
the same zone
Facilitate the development of emergency
shelter and transitional housing for the
homeless, victims of domestic violence, or
the formerly incarcerated
Ongoing
No reportable actions in 2021. However, staff provided informational updates on unhoused residents in East Palo Alto and were directed by City Council to return with recommendations in spring of 2022, including how the City can facilitate temporary housing.

Accommodate and facilitate the
development of additional
transitional housing facilities that
serve victims of domestic violence,
homeless individuals, and/or
formerly incarcerated persons
Facilitate the development of emergency
shelter and transitional housing for the
homeless, victims of domestic violence, or
the formerly incarcerated
Annually Emergency Shelters remain a permitted use in the M-1 zone.

Continue to allow by right the
development of Single-RoomOccupancy projects in High
Density Residential Zones
Facilitate the development of emergency
shelter and transitional housing for the
homeless, victims of domestic violence, or
the formerly incarcerated
Annually No reportable actions in 2021.

3.6.b
Packet Pg. 160 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Continue to enforce the spacing
requirement for residential care
facilities, as identified in
Section 6515.5 of the East Palo
Alto Zoning Ordinance, which is
currently seven hundred
and fifty feet (750) for facilities that
house ten persons or more, and
500 feet for facilities that house 6-
10 residents
Provide adequate housing to special need
groups
2020
No reportable actions in 2021.

Continue to implement Rent
Stabilization Ordinance
Stabilize rents in the City through continued
implementation of the Rent Stabilization
Program and Just Cause for Eviction
Ordinance
Ongoing Rent Stabilization staff continued to implement the Rent Stabilization and Just Cause for Eviction ordinance in 2021.

Annual certification of Maximum
Legal Rents
Stabilize rents in the City through continued
implementation of the Rent Stabilization
Program and Just Cause for Eviction
Ordinance
Ongoing Rent Stabilization staff continued to implement the Rent Stabilization and Just Cause for Eviction ordinance in 2021.

Work with non-profit housing
service providers to provide
education and legal
assistance to secure tenant rights
Stabilize rents in the City through continued
implementation of the Rent Stabilization
Program and Just Cause for Eviction
Ordinance
Ongoing
City staff refer residents to Community Legal Services and the Legal Aid Society of San Mateo County for certain housing related issues. In 2019, the City released an RFP for tenant services, and in 2020, local nonprofits Community Legal Aid Services in East Palo Alto, Youth United for Community Action, and Nuestra Casa received funding for tenant education, tenant protections, and emergency assistance. Also in 2020, the City provided additional funding to nonprofit agencies to assist tenants with COVID-19-related financial hardships and prevent evictions. This work continued through 2021.

Pursue funding to acquire or assist
in the acquisition of at least 20
foreclosed properties with the
intent to sell to low-income families
Increase the supply of extremely low-, very
low-, and low-income housing opportunities
through acquisition of foreclosed properties
Ongoing No reportable actions in 2021.

Monitor BMR Units
Implement and monitor affordable housing
programs to ensure the continued
availability of below market rate units in the
city
Ongoing
The City has contracted with EPACANDO since 2019 to administer the City's BMR portfolio. This is an ongoing endeavor that included the refinancing and re-sale of BMR units in 2021.

3.6.b
Packet Pg. 161 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Monitor the effectiveness of the
City’s affordable housing mitigation
programs, including
the Affordable Housing Program
and the Condominium Conversion
Ordinance, as tools
to facilitate affordable housing
development
Implement and monitor affordable housing
programs to ensure the continued
availability of below market rate units in the
city
Ongoing City staff continues to monitor the City's BMR units and Condo Conversion Ordinance.

No specific actions in 2021.

Discourage Mobile Home Removal
or Relocation
Preserve existing, conforming mobile home
parks as a source of affordable housing Ongoing
City staff ensure compliance with State laws related to mobile home parks on an ongoing basis. Since September 2020, staff have closely monitored the conversion process of the Palo Mobile Estates Mobile Home Park.

Assist eligible mobile home park
residents in receiving Mobile Home
Park Resident
Ownership Program (MPROP)
funds
Preserve existing, conforming mobile home
parks as a source of affordable housing Ongoing No reportable actions in 2021.

Work with the property owners of
existing mobile home parks to
prepare infrastructure studies of
said parks
Preserve existing, conforming mobile home
parks as a source of affordable housing Ongoing No reportable actions in 2021.

Make first-time homebuyer funds
and mortgage enhancement
available through as many means
as possible
Establish new and/or participate in existing
programs that utilize a variety of funding
sources to assist lower and moderateincome renters in obtaining affordable homeownership
Ongoing No reportable actions in 2021.

3.6.b
Packet Pg. 162 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Work with lenders and fair-housing
service providers to provide credit
counseling
workshops in East Palo Alto that
assist residents in understanding
home improvement
and purchase processes and how
to access financing
Establish new and/or participate in existing
programs that utilize a variety of funding
sources to assist lower and moderateincome renters in obtaining affordable homeownership
Ongoing No reportable actions in 2021.

Investigate new program
possibilities that provide down
payment assistance and/or
low-interest loans for City
employees and residents
Whenever possible, give priority for
affordable housing opportunities to existing
residents and those who work in East Palo
Alto but cannot afford to live in the city
Annually No reportable actions in 2021.

Implement the Condominium
Conversion Ordinance
Conserve the existing supply of affordable
rental housing by preserving existing highdensity residential areasOngoing No reportable actions in 2021.

Conserve units governed by the
Rent Stabilization Program by
limiting commercial
redevelopment which would reduce
the supply of affordable units
Conserve the existing supply of affordable
rental housing by preserving existing highdensity residential areasOngoing No reportable actions in 2021.

Distribute literature on the health
and safety risks of lead-based
paint and continue to work with the
San Mateo County Housing and
Code Enforcement Division to
explore resources and programs
available to address lead-based
paint in the City’s housing stock
Implement both proactive and reactive code
enforcement to correct Housing, Health,
and Safety Code violations
Ongoing No reportable actions in 2021.

3.6.b
Packet Pg. 163 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Refer East Palo Alto homeowners
to the San Mateo County Housing
and Community Development
Division’s Home Repair Program
and explore ways to increase
homeowner participation.

Disseminate information on the
Home Repair Program
through brochures available at
public counters and the City’s
website
Improve existing housing conditions and
neighborhood quality through housing
rehabilitation and neighborhood
improvement efforts
Annually No reportable actions in 2021.

Inform homeowners on the
availability of County-funded
rehabilitation assistance with
Improve existing housing conditions and
neighborhood quality through housing
rehabilitation and neighborhood
Ongoing No reportable actions in 2021.

Assist eligible extremely low-, very
low-income and low-income
homeowners in the City
in pursuing funds to aid in the
rehabilitation and renovation of
their homes
Assist extremely low-, very low-, low- and
moderate-income households in making
necessary repairs and improvements
Ongoing No reportable actions in 2021.

Provide resources for homeowners
facing foreclosure on the City’s
website, including links to loan
servicers and agencies that can
provide counseling and legal
assistance
Assist homeowners faced with foreclosure
and reduce the inventory of vacant
foreclosed homes in the City, in part by
creating programs to prevent residents from
losing their homes and to enable residents
to purchase foreclosed homes
Annually
No reportable actions in 2021. However, the the City continues to work with the ADU Working Group member organizations and other partners on unpermitted garage conversions in East Palo Alto, and Housing staff prepared for the launch of the CalHome ADU/JADU loan program, which is available for rehab related to second units, in January 2022.

Investigate the feasibility of an
ordinance that requires landlords to
notify tenants of a foreclosure and
protects all tenants from utility shutoffs and loss of security deposit due to a change of ownership.

Assist homeowners faced with foreclosure
and reduce the inventory of vacant
foreclosed homes in the City, in part by
creating programs to prevent residents from
losing their homes and to enable residents
to purchase foreclosed homes
Ongoing No reportable actions in 2021.

3.6.b
Packet Pg. 164 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) For affordable housing projects
that have received financial
assistance from the City, identify
projects where a history of
complaints and failed inspections
by authorized agencies indicate
continued and uncorrected
mismanagement. Contact
identified property managers to
determine a timeline for correction
or negotiate change in property
management per the stipulations
set forth in the financial agreement
between the City and the
affordable housing developer
Address negligent affordable housing
property management of projects that have
received financial assistance from the City
through the negotiation of a change in
management to a company with a
satisfactory record of complying with
current health, safety, and building codes
Ongoing No reportable actions in 2021.

Support, publicize, and make
referrals to fair housing and legal
assistance programs that provide
information, counseling, and
investigation services concerning
housing discrimination. Publicize
ordinance through the city’s
website, notices at city offices, in
the city newsletter and mailings,
and with relevant stakeholder
groups
Actively encourage fair housing choices for
all residents Ongoing No reportable actions in 2021. Residents are referred to Community Legal Services and the Legal Aid Society of San Mateo County.

Support local, regional, State, and
federal initiatives in addressing
predatory lending practices to
protect the most vulnerable
segments of the community
Facilitate the development of a variety of
housing options at a range of prices to meet
the various housing needs of residents
Ongoing No reportable actions in 2021.

3.6.b
Packet Pg. 165 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Allocate financial and staff
resources to maintain a monitoring
system that collects information on
the accomplishments and lessons
learned of concerning the Housing
Element’s objectives and
programs. Prepare detailed
progress report for review by the
City Council, stakeholders, and the
general public
Improve public accountability in
implementing Housing Element programs,
making necessary adjustments to staff and
financial resources in a timely manner
Ongoing No reportable actions in 2021.

The City Council shall hold public
meetings and study sessions to
discuss various housing policies in
the city and to exchange input and
information with residents and
developers about housing needs,
resources, and program options.

To the extent possible, publish a
schedule of study sessions
Improve public accountability in
implementing Housing Element programs,
making necessary adjustments to staff and
financial resources in a timely manner
Ongoing
Multiple housing study sessions, Policy & Action items, and public hearings related to housing were held in 2021. This includes the Ravenswood Specific Plan update, development of an East Palo Alto Opportunity to Purchase Act (EPA OPA), Inclusionary Housing, and many others.

Update the website and explore
other means to communicate
important housing concerns,
policies, and programs to the
general public
Improve public accountability in
implementing Housing Element programs,
making necessary adjustments to staff and
financial resources in a timely manner
Annually
The City website was updated in 2020, and staff continued to use the Housing webpage, in addition to the City calendar, City newsletter, and social media to reach out to the public on housing-related issues.

Report to the City Council on the
state of housing in East Palo Alto
Improve public accountability in
implementing Housing Element programs,
making necessary adjustments to staff and
financial resources in a timely manner
Annually
The City provides semiannual updates to the City Council on progress on the 5-year Affordable Housing Strategy. City staff annually prepare a Housing Element Progress Report in accordance with State law. The 2021 Progress Report is being completed with this summary. Staff also began the process of reviewing the 2015-23 Housing Element in its entirety in 2021 as part of the Housing Element update process.

Website Updates
Improve public accountability in
implementing Housing Element programs,
making necessary adjustments to staff and
financial resources in a timely manner
Ongoing
City staff annually prepare a Housing Element Progress Report in accordance with State law. The 2021 Progress Report is being completed with this summary. Staff also began the process of reviewing the 2015-23 Housing Element in its entirety in 2021 as part of the Housing Element update process.

3.6.b
Packet Pg. 166 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report) Enforce State Energy Code for new
residential construction and
additions/renovations to existing
structures
Promote energy conservation in the design
and siting of new residential units, and
energy reduction programs for existing
residential units
Ongoing Building Division staff, on an ongoing basis, enforce the State Energy Code for new residential and additions/constructions to existing units.

Grants for Energy Efficiency Implement Housing Policies and Broad Participation in Associated Programs Ongoing No reportable actions in 2021.

General Comments

3.6.b
Packet Pg. 167 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report)

3.6.b
Packet Pg. 168 Attachment: Housing Element APR (excerpts) (2149 : 2021 Housing Element Annual Progress Report)

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3.6.c
Packet Pg. 169 Attachment: 2021 General Plan Program Status Table (2149 : 2021 Housing Element Annual Progress Report)

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3.6.c
Packet Pg. 176 Attachment: 2021 General Plan Program Status Table (2149 : 2021 Housing Element Annual Progress Report)

HOUSING SUCCESSOR TO THE REDEVELOPMENT AGENCY ANNUAL REPORT

REGARDING THE

LOW AND MODERATE INCOME HOUSING ASSET FUND
FOR FISCAL YEAR 2020-21

PURSUANT TO
CALIFORNIA HEALTH AND SAFETY CODE SECTION 34176.1(f)

FOR THE

CITY OF EAST PALO ALTO
This Housing Successor Annual Report (Report) regarding the Successor Housing Low and Moderate Income Housing Asset Fund (LMIHAF) has been prepared pursuant to California Health and Safety Code Section 34176.1(f) and is dated as of March 15, 2022.

This Report sets forth certain details of the housing activities of the City of East Palo Alto, successor to the former Redevelopment Agency of the City of East Palo Alto during Fiscal Year 2020-21. The purpose of this Report is to provide the governing body of the Housing Successor an annual report on the housing assets and activities of the Housing Successor under Part 1.85, Division 24 of the California Health and Safety Code, in particular sections 34176 and 34176.1 (Dissolution Law).

The following Report is based upon information prepared by Housing Successor staff and information contained within the independent financial audit of the Low and Moderate Income Housing Asset Fund. Further, this Report conforms with and is organized into sections I. through XI., inclusive, pursuant to Section 34176.1(f) of the Dissolution Law:

I. Loan Repayments: The amount the city, county or city and county received pursuant to subparagraph (A) of paragraph (3) of subdivision (b) of Section 34191.4.

II. Amount Deposited into LMIHAF: This section provides the total amount of funds deposited into the LMIHAF during the Fiscal Year. Any amounts deposited for items listed on the Recognized Obligation Payment Schedule (ROPS) must be distinguished from the other amounts deposited.

III. Ending Balance of LMIHAF: This section provides a statement of the balance in the LMIHAF as of the close of the Fiscal Year. Any amounts deposited for items listed on the ROPS must be distinguished from the other amounts deposited.

IV. Description of Expenditures from LMIHAF: This section provides a description of the expenditures made from the LMIHAF during the Fiscal Year. The expenditures are to be categorized.

V. Statutory Value of Assets Owned by Housing Successor: This section provides the statutory value of real property owned by the Housing Successor, the value of loans and grants receivables, and the sum of these two amounts.

VI. Description of Transfers: This section describes transfers, if any, to another housing successor agency made in previous Fiscal Year(s), including whether the

3.6.d
Packet Pg. 177 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report) funds are unencumbered and the status of projects, if any, for which the transferred LMIHAF will be used. The sole purpose of the transfers must be for the development of transit priority projects, permanent supportive housing, housing for agricultural employees or special needs housing.

VII. Project Descriptions: This section describes any project for which the Housing Successor receives or holds property tax revenue pursuant to the ROPS and the status of that project.

VIII. Status of Compliance with Section 33334.16: This section provides a status update on compliance with Section 33334.16 for interests in real property acquired by the former redevelopment agency prior to February 1, 2012. For interests in real property acquired on or after February 1, 2012, provide a status update on the project.

IX. Description of Outstanding Obligations under Section 33413: This section describes the outstanding inclusionary and replacement housing obligations, if any, under Section 33413 that remained outstanding prior to dissolution of the former redevelopment agency as of February 1, 2012 along with the Housing Successor’s progress in meeting those prior obligations, if any, of the former redevelopment agency and how the Housing Successor’s plans to meet unmet obligations, if any.

X. Income Test: This section provides the information required by Section 34176.1(a)(3)(B), or a description of expenditures by income restriction for five-year period, with the time period beginning January 1, 2014 and whether the statutory thresholds have been met.

XI. Senior Housing Test: This section provides the percentage of units of deedrestricted rental housing restricted to seniors and assisted individually or jointly by the Housing Successor, its former redevelopment Agency, and its host jurisdiction within the previous 10 years in relation to the aggregate number of units of deedrestricted rental housing assisted individually or jointly by the Housing Successor, its former Redevelopment Agency and its host jurisdiction within the same time period. For this Report the ten-year period reviewed is January 1, 2007 to January 1, 2017.

XII. Excess Surplus Test: This section provides the amount of excess surplus in the LMIHAF, if any, and the length of time that the Housing Successor has had excess surplus, and the Housing Successor’s plan for eliminating the excess surplus.

XIII. Homeownership Units: An inventory of homeownership units assisted by the former redevelopment agency or the housing successor that are subject to covenants or restrictions or to an adopted program that protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund pursuant to subdivision (f) of Section 33334.3. This inventory shall include all of the following information:
(A) The number of those units.

3.6.d
Packet Pg. 178 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report) (B) The number of the units lost to the portfolio in the last fiscal year and the reason for those losses.
(C)Any funds returned to the housing successor as part of an adopted program that protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund.
(D)Whether the housing successor has contracted with any outside entity for the management of the units and, if so, the identity of the entity.

I. LOAN REPAYMENT
The Housing Successor received $72,837 of loan repayments pursuant to subparagraph (A) of paragraph (3) of subdivision (b) of Section 34191.4.

II. AMOUNT DEPOSITED INTO LMIHAF
A total of $557,734 of program income was deposited into the LMIHAF during the Fiscal Year consisting $463,954 in Sponsoring Entity loan repayments (73%) from ROPS, and $93,780 interest and minor program income.

III. ENDING BALANCE OF LMIHAF
At the close of the Fiscal Year, the ending balance in the LMIHAF was $11,299,418.

IV. DESCRIPTION OF EXPENDITURES FROM LMIHAF
The following is a description of expenditures from the LMIHAF by category:

Expenditure Amount
Administrative and Legal Fees $206,150
Homeless Prevention and Rapid Rehousing
Services $291,666
Housing Development
Extremely -Low Income Units (0-30% AMI) $0
Very-Low Income Units (31-50% AMI) $0
Low Income Units (51-60% AMI) $0
Unrestricted Units (Manager's units) $0
Expenditures of Acquisition and
Predevelopment $0
Total LMIHAF Expenditures in Fiscal Year 20-
21 $497,816

3.6.d
Packet Pg. 179 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report) California Health and Safety Code Section 34176.1 allows for 5% of the total $11,683,119 gross value of Housing Successor assets, or $584,156 to be used on monitoring and administrative expenditures. The Housing Successor continues to monitor expenditures from the LMIHAF.

V. STATUTORY VALUE OF ASSETS OWNED BY HOUSING SUCCESSOR IN LMIHAF Under the Dissolution Law and for purposes of this Report, the “statutory value of real property” means the value of properties formerly held by the former redevelopment agency as listed on the housing asset transfer schedule approved by the Department of Finance as listed in such schedule under Section 34176(a)(2), the value of the properties transferred to the Housing Successor pursuant to Section 34181(f), and the purchase price of property(ies) purchased by the Housing Successor. Further, the value of loans and grants receivable is included in these reported assets held in the LMIHAF.

The following provides the statutory book value of assets owned by the Housing Successor.

Asset Description As of End of Fiscal
Year
Statutory Value of Real Property Owned by Housing Successor $2,603,735 Value of Loans and Grants Receivable $6,571,314
Total Value of Housing Successor Assets $11,683,119
VI. DESCRIPTION OF TRANSFERS
The Housing Successor did not make any LMIHAF transfers to other Housing Successor(s) under Section 34176.1(c)(2) during the Fiscal Year.

VII. PROJECT DESCRIPTIONS
The Housing Successor does not receive or hold property tax revenue pursuant to the ROPS.

VIII. STATUS OF COMPLIANCE WITH SECTION 33334.16
Section 34176.1 provides that Section 33334.16 does not apply to interests in real property acquired by the Housing Successor on or after February 1, 2012; however, this Report presents a status update on the projects related to such real property.

With respect to interests in real property acquired by the former redevelopment agency prior to February 1, 2012, the time periods described in Section 33334.16 shall be deemed to have commenced on the date that the Finance Department approved the property as a housing asset in the LMIHAF; thus, as to real property acquired by the former redevelopment agency now held by the Housing Successor in the LMIHAF, the Housing Successor must initiate activities consistent with the development of the real property for

3.6.d
Packet Pg. 180 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report) the purpose for which it was acquired within five years of the date the DOF approved such property as a housing asset.

Property Address Date of Acquisition Status of Housing Successor Activity 965 Weeks Street July 15, 2009 In July of 2018, the City issued a Request for Proposal (RFP) to identify
an affordable housing developer to
develop 965 Weeks Street (the
Property). In September and October
2018, the City, with consultation from a
team of knowledgeable professionals
reviewed, interviewed, and further
deliberated on which developer to select
on the City’s behalf to develop the
Property into a thriving affordable
housing community. In November 2018,
the City Council selected Mid Peninsula
Housing as the entity to develop the
affordable housing project. The City
entered into an Exclusive Negotiation
Agreement (ENA) with MidPen Housing
in June 2019, and in December 2019,
the project received its entitlements. The
Disposition, Development, and Loan
Agreement (DDLA), which included a
loan commitment in the minimum
amount of approximately $715,000 from
the City’s LMIHAF, was executed
December 15, 2020.

IX. DESCRIPTION OF OUTSTANDING OBLIGATIONS PURSUANT TO SECTION 33413 Replacement Housing.

No Section 33413(a) replacement housing obligations were transferred to the Housing Successor during the Fiscal Year.

Inclusionary/Production Housing.

No Section 33413(b) inclusionary/production housing obligations were transferred to the Housing Successor in the fiscal year.

X. EXTREMELY-LOW INCOME TEST
Section 34176.1(a)(3)(B) requires that the Housing Successor must require at least 30% of the LMIHAF to be expended for development of rental housing affordable to and occupied by households earning 30% or less of the AMI. If the Housing Successor fails to comply with the Extremely-Low Income requirement in any five-year report, then the

3.6.d
Packet Pg. 181 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report) Housing Successor must ensure that at least 50% of the funds remaining in the LMIHAF be expended in each fiscal year following the latest fiscal year following the report on households earning 30% or less of the AMI until the Housing Successor demonstrates compliance with the Extremely-Low Income requirement.

Staff anticipates making a financial contribution using Housing Successor funds for the 965 Weeks affordable housing project in 2023. The City intends to abide by the requirements of Section 34176.1.

XI. SENIOR HOUSING TEST
The Housing Successor is to calculate the percentage of units of deed-restricted rental housing restricted to seniors and assisted by the Housing Successor, the former redevelopment agency and/or the City within the previous 10 years in relation to the aggregate number of units of deed-restricted rental housing assisted by the Housing Successor, the former redevelopment agency and/or City within the same time period. If this percentage exceeds 50%, then the Housing Successor cannot expend future funds in the LMIHAF to assist additional senior housing units until the Housing Successor or City assists and construction has commenced on a number of restricted rental units that is equal to 50% of the total amount of deed-restricted rental units.

The Housing Successor has not funded any senior housing units in the previous 10 years.

XII. EXCESS SURPLUS TEST
Excess Surplus is defined in Section 34176.1(d) as an unencumbered amount in the account that exceeds the greater of one million dollars ($1,000,000) or the aggregate amount deposited into the account during the Housing Successor’s preceding four Fiscal Years, whichever is greater.

The following provides the Excess Surplus test for the preceding four Fiscal Years:

FY 17-18 FY 18-19 FY 19-20 FY 20-21 Total
Beginning Balance $10,383,625 $10,670,775 $10,987,755 $11,239,500 $10,383,625 Add: Deposits $288,006 $366,220 $588,082 $557,734 $1,800,042 (Less)
Expenditures $(856) $(49,240) $(336,337) $(497,816) $(884,249) (Less)
Encumbrances $(9,755,770) $(10,008,34
5)
$(9,352,876) $(9,177,279) $(9,177,279)
Unencumbered
Balance $915,005 $979,410 $1,886,624 $2,122,139 $2,122,139 The LMIHAF has incurred an Excess Surplus for the first time in FY 2019-20. The aggregate amount deposited into the account during the four Fiscal Years is $1,800,042.

The unencumbered amount of $2,122,139 exceeds the maximum amount allowed by the amount of $322,097. In FY 2021-22, approximately $715,000 was adopted and committed

3.6.d
Packet Pg. 182 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report) by the City Council in connection with project financing of the 965 Weeks Street property held by the Housing Successor.

XIII. HOMEOWNERSHIP UNITS
The Housing Successor is to provide an inventory of homeownership units assisted by the former redevelopment agency or the housing successor that are subject to covenants or restrictions or to an adopted program that protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund pursuant to subdivision (f) of Section 33334.3.

A. Number of Homeownership Units as of 6/30/18: 83
B. Homeownership Units lost after February 1, 2012: 0
C. $0 single family loan funds were returned to the housing successor since February 2012 as part of an adopted program that protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund.

The Housing Successor recently contracted with an outside entity to manage the City’s Below Market Rate (BMR) program. The newly contracted organization continues to conduct a comprehensive analysis of the City’s BMR portfolio to ensure all of the 83 units referenced above are being occupied in accordance with the City’s deed restrictions. This report is expected to be presented to the City Council on or after April 5, 2022.

3.6.d
Packet Pg. 183 Attachment: 2022 HSA Report (2149 : 2021 Housing Element Annual Progress Report)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Patrick Heisinger, Assistant City Manager
Patrick Heisinger, Assistant City Manager
SUBJECT: Application to the California State Library for the Building Forward Library Infrastructure Program
Recommendation
By motion, direct the City Manager to submit an application to the California State Library for the Building Forward Library Infrastructure Program (“Program”).

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 4: Improve Public Facilities and Infrastructure Background
On December 7, 2021, the City Council adopted a Resolution authorizing the City Manager to execute a PSA between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC (an affiliate of the John and Marcia Goldman Foundation) for the potential acquisition of the Site for potential future development of a new public library. Staff is in the process of completing several due diligence tasks required prior to the end of the due diligence period.

On February 8, 2022, the State Library announced that they were now accepting applications from local libraries for more than $400 million in funding to address critical maintenance and expansion opportunities for the state’s 1,130 local libraries. The maximum grant amount is $10 million.

The purpose of this staff report is to seek City Council direction to apply for the Program to support the City’s intended construction of a new public library near the corner of Bay Road and Pulgas Avenue.

3.7 Packet Pg. 184
Analysis
Staff has reviewed the Program guidelines and recommends that the City apply to the state up to the maximum subsidy amount provided in the guidelines ($10 M). The deadline to submit an application is March 21, 2022.

The initial need for Program funding would provide resources to cover the costs of predevelopment activities, such as design, building plans, and other tasks that are essential to facilitate the bidding of the library project. These costs could total as much as $5 million.

Staff has conferred with Harris and Associates, a firm that recently entered into contract with the City for grant writing services. Harris and Associates estimated the cost of applying for the grant would range in cost from $10,000 to $12,000.

At this time, the City is not required to adopt a Resolution to apply for the grant, nor is the City required to appropriate the City’s match (1:1) if awarded. Staff would bring these items back to the City Council for consideration if the City’s grant application is preliminary awarded.

Fiscal Impact
At this time, there is no fiscal impact to the City associated with this report.

3.7 Packet Pg. 185

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Batool Zaro, Assistant Civil Engineer
Kamal Fallaha, Public Works Director
SUBJECT: Approving an Amendment to the Amended and Restated Water Supply Agreement
Recommendation
That the City Council adopt a resolution to:

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
In June 2009, City of East Palo Alto, entered into a Water Supply Agreement with the City and County of San Francisco (San Francisco) and Wholesale Customers in Alameda

3.8 Packet Pg. 186
County, San Mateo County and Santa Clara County (WSA). The WSA establishes the terms by which the twenty-six Wholesale Customers purchase water from the San Francisco Regional Water System. The WSA builds upon the 1984 "Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County." In September 2017, the Bay Area Water Supply and Conservation Agency (BAWSCA) and the Water Management Representatives (WMRs) of the BAWSCA member agencies began reviewing the issue of Minimum Purchase Quantities, as described in Section 3.07.C of the WSA, and discussing the creation of a process to transfer Minimum Purchase Quantities.

Throughout 2017 and 2018, the WMRs held multiple meetings during which the agencies currently subject to Minimum Purchase Quantity requirements and the other Wholesale Customers shared their interests and concerns regarding changes to the Minimum Purchase Quantity requirements and allowing transfers of Minimum Purchase Quantities.

On March 19, 2019, this City Council, by Resolution No. 5094, approved the Amended and Restated WSA, at which time the Wholesale Customers expressed a collective interest in working together to develop a process for the expedited and permanent transfer of Minimum Purchase Quantities.

Under Article 3 of the Amended and Restated WSA, the San Francisco Public Utilities Commission (SFPUC) agrees to deliver water to the Wholesale Customers up to the amount of 184 million gallons per day (MGD), referred to as the “Supply Assurance,” and the Wholesale Customers have allocated shares of the Supply Assurance among themselves, referred to as Individual Supply Guarantees (ISG).

Section 3.04 of the Amended and Restated WSA enables a Wholesale Customer that has an ISG to transfer a portion of its ISG to one or more other Wholesale Customers, subject to several conditions.

Section 3.07 of the Amended and Restated WSA provides that four Wholesale Customers (Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale, collectively, the “Minimum Purchase Customers”) may purchase water from sources other than the SFPUC, but they are each obligated to purchase a specific minimum annual quantity of water from the SFPUC, referred to as a “Minimum Purchase requirement." If a Minimum Purchase Customer does not meet its minimum purchase requirement in a particular fiscal year, it must pay the SFPUC for the difference between its metered water purchases during the fiscal year and its minimum annual purchase quantity set forth in Attachment E of the Amended and Restated WSA. The Amended and Restated WSA does not currently allow a Minimum Purchase Customer to transfer a portion of its minimum purchase requirement and the associated financial obligation to another Wholesale Customer.

In 2019, the Wholesale Customers directed BAWSCA to draft a proposed amendment to the Amended and Restated WSA to provide a procedure for expedited and permanent transfers of Minimum Purchase Quantities that safeguards the financial and water supply interests of Wholesale Customers not participating in such transfers.

Proposed Amendment
The proposed amendment (shown in Attachment 2) allows Wholesale Customers with

3.8 Packet Pg. 187
ISGs to permanently transfer a portion of Minimum Purchase Quantity through an expedited procedure. The proposed amendment offers the following benefits:

1. Procedural safeguards built into the process by which a Wholesale Customer transfers a portion of its Minimum Purchase Quantity and ISG ensure that such transfers will not result in new or different risks to the water supply and financial interests of Wholesale Customers not participating in a transfer.

2. A Minimum Purchase Customer may transfer a portion of its Minimum Purchase Quantity within its respective ISG to reduce its financial obligation to pay for imputed sales for Minimum Purchase water that it did not use.

3. Intra-system water transfers are one potential solution to long term water reliability needs among the Wholesale Customers. This expedited, permanent transfer procedure will allow intra-system water transfers of Minimum Purchase Quantity to occur without a contract amendment approved by the Wholesale Customers, thus removing administrative obstacles to such transfers.

4. Expedited permanent intra-system transfers of portions of Minimum Purchase Quantity and ISG will facilitate the development of new water supplies by the SFPUC that are necessary to support the Cities of San Jose and Santa Clara becoming permanent Wholesale Customers.

5. The Wholesale Customers may increase the 6 MGD cap on the total aggregate amount of Minimum Purchase Quantity that may be transferred by all of the Minimum Purchase Customers over the course of one or multiple transfers if demand for Minimum Purchase Quantity transfers exceeds 6 MGD in the future.

San Francisco, acting by and through the SFPUC, approved the 2021 Amended and Restated Water Supply Agreement, as negotiated by BAWSCA, on January 26, 2021, pending approval by the requisite number of the Wholesale Customers.

The Amended and Restated Water Supply Agreement and the Redline Comparing 2018 WSA To the Minimum Purchase Agreement may be found on the City website linked below:
https://www.cityofepa.org/publicworks/page/amended-and-restated-water-supply-agreement Fiscal Impact
There is no fiscal impact related to this action.

3.8 Packet Pg. 188
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.

Attachments

1. Minimum Purchase Resolution

2. Amended and Restated Water Supply Agreement

3. Redline Comparing 2018 WSA to Minimum Purchase Agreement

3.8 Packet Pg. 189
RESOLUTION NO. XX -2022

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

APPROVING AN AMENDMENT TO THE AMENDED AND RESTATED WATER

SUPPLY AGREEMENT BETWEEN THE CITY AND COUNTY OF SAN FRANCISCO

AND WHOLESALE CUSTOMERS IN ALAMEDA COUNTY, SAN MATEO COUNTY,

AND SANTA CLARA COUNTY
WHEREAS, water supply agencies in Alameda, San Mateo, and Santa Clara Counties have purchased water from the City and County of San Francisco (San Francisco) for many years; and
WHEREAS, the San Francisco Public Utilities Commission (SFPUC or Commission) operates the Regional Water System, which delivers water to communities in Alameda, San Mateo, and Santa Clara Counties, as well as to customers within San Francisco (collectively, “the Parties”); and WHEREAS, the Parties entered into the “Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County” in 1984 (1984 Settlement Agreement and Master Water Sales Contract); and WHEREAS, in April 2003, water supply agencies in Alameda, San Mateo and Santa Clara Counties (collectively, "Wholesale Customers" or "BAWSCA member agencies") established the Bay Area Water Supply and Conservation Agency (BAWSCA), as authorized by Water Code Section 81300 et seq.; and WHEREAS, upon expiration of the 1984 Settlement Agreement and Master Water Sales Contract, the Parties entered into the “Water Supply Agreement between San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County” (Water Supply Agreement or WSA) on July 1, 2009, authorized by SFPUC Resolution No. 09-0069, dated April 28, 2009; and

3.8.a
Packet Pg. 190 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement) WHEREAS, in 2017, the Wholesale Customers directed BAWSCA to act as its authorized representative in discussions and negotiations with San Francisco to amend the Water Supply Agreement to address a number of substantive issues and these negotiations resulted in the Parties' adoption of the Amended and Restated Water Supply Agreement (Amended and Restated Water Supply Agreement) in 2018, authorized by SFPUC Resolution No. 18-0212, dated December 11, 2018; and WHEREAS, on March 19, 2019, this City Council, by Resolution No. 5094, approved the Amended and Restated Water Supply Agreement; and WHEREAS, under Article 3 of the Amended and Restated Water Supply Agreement, the SFPUC agrees to deliver water to the Wholesale Customers up to the amount of 184 million gallons per day (MGD), referred to as the “Supply Assurance,” and the Wholesale Customers have allocated shares of the Supply Assurance among themselves, referred to as Individual Supply Guarantees (“ISG”); and WHEREAS, Section 3.04 of the Amended and Restated Water Supply Agreement enables a Wholesale Customer that has an ISG to transfer a portion of its ISG to one or more other Wholesale Customers, subject to several conditions; and WHEREAS, under Section 3.07 of the Amended and Restated Water Supply Agreement, four Wholesale Customers (Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale, collectively, the “Minimum Purchase Customers”) may purchase water from sources other than the SFPUC, but they are each obligated to purchase a specific minimum annual quantity of water from the SFPUC, referred to as a “Minimum Purchase requirement”; and WHEREAS, if a Minimum Purchase Customer does not meet its Minimum Purchase requirement in a particular fiscal year, it must pay the SFPUC for the difference between its metered water purchases during the fiscal year and its minimum annual purchase quantity set forth in Attachment E of the Amended and Restated Water Supply Agreement; and

3.8.a
Packet Pg. 191 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement) WHEREAS, the Amended and Restated Water Supply Agreement does not currently allow a Minimum Purchase Customer to transfer a portion of its Minimum Purchase requirement and the associated financial obligation to another Wholesale Customer; and
WHEREAS, in September 2017, BAWSCA and the Water Management Representatives (WMRs) of the BAWSCA member agencies began reviewing the issue of Minimum Purchase Quantities, as described in Section 3.07.C of the Water Supply Agreement, and discussing the creation of a process to transfer Minimum Purchase Quantities; and
WHEREAS, throughout 2017 and 2018, the WMRs held multiple meetings during which the agencies currently subject to Minimum Purchase Quantity requirements and the other Wholesale Customers shared their interests and concerns regarding changes to the Minimum Purchase Quantity requirements and allowing transfers of Minimum Purchase Quantities; and
WHEREAS, at the time the Amended and Restated Water Supply Agreement was approved, the Parties expressed a collective interest in working together to develop a process for the expedited and permanent transfer of Minimum Purchase Quantities; and
WHEREAS, in 2019, the Wholesale Customers directed BAWSCA to draft a proposed amendment to the Amended and Restated Water Supply Agreement to provide a procedure for expedited and permanent transfers of Minimum Purchase Quantities that safeguards the financial and water supply interests of Wholesale Customers not participating in such transfers; and
WHEREAS, the Parties recognize that, both before and after the most recent statewide drought, after meeting drought-related conservation mandates, several BAWSCA member agencies were unable to meet their respective Minimum Purchase requirements described in Article 3.07 of the Amended and Restated Water Supply Agreement, which requires payment for water up to the required Minimum Purchase level even if such water is not delivered and used; and

3.8.a
Packet Pg. 192 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement) WHEREAS, several of the Wholesale Customers with Minimum Purchase requirements might be interested in transferring a portion of their Minimum Purchase Quantity within their respective ISGs to reduce the financial obligation to pay for imputed sales for Minimum Purchase water that is not used; and WHEREAS, with its Alternative Water Supply Program, the SFPUC is in the early stages of planning for fourteen projects to support the Wholesale and Retail Customers' ability to respond to climate change and address future water supply challenges and vulnerabilities, such as regulatory changes, earthquakes, disasters, emergencies, and increases in population and employment; and
WHEREAS, the City of San Jose (San Jose) and the City of Santa Clara (Santa Clara) are temporary, interruptible Wholesale Customers of the SFPUC Regional Water System and both cities wish to become permanent Wholesale Customers; and WHEREAS, pursuant to Section 4.06 of the Amended and Restated Water Supply Agreement, by December 31, 2028, San Francisco must complete any necessary California Environmental Quality Act (CEQA) review and must decide whether or not to make San Jose and Santa Clara permanent Wholesale Customers of the Regional Water System with a combined Individual Supply Guarantee (ISG) of 9 million gallons per day (MGD) allocated equally between the two cities, as well as how much water in excess of 9 MGD it will supply to San Jose and Santa Clara; and WHEREAS, Section 4.06 of the Amended and Restated Water Supply Agreement provides: "San Francisco will make San Jose and Santa Clara permanent customers only if, and to the extent that, San Francisco determines that Regional Water System long term water supplies are available;" and
WHEREAS, according to SFPUC's December 2021 Alternative Water Supply Planning Quarterly Update (Quarterly Update), "[f]or San Jose and Santa Clara to become permanent customers of the SFPUC, an additional 9 MGD of new, year-round supplies would be needed to meet historic demand levels and up to 15.5 MGD would be needed to meet planned demand through 2045;" and

3.8.a
Packet Pg. 193 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement) WHEREAS, according to its December Quarterly Update, SFPUC is planning with the “intention to be able to make San Jose and Santa Clara permanent customers,” but is prioritizing instream flow obligations to meet existing permanent customer demands, including drought supplies; and
WHEREAS, SFPUC has budgeted $298.3 million over the next ten years to fund water supply projects; and
WHEREAS, SFPUC, San Jose, Santa Clara, and BAWSCA are actively working together to consider water supply projects that may offer potential sources of supply to support San Jose and Santa Clara as permanent Wholesale Customers; and WHEREAS, BAWSCA and SFPUC have identified intra-system water transfers as one potential solution to long term water reliability needs among the Wholesale Customers; and
WHEREAS, a Minimum Purchase Customer might be more inclined to transfer a portion of its ISG to another Wholesale Customer under Section 3.04 of the Amended and Restated Water Supply Agreement if it was able to include a simultaneous transfer of a portion of its Minimum Purchase requirement and the associated financial obligation; and
WHEREAS, allowing simplified permanent intra-system transfers of portions of Minimum Purchase Quantity and ISG will facilitate the development of new water supplies by SFPUC that are necessary to support San Jose and Santa Clara as permanent Wholesale Customers; and
WHEREAS, the Parties have developed a process to allow for the transfer of a Wholesale Customer's Minimum Purchase Quantity in conjunction with an ISG transfer pursuant to Section 3.04, which ensures that such transfers will not result in new or different risks to the water supply and financial interests of Wholesale Customers not participating in a transfer; and

3.8.a
Packet Pg. 194 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement) WHEREAS, the Parties agree that the total aggregate amount of Minimum Purchase Quantity that may be transferred by all of the Wholesale Customers subject to Minimum Purchase requirements as first specified in Attachment E of the Amended and Restated Water Supply Agreement, over the course of one or multiple transfers, is limited to 6 MGD; and
WHEREAS, if demand for Minimum Purchase Quantity transfers exceeds 6 MGD in the future, the Parties agree to consider further amending Section 3.04 of the Amended and Restated Water Supply Agreement to increase the total aggregate cap on the amount of Minimum Purchase Quantity that may be transferred; and WHEREAS, a proposed transfer that does not meet the requirements of Section

3.04 of the Amended and Restated Water Supply Agreement, as amended by this Resolution, may be presented as an amendment to the Amended and Restated Water Supply Agreement pursuant to Section 2.03 of the Amended and Restated Water Supply Agreement; and
WHEREAS, the Parties agree to consider a proposal by the City of Mountain View (Mountain View) and the City of East Palo Alto (East Palo Alto) to amend the Amended and Restated Water Supply Agreement to allow for the conversion of Mountain View's 2017 sale of 1 MGD of ISG to East Palo Alto into a transfer of 1 MGD of Mountain View's ISG that includes Minimum Purchase Quantity to East Palo Alto, over a period of time, and in a manner that protects the other Wholesale Customers' financial and water supply interests; and
WHEREAS, if such a conversion is approved by the Parties, the 1 MGD of Mountain View's Minimum Purchase Quantity would be counted towards the total aggregate 6 MGD cap on Minimum Purchase Quantity transfers; and WHEREAS, the Parties now desire to adopt an amendment to the Amended and Restated Water Supply Agreement to permit Wholesale Customers with an ISG to transfer, or accept a transfer, of both a portion of a Wholesale Customer's ISG and its Minimum Purchase Quantity; and

3.8.a
Packet Pg. 195 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement) WHEREAS, an updated Amended and Restated Water Supply Agreement, reflecting this amendment, in the form negotiated by BAWSCA (2021 Amended and Restated Water Supply Agreement), was presented to and approved by SFPUC on January 26, 2021 pursuant to SFPUC Resolution No. 21-0009.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO HEREBY finds as follows:

1. The City Council approves the modifications included in the attached "2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County" dated January 2021 (2021 Amended and Restated Water Supply Agreement).

2. The City Manager is authorized and directed to sign the 2021 Amended and Restated Water Supply Agreement, in the form previously approved by the San Francisco Public Utilities Commission and attached hereto.

PASSED AND ADOPTED this 15th day of March 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Rubin Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

James Colin, Acting City Clerk Valerie J. Armento, Interim City Attorney

3.8.a
Packet Pg. 196 Attachment: Minimum Purchase Resolution (2137 : Approving an Amendment to the Amended and Restated Water Supply Agreement)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Humza Javed, City Engineer
Kamal Fallaha, Public Works Director
SUBJECT: 12-Inch Transmission Water Main Project along University Avenue/Cooley Avenue funding strategy
Recommendation
Adopt a resolution approving a funding strategy for the 12-Inch Transmission Water Main Project along University Avenue/Cooley.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 2: Enhance Economic Vitality
Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
Due to the need to meet potential emergency water supply shortfalls and the future water demand envisioned in the City General Plan and the Ravenswood Specific Plan over the next 20 years, the City pursued additional water supplies over the last several years. The City was able to increase the availability of water through the development of groundwater wells. The City was also able to secure water supply allocation from the Cities of Mountain View and Palo Alto. With the increase in water supply allocation, essential improvements to the City’s water distribution system are needed to provide additional flow, storage, redundancy, and reliability.

These improvements are intended to protect the health and safety of East Palo Alto residents.

Fire flow data at various locations in the City, including the southside (Willow and Woodland Neighborhood) and the Ravenswood Business District, are currently at unacceptable levels for new development. This directly impacts the City’s ability to approve some of the development

3.9 Packet Pg. 197
projects that have already been approved by the City Council. Critical housing projects, such as the City’s own 965 Weeks Street, will also be impacted. Constructing new watermains to supply more water flow to these areas is critical to addressing the fire flow requirements as required by the Fire Code.

As proposed in the Water Safety Strategy Blueprint, presented to the City Council on January 30th, 2020, the water infrastructure will be improved in phases. The number one priority is the 12-Inch Transmission Water Main Project along University Avenue/Cooley Avenue. This project includes installation of a 12” water main from the City's upgraded water intertie with San Francisco Public Utilities Company (SFPUC) at O’Brian Street and University Avenue.

The proposed water main continues southerly along University Avenue and Cooley Avenue up to Donohoe Street in East Palo Alto. This water main will connect to the existing water main at multiple locations providing additional flow along Bay Road, Weeks Street, Runnymede Street, Bell Street, and Green Street. The 12-inch water main will bypass sections of the city that currently have adequate water flow and deliver a large volume of water to areas in need, including, but not limited to 965 Weeks Street. The scope of the proposed work will include trenching, 12-inch C-900 PVC piping, traffic control and surface repair. The total length of the project is approximately one mile.

Analysis
On January 8, 2022, City Council held a Strategic Priority Setting retreat to establish the City Council’s Strategic Priorities. Of the priorities set as an outcome of this retreat, improving the City’s water infrastructure, and primarily the 12-Inch Water Transmission main project was identified as a Council priority.

The design package for the project is 100% complete and it was approved by City Council on March 16, 2021.

The City currently does not have available funding for the construction of the project. Over the course of the last two years, the City has submitted grant applications through Economic Development Agency (EDA) and has been unsuccessful during these cycles.

This is a key project to bring additional flow to areas with inadequate flow throughout the City.

Due to the urgency of need of additional water flow to upcoming developments, it is recommended the City Council approve a funding strategy to fund construction of this project.

The project design package is located on the City website at the following link:
<https://www.cityofepa.org/publicworks/project/university-ave-and-cooley-ave-12-watertransmission-main-project> Upon approval by City Council, Staff will begin the project advertisement phase. A tentative schedule is as follows:

May 2022 Advertise the project for construction bids
June 2022 Open Bids
July 2022 City Council award of construction contract
September 2022 Start of Construction
March 2023 Construction completion

3.9 Packet Pg. 198
Fiscal Impact
The construction of this project is estimated at $4,904,130.

The project can be funded as follows:

Water Capital (Fund 511) $3,794,000
CIP (Fund 301) $ 700,000
Water Impact fees $ 456,000
Total $4,950,000
Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.

Attachments

1. Resolution

3.9 Packet Pg. 199
1 of 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO
APPROVING A FUNDING STRATEGY FOR THE 12-INCH WATER TRANSMISSION MAIN

PROJECT ALONG UNIVERSITY AVENUE AND COOLEY AVENUE
WHEREAS, the City of East Palo Alto’s water infrastructure will be improved in two tiers, as proposed in the Water Safety Strategy Blueprint presented to the City Council on January 30, 2020; and
WHEREAS, a portion of the first-tier project includes the 12-Inch Transmission Water Main Project, which runs from the City's upgraded water intertie with San Francisco Public Utilities Company (“SFPUC”) located at O’Brian Street and University Avenue down University Avenue and Cooley Avenue up to Donohoe Street; and
WHEREAS, on April 21, 2020, the City Council adopted Resolution No. 58-2020 authorizing Freyer and Laureta Inc., to design the 12-Inch Transmission Water Main Project; and WHEREAS, on March 16, 2021, the City Council adopted Resolution No. 35-2021 approving the 100% design package of the project, and authorized the City Manager to advertise the project for construction upon availability of construction funds; and WHEREAS, the City has been unable to secure grants to fund the project construction; and WHEREAS, the project estimate is $4.9 million, and the project can be funded through collected water impact fees as well as the CIP fund, and the water capital fund. (funding strategy).

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY approves the funding strategy for the 12-Inch Water Transmission Main Project along University Avenue and Cooley Avenue.

PASSED AND ADOPTED this 15
th day of March 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Rubin Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

City Clerk Valerie J. Armento, Interim City Attorney

3.9.a
Packet Pg. 200 Attachment: Resolution (2143 : 12-Inch Transmission Water Main Project along University Avenue/Cooley Avenue funding strategy)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
James Colin, Executive Assistant
SUBJECT: Proclamation of the City Of East Palo Alto Celebrating César E. Chavez Birthday, His Legacy and That of Farmworkers And the Work of the Chavez Family Vision Inc. Organization
Recommendation
Attachments

1. Cesar Chavez Proclamation

3.10 Packet Pg. 201

3.10.a
Packet Pg. 202 Attachment: Cesar Chavez Proclamation (2150 : Cesar Chavez Proclamation)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
James Colin, Executive Assistant
SUBJECT: Proclamation of the City of East Palo Alto Celebrating The Month of April as National Poetry Month
Recommendation
Attachments

1. National Poetry Month Proclamation

3.11 Packet Pg. 203

3.11.a
Packet Pg. 204 Attachment: National Poetry Month Proclamation (2152 : National Poetry Month Proclamation)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
James Colin, Executive Assistant
SUBJECT: Proclamation Of the City of East Palo Alto Celebrating the Silver Jubilee of The Shree Sanatan Dharm Religious and Cultural Society of California and Congratulating Them for Their Work in The Community
Recommendation
Attachments

1. Shree Ram Mandir proclamation

3.12 Packet Pg. 205

3.12.a
Packet Pg. 206 Attachment: Shree Ram Mandir proclamation (2151 : Shree Ram Mandir of East Palo Alto Proclamation)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Valerie J. Armento, Interim City Attorney
SUBJECT: Letter Supporting Extension of AB 832
Recommendation
Direct the City Manager to submit a letter to the Governor and State Legislature requesting emergency legislation to extend the provisions of AB 832 (AB 832, COVID-19: tenancy: federal rental assistance (Chapter 27, Stats 2021) by five months, through August 31, 2022.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 6: Create a Healthy and Safe Community
Background
AB 832
AB 832 (Chiu) was signed by the Governor on July 28, 2021 and became effective immediately. This law extended and added key provisions to the tenant protections and distribution of rental assistance funds of SB 91,1 providing additional time for tenants and landlords to access federal rental assistance funds and prohibiting evictions due to nonpayment of COVID-19-related rental debt from proceeding where landlords did not seek rental assistance funds, among other actions. It also limited the ability of the City to enact its own eviction limitations.

These protections are set to expire on March 31, 2022.

While existing law has aided in reducing rental debt related to COVID-19 and preventing eviction or displacement due to COVID-19-related financial hardship, the timely 1 For an overview of SB 91, please see this informational report from February 16, 2021:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=None&MeetingID=1348&MediaPosition=438.313&ID=1572&Css Class=

3.13 Packet Pg. 207
distribution of rental assistance remains a major concern statewide. Service providers and community partners assisting East Palo Alto residents with rental assistance applications continue to report significant delays in receiving funds.

Analysis
Letter to Governor and State Legislature
A draft letter from the City Council of the City of East Palo Alto is provided in Attachment

1. This letter, addressed to Governor Newsom, Senate President Pro Tempore Atkins, and Assembly Speaker Rendon, requests the State take action to extend the protections of AB 832 for five months (through August 2022) to allow more time for tenants and landlords to receive rental assistance funds and relieve rental debts related to COVID-19.

Staff recommends that the City Council direct the City Manager to submit this letter on behalf of the City Council.

Next Steps
If directed, the City Manager will submit the letter, signed by the Mayor, on behalf of the City Council to the intended recipients.

Fiscal Impact
There is no fiscal impact associated with this staff report.

Public Notice
The public was provided notice by making the agenda and report available on the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.

Attachments

1. AB 832 Letter

3.13 Packet Pg. 208

CITY OF EAST PALO ALTO
Office of the City Council
East Palo Alto Government Center – 2415 University Avenue, East Palo Alto, CA 94303 – 650.853.3100 March 15, 2022
The Honorable Gavin Newsom
Governor State of California
1021 O Street, Suite 9000
Sacramento, CA 95814
The Honorable Toni Atkins
President Pro Tempore
California Senate
California State Senate
1021 O Street, Suite 8518
Sacramento, CA 95814
The Honorable Anthony Rendon
Speaker California Assembly
1021 O Street, Suite 8330
Sacramento, CA 95814
RE: Extension of COVID-19 relief: tenancy: federal rental assistance. (AB 832, COVID-19: tenancy: federal rental assistance (Chapter 27, Stats 2021)
Dear Governor Newsom, President Pro Tempore Atkins, and Speaker Rendon:

On behalf of the City of East Palo Alto, we write to respectfully request that you consider and pass emergency legislation to extend for at least five additional months AB 832 COVID-19 relief: tenancy: federal rental assistance (Chapter 27, Statutes of 2021). Unfortunately, many of our residents-- landlords and tenants included-- have faced delays in receiving their rental assistance payments despite making timely efforts to apply for these funds.

We know the state has worked diligently to distribute the ERAP funds, but the demands have been overwhelming. As we run up against the March 31, 2022, date - a deadline that was built into the statewide and local law (AB 832) - we believe it’s in the public’s interest not to evict tenants who have applied, qualified, and been approved for but who are awaiting payment from the state and local ERAP funds. Local landlords would certainly prefer that the rent be paid and that they not be forced to make the decision to pursue eviction, which, in some cases, is the only alternative if they need rental income to pay their obligations related to the property.

The City of East Palo Alto respectfully requests an extension of the existing law (AB 832) for a minimum of five additional months (August 31, 2022), giving rental property owners and tenants some additional breathing room when it comes to awaiting ERAP funds.

Thank you for your consideration.

Ruben Abrica
City of East Palo Alto Mayor

3.13.a
Packet Pg. 209 Attachment: AB 832 Letter (2148 : Letter Supporting Extension of AB 832)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager Amy Chen, Community & Economic Development Director
Patrick Heisinger, Assistant City Manager
SUBJECT: First Source Hiring Ordinance
Recommendation

1. Waive the First Reading and introduce an Ordinance titled, “First Source Hiring for CityFunded Projects and Properties,” adding Chapter 5.11 to the East Palo Alto Municipal Code;

2. Direct the City Manager to draft and return with Administrative Guidelines; and

3. Direct the City Manager to make comprehensive updates to the City’s procurement processes and construction documents, as necessary, to ensure the First Source Hiring Ordinance is administered correctly.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 2: Enhance Economic Vitality
Background
First Source Hiring Policy (FSH)
A First Source Hiring and Local Business Enterprise Policy was initially approved for the City of East Palo Alto in 1994, with updates provided over the subsequent years. The most recent version of a First Source Hiring Policy (“FSH Policy”), adopted in 2001, applied to all projects receiving direct or indirect assistance from the City or the

8.1 Packet Pg. 210
Redevelopment Agency (“Agency”) valued at over $50,000.1 This FSH Policy included a 30% local employment goal for all jobs created by the project and a 30% goal for local small business participation.

In 2018, East Palo Alto voters passed Measure HH, a parcel tax of $2.50 per square foot on commercial office spaces greater than 25,000 sq ft. Revenue from Measure HH is restricted to certain uses, including creating programs that facilitate access to job opportunities for East Palo Alto residents in the science, technology, engineering, and mathematics (“STEM”) sectors and building trades and strengthening the City’s FSH Program.

On October 6, 2020, the City Council approved a $125,000 agreement with Emerald Cities Collaborative (“Emerald Cities”) to provide review and analysis of the FSH Policy.

Key meetings and milestones are shown in the table below.

FSH PROGRESS AND MILESTONES
Date Milestone
January 27, 2021 Informational Community Kick Off meeting of Measure HH and FSH
June 15, 2021 City Council Meeting: FSH Policy – Best Practices Overview2 and initial consultant recommendations
September 29, 2021 FSH Public Meeting
November 1, 2021 City Council Study Session on FSH – staff recommendations for an updated FSH Policy
November 1, 2021 Study Session
At the November 1, 2021 study session, staff presented recommendations on an updated FSH policy and sought direction from City Council on the City’s approach to all categories of development projects, which included:
• City public works projects
• Projects receiving City subsidy
• Private development projects
• Private development projects seeking City concessions The City Council directed staff to return with an FSH draft ordinance that applies to City public works contracts and City-subsidized projects valued at $100,000 or more, or a project located on City property, with a requirement that:
• a minimum of twenty percent (20%) of the total work hours for the contract or project be performed by East Palo Alto residents; and
• a minimum of twenty percent (20%) of all New Hires be East Palo Alto residents for the duration of the contract or project.
1 The policy applied to all projects receiving a Subsidy. “Subsidy” was defined as: direct or indirect assistance by the City or Agency to a Developer that materially benefits the Developer, including, but not limited to, grants or loans of funds administered by the City or Agency, tax abatements or deferrals, issuance of bonds, and infrastructure improvements made for the purpose of facilitating or supporting a redevelopment project, land sale, a ground lease, or other project. 2 June 15, 2021 City Council Meeting:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&MeetingID=1402&MediaPosition=18039.335&ID=1775&CssCla ss=

8.1 Packet Pg. 211
The proposed First Source Hiring Ordinance for City- Funded Projects & Properties (“Ordinance”) is provided as Attachment 1.

Analysis
First Source Hiring Ordinance Overview
The main components of the Ordinance are summarized in the table, with further detail provided below.

Ordinance Component Description
Applicable Projects and Value Threshold • Public Works projects: $100,000 or greater
• Subsidized Projects: with a subsidy
from the City of $100,000 or more
• A project that is sited on property
leased from the City
Public Works Project FSH Minimum • 20% of all work hours for duration of project
• 20% of new hires for duration of
project,
o of which 5% must be
“disadvantaged” workers3
Subsidized Retail, Office, Administrative
Other Project * FSH Minimum
• 20% of total workforce
• 20% of new hires (for limited time)
Basic Requirements • First Source Agreement with
established hiring process
• Engagement with City employment
referral system
• Regular reporting to City
“Good Faith” definition Ability to demonstrate:
• Adherence to City-published
guidelines
• Submittal of City-approved Local
Employment Plan
• Information on new jobs provided
min. 48 hrs prior to hire to City job
coordinator
3 "Disadvantaged Workers" means an individual, who prior to commencing work on the public work, faces at least two of the following barriers to employment; (1) being homeless; (2) being a custodial single parent; (3) receiving public assistance; (4) lacking a GED or high school diploma; (5) having a criminal record or other involvement with the criminal justice system; (6) suffering from chronic unemployment; (7) emancipated from the foster care system; (8) being a veteran of the Iraq/Afghanistan war; or (9) being an apprentice with less than 15% of the required apprenticeship hours in the program.

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• Worked with unions to hire East
Palo Alto residents
• Failure to hire residents on basis of
objective criteria
Waivers • Approval of any contract that does
not demonstrate ability to meet
FSH requirements would require
waiver, with City Council approval
only
Exempt Projects Small businesses (fewer than 10
employees)
Enforcement • City has authority to determine
compliance
• Public Works Contracts may be
paused or revoked as necessary if
provisions are not followed
• Civil penalties for noncompliance
*Applies to retail, office, administrative and other employment with more than 10 employees and in effect minimum of 3 years, based on size of subsidy.

Development Projects Subject to the Ordinance
As noted above, the Ordinance applies to City public works projects (“Public Works Projects”) and projects that receive City subsidy (“Subsidized Projects”) valued at or above $100,000, in addition to any project sited on a property owned by the City.

In the Ordinance, a Public Works Contract is defined as any contract with the City for construction, alteration, demolition or repair work, while a Subsidized Project is defined as a project that receives one or more of the following from the City within any twelve-month period:
• grants and loans
• tax abatements or deferrals
• fee deferrals or abatements
• infrastructure improvements that benefit the project
• land sale or ground lease below market value
It should be noted that, in a limited number of cases, a Public Works Project may not be subject to the Ordinance’s provisions because a state or federal funding source does not allow for it. The Ordinance provides that if any of its provisions conflict with federal or state funding, an Employer is “excused” from meeting the Ordinance’s requirements.

Total Workforce & New Hire Goal
The stated workforce and hiring goals of the Ordinance are for a minimum of:
• 20% of total work hours on Public Works Projects;
• 20% of new hires for Public Works Projects and Subsidized Projects; and • 20% of the total workforce in Subsidized Projects

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to be East Palo Alto residents.4
Additionally, of the minimum 20% of new hires on Public Works Projects that are East Palo Alto residents, a minimum of 5% should be Disadvantaged Workers.

The Ordinance defines a Disadvantaged Worker as: an individual, who prior to commencing work on the public work, faces at least two of the following barriers to employment; (1) being homeless; (2) being a custodial single parent; (3) receiving public assistance; (4) lacking a GED or high school diploma; (5) having a criminal record or other involvement with the criminal justice system; (6) suffering from chronic unemployment; (7) emancipated from the foster care system; (8) being a veteran of the Iraq/Afghanistan war; or (9) being an apprentice with less than 15% of the required apprenticeship hours in the program.

The 20% new hire and total workforce goal for administrative, office, retail, and other types of Subsidized Projects is an ongoing requirement based on the amount of City subsidy, with a minimum of three years and maximum of 10 years after completion of construction. The Administrative Guidelines will specify the exact subsidy-to-year calculation and maximum number of years by type of Subsidized Project.

Please note that for larger City contributions to affordable housing projects, there may be additional provisions included in the loan agreement that result in the new hire and total workforce goal being in place for a longer period of time. For projects sited on a property leased from the City, the new hire and total workforce goal similarly would align with the terms of that lease or other agreement.

First Source Agreement & Referral System
Contractors and employers of City Public Works Projects and Subsidized Projects (“Employers”) are required to execute a First Source Agreement with the City that establishes a hiring process and further demonstrates how the Employer will make a good faith effort to meet the workforce and hiring goals of the Ordinance. The First Source Agreement also includes the Employer’s obligations regarding compliance monitoring, including proper record-keeping and promptly providing information to support staff’s annual reporting to City Council.

The Ordinance requires Employers to engage with a City-established employment referral system, including responsible City staff, and/or directly with unions, if applicable, when seeking new employees. For projects that will include new hires over time, Employers must also provide the City with hiring projections, including number, type, and qualifications for any projected jobs.
4 The Ordinance provides “credit” to Employers towards the 20% workforce or hiring goal if they can demonstrate that they have hired East Palo Alto residents in other projects outside the City. The Administrative Guidelines will specify how such credit would be determined and the maximum amount that a single Employer can receive. Additionally, Employers who achieve a minimum 30% of total workforce and total hours for four consecutive quarters will be required to submit only annual, rather than quarterly, reports to the City.

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Additionally, in seeking East Palo Alto residents as employees, Employers (including subcontractors) on Public Works Contracts and Subsidized Projects should draw from local job training and apprenticeship programs. The Administrative Guidelines will further specify the types of programs that the City deems appropriate. Over time, staff expects that a more robust relationship will develop between any Measure HH-funded job training programs and the FSH program.

Incorporation of Ordinance into Existing Procurement & Public Works Procedures The Ordinance must integrate FSH into the City’s existing procurement practices. Staff anticipates that the City will need to update its construction documents to comply with the Ordinance on Public Works contracts.

If the Ordinance is adopted, the Ordinance requires the City to take the following steps, among others:
• Holding required pre-bid meetings for applicable projects to inform potential bidders of the Ordinance’s requirements;
• Including Ordinance requirements in all relevant documents and agreements, such as Requests for Proposals, Requests for Qualifications, Disposition and Development Agreements, Ground Leases, and others;
• Ensuring that the Ordinance’s requirements are included in agreements with all contractors, subcontractors, successors, and assigns; and • Evaluating all bids and proposals based on a respondent’s ability to meet the FSH requirement, or having met (or not met) FSH requirements in the past.

The Ordinance specifies that for any Employer seeking a waiver from the requirements of the Ordinance, the City Manager must make a formal request to the City Council. The Administrative Guidelines will outline this waiver process.

Implementation and Administration
In addition to incorporating FSH into the City’s procurement practices, there is an ongoing compliance monitoring component to the Ordinance that will require dedicated staff capacity. For example, staff is responsible for ensuring compliance for the duration of a project—which, in the case of a Subsidized Project, could be for several years after completion of construction -- and for providing regular annual reports to City Council on the status all current Public Works Contracts and Subsidized Projects. The Ordinance also requires staff to convene “a semi-annual meeting of stakeholders” to gather feedback on the implementation of the Ordinance.

As noted above, the City must establish and maintain an employment referral system to be used by Employers for new hires, and the Ordinance requires close collaboration with a City-based job coordinator to ensure timely announcement of open positions.

Administrative Guidelines

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If the City Council adopts the Ordinance, staff must draft Administrative Guidelines, a complementary document to the Ordinance that explains in greater detail what projects are subject to the Ordinance, what is required of potential Employers and the City, and what mechanisms exist to implement and enforce the Ordinance.

Next Steps
If City Council introduces the Ordinance at this meeting, the Ordinance may be adopted at the next City Council meeting on April 1 and would take effect 30 days thereafter. The Ordinance would apply to future development projects only; existing FSH agreements under the current policy would remain in effect.

Following adoption of the Ordinance, staff would immediately begin drafting Administrative Guidelines. The initial Administrative Guidelines would be adopted by the City Council, with future amendments under the authority of the City Manager.

Staff anticipate that the Ordinance will require close coordination between Public Works and other City staff. As noted above, adoption of this Ordinance will require the City to review and update, where necessary, its construction documents to fully comply with the Ordinance.

Staff would also return to City Council with recommendations on future staffing of an FSH program. For FSH program implementation, the City may additionally hire a consultant that specializes in FSH programs or explore a partnership with the County of San Mateo.

In addition to developing the proposed ordinance, the City Council also directed staff to develop recommendations for a potential policy that encourages developers seeking concessions from the City for their project to voluntarily take steps to advance the goals of a City FSH program. The Ordinance does not capture these types of projects, but staff believes it may be possible to integrate FSH goals into projects on a case-by-case basis using the City’s discretionary authority or in some instances as part of a development agreement.

Fiscal Impact
There is no fiscal impact associated with this staff report. However, if the Ordinance is adopted, there will be an increase in administrative burden on the City to ensure compliance with the City’s FSH policy. As noted above, staff will return with recommendations for adequate staffing and potential partnership with San Mateo County to support the implementation of an FSH program.

Public Notice
The public was provided notice via publication in the Palo Alto Daily News on March 4, 2022, and by making the agenda and report available on the City’s website and at the

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San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.

Attachments

1. Ordinance

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551\01\3246362.1
ORDINANCE NO. _________

AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO
ENACTING CHAPTER 5.11 OF THE EAST PALO ALTO

MUNICIPAL CODE RELATING TO FIRST SOURCE HIRING FOR

CITY-FUNDED PROJECTS AND PROPERTIES

THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO DOES ORDAIN AS FOLLOWS:

SECTION 1. CHAPTER 5.11 ENACTED.

A new chapter, Chapter 5.11 is added to the East Palo Alto Municipal Code to read as follows:

5.11.010 Findings
A. The City Council of the City of East Palo Alto hereby finds statistics indicate that unemployment levels for the residents of the City of East Palo Alto are higher than for the remainder of San Mateo and Santa Clara Counties. Statistics also indicate that the higher unemployment level in the City of East Palo Alto correlates to the higher number of families living in poverty, to a higher crime rate, and to an increased need for essential services provided by government agencies.

B. Residents of East Palo Alto also have significantly lower per capita income and median family incomes than residents of the surrounding Bay Area, resulting in higher levels of poverty and increased need for social services.

C. Residents of East Palo Alto are much more diverse than the surrounding Bay Area, with the majority of the residents being Black, Indigenous or People of Color (BIPOC).

BIPOCs are underrepresented in the Science, Technology, Engineering and Mathematics (STEM) fields which represent a significant segment of the jobs available in the Bay Area and suffer from higher unemployment rates.

D. Residents of East Palo Alto have a lower rate of high school and college graduation than the surrounding Bay Area, making it harder for East Palo Alto residents to compete for high paying quality jobs.

E. Employed residents of East Palo Alto on average have a 25-minute one-way commute to their place of employment, adding additional cars to the Bay Area's congested roadways and increasing climate impacts.

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F. On November 6, 2018, the residents of East Palo Alto passed a parcel tax on commercial space, titled Measure HH, the funds from which are to create and maintain programs that facilitate access to job opportunities for East Palo Alto residents in the STEM and building trade sectors.

G. Providing jobs to East Palo Alto residents in publicly financed construction and development projects will assist in combatting the negative impacts of unemployment in the community by decreasing the need for social services, increasing the standard of living for East Palo Alto residents, addressing long standing racial inequities, and shortening resident's commute times.

5.11.020 Title, Policy and Purpose
A. This chapter may be referred to as the First Source Hiring Ordinance.

B. It is the policy of the City of East Palo Alto to ensure full and equitable opportunities for East Palo Alto residents to participate in the employment opportunities that arise from public works contracts and subsidized projects. It is also the policy of the City to increase the number of employed persons living in the City of East Palo Alto in an attempt to counteract the grave economic and social ills associated with the higher unemployment levels that exist within the City and to address the effects of systemic racism.

C. The City Council has determined, that although there are numerous workforce development programs providing services to East Palo Alto residents, there is a need to provide East Palo Alto residents with more opportunities to participate in workforce development programs that include life skills training, job readiness training, and case management services. Such workforce development programs will increase the capacity of East Palo Alto residents to succeed in obtaining jobs and reduce the unemployment rate and accompanying poverty and crime conditions.

D. By increasing the capacity of East Palo Alto residents through workforce development programs, East Palo Alto residents will be better suited to compete in the marketplace, and East Palo Alto employers will be better able to meet increased local workforce participation goals.

E. In furtherance of these policies, the City establishes a first source hiring program to encourage the hiring and retention of East Palo Alto residents for the work to be performed under public works contracts and subsidized projects.

5.11.030 Scope and Goals.

A. For any public works contracts with the City that have a value of $100,000 or more, a subsidized project with a subsidy from the City of $100,000 or more, or a project sited on property leased from the City, there is hereby established the following goals for employment of East Palo Alto residents:

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1. Public Works (Construction) Employment: A minimum of twenty percent (20%) of the total work hours for the contract or project shall be performed by East Palo Alto residents, and a minimum of twenty percent (20%) of all new hires for the contract or project shall be East Palo Alto residents for the duration of the contract or project, of which a minimum of five percent (5%) of all new hires for the contract or project shall be disadvantaged workers who are East Palo Alto residents.

2. Retail Employment in Subsidized Project: A minimum of twenty percent (20%) of the total workforce shall be East Palo Alto residents, and a minimum of twenty percent (20%) of all new hires shall be East Palo Alto residents.

3. Office, Administrative, and Other Employment in Subsidized Projects: A minimum of twenty percent (20%) of the total workforce shall be East Palo Alto residents, and a minimum of twenty percent (20%) of all new hires shall be East Palo Alto residents.

B. An employer who does not meet these goals may still be deemed in compliance with these requirements if the employer demonstrates the following good faith efforts:

1. The employer complied with the guidelines adopted by the City to implement this policy including any local employment plan approved by the City;

2. The employer demonstrates that information on all available jobs was presented to the City's designated job coordinator or coordinators at least forty-eight (48) hours prior to hiring for any available position

3. The employer provides evidence that it made requests to any unions working on the project for East Palo Alto residents

4. If the employer received applications from East Palo Alto residents but did not hire the East Palo Alto residents, the employer can demonstrate the failure to hire was based on objective skills-based criteria.

C. The goals established in this section represent the minimum employment standards for the affected categories, and subject businesses are encouraged to exceed these goals whenever possible.

D. With respect to retail employment and office, administrative, and other employment by any employer that occupies any portion of a subsidized project or any property owned by the City pursuant to a lease or other agreement with the City and employs more than ten (10) full time equivalent employees at the site shall meet the employment goals as provided for in this section. The obligation to comply with these goals for a subsidized project shall be for a term of not less than three (3) years or more than ten (10) years after issuance of the certificate of occupancy for the subsidized project, with such term determined by the amount of the City subsidy in accordance with the adopted guidelines. The obligation to comply with these goals for any property owned by the City pursuant to a lease or other agreement with the City shall be in accordance with the terms of that lease or other agreement.

E. Any small business is exempt from the requirements of this chapter.

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G. Any waiver of the provisions of this chapter for any public works contract or subsidized contract must be approved by the city council. The city council may consider a waiver of the provisions of this chapter if application of this chapter to a particular project or public work contract would make the City ineligible for state or federal funding.

H. The employer's compliance with this chapter shall be a requirement for any bid for a public work contract to be considered responsive and responsible. If the City elects to prequalify contractors, a contractor's or subcontractor's agreement to comply with this chapter shall be required for the contractor or subcontractor to be considered qualified, capable and fit. Failure of a contractor or subcontractor to comply with the requirements of this chapter in past contracts shall be a basis for the City to determine that the contractor or subcontractor is not qualified, capable or fit and shall be a factor in determining whether the contractor is the lowest responsible bidder in accordance with Section 2.84.080.

5.11.040 Definitions
As used in this chapter:
"City Manager" means the City Manager for the City of East Palo Alto, or designee. "Construction contractor" means an individual, partnership, corporation, joint venture or other legal entity entering into a public works contract with the City or performing construction work on a subsidized project.
"Disadvantaged Workers" means an individual, who prior to commencing work on the public work, faces at least two of the following barriers to employment; (1) being homeless; (2) being a custodial single parent; (3) receiving public assistance; (4) lacking a GED or high school diploma; (5) having a criminal record or other involvement with the criminal justice system; (6) suffering from chronic unemployment; (7) emancipated from the foster care system; (8) being a veteran of the Iraq/Afghanistan war; or (9) being an apprentice with less than 15% of the required apprenticeship hours in the program. "Employer" means a construction contractor, subsidy recipient or any of their subcontractors, or any business which occupies and conducts its business on any portion of the site of any subsidized project while the chapter is applicable to the project or on any property leased from the City.
"Guidelines" means the guidelines for implementation of this policy as initially adopted or as may be amended from time to time.
"First source agreement" means a written contract between an employer and the City establishing the hiring process to be followed and containing the employer's commitment to abide by the responsibilities of an employer under this chapter and agreement that the

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specified hiring process shall be followed in order to maximize the number of East Palo Alto residents and disadvantaged workers employed.
"New hire" means any employee of an employer who is not listed on the employer's last quarterly tax statement for the period prior to the commencement of work. "Public works contract" means any contract with the City for construction, alteration, demolition or repair work.
"Referral system" means the system established by the City to provide referrals of residents to employers for employment covered by this chapter.
"Resident" means any person who is domiciled in East Palo Alto as that term is defined in Election Code Section 349(b).
"Small business" means any business that employs the equivalent of ten (10) or fewer fulltime employees in its total workforce. "Subcontractor" means any and all parties with whom a subsidy recipient, construction contractor or other subcontractor enters into a contract to perform a portion of any construction, alteration, demolition or repair work.
"Subsidized project" means a development project for which a subsidy recipient received one or more subsidies with a total value to the City of $100,000 or more. "Subsidy" means direct or indirect assistance by the City or as directed by the City that materially benefits a person or entity, including, but not limited to: grants or loans of funds administered by the City; tax abatements or deferrals; fee deferrals or abatements; infrastructure improvements made for the purpose of facilitating or supporting a development project; land sale or ground lease at below market value. "Subsidy recipient" means a person or entity that in any twelve-month period receives one or more subsidies from the City with a total value of $100,000 or more; and/or a person or entity that receives written notice that in exchange for the grant or subsidy to that person or entity, such person or entity must abide by the provisions of this chapter.

5.11.050 Powers and Duties of City
In addition to the duties and powers given to the City set forth elsewhere in the East Palo Alto Municipal Code, the City shall have the following duties and powers regarding this chapter:

A. The City shall conduct pre-bid meetings for public works contracts or projects subject to this chapter to inform potential bidders of the requirements codified in this chapter; B. The City shall include the requirements of this chapter in all bid packages for public works;

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C. The City shall have the exclusive right to determine whether or not a business is a small business;
D. The City shall require all employers with contracts or projects subject to this chapter to abide by its provisions;
E. The City shall require that employers require compliance with and enforce the provisions of this chapter with any and all subcontractors, successors and assigns; F. The City shall actively monitor compliance with this chapter and submit periodic reports to the city council on the status of the implementation of this chapter on all public works contracts, and subsidized projects. Compliance will be measured from the initial day of performance and shall continue for the duration of the contract or project in question; G. The City shall convene a semi-annual meeting of stakeholders including, local labor unions, local contractors who participate in state-certified jointly administered training programs, community-based training and job development program providers, local college training programs, and social justice advocacy groups to provide feedback and suggestions about this chapter and to review employment goals established by this chapter.

Such feedback and suggestions shall be included in the required report to city council; H. The City shall require that this chapter is incorporated into all relevant development agreements, development and disposition agreements, land disposition agreements, leases, requests for proposal, requests for qualifications, bid packages, construction contracts, and other such documents;
I. The City shall ensure the employment goals set pursuant to this chapter are maintained for the duration of the contract or project in question.

5.11.060 Employer Responsibilities
A. As a condition of entry into any contract or receipt of a subsidy subject to this chapter, or of locating in a subsidized project, each employer shall comply with the responsibilities and goals set forth in this chapter, including, but not limited to:

1. First Source Agreements. Each employer shall enter into a first source agreement. The first source agreement shall establish the hiring process to be followed by the employer for construction and non-construction hiring to achieve the goals of this chapter. Unless the city council directs otherwise, first source agreements shall contain the terms set forth in the sample documents. The form of the first source agreement shall be approved by the city manager and shall be consistent with this chapter and the guidelines.

2. Pre-Bid Meetings. Each employer shall attend any pre-bid meeting conducted by the city for any contract or project subject to this chapter;

3. Cooperation with Monitoring Efforts. Each employer shall make available to the city all records and information relevant to monitoring and enforcement of this chapter, including contracts with other entities. The City shall not use such records or information

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for any purpose other than monitoring or enforcement of this chapter. Each employer shall cooperate fully and promptly with any inquiry or investigation the City deems necessary in order to monitor compliance, including allowing access to job sites and employees. In no event shall an employer take more than ten (10) days to respond to an inquiry or investigation. Employers may remove names and social security numbers from requested records to protect the privacy of individual employees, however, the City may require that an employer provide addresses of individual employees if their actual place of residence is at issue.

B. Reporting Exemption. As an incentive to exceed the goals of this chapter, an employer who meets the following requirements shall be deemed to be in compliance with the goals for the quarter and exempt from reporting requirements for that quarter:

1. Public Works (Construction) Employment: A minimum of thirty percent (30%) of the total work hours for the contract or project during the quarter was performed by residents and/or disadvantaged workers;

2. Retail Employment: A minimum of thirty percent (30%) of the total workforce during the quarter was residents;

3. Office, Administrative, and Other Employment: A minimum of thirty percent (30%) of the total workforce during the quarter was residents.

4. Any employer who achieves or exceed the goals set forth in this subsection for four consecutive quarters shall thereafter be required only to make an annual report, unless the employer fails to file the annual report or the report fails to demonstrate compliance.

C. Non-City Project Hiring. An employer who can adequately document the new hire of an East Palo Alto resident on any non-City project within one of the nine Bay Area counties (Alameda, Contra Costa, San Francisco, San Mateo, Santa Clara, Marin, Solano, Napa, and Sonoma), during the time a subject contract or project is in effect, shall be entitled to credit the hours of that East Palo Alto hire towards meeting the new hire goals of this chapter.

D. Binding on Successors and Assigns. Each employer subject to this chapter shall not assign, sell or in any way transfer any portion of their interest in a contract, project, subsidy or other interest subject to this chapter without first notifying the City. Each employer shall require each of the employer's successors and/or assigns agree to comply with all terms of this chapter applicable to employers.

E. Nondiscrimination in Conditions of Employment. Employers shall not discriminate against residents in any terms and conditions of employment, including retention, promotions, job duties, shift assignments and training opportunities.

5.11.070 Responsibilities Regarding New Hires.

Every employer shall have the following responsibilities:

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A. Each employer shall comply with the goals for all new hires and shall use union hiring halls for union contracts and any referral system specified by the City for non-union contracts;
B. Each employer shall, prior to hiring in furtherance of the contract or project, provide to the City its hiring projections, including number, type, and qualifications for the projected jobs;
C. Each employer shall utilize the hiring process specified in their first source agreement with the City.

5.11.080 Noncompliance
A. The City shall determine whether an employer has complied with the requirements of this chapter. If the City determines the employer failed to comply with the provisions of this chapter, the employer has the burden of proving compliance and its obligations under this chapter or a good faith effort to comply. Each employer agrees to pay civil penalties if imposed if found in noncompliance.

B. The city manager has the power, in addition to any other remedy the City may have under this code or by operation of law, to suspend or terminate the pertinent contract in whole or in part, with continuance thereof conditioned upon a satisfactory showing to the city manager of the employer's ability to comply.

C. In the event the City believes the employer may not be in compliance with the requirements of this chapter, the following procedure will be followed:

1. The City Manager or designee shall cause to be delivered to the employer a written "Notice of Noncompliance." This notice shall specify the matters which constitute the noncompliance; the specific action required to correct the noncompliance; and the time period during which such correction shall occur. In no event shall this time period be more than thirty (30) days after receipt of the notice by the employer. If the notice is mailed, it will be deemed received five days after the date of mailing.

2. If the employer disagrees with the notice, it shall have the burden of proving compliance with the provisions of this chapter and shall submit any evidence and argument to the city manager to establish compliance no more than thirty (30) days after receipt of the notice of noncompliance by the employer.

3. In the event the city manager subsequently agrees compliance has occurred, the city manager shall cause to be delivered promptly to the employer a written "Notice of Correction of Noncompliance," specifying the original noncompliance which has been corrected.

4. In the event the City Manager does not agree compliance has occurred, the city manager shall promptly notify the employer by a written "Notice of Failure to Correct Noncompliance," describing the facts constituting the noncompliance.

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5. After the issuance of a written "Notice of Failure to Correct Noncompliance," the employer shall have the right to request a hearing before the city council or a mutually agreed upon arbitrator who shall make the final determination. The request for a hearing must be made within ten (10) business days after receipt of the "Notice of Failure to Correct Noncompliance." If the notice is mailed, it will be deemed received five days after the date of mailing. The hearing shall be held no sooner than twenty (20) and no later than thirty (30) days after receipt by the City of the request for hearing, unless otherwise agreed to by the parties. At the hearing, the employer may present any evidence and argument it believes proves compliance. The city council or neutral arbitrator shall issue a final determination no later than ten(10) business days after the hearing. The employer must exhaust this administrative remedy prior to commencing further legal action.

6. In the event no request for hearing is timely made, the determination of failure to correct noncompliance shall be deemed to be final;

7. If the employer fails to comply with the "Notice of Noncompliance" and a final determination of noncompliance is made, the City may exercise any of its powers as specified in this section.

D. Civil Penalties. The City may assess civil penalties for violations of this chapter. Civil penalties for violations are as follows: An amount not to exceed $1,000.00 or 1% of the total contract amount, whichever is greater, for each working day of noncompliance, regardless of the number of separate acts of noncompliance by the employer existing on a particular day.

E. The City shall keep a record of all violations of the hiring goals established by this chapter. A history of violation shall be a factor considered by the City when deciding upon any future awards of contracts to the affected employer and may form the basis for denying any future contracts to the affected employer.

5.11.090 Miscellaneous
A. Sources of Authority. This chapter constitutes an exercise of the police powers of the City and the contracting and spending powers of the City.

B. Compliance with State and Federal Law. This chapter shall be enforced only to the extent it is consistent with the laws of the State of California and the United States of America. Nothing in this chapter is intended to affect the duties of any business, including any small business, under state or federal law. In addition, no provision of this chapter is intended to exempt any business from complying with applicable state or federal law. No employer shall be required to violate its obligations under an agreement governed by the National Labor Relations Act and the Labor-Management Relations Act. If the provisions of the chapter conflict with any federal or state funding applicable to a project, the employer shall be excused from complying with the provisions of this chapter but only if the federal or state funding requirements prohibit compliance. If any provision of this chapter is held by a court of law to be in conflict with state or federal law, the applicable law shall prevail

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over the terms of this chapter, and the conflicting provisions of this chapter shall not be enforceable.

C. Compliance with Court Order. An employer shall be excused from compliance with the pertinent terms of this chapter if the employer is bound by a court or administrative order or decree which conflict with those terms.

D. Material Terms. The provisions of this chapter are material terms of all contracts or agreements in which this chapter is incorporated.

SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT
This Ordinance is not subject to CEQA because it is not a “project” which would have a direct physical change or a reasonably foreseeable indirect physical change on the environment pursuant to California Environmental Quality Act ("CEQA") Guidelines section 15378. Even if it were a project subject to CEQA review, this project would be exempt from CEQA Guideline Section 15378 (regulatory actions), Section 15061(b)(3) (no significant environmental impact), and Section 15183 (actions consistent with the general plan and zoning). The Council therefore directs that the Planning Division may file a Notice of Exemption with the San Mateo County Clerk.

SECTION 3. SEVERABILITY.

If any section, subsection, sentence, clause, phrase, or word of this Ordinance is for any reason held to be invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed and adopted this Ordinance, and each and all provisions hereof, irrespective of the fact that one or more provisions may be declared invalid.

SECTION 4. EFFECTIVE DATE.

This Ordinance shall take effect and be in full force thirty (30) days from and after the date of its adoption, and shall govern all contracts and other relevant agreements not executed by that date.

SECTION 5. PUBLICATION.

The City Clerk is hereby directed to cause publication of this Ordinance as required by Government Code Section 36933.

This Ordinance was introduced at the______________ meeting of the City Council of the City of East Palo Alto.

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PASSED AND ADOPTED this _____ day of ______________, 2022 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

______________________________
Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:
___________________________ _______________________________ City Clerk Valerie J. Armento, Interim City Attorney

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Patrick Heisinger, Assistant City Manager
Patrick Heisinger, Assistant City Manager
SUBJECT: Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto Sanitary District
Recommendation
It is recommended that the City Council:

1. Accept the report on the issues concerning the Light Tree affordable housing project and the East Palo Alto Sanitary District; and

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
On January 29, 2019, the East Palo Alto City Council (“Council”) approved the Light Tree development, a 185-unit 100% affordable housing project (“Project”) located at 1805 East Bayshore Road developed by Eden Housing and EPACANDO (“Developer”). At that time, the Council appropriated $4,000,000 from the Facebook Catalyst Fund to support the Project. The City of East Palo Alto (“City”) received no comments or claims of adverse impacts from reviewing agencies with jurisdiction over systems that may be affected by the Project. As such, the Project received a Categorical Exemption under the California Environmental Quality Act (“CEQA”).

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In June 2019, the State of California (“State”) awarded the Project $20,000,000 of Affordable Housing and Sustainable Communities (“AHSC”) funding. The City is responsible for ensuring these funds are spent for their intended purposes prior to the deadline stipulated in the agreement between the City and the State (July 2024).

The scope of the Project entails an expansion of the number of dwelling units on site from 94 apartments to 185 units through a combination of substantial rehabilitation and new construction. As such, the Developer was aware that a connection fee to the East Palo Alto Sanitary District (“EPASD”) would be required to ensure service for the 91 net new units.

Shortly following Project approval, the Developer approached EPASD to discuss the Project’s eventual connection to the EPASD infrastructure, but EPASD stated that their system did not have capacity to serve the Project. Specifically, EPASD contended that their system would only need improvements if the additional 90 units resulting from the Project are added to the system.

The City, Developer, and EPASD then held several meetings to seek a joint resolution, with the goal of receiving a “will serve” letter from EPASD for the Project. The City, Developer, and several knowledgeable professionals challenged the assertions that the EPASD system could not accommodate the Project. However, due to timeline limitations associated with Project financing, the Developer decided to resolve the dispute by negotiating a payment to EPASD.1 On June 12, 2020, EPASD and the Developer entered into a Wastewater Service Agreement (“WSA”) for the Project. The WSA outlines the roles and responsibilities of each party, respectively, as described in the table below. Please also see Attachment 1 to review the full WSA.

Entity Obligation
Developer Make a payment totaling $2,486,585 to fund infrastructure costs, as well as capacity, permitting, and other administrative fees.

EPASD Provide wastewater service to the Project within 18 months of receiving the Developer’s payment.

EPASD also committed to pay $2,000,000 to contribute to the cost of the upgrades.

The segments and improvements of the necessary work codified in the WSA are illustrated in Map #1 below:

Map #1
1 Through the negotiation period, EPASD increased their request for Developer funding for the improvements from $3,000,000 to $5,000,000 and eventually to $7,000,000.

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On August 5, 2020, the Developer paid EPASD the administrative fee of $17,400; on September 25, 2020, the Developer paid EPASD the remaining fee of $2,469,185. Based on this schedule, EPASD would be required to complete necessary system improvements and provide wastewater service by March 25, 2022.

The Project broke ground on October 5, 2020, 20 homes were completed in August 2021, 28 are expected to be completed by April 1, 2022, and 47 new homes are anticipated for completion by May 17, 2022. These 95 total units equal the number of apartments that previously existed at the location prior to the initiation of the Project and, therefore, these units could be assumed to have EPASD service. The 90 additional homes are expected to be completed by January 3, 2023.

In late November 2021, the City was made aware that EPASD had retained EMC Planning, the firm that had completed the Notice of Exemption (“NOE”) for the Project. In response to the City’s questions regarding Segment 7 shown in the map above, EPASD asked EMC Planning to conduct an environmental review for a new Trunk Line (“Trunk Line Project”) and any update necessary to the Project’s NOE. The map below shows the location of the Trunk Line Project:

Map #2

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In early January 2022, the City became aware that EPASD would not meet the terms of the WSA by providing the “will serve” letter when the Project’s new units were completed. Eden Housing provided further information that EPASD was requiring the Developer to sign an amended WSA, obligating the Developer to pay for all additional costs attributed to “unforeseen” costs resulting from the improvements identified in the WSA. When the Developer informed EPASD that the WSA could not be amended due to the fact that the award of Federal/State Tax Credits and investments in the Project were based on the signed WSA, EPASD expressed their desire to turn the improvement project over to the Developer.

On February 8, 2022, the Mayor, City and EPASD representatives met to discuss the Project.

During that meeting, the EPASD General Manager stated that their consultant, EMC Planning, had reported the need for a new CEQA and permitting process due to the EPASD Trunk Line project. City staff inquired about potential options and the EPASD General Manager stated that EPASD would be willing to consider another option, if EMC Planning could identify a viable solution that would move the Project forward and not impact the Trunk Line project.

On February 9, 2022, during a call between the City and EMC Planning, EMC Planning identified a feasible means of advancing the Project, without other impacts, as described in the Proposed Approach section below. EMC Planning also mentioned that this option had been communicated to EPASD in November 2021.

On February 23, 2022, the City and representatives from the Developer and EMC Planning met to discuss potential approaches for advancing the Project. During that meeting, EMC Planning reaffirmed their professional opinion that the Project’s existing CEQA approvals could be updated without interrupting progress on the development.

Analysis
Proposed Approach Articulated by EMC Planning
To ensure that the Project can be completed in a timely manner, EMC Planning proposed to bifurcate and study the potential environmental impacts of the two upgrade projects individually, as follows:

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1. The improvement project move forward with construction shown in segments A through 6, in map #1 above since the CEQA clearance for that work is document in the Notice of Exemption filed by EPASD on March 23, 2021 pertaining to the “1805 East Bayshore Road Sewer Main Replacement” Project.

2. EPASD would complete a full CEQA review of all work associated with their Trunk Line project which would include Segment 7 (map #2 above).

On February 24, 2022, City and EPASD representatives met again to discuss the option provided by EMC Planning. After reviewing the recommended option, the EPASD General Manager stated that this approach would increase the project costs by $1,000,000. An increase of $1,000,000 to the Project’s sewer improvement would equate to a cost increase of 22% in one year. When asked about the basis of this opinion, the General Manager stated that construction costs have increased since the WSA was executed. However, the General Manager also confirmed that EPASD has yet to complete a bid process for the improvement work which would beneficial to better estimate construction costs.

It is customary for jurisdictions to calculate assumed construction cost increases that account for the timeline associated with the completion of the improvement, and to include these cost increases in any agreements, as appropriate. However, EPASD is not able to provide a current Capital Improvement Plan that would describe the anticipated or needed improvements over time, it is difficult to understand the basis for EPASD’s estimates. When asked why the fees established in the WSA did not account for price adjustments overtime, the EPASD General Manager’s response was, “Nobody does fees that way.” Concluding the February 24, 2022, meeting, the Mayor suggested that the City draft and forward a proposal to the EPASD Board of Directors for consideration. The EPASD Board Chair and General Manager agreed to consider the proposal once received. In the interest of transparency and providing a forum for all parties to be heard, the Mayor also suggested that it may be beneficial to discuss the Project at both a City Council meeting and an EPASD Board of Directors meeting.

City’s Proposed Approach
On March 4, 2022, a letter (Attachment 2) from the Mayor was sent to EPASD’s Board of Directors and EPASD’s General Manager requesting the following:

1. The project move forward with construction shown in segments A through 6 identified in Map #1 above;

2. The City will issue an encroachment permit for all work required in segments A through 6 identified in Map #1 above;

3. EPASD begin construction work on segments A through 6; and

4. The CEQA environmental review of the construction and installation of the sewer lines in Segment 7 will be included in the CEQA review for EPASD’s Trunk Line Project.

In an effort to advocate for more transparency, the City recommends that the City and EPASD enter into a Memorandum of Understanding (MOU) to codify the proposed approach outlined above.

Next Steps
As of the date of this memorandum, staff is not certain if EPASD will consider the City’s proposal outlined in the Mayor’s letter sent on March 4, 2022. City staff is eager to engage with the District’s Board to resolve the issues placing the Light Tree affordable housing development at risk of not being completed.

Conclusion

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The Project is a $170 Million development that will provide much needed housing for East Palo Alto. In addition, the City is responsible for ensuring that the AHSC funding allocated to the Project is spent in a timely manner. For these reasons, it is imperative that the City and EPASD partner to resolve the impasse between the District and Developer to ensure the Project will be 100% occupied by January 2023.

Fiscal Impact
At this time, there is no fiscal impact to the City associated with this report.

Attachments

1. Wastewater Services Agreement

2. Letter from Mayor Abrica to the EPASD Board of Directors and General Manager dated March 4, 2022

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WASTEWATER SERVICE AGREEMENT
This WASTEWATER SERVICE AGREEMENT (“Agreement”) is made and entered into on June 12, 2020 (“Effective Date”) by the EAST PALO ALTO SANITARY DISTRICT, a California sanitary district organized under the laws of the State of California (“District”), and LIGHT TREE TWO, L.P., a limited partnership (“Developer”) (individually, a “Party”, collectively, the “Parties”).

RECITALS
A. The District provides wastewater service to property within its service area.

B. Developer is under contract for the purchase of certain property within the District’s service area located at 1805 East Bayshore Road, in the City of East Palo Alto (“City”), CA 94303 as more particularly described on Exhibit A attached hereto and incorporated herein (the “Property”). The Property is currently developed with 94 residential units (the “Existing Units”), which are currently served by the District’s wastewater system (the “System”).

C. Developer is proposing to develop a 185-unit affordable housing project (the “Development”). The Development will refurbish the Existing Units and create 91 net new units (the “Net New Units”). As part of the Development process, and in order to obtain financing for the Development, Developer has requested that the District issue an unconditional will-serve letter to Developer as evidence of its commitment to provide wastewater service to the Net New Units of the Development (the “Will Serve Letter”), in substantially the form set forth in Exhibit B attached hereto.

D. The District acknowledges that it currently provides service to the Existing Units.

The Wastewater System (defined below) currently lacks sufficient capacity to provide wastewater service to the Net New Units. The estimated additional load that the Net New Units will add to the District’s system is 21840 gpd (“Additional Load”). Because the District currently provides service to the Existing Units, the Existing Units are not the subject of this Agreement.

E. Upon satisfaction of the terms and conditions set forth herein, including all financial obligations of Developer and at no expense to the District except as explicitly set forth herein, the District shall expand the System to accommodate the Additional Load (“Expansion”). For the purposes of this Agreement the term “Connection” shall mean connecting the Development’s Wastewater Systems (defined below) to the System, including but not limited to all inspections and certifications required for the Development to receive a Certificate of Occupancy from the City.

F. The improvements required for the Expansion (“System Expansion Improvements”), which includes downstream improvements necessary to provide service to the Developer, and the Developer’s share of their associated values are set forth on Exhibit C

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attached hereto and incorporated herein. The total cost of the Expansion including the Peak Dry Weather Flow Plus 10 year storm value shall be referred to as the “Expansion Cost”.

G. There are other planned and approved developments within the District’s service area (“Additional Development”) which may also add additional load to the System (“Third Party Loads”). The District is currently working with the developers of such Additional Development (“Third Party Developers”) to expand the System in order to accommodate such Third Party Loads (“Third Party Expansions”). To the extent that such Third Party Developers use any portion of the Expansion to meet their Third Party Loads or such Third Party Expansion connect to or build upon the Expansion, the Parties intend that such Third Party Developers shall pay their fair share of the Expansion Cost.

H. As an affordable housing developer, Developer is providing an important public service. The District is entering into this Agreement in recognition of the public benefit associated with the Development. The District acknowledges that as a sewer service provider, it has a duty to grant a priority for the provision of sewer services to developments that include housing units affordable to lower income households, pursuant to Government Code Section 65589.7(a), subject to availability of capacity. Health and Safety Code section 5410 et seq. further prohibits any person, including the District, from discharging sewage or other waste, or the effluent of treated sewage or other waste, in any manner which will result in contamination, pollution or a nuisance, including through overflow. Because insufficient capacity currently exists in the System to accommodate the Development, this Agreement is necessary to facilitate the Expansion and accommodate the Development. In addition, this Agreement provides a public benefit because the Development is currently the only exclusively affordable housing development currently requesting a will-serve letter from the District.

I. The total amount due from Developer under this Agreement, which sums shall be payable in accordance with the terms herein, shall be Two Million Four Hundred Eighty Six Five Hundred Eighty Five Dollars ($2,486,585.00), broken down in the table below. Capitalized terms not previously defined are defined in the Agreement below.

Payment Due Date Amount
System Expansion Payment (Section 4) Upon Receipt of Financing $1,894,600.00 Inspection Fees (Section 3) Upon Receipt of Financing $18,500.00 Permit Fees (Section 3) Upon Receipt of Financing $4,625.00 Capacity Fees (Section 3) Upon Receipt of Financing $551,460.00 Administrative Fee (Section 5) Upon Execution $17,400.00 Total $2,486,585.00

AGREEMENT

1. RECITALS. The Recitals set forth above are true and correct, and by this reference incorporated herein.

2. ISSUANCE OF “WILL SERVE” LETTER; COMPLETION OF SYSTEM EXPANSION IMPROVEMENTS.

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(a) A Will Service Letter is required for Developer to obtain its construction financing. Immediately upon full execution of this Agreement, the District shall provide the Developer with the Will Serve Letter stating that the District can and will furnish sewer service for the Net New Units. The Capacity Fees, the Inspection Fees, the Permit Fees and the System Expansion Payment (but not the Administrative Fee due under Section 5 hereof) (“Funds”) shall be due immediately upon receipt of the tax credit financing by Developer, which is currently contemplated to be August 1, 2020, as may be extended by Developer or Developer’s tax credit lender (“Financing Date”). The District’s obligations hereunder to build the System Expansion Improvements shall not commence until the Funds are actually received by the District and deposited into the applicable District fund as set forth for each fee below in Sections 3 and 4, and under no circumstances shall the District have any obligation to expend District funds from any source for the Expansion unless the Funds are actually received and deposited with the District. Should Developer fail to deposit the Funds required hereunder with the District by the Financing Date, the Will Serve Letter will be rescinded and will terminate, and neither Developer nor any other person shall have any right to rely upon such Will Serve Letter, unless the District’s General Manager shall have consented to an extension for deposit of the Funds.
(b) Upon deposit or payment of the Funds, the District commits to providing wastewater service to the Development and connecting the Development to the System within eighteen (18) months (“Completion Date”), subject to Section 2(c) below. For purposes of this Agreement, the Completion Date shall be the day that is five hundred forty eight (548) days after the initial deposit, in full, of the Funds, not including the date of deposit. (c) The Completion Date shall be extended for a period of time equal to the number of days during which the District (or any contractor or subcontractor of the District) is prevented from proceeding with the construction of the System Expansion Improvements by reason of force majeure. The term “force majeure” as used in this Section shall include acts of God, flooding, strikes, lockouts or other labor trouble, materially adverse weather conditions, fire or other casualty, epidemics, pandemics or outbreak of communicable disease, quarantines, governmental preemption in connection with a national emergency, any rule, order or regulation of any governmental agency or any department or subdivision thereof, or inability to secure materials or labor because of any such emergency, rule, order, regulation, war, civil disturbance, or other emergency, cause or event beyond the reasonable control of District. Should Developer receive more favorable terms than are set forth in this provision in Developer’s construction financing documents, such terms will automatically apply to the District and are deemed to be incorporated into this Agreement by this reference.

3. CAPACITY FEES, INSPECTION FEES, AND PERMIT FEES.
(a) Upon receipt of Developer’s tax credit financing, in accordance with Section 2 above, Developer shall pay to the District Five Hundred Fifty One Thousand Four Hundred and Sixty Dollars ($551,460.00) in satisfaction of the District’s standard capacity and connection fees applicable to the Connection of the Net New Units (“Capacity Fees”). Such amount is based on the 2018 Wastewater Capacity Charge Update, and shall be deposited in a the District’s fund created for deposit of capacity fees (“Capital Facilities Fund”), which is a restricted fund created and accounted for pursuant to the requirements of California Government

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Code section 66013, and used in accordance with applicable law governing the District’s Capacity Fees.
(b) Upon receipt of Developer’s financing, in accordance with Section 2 above, Developer shall pay to the District Eighteen Thousand Five Hundred Dollars ($18,500) in satisfaction of the District’s standard inspection fees (“Inspection Fees”). Inspection Fees are calculated at the rate of One Hundred Dollars ($100) per equivalent dwelling unit. Inspection Fees may be deposited into the District’s general fund, or any other fund of the District at the District’s discretion, and used to cover the cost of inspections associated with the Development. (c) Upon receipt of Developer’s financing, in accordance with Section 2 above, Developer shall pay to the District Four Thousand Six Hundred Twenty Five Dollars ($4,625) in satisfaction of the District’s standard permitting fees (“Permit Fees” and, together with the Capacity Fees and Inspection Fees, “Fees”). Permit Fees are calculated at the rate of Twenty Five Dollars ($25) per equivalent dwelling unit. Permit Fees may be deposited into the District’s general fund or any other fund of the District, at the District’s discretion, and used to cover the cost of issuing permits to the Development.

4. SYSTEM EXPANSION PAYMENT.
(a) Developer’s Share of Construction Costs. In addition to the Fees described above, upon receipt of Developer’s financing, in accordance with Section 2 above, the Developer shall pay the a portion of the Expansion Cost which shall equal One Million Eight Hundred Ninety Four Thousand Six Hundred Dollars ($1,894,600.00) (“System Expansion Payment”). Developer’s System Expansion Payment is based on the District’s Conceptual Opinion of Probable Project Cost for PWWF Improvements, as shown on Exhibit C attached hereto and incorporated herein.
(b) The District currently deposits all capacity fees, including the Capacity Fees, into the Capital Facilities Fund, as required by law. The Capital Facilities Fund is a restricted fund, and revenues deposited therein may only be used for the purposes for which the Capital Facilities Fund was created, including capital facilities necessary to provide wastewater service. The District shall create a sub-account in the Capital Facilities Fund to be called the “Light Tree Apartment Fund” into which the System Expansion Payment shall be deposited. (c) The Light Tree Apartment Fund shall be fully funded by the System Expansion Payment upon receipt of financing by Developer. The District shall not be obligated to commence the System Expansion Improvements until the System Expansion Payment has been deposited into the Light Tree Apartment. Upon deposit of the System Expansion Payment into the Light Tree Apartment Fund, the District shall have the right to draw down from the Light Tree Apartment Fund for the System Expansion Improvements; provided, however, that the District shall only withdraw funds from the Light Tree Apartment Fund for costs immediately due and payable, excluding any Retention (as hereinafter defined), for the System Expansion Improvements, as evidenced by an invoice from a District contractor, subcontractor, or other person hired for the System Expansion Improvements (“Invoice”). The District shall make such Invoices available to Developer immediately prior to withdrawal from the Light Tree Apartment Fund.

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(d) Developer shall have the right to review all Invoices and transactions from the Light Tree Apartment Fund to ensure the System Expansion Payment is used for the System Expansion Improvements. Developer shall further have the right to audit the Light Tree Apartment Fund at the sole cost and expense of Developer. Additionally, on the one year anniversary of the deposit of the System Expansion Payment into the Light Tree Apartment Fund, Developer may request (and District shall oblige) that the District provide a report as required under Government Code section 66013(d) to Developer with respect to the Light Tree Apartment Fund, provided that Developer provides District with at least 30 days’ notice for the preparation of such report.
(e) The District and Developer understand that the District will enter into agreements with other parties (“Contractors”) for the construction of the System Expansion Improvements (“Construction Agreements”). The District shall include in all Construction Agreements a requirement that the District withhold between five percent and ten percent (5% to 10%) of the total amount invoiced until the particular improvements subject to the Construction Agreement are substantially complete, in the mutual determination of the District and the Developer (“Retention”). Additionally, Developer shall select an inspector, subject to approval by the District’s General Manager, who shall remain at the site of the System Expansion Improvements. Such inspector shall review and certify all invoices prior to payment by the District. Costs for the inspector shall be paid from the System Expansion Payment deposited in the Light Tree Apartment Fund.
(f) Additional Developers’ Fair Share. The Parties intend that any Third Party Developers will pay for their fair share of the Expansion Costs. Developer may seek reimbursement from such Third Party Developers for any portion of their fair share of the Expansion Costs that Developer paid in the System Expansion Payment. To the extent that any Third Party Expansion is constructed after the Expansion and incorporates, uses, or builds upon the System Expansion Improvements, as determined by the District when analyzing the capacity needs of a Third Party Developer, the District shall facilitate a mechanism through any agreements with the Third Party Developers for connection, expansion and service for the Additional Development to reimburse the Developer for any Expansion Costs related to the Third Party Developer. Nothing contained herein shall create any liability for the District to reimburse Developer from District funds.

5. ADMINISTRATIVE FEE. Developer shall pay a sum of Seventeen Thousand Four Hundred Dollars ($17,400.00) to the District for the District’s legal and administrative costs in entering into this Agreement (“Administrative Fee”). The Administrative Fee shall be due immediately upon execution of this Agreement.

6. OVERPAYMENT OF FEES AND CHARGES.
(a) Unused System Expansion Payment. Upon completion of the System Expansion Improvements and payment of all costs related thereto, as determined by an independent third party auditor, the District shall promptly reimburse Developer for any amount of the System Expansion Payment exceeding Developer’s Fair Share of the System Expansion Improvements. The District shall reimburse Developer within thirty (30) days after the auditor’s determination.

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(b) Third Party Developer Reimbursement. In the event that Third Party Developers’ fair share of the Expansion Costs reduce Developer’s Fair Share, the District shall cause the Third Party Developers to reimburse Developer directly for said overpayment as set forth in Section 4(f) above. Nothing contained in this Agreement shall require the District to make any payment to Developer from District funds except as provided above, nor shall there be any liability created on the part of the District for any Third Party Developer’s failure to reimburse Developer.
(c) Further Reimbursement. Nothing contained in this Agreement shall guarantee nor limit Developer’s ability to seek reimbursement for the cost of the System Expansion Improvement from any person seeking to connect to the District’s wastewater system and benefiting from the System Expansion Improvements.

7. CONNECTION TO DISTRICT’S WASTEWATER SYSTEM. The District shall initiate and complete all design, entitlement, permitting, construction and inspections to ensure the System Expansion Improvements shall be completed in a timely manner, in accordance with Section 2 of this Agreement. The District represents and warrants that, in addition to the System Expansion Payment, the District has sufficient funds to complete the Expansion.

8. INTERIOR PLUMBING; SIZING. The Developer is responsible for ensuring that lateral sewer pipes, building sewer pipes, interior plumbing fixtures or piping and all fixture units within the Development (together with any downstream improvements necessary to provide sufficient capacity to the Development, the “Wastewater Systems”) have sufficient capacity to provide sewer service. The District shall have no responsibility to inspect the Wastewater Systems of any building in the Development.

9. INDEMNIFICATION. To the fullest extent permitted by law, Developer, at its own expense, shall defend, indemnify and hold harmless the District, its agents, officers, officials, and employees from and against any and all claims, demands, actions, causes of action, suits, proceedings, costs, expenses, liabilities, judgments, awards, decrees, settlements, loss, damage or injury of any kind, in law or equity (collectively, “Claims”) brought against the District, its agents, officers, officials, and employees, that arise out of, pertain to, or are incident to the Will Serve Letter including, without limitation the payment of all expert witness fees, and attorneys’ fees and other related costs and expenses (“Indemnification Obligation”) but does not include any Claims asserted against the District that would have been brought regardless of the Will Serve Letter. The Indemnification Obligation will not require that Developer indemnify the District for District’s gross negligence or willful misconduct. The Developer’s obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the District, its agents, officers, officials, and employees. The District shall have the right to appear and defend its interest with respect to any Claim through counsel selected by the District. Developer shall reasonably cooperate in all aspects of the litigation contemplated herein. The District acknowledges that other applicants for will serve letters may object to the costs or fees the District imposes and any challenges that arise out of such disputes will not trigger this indemnity obligation unless the later claimant bases its challenge in whole or in part on the District’s Will Serve Letter. The Developer’s indemnity to the District set forth in this Section 9: (i) does not include in its scope any claims regarding the District’s use or administration of the System Expansion Payment, Capacity Fees or Administrative Fee, and (ii) does not preclude any claims

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by the Developer regarding the District’s use or administration of the System Expansion Payment, Capacity Fees or Administrative Fee not according to the Agreement.

10. TERMINATION. This Agreement is not subject to termination, except by mutual agreement or as otherwise provided herein.

11. EXCLUSIVE REMEDY. The Parties acknowledge that none of the Parties would have entered into this Agreement if it were to be liable in damages under or with respect to all or any part of this Agreement. Accordingly, no Party shall sue the other for damages or monetary relief for any matter related to this Agreement. The Parties’ litigation remedies shall be limited to declaratory and injunctive relief, mandate, and specific performance. For purposes of this Agreement, the term “specific performance” shall include, without limitation, payment of all Indemnification Obligations pursuant to the provisions set forth in this Agreement.

12. COMPLETE AGREEMENT AND GOVERNING LAW. This Agreement represents the complete understanding between the Parties with respect to matters set forth herein. This Agreement shall be construed in accordance with the laws of the State of California.

13. SUCCESSORS AND ASSIGNS. The obligations specific herein shall be made and are binding on the successors in interest of the Parties, whether the succession is by agreement, by operation of law or by any other means.

14. THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person other than the Parties and their respective successors and permitted assigns, any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.

15. SEVERABILITY. If any term, provision, covenant or condition of this Agreement is held to be invalid, void or otherwise unenforceable, to any extent, by any court of competent jurisdiction, the remainder of this Agreement shall not be affected thereby, and each term, provision, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

16. SURVIVAL. The Parties agree that this Agreement shall constitute a separate agreement from any other conditions set forth in the Will Serve Letter, and if the Will Serve Letter in part or in whole, is invalidated, rendered null or set aside by a court of competent jurisdiction, the Parties agree to be bound by the terms of this Agreement, which shall survive such invalidation, nullification or setting aside.

17. INTERPRETATION. The Parties have been advised by their respective attorneys, or if not represented by an attorney, represent that they had an opportunity to be so represented in the review of this Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in interpreting this Agreement.

18. CAPTIONS AND HEADINGS. The captions and section headings used in this Agreement are inserted for convenience of reference only and are not intended to define, limit or affect the construction or interpretation of any term or provision hereof.

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19. JURISDICTION AND VENUE. Any action at law or in equity arising under this Agreement or brought by a party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed in the Courts of San Mateo, State of California, and the parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court or jurisdiction.

20. COUNTERPARTS, FACSIMILE AND ELECTRONIC EXECUTION. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. To facilitate execution of this Agreement, the Parties may execute and exchange facsimile or electronic counterparts, and facsimile or electronic counterparts shall serve as originals.

21. REVISION OF AGREEMENT. This Agreement may, from time to time, be amended, revised, or supplemented by and with the consent of the Parties hereto and subject to the approval and ratification of their respective governing bodies. [SIGNATURES ON FOLLOWING PAGE]

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9.1.a
Packet Pg. 243 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Agreement, among the East Palo Alto Sanitary District and Light Tree Two, L.P. as of the date first written above.

ATTEST:

Secretary
APPROVED AS TO FORM:

General Counsel
081503111725962v6 9

EAST PALO ALTO SANITARY

DISTRICT
By Nam_e_ : : _________ _
Title: __________ _
LIGHT TREE TWO, L.P.,
a California limited partnership
By: Light Tree Two LLC,
a California limited liability company,
its managing general partner
By:

By: Light Tree CANDO LLC,
California limited liability company,
its co-general partner
By: East Palo Alto Community
Alliance and Neighborhood Development
Organization, Inc.,
a California nonprofit public benefit
corporation, its sole member/manager
By: _______ _
Name: Its: --------

9.1.a
Packet Pg. 244 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Agreement, among the East Palo Alto Sanitary District and Light Tree Two, L.P. as of the date first written above.

ATTEST: EAST PALO ALTO SANITARY

DISTRICT
By:

APPR ED AS TO FORM:
ary
Name:

Title:

General Counsel
LIGHT TREE TWO, L.P.,
a California limited partnership
By: Light Tree Two LLC,
a California limited liability company,
its managing general partner
By: Eden Housing, Inc.,
a California nonprofit public benefit
corporation, its manager
By:

Name:

Its:

By: Light Tree CANDO LLC,
a California limited liability company,
its co-general partner
By: East Palo Alto Community
Alliance and Neighborhood Development
Organization, Inc.,
a California nonprofit public benefit
corporation, its sole member/manager
By:

Name:

Its:
081503\11725962v6 9

9.1.a
Packet Pg. 245 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto 081503\11725962v6 10

9.1.a
Packet Pg. 246 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto 081503\11725962v6 A-1
Exhibit A
Legal Description of the Property
Draft subdivision legal description for Light Tree Two:

Real Property in the City of East Palo Alto, County of San Mateo, State of California, described as follows:

PARCEL I:

PARCEL 1 OF THAT CERTAIN PARCEL MAP RECORDED ON ___________, 2020 AS MAP BOOK _____,
PAGE _______________, OFFICIAL RECORDS.

EXCEPTING THEREFROM ALL BUILDINGS AND IMPROVEMENTS SITUATED THEREON AS

RESERVED IN

THE DEED FROM LIGHT TREE HOUSING PARTNERS TO LIGHT TREE LAND LLC, RECORDED

DECEMBER
14, 1999, DOCUMENT NO. 1999-202825, SAN MATEO COUNTY RECORDS, WHICH BUILDING AND IMPROVEMENTS ARE AND SHALL REMAIN REAL PROPERTY.

PARCEL II:

ALL BUILDINGS AND IMPROVEMENTS SITUATED ON THE FOLLOWING DESCRIBED LAND AS

RESERVED

IN THE DEED FROM LIGHT TREE HOUSING PARTNERS TO LIGHT TREE LAND LLC, RECORDED DECEMBER 14, 1999,INSTRUMENT NO. 1999 202825, SAN MATEO COUNTY RECORDS, WHICH BUILDINGS AND IMPROVEMENTS ARE AND SHALL REMAIN REAL PROPERTY:

PORTION OF LOTS 14 AND 16, AS DESIGNATED ON THE MAP ENTITLED "MAP OF FABER

SUBDIVISION,
SAN MATEO COUNTY, CALIFORNIA", WHICH MAP WAS FILED IN THE OFFICE OF THE

RECORDER OF
THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON OCTOBER 23, 1912, IN BOOK 8 OF

MAPS AT
PAGE 31, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE

NORTHEASTERLY LINE OF THE LANDS DESCRIBED IN THE DEED FROM TSURUKO NAKANISHI AND
JOHN M. NAKANISHI, HER HUSBAND, TO THE STATE OF CALIFORNIA DATED SEPTEMBER 13, 1955, AND
RECORDED OCTOBER 24, 1955, IN BOOK 2900 OF OFFICIAL RECORDS OF SAN MATEO COUNTY AT
PAGE 258 (96987-M) DISTANT THEREON SOUTH 53° 3' 00" EAST 20.01 FEET, FROM THE

INTERSECTION
THEREOF WITH THE EASTERLY LINE OF CLARKE AVENUE (40 FEET WIDE) AS SHOWN ON THE ABOVE
MENTIONED MAP; SAID POINT ALSO BEING THE SOUTHEASTERLY CORNER OF THE EASEMENT FOR

ROAD PURPOSES AND ALL PUBLIC UTILITIES DESCRIBED IN DEED FROM TSURUKO NAKANISHI TO
COUNTY OF SAN MATEO, DATED MAY 2, 1963, AND RECORDED MAY 8, 1963, IN BOOK 4452 OF

OFFICIAL
RECORDS OF SAN MATEO AT PAGE 471 (90785-V); THENCE FROM SAID POINT OF BEGINNING ALONG
THE EASTERLY LINE OF SAID ROAD EASEMENT (90785-V), NORTHWESTERLY ON THE ARC OF A TANGENT CURVE TO THE RIGHT, HAVING A RADIUS OF 15 FEET, A CENTRAL ANGLE OF 52° 18' 52", A
DISTANCE OF 13.70 FEET (CALLED A CENTRAL ANGLE OF 52° 17', AN ARC LENGTH OF 13.69

FEET IN
SAID 90785-V), AND NORTH 1° 34' 08" WEST (CALLED SOUTH 1° 29' EAST IN SAID 90785-V), 77.56 FEET

TO THE NORTHERLY LINE OF THE LANDS DESCRIBED IN THE DEED FROM TSURUKO

NAKANISHI, A

9.1.a
Packet Pg. 247 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto 081503\11725962v6
A-2

MARRIED WOMAN TO CLARKE AVENUE ASSOCIATES, A LIMITED PARTNERSHIP, DATED JUNE 11, 1964,
AND RECORDED JUNE 11, 1964 IN BOOK 4729 OF OFFICIAL RECORDS OF SAN MATEO COUNTY AT
PAGE 642 (31262-X); THENCE NORTH 87° 19‘ EAST ALONG THE NORTHERLY LINE OF THE LAST MENTIONED LANDS 504.20 FEET TO THE NORTHEASTERLY CORNER THEREOF; THENCE

ALONG THE

EASTERLY LINE OF THE LANDS DESCRIBED IN SAID DEED TO CLARKE AVENUE ASSOCIATES

AND THE
SOUTHERLY PROLONGATION OF SAID EASTERLY LINE SOUTH 1° 24' EAST 321.71 FEET TO THE NORTHERLY LINE OF SAID LOT 14; THENCE NORTH 87° 31' EAST ALONG THE LAST MENTIONED LINE

22.70 FEET TO THE DIVIDING LINE BETWEEN LOTS 14 AND 15, AS SHOWN ON THE MAP ABOVE MENTIONED; THENCE ALONG SAID DIVIDING LINE SOUTH 1° 29' EAST 180.45 FEET TO THE SAID

NORTHEASTERLY LINE OF THE LANDS DESCRIBED IN SAID DEED TO STATE OF CALIFORNIA, FIRST
ABOVE MENTIONED; THENCE NORTH 53° 53' WEST ALONG SAID NORTHEASTERLY LINE 658.47 FEET
TO THE POINT OF BEGINNING.

PARCEL III:

A LEASEHOLD AS DISCLOSED BY THAT CERTAIN MEMORANDUM OF GROUND LEASE

RECORDED
DECEMBER 14, 1999 AS INSTRUMENT NO. 1999-202826 OF OFFICIAL RECORDS AFFECTING THAT
CERTAIN LAND BEING DESCRIBED AS FOLLOWS:

PORTION OF LOTS 14 AND 16, AS DESIGNATED ON THE MAP ENTITLED "MAP OF FABER

SUBDIVISION,
SAN MATEO COUNTY, CALIFORNIA", WHICH MAP WAS FILED IN THE OFFICE OF THE

RECORDER OF
THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON OCTOBER 23, 1912, IN BOOK 8 OF

MAPS AT
PAGE 31, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE NORTHEASTERLY LINE OF THE LANDS DESCRIBED IN THE

DEED FROM
TSURUKO NAKANISHI AND JOHN M. NAKANISHI, HER HUSBAND, TO THE STATE OF CALIFORNIA DATED
SEPTEMBER 13, 1955, AND RECORDED OCTOBER 24, 1955, IN BOOK 2900 OF OFFICIAL

RECORDS OF
SAN MATEO COUNTY AT PAGE 258 (96987-M) DISTANT THEREON SOUTH 53° 3' 00" EAST 20.01 FEET,
FROM THE INTERSECTION THEREOF WITH THE EASTERLY LINE OF CLARKE AVENUE (40 FEET WIDE)
AS SHOWN ON THE ABOVE MENTIONED MAP; SAID POINT ALSO BEING THE SOUTHEASTERLY CORNER

OF THE EASEMENT FOR ROAD PURPOSES AND ALL PUBLIC UTILITIES DESCRIBED IN DEED FROM
TSURUKO NAKANISHI TO COUNTY OF SAN MATEO, DATED MAY 2, 1963, AND RECORDED MAY 8, 1963,
IN BOOK 4452 OF OFFICIAL RECORDS OF SAN MATEO AT PAGE 471 (90785-V); THENCE FROM SAID
POINT OF BEGINNING ALONG THE EASTERLY LINE OF SAID ROAD EASEMENT (90785-V), NORTHWESTERLY ON THE ARC OF A TANGENT CURVE TO THE RIGHT, HAVING A RADIUS OF 15 FEET,
A CENTRAL ANGLE OF 52° 18' 52", A DISTANCE OF 13.70 FEET (CALLED A CENTRAL ANGLE OF 52° 17',

9.1.a
Packet Pg. 248 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto 081503\11725962v6
A-3
AN ARC LENGTH OF 13.69 FEET IN SAID 90785-V), AND NORTH 1° 34' 08" WEST (CALLED SOUTH 1° 29'
EAST IN SAID 90785-V), 77.56 FEET TO THE NORTHERLY LINE OF THE LANDS DESCRIBED IN

THE DEED

FROM TSURUKO NAKANISHI, A MARRIED WOMAN TO CLARKE AVENUE ASSOCIATES, A LIMITED PARTNERSHIP, DATED JUNE 11, 1964, AND RECORDED JUNE 11, 1964 IN BOOK 4729 OF

OFFICIAL
RECORDS OF SAN MATEO COUNTY AT PAGE 642 (31262-X); THENCE NORTH 87° 19' EAST

ALONG THE
NORTHERLY LINE OF THE LAST MENTIONED LANDS 504.20 FEET TO THE NORTHEASTERLY CORNER
THEREOF; THENCE ALONG THE EASTERLY LINE OF THE LANDS DESCRIBED IN SAID DEED TO CLARKE

AVENUE ASSOCIATES AND THE SOUTHERLY PROLONGATION OF SAID EASTERLY LINE SOUTH 1° 24’
EAST 321.71 FEET TO THE NORTHERLY LINE OF SAID LOT 14; THENCE NORTH 87° 31' EAST

ALONG THE
LAST MENTIONED LINE 22.70 FEET TO THE DIVIDING LINE BETWEEN LOTS 14 AND 15, AS

SHOWN ON
THE MAP ABOVE MENTIONED; THENCE ALONG SAID DIVIDING LINE SOUTH 1° 29' EAST 180.45

FEET TO

THE SAID NORTHEASTERLY LINE OF THE LANDS DESCRIBED IN SAID DEED TO STATE OF

CALIFORNIA,
FIRST ABOVE MENTIONED; THENCE NORTH 53° 53' WEST ALONG SAID NORTHEASTERLY LINE 658.47
FEET TO THE POINT OF BEGINNING.

APN: 063-492-350

9.1.a
Packet Pg. 249 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto 081503\11725962v6 B-1
Exhibit B
Form of Unconditional Will Serve Letter
[EAST PALO ALTO SANITARY DISTRICT LETTERHEAD]
June __, 2020
André Madeira
Senior Vice President
Light Tree Two, L.P., a California Limited Partnership
22645 Grand Street
Hayward, CA 94541
Subject: Will Serve Letter – 1805 East Bayshore Road, 185 (Existing and Net New) Units Dear Mr. Madeira:

This letter will serve as notice that your project at 1805 East Bayshore Road can be served by the East Palo Alto Sanitary District and can receive all available services from the District, pursuant to compliance with the District’s Code of General Regulations, and payment of all fees set forth in the Wastewater Service Agreement between the District and Light Tree Two, L.P., . We understand that Light Tree Two, L.P. is proposing to create 91 net new units.

We look forward to reviewing your project plans, when they become available. Furthermore, we look forward to ultimately issuing you a sewer connection permit, provided all District General Regulations are met. When plans are ready, please submit to the District for review in accordance with the District’s requirement that you submit an application for a permit for sewer connection. The plan check fee deposit is $800.00.

Please contact me at (650) 325-9021 if you have any questions.

Sincerely,
Sincerely,
____________________________________
Akintunde A. Okupe, M.B.A., P.E.

District General Manager and District Engineer

9.1.a
Packet Pg. 250 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto 081503\11725962v6 C-1
Exhibit C
Conceptual Opinion of Probable Project Cost for PWWF Improvements Notes
(1) Reserved.
(2) Quantities rounded to nearest 10 feet.

9.1.a
Packet Pg. 251 Attachment: Wastewater Services Agreement (2142 : Issues Concerning the Light Tree Affordable Housing Project and the East Palo Alto

CITY OF EAST PALO ALTO
Office of the City Council
East Palo Alto Government Center – 2415 University Avenue, East Palo Alto, CA 94303 – 650.853.3100 March 4, 2022
President Betsy Yanez
Board of Directors
East Palo Alto Sanitary District
901 Weeks Street
East Palo Alto Alto, CA 94303
Dear President Yanez and Board members:

I am writing this letter at the direction of the City Council. As you know the City of East Palo Alto and the East Palo Alto Sanitary District are currently involved with a 185- unit affordable housing development at 1805 E. Bayshore Road in the City being pursued by Light Tree Two, L. P. (“Light Tree”.) The existing 94 existing unit apartment complex will be rehabilitated by demolishing 37 existing apartments, renovation of the remaining 57 apartments and construction of 128 new apartments for a total of 185 units.

The City understands that, in 2020, Light Tree and the District entered into a Wastewater Services Agreement for the project. The agreement describes construction of sewer lines as set forth in Exhibit C to the agreement is attached here as Exhibit A.

The City also understands that Light Tree has fully paid to the District all of the financial obligations specified in the Wastewater Services Agreement. Therefore, to move the Light Tree project forward, the City recommends the following:

1. The project move forward with construction shown in segments A through 6 of the Exhibit.

2. The city will issue an encroachment permit for all work required in segments A through 6, and the California Environmental Quality Act clearance for that permit and work is documented in the Notice of Exemption filed by the District on March 23, 2021 pertaining to the “1805 East Bayshore Road Sewer Main Replacement” Project.

3. The District begin construction work on segments A through 6.

4. The California Environmental Quality Act environmental review of the construction and installation of the sewer lines in Segment 7 will be included in the California Environmental Quality Act environmental review for the District’s Trunk Line Project.

With completion of segments A through 6, 77% of the district system expansion will be brought online before the new units at Light Tree will be occupied thus preserving the project’s existing financing which includes a $20,000,000 Affordable Housing Sustainable Communities award.

9.1.b
Packet Pg. 252 Attachment: Letter from Mayor Abrica to the EPASD Board of Directors and General Manager dated March 4, 2022 (2142 : Issues Concerning At the next regular City Council meeting on March 15, 2022, The City will consider entering into a Memorandum of Understanding between the City and the District with reference to the above proposals. We respectfully request that the Board of Directors also place this matter on the agenda of your next regular meeting.

Both the City and District should receive significant benefits from the Light Tree project.

We look forward to working with you in bringing this project to successful completion.

Sincerely,
Ruben Abrica
Mayor
Attachment
Exhibit A
cc: EPASD Board of Directors
Akin Okupe, District Manager
City Councilmembers
Jaime Fontes, City Manager
Patrick Heisinger, Assistant City Manager

9.1.b
Packet Pg. 253 Attachment: Letter from Mayor Abrica to the EPASD Board of Directors and General Manager dated March 4, 2022 (2142 : Issues Concerning

EAST PALO ALTO

CITY COUNCIL

Property
Recommendation
Adopt a Resolution (Attachment 1) directing the City Manager to enter into a Memorandum of Understanding (MOU), subject to minor modifications approved by the Interim City Attorney, between the County of San Mateo (County) and City of East Palo Alto (City) to explore a real property exchange as further described in the staff report.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
On June 5, 2018, California voters approved Proposition (Prop.) 68, the California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access for All Act. The Statewide Parks Program (SPP) is a subset of Prop. 68 funds are intended for use by municipalities to revitalize existing facilities or construct additional facilities, thereby increasing recreational opportunities that enhance the health and wellness of Californians. These types of outdoor recreation features include, but are not limited to:
• Athletic fields
• Athletic courts
• Community gardens
• Dog parks
• Open space
• Performance venues
• Picnic areas

9.2 Packet Pg. 254
• Playgrounds and tot lots
• Trails
• Tracks and jogging loops
In July 2020, the State of California Department of Parks and Recreation, Office of Grants and Local Services (OGALS), announced the availability of up to $395 Million in Prop. 68 grant funds through the Statewide Park Development and Community Revitalization Program. The City prepared to submit an application package to OGALS prior to the December 14, 2020, deadline.

On October 26, 2020, staff presented to the Planning Commission, providing information about Prop. 68 and a proposed approach for a potential City grant application. During that meeting, the Planning Commission and community communicated a clear preference to update the City’s athletic facilities to provide safe places for the community to play. A majority of the community showed their support for improving the Martin Luther King Jr. (MLK) Park and expressed the desire to expand MLK Park by acquiring the County-owned parcel at 1266 Beech Street (Property).

Shortly following that public discussion, the State notified City staff that the proximity of MLK Park to the Ravenswood Preserve would impact the Prop 68. scoring, likely making the City’s application less competitive.

On November 5, 2020, in recognition of the County’s intent to develop affordable housing on the Property, staff presented the option of exchanging the Property for the City-owned parcel located at 2277 University Avenue. During a closed-session discussion, staff received direction from the City Council to approach the County to discuss options for the disposition of the Beech Street property.

On November 17, 2020, staff presented the City Council with an update on the Prop. 68 Program. After explaining the community’s interest in seeking Prop. 68. funding to improve MLK Park, as well as the likelihood that the City’s application would not be competitive due to the State’s scoring system, the City Council directed staff to develop a competitive application for Prop. 68 funding that would support the City’s efforts at an alternative site.

On January 23, 2021, the City Council held their annual Priority Setting Retreat to identify their key goals and objectives for Fiscal Year 2021-2022. Acknowledging the community will, the City Council added a workplan priority to proactively design the MLK Park. On March 16, 2021, the City Council adopted a Resolution establishing their priorities for FY 2021-2022, which included the design of MLK Park.

On May 18, 2021, the City Council adopted the Facilities Master Plan, inclusive of the specific goal to discuss the potential acquisition of the Beech Street property for the purposes of expanding MLK Park.

On July 20, 2021, the City Council adopted a Resolution selecting Verde Design as the lead consultant to complete the master plan for MLK Park, for the contract cost of $271,713.60.

In July 2021, City and County representatives met to discuss several items of joint interest, including the potential acquisition of the Property. City representatives offered to conduct analysis on the 2277 University Avenue parcel, as a means of facilitating further consideration

9.2 Packet Pg. 255
of a possible exchange.

On February 2, 2022, City and County representatives met again to discuss several items, including the Property. During that meeting, both parties agreed that to enter into a Memorandum of Understanding (MOU) regarding future use of the Property and a possible exchange of parcels. The County representatives agreed to draft the MOU and has since been working with City staff and the City’s Interim City Attorney to finalize the draft.

The purpose of this staff report is to provide the City Council with an opportunity to ask questions or provide early feedback regarding the proposed MOU.

The MOU will be placed on the City Council Agenda on March 15, 2022, for consideration.

Analysis
Key Provisions of the MOU
Item Term
Properties 1266 Beech Street (County owned)
2277 University Avenue (City owned)
Duration One year from the date the MOU is fully executed Extension Provision One-six-month extension of the MOU Term at the sole discretion of the City Manager, subject to County approval Due Diligence City and County agree to partner on due-diligence items (e.g. appraisals, environmental review, financial feasibility) The complete MOU is attached to the Resolution as Exhibit A.

Next Steps
County staff has indicated that they will seek approval by the Board of Supervisors of the MOU on April 19, 2022.

At the conclusion of the MOU term, or at a time with both the City and County mutually agree to do so, both parties would consider entering into a formal agreement to effectuate the land swap. However, because the MOU addresses only preliminary aspects of the transaction, there is a chance that during the MOU term either the City or Council decide not to move forward with the exchange.

Fiscal Impact
At this time, there is no fiscal impact to the City associated with this report.

9.2 Packet Pg. 256
Alto.

Attachments

1. Resolution

2. Exhibit A

9.2 Packet Pg. 257
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

AUTHORIZING THE CITY MANAGER TO ENTER INTO A MEMORANDUM OF

UNDERSTANDING BETWEEN THE COUNTY OF SAN MATEO AND CITY OF EAST

PALO ALTO TO EXPLORE A REAL PROPERTY EXCHANGE
WHEREAS, on January 23, 2021, the City Council held their annual Priority Setting Retreat to identify key goals and objectives for Fiscal Year 2021-2022, which included acknowledging the community interests, the City Council added a workplan priority to proactively design the Martin Luther King (MLK) Park; and WHEREAS, on March 16, 2021, the City Council adopted a Resolution establishing priorities for FY 2021-2022, which included the design of MLK Park; and WHEREAS, on May 18, 2021, the City Council adopted the Facilities Master Plan, inclusive of the specific goal to discuss potential acquisition of the County owned property located at 1266 Beech Street (Property) for the purposes of expanding MLK Park; and
WHEREAS, in July 2021, City and County representatives met to discuss several items of joint interest, including the potential acquisition of the Property, and City representatives offered to conduct analysis on the 2277 University Avenue parcel, as a means of facilitating further consideration of a possible exchange; and WHEREAS, on February 2, 2022, City and County representatives met again and agreed to enter into a Memorandum of Understanding (MOU) regarding future use of the Property and a possible exchange of parcels.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO hereby authorizes the City Manager to enter into a Memorandum of Understanding (Exhibit A), subject to minor modifications approved by the Interim City Attorney, between the County of San Mateo (County) and City of East Palo Alto (City) to explore a real property exchange.

PASSED AND ADOPTED this 15th day of March 2022, by the following vote:

AYES:

NOES:

ATTACHMENT 1

9.2.a
Packet Pg. 258 Attachment: Resolution (2147 : Council consideration of a MOU with the County regarding the Beech St. Property) ABSENT:

ABSTAIN:

SIGNED:
________________________________
Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:
_______________________________ _____________________________ James Colin, Acting City Clerk Valerie J. Armento, Interim City Attorney

9.2.a
Packet Pg. 259 Attachment: Resolution (2147 : Council consideration of a MOU with the County regarding the Beech St. Property) MOU between County of San Mateo and City of East Palo Alto 1 MEMORANDUM OF UNDERSTANDING BETWEEN COUNTY OF SAN MATEO AND CITY OF EAST PALO

ALTO REGARDING A POTENTIAL REAL PROPERTY EXCHANGE
This MEMORANDUM OF UNDERSTANDING (“MOU”), entered into this _______ day of ____, 2022 (the “Effective Date”), by and between the County of San Mateo (“County”) and the City of East Palo Alto (“City”) (each a “Party”, and collectively, the “Parties”) sets forth the respective responsibilities of each Party related to the Parties’ consideration of a potential real property exchange.

RECITALS
WHEREAS, County is the owner of certain real property located at 1266 Beech Street, in the City of East Palo Alto, State of California, consisting of approximately 1.85 acres, designated as San Mateo County Assessor’s Parcel Number 063-600-060, hereinafter referred to as the “County Property;” and WHEREAS, City is the owner of certain real property in the City of East Palo Alto, State of California, consisting of approximately 0.36 acres, located at 2277 University Avenue, between Runnymede Street and Bell Street, designated as San Mateo County Assessor’s Parcel Number 063-302-460, hereinafter referred to as the “City Property”; and
WHEREAS, City wishes to construct or cause the construction an expansion of Martin Luther King, Jr.

Park (“MLK Park”) on the County Property to serve the recreation needs of the local area (“Proposed City Use”); and
WHEREAS, County wishes to cause the construction of affordable housing on the City Property by issuing a request for proposals (“RFP”) and selecting an affordable housing developer to which County would ground lease the City Property for the construction and operation of affordable housing (“Proposed County Use”); and
WHEREAS, the Zoning and General Plan land use designations of the City Property support a highdensity residential use at the site, and City supports the Proposed County Use of constructing highdensity affordable housing at the site; and WHEREAS, the Parties are committed to exploring a potential exchange of the County Property and the City Property to facilitate the Proposed City Use of County Property and Proposed County Use of City Property (“Property Exchange”); and
WHEREAS, California Government Code section 25365(a) authorizes counties, by a four-fifths vote of the Board of Supervisors, to exchange real property with a city upon the terms and conditions as are agreed upon, where the real property to be acquired is required for County use; and WHEREAS, California Government Code section 37351 authorizes cities to exchange real property as is necessary or proper for municipal purposes; and
WHEREAS, pursuant to the terms and conditions set forth herein, each Party wishes to complete due diligence activities to determine whether or not the Property Exchange is desirable.

9.2.b
Packet Pg. 260 Attachment: Exhibit A (2147 : Council consideration of a MOU with the County regarding the Beech St. Property) MOU between County of San Mateo and City of East Palo Alto 2 THEREFORE, the Parties agree to be bound by the following terms in this MOU:

1. Term and Termination
Subject to compliance with all terms and conditions, the term of this MOU shall be from ______, 2022 through ______, 2023 (“MOU Term”). This MOU may be terminated by either Party upon thirty (30) days written notice.

2. Due Diligence Tasks

2.1 Overview. The Parties shall use reasonable, good faith efforts to accomplish the due diligence tasks set forth in this Section during the MOU Term.

2.2 Intent of MOU. Through this MOU, the Parties are intending to commit to undertaking certain due diligence activities to determine whether the Property Exchange is viable. Subsequent to the completion of due diligence activities, each Party shall assess its respective interest in the Property Exchange.

2.3 Delivery of Materials. Each Party agrees to exchange non-privileged information and documents in its possession, which may be useful in evaluating the Property Exchange, with the other Party, This includes, but is not limited to, site acquisition history, site funding history, site development history, site proposed development history, site use history, site maintenance and rehabilitation history, and a history of code enforcement actions, nuisances and/or any known illegal activities at the site.

2.4 Appraisals. Upon mutual agreement between City and County with respect to the selection of an appraiser, an appraisal of the County Property and City Property shall be conducted to determine the valuation of each site. Should the appraisals reflect a difference in the valuation of City Property and County Property, City and County shall discuss possible ways to negotiate the Property Exchange with an existing difference in valuation.

2.5 Environmental Review. During the MOU Term, County and City shall review existing environmental documentation related to the City Property and the County Property, such as environmental assessments and feasibility studies, to determine whether (1) City’s Proposed Use and County’s Proposed Use are achievable based on existing environmental conditions of the County Property and City Property, and (2) additional environmental reports are necessary for County Property and/or City Property in order to comply with the California Environmental Quality Act (“CEQA”), the National Environmental Policy Act (“NEPA”), and any other applicable laws or regulations.

2.6 Financial Feasibility. County and City shall engage in efforts to determine whether Proposed County Use and Proposed City Use are financially feasible.

2.7 Existing Uses. County and City to investigate whether there would be any impacts, such as residential or economic displacement, if the Proposed County Use and the Proposed City Use were put into effect, and to the extent such impacts exist, how they will be addressed and/or mitigated.

9.2.b
Packet Pg. 261 Attachment: Exhibit A (2147 : Council consideration of a MOU with the County regarding the Beech St. Property) MOU between County of San Mateo and City of East Palo Alto 3 2.8 Title Reports. County shall cause a reputable title company to issue a preliminary title report for County Property, and City shall cause a reputable title company to issue a preliminary title report for City Property. County and City shall review title report for City Property and title report for County Property to identify any impacts on Proposed City Use and Proposed County Use.

2.9 County and City Costs Associated with the MOU. Each Party shall be responsible to pay its respective costs and expenses (including legal fees, consultant costs and staff time) incurred in undertaking due diligence tasks set forth in this section and fulfilling its respective obligations under this MOU, including but not limited to the costs of property appraisals, title reports, and the use of economic consultants used to evaluate the financial feasibility of a proposed use of the properties that are the subject of this MOU.

2.10 Schedule of Performance. Subsequent to the execution on this MOU, the Parties agree to develop schedule for completing due diligence tasks set forth in this section, including establishing a date for identifying an appraiser, date(s) for obtaining appraisals of the City Property and the County Property, and date(s) for completing an environmental review of the City Property and the County Property.

3. General Provisions

3.1 Authorizations. The County Manager of the County of San Mateo and the City Manager of the City of East Palo Alto, or their respective designees, are authorized to modify the MOU and its terms, resolve conflicts, and/or otherwise grant approvals on behalf of their respective agencies, provided such approvals are not otherwise vested in the authority of the agency’s governing board. All such modifications and approvals shall be in writing and signed by both Parties.

3.2 Mutual Indemnification. Pursuant to Government Code Section 895.4, each Party agrees to fully indemnify, defend, and hold the other Party (including its appointed and elected officials, officers, employees, and agents) harmless and free from any damage or liability imposed for injury (as defined by Government Code Section 810.8) or liability occurring by reason of the negligent acts or omissions or willful misconduct of the indemnifying Party, its appointed or elected officials, officers, employees, or agents, under or in connection with any responsibility, authority, or jurisdiction delegated to such Party under this MOU. Neither Party, nor any appointed or elected official, officer, employee, or agent thereof, shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of the other Party, its appointed or elected officials, officers, employees, or agents, under or in connection, with any authority, responsibility, or jurisdiction delegated to such other Party under this MOU.

3.3 Choice of Law; Venue. The formation, interpretation and performance of this MOU shall be governed by the laws of the State of California. Venue for all litigation relative to the formation, interpretation and performance of this MOU shall be in San Mateo County Superior Court.

9.2.b
Packet Pg. 262 Attachment: Exhibit A (2147 : Council consideration of a MOU with the County regarding the Beech St. Property) MOU between County of San Mateo and City of East Palo Alto 4 3.4 Notices. Any notice to be given to the Parties shall be in writing and shall be served, either personally or by mail, to the following:

In case of the County, to:

Name/Title: Michael Callagy, County Manager
Address: 400 County Center, 1st Floor, Redwood City, CA 94063 In the case of the City, to:

Name/Title: Jaime M. Fontes, City Manager
Address: 2415 University Avenue, East Palo Alto, CA 94303 Such notices shall be served by depositing them addressed as set out above, postage prepaid, in the U.S. mail, reliable overnight courier, or by personal delivery. The date of mailing, or in the event of personal delivery, the date of delivery shall constitute the date of service.

3.5 Construction. All section headings are for reference only and shall not be considered in construing this MOU.

3.6 Severability. If any provision of this MOU shall be held to be invalid, void or unenforceable, the validity, legality or enforceability of the remaining portions of this MOU shall not in any way be affected or impaired thereby.

3.7 Entire Agreement. This MOU sets forth the entire agreement between the Parties, and supersedes all other oral or written provisions. This MOU may be modified only as provided in Section

3.1, “Authorizations.”

3.8 Cooperative Drafting. This MOU has been drafted through a cooperative effort of all the Parties, and all the Parties have had an opportunity to have the MOU reviewed and revised by legal counsel. No Party shall be considered the drafter of this Agreement, and no presumption or rule that an ambiguity shall be construed against the Party drafting the clause shall apply to the interpretation or enforcement of this MOU.

3.9 Representation re Authority of Parties/Signatories. Each person signing this MOU represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this MOU.

Each Party represents and warrants to the other that the execution and delivery of the MOU and the performance of such Party’s obligations hereunder have been duly authorized and that the MOU is a valid and legal agreement binding on such Party and enforceable in accordance with its terms.

3.10 No Third-Party Beneficiaries. Except as expressly set forth herein, nothing contained in this MOU is intended to or shall be deemed to confer upon any person, other than the Parties, any rights or remedies hereunder.

3.11 Debt Limitation. The Parties are subject to laws or policies which limit their ability to incur debt in future years. Nothing in this MOU shall constitute an obligation of future legislative bodies of the County or City to appropriate funds for the purpose of this MOU.

9.2.b
Packet Pg. 263 Attachment: Exhibit A (2147 : Council consideration of a MOU with the County regarding the Beech St. Property) MOU between County of San Mateo and City of East Palo Alto 5 3.12 Conflict of Interest. Each of the Parties shall avoid all conflicts of interest in the performance of this MOU and shall immediately notify the other Parties should a conflict of interest arise that would prohibit or impair its ability to perform under this MOU.

3.13 Disputes. The Parties agree that, with regard to all disputes or disagreements arising under this MOU that are not resolved informally at the staff level after a good faith attempt, the Parties may, at their sole and mutual discretion, agree to engage in mediation, and the costs of any such mediation shall be divided equally between the Parties.

3.14 Non-Discrimination. The Parties will not discriminate, in any way, against any person based on sex, pregnancy, childbirth or related medical conditions, race, veteran status, religion, color, national origin or ancestry, physical or mental disability, medical condition, marital status, age, gender (including gender identity and gender perception), sexual orientation, use of family medical leave, genetic testing, or any other basis protected by federal or state law. This policy shall apply to all employment practices.

3.15 Counterparts. This MOU may be executed in counterparts, each of which will be deemed an original and all of which together will constitute a complete agreement. Moreover, this MOU may be signed by electronic signature and copies of original signatures shall be treated the same as the originals.

AGREED:
__________________________________ ________________
Michael Callagy, County Manager
County of San Mateo DATE
________________
Jaime M. Fontes, City Manager,
City of East Palo Alto DATE

9.2.b
Packet Pg. 264 Attachment: Exhibit A (2147 : Council consideration of a MOU with the County regarding the Beech St. Property)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: March 15, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Karen Camacho, Housing Project Manager
Rachel Horst, Housing and Economic Development Manager
SUBJECT: Potential Ballot Measure for Affordable Housing Revenue Recommendation
Receive the report and provide staff direction on potential revenue sources for affordable housing.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 2: Enhance Economic Vitality
Priority No. 3: Increase Organizational Effectiveness and Efficiency Priority No. 6: Create a Healthy and Safe Community
Background
City Goal of Establishing a Sustainable Affordable Housing Revenue Source For the last three years, City Council has prioritized a sustainable revenue source to support the City’s affordable housing activities. In particular, the City sought additional revenue to support housing preservation activities as part of its two-year Partnership for the Bay’s Future Challenge Grant for Housing Protection and Preservation (“Challenge Grant”), which began in January 2020.

Establishing a sustainable revenue source for housing preservation was one of the three main goals of the Challenge Grant scope of work, in addition to launching a preservation model centered on a Community Land Trust and designing and supporting the passage of a local preservation ordinance like a Tenant Opportunity to Purchase Act/Community Opportunity to Purchase Act.

9.3 Packet Pg. 265
At recent City Council meetings, East Palo Alto residents have also expressed strong support for City Council to explore funding to help with the City’s affordable housing activities.

Measure V – 2020 Transient Occupancy Tax Ballot Measure On February 18, 2020, City staff presented a report to City Council detailing potential revenue sources to support the City’s Challenge Grant work. The staff report included a comprehensive analysis from David Rosen & Associates (“DRA”) titled “Housing Trust Fund Revenue Sources,” which is provided as Attachment 2. The City Council directed staff to return with more information on a potential adjustment of the City’s Transient Occupancy Tax (“TOT”).

On July 21, 2020, via Resolution No. 99-2020, the City Council unanimously voted to order a submission of a measure amending Chapter 3.68 of the East Palo Alto Municipal Code, to increase the Transient Occupancy Tax (TOT) rate from 12% to 14% over a two-year period, with a 1% increase in 2022 and another 1% increase in 2023, generating an estimated $195,000 the first year and $390,000 per year thereafter to fund affordable housing development, acquisition and rehabilitation activities.

In November 2021, the ballot measure (“Measure V”) received a 64.66% vote in support but fell just short of the required two-thirds vote to pass.

City Council 2022 Priority & EPA OPA
On January 8, 2022, at the City Council Priority Setting for Fiscal Year 2022-2023, City Council once again prioritized a potential ballot measure for affordable housing funding. In addition, at a recent public hearing on the East Palo Alto Opportunity to Purchase Act Ordinance (“EPA OPA”) on January 25, 2022, the City Council directed staff to engage DRA to conduct an updated analysis on potential housing revenue sources and provide new recommendations building on the “Housing Trust Fund Revenue Sources” report.

On January 18, 2022, the City Council adopted Resolution No. 5081, authorizing the City Manager to execute an amendment to an existing contract with DRA to provide an update to the 2020 report with additional recommendations on potential funding sources that may be used to support housing preservation and other affordable housing activities. The memorandum (“DRA Report”) is provided in Attachment 1.

During the public hearing on EPA OPA on March 1, 2022, City Council continued to express interest in creating funding sources to support families in preserving their households and creating affordable homeownership opportunities.

The purpose of this staff report is to present this complement to the 2020 DRA “Housing Trust Fund Revenue Sources” report for City Council review and to seek City Council direction on a potential revenue source to support affordable housing activities, including actions which may require placing a measure on the November 2022 ballot for voter approval.

Analysis
Update to 2020 DRA Report

9.3 Packet Pg. 266
The DRA Report evaluates additional options for revenue generation through modification of existing general and special taxes1 and new taxes based on projected revenue generation.

The report recommends consideration of the following three areas:

1. Increase and modification of City’s Gross Receipts Tax (“Modified GRT”)2

2. Increase and modification of Transient Occupancy Tax (“Modified TOT”)

3. New parcel tax on residential properties (“Parcel Tax”) Modified Gross Receipts Tax
The City currently levies a GRT on businesses in East Palo Alto, including rental properties of up to five units, at rates shown in Table 1 of Attachment 1. This is referred to as the Business License Tax. For residential rental properties of five or more units only, the City applies a GRT, referred to as Measure O (“Measure O GRT”), currently at a rate of 1.5%. These taxes are shown in the chart below:

Current Gross
Receipts Tax Applicability Tax
Business License
Tax
Rental residential
properties with <5 units
Graduated dollar amount
based on gross receipts (see
Table 1 in Attachment 1)
Measure O Rental residential
properties with 5+ units 1.5%
The DRA Report considers modifications to the GRT that include 1.) extending the Measure O GRT to apply to rental residential properties of fewer than five units owned by non-residents;

2.) removing the 10-year delay on applying the tax to new developments; and 3.) increasing the Measure O GRT to 2% or 2.5%. The estimated increase in revenue from implementing the above is shown in Tables 3 and 5 of Attachment 1.

Modified Transient Occupancy Tax
The DRA Report reviewed the City’s current TOT of 12% and considered the potential increase in revenues from increasing the TOT to 14%, in addition to applying the TOT to shortterm rentals. The anticipated increase in revenue from increasing the TOT is shown in Table 7 of Attachment 1. Due to lack of existing data on short-term rentals in East Palo Alto, DRA was unable to calculate the increase in revenue from applying the TOT to those properties.

Parcel Tax
The DRA report considered levying a new parcel tax, a flat-rate tax, on all residential parcels, at the rate of $100 per parcel. Table 8 of Attachment 1 shows estimated revenue from this Parcel Tax.

Summary of Estimated Revenue
The following table summarizes potential revenue from each of the above options:
1 Special taxes require 2/3 voter approval. General taxes (or increases thereof) require a majority vote. 2 The City’s current GRT, also known as “Measure O,” is levied on properties of five or more units.

9.3 Packet Pg. 267
Comparison of Potential Increase in Annual Revenue
Modified Gross
Receipts Tax
Modified Transient
Occupancy Tax
Parcel Tax
$400,000 raising
existing Measure O to

2.5%
$115,000 $458,100
$1,150,000 extending
Measure O to <5-unit
rental properties owned
by non-EPA residents +

2.5%
Per the DRA Report, any new or increased GRT as a general tax requires a majority vote of the electorate. To dedicate a GRT revenue for special purposes, such as affordable housing, would require two-thirds voter approval.

Initial Legal Review
The three options presented in the DRA report were reviewed by the Interim City Attorney.

Next Steps
City Council may direct staff to pursue a revenue source that would require placement on the November 8, 2022 ballot. City Council may also direct staff to look further into pursuing the regulation of short-term rentals in a Gross Receipts Tax if it wishes to further explore the Modified Gross Receipts Tax option. If directed, staff will return to City Council on April 19 for final direction.

If the City Council directs staff to pursue a tax of any type, voter approval via a ballot measure is required. The following is a timeline to add a ballot measure in this year’s election.

City Council and County Timeline for Ballot Measure
April 19, 2022 Council discuss and provide direction on potential Ballot Measure provisions. Council also creates subcommittee to provide further input.

May 2022 Staff return with potential Ballot Measure provisions for more direction on particular questions.

May 2022 City Council approves ballot measure.

June 2022
(July 2022 the latest)
Council adopts resolutions ordering submission of
measure.

August 12, 2022 Deadline to submit Resolution is 88 days before election day
August 17, 2022 Deadline to submit an Amendment is 83 days before election day
August 19, 2022* Deadline to submit Argument in Support of measure August 29, 2022* Deadline to submit Impartial Analysis
November 8, 2022 Election Day
* These are the San Mateo County Assessor-County Clerk-Recorder's Office’s recommended

9.3 Packet Pg. 268
deadlines. However, City Council may decide on its own deadlines and set them in the Resolution to notify the County.

Additional Staff Capacity through Breakthrough Grant
On February 1, 2022, the City of East Palo Alto was announced as one of 11 Partnership for the Bay’s Future 2022-2024 Breakthrough Grant recipients. Breakthrough Grant jurisdictions receive a Breakthrough Grant Fellow for a two-year period to implement the grant scope.3 The Breakthrough Grant Fellow is intended to provide added staffing capacity to support the City over the next two years, and may support fund development and resource building for affordable housing activities. This includes any work associated with a potential ballot measure.

Fiscal Impact
The information in this staff report is for information only. If the City Council elects to pursue any funding source, there may be staffing or other considerations that may have a fiscal impact on the City. Staff would return with estimated revenues based on the option that City Council chooses to pursue.

Public Notice
The public was provided notice of this agenda item by making the agenda and report available on the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.

Attachments

1. David Rosen & Associates 2022 Report

2. David Rosen & Associates 2020 Housing Trust Fund Revenue Sources Report 3 The intended result of these efforts is fewer residents at imminent risk of displacement, more permanently affordable rental housing, and more housing stock in East Palo Alto in the hands of East Palo Alto residents.

9.3 Packet Pg. 269
City of East Palo Alto
Evaluation of Selected Housing Trust
Fund Revenue Source
March 9, 2022

9.3.a
Packet Pg. 270 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources PREPARED FOR :

City of East Palo Alto
2415 University Avenue
East Palo Alto, CA 94303
PREPARED BY:

David Paul Rosen & Associates
1330 Broadway, Suite 937
Oakland, CA 94612
510-451-2552
510-451-2554 Fax
[email protected]
www.draconsultants.com
3941 Hendrix Street
Irvine, CA 92614
949-559-5650
949-559-5706 Fax
[email protected]
www.draconsultants.com

9.3.a
Packet Pg. 271 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources Table of Contents

1.0 Summary and Recommendations .............................................................. 1

1.1 Gross Receipts Business License Tax..................................................... 1

1.2 Transient Occupancy Tax ...................................................................... 2

2.3 Parcel Tax

2.0 Business License Tax.................................................................................. 2

2.1 Existing Gross Receipts Business License Tax in East Palo Alto ........... 2

2.2 Existing East Palo Alto Gross Receipts Tax on Rental Properties of Five or More Units .............................................................................. 4

2.3 Gross Receipts Tax on Rental Properties in Other Bay Area Cities..... 4

2.4 Potential East Palo Alto Gross Receipts Tax on Residential Properties with Less than Five Units................................................... 6

3.0 Transient Occupancy Tax ........................................................................... 7

3.1 Existing Transient Occupancy Tax in East Palo Alto ............................. 8

3.2 Transient Occupancy Tax on Short-Term Rentals................................. 8

3.3 Potential Increase in Transient Occupancy Tax Rate............................ 9

4.0 Parcel Tax.................................................................................................10

4.1 Existing Parcel Tax on Large Commercial Properties.......................... 10

4.3 Potential Parcel Tax on Residential Parcels........................................ 11

9.3.a
Packet Pg. 272 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources List of Tables
1 Gross Receipts Business License Tax Rates, City of East Palo Alto
3 2 Annual General Fund Revenues from Gross Receipts
Business License Tax, City of East Palo Alto
4 3 Business License Tax from Multifamily Properties with Five or More Units and Potential Increase, City of East Palo Alto
5 4 Gross Receipts Tax on Residential Rental Properties, Selected Bay Area Cities
7 5 Potential Revenue from Gross Receipts Business
License Tax on Residential Rental Properties Owned by
Non-Residents
8 6 Budgeted Annual General Fund Revenues from
Transient Occupancy Tax
10 7 Potential Increase in Transient Occupancy Tax Revenue from Increasing the Rate from 12% to 14%
11 8 Potential Annual Revenue from a $100 Flat Rate Parcel Tax on Residential Parcels
13 9.3.a
Packet Pg. 273 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) Evaluation of Selected Housing Trust Fund Revenue Sources March 9, 2022 1 1.0 Summary and Recommendations
In 2019, the City of East Palo Alto requested DRA to evaluate various funding measures that would provide an ongoing, sustainable source of funding for affordable housing in the City. Recently, the City asked DRA to update its report with additional recommendations.

This is a supplemental document to the comprehensive report provided in January, 2020.

Specifically, DRA provided additional evaluation of the following three potential revenue sources for the City’s Affordable Housing Trust Fund (AHTF):
• Potential modifications to the City’s Measure O business license tax (which is a gross receipts tax, or GRT) on rental properties with five or more units, including:
o Increasing the tax rate from 1.5% to 2.0% or 2.5%;
o Eliminating the exemption for rental properties during the first ten years after the issuance of a certificate of occupancy;
o Applying a gross receipts tax to rental properties with less than five units. • Potential increases to the transient occupancy tax (TOT). • A parcel tax on residential properties in the City.

As described more fully in DRA’s 2020 report, new general taxes, or tax increases above prior limits, require approval from a majority of voters. A city or county tax dedicated to a specific purpose qualifies as a special tax, requiring a two-thirds vote of the electorate.

Non-dedicated taxes require a simple majority vote. This report describes DRA’s analysis of the above three revenue options to capitalize the HTF, including projections of potential revenue generation, as data permit.

9.3.a
Packet Pg. 274 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 2 DRA’s recommendations are as follows:

1.1 Gross Receipts Tax
a. Increase the GRT rate on rental properties with five or more units to 2.5%. DRA estimates that an increase in the GRT tax on multifamily properties of 5 or more units from 1.5% to 2.5% could generate close to $400,000 in additional revenue per year (see Table 3). Raising the rate to 2.0% would generate an increase of half that much.
b. Eliminate the exemption for rental properties during the first ten years after the issuance of a certificate of occupancy. We are not aware of other local GRT’s that exempt new businesses, rental housing or others. We do not believe that a tax of

1.5% to 2.5% is of sufficient magnitude to discourage new rental housing development. Section 5.08.125 D of the City’s municipal code provides an avenue for entities subject to the tax to seek a hardship exemption due to exceptional circumstance.
c. Broaden the GRT to apply to rental properties with fewer than 5 units. The Cities of Berkeley and Oakland apply their GRT to rental properties of all sizes. DRA estimates that a GRT applied to rental properties of less than 5 units could raise approximately $1.15 million per year (see Table 5).

1.2 Transient Occupancy Tax
a. Increase the TOT rate from 12% to 14%. East Palo Alto’s TOT is below the upper limit on typical TOT rates. Increasing the TOT rate from 12% to 14% would raise approximately $479,000 annually based on the TOT raised in 2019, or $115,000 annually based on the more constrained TOT revenue the City budgeted for 2021 (see Table 7). Hotel occupancies plunged at the start of the COVID-19 pandemic and recovery of hotel occupancy rates in the region has been slow, resulting in the lower TOT revenues in the last several years.
b. Consider the feasibility and cost/benefit of applying the TOT to short-term rentals in East Palo Alto. Other Bay Area communities have instituted such a tax. DRA has insufficient information on short term rentals in East Palo Alto to estimate the potential revenue generation in a TOT on short-term rentals.

9.3.a
Packet Pg. 275 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 3

1.3 Parcel Tax on Residential Properties
a. Consider a parcel tax on residential parcels. A tax of $100 per parcel per year would generate an estimated $458,000 in annual revenue.

2.0Gross Receipts Business License Tax

2.1 Existing Gross Receipts Business License Tax in East Palo Alto The City of East Palo Alto levies a gross receipts business license tax on a range of businesses in East Palo Alto. Table 1 summarizes the gross receipts business license tax applied to all businesses in East Palo Alto except owners of five or more rental units, which is discussed separately below.

Table 1
Business License Tax Rates
City of East Palo Alto
Annual Gross Receipts Range Tax
-- $1,000 $50
$1,001 $100,000 $125
$100,001 $250,000 $250
$250,001 $500,000 $500
$500,001 $10,000,000 $1 for each $1,000 of gross receipts $10,000,001 And up $10,000 + $0.50 for each $1,000 of gross receipts above $10,000,001
Source: City of East Palo Alto 2022 Business License Renewal, Instructions for Completing Declaration; DRA.

9.3.a
Packet Pg. 276 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 4 Table 2 summarizes budgeted annual revenues from the gross receipts business license tax in East Palo Alto for FY 2019/20 through FY 2021/22.

Table 2
Annual General Fund Revenues from Business License Tax
City of East Palo Alto
FY 2019/2020 to FY 2021/22
FY 2019/2020
Actual
FY 2020/21
Budget
FY 2021/22
Budget
$1,585,840 $975,000 $1,280,000
Source: City of East Palo Alto FY 2021/22 Adopted Budget; City of East Palo Alto; DRA.

2.2 Existing East Palo Alto Gross Receipts Business License Tax on Rental Properties of Five or More Units
In 2016 East Palo Alto voters passed Measure O, with 77.5% approval, authorizing a tax equal to 1.5% of gross rental receipts on the owners of five or more rental units. The tax is a general tax, but text of the measure emphasized the City’s proposed use of funds for housing-related purposes. The Measure O business license tax may not be passed on to tenants. It does not apply to any units during the first 10 years after a certificate of occupancy is issued. Anyone leasing less than five units, nonprofit operators of affordable housing, Section 8 units, or below market rate units with deed restrictions are exempt.

Table 3 summarizes the annual business license tax collected under Measure O from FY 2018/19 through February, 2022 at the existing 1.5% tax rate. The table also shows DRA’s estimates of total annual revenues from the Measure O business license tax at increased tax rates of 2.0% and 2.5%, respectively, as well as the annual increase in revenues achieved by going to these higher rates.

9.3.a
Packet Pg. 277 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 5 Table 3
Annual General Fund Revenues from Measure O Business License Tax And Potential Revenues from Increase in Tax Rate
City of East Palo Alto
FY 2019/2020 to FY 2021/22
FY 2018/2019 FY 2019/2020 FY 2020/21
FY 2021/22
(as of
2/18/22)

1.5%1
(Actual) $599,000 $600,300 $546,700 $552,200

2.0%
(Estimate) $798,667 $800,400 $728,933 $736,267

2.5%
(Estimate) $998,333 $1,000,500 $911,167 $920,333
Increase from

1.5% to 2.0% $199,667 $200,100 $182,233 $184,067
Increase from

1.5% to 2.5% $399,333 $400,200 $364,467 $368,133
1 Actual figures at current 1.5% tax rate are rounded. For the past three years, the City has been collecting from about 32 owners/property management companies.

Source: City of East Palo Alto FY 2021/22 Adopted Budget; City of East Palo Alto; DRA.

2.3 Gross Receipts Taxes on Rental Properties in Other Bay Area Cities DRA reviewed the business license tax requirements on rental properties in other Bay Area cities. The City of San Jose does not charge a gross receipts tax but charges a business license tax on all rental units on a sliding scale based on the number of housing units.1 The cities of Berkeley, Oakland and San Francisco levy gross receipts business license taxes (GRTs) on rental properties, as summarized in Table 4.
1 The base tax for 1 to 2 units is $207, with an incremental tax of up to $28 per unit for projects with 500 or more units and an overall project cap of approximately 166,300.

9.3.a
Packet Pg. 278 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 6 • Oakland charges the same GRT rate (1.395%) for all residential rental properties. • In November, 2016, Berkeley voters passed Measure U1 establishing an enhanced business license tax on owners of properties with 5 or more rental units. Starting in 2018, Berkeley charges two rates, with a higher rate (2.880%) for properties with five or more housing units and a lower rate (1.081%) for smaller properties. The City estimates the revenue generated from the measure has the potential to create roughly 400 affordable homes in Berkeley over the next 10 years and also fund emergency rental assistance.
• Starting in 2014, San Francisco transitioned to a gross receipts tax for all business activities, which was to be phased in over five years with incremental increases in the GRT. Proposition F, approved by voters in November 2020, became effective January 1, 2021 and completes the City’s transition away from payroll taxes. San Francisco’s tax rate is on a sliding scale by gross receipts and is phased in over the 2021 to 2024 tax years.
o Small businesses with less than $2,000,000 in San Francisco gross receipts (this threshold is adjusted annually for inflation) are exempted from the GRT. o A residential landlord is considered a “small business enterprise” in San Francisco in terms of the exclusion from the GRT if and only if the landlord leases fewer than four units in any individual building. o Lessors of residential real estate may exclude from gross receipts 50% of the total amount received from the rental of real property to tenants in occupancy at any location in San Francisco that is subject to limits on rent increases.

9.3.a
Packet Pg. 279 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 7 Table 4
Gross Receipts Tax on Residential Rental Properties
Selected Bay Area Cities
Tax Rate as % of Gross
Receipts
Berkeley Rental Properties with 5+ Units
Rental Properties with <5 Units

2.880%

1.081%
Oakland All Rental Properties 1.395%
San Francisco1 Rental Properties with 4+ Units
With Gross Receipts up to $5M
With Gross Receipts greater than $5M

0.442%

0.465% 1
For tax year 2024, if certain thresholds are met. Rates for 2021 tax year are approximately 90% of the 2024 rate and are gradually increased during tax years 2022 and 2023 if certain thresholds are met.

Source: Cities of Berkeley, Oakland and San Francisco; DRA.

2.3 Potential East Palo Alto Gross Receipts Business License Tax on Residential Properties with Less than Five Units
The City of East Palo Alto is considering levying a gross receipts business license tax on rental residential properties with fewer than five rental units in East Palo Alto. According to analysis of PropertyRadar data by City staff, the City has approximately 1,434 residential parcels owned by non-residents of the City, broken down as follows:

Single-Family Residential (SFR) Parcels 1,118
Multi-Family Residential (MFR) Parcels1 175
Other Residential Parcels 141
Total Parcels Owned by Non-Residents 1,434
DRA’s analysis of the same data set estimates that there are as many as 30 multi-family parcels with 5 or more units, leaving roughly 145 multifamily residential (MFR) parcels with fewer than 5 units that are owned by non-residents. DRA’s analysis of the PropertyRadar data estimates an average of 2.60 units per parcel for MFR parcels with two to four units.

According to RentCafe.com, the average apartment rent in East Palo Alto is $2,700 as of January, 2022. This rent may underestimate the average rent for single-family (SFR) rental 1 Includes parcels with more than two units, excluding condos or townhomes.

9.3.a
Packet Pg. 280 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto March 9, 2022
Evaluation of Selected Housing Trust Fund Revenue Sources 8 homes, which tend to be larger than multi-family units. DRA did not estimate GRT revenue from the 141 “other residential parcels” owned by non-residents.

Based on DRA’s estimates, summarized in Table 5, a GRT of 1.5% on residential parcels owned by non- residents, could raise approximately $690,000 in annual revenue, while a GRT of 2.5% could generate approximately $1.15 M in annual revenue.

Table 5
Potential Revenue from Gross Receipts Tax on Residential Rental Properties Owned by Non-Residents
City of East Palo Alto
Single-Family
Residential
Multi-Family
Residential
<5 Units Total
Estimated Number of Parcels
Owned by Non-Residents1
1,118 145 1,263
Estimated Units Per Parcel2 1 2.6
Estimated Units Owned by NonResidents1,118 377 1,495
Average Monthly Rent3 $2,700 $2,700
Gross Annual Rental Income4 $34,412,000 $11,604,000 $46,016,000 Gross Receipts Tax Revenue @

1.5%
$516,000 $174,000 $690,000
Gross Receipts Tax Revenue @

2.5%
$860,000 $290,000 $1,150,000
1 For MFR parcels, equals a total of 175 MFR parcels less an estimated 30 parcels with 5 or more housing units.
2 Average of 2.6 units/parcel for parcels with 2 to 4 units owned by non-residents. 3 Average apartment rent per unit from RentCafe.com for January 2022. This may underestimate the average rent, especially for single-family units, which tend to be larger than apartment units. 4 Assumes 95% average occupancy rate.
1 Sources: City of East Palo Alto analysis of PropertyRadar data; DRA analysis of PropertyRadar data; RentCafe.com; DRA.

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3.0Transient Occupancy Tax
California Revenue and Taxation Code section 7880 authorizes the legislative body of any city, county or city and county to levy a tax on the privilege of occupying a room or other living space in a hotel or other lodging unless the occupancy is for a period of more than 30 days. Such transient occupancy taxes are often referred to as “hotel” taxes.

Most cities set the rate of their TOT as a percentage of the hotel room rate. According to the League of California Cities, TOT rates generally range from 8% to 14%. Some cities set a cap, providing the city council the option to set the TOT at the cap rate or any lesser rate that the city council shall determine by resolution.

3.1 Existing Transient Occupancy Tax in East Palo Alto
The City of East Palo Alto currently charges a TOT of 12%, which is the maximum approved by the City Council. Additional increases in the TOT in East Palo Alto must be approved by a majority of voters. Of the TOT collected annually in East Palo Alto, the City’s current policy is for 80% to remain in the General Fund, 10% to be allocated to the TOT-Affordable Housing Fund (for affordable housing development), and 10% to be allocated to Children Youth Family Fund (for local grants).

Table 6 summarizes the budgeted annual revenues for FY 2019/20 through FY 2021/22 from the City’s Transient Occupancy Tax.

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Evaluation of Selected Housing Trust Fund Revenue Sources 10 Table 6
Budgeted Annual General Fund Revenues from Transient Occupancy Tax City of East Palo Alto
FY 2019/2020 to FY 2021/22
Fund Category FY 2019/2020 FY 2020/21 FY 2021/22
General Fund $2,300,000 $950,000 $550,000
CYSFF1 $287,500 $118,750 $68,750
Housing Programs2 $287,500 $118,750 $68,750
Total $2,875,000 $1,187,500 $687,500 1
The CYSFF Fund accounts for 10% of the Transient Occupancy Tax (TOT) collected as approved by voters to fund various nonprofit organizations providing services to children, youth, and families. 2 The Housing TOT Fund accounts for 10% of the Transient Occupancy Tax (TOT) collected as approved by voters and committed by Council to fund affordable housing development activity.

Sources: City of East Palo Alto Adopted Budgets for FY 2019/20, FY 2020/21 and FY 2021/22; City of East Palo Alto; DRA.

3.2 Transient Occupancy Tax on Short-Term Rentals
Short-term rentals have become a topic of interest in many communities, and an increasing number of cities, counties and states have passed laws to regulate these types of rentals. For example, the City of Pacific Grove requires owners of short-term rentals (STRs) to obtain a STR or Home Sharing License. These ordinances apply to all properties (including rooms and guest houses whether or not detached) rented for less than 30 days.

In 2017, the City Council approved an ordinance allowing a maximum of 250 STR licenses in the City at a time, and implementing a lottery to determine who receives those licenses.

Vacation rental hosts are required to collect the city’s transient occupancy tax (TOT) from guests and file monthly TOT returns with the city. While Airbnb collects this tax from guests on behalf of its hosts, other short-term rental platforms (such as HomeAway and VRBO) do not. Short-term rental operators using those platforms are responsible for collecting it themselves. The TOT rate in Pacific Grove is 12%. The City estimates that STRs generate more than $1 million a year in TOT revenue.

As other examples, Redwood City passed a similar STR law in 2018, and estimates that the 12% TOT tax could generate $400,000 a year for the City.

DRA was unable to estimate the number of STR listings on AirBNB, or other STR sites, in East Palo Alto.

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Evaluation of Selected Housing Trust Fund Revenue Sources 11 The City could also evaluate whether a GRT tax on short-term rentals in East Palo Alto could be levied as a gross receipts business license tax, rather than a transient occupancy tax (TOT).

3.3 Potential Increase in Transient Occupancy Tax Rate
In November, 2020, East Palo Alto voters narrowly failed to pass Measure V, which proposed to increase the City’s existing TOT tax rate of 12% to a rate of 14%, to be phased in over two years. Since Measure V proposed to dedicate the increase in revenues to affordable housing development, acquisition and rehabilitation activities in the City, the tax was posed as a special tax, requiring a two-thirds majority to pass.

Table 7 estimates the potential increase in TOT revenues to the City from raising the existing TOT rate of 12% to a new rate of 14%. DRA used the historical data on budgeted TOT revenues from Table 6 to illustrate the potential increase in revenues. DRA’s estimates indicate an increase of 2% in the TOT rate could generate an additional $115,000 to $479,000 in revenues annually..

Table 7
Potential Increase in Transient Occupancy Tax Revenue from Increasing the Rate from 12% to 14%
City of East Palo Alto
FY 2019/2020 to FY 2021/22
Increase in TOT Based on the Budgeted Amount of TOT Revenue in:

FY 2019/2020 FY 2020/21 FY 2021/22
$479,000 $198,000 $115,000
Sources: City of East Palo Alto; DRA.

4.0 Parcel Tax
Article 11 of the California Constitution permits cities to enact an “excise” tax, often called a “parcel” tax, on the privilege of occupying residential property in general, similar to but broader than a transient occupancy tax. In general, such taxes have been submitted to the voters as special taxes for an identified purpose, subject to a two-thirds approval requirement. Between 2002 and 2012, California cities, school districts and special districts

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Evaluation of Selected Housing Trust Fund Revenue Sources 12 placed almost 700 parcel tax proposals on the ballot, of which more than half passed1. A parcel or occupancy tax is not a special tax subject to Proposition 13 if its proceeds are not earmarked for a particular purpose.

Most parcel taxes assess a flat fee on each parcel of property, regardless of its size or value. Parcel taxes are regressive, since they represent a larger burden on less expensive properties. A parcel tax rate may differ based on the type of property, for instance improved and unimproved properties may have different rates, and residential and commercial properties may have different rates.

Most parcel taxes in California are used to support local school districts. Relatively few school districts have attempted to pass a parcel tax. More than half of the parcel tax elections held since 1983 have passed, but the districts that passed them represent less than 10% of student population in California.2

4.1 Existing Parcel Tax on Large Commercial Properties in East Palo Alto
In November, 2018, voters in the City of East Palo Alto approved Measure HH, with 79.6% approval, authorizing a parcel tax on large corporations holding real estate in the city. The measure imposes a tax of $2.50 per square foot on commercial office property over 25,000 square feet. Property that is 25,000 square feet or less and property that is not used for commercial office purposes (for example, where the primary business is retail trade, not including retail trade from non-store retailers), agriculture, accommodation and food serves are not subject to the parcel tax. The revenue generated from the tax can be used for affordable and supportive housing programs, with an emphasis on the creation of net new housing; as well as programs that facilitate access to job opportunities for East Palo Alto residents in the science, technology, engineering, and mathematics sectors, the building trades, and strengthen the City’s First Source Hiring Program.

A minimum of 35% of the revenue must be used exclusively for the construction of new, affordable housing stock. A maximum of 15% of the proceeds from the parcel tax can be used for reasonably incurred costs to the City for staff and overhead to administer the ordinance and provide annual reports on the amount of funds collected and expended, and the status of any project.
1 Source: Public Policy Institute of California, “Parcel Taxes as a Local Revenue Source in California,” April 2015.
2 Source: ed100.org.

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4.2 Potential New Parcel Tax on Residential Parcels
The City of East Palo Alto is considering the imposition of a parcel tax on residential parcels in the City. The amount of revenue raised will, of course, depend on the parcel tax rate.

Most parcel taxes have been imposed by school districts. Of the 389 parcel taxes proposed by school districts in California between 2003 and 2012, 86% were flat rate. The average rate was $134 per parcel, and the median was $96.1
Table 8 estimates the revenue generation potential of a parcel tax of $100 per parcel on residential parcels in East Palo Alto. As noted above, designating the revenue raised from a parcel tax for housing programs would require two-thirds voter approval of the parcel tax.

Table 8
Potential Annual Revenues from a $100 Flat Rate Parcel Tax on Residential Parcels
Total
Number of Parcels 4,581
Estimated Annual Revenue $458,100
Source: City of East Palo Alto analysis of PropertyRadar data; DRA. 1 Source: Public Policy Institute of California, “Parcel Taxes as a Local Revenue Source in California,” April 2015.

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Housing Trust Fund Revenue Sources
Public Review Draft
February 3, 2020

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New Revenue Sources
PREPARED FOR:

City of East Palo Alto
PREPARED BY:

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New Revenue Sources
Table of Contents

1.0 Introduction and Summary....................................................................1

2.0 Principles for Housing Trust Funds........................................................2

2.1 Initial Criteria for Assessing Revenue Sources.............................2

2.2 Potential Revenue Sources.........................................................3

3.0 Basic Principles Governing Taxes and Fees in California.......................5

3.1 Fees Versus Taxes: Distinctions and Relative Advantages ..........5

3.2 Taxing Power of the City.............................................................5

3.3 Proposition 13 ............................................................................6

3.4 Propositions 62, 218 and 26 .......................................................7

3.5 Special Taxes and General Taxes Compared ..............................8

3.6 Limitations on Fees: The "Nexus" Requirement.........................10

3.7 Propositions 4 and 111 (Gann Limit).........................................12

4.0 Taxing Mechanisms and Fees...............................................................13

4.1 Real Estate Transfer Tax.............................................................13

4.2 Assessment Districts..................................................................14

4.3 Infrastructure Financing Districts...............................................15

4.4 Enhanced Infrastructure Financing Districts...............................16

4.5 Pay-for-Performance and Social Impact Bonds..........................16

4.6 Business Fees and Taxes............................................................18

4.7 Transient Occupancy Tax .........................................................19

4.8 General Occupancy, Parcel and Municipal Service Taxes.........21

4.9 Utility User Tax.........................................................................22

4.10 Utility Franchise Fee ...............................................................22

4.11 Housing Conversion and Preservation Taxes and Fees ............23

4.12 Sales and Use Tax...................................................................25

4.13 General Obligation Bonds.......................................................26

4.14 Automobility Taxes.................................................................26

5.0 Foundation and Corporate Support.....................................................27

5.1 Housing Trust Silicon Valley .....................................................28

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New Revenue Sources

5.2 Silicon Valley Community Foundation......................................28

5.3 Chan Zuckerberg Initiative........................................................29

5.4 Facebook ..................................................................................30

5.5 Google Foundation ...................................................................30

5.6 Salesforce Foundation...............................................................30

6.0 Estimated Revenue from New/Increased Revenue Sources.................33

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New Revenue Sources
List of Tables
1 Business License Tax Rates, City of East Palo Alto 19 2 Budgeted Annual Revenues from Selected Key
Revenue Sources, City of East Palo Alto, FY 2019/20
33 3 Estimated Annual Revenue Potential, Affordable
Housing Trust Fund Revenue Sources
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Administrative Review Draft 1

1.0 Introduction
DRA was retained by the City of East Palo (City) to evaluate potential new revenue sources for the City’s Affordable Housing Trust Fund (AHTF). The City’s AHTF is a permanently dedicated, annually renewable source of revenue available to help low and moderate income people achieve affordable housing. These funds help to fill the gap between the amount low and moderate income households can afford to pay for housing and the cost of developing or acquiring housing in the marketplace. They help provide the debt, equity, subsidy and credit enhancement capital needed to provide affordable housing. Since current sources of affordable housing subsidies available to the are insufficient to meet the need for affordable housing in the City, the City is interested in identifying additional resources that can promote the development of affordable housing.

Current sources of affordable housing subsidies available to the City include inclusionary housing in lieu fees and commercial development nexus fees. The City is not an entitlement jurisdiction for HOME, CDBG or Emergency Shelter Grant (ESG) funds, but participates in and is eligible to receive funds from the County of San Mateo HOME Consortium. These sources are not profiled here.

DRA does describe briefly in this report recent ballot initiatives passed by the voters of East Palo Alto, a portion of the proceeds of which are either restricted or currently appropriated for affordable housing activities:
• Measure HH, a parcel tax on large commercial properties approved by East Palo Alto voters in November, 2018;
• Measure O, a 1.5% residential rental business license tax on properties of five or more residential units; and

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• Measure P, a 0.5% sales tax to general funding for local projects and vital City services.

DRA also evaluates potential new sources and estimates the revenue potential from increased tax or fee rates for several existing sources already in use by the City.

It should be noted that the City of East Palo Alto is currently close to its Gann appropriation limit on the proceeds of taxes that may be appropriated for spending in a given fiscal year (see Section 3.7 below). According to the FY 2019-20 Appropriations Limit (i.e. Gann Limit) approved by the City Council, the City is at approximately 88% of its limit. Therefore, the City is significantly limited in the amount of additional tax and fee revenue from many of these sources that the City can adopt for use in its Housing Trust Fund or other uses in the City.

This report evaluates the following categories of potential revenue sources:
n taxes
n fees
n assessment and infrastructure financing districts.
n foundation support; and
n corporate support.

2.0 Principles for Housing Trust Funds
Housing Trust Funds are particularly well suited to meet the large and long-term capital investment needs of housing development. Unlike funds that rely principally on the vagaries of state or local annual appropriations, the Housing Trust Fund is a permanent dedication to the provision of affordable housing. Thus, local officials, developers, lenders and neighborhood groups alike can determine construction investment schedules and amounts far in advance. Ideally, funds will be available when needed and in the amount needed.

To maximize the prospective benefits, trust funds should observe six principles:

Equity: Trust funds operate to correct the inequities of unregulated markets by targeting their assets for
the benefit of individuals and families most in need
and underserved by market rate housing.

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Productivity: Trust fund programs emphasize the economically productive activities of new construction and
rehabilitation, and emphasize purchasing or
refinancing existing housing when acquired for
long-term or permanent affordability.

Supplementation: Trust funds supplement, rather than supplant, current state and local funding for housing.

Size: Trust funds are large enough to materially alleviate the housing crisis. They do not represent a token
effort.

Efficiency: Trust fund administration and programs maximize efficiency and minimize bureaucratic delays, cost
and complexity.

Profitability and Creditworthiness:

Trust fund beneficiaries are best served by a design
that provides profit-making incentives for the
participation of private sector partners, particularly
financial institutions.

2.1 Initial Criteria for Assessing Revenue Sources
The following initial criteria for evaluating potential revenue sources were developed by DRA based on the above principles and our experience with the development of Housing Trust Funds:
n election and other adoption requirements: the adoption requirements of a potential revenue source can have a
significant effect on the success of establishing a revenue source for a housing trust fund. Generally, potential revenue sources subject to general elections are difficult to adopt. In many cases, sources subject to general elections require a supermajority vote for successful passage. Other sources, such as commercial linkage fees, require adoption by a City Council. Private sources, such as foundation support, are not subject to public approvals of any kind.

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n ability to raise funds for affordable housing.
n degree of control by City staff: depending upon the source of funds for a housing trust fund, City staff may or may not have control over developing programs and policies for the use of housing trust funds.
n cost of developing revenue source.
n successful development of revenue source in other cities. n changes to state law are not required.

2.2 Potential Revenue Sources
The following potential revenue sources are reviewed in this report:
n real estate transfer taxes
n assessment districts
n infrastructure financing districts
n business fees and taxes
n transient occupancy tax
n general occupancy, parcel or municipal services taxes n utility user tax
n utility franchise fees
n housing conversion and preservation taxes and fees
n sales and use tax
n general obligation bonds
n automobility (rideshare) taxes
n private foundation and corporate support

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3.0 Basic Principles Governing Taxes and Fees in California

3.1 Fees Versus Taxes: Distinctions and Relative Advantages A tax is a charge by a public entity that is imposed to raise revenue. A general tax is levied for general purposes. A special tax is legally committed to a specified purpose. A fee is a charge for a specific purpose, payable by persons who need or create the need for a service or facility.

The major advantage of taxes is that no connection is required between the activity that is taxed and the purposes for which the resulting funds are spent. In general, a city may tax one activity, put the money in its general fund or in some special fund, and expend it for an entirely unrelated purpose.1 On the other hand, under California law, and U.S. Supreme Court case law, fees must bear a reasonable relationship to a burden created or benefit received by the person charged the fee.

Fees are not subject to Proposition 13’s amendments to the state Constitution, to other provisions that require voter approval or potentially prohibit certain taxes, or to the limit on overall municipal revenue imposed by Article XIIIB of the California Constitution. Some forms of taxes are now prohibited altogether and others require a two-thirds vote.

3.2 Taxing Power of the City
Cities that are organized under the general laws of the State (Section 34102) have less autonomy than those that adopt their own charter (Section 34101), also known as “home rule” cities. General law cities follow the laws set forth in the Government Code commencing with Section 34000.

California courts have found that, except as provided in the municipal affairs doctrine, there is no constitutional grant of authority to tax.2 The Constitution prohibits the Legislature from imposing taxes for local purposes. Instead, the Legislature may authorize local governments to impose them (California Constitution, Article XIII, Section 24). Court cases have confirmed that the power 1 See e.g., Fenton v. City of Delano (1984) 162 Cal. App. 3d 400, 405 (a tax is a public burden imposed without reference to particular benefits to individuals). 2 Source: California Legislature Senate Committee on Local Government, Revenues and Responsibilities: An Inventory of Local Tax Powers Second Edition, December 2010.

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is derived from the Constitution with authorization by the Legislature (City of Woodlake v. Logan (1991) 230 Cal.App.3d 1058, 1065 [282 Cal.Rptr. 27]; Armstrong v. County of San Mateo (1983) 146 Cal.App.3d 597, 624 [194 Cal.Rptr. 294]; County of Los Angeles v Sasaki [23 Cal.App.4th 1442 (1994)].

Under the constitutional “municipal affairs” doctrine, charter cities can levy taxes which have not been preempted by the state or federal governments (Article XI, Section 5). In contrast to a charter city, a general law city may only impose those taxes that it is authorized to impose under California statutes. However, Government Code Section 37100.5 grants statutory authority for general law cities to levy any tax which may be levied by any charter city unless a different general law limits or prohibits such a tax. This blanket authority means that a general law city’s authority to tax is similar, but not identical, to a charter city’s authority.

Government Code Section 37100.5 allows general law cities to impose most, but not all, of the taxes that charter cities may impose under the “municipal affairs” doctrine. For example, California Supreme Court decisions which have allowed charter cities to impose real property transfer taxes do not grant the same authority to general law cities, which are still subject to Constitutional and statutory restrictions on such a tax.

The California Constitutional and statutory limits are discussed below.

3.3 Proposition 13
Proposition 13, enacted by voters in 1978, added Article 13A to the California Constitution. In addition to its well-known limit on increases in property taxes, Article 13A prohibits any local government from imposing any “sales or transaction” tax on the sale of real property. This language covers local real estate transfer taxes, if they are special taxes. The Court of Appeal held that this prohibition does not apply to general taxes (Cohn v. City of Oakland, 1990, 223 Cal. App. 3d 261, 263).

Article 13A also requires a two-thirds popular vote to approve any permissible “special tax.” A special tax is one for a specific purpose, and not placed in the general fund for general governmental purposes, in contrast to a “general tax,” the proceeds of which are deposited into the city’s general fund (City and County of San Francisco v. Farrell, 1982, 32 Cal. 3d 47,57). Thus, if the City were to enact a tax earmarked and legally obligated to be placed in a special fund such as a Housing Trust Fund, it would constitute a special tax and require a two-thirds vote.

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3.4 Propositions 62, 218 and 26
Under current case law, Article 13A (Proposition 13) does not affect general taxes, other than ad valorem taxes on real property. With the passage of Proposition 62 in 1986 and Proposition 218 in 1996, however, a majority vote is necessary for local governments to adopt a general tax. In addition, under Propositions 62 and 218, a “special” tax requires a two-thirds approval of the electorate.

Article 13C of the California Constitution defines a general tax as “any tax imposed for general governmental purposes.” A special tax is “any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.” In other words, a new tax (or increase in existing tax) that dedicates revenues specifically to an affordable housing trust fund is considered a special tax under the California Constitution.

Article 13C discusses voter approval necessary for local taxes. Article 13C states that “(a) All taxes imposed by any local government shall be deemed to be either general taxes or special taxes… (b) No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote… (d) No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”
Proposition 62 imposed several restrictions on the powers of cities, counties and special districts to enact general taxes, including the following:
n All new general taxes must be submitted to the voters and approved by a majority of the electorate.
n No tax may be submitted to the voters except by
ordinance or resolution passed by a two-thirds vote of
the local legislative body.
n No new transaction or sales tax may be imposed on the sale of real property.
n Any special tax must be approved by two-thirds of the electorate.

For bond measures, Article 13 of the California Constitution requires a two-thirds approval by voters. With the passage of Proposition 39 in 2000, bond measures

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that benefit schools only require 55 percent approval by voters. All other bond measures, however, remain at the two-thirds voter approval standard.

During the years since the passage of Proposition 218, California courts have struggled to differentiate between taxes requiring voter approval and other kinds of government revenue measures that do not. In 2010, California voters passed Proposition 26, amending Article XIIIC to add the first constitutional definition of a "tax." Under Proposition 26, all levies, charges, and exactions “imposed” by state or local governments are taxes, unless they fit into one of the seven stated exceptions for local government:

1. “A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.

2. A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.

3. A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.

4. A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property.

5. A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law.

6. A charge imposed as a condition of property development.

7. Assessments and property-related fees imposed in accordance with the provisions of Article XIII D.

3.5 Special Taxes and General Taxes Compared
From the point of view of providing secure funding, each type of tax, special or general, has its advantages and disadvantages. The obvious disadvantage of a

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special tax is the two-thirds popular vote requirement under Propositions 13, 62 and 218. At the same time, a special tax is earmarked for a specific fund and cannot be reallocated through the annual budget process.

Money raised through a general tax goes into the general fund of the city or county and does not provide a continuing source of secure funding for housing. The city or county may make policy commitments or other types of informal arrangements that attempt to ensure the expenditure of the money for a specific purpose.

However, no formal commitment can specifically limit the use of the funds. Any such commitment would make the tax a special tax and trigger the two-thirds popular vote requirement.

The City of East Palo Alto can make annual housing subsidy allocations from new general fund revenues, even if the revenues are provided by a new or increased general tax motivated by housing goals. Placement in the general fund appears to prevent a tax from being treated as special, even if it is enacted because there is a special need.

For example, one strategy used by the City Council of San Diego with DRA’s guidance is to develop multiyear plans that demonstrate the “intent” to dedicate funds to the City of San Diego Housing Trust Fund over a rolling three-year period.

The City of San Diego’s Housing Trust Fund, formed in 1992, has multiple sources of funds, including commercial linkage fees and Transient Occupancy Tax revenues:
n redevelopment agency funds;
n proceeds from the sale of City-owned property; and,
n repayments from loans made from Community
Development Block Grant funds.

The City Council reviews a 3-Year Program Plan and approves an annual investment strategy. The 3-Year Program Plan incorporates both estimates of “investments” (uses of Housing Trust Fund dollars) and a statement of revenue sources, including general tax sources such as the City’s Transient Occupancy Tax (TOT).

As a general tax, TOT revenues cannot be dedicated to the Housing Trust Fund.

However, with the City Council’s 3-Year Plans, the Council declares their intent to

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provide a quantified amount of TOT revenues to the Housing Trust Fund over a three-year period. The actual amount of TOT revenue that goes to the Housing Trust Fund is voted upon annually by the City Council.

3.6 Limitations on Fees: The “Nexus” Requirement
Fees are charges placed on individual activities. If a proper factual foundation is laid, the imposition of fees is not limited by Propositions 13, 62, or 218, because the fees are not treated as taxes. However, a “nexus” must be established before a fee can be imposed.

Prior to Proposition 13, the nexus issue enjoyed little attention. Since both fees and taxes could be imposed by a majority vote of local legislative bodies, there was little urgency to establishing through nexus analysis that a particular charge was a fee, not a tax. Following Proposition 13, however, a tax requires an election. On the other hand, a fee does not, if it meets the nexus requirement.

To satisfy the nexus requirement, a jurisdiction charging a fee must make an affirmative showing that: (1) those who must pay the fee are contributing to the problem which the fee will address; and (2) the amount of the fee is justified by the magnitude of the fee-payer’s contribution to the problem.

Fees on development in California are subject to two overlapping sets of legal requirements: constitutional requirements of nexus and “rough proportionality” under the U. S. Supreme Court cases of Nollan v. California Coastal Commission (1987) 483 U. S. 825 and Dolan v. City of Tigard (1994) 512 U.S. 374; and, California’s statutory “reasonable relationship” requirements under California Government Code sections 66000-66010. Although legally distinct, these two standards are substantively similar and in practice a development fee that satisfies one will almost certainly satisfy both. The California Supreme Court in Ehrlich v.

City of Culver City (1996) 12 Cal. 4th 854, 867 concluded that the two standards “for all practical purposes, have merged.”
The Supreme Court’s decision in Nollan v. California Coastal Commission imposed a requirement that a “rational nexus” be demonstrated between the impact associated with an action and the remedy being required or, in the case of a fee, the use of the funds exacted from the developer.

To implement the Nollan decision in California, the State Legislature passed A.B. 1600, which requires local jurisdictions to establish a reasonable relationship

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between a development project or class of development project, and the public improvement for which the developer fee is charged, and to segregate and account for the money separately from general fund monies. A city council or county board of supervisors can enact a fee if a rational nexus is established.

In Sterling Park, L.P. v. City of Palo Alto (“Sterling”), the California Supreme Court ruled in October 2013 that local affordable housing requirements may be challenged under the provisions of California’s Mitigation Fee Act (government code section 66000 etc.). The facts surrounding the Court’s ruling in Sterling centered on the City’s failure to file timely notice to the developer that an affordable housing in-lieu fee was required. The court ruled that the Mitigation Fee Act’s protest provisions would apply if the City’s affordable housing requirement would “divest the developer of money or possessory interest in property.” The court further ruled that these provisions would not apply if the City’s ordinance only restricted how the developer may use the property. In response to the Sterling decision, California jurisdictions are well advised to provide early written notice at the time of approval for any development project regarding fee payments as a standard condition of approval.

In Koontz v. St. Johns River Water Management District (“Koontz”), the U.S.

Supreme Court held that the requirements of Nollan and Dolan for essential nexus and rough proportionality apply even when a jurisdiction denies a permit for development. Further, the Court held in this case that the government’s demand for property from a land use permit applicant must satisfy Nollan and Dolan requirements, even when the government’s demand is for money only (i.e., an inlieu fee).

There is some suggestion in Koontz that the Court may look more closely at impact fee calculations going forward.

In response to Koontz, it will be important for jurisdictions considering affordable housing impact or nexus fees to:
• Calculate those fees within a quantified nexus methodology of reasonable relationship;
• Measure proposed fees against development feasibility; • Provide for waivers and/or individual negotiation of fees, in some cases; • Clearly demarcate any imposition of such fee from a policy of rent control; and

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• Conduct a nexus study to support establishment of the fee.

3.7 Proposition 4 and Proposition 111 (Gann Limit)
In 1979, California voters approved Proposition 4, which created Article XIIIB of the State Constitution, a state law that requires the State and local governments to adopt an annual appropriation limit. This limit, also referred to as the “Gann Limit,” establishes a limit on the proceeds of taxes that may be appropriated for spending in a given fiscal year. The limit allows the City’s spending of tax proceeds to increase only by population growth and cost-of-living factors from the base year of 1978-1979. In 1990, Proposition 111 was passed which changed the way the limit is calculated. Under Article XIIIB City may increase its limit annually in two ways:
• By a percentage equal to the increase from the preceding year in county or city population (whichever is greater).
• By an amount equal to the change in per capita personal income in California or the change in the assessment roll the preceding year due to the addition of local non-residential new construction (whichever is greater).

The appropriations limit applies only to those revenues defined as “proceeds of taxes.” Certain expenditures of tax proceeds do not count as appropriations subject to the limit, including those for voter-approved debt, qualified capital outlay, and the costs of complying with court orders and federal mandates. Further, if the State provides funds to a local government for general purposes, the funds are to be counted as “state subventions” and included in the appropriations subject to limit of the local agency. However, if the State Legislature restricts the funds to specific purposes, then the funds are counted in the State—rather than local— appropriations subject to limit. During any fiscal year, a government entity may not appropriate any proceeds of taxes received in excess of the appropriations limit of the entity. If a local government receives excess funds in any one year, it may carry those excess funds into the subsequent year for use. Any excess funds remaining after the second year must be returned to taxpayers by reducing tax rates or fees. As an alternative, a majority of voters may approve an “override” to increase the appropriations limit. The law allows such an override to last for a maximum of four years.

For most local governments, the funds constrained by Article XIIIB include the general fund, the capital outlay fund and special revenue funds. The source of

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revenues will determine whether a fund requires a separate appropriations limit.

Examples of proceeds of taxes governed by the Gann appropriation limit are:
property taxes, sales taxes, utility taxes, state subventions, fines, forfeitures, interest revenue on regulatory licenses, user charges and user fees to the extent that those proceeds exceed the costs reasonably borne by the entity in providing the regulation, product or service. Nexus fees which are established at the estimated cost to mitigate or defray the impact of development are an example of fees that would not be subject to the appropriation limit.

4.0 Taxing Mechanisms and Fees

4.1 Real Estate Transfer Taxes
Real estate transfer taxes are local taxes assessed on real property when ownership of the property is transferred between parties. Authorized by the Documentary Transfer Tax Act, California Revenue and Taxation Code Sections 11901-11934, counties are allowed to impose a tax of $1.10 per thousand dollars of property value. A city within a county is allowed to charge a rate of one-half of the amount specified above, to be credited against any tax charged by the county (so the combined amount does not exceed $1.10 per $1,000).

Article 13A, Section 4, of the California Constitution states that “cities, counties, and special districts…may impose special taxes on such district, except for ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County, or special district.” In order for any city or county to raise real estate taxes over the $1.10 per thousand dollars authorized under the Documentary Transfer Tax Act, an amendment to the California Constitution is required to overturn Article 13A, Section 4.

The one potential exception to Article 13A, Section 4, is the ability of charter cities to impose real estate transfer taxes. Article 11 of the California Constitution authorizes cities to adopt a city charter and provides that such a charter has the force and effect of state law. In addition, under Article 11 there is a “home rule” provision that grants to charter cities the authority over “municipal affairs”, which the courts have interpreted to include the power to tax. Because Article 13A does not clearly define “cities”, it is not clear if the Article 13A prohibition on the establishment of local real estate transfer taxes applies to charter cities. However, Article 13C clearly applies to charter cities, so at a minimum a charter city contemplating a local real estate transfer tax must secure two-thirds approval from

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the electorate. Many charter cities in California currently charge higher real estate transfer taxes than the amount authorized by the Documentary Transfer Tax Act.

The City of East Palo Alto currently charges a documentary transfer tax at the permitted rate for a general law city of $0.55 per $1,000.

4.2 Assessment Districts
Assessment districts can often be used to relieve general fund burdens and potentially make general fund moneys available for housing. Unlike a tax, which is applied to all property in an area to pay for general expenditures and improvements whether or not the property is directly benefited, a special assessment can be charged only on property specially benefited and assessed in proportion to the benefit received. Special assessments are not subject to the Proposition 13 or Proposition 62 election requirements.

We know of no case in which an assessment district has been formed and special assessments collected to assist affordable housing, although assessments are used to construct infrastructure, which lowers the total cost of constructing housing.

Assessment districts have also been used to relieve cities’ general funds of existing obligations, freeing up general fund revenues for other uses.

Over a dozen State statutes enable cities and counties to set up special assessment districts. The procedures for creating districts vary. Setting up a special assessment district generally involves adoption by the city council of a resolution of intention, notice to the property owners involved, and preparation of a report spreading the cost of improvements among the affected properties. If the owners of a more than half of the area of property to be assessed file protests, a four-fifths vote of the city council is most commonly required to override the protest.

Some districts have less strict approval requirements. A Landscape and Lighting Maintenance District can be created by the governing body. A Parking and Business Improvement Area Act district can be stopped by a protest of the majority of affected landowners, but can otherwise be created by the governing body. A Benefit Assessment Act district for street maintenance can be created by the governing body unless 25 percent of the affected voters protest, in which case an election is required.

Proposition 218 provides a weight for each property owner’s vote, based on the amount of the assessment paid by the property owner. Article 13D of the

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California Constitution states that an “agency shall not impose an assessment if there is a majority protest. A majority protest exists if, upon the conclusion of the hearing, ballots submitted in opposition to the assessment exceed the ballots submitted in favor of the assessment. In tabulating the ballots, the ballots shall be weighted according to the proportional financial obligation of the affected property.”
Article 13D also states that “electors residing within the district who do not own property within the district shall not be deemed under this Constitution to have been deprived of the right to vote for any assessment. If a court determines that the Constitution of the United States or other federal law requires otherwise, the assessment shall not be imposed unless approved by a two-thirds vote of the electorate in the district.” In other words, if a vote to approve a benefit assessment district that is limited to property owners is declared unconstitutional or otherwise illegal, then a two-thirds voter approval standard is automatically adopted for benefit assessment districts.

Article 13D states that “in any legal action contesting the validity of any assessment, the burden shall be on the agency to demonstrate that the property or properties in question receive a special benefit over and above the benefits conferred on the public at large and that the amount of any contested assessment is proportional to, and no greater than, the benefits conferred on the property or properties in question.” This standard may be difficult to meet for a benefit assessment district for affordable housing.

4.3 Infrastructure Financing Districts
Senate Bill No. 308 enacted in 1990 authorizes cities and counties to create infrastructure financing districts (IFDs). The funds collected through such districts can be used to finance public capital facilities, including housing.

The intent of the Legislature in allowing infrastructure districts to be created was to provide a mechanism for public capital facilities to be financed in areas that are substantially undeveloped. A district cannot finance facilities or services that existed when the district was created and it cannot finance facilities or services that supplant those that already existed. Infrastructure financing districts can’t pay for maintenance, repairs, operating costs, and services.

A district may only finance public capital facilities of community-wide significance that provide benefit to or are larger than the district. Examples of such facilities are

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highway, water treatment plants, childcare facilities, libraries, parks open space and housing. At least 20% of any housing units built must be affordable to low or moderate income households.

Forming an infrastructure financing district is cumbersome. The city or county must develop an infrastructure plan, send copies to every landowner, consult with other local governments, and hold a public hearing. Every local agency that will contribute its property tax increment revenue to the infrastructure financing district must approve the plan. Schools cannot contribute their property tax increment revenues to the IFD. Once the other local officials approve, the city or county must still get the voters’ approval to:
n Form the IFD (requires 2/3 voter approval).
n Issue bonds (requires 2/3 voter approval).
n Set the IFD’s appropriations limit (majority voter
approval).

4.4 Enhanced Infrastructure Financing Districts
SB 628, which became effective on January 1, 2015, authorizes cities and counties to create Enhanced Infrastructure Financing Districts (EIFDs). The EIFD legislation equips local jurisdictions with new tools for financing affordable housing, chiefly through the use of tax increment financing (TIF).

EIFDs may only use incremental property tax revenues from tax entities that consent to participating in the EIFD, and the law specifically excludes the diversion of tax increment belonging to educational districts. Moreover, taxing entities that elect to participate also specify their level of participation. Accordingly, the amount of tax increment generated in EIFDs will be less the increment generated by TIFs that were created under redevelopment.

SB 628 contains provisions that provide extensive flexibility in the crafting of housing programs. For example:
• A single District may include areas that are not contiguous. • An EIFD may cross municipal boundaries.

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• EIFD funded projects need not be located in the District provided that “any facilities financed outside of a district must have a tangible connection to the work of the district.”
• An EIFD can be established without a finding that the area comprising the District is blighted.

EIFDs can support a wide assortment of project types, and the City can employ a variety of financing strategies using EIFD tax increment revenues. In comparison to the financing practices used by redevelopment agencies under the redevelopment program, the City will almost certainly want to emphasize new financing techniques, relying less on the issuance of tax increment bonds, which requires approval of 55 percent of the registered voters in the District. TIF strategies that the City should consider include site-specific and pay-as-you go TIF structures.

East Palo Alto City CouncilMarch 15, 2022

East Palo Alto City Council
March 15, 2022