Agenda packet — East Palo Alto City Council, April 5, 2022

East Palo Alto City Council April 5, 2022 Agenda Page 1 of 4

EAST PALO ALTO CITY COUNCIL

REGULAR MEETING AGENDA
April 5, 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.

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International numbers available: https://zoom.us/u/aMWYF4KT East Palo Alto City Council April 5, 2022 Agenda Page 2 of 4

1. CALL TO ORDER AND ROLL CALL

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

3. APPROVAL OF CONSENT CALENDAR

1. Award of the Addison Avenue Improvement Project to Granite Rock Company Recommendation: Adopt a Resolution authorizing the City Manager to:

Execute a construction contract, in a form approved by the City Attorney, with Granite Rock Company in the amount of $1,855,908.50, establish a 20% construction contingency in the amount of $371,181.7, for a total construction budget of $2,227,090.2, and execute future change orders in an amount not-to-exceed the appropriated construction contingency, and.

Approve contract amendment number 2 with CSG Consultants, Inc. for design support services during construction in the amount of $110,330, and.

Execute any other agreements necessary for the project.

2. Grassroots Ecology Contract Funding Source and Duration Update Recommendation: Direct the City Manager to update contract with Grassroots Ecology as follows:

Rescind Resolution No. 5168; and
Execute a three (3) year agreement with Grassroots Ecology, in a form approved by the City Attorney, with a not-to-exceed total amount of $45,000, ($15,000 per year) for the purposes of coordinating cleanup events in the City, funded with $27,000 from the Stormwater Impact Fund, and up to $18,000 from the CalRecycle Beverage Container Payment Program

3. Adoption of the First Source Hiring Ordinance for City Funded Projects and Properties
Recommendation: Waive the Second Reading and adopt an Ordinance titled, “First Source Hiring for City-Funded Projects and Properties,” adding Chapter 5.11 to the East Palo Alto Municipal Code; and
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.

4. Amendment Five with Youth Community Service for Distribution of Gift Cards to Encourage Vaccination
Recommendation: Adopt a Resolution authorizing the City Manager to execute a Fifth Amendment with Youth Community Services, to increase the contract amount by Five Thousand Dollars ($5,000), for a new total not-to-exceed amount of Forty-Five Thousand Dollars ($45,000), to extend the term through May 31, 2022, to continue the vaccine incentive program and to authorize the incentive program for youths below the age of five (5) when a vaccine for this cohort approved by Federal Drug Administration.

5. David Rosen & Associates Contract Amendment
Recommendation: Adopt a Resolution:

Appropriating $45,000 from the following Funds: Measure HH (F219), Housing Successor (F220), and General Fund (010); and
Authorizing the City Manager to execute an amendment to the Agreement with DRA that increases the not-to-exceed amount to $170,000 and allows for an additional one-year extension of the contract term with approval of the City Manager; and Rescinding Resolution No. 01-2022.

6. Proclamation Recognizing R.B. Jones for his years of service to the City as a Council member and Mayor in the 1900's.

4. CLOSED SESSION -NONE

5. PUBLIC COMMENT
East Palo Alto City Council April 5, 2022 Agenda Page 3 of 4 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

1. Verbal update from Interim Police Chief, Jeff Liu
Recommendation: Receive update.

2. Below Market-Rate Housing Program Administration Update Recommendation: Accept the report on the City’s Below Market Rate Housing Program administration.

3. San Francisco Public Utility Commission Wholesale Water Rate Increases Recommendation: Receive and file update on expected wholesale water rate increase and the City’s planned response.

7. SPECIAL PRESENTATIONS

1. Update on San Francisquito Creek Joint Powers Authority (SFCJPA) Projects Recommendation: Receive presentation by Margaret Bruce, Executive Director of the SFCJPA on the San Francisquito Creek Reach 2 widening and bridge replacement project and the SAFER Bay Project.

8. PUBLIC HEARINGS - NONE

9. POLICY AND ACTION

1. Interim City Manager Employment Agreement
Recommendation: Adopt a resolution appointing Patrick Heisinger as the Interim City Manager and approving the Interim City Manager Employment Agreement.

2. 2022-2023 City Council Priorities
Recommendation: Adopt a Resolution (Attachment 1) approving the 2022-2023 City Council Priorities.

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

4. Proposed Strategy for Providing Housing for the Unhoused Currently Residing at Bell Street Park
Recommendation: It is recommended that the City Council take the following actions:

Accept the staff report; and
Provide staff with direction regarding the proposed strategy for housing the unhoused individuals currently residing at Bell Street Park.

5. Update and Recommendations Regarding the City's Unhoused Residents Recommendation: It is recommended that the City Council take the following actions:

Accept staff’s report regarding the City’s unhoused residents.

Direct staff to return to the City Council on May 3, 2022 to establish a Master Temporary Use Permit process to allow temporary housing for unhoused individuals on private and public property; and
Provide direction on whether to pursue a contract with the Downtown Streets Team to support the unhoused as further described in the staff report.

6. Pavement Management Plan Presentation and Annual Street Resurfacing Project 2022
Recommendation: Receive a presentation on the City's Pavement Management Plan (PMP) and adopt a resolution approving the Plans, Specifications, and Estimates for the East Palo Alto City Council April 5, 2022 Agenda Page 4 of 4 Annual Street Resurfacing Project 2022 and authorizing the City Manager to advertise the project to solicit bids for the construction phase

7. Developer Payment Obligations Connected to the RBD Specific Plan Update Recommendation: It is recommended that the City Council:

Affirm previous direction that the three developers seeking an amendment to the RBD Specific Plan pay an equal share (or one third) of the associated costs related to the environmental review process in addition to a pro rata share of the City’s investment if the of the RBD Specific Plan is updated and projects are approved; and Direct staff to only process and/or consider projects where the developer’s payment obligations are up to date and in good standing.

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

10. COUNCIL REPORTS

11. ADJOURNMENT
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: April 1, 2022
ATTEST:

James Colin
Acting City Clerk
FUTURE MEETINGS:

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

Study Session Meeting April 26, 2022 at 6:00 p.m.

Regular Meeting May 3, 2022 at 6:30 p.m.

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Batool Zaro, Assistant Civil Engineer
Humza Javed, City Engineer
SUBJECT: Award of the Addison Avenue Improvement Project to Granite Rock Company Recommendation
Adopt a Resolution authorizing the City Manager to:

1. Execute a construction contract, in a form approved by the City Attorney, with Granite Rock Company in the amount of $1,855,908.50; establish a 20% construction contingency in the amount of $371,181.7, for a total construction budget of $2,227,090.2, and execute future change orders in an amount not-to-exceed the appropriated construction contingency.

2. Approve contract amendment number 2 with CSG Consultants, Inc. for design support services during construction in the amount of $110,330.

3. Execute any other agreements necessary for the project.

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

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
The Addison Avenue Safe Route to School and Green Street Improvements Project (“Project”) includes utility and street improvements along Addison Avenue between East Bayshore Road and Bay Road.

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Safe Routes to School (SRTS) San Mateo County is a countywide program that encourages and enables school children to walk and bicycle to school by implementing projects and activities that improve the health, well-being, and safety of children and result in less traffic congestion and emissions caused by school-related travel. SRTS projects create physical improvements to the streets that make walking and bicycling safer, more comfortable, and more convenient. The Addison Avenue Project includes SRTS aspects; improvements include continuous sidewalk on the west side of Addison Avenue, Class III bike lane sharrows, pavement markings, ADA curb ramps, curb extensions, and high visibility crosswalks.

Green Infrastructure is required by the San Francisco Bay Regional Water Quality Control Board, as part of the Municipal Regional Permit Program. Green Infrastructure is a stormwater management approach to capture rainwater where it falls. The approach incorporates vegetation (perennials, shrubs, trees), special soils, and engineered systems, such as, bioretention areas that slow, filter, and cleanse stormwater runoff from impervious surfaces (e.g., streets, sidewalks). Traditional drainage systems directed stormwater runoff from impervious surfaces into storm sewer systems (gutters, drains, pipes) that discharge directly into surface waters, rivers, and streams. Green Infrastructure reduces the amount of water and speed at which water discharges into surface waters, rivers, and streams. The Addison Avenue improvements include eight (8) bioretention areas. The new drainage system with green infrastructure elements will eliminate significant ponding at one low point on Addison Avenue where no drainage system currently exists. The eight bioretention areas will reduce the amount of water and speed at which water discharges into the San Francisco Bay.

The street pavement will also be reconstructed and repaired. The pavement between East Bayshore Road and Garden Street will be reconstructed due to inadequate depth of the existing subbase. The pavement between Garden Street and Bay Road will be repaired and a slurry seal will be applied. All existing signage will be replaced with new signage. New pavement markings and striping will be installed.

The existing site does not have underground storm drain and a portion of the roadway is in disrepair due to non-existence of a drainage system. A key element of this project is construction of an underground storm drain system to drain runoff in order to preserve the pavement life, as well as provide overflow drainage around the proposed bio-retention basins.

In order to successfully accomplish this, utility relocations will be needed by Palo Alto Park Mutual Water Company as well as East Palo Alto Sanitary District.

The Project was presented to the Public Works and Transportation Commission (“Commission”) at its regular meeting held on October 20, 2021. Notices were sent to the community in order to encourage attendance and receive feedback at the meeting.

On December 7th, 2021, City Council approved the projects Plans, Specifications, and Estimate and authorized the City Manager to advertise the project.

The 100% PS&E can be found on the City website under the Addison Avenue Complete Green Street page: https://www.cityofepa.org/publicworks/project/addison-avenue-complete-greenstreet Analysis
The project was advertised on February 11, 2022 for solicitation of construction bids. On

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March 24, 2022, sealed bids were received, publicly opened via Zoom, and read aloud by the Acting City Clerk and Public Works Engineers. Five (5) contractors submitted bids for the Project with the following bid results:

No. Company Name Total Base Bid Amount
1 Graniterock $1,855,908.50
2 Azul Work Inc. $2,088,167.80
3 Redgwick Construction Co. $2,544,833.60
4 O’Grady Paving $2,743,234.70
5 RK Engineering $3,054,135.00
The bid analysis is included as Attachment 2 to this report. The Engineer’s Estimate for the project was $2,344,396.45.

Granite Rock Company submitted the lowest base bid in the amount of $1,855,908.50. City staff performed a bid analysis, verified qualifications, and checked references for the lowest bidder.

Contingent upon completing all insurance and bonding requirements of the Contract Specifications, staff recommends that the City Council authorize the City Manager to execute a construction contract with Granite Rock Company, the lowest responsive and responsible bidder, in an amount not-to-exceed $1,855,908.50 and appropriating an additional $371,181.7 (20%) for construction contingency.

In 2019 City entered into an agreement with CSG Consultants, Inc. for the design of the project. The existing contract does not include any design support services during the construction phase. City Staff negotiated a scope and fee for design services during the construction. The construction support services include but are not limited to field design changes during construction, update to the specifications, geotechnical support services, and preparation of as-built drawings. The proposal is included as Attachment 3.

The project may require the City Manager to execute additional agreements with private parties and companies to implement the project. These may include right of entry agreements with residents to perform construction work on private property for fence relocation, agreements with Palo Alto Park Mutual Water Company for work on private laterals, and with the East Palo Alto Sanitary District to perform work on its infrastructure.

Project Schedule
Construction is planned to commence Summer 2022. The contract provides for 130 working days (approximately six months) after notice to proceed to complete the project. Appropriate construction signage will be installed prior to project commencement.

Fiscal Impact
The Project has funding in the amount of $2,402,300 that is comprised of (a) a grant in the

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amount of $250,000 from the City/County Association of Governments of San Mateo County (C/CAG); (b) $37,500 of Measure A fund City match; (c) a grant in the amount of $2.0 million from the Affordable Housing and Sustainable Communities (AHSC) program of the California Department of Housing and Community Development; and (d) a grant in the amount of $114,800 from the Association of Bay Area Governments (ABAG).

Task Provider Contract Contingency Total
Construction Granite Rock $1,855,908.5 $371,181.7 $2,227,090.20 Construction Support
Services
CSG
Consultants
$110,330 $110,330
Total $2,337,420.20
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
Environmental
This Project is categorically exempt under California Environmental Quality Act (CEQA) Chapter 3, Article 19, Categorical Exemptions, Section 15302(c).

3.1 Packet Pg. 8

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Michelle Marie Daher, Management Analyst
SUBJECT: Grassroots Ecology Contract Funding Source and Duration Update Recommendation
Direct the City Manager to update contract with Grassroots Ecology as follows:

1. Rescind Resolution No. 5168 and replace it herein; and

2. Execute a three (3) year agreement with Grassroots Ecology, in a form approved by the City Attorney, with a not-to-exceed total amount of $45,000, ($15,000 per year) for the purposes of coordinating cleanup events in the City, funded with $27,000 from the Stormwater Impact Fund, and up to $18,000 from the CalRecycle Beverage Container Payment Program Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 3: Increase Organizational Effectiveness and Efficiency Background
Grassroots Ecology is a local non-profit providing Ecological and Environmental Education support to the East Palo Alto community, with focused programs at Cooley Landing. On September 17, 2019, through Resolution No. 5168, the City Council authorized a five-year contract with Grassroots Ecology for services including ongoing litter abatement and public education programs. The proposed Scope of Services included volunteer engagement events not to exceed $9,000 per year for five consecutive years. The CalRecycle Beverage Container Payment Program was the noted means of funding for this contract, authorized through Resolution No. 5167, wherein the City Manager was directed to request said funds from CalRecycle by submitting an application and all documents required to obtain funds.

Prior to the contract being finalized and funding secured, staff were temporarily reassigned to assist the community in support of relief from pandemic related impacts. Subsequently, contracts for service were not finalized. Grassroots Ecology continued to provide ongoing support for related items, though a budgetary gap materialized for the non-profit during this time.

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Cal Recycle requested completed applications for funding at the start of 2020 and each subsequent year. The City initiated an application at the beginning of 2020 and provided supporting documentation including noted resolutions yet failed to complete the application process for 2019 funds and did not submit applications for subsequent years.

Litter abatement of Cooley Landing and Runnymede drainage ditch is a required action under the city’s National Pollution Discharge Elimination System (NPDES) permit to prevent litter impacts to the San Francisco Bay. Grassroots Ecology has consistently provided ongoing cleanup support and modified programming during the fiscal years in question to accommodate changing needs of volunteers, while also hiring local community members as interns to provide program support as volunteer levels waned.

Grassroots Ecology has been unable to obtain gap funding to address the agreed upon incoming funds from the City and has proposed a modified scope of services to enable full access to agreed upon funds by condensing the use of the anticipated $45,000 in funds over a three-year period.

Analysis
CalRecycle Beverage Container Payment Program will not authorize retroactive distribution of the 2019 through 2022 program cycles. Applications for CalRecycle Beverage Container Payment Program funds will be available Fall 2022 and again Fall 2023 for Fiscal Year 2022/2023 and 2023/2024 distributions, at which time the City will request payments. These funds will become available under the authorized contract with Grassroots Ecology, upon successful completion of the required application.

Staff recommends the following actions are taken:

1. Rescind Resolution No. 5168; and

While typical distributions have been over $9,000 per year, if authorized, the above actions will promote organizational efficiency as varying payment totals for the CalREcycle Beverage Container Payment Program are provided at the end of the calendar year.

Fiscal Impact
Authorization of the recommendation will result in a $27,000 allocation from the NPDES fund and up to $18,000 from the CalRecycle Beverage Container Payment Program.

Public Notice
Published with the City Council agenda packet.

Environmental
The action being considered by the City Council is exempt from the California Environmental Quality Act (CEQA) because it is not a "project" pursuant to 15378(b)(4) because it is a fiscal

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activity which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.

Attachments

1. GRE 3 Year Contract 2022 3-11

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1 of 2
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

AUTHORIZING THE CITY MANAGER TO ENTER INTO A THREE YEAR CONTRACT

WITH GRASSROOTS ECOLOGY TO PERFORM ECOLOGICAL STEWARDSHIP WITH

COMMUNITY VOLUNTEERS TO PERFORM LITTER COLLECTION EVENTS

UTILIZING STORMWATER FEES AND CALIFORNIA BEVERAGE CONTAINER

PAYMENT PROGRAM FUNDS
AND RESCINDING RESOLUTION NO. 5168
WHEREAS, on May 18, 2018, the City Council authorized the City Manager to enter into an agreement in an amount not to exceed $14,127.49 with Grassroots Ecology to grow a plant palate for Cooley Landing Construction Phases 4 and 5, and the City entered into the contract to purchase these plants from Grassroots nursery, which specializes in native plants that do not contain the pathogen, phytophthora; and WHEREAS, Grassroots Ecology (under its former name, Acterra) has an ongoing Memorandum of Understanding with the City to provide programs at Cooley Landing Environmental Education Center performing ecological stewardship activities; and WHEREAS, Grassroots Ecology has been engaged in litter abatement cleanup efforts at Cooley Landing since 2016; and
WHEREAS, the City Council recognizes the environmental and aesthetic value of the City's urban parks and the benefits to public health, meeting of mandatory compliance requirements for stormwater pollution prevention, and enhanced vibrancy that litter abatement will provide this and future generations; and WHEREAS, California Beverage Container Payment Program funds are designated for programs that enhance community awareness of beverage container recycling, and efforts to enhance the collection of this material; and WHEREAS, stormwater fees are collected for the express use of meeting the City’s National Pollutant Discharge Elimination System (NPDES) Permit requirements, including therein section C.10 relating to trash abatement and protection of the waters of the state; and
WHEREAS, the City Council wishes to financially contribute to this charitable organization to reimburse them for services that complement and enhance the City's stormwater compliance mandates, as well as removal of litter in Cooley Landing Park and Runnymede Drainage system, and other areas where litter threatens water quality, with the added community benefit of community engagement, encouraging volunteerism, expanding ecological education opportunities, and building community pride; and WHEREAS, the City Council through Resolution No. 5168 authorized a five-year contract with a not-to-exceed $9,000 per month with Grassroots Ecology which is being replaced; and

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Packet Pg. 12
Attachment: GRE 3 Year Contract 2022 3-11 (2130 : Grassroots Ecology Contract Update) 2 of 2

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OFEAST PALO ALTO HEREBY authorizes the City Manager to:

Execute a three (3) year agreement with Grassroots Ecology, in a form approved by the City Attorney, with a not-to-exceed total amount of $45,000, ($15,000 per year) for the purposes of coordinating cleanup events in the City, funded with $27,000 from the Stormwater Impact Fund, and up to $18,000 from the CalRecycle Beverage Container Payment Program
BE IT FURTHER RESOLVED that Resolution No. 5168 is hereby rescinded.

PASSED AND ADOPTED this 5th day of April, 2022.

AYES:

NOES:

ABSENT:

ABSTAIN:

Rubin Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

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

3.2.a
Packet Pg. 13
Attachment: GRE 3 Year Contract 2022 3-11 (2130 : Grassroots Ecology Contract Update)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 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: Adoption of the First Source Hiring Ordinance for City Funded Projects and Properties
Recommendation

1. Waive the Second Reading and adopt 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. 2: Enhance Economic Vitality
Priority No. 6: Create a Healthy and Safe Community
Executive Summary
On March 15, 20221, the City Council waived the first reading and introduced an ordinance requiring First Source Hiring for City-Funded Projects and Properties to be effective 30 days after the second reading (Attachment 1).
1 Please see link to City Council agenda item 8.1:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=None&MeetingID=1804&MediaPosition=3250.173&ID=2139&Cs sClass=

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Prior to introduction, the Council directed City staff to revise the proposed ordinance by changing the definition of “Applicable Projects and Value Threshold” from $100,000 to $250,000, as set forth in the following sections. Please see the highlighted bold and underlined text below, which has been incorporated into the ordinance (Attachment 1):

5.11.030 Scope and Goals.

A. For any public works contracts with the City that have a value of $250,000 or more, a subsidized project with a subsidy from the City of $250,000 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:

5.11.040 Definitions
"Subsidized project" means a development project for which a subsidy recipient received one or more subsidies with a total value to the City of $250,000 or more. "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 $250,000 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.

Additionally, the City Council discussed the need to develop employment opportunities for East Palo Alto residents, regardless of background or barriers faced. The City Council was interested in further refinements to the definition of disadvantaged worker and City staff will do so in the Administrative Guidelines.

The City Council also gave direction to staff to clarify certain issues in the Administrative Guidelines including the infrastructure improvements provided by the City on behalf of a development project that would constitute a subsidy.

The City Council unanimously introduced the attached ordinance.

Fiscal Impact
There is no fiscal impact with the items described in this staff report.

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 San Mateo Co.

Library located at 2415 University Avenue, East Palo 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.

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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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Packet Pg. 17
Attachment: Ordinance (2177 : Adoption of the First Source Hiring Ordinance for City Funded Projects and Properties) 551\01\3246362.1
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, regardless of background or barriers faced, 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 $250,000 or more, a subsidized project with a subsidy from the City of $250,000 or more, or a project sited

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on property leased from the City, there is hereby established the following goals for employment of East Palo Alto residents:

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

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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.

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.

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"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 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 $250,000 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.

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"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 $250,000 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;
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

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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 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 exceeds 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,

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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:

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

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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.

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.

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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 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.

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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.

PASSED AND ADOPTED this _____ day of ______________, 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

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Patrick Heisinger, Assistant City Manager
Greg Henry, Senior Management Analyst
SUBJECT: Amendment Five with Youth Community Service for Distribution of Gift Cards to Encourage Vaccination
Recommendation
Adopt a Resolution authorizing the City Manager to execute a Fifth Amendment with Youth Community Services, to increase the contract amount by Five Thousand Dollars ($5,000), for a new total not-to-exceed amount of Forty-Five Thousand Dollars ($45,000), to extend the term through May 31, 2022, to continue the vaccine incentive program and to authorize the incentive program for youths below the age of five (5) when a vaccine for this cohort approved by Federal Drug Administration.

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

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 5: Improve Communication and Enhance Community Engagement Priority No. 6: Create a Healthy and Safe Community
Background
The widespread, deleterious impacts of the outbreak of novel coronavirus (named “COVID-19” by the World Health Organization) continues to strain communities throughout the Bay Area and the world.

On March 17, 2020, the Council proclaimed a local emergency for COVID-19 and further authorized the City Manager to make repairs, alterations, or improvements to the City’s public facilities, take any directly related and immediate actions required by said emergency, and procure the equipment, services, and supplies for those purposes.

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On July 20, 2021, following the COVID-19 Vaccination Program Regular Update agenda item, the Council authorized $25,000 in funds to be used for a vaccination gift card incentive program. Council direction was that residents should receive $50 incentive cards for completing a COVID-19 vaccination schedule.

Following review, the City Manager determined the best use of City resources would be to outsource the administration of this program. Youth Community Service (YCS) was chosen.

The City initiated a third amendment with YCS to authorize the use of the incentive program for youths between the ages of 5-16.

On December 21, 2021 the City Council authorized a fourth amendment with YCS to extend the program through the end of February 2022 and to increase the not to exceed by $15,000 which was the amount provided by the County through a grant.

Analysis
This program has supported the City's incredible increase the population percentage of vaccination. Staff are asking for a small increase in both funding and term in order to manage this program through the anticipated authorization of an under five vaccine.

Staff anticipates this will be the last amendment for this agreement due to the reduced number of residents seeking a COVID-19 vaccination at this time.

Fiscal Impact
The $25,000 cost of this program was previously authorized as an appropriation by Council.

An additional $15,000 increase to the program was funded through a grant with the County.

The additional $5,000 requested by this amendment will come from reserves.

Public Notice
N/A
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 YCS Amendment 5

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Resolution No. XX-2021 1 of 2
RESOLUTION NO.– 2021

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

AUTHORIZING THE CITY MANAGER TO EXECUTE A FIFTH AMENDMENT TO AN AGREEMENT

WITH YOUTH COMMUNITY SERVICES TO INCREASE THE CONTRACT AMOUNT BY FIVE THOUSAND DOLLARS ($5,000), FOR A NEW TOTAL NOT-TO-EXCEED AMOUNT OF FORTYFIVE THOUSAND DOLLARS ($45,000), TO EXTEND THE TERM THROUGH MAY 31, 2022, TO

CONTINUE THE VACCINE INCENTIVE PROGRAM AND TO AUTHORIZE THE INCENTIVE PROGRAM FOR YOUTHS UNDER THE AGE OF FIVE (5) WHEN VACCINE FOR THIS COHORT APPROVED BY THE FEDERAL DRUG ADMINISTRATION.

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 WHEREAS, the Centers for Disease Control and Prevention ("CDC”) has stated 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 (“COVID-19”) and on March 10, 2020, the San Mateo County Board of Supervisors (“County Board”) 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
WHEREAS, on March 17, 2020, the City Council proclaimed a local emergency due to COVID19 and further authorized the City Manager to make repairs, alterations or improvements to the City’s public facilities pursuant to Section 22050 of the California Public Contract Code, take any directly related and immediate actions required by the emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids to let contracts; and WHEREAS, on July 20, 2021, the City Council appropriated Twenty-Five Thousand Dollars ($25,000) for a vaccination incentive program which would provide gift cards to residents upon vaccination; and
WHEREAS, on September 7, 2021, the City Council approved an amendment to the contract dated June 25, 2021 with Youth Community Services for the purchase and management of gift cards for the vaccination incentive program; and
WHEREAS, on October 18, 2021, the City entered into an agreement with the County of San Mateo for Fifteen Thousand Dollars ($15,000) in additional gift card funding; and WHEREAS, the vaccination incentive program is being expanded to incentivizing vaccination by youths ages 5 – 16 with amendment three to the contract; and WHEREAS, on December 21, 2021, the City Council approved amendment four to the contract

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with Youth Community Services for the purchase and management of gift cards for the vaccination incentive program;

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY authorizes the City Manager to execute a Fifth Amendment with Youth Community Services, to increase the contract amount by Five Thousand Dollars ($5,000), for a new total not-to-exceed amount of Forty-Five Thousand Dollars ($45,000), to extend the term through May 31, 2022 to continue the vaccine incentive program and to authorize the incentive program for youths under the age of five (5) when a vaccine for this cohort is approved by Federal Drug Administration.

PASSED AND ADOPTED this 5th day of April 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

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EAST PALO ALTO

CITY COUNCIL

1. Appropriating $45,000 from the following Funds: Measure HH (F219), Housing Successor (F220), and General Fund (010); and

2. Authorizing the City Manager to execute an amendment to the Agreement with DRA that increases the not-to-exceed amount to $170,000 and allows for an additional oneyear extension of the contract term with approval of the City Manager; and

3. Rescinding Resolution No. 01-2022.

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

Priority No. 6: Create a Healthy and Safe Community
Background
On January 18, 2022, the City Council directed staff to engage David Rosen & Associates to perform analyses related to the proposed East Palo Alto Opportunity to Purchase Act (“EPA OPA”) and potential revenue sources to support affordable housing activities. This work required an increase to the existing not-to-exceed amount of $125,000 in the current professional services agreement with DRA (“DRA Agreement”).

Resolution No. 01-2022, which authorized the City Manager to execute an amendment to the DRA Agreement, included an appropriation of $40,000 and corresponding increase in the notto-exceed amount from $125,000 to $165,000. This was a staff error; the increase should have been $45,000, for a not-to-exceed amount of $170,000.

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The purpose of this staff report is to correct the error in Resolution No. 01-2022 and clarify that the not-to-exceed amount is $170,000.

Analysis
The replacement resolution is provided as Attachment 1.

Next Steps
If adopted by the City Council, the resolution will authorize the City Manager to execute the amendment to the DRA Agreement. After payment of any outstanding invoices, this will close out the DRA Agreement.

Fiscal Impact
The fiscal impact of a $40,000 appropriation was discussed in the January 18, 2022 staff report. The action associated with this staff report is to increase the appropriation to $45,000. Staff recommend that this additional $5,000 be appropriated from the Housing Successor Fund (F220).

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. Resolution

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Resolution No. XX-2022 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 EXECUTE AN AMENDMENT TO THE PROFESSIONAL

SERVICES AGREEMENT WITH DAVID ROSEN & ASSOCIATES FOR FINANCIAL CONSULTING SERVICES TO INCREASE THE NOT-TO-EXCEED AMOUNT TO $170,000 AND EXTEND THE TERM

BY ONE YEAR
WHEREAS, on February 5, 2019, by Resolution No. 5081, the City Council authorized the City Manager to execute a Professional Services Agreement (“Agreement”) with David Rosen & Associates (“DRA”) in an amount not to exceed $125,000 for a three-year term for financial consulting services; and
WHEREAS, DRA has performed analyses under this Agreement to support the City of East Palo Alto’s (“City”) affordable housing and development work, including development of its Inclusionary Housing ordinance and program; and
WHEREAS, at a public hearing on December 22, 2021, the City Council considered an East Palo Alto Opportunity to Purchase Act Ordinance (“EPA OPA”) and directed staff to return with an updated ordinance and accompanying analysis of real estate trends and potential impacts of EPA OPA for City Council consideration; and
WHEREAS, the City Council wishes to engage DRA, as an experienced real estate economics consultant, for an analysis of EPA OPA; and
WHEREAS, at the City Council Priority-Setting Session on January 8, 2022, the City Council directed staff to return in February or March with a study of City revenue options to support affordable housing, an analysis that was most recently completed by DRA in February 2020; WHEREAS, completion of these tasks and other activities under the Agreement require additional funds; and
WHEREAS, on January 18, 2022, by Resolution No. 01-2022, the City Council appropriated the amount of $40,000, rather than $45,000, and authorized the City Manager to execute an amendment to the Agreement with DRA that increases the not-to-exceed amount to $165,000, rather than $170,000, and allows for an additional one-year extension of the contract term with approval of the City Manager.

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

1. Appropriates $45,000 from the following Funds: Measure HH (F219), Housing Successor (F220), and General Fund (010); and

2. Authorizes the City Manager to execute an amendment to the Agreement with DRA that increases the not-to-exceed amount to $170,000 and allows for an additional one-year extension of the contract term with approval of the City Manager, and

3. Rescinds Resolution No. 01-2022.

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Attachment: Resolution (2178 : David Rosen & Associates Contract Amendment) Resolution No. XX-2022 2 of 2

PASSED AND ADOPTED this 5th day of April 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

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Attachment: Resolution (2178 : David Rosen & Associates Contract Amendment)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
SUBJECT: Proclamation Recognizing R.B. Jones for his years of service to the City as a Council member and Mayor in the 1900's.

Recommendation
Present the proclamation.

Attachments

1. Placeholder R.B. Jones

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Attachment: Placeholder R.B. Jones (2179 : R.B. Jones Proclamation)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
SUBJECT: Verbal update from Interim Police Chief, Jeff Liu Recommendation
Accept the verbal update from Interim Police Chief, Jeff Liu.

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager SUBJECT: Below Market-Rate Housing Program Administration Update Recommendation
Accept the report on the City’s Below Market Rate Housing Program administration.

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 City’s current stock of Below Market Rate (“BMR”) homeownership units primarily consists of homes that were created through either monetary assistance from the former Redevelopment Agency or market rate developer obligations to create inclusionary units.

These homeownership units typically have a resale restriction agreement between the City (as the successor to the former Redevelopment Agency) and the homeowner. The resale restriction agreement regulates the price at which the homeowner may resell the property and gives the City an option to purchase the home if the homeowner wishes to sell.

Following the dissolution of Redevelopment Agencies in 2011 and subsequent staffing cuts, the City had no consistent monitoring of its BMR units. Regular transactions such as refinances, loan subordinations, and re-sales required significant time and involvement of the City’s Community and Economic Development Department, Office of the City Attorney and outside counsel.

To build back capacity after several years of limited oversight and administration of this affordable housing portfolio, in 2018, the City Council directed staff to issue a Request for Proposals (“RFP”) to identify a consultant to assist with creating a more efficient and costeffective program.

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EPACANDO and the Bay Area Affordable Homeownership Alliance (“BAAHA”) were selected through this RFP process, and on February 5, 2019, by Resolution No. 5080, the City Council awarded the team of EPACANDO and BAAHA a 3-year contract (“Agreement”) totaling $125,000, with a three-year term that commenced in May 2019 and allows for two optional one-year extensions at the discretion of the City Manager.

The staff report from February 5, 2019 states there are “approximately 105 homes” in the City’s BMR portfolio. EPACANDO’s review of each file has shown this initial figure of 105 required further clarification. Across all BMR units citywide, there is a combination of City BMR units with a City-recorded restriction; Habitat for Humanity BMR units that the City monitors but does not have the ability to enforce; and units with a Downpayment Assistance Loan. The exact breakdown of unit types and totals is shown in the Analysis section below.

The purpose of this report is to provide an update on program operations since EPACANDO and BAAHA assumed the role of BMR Administrator in 2019.

Analysis
BMR Program Set-Up
One of the goals of the RFP was to identify a BMR Administrator that would institute a full BMR program by establishing a proper filing system, protocols and guidelines, and a point of contact for public inquiries.

To that end, the scope of work for the Agreement included several important “start-up” tasks:
• Hire a full-time Program Associate to oversee all aspects of the BMR program • Determine the number of BMR homes remaining in the City’s BMR portfolio • Review all case files for completeness and load basic information into a database • Conduct a basic “risk assessment”
• Re-instate an annual monitoring regimen
• Hold workshops or one-on-one homeowner consultation
Number of BMR Units in City Portfolio
Table 1 below summarizes all BMR units in the City’s portfolio. Initial estimates of peak program size were based on the existence of program files associated with 108 property addresses. EPACANDO found that historically, there were 74 BMR homes with a Cityrecorded restriction, before 14 planned contract expirations and 7 unplanned losses in years past. These unplanned losses were due to foreclosure or sale in violation of the BMR Resale Restriction Agreement. No homes have been lost out of the City’s BMR portfolio since 2013.

Table 1. Number of BMR Units in City Portfolio
Total # of files 108
Less files for rental BMRs, not in ownership BMR program (3) Less files for Habitat for Humanity, not in the City BMR program
(27)
Less files for down-payment assistance loans, not for BMRs (3) Less files for coordination of volunteer work to rehab a home (1) Files for properties that are now, or were, in BMR program 74

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Less properties with 5-year affordability contract expiration (14) Less properties lost to foreclosure; City not able to intervene (4) Less properties sold in violation of resale agreement (3) Files for properties currently in ownership BMR program 53 As shown above, the City has enforcement authority over the units in its BMR program (74), though it also monitors the availability of other non-profit sponsored, permanently affordable homeownership units, including those built by Habitat for Humanity, as important community assets.

It should be noted that attrition in BMR programs is a challenge all jurisdictions experience over time. As a point of reference, a 2010 Regional Assessment of BMR Program Administration in San Mateo County, which the City participated in, provided findings and recommendations for best practices in affordable housing program administration. The assessment is provided as Attachment 1.

Other Start-Up Tasks
EPACANDO has reviewed all files, basic information has been loaded into the Homekeeper database, annual monitoring is now in its third cycle, and the initial risk assessment has been completed. A description of the monitoring and the findings of the risk assessment are presented under Current Operations, below.

Current Operations of BMR Program Administration
Operations comprise transactions, monitoring and enforcement. Transactional services include marketing new BMRs, conducting resales, and processing refinances, title changes and general inquiries. During the three years 2019, 2020, and 2021 there have been:
• No new BMRs to market
• Three resales
• Four refinances
• One title change
• Over 50 consultations
BMR Resales
For each of the three BMR resales conducted, more than 50 households applied, more than 25 households qualified for the lottery, and the ultimately successful buyer was an East Palo Alto resident. This result is attributable to focused outreach to current and former East Palo Alto residents, and to incorporation of the City’s local preference into the lottery – a system that increases the chances of locally employed individuals and local residents.

Other Transactions
Other transactional work, including refinances, loan payoffs, title changes, and other inquiries, is less complex but typically requires coordination among all parties involved: homeowner, BMR administrator, City staff, and a finance and real estate professional who may or may not be familiar with BMRs.

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Monitoring & Education
EPACANDO is currently conducting its 2022 annual monitoring. As in 2020 and 2021, each BMR homeowner is asked to complete a notarized affidavit to confirm residency and acknowledge familiarity with BMR program regulations: notably, the requirements to not rent out the unit, refinance, remodel or change title without City approval.

The monitoring process now runs smoothly but required efforts up-front to gain homeowner cooperation, as many had not contacted by the City for such information for several years.

There are also variations in requirements. Though the current version of the Buyer’s Occupancy and Resale Restriction Agreement explicitly requires cooperation with monitoring and secures a right for the City to inspect interiors, neither of these conditions are in the agreements for 14 of the earliest BMR homes.

Except as detailed below, BMR homeowners are in compliance. EPACANDO reports that, primarily through conversations triggered by the monitoring process, BMR homeowners have refreshed their understanding of their regulatory documents and are now frequently initiating discussion of ordinary topics such as changes in family size, implications of the title-holders aging, family and extended family returning to or joining the household.

Compliance Concerns
Within the City’s BMR portfolio, there are 11 instances of probable violation that merit putting the homeowner on notice of potential enforcement, as summarized in Table 2 below.

TABLE 2: Compliance Concerns
Delinquent Down-Payment Assistance Loan 1
Non-Compliant Occupancy 1
Non-Compliant Refinance, Lower Risk 7
Non-Compliant Refinance, Higher Risk 2
Total 11
These are cases in which continued consultation has not resulted in the homeowner complying with the BMR regulations or relinquishing the home for resale. As shown above, these cases include not repaying a relatively small City loan; living out of state; and refinancing without permission, and for amounts originally above the restricted resale value. The “lower risk category” includes those that are no longer over-financed, as their resale value has risen; while those in the “higher risk” category are still over-financed, meaning the homeowner owes more than the restricted resale value of their home.

EPACANDO and City staff are currently coordinating next steps for these 11 cases.

Future BMR Administration
BMR program growth depends on construction of new for-sale or rental homes in developments covered by the City’s Inclusionary Housing Ordinance (“Ordinance”). The Ordinance requires that 20% of new units in a residential development be restricted at certain levels of affordability, and these units become part of the City’s BMR program. This will require technical assistance and oversight for developers and property managers, from marketing and lease-up or sale of the new units, and for all changes in ownership or tenancy in the future.

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At this time, there are a small number of for-sale inclusionary units in the City’s pipeline, with only one unit under construction. EPACANDO will continue to monitor the portfolio and act as BMR Administrator for the duration of the Agreement term.

As the BMR program grows, the City Council may wish to revisit the administration of the program and make updates to the program structure and the City’s investment in it.

Fiscal Impact
There is no fiscal impact associated with the items described in this staff report. BMR administration is funded through the term of the Agreement with EPACANDO.

East Palo Alto, like most cities with a BMR program, does not pass any program administration costs through to BMR homeowners. EPACANDO estimates this cost to be $75 to $125 per unit per month. This would be a substantial cost for most low- or moderate-income BMR homeowners. Some cities charge an administrative fee and lower the price of the BMR unit accordingly. In the future, the City may wish to consider incorporating an administrative fee into the program.

Library located at 2415 University Avenue, East Palo Alto.

Attachments

1. San Mateo County Regional Assessment of BMR Program Administration

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Attachment: San Mateo County Regional Assessment of BMR Program Administration (2175 : BMR Administration Update) PAGE 2 CORNERSTONE PARTNERSHIP
keeping homes affordable and communities strong
Produced as a project of Cornerstone Partnership
The Cornerstone Partnership is a peer network for homeownership programs that preserve long-term affordability and community stability, helping more hard-working people buy homes today, maintain those homes and keep them affordable in the future. The Cornerstone Partnership is a program of NCB Capital Impact funded by the Ford Foundation.

For more information contact
Colby Dailey
Cornerstone Partnership
1333 Broadway, Ste. 602
Oakland, CA 94612
510/496-2202
[email protected]
Copyright NCB Capital Impact 2010
Copies of these tools are available for download on the Cornerstone Partnership website at www.affordableownership.org.

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Attachment: San Mateo County Regional Assessment of BMR Program Administration (2175 : BMR Administration Update) CORNERSTONE PARTNERSHIP PAGE 3
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Table of Contents
Table of Contents................................................................................................................... 3 I. Executive Summary and Recommendations..................................................................... 5 San Mateo County Strengths and Challenges.......................................................... 5 Recommendations:.................................................................................................... 6 II. Background ........................................................................................................................ 8 NCB Capital Impact .................................................................................................... 9 San Mateo County.....................................................................................................10 Assessment Tool and Process ..................................................................................12 Assessment Tool in San Mateo County ...................................................................12 III. San Mateo County Programs ..........................................................................................13 Description of Programs...........................................................................................13 Best Practices in the County.....................................................................................14 Common Strengths...................................................................................................16 Common Challenges .................................................................................................17 IV. Recommendations.......................................................................................................... 20 Greater Inter-program Cooperation to Achieve Economies of Scale.................... 21 Twelve High Impact Practices ..................................................................................23 V. Assessment Tool and Results by Question......................................................................37

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Attachment: San Mateo County Regional Assessment of BMR Program Administration (2175 : BMR Administration Update) CORNERSTONE PARTNERSHIP PAGE 5
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I. Executive Summary and Recommendations
NCB Capital Impact, a national community development financial institution, has spent the last year developing tools to help better manage affordable housing programs. As part of this work, experts in the field conducted an assessment of affordable ownership housing programs in San Mateo County, California to offer guidance for the jurisdictions as well as to test the assessment instrument. Eleven jurisdictions and one nonprofit were interviewed individually in spring 2010. The assessment contained a number of open ended questions and approximately sixty yes/no questions about whether jurisdictions follow certain best practices, which were identified by NCBCI based on several prior years of work with stakeholders nationwide.

There were two primary types of programs, home purchase assistance loan programs and below market rate homes (BMRs). Program BMR portfolios ranged in size from fewer than five homes to over 150 homes. Loan program portfolios ranged from five to almost 200 loans.

These programs have been an effective way to provide affordable housing in one of the most expensive real estate markets in the country.

The assessment found that programs followed between 23 and 81 percent of the best management practices. Practices associated with the front end of programs (such as providing affordability and marketing) were more likely to be followed than those associated with the back end of programs (such as evaluation and monitoring).

Larger programs were much more likely to follow best practices. Most small and midsized programs do not have the safeguards in place to ensure the public investment is always protected. This is primarily due to the limited staffing and resources available for very small programs.

Jurisdiction staff members report that the programs are popular with the general public and participants. Additionally, program administrators have shown flexibility and an ability to adapt to changing times.

The biggest shared challenge is to ensure that the affordability of the homes is protected. For example, only a few of the programs communicate with homeowners regularly (at least annually), and many do not have adequate monitoring to avoid problems such as defaults.

Consequently, some of the programs reported loss of homes (i.e. they are now market rate homes) and it is likely that additional programs have lost homes and do not know about it at this time.

San Mateo County Strengths and Challenges
San Mateo County programs are doing an excellent job of ensuring their programs are affordable to low and moderate income buyers. Because there is such a large difference between market rate prices and affordable housing prices, there is a tremendous demand for the programs.

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Additionally, San Mateo County’s affordable homeownership programs seem to be doing a good job of ensuring that homebuyers understand price restrictions or loan terms. Almost all of the jurisdictions have written material with examples to help explain the programs and the resale restrictions.

One key factor that influences programs in San Mateo County is programs’ limited staff resources. In most cases, jurisdictions do not have sufficient resources for support, monitoring or enforcement. They have the ability to respond to problems, but not to be proactive. This can put the affordability protections at risk. Moreover, because administrators’ schedules are already stretched, their available time for running the programs is limited. As a result, most program administrators have not identified clear program goals, do not evaluate program outcomes over time, and do not track the equity earned by homeowners.

Jurisdictions generally have a mechanism for enforcing lender notification of default, but would benefit from having clearer procedures regarding what types of loans are appropriate for program participants.

Recommendations
Based on the results of this study, jurisdictions should explore opportunities to cooperate on the management of affordable housing programs. While policy setting should remain at a local level, some aspects of project administration can be easily shared to reduce costs, increase capacity, and gain efficiencies of scale.

Jurisdictions should also compare their practices to the short list of “high impact” practices summarized below. These practices are commonly followed by higher capacity programs within the county, but wider implementation of these 12 key policies is necessary to adequately protect the public investment and protect homebuyers.
12 High Impact Practices

1. The program has stated goals and objectives.

2. The program has incorporated ongoing evaluation into program design.

3. The program has a written marketing plan.

4. The program makes special efforts to connect with difficult to reach populations.

5. The program tracks ongoing affordability of assisted homes and the amount of homeowner equity gains at resale.

6. There is a backup sales strategy for homes that do not sell within a specified timeframe.

7. All owners are contacted by mail annually to remind them of program requirements.

8. There are written policies on repairs required at resale.

9. The program has adequate staffing available for support, monitoring & enforcement.

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10. The program has written mortgage criteria describing what types of loans are permitted.

11. The program has written procedures for responding to a notice of default.

12. All buyers receive a concise disclosure document that summarizes the program guidelines and resale restrictions in plain language.

Currently, jurisdictions follow between 25 and 80 percent of these high impact best practices.

Specifically, the three smallest programs follow less than half (45 percent) of the high impact best practices and the three largest follow over 70 percent.

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Attachment: San Mateo County Regional Assessment of BMR Program Administration (2175 : BMR Administration Update) CORNERSTONE PARTNERSHIP PAGE 9
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II. Background
NCB Capital Impact
NCB Capital Impact (NCBCI), a national community development financial institution, is in the process of launching a national initiative funded by the Ford Foundation intended to improve the quality of management and oversight of homeownership homes with long-term affordability restrictions.

Working with Fannie Mae, NeighborWorks America, Habitat for Humanity International, the National CLT Network, and the National Housing Conference, NCBCI convened a series of day long workshops including 100 experienced affordable homeownership practitioners to outline a broad set of voluntary standards to guide local homeownership programs. Participants identified general principles and specific practices that programs can use to make the most of public investment in affordable homeownership and avoid many common problems.

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DRAFT STEWARDSHIP PRINCIPLES
These principles are intended to guide the implementation of programs that invest public or philanthropic resources to reduce the cost of homeownership and seek to preserve this public investment for maximum impact. The draft principles fall into six categories – the full list of principles is available at www.affordableownership.org.

IMPACT-DRIVEN: SET & TRACK GOALS THAT REFLECT COMMUNITY PRIORITIES Affordable homeownership programs should reflect a thoughtful and informed balance of community priorities grounded in a careful analysis of objective data on market conditions and needs.

TARGETED: FOCUS ON BUYERS WHO NEED HELP BUT ARE LIKELY TO SUCCEED Scarce public resources for affordable homeownership should be targeted toward households that need it and would be unable to afford ownership without support but are in a strong position to succeed in ownership over time.

BALANCED: BUILD WEALTH FOR OWNERS WHILE PRESERVING THE COMMUNITY INTEREST Every program should attempt to maximize the impact of public funding by balancing the interests of individual homeowners and the broader community.

MANAGED: STEWARD THE PUBLIC INVESTMENT TO ENSURE LONG TERM BENEFIT Public investment in affordable homeownership should be actively and professionally managed for maximum community benefit over the long term.

SAFE: ENSURE SOUND MORTGAGE FINANCING
Every program should ensure that private mortgage financing is safe, appropriate and consistent with the goals of the program. In addition to helping buyers make informed decisions, the program should protect the public interest by preventing predatory loan products and avoiding foreclosures whenever possible.

UNDERSTANDABLE: EDUCATE BUYERS ON PROGRAM REQUIREMENT
Every program should provide written materials and training to help buyers understand program requirements and should actively verify homeowners’ understanding prior to sale.

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NCBCI built a library of hundreds of program documents from established affordable homeownership programs around the country and engaged a team of consultants to identify common elements and key features. Drawing on these sources, NCBCI created an assessment tool which evaluates the extent to which a program is implementing over 60 different best practices. San Mateo County agreed to serve as a test pilot for NCBCI’s assessment tool.

San Mateo County
San Mateo County has an established history of producing permanently affordable housing.

Together, various public and private agencies in San Mateo County have created over 10,000 community-assisted homes (i.e., affordable housing subsidized in some manner), over 1,000 of which are owner occupied homes, more than half with long-term price restrictions. The public cash investment in this housing asset is over $100 million. Public and private subsidies together total over $300 million and have current market value over $1 billion. Additionally, San Mateo County also has a long tradition of inter-jurisdiction cooperation.

In late 2009, NCBCI approached the Department of Housing in San Mateo County about a possible partnership. NCBCI hoped to find a good test site for its affordable housing management assessment tool. San Mateo County, with its diverse network of programs and providers, from large to small, and from urban to suburban, provided a pilot area. Additionally, many jurisdictions had never completed a robust assessment of their affordable housing programs, so there was an opportunity for the municipalities to benefit as well.

The following jurisdictions participated in the assessment:

1. Belmont

2. Brisbane

3. East Palo Alto

4. Habitat for Humanity Greater San Francisco (nonprofit)

5. Menlo Park

6. Pacifica

7. Redwood City

8. San Bruno

9. San Carlos

10. San Mateo City

11. San Mateo County – Loan Program

12. San Mateo County – BMR Program

13. South San Francisco

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ABOUT 21 ELEMENTS
21 Elements is a multi-year, multi-phase housing policy collaboration project between all twenty-one San Mateo county jurisdictions, along with partner agencies and organizations. It is a forum for sharing resources, successful strategies and best practices. It has continued to grow to meet the changing needs of jurisdictions since its inception in 2006.

PHASE ONE (2006–2008) — HOUSING NEEDS ALLOCATION
Jurisdictions negotiated the redistribution of the countywide housing production allocation, in preparation for their Housing Element updates.

PHASE TWO (2008–2009) — HOUSING ELEMENT UPDATES
21 Elements organized a peer learning group of municipal planning staff involved in preparation of Housing Elements, developed the 21 Elements website (www.21elements.com) and the Housing Element Update Kit, which supplied material to help jurisdictions complete their Housing Element.

PHASE THREE (2009–2013) — HOUSING ELEMENT IMPLEMENTATION Phase Three involves jurisdictions cooperating as they implement eight high-value projects.

Areas of cooperation include updating emergency housing zoning rules, encouraging well designed mixed use/infill development, and identifying ways to reduce housing production reporting requirements.

PHASE FOUR (2010-2013) – HOUSING AND SUSTAINABILITY
Among other topics, the next phase will assist jurisdictions as they include the greenhouse gas reduction requirements associated with SB 375 into their housing plans. 21 ELEMENTS IS SPONSORED BY THE CITY/COUNTY ASSOCIATION OF SAN MATEO

COUNTY AND THE SAN MATEO COUNTY DEPARTMENT OF HOUSING

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Assessment Tool and Process
The first part of the assessment was a review of the programs that jurisdictions offer, including their size, target market, funding sources, management structure, and other important characteristics.

In addition to a number of open ended questions, jurisdictions were asked about which of approximately 60 different specific best practices they were currently implementing in their affordable homeownership programs. They could answer yes, no or needs improvement for each practice. These questions corresponded to the principles of best of practice developed by NCBCI (listed on page 21). Jurisdictions were provided sample policies and procedures for best practices they were not currently following. Please see the Appendices for information on how to get copies of the Assessment, sample policies or other tools.

The assessment included questions such as:
• Does the program have a written policy and procedures manual? • Does the program have a marketing plan?
• Does the program’s outreach material clearly explain the resale pricing formula to potential buyers?
• Does the program have a way to systematically track information on the buyers, the transactions and the homes?
Assessment Tool in San Mateo County
In spring 2010, NCBCI staff contacted staff members from jurisdictions in San Mateo County to find out if they would be interested in participating in an assessment pilot. In total, eleven jurisdictions and Habitat for Humanity Greater San Francisco agreed to help pilot the assessment tool. For simplicity, this summary refers to all participating entities as “jurisdictions”, even though Habitat’s program is included as well. In addition, there were separate interviews and assessments for the County BMR program and the County Loan program which lead to the total of 13 program assessments summarized in this memo.

The process began with jurisdiction staff collecting pertinent background material, such as administrative handbooks, policy manuals, sample legal documents, etc. NCBCI staff then met with each jurisdiction and conducted an approximately two hour interview. In some cases, follow up was needed to clarify points or get more information. Based on these interviews NCBCI wrote confidential individual jurisdiction assessment memos as well as this countywide summary.

Because San Mateo County is the pilot location for the assessment, it is not possible to compare the results to programs in other parts of the country. However, anecdotal evidence suggests that generally the trends observed in the county hold true for many places, yet in some cases there is more capacity to run programs well in San Mateo County than in other regions.

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III. San Mateo County Programs
Description of Programs
There is a wide range of programs to support homeownership in San Mateo County. They vary in many aspects such as size, level of institutionalization (e.g., formal or ad hoc), and maturity (e.g., from new initiatives to legacy programs that are no longer active). Broadly speaking, there are two major activities: homes that are sold for below market prices (referred to as BMRs) and purchase assistance loans to help reduce mortgage payments or down-payment requirements for buyers.

Below Market Rate Housing
Many jurisdictions have inclusionary housing, redevelopment agencies or other programs that create BMR homes. Most of these programs started in the 1990s, but some jurisdictions have added them more recently. In total 15i out of 21 jurisdictions in San Mateo County have inclusionary housing programs. The assessment documented the size of ten of these programs, which collectively have created 314 homes. Additionally, approximately 41 homes are in the development pipeline, but growth has slowed considerably with the current downturn in the real estate market. The largest of these programs has almost 70 homes while the smallest has less than five homes. Because many jurisdictions are not expecting significant new growth in the coming years, many of the programs are inactive or marginally active. Besides inclusionary housing ordinances, the largest source of BMRs is Habitat for Humanity, which has produced over 150 homes and has approximately 45 homes in the development pipeline.

Most of the programs target moderate income buyers – households at or below 120 percent of the area median income (AMI), but some reserve a percentage of their homes for very low income households (at or below 50 percent of AMI).

Loan programs
Nine jurisdictions have purchase assistance loan programs, totaling over 500 homes in their combined portfolios. However, a number of these programs currently are not making new loans, primarily due to a lack of funding. The loan portfolios range from under 10 to almost 200.

The median is just under 25.

The loans vary widely in how they are structured. Some are forgivable, some are silent (no payments required until the property is sold), and some charge interest and require monthly payments starting immediately. The largest loans can be for up to $200,000, but the majority fall between $75,000-$100,000. These loans are occasionally referred to as “Down payment Assistance Loans” even though in some cases the dollar amount of the loan may be larger than a traditional down payment (which is usually ten to twenty percent of the purchase price).

Interest rates also vary from zero percent to five percent. Most of these loan programs incorporate either shared appreciation procedures or resale restrictions. Some of the programs reserve loans for applicants who are buying BMR homes, effectively providing program participants with the benefits of more than one program.

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Best Practices in the County
Range of Best Practices
The number of best practices that jurisdictions are following ranged widely from a low of 13 to a high of 45 out of a total of 60 questions on the comprehensive assessment tool that are conducive to simple yes/no answers. Conversely, the number of best practices that jurisdictions are not following ranged from nine to 43. In percentage terms, jurisdictions followed between 23 and 80 percent of best practices. In almost all cases, there were some best practices that were not applicable to a given program, and these were not included in the percentage calculations.

Note: While the percentage calculation of best practices that are followed gives a rough sense of how well a program is run, it is limited because best practices are not weighted according to their importance. Consequently, the number should be thought of as only a rough indicator of a well managed program, but not a grade or score. In addition, comparing programs with this rough tool is not intended to suggest that every program should be implementing every one of our suggested best practices. Many programs have made a conscious decision not to implement certain practices that were included in the assessment. In some cases programs have decided that the practice is not appropriate due to certain local circumstances. More commonly programs have decided that the benefits of implementing the practice were not sufficient to justify the time and expense required. Jurisdictions can make a sensible choice to spend limited public resources on other things. Nonetheless, the overall pattern of answers seems to provide an accurate picture of the extent of each program’s capacity and to point to appropriate areas for future development.

Size and Best Practices
With a high degree of consistency, larger programs were more likely to follow best practices than small programs. While this may not seem surprising, the extent of this phenomenon is telling. Almost without fail, the larger the program the more likely it is to follow best practices.

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The three smallest programs (in terms of number of BMRs) followed the fewest best practices, while the three largest followed the mostii.

SIZE

BEST PRACTICES FOLLOWED
(AVERAGE)
Three largest programs 75%
Three smallest programs 39%
Countywide 56%
This pattern holds true even when examining only the ”high impact” best practices that the authors highlight in the recommendations section below. For these practices, the three smallest programs followed less than 44 percent of the best practices and the three largest followed over 70 percent.

To some extent the correlation between program size and best-practice administration may be due to a common underlying factor, a local revenue source dedicated to affordable housing.

Jurisdictions that receive CDBG or HOME funds directly, and those with mandated set-asides from redevelopment agency tax proceeds, have more money to subsidize production and more money for program administration.

Best Practice by Category
Generally, jurisdictions are following more best practices on the front end of BMR or loan processing (e.g. providing affordability, setting up programs, marketing homes, etc) versus the back end (e.g. support, enforcement, default/foreclosure protection).

Jurisdictions tended to follow best practices at high rates for topics that are needed to start programs, find eligible participants, and complete transactions (sales or rentals). For example, ten of 11 programs have pricing that is affordable to the target market (and the eleventh program only partially does), and all the programs have procedures to ensure buyers are eligible. Countywide, jurisdictions followed approximately 75 percent of best practices for topics related to affordable pricing and setting sale and resale prices.

One area for improvement is that of post-purchase support, monitoring and enforcement, where jurisdictions tended to follow fewer best practices than in other topic areas.

Countywide, jurisdictions followed 35 percent of these best practices. The low percentage reflects the fact that only two out of ten jurisdictions communicate regularly with home owners to remind them of the resale terms or to see if they have moved. Similarly, only three of 12 jurisdictions have plans to address homeowner violations. As discussed below, having regular post purchasing communication and monitoring is important because it helps reduces problems like illegal sales, and detects issues quickly if they occur.

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Common Strengths
Providing Affordable Housing
One of the greatest common strengths of the San Mateo County affordable ownership housing programs is simply that they are producing affordable housing in one of the most expensive real estate markets in the country. Despite the market, the programs are growing and have a solid grounding in local and State law. Many of the jurisdictions started with a program in the Housing Element of their General Plan to consider adopting inclusionary housing, which led to studies, and in many cases led to the creation of the programs. Similarly, the loan programs were often identified as a need in the housing plans and then studied and funded. Participation in this assessment study continues this trend, as many jurisdictions, in their most recent update of their respective Housing Element, committed to conducting program evaluations of their affordable ownership programs.

In general, jurisdictions are continuously building expertise and adapting their programs to be more effective. This is particularly the case for those with larger programs. For example, Redwood City’s current program structure, called Move Up, supports home buyers as they transition from rental homes to BMR homes and then to market rate housing.

Lack of Complaints
As a whole, the programs have not seen significant complaints or problems. There have not been a significant number of appeals or challenges. Staff members feel that the programs are generally well received by the community and they believe affordability restrictions on homes are not being lost.

Flexibility
The programs tend to be flexible and capable of meeting changing conditions. The rules governing the programs empower staff to adapt the programs as needed. Often, the programs grow organically, developing more explicit procedures in response to problems that arise.

While foreseeing and avoiding problems is always preferred, when this is not possible flexibility is important. An interview with the County loan program administrator offered an example of how the evolution and change happens, “We have added disclosures [for program participants] along the way. I had someone tell me, ‘You didn’t tell me about (the processing fees),’ and I said, ‘You signed a disclosure.’”
Menlo Park’s administrator described how they have developed guidelines over time:

We've had five [program] updates over the last 10 years. For instance, we just changed the wording on what a “sellable condition” is for a home because a person who was reselling a house in the program was upset that we wanted the home in pristine condition, like anyone else would selling a home. So we made [the wording] more specific.

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Good Accounting on Loans
The homes with active loans are usually well tracked and well documented. For loans that are paid back before the time of sale, jurisdictions know quickly if there is a problem because monthly payments stop. One jurisdiction’s explanation captured how the best practice can be sacrificed because of limited resources:

We used to send out a notification asking for current address and phone number. It served as a type of monitoring. One time, I am going down this list looking at mailing addresses and I see, Boston, Massachusetts…We had to make them take their loan off. We gave them a long lead time to get it done but we explained, “You can’t do this - you’re not living there.” They eventually refinanced and paid us off. [I believe] they did not realize that they were not allowed. They just did not realize…We have not done that mailing in a long, long time because we don’t have the staffing to do it.

Common Challenges
Many of the challenges stem from the small size of some of the programs. Jurisdictions with only a small number of homes often can not spend time developing policies and procedures.

Many months can pass between infrequent transactions that require staff members to devote attention or resources to managing the program. These long breaks mean that procedure can be forgotten. The challenges are:

Stewardship
One of the biggest challenges across programs is ensuring that the affordability guarantees on homes remain in place. Most jurisdictions do not have the staff resources to regularly communicate with home owners, so there can be a long period without any communication.

During this time, many things can go wrong. For instance, a home could be sold or refinanced at market based prices. Further, adequate systems are often not in place to allow programs to respond to problems once they are detected. For example, eight out of 11 jurisdictions have no written procedures for what to do if they receive a Notice of Default from a homeowner’s first mortgage lender.

Aside from homes being illegally sold at market prices, short salesiii and foreclosures can cause the lost of affordability. As one program that lost two homes to short sales said, they “…just had to eat it.” If the jurisdiction is fortunate, it can recapture the money it is due, but if it is not, it loses the investment completely.

In some jurisdictions, poor record keeping has contributed to problems. Because years can pass without any communication between the jurisdiction and the homeowner and/or the bank, the extent of the problem is very difficult to estimate. This dilemma is summed up by a quote by one of the program administrators:

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If we’ve lost units, we don’t know we have… In the years we have had the program we have done no monitoring or enforcement. As our portfolio has grown, it is very worrisome that we have no clue what is going on out there.

Having regular communication between home owners and the jurisdictions is one of the most important changes that jurisdictions could make. Habitat provides a good example of how to maintain ongoing communication. They send newsletters twice a year and offer classes on issues like home maintenance and finding a reliable contractor. They also know the homeowners in many of the homeowner associations (HOA) and can ask a new participant at a HOA meeting, “Who are you? Where do you live?”
Often problems are not detected for many years. For example, one homeowner had a low interest loan through an affordable housing program. After she paid it off she assumed that resale restrictions no longer applied to her home, but this was not true. The original owner/borrower sold it on the open market and, six years later, the new owner tried to sell it.

Luckily for the City, the restrictions showed up on the new title report. In the end, after a lawsuit the first title company paid the City its legal fair share of the appreciation. The City lost the home, but at least was able to recapture the excess proceeds funds.

A few jurisdictions have good practices to prevent these problems. For instance, several jurisdictions record an Excess Proceeds Deed of Trust because they believe escrow officers are more likely to notice this relative to other measures. South San Francisco, among others, records a simple, easy to understand two-page Notice of Affordability Restrictions that summarizes the lengthy affordability restriction document.

Programs provide good stewardship by making sure that homes are appropriately maintained over time, for example by ensuring that program participants are ready for the responsibility of owning a home or by requiring homeowners insurance. Some jurisdictions have had trouble because home owners were not prepared for the cost of Home Owners Association dues or for the maintenance standards expected in neighborhoods. Maintenance is especially important because community members can form opinions about the merits of affordable housing programs based on one bad neighbor. Habitat for Humanity provides a good model for preventing problems by providing new owners with classes and education related to maintenance and home repair.

Sustaining Programs Over Time
Most programs have no sustainable mechanism for funding program administration over time.

These programs are generally included within local housing department administrative budgets. However, as programs grow and produce affordable owner occupied homes that require monitoring and administration over long periods of time, the staffing demands can potentially exceed available resources.

Problems associated with lack of resources may get worse over time. Homes that were created by a redevelopment agency will have to be monitored by another entity once the agency ages out of existenceiv. This concern was captured by one participant who said:

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[While not much monitoring has happened to date,]…right now we can afford to contract or hire someone or find some way to pay for it because we have a robust Redevelopment Agency. But at some point that agency is going to fade away…There is a big worry how the maintenance of some of the programs is going to be funded and I have no idea how we can make it self-supporting.

Intentionality
Presumably, jurisdictions define their target markets thoughtfully. However, few programs record their strategic goals—which buyers to target and why—or systematically measure progress toward strategic goals. Because significant public and private subsidies are involved, it is important to identify the best use of those funds and to be able to track outcomes. For example, should the jurisdiction prioritize large homes or small ones? Will the program be open to anyone, target current residents, or be open only to certain groups such as those who work in the jurisdiction but live elsewhere, public safety employees, teachers, etc.? Once the target market is identified, the resources and restrictions can be appropriately targeted. However, because there is such a huge demand for affordable housing in San Mateo County, the easier route is to be less intentional with targets.

Only four of the 13 participating jurisdictions report that they conducted market research for their programs, which often serves as a first step for planning. While most programs receive community feedback informally, only one jurisdiction has a formal community outreach plan.

Seven out of the 13 jurisdictions report that they have conducted some level of evaluation of their program, but most of these are not comprehensive and none involve tracking the longer term outcomes that the programs are achieving, the impact that these scarce housing resources are having on neighborhoods or the change that they make in the lives of the buyers.

Emerging Challenges in a Depressed Real Estate Market
Historically, because market rate housing has cost sufficiently more than affordable homes, it was never a problem to sell (or resell) BMR homes at the approved prices. With the dramatic decline in home prices, this may no longer be true in some locations. Jurisdictions should have contingency plans in case homes can not sell in the required amount of time. Currently only four of the ten jurisdictions with BMR programs currently have such plans.

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IV. Recommendations
Greater Inter-program Cooperation to Achieve Economies of Scale The study results suggest that, given the realities of limited government resources, it simply may not be possible for small jurisdictions to do an excellent job of administering and monitoring affordable owner occupied homes. The results suggest that a certain minimum scale may be necessary before it is practical for a program to implement certain practices - including some that appear very likely to result in significantly improved outcomes for both homebuyers and the community.

The obvious solution to this challenge is for programs, especially smaller programs, to band together and develop some level of shared administrative capacity. By pooling resources, a shared program could achieve essential economies of scale which would make it practical to implement more of the best practices and relieve some of the work load on overtaxed local housing departments.

Based on the interviews, most jurisdictions are receptive to the idea of cooperating on basic tasks. One factor driving this may be the small numbers of BMR homes many jurisdictions administer. One program administrator summarized it as follows:
[It is about] efficiency. There is no scale. It is ridiculous for us to hire someone to do this [run the program]. We just don’t have the scale for it… I think we need a countywide solution…We have a lot of cities and we need to figure out how to do it together because we can’t all be doing it individually.

Stakeholder suggestions for cooperation fell into two broad categories: 1) outreach and marketing activities like awareness raising, and distributing information to the public, and 2) the management and monitoring of affordable homes.

Possible shared public marketing and outreach activities include:
• Maintaining an interested buyers list
• Developing outreach material for homes
• Home buyer education
• Verifying that applicants meet income and other eligibility guidelines. • Assisting potential buyers through the process of securing appropriate first mortgage financing
• Ensuring that homebuyer mortgage loans are safe and appropriate and comply with local program rules.
• Coordinating the process of selling individual inclusionary homes • Coordinating the process of reselling BMR homes
• Maintaining a list of occupied, available and upcoming homes (including AB 987/redevelopment homes), and a list of accessible homes • Developing a list/description of programs with notes about the status (active/inactive)

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Shared management and monitoring activities include:
• Maintaining ongoing contact with homeowners and sending annual letters • Verifying owner occupancy
• Monitoring homes to identify potential illegal refinancing or sales • Working with the Assessor’s Office to expand the program to alert the jurisdictions when homeowners transfer their homestead exemption • Coordinating communication with homeowners who have decided to sell their homes
• Processing sales or resales
It is useful to separate the policy level decisions, which should remain at a jurisdiction level, and the implementation, which can happen cooperatively. In fact, some de facto coordination is already happening. The County administers four programs in addition to two of its own.

Another four programs are administered by one of two private companies, First Home, Inc. or HomeBricks. Moreover, many jurisdictions use standard documents developed in an earlier cooperative effort called the Countywide Homeownership Investment Program (CHIP). Ten years ago a large CHIP working group— municipal staff, private lenders, mortgage brokers and real estate brokers who specialized in serving first-time homebuyers, and private homebuyer program administrators—met to improve program administration, introduce the use of sharedappreciation mortgages, and form a method or entity for joint program administration. The final step was not accomplished, but returning to that task may now be timely given the degree of consolidation, the existence of the 21 Elements project as a problem-solving framework and the emergence of the countywide housing trust fund (HEART), a joint powers authority to which all 21 jurisdictions belong.

One of the major challenges of a cooperative solution will be paying for shared services.

Currently, individual jurisdictions assign these responsibilities to existing staff. Outsourcing some functions could reduce the need to hire additional staff as a program grows but it will be difficult for any program to pay an outside entity to take over responsibilities currently performed by existing staff. Many of the housing department budgets are too tight to absorb any fees paid to a third party administrator. Where it is relatively easy to add additional responsibilities to already overburdened internal staff, assigning the same responsibilities to an external entity requires that funds for these services be explicitly identified and set aside. There is not likely to be any short term silver bullet to overcome this challenge. However, over the longer term, building fee income into the design of these programs can make it far easier to outsource ongoing implementation and take advantage of economies of scale.

One common starting point for inter-jurisdiction collaboration is in marketing. A reason for that is that building a marketing fee into the budget of each new project or charging a marketing fee upon resale of BMR homes is fairly simple. Marketing is time consuming and happens sporadically, so it is difficult for smaller programs to undertake proactively, but pooling these marketing fees through a single countywide entity potentially allows the individual programs to realize significant cost savings. Collaboration through hiring a single marketing contractor who could coordinate a marketing effort promoting affordable homeownership in general (including proactive outreach to minority and limited english speaking commuities) and

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through building one central database of eligible homebuyers could supplement efforts to market individual homes.

The most pressing need for shared services, however, appears to relate to monitoring homes after sale. Clearly many programs could benefit from a countywide program that maintained a list of BMR homes, contacted each owner annually to verify owner occupancy and monitored the properties for illegal refinancing or resale. Combined monitoring activities provide very significant economies of scale. Setting this kind of system up for a very small number of homes would be impractical but once such a system is up and running, each additional home in the system would add only a very small marginal cost. While each program likely would have to budget some modest annual cost for each home that the countywide entity was to monitor, jurisdictions can explore whether the cost of monitoring could be reduced or eliminated entirely by a countywide effort.

A number of viable models for shared program administration exist. In San Mateo County, it could materialize as a new special purpose consortium, could be folded into an existing collaborative entity, such as the countywide housing trust fund HEART, or be some hybrid of new and existing entities. Further, any one of the jurisdictions could be designated to perform the shared activity and, in essence, act as an independent contractor to the other jurisdictions.

Twelve High Impact Practices
NCBCI’s draft assessment tool poses questions based on more than 60 different industry “best practices”. These best practices range from the relatively minor administrative details (such as whether a program has a written conflict of interest policy) to those practices that are highly indicative of a program’s fairness or effectiveness (such as appropriate disclosure of affordability restrictions to buyers). As such, not all of these best practices are weighted equally in importance.

In this section the report highlights 12 practices that are not currently being implemented consistently which could have the greatest impact on the quality and sustainability of San Mateo County’s homeownership programs. For each of these practices the report presents, side by side, an outline of national best practices and a summary of current practice in San Mateo County. All of the best practices are derived from industry stewardship principles, which, in order to put this next section in context, are described below.

NCB Capital Impact convened three separate day-long meetings including 100 experienced affordable homeownership practitioners in order to formulate a broad set of principles of effective stewardship for affordable owner occupied homes. In the course of these meetings, 300 best practices were suggested but in the end these practitioners were able to articulate a set of higher-level guiding principles which fell into six categories. Practitioners suggested that programs which invest public funds to make homeownership affordable, whatever their size or structure should focus more on these six general areas of performance.

1. Impact-Driven: Set & Track Goals that Reflect Community Priorities

2.Targeted: Focus on buyers who need help but are likely to succeed

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3.Balanced: Build Wealth for Owners While Preserving the Community Interest

4.Managed: Steward the Public Investment to Ensure Long Term Benefit

5.Safe: Ensure Sound Mortgage Financing

6.Understandable: Educate Buyers on Program Requirement With these principles in mind the authors of this report selected 12 practices that were currently being implemented by San Mateo County’s stronger affordable homeownership programs but were far from universal. While no one program is currently implementing all of these practices, the presence of these 12, to some extent, are indicative of the most effective programs.

Principle 1: Impact-driven
Affordable homeownership programs should reflect a thoughtful and informed balance of community priorities grounded in a careful analysis of objective data on market conditions and needs.

Set and Track Goals that Reflect Community Priorities

HIGH IMPACT PRACTICES

1. The program has stated goals and objectives
Most affordable homeownership programs successfully achieve multiple objectives. But not all program designs advance all objectives equally well. To ensure that the program design selected successfully advances the community’s priorities, the key policy objectives of the program need to be identified and prioritized. This identification and balancing of program objectives should be informed by an analysis and discussion among stakeholders of the multiple objectives that affordable homeownership programs often seek to serve.

2. The program has incorporated ongoing evaluation into its design.

In addition to measuring program outputs (number of families assisted, dollars invested, etc.) programs should seek to measure their success in meeting the key program objectives that they have identified. At a minimum, every program should track initial and ongoing affordability, the success of the program in helping participants build assets, the average length of residency for owners, the share of sellers who subsequently purchase homes without assistance, the growth or decline in the value of public investment and the cost of ongoing stewardship. Ongoing evaluation should also incorporate an assessment of homebuyer satisfaction with the program. This would provide a formal feedback look for the buyers to evaluate the program’s effectiveness.

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San Mateo County Analysis
The two key factors that influence programs in San Mateo County are limited staff resources and an extremely high demand for affordable housing. These two factors result in most program administrators not investing in the identification of clear program goals or evaluating program outcomes over time. In fact, only three out of 13 programs have clearly stated goals and evaluations that are used for program design. The result is that, while it seems likely that these programs are having the kinds of results that policymakers had expected, there is really no way to be sure. If the programs are there to serve important social objectives, the policymakers need to be more explicit about what those goals are and the administrators need to track the results to determine whether the goals have been met. Nonetheless, many of the programs have informal feedback mechanisms and the flexibility of programs in their ability to respond to specific problems is a sign that they are in fact receiving regular feedback.

EAST PALO ALTO WAS ONE OF THE CITIES THAT HAD STATED OBJECTIVES FOR

THEIR HOUSING DEVELOPMENT DIVISION
FISCAL YEAR 2009-2010 OBJECTIVES
To increase the number of affordable Below Market Rate (BMR) houses for first-time home buyers in the City of East Palo Alto by 10%, from current of 68 to 75 units.

To increase the supply of affordable rental housing units in East Palo Alto by 25% from current of 198 to 248 units.

To provide $20,000 worth of closing cost grant assistance to first-time home buyers in the City’s BMR Housing Program.

To promote financial literacy home-buyer educational programs for BMR and other first-time home buyers.

To attend Planning Commission meetings, as required, to assist in shaping policies for proposed housing projects under review.

To review preliminary plans, as required, which are submitted to the City by residential developers

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Principle 2: Targeted
Scarce public resources for affordable homeownership should be targeted toward households that need it and would be unable to afford ownership without support but are in a strong position to succeed in ownership over time.

Focus on buyers who need help but are likely to succeed

HIGH IMPACT PRACTICES

3. The program has a written marketing plan.

Every program should engage in an ongoing, open and transparent marketing effort that targets the specific local populations likely to benefit and is consistent with fair housing goals. Programs should maintain a list of interested buyers that is independent of specific properties or projects.

4. The program makes special efforts to connect with difficult to reach populations.

The history of fair housing programs suggests that in the absence of “affirmative marketing” efforts to limited-English speaking and other minority populations, these families are significantly less likely to benefit from affordable housing opportunities.

This kind of proactive outreach is especially challenging for small programs but it need not be expensive or time consuming. In some cases a single partnership with the right nonprofit organization or marketing firm can ensure that all local families have a fair chance to benefit from scarce affordable homes.

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San Mateo County Analysis
San Mateo County programs are doing an excellent job of ensuring their programs are affordable to low and moderate income buyers. Because there is such a large difference between market rate prices and affordable housing prices, there is a tremendous demand for the programs. However, the ready supply of buyers has encouraged some jurisdictions to be less proactive than they should be about publicizing the programs. While most large programs have a marketing plan, most small programs do not. Additionally, very few of the programs make special efforts to reach difficult to reach populations, with the exception of providing information in languages other than English.

A marketing plan template was provided to each of the jurisdictions that does not currently have one (the marketing plan can be found at www.21elements.com). Additional program observations include:
• All jurisdictions have policies in place for setting affordable pricing, and most use the same definition for “affordable housing cost” (CA Health and Safety Code Section 50052.5) • The larger programs maintain a central list of potential buyers, but the smaller ones do not, which is not surprising given how infrequently homes become available. • Most have not done a target market analysis and no jurisdictions have a written community outreach plan.
• Most programs have written eligibility criteria, but no appeals process. An appeals process is important to ensure that program applicants have recourse in the event that they feel that they have been treated unfairly, and to reduce the likelihood of lawsuits. • Most jurisdictions do not require homebuyer education.

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Principle 3: Balanced
Every program should attempt to maximize the impact of public funding by balancing the interests of individual homeowners and the broader community. There is no one correct approach to how equity building should be shared between homeowners and jurisdictions, but the final decision should be made after a thoughtful process.

Build Wealth for Owners While Preserving the Community Interest

HIGH IMPACT PRACTICES

5. The program tracks the ongoing affordability of assisted homes and the amount of homeowner equity gains at resale.

Each program should track the average seller’s net asset gain and each home’s ongoing affordability when homes resell to verify that the program is achieving the intended balance between asset building and affordability over time and under changing market conditions.

6. There is a backup sales strategy for homes that do not sell within a specified timeframe.

Each program should have a contingency plan that allows owners to eventually sell their homes even when an appropriate income eligible buyer cannot be located. A backup sales strategy is needed to protect home owners, particularly in down markets, and to protect jurisdictions from losing homes if they do not sell in a reasonable time. While there were not reports of difficulties in reselling BMR homes in San Mateo County, other Bay Area jurisdictions have found that some owners have been unable to locate income qualified buyers (often because potential buyers have been unable to qualify for mortgage financing). In some of these cases buyers have been prevented from selling their BMR homes for extended periods of time. With some foresight programs can avoid this potential problem by adopting a policy allowing eventual sale of BMR homes at market prices with the sponsoring agency recapturing the difference between the BMR price and the market price. In this way the program can avoid trapping owners while still protecting the public investment.

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San Mateo County Analysis
Jurisdictions generally do not track the equity earned by homeowners because it is not an explicit program goal. More commonly their goal is to provide affordable housing, so that is what they track. However, building equity is an important consideration and jurisdictions should analyze it, even if they chose to prioritize long term affordability.

One challenge is that the assumptions used in calculations about affordability are often not explicitly defined. There are many variables, like utilities, inflation, etc., that can be calculated in different ways. According to one interviewee, “It is very subjective: by changing the assumptions you can change the price [dramatically].” This lack of clarity can lead to problems including disagreements, delays and lawsuits.

Jurisdictions that lacked a back-up sales strategy were provided with a sample policy (sample policy can be found at www.21elements.com).

Additional observations include:
• All programs record requests for Notice of Default, but only one jurisdiction has a written process for responding.
• Most jurisdictions believe they have not lost any homes, but because of the lack of monitoring they do not know for sure.
• Generally, jurisdictions are not connecting buyers to additional resources beyond County Mortgage Credit Certificate Program or second loans. Combining the jurisdiction program with other resources could stretch funding further.

BALANCING GOALS: HOMEOWNER EQUITY AND LONG TERM AFFORDABILITY When we started our ownership program 20 years ago we had the dual goal of supporting both affordability and owner equity gain, and felt confident our program would be a win-win in this regard. I would love to say that this is still true; however given the changing real estate and lending markets over the years, we have essentially given up on the goal of equity gain and focused on our primary goal of long term affordability. We have simply not figured out how to do both, although we are happy to report that many of our buyers have indeed moved up and out into the open market. I think that our program was instrumental helping them achieve this, but many of those folks were in the right place at the right time. We have revised our programs numerous times to address the changing markets, and truly tried to do both, but given the large amounts of City subsidy put into our First Time Buyer program, and the huge discrepancy between affordable and market rate pricing for our BMR units, we have focused on long term affordability. This is a conscious decision and although not written anywhere it has been the direction supported by staff and Council over the years as we have constantly tweaked our program.

City of San Mateo’s Affordable Housing Program Manager

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Principle 4: Managed
Public investment in affordable homeownership should be actively and professionally managed for maximum community benefit over the long term.

Steward the Public Investment to Ensure Long Term Benefit

HIGH IMPACT PRACTICES

7. All owners are contacted annually by mail to remind them of program requirements.

The program should maintain an ongoing relationship with assisted homeowners and should, at a minimum, contact each owner by mail annually to remind them of program requirements. Programs that are investing high levels of subsidy per home should expect homeowners to provide annual documentation of owner occupancy.

8. There are written policies on repairs required at resale.

BMR programs have an interest in ensuring that assisted homes are well maintained over time and that future buyers receive the homes in good condition. When resale prices are set by formula, a selling homeowner may not have sufficient incentive to perform basic repairs before selling the home. For this reason, programs must develop clear, written policies about the condition of homes at the time of resale and how required repairs will be identified. A clear policy outlined in advance can avoid misunderstandings, arguments and potentially lawsuits.

9. The program has adequate staffing available for support, monitoring & enforcement.

Both loan and BMR programs require some level of ongoing monitoring, support and enforcement in order to protect the public investment. The long term outcomes for these programs depends on adequate staffing being available to perform these key functions. Funding for adequate ongoing stewardship should be identified at the outset of every program. To the greatest extent practical, funding for ongoing stewardship should come from fees and other sources that will grow along with the program workload.

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San Mateo County Analysis
In most cases, jurisdictions do not have sufficient resources for support, monitoring or enforcement. They have the ability to respond to problems, but not to be proactive. One specific example that comes up often is that of owners renting homes that are supposed to be owner occupied. Most jurisdictions do not allow BMR homes to be rented, but they have no regular communication with homeowners to remind them of this policy, or to learn if it is violated. One potential solution is to work with the County Assessor’s office, which already (occasionally) notifies jurisdictions of changes of mailing addresses associated with BMR homes. Jurisdictions should, at a minimum, send a letter to every homeowner at least once a year asking owners to certify that they still live at the property. Doing so has the added benefit of allowing jurisdictions to receive word from the post office that mail is being forwarded.

There is a clear distinction between the management of loan programs and BMR homes. Most jurisdictions carefully track loan payments and know the exact status of those homes. In contrast, some programs do not even have a centralized, computerized list of BMR homes.

Years can pass without jurisdictions communicating with homeowners. Consequently, these BMR homes are at risk.

Generally, programs report that they have not experienced many problems with monitoring or enforcement, but that may be because they are not looking closely. In the assessment, most jurisdictions (ten out of 13) feel that they have adequate resources for monitoring and support; however, their conclusion is based on the minimal work they do now. The programs that were currently implementing the greatest number of best practices were, surprisingly, among the most likely to report that they had too little staffing. It is likely that there are problems that have not been noticed because jurisdictions are not looking closely enough. The problems can range from the relatively small (someone is illegally renting their home), to the large (the home has been sold at market value and the program has not been notified). Ongoing communication with homeowners, at least annually, is a key mechanism for preventing problems.

Additionally, in many cases, jurisdictions lack written operating procedures, or the operating procedures are minimal or out of date. For example, almost half of the jurisdictions do not have clear policies about either the condition of the home or the repairs needed at the time of resale. Many jurisdictions do not have standard forms or checklists and end up reinventing procedures as needed.

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One important consideration for the future is what will happen when Redevelopment Areas age out of existence. Right now, the Redevelopment Agencies provide an important source of funding and stability, but the responsibility will need to be transferred to other entities that are currently less well funded.

Staff turnover and loss of institutional knowledge remains a problem, especially in small programs where all the knowledge resides with one person who works on housing issues parttime. According to the manager of one program, “That is one of the problems, institutional knowledge and succession. If I were to leave, the City would be in serious trouble picking up the program.” While departing managers are often committed to a smooth transition, the risk remains, as demonstrated in one small jurisdiction where the only guidance for the new program administrator was a one page email from the staff person who had left.

Additional observations include:
• All programs have mechanisms to ensure resale buyers are eligible. • Most programs are not explicit about the repairs required or the expected condition of home at resale, resulting in problems in some places.
• Most programs do not provide post-purchase support or services. Some provide informal assistance upon request.
• Most do not remind owners about the resale conditions after closing. • Most jurisdictions do not currently monitor homes for compliance and have not identified specific issues that will trigger a physical inspection. • Most jurisdictions do not have enforcement plans, nor do they audit paper files. However, most administrators believe they have adequate staffing for enforcement. • About two thirds of jurisdictions have written procedures manual. • Most administrators consider their programs to be adequately staffed- especially due to low volume and current activity levels. They often do not have a separate budget for BMRspecific administration.

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CASE STUDY: NAPA COUNTY
Five Napa County jurisdictions have been cooperating on the management of below market rates homes since the 1980s. Currently there are over 3,000 units that are managed in this arrangement. The effort has proven to be successful in saving money and promoting best practices, but the vehicle, a Joint Powers Authority, may not have been the best choice.

Jurisdictions have coordinated on a number of activities, including:
• Administering and monitoring restricted affordable units, rental and homeownership
• Monitoring and operating farm worker housing
• Administering affordable and first time home buyer loan programs.

Jurisdiction staff reported that the participating jurisdictions all benefited from having a single contract which resulted from the Joint Powers agreement. The program administrators could easily take best practices from one program and use them to improve other programs. For example, administrators could use the regulatory documents from one city as a template for another city instead of having to expend resources for lawyers to draft new documents. However, the program staff reported that each of these affordable homeownership programs had their own procedures, which made monitoring and administration time consuming and challenging.

In addition, the Joint Powers Authority added unnecessary costs. Specifically, the entity had to have insurance, audits, boards, etc. all of which had to be paid collectively by the municipal governments. The current plan is to have jurisdictions contract with the Housing Authority of the City of Napa to jointly administer the programs.

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Principle 5: Safe
Every program should ensure that private mortgage financing is safe, appropriate and consistent with the goals of the program. In addition to helping buyers make informed decisions, the program should protect the public interest by preventing predatory loan products and avoiding foreclosures whenever possible.

Ensure Sound Mortgage Financing

HIGH IMPACT PRACTICES

10. The program has written mortgage criteria describing what types of loans are permitted.

Because public investment is generally at risk in the event of foreclosure, programs have a responsibility to prevent buyers from using high risk loan products. Each program should adopt a clear policy regarding allowable mortgage products (for both purchase and refinancing loans) that allows owners flexibility to obtain competitive financing while protecting the public interest.

11. The program has written procedures for responding to a notice of default.

Inevitably, some homeowners will experience financial difficulty but the affordable homeownership program’s investment need not be jeopardized when homeowners run into problems. A small number of programs record affordable housing restrictions which survive foreclosure, but even where the restrictions are extinguished by foreclosure, if a program is notified of a default prior to foreclosure and is able to quickly take action, loss of public investment can be avoided in nearly all cases.

However, responding quickly to homeowner defaults requires some level of planning and preparation in advance.

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San Mateo County Analysis
Jurisdictions often have a mechanism for enforcing lender notification of default, but would benefit from having clearer procedures regarding what types of loans are appropriate for program participants.

Just because a bank is willing to make a loan does not mean the loan is appropriate, as was demonstrated by recent trends in mortgages that included balloon payments and interest only loans. Foreclosures, in addition to all the other negative effects, can cause an affordable home to be lost. Less than half of jurisdictions (five out of 11) have written mortgage criteria, an important basic step. In contrast, almost all programs have a mechanism to enforce the lender notification of default and policies on refinancing. However, many of the jurisdictions do not have written procedures for dealing with the notice of default once they receive it.

Furthermore, by the time a jurisdiction receives notice, there is not always time to respond before the foreclosure.

Most jurisdictions do not have a list of “approved” lenders, but all respond and/or approve mortgages within a reasonable timeframe. This is consistent with the finding that programs are more active during the front end (such as initiation process), than the back end (such as compliance and monitoring) of program processing.

Jurisdictions that currently lack an allowable mortgage policy were provided with a sample policy which spells out allowable loan provisions and qualifying ratios, prohibits certain types of (potentially predatory) loan products and requires that mortgage lenders acknowledge the goals and restrictions imposed by the program.(A sample policy can be found at www.21elements.com).

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Principle 6: Understandable
Every program should provide written materials and training to help buyers understand program requirements and should actively verify homeowners’ understanding prior to sale.

San Mateo County Analysis
San Mateo’s affordable homeownership programs seem to be doing a good job of ensuring that homebuyers understand price restrictions or loan terms. Almost all of jurisdictions have written material with examples to help explain the programs and the resale restrictions. Nearly all programs require owners to participate in some kind of orientation session that includes a discussion of program rules, resale restrictions, etc. Only about two-thirds of programs take the extra precaution of having these restrictions explained by a neutral third party, a precaution that helps ensure that buyers receive an unbiased explanation. Most importantly several programs lack a clear and concise plain language summary of key restrictions and requirements. – a relatively simple and practical precaution that should be realistic for even very small programs to provide.

NCBCI staff provided a sample of such a plain language document to the programs that currently lack one (the plain language document can be found at www.21elements.com).

Educate Buyers on Program Requirements

HIGH IMPACT PRACTICE

12. All buyers receive a concise disclosure document that summarizes the program guidelines and resale restrictions in plain language.

In addition to providing buyers with complete legal documents, each program should provide each buyer with a one to two page plain language disclosure document which highlights key affordability requirements including any owner occupancy requirements, price restrictions, purchase options or loan repayment requirements.

The potential buyers should also review simple, clear financial models illustrating the program’s price restrictions or recapture provisions. These documents should be reviewed with buyers in person prior to closing.

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V. Assessment Tool and Results by Question
A draft of the Comprehensive Assessment tool is included below. Where useful, numeric tallies of the actual responses are included.

INTRODUCTORY QUESTIONS
What are the names of the programs that the jurisdiction offers?
Describe the programs.

What year were they started?
What year were they updated?
Who is the main contact person?
How many units are there currently and how many are
created annually?

BUSINESS PLANNING
YES NO
NEEDS

IMPROVMT N/A

SUSTAINABLE PROGRAMS
Does the program have a written policy and procedures
manual? 8 4 1 0
Does the program have a written mission statement? 8 5 0 0 Does the program have stated goals and objectives? If yes, how does the program track its progress toward meeting its goals and objectives? - - - -
Has the program clearly identified its service area and target markets(s)? - - - -
Has the program conducted marketing research to
determine the need for its services and/or products? 4 8 0 0 Is the program adequately staffed? How many FTEs are
dedicated to the program(s)? 10 3 0 0
Does the program have legal counsel that that specializes in affordable home ownership programs? - - - -
Has the program developed a budget to project its operating revenues and expenses for the next few years? 4 9 0 0

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Has the program staff made a conscious decision to--or not to--charge participants and/or developers program fees? If yes, describe to what extent are program administrative costs covered by fees. 12 1 0 0

PUBLIC ACCOUNTABILITY YES NO
NEEDS

IMPRVMT N/A
Is there public support and awareness of the program?
Do you have a community outreach plan? 1 12 0 0
Does the program incorporate ongoing evaluation into the program design? Please describe how the program has
changed in response. 5 7 0 0
Does the program incorporate homebuyer evaluations into the program design? Please describe. - - - -
Does the program conduct annual reporting or auditing?
Please describe. - - - -
Does the program have a way to systematically track
information on the buyers, the transactions and the units? Please describe. - - - -
Does the program have a clear conflict of interest policy? For example, a policy which details who is not eligible to apply? 5 7 0 0
Does the program have stated goals and objectives 7 5 0 0

AFFORDABLE PRICING YES NO
NEEDS

IMPRVMT N/A
How are sales and resale prices determined?
Does the Program create a chart of unit sizes/prices that is updated annually (or periodically)? Or is there a program policy that details the formula to set prices for each unit? - - - -

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When did the program last review and update its formula? - - - - Does the program ensure that the prices are affordable to the program’s target market, absent other subsidies (second loans, grants)? How?
Does the formula use an income level below the maximum
eligibility level? - - - -
Has the program been able to sell units to buyers well below the maximum income level?
Or are buyers' incomes primarily at or just below the
maximum allowable income eligibility? - - - -
Has the program been able to sell new and resale units
within a reasonable timeframe?
If not, please describe challenges. - - - -
Does the program link homebuyers to additional resources? If yes, describe. (For example down payment assistance, credit repair, homebuyer education…) 8 4 0 1
Does the program ensure that the prices are priced
competitively below market rate?
For example, how does the program ensure that prices are far enough below market? - - - -
The program ensures prices are affordable to a range of buyers
10 1 0 2
The program maintains chart of unit/sizes/prices
3 4 0 1
The program has policy setting formula
9 1 0 1

MARKETING AND SELECTION

FAIR MARKETING YES NO
NEEDS

IMPRVMT N/A
Who is responsible for developing and updating the
marketing plan? - - - -
The Program/Organization - - - -

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Does the program have a marketing plan? - - - -
When did the program last update the plan? - - - -
Does the program require submission of marketing plans
prior to commencement of marketing efforts? - - - -
Does the program have written guidelines for developers or a template or example of an appropriate plan? - - - -
Does the program require submission of marketing plans
prior to commencement of marketing efforts? - - - -
Is there a marketing plan. If so, who is responsible for implementing the marketing plan? 5 6 0 0
Does the marketing plan describe special efforts to reach difficult to reach populations? If yes, what are they? 2 6 0 2 Does the program ensure that Limited English Speaking
Applicants can understand the program and are able to
apply? If yes, describe. 7 3 0 0
Does the program maintain a centralized interest list of potential buyers? If yes, on average how many people are on the list? 6 7 0 0
Does the program set a maximum timeframe for marketing
homes to eligible buyers? If yes, describe. 6 3 0 2
Has the program established a backup sales strategy for unsold units? If yes describe. If no, describe how the
program would respond to unsold units. 4 6 0 2
Is there a mechanism in place to ensure that the back up sales strategy does not result in a disproportionate financial gain to the seller? If yes, please describe. 7 2 0 1

TRANSPARENT SELECTION YES NO
NEEDS

IMPRVMT N/A
Who manages the screening and selection of buyers?
- - - -
If not the program, does the program contract with an
independent third party (not private developers)? - - - - If there are third party contracts, are roles and expectations clearly spelled out in the contract? - - - -

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Do applicants attend a workshop or one on one orientation in which the program, guidelines and restrictions are
described?----
Does the program clearly explain to applicants the method and process by which buyer applications are ranked,
selected and approved?----
Does the program have a disclosure document that
summarizes the program guidelines and resale restrictions in plain language for the buyer?
If Yes, does the program review it in person with the buyer in advance of closing? ----
Does the program have a written list of homebuyer eligibility criteria made available to all applicants? 11
110
Do you have a homebuyer application?
If yes, does it include a checklist of documents required to be submitted?----
Does the program have a checklist to track applicant
documents received?
----
Does the program have any selection preferences? If yes, please describe.

If yes, has it ensured that its selection preferences, if any, are consistent with fair housing, local and state laws?6700 Does the program have a policy that ensures that units are allocated to households of the appropriate size? If yes, describe.5511
Does the program ensure that applicants with special needs have priority in applying for accessible units? If yes, describe. 4502
Has the program established an appeals process for
applicants who feel that they have been treated unfairly or to challenge the program administrator’s decisions? 1 1010 The eligibility criteria reflects policy goals
7100
The program clearly explains selection process to applicants 11200

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RESALES YES NO
NEEDS

IMPRVMT N/A
Describe your resale pricing formula.

Is it linked to an index? What are the variables affecting pricing? - - - -
Does the program’s outreach material clearly explain the resale formula to potential buyers? 7 4 0 1
Does every buyer participate in a workshop or one-to-one meeting at which the resale formula is explained with
examples? 8 1 0 2
Is it explained by program staff or a neutral third party? 6 3 0 2 Does the program periodically evaluate the effectiveness of the resale formula in meeting the program goals? 6 1 0 2 Has the program successfully maintained affordability over time? If yes, how do you know? - - - -
Does the program track how much equity homeowners have
accumulated? If yes, how do you keep track? 2 9 0 1
Does the resale formula include credits for capital
improvements? If so, please describe. 11 0 0 1
Does the resale formula include deductions for damages or needed repairs? If so, please describe. - - - -
How are eligible buyers for resale units identified? - - - - Does the program ensure that homes are resold only to
eligible borrowers? 12 0 0 1
Does the Program have written policy describing the
required condition of the home at resale? 6 4 0 1
Does the Program have a process for inspecting the units prior to transfer and ensuring that required repairs or made? - - - -

MORTGAGE FINANCING

REFINANCING AND CASH OUT YES NO
NEEDS

IMPRVMT N/A
Do the program restrictions (deed restrictions/ground
leases) contain clear policies on refinancing or home equity loans? If yes please describe policies. 5 6 0 1
What steps are taken to ensure that homeowners comply
with these requirements and avoid noncompliant loans? - - - -

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Has the program had problems with illegal re-financing? Please describe. - - - -
The program maintains a current list of approved lenders 5 7 0 1 The program has its own underwriting criteria in addition to first lender 4 8 0 0
The program has clear policies on refinancing and/or lines of credit 12 1 0 0
The program knows if there has been illegal financing 5 5 0 1 The program has written procedures for
reviewing/approving mortgages 5 5 0 1
The program has clear policy on homebuyer education
requirements 7 5 0 0
The program has a checklist for required documents to be submitted for approval 7 5 0 0
The program has a checklist for documents received after closing 6 6 0 0
The program can review and respond to requests for
approval in reasonable timeframe 11 0 0 1

DEFAULT AND FORECLOSURE
YES NO
NEEDS

IMPRVMT N/A
Does the program generally subordinate their restrictions to the first lender? - - - -
Does the program have the right to cure a default, or first right of purchase in the event of foreclosure? - - - -
Does the program have a mechanism in place to require and enforce lender notification of default? 11 1 0 1
If/when notice is received, does the program have written procedures for responding to a notice of default? If not, how would the program respond? 2 8 1 1
Has the program “lost” units due to foreclosure or other reasons? If yes, how many? Please describe the outcome. 3 9 0 1
The program restrictions survive foreclosure 4 8 0 1

SUPPORT, MONITORING AND FINANCING YES NO
NEEDS

IMPRVMT N/A
Does the program provide post-purchase support? If yes, describe types of support and services offered. 4 9 0 0

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Does the program communicate regularly with owners
about the terms of the regulatory agreement? If yes, how and how often? 2 10 0 1
Has the program determined the frequency with which it will monitor program compliance? If yes how frequent? 5 8 0 0 Has the program determined what documentation it will
require in compliance certification? 5 7 0 0
Does the program have an enforcement plan describing
steps that staff will take in the event of various forms of homeowner violations? 3 9 0 0
Has the program identified any conditions that would trigger a physical site visit rather than paper monitoring? If yes, please describe. 2 10 0 0
Do the program's resale restrictions include sample program forms as exhibits?
For example, an annual certification form, notice of intent to transfer, request for refinance, etc. - - - -
Does the program have adequate staffing for support,
monitoring and enforcement? 10 3 0 0
Has the program established a schedule for auditing its own paper files to ensure completeness? 3 8 0 0

WRAP UP YES NO
NEEDS

IMPRVMT N/A
Which of the issues we've discussed are most relevant
and/or important to the program right now? - - - -
What changes to the program are currently in process? - - - - Is there anything else you would like to share? - - - - i
Not all of the jurisdictions took part in the assessment, and not all of the programs are active. ii There are numerous ways to analyze the data in terms of the best practices of large and small programs. The patterns hold if you look at various sizes groups (rather than the three largest and smallest programs). Another method to analyze the data is portfolio size (including both rentalhomes and BMR homes), and the pattern of larger programs following more best practices holds in this case as well. iii Short sales refers to sales where the bank or mortgage lender allows the home to be sold for less than the balance due on the mortgage.
iv California law allows Redevelopment Agencies to be active in an area for up to 40 years, depending on conditions.

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Humza Javed, City Engineer
Greg Henry, Senior Management Analyst
SUBJECT: San Francisco Public Utility Commission Wholesale Water Rate Increases Recommendation
Receive and file update on expected wholesale water rate increase and the City’s planned response.

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

Priority No. 5: Improve Communication and Enhance Community Engagement Background
According to the San Francisco Public Utility Commission’s (SFPUC) latest update provided at the annual wholesale customers meeting earlier this year, the SFPUC is currently projecting a

15.9% wholesale rate increase for FY 2022-23 and another 10.9% increase for FY 2023-24.

The two increases would result in a projected wholesale water rate from the current rate of $4.10 to of $4.75/ccf (centum cubic feet or a hundred cubic feet) in FY 2022-23. The FY 2022- 23 rate notice will be distributed by the SFPUC in early May 2022.

When SFPUC notified the City of the FY 2022-23 increase, it also included an expectation that rates will increase further in 2023 to $5.28/ccf in FY 2023-24. Staff will be monitoring this additional increase and will update the Council next year.

Analysis
The City included a “pass-through” provision in the last Proposition 218 rate-setting process found in Resolution 5154. This allows the City to adjust the retail water rate as needed to “pass-through” the cost increase of the wholesale water to our customers without another Proposition 218 process. Specifically, for each 1 cent increase by SFPUC, the retail rate of

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water is schedule to increase by 1.2 cents.

Council needs only approve the rate increase by resolution and staff must notify all customers via a mailed notice. While this process won’t diminish the burden on our customers, it will allow the City itself to respond quickly to this unanticipated and extreme rate increase by SFPUC.

Once the rates for FY 2022-23 are finalized by SFPUC and notices are provided to consumers through the City’s water operator, Veolia, this will initiate the pass through of these whole sale rate increases consistent with Resolution 5154.

City Staff will return to City council for the rate increase approval in May 2022. Upon City Council approval, 30-day notices will be provided to customers regarding the planned increase.

It should be noted that the City has limited control over the cost of water itreceives. The City is simply a customer of SFPUC and does not currently have the ability to use any other sources of water.

Fiscal Impact
On July 1, 2022 the water usage charge is scheduled to increase to $7.77 per ccf from the current rate of $7.66. With the additional pass-through rate of $0.76 anticipated, the water usage charge will be $8.53 per ccf.

The pass-through rate is calculated as follows: ($4.75 - $4.10) * (1.2) = $0.64*1.2 = $0.768.

The is rounded down to $0.76.

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.

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Humza Javed, City Engineer
SUBJECT: Update on San Francisquito Creek Joint Powers Authority (SFCJPA) Projects Recommendation
Receive presentation by Margaret Bruce, Executive Director of the SFCJPA on the San Francisquito Creek Reach 2 widening and bridge replacement project and the SAFER Bay Project.

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

Priority No. 1: Enhance Public Safety and Emergency Preparedness Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
Two SFCJPA projects are discussed below, the Reach 2 Project and the SAFER Bay Project.

More information about these projects can be found under the “Projects” tab at https://www.sfcjpa.org/
Analysis
1) San Francisquito Creek Reach 2 Project
The San Francisquito Creek Reach 2 project will increase flow capacity of the creek and improve the riparian corridor from West Bayshore Road to upstream of the Pope Chaucer Bridge. This project will reduce the risk of flooding from a storm of approximately 7,500 cubic feet per second (cfs), approximately equal to the El Niño storm of record in 1998. The SFCJPA implemented the initial part of its plan to protect homes and businesses from Highway 101 to the Bay in 2019 by increasing the capacity of the creek in this area from about 4,500 cfs to greater than 9,000 cfs. The Reach 2 project will reduce flood risks to the many residents along Woodland Avenue from creek flows up to 7,500 cfs.

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The Reach 2 project will widen the creek in several places where there the channel is narrow and will replace the Pope-Chaucer and Newell Bridges. In addition, the temporary wooden floodwall the City installed in 2012 near University Avenue will be replaced with a permanent concrete floodwall that can be certified by FEMA. The Newell Bridge project is being led by the City of Palo Alto via a Caltrans grant but is being combined for permitting purposes by the SFCJPA as part of an integrated watershed program.

The SFCJPA will submit draft regulatory permit applications in early April. Tree removal, encroachment, and grading permits will also be required. The SFCJPA will continue to work with our member agency staff on these items. The SFCJPA has partnered with the U.S. Army Corps of Engineers (USACE) for the design and construction of four channel widening sites.

Key economic and design analyses are anticipated from the USACE in May. Santa Clara Valley Water District (Valley Water) engineering staff are planning to survey and evaluate the existing aging top-of-bank structures downstream of the Newell Bridge on both sides of the creek this spring. If it is determined that these structures are no longer adequate, a supplementary EIR will be initiated in preparation for adding retrofit or replacement of these structures to the project.

The project components are in varying stage of design, ranging from about 60% to 80% to preliminary plans. The location of each of the project components is provided below:

Estimated Costs for Construction, CM, Mitigation
and Real Estate
Project Feature Feature Cost Est
Newell Road Bridge Modification $10,536,600
Pope/Chaucer Bridge Modification $9,762,150

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Channel Improvements– Newell Ave. to Euclid Ave. $16,232,000 Top of Bank Treatments $5,000,000
W. Bayshore Transition Floodwall $8,169,600
Total Cost Estimate $49,700,350
2) Safer bay Project
The Strategy to Advance Flood protection, Ecosystems and Recreation along San Francisco Bay (SAFER Bay) Project extends from the southern border of East Palo Alto by the O’Connor Pump Station along the bay shoreline to the north across the Dumbarton west approach and ends at the border of Redwood City by Menlo Park’s Bedwell Bayfront Park.

Residents, businesses, and critical infrastructure in East Palo Alto are vulnerable to tidal flooding, sea level rise, and emergent groundwater due to sea level rise. There are opportunities to restore, protect or improve local habitat for critically endangered species, and enhance recreational assets in the area. The SAFER Bay project integrates these activities, and the City reinforced its commitment to addressing this issue on September 18, 2018, when the City set aside $5.5M for construction and long-term operation and maintenance of proposed new coastal levees.

Project Work to Date
Preliminary designs- Base mapping has been completed for East Palo Alto and concepts for levee designs have been presented to the community.

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Planning- a draft Community Engagement Plan is available for review and comment.

Preliminary geotechnical- FEMA has completed their Environmental and Historical Preservation review and the City should be receiving a notification of award letter from CalOES in the near future for Phase 1 funding. Property access/easement coordination- a list of properties has been prepared and contact with landowners has been initiated.

Stakeholder Engagement- the SFCJPA has partnered with Climate Resilient Communities and Nuestra Casa. The SFCJPA will continue to meet with members of the community throughout design and construction. Regulatory Agency communications and coordination- the project is being permitted through the Bay Area Restoration Regulatory Integration Team (BRRIT). The SFCJPA has held two preapplication meetings with the BRRIT and will continue routine meetings prior to submitting permit applications.

Project Work in the Near Future
Notice of Preparation (NOP) for Program-level CEQA for the entire project and Project-level CEQA for the first East Palo Alto reaches is planned for Spring 2022.

Along with the release of the NOP, the SFCJPA and its community partners will be engaged in wide-ranging community outreach to seek community input on the project.

Cost Estimate
SAFER Bay is a megaproject and existing funding, although significant is not enough. A preliminary cost estimate to construct the entire project, not including the Dumbarton Corridor, is approximately $130M. Current and pending funding is anticipated to contribute a total of $93M. Of this, the cost for portions in East Palo Alto are estimated to total about $46,450,000.

The following funding sources have been awarded, or are pending:
• Department of Water Resources Grant Agreement No.4600009954 for $ 1,045,625.

Match funding $448,125 was provided by the cities of East Palo Alto and Menlo Park. • CalOES/FEMA Hazard Mitigation Grant Program (HMGP)- The City is anticipated to be awarded a $17.2M and has provided $5.5M in local match funding. FEMA completed EHP review, and a letter notification for Phase 1 funding is anticipated from CalOES in the coming months.
• The City of Menlo Park is eligible for award of $50M under the CalOES/FEMA Building Resilient Infrastructure and Communities (BRIC) grant. In Menlo Park, additional grant partners include PG&E and Facebook, who have jointly provided $17.8M local match funding.
• San Francisco Bay Restoration Authority (SFBRA) Measure AA. On behalf of the City, the SFCJPA applied for funding, and were notified of a preliminary award of $1M.

Formal approval of the grant funding will be determined by the SFBRA governing board at their meeting on June 24, 2022.
• In February, East Palo Alto and the SFCJPA were contacted by CalOES regarding a new State funding program, PrepareCA, which provides some or all the local match funding required for federal grants, for disadvantaged communities. We will know if East Palo Alto’s request will be awarded, probably within 6 months.

The SFCJPA is continuing to seek and evaluate additional potential funding partners and sources for this project.

Public Notice

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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.

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
Valerie J. Armento, Acting City Attorney
SUBJECT: Interim City Manager Employment Agreement
Recommendation
Adopt a resolution appointing Patrick Heisinger as the Interim City Manager and approving the Interim City Manager Employment Agreement.

Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
• Priority #4: Ensure Our Financial and Organizational Health Approval of this recommendation will assist in fulfilling all of the City Council’s adopted priorities and goals.

Background
Current City Manager Jaime Fontes fulfills his contract with the City of East Palo Alto effective close of business April 30, 2022 and is pursuing other opportunities for the well-being of his family. Consequently, the City of East Palo Alto needs interim city manager services to fulfill the duties of the position of city manager while the City Council conducts an executive search to fill the position.

Analysis
Patrick Heisinger has 19 years’ experience in local government and nearly 4 years of experience working in the City of East Palo. He joined the City in Spring 2018 as Housing Manager and then Director of Community and Economic Development. Since September 2019 he has served as Assistant City Manager overseeing Community and Economic Development, the City’s work program, capital projects, new policy initiatives and other special projects. He began his career working in management level roles on housing related issues for agencies as

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diverse as the City of San Jose, County of Santa Cruz, Housing Authority of Santa Clara County and Neighborhood Housing Services of the Inland Empire. Mr. Heisinger has both a BA and an MA from the University of the Redlands and an MPA from San Jose State University.

Attached for City Council review and approval is an Interim City Manager Employment Agreement. The financial terms of the employment agreement are as follows:
• Compensation: A base annual salary of Two Hundred Twenty-two Thousand and Five Hundred Dollars ($222,500) during the term of the agreement. • Benefits: The benefits earned shall be the same as those provided to other Executive Management Employees of the City.
• Vacation cash-out: An additional week of accrued vacation cash-out by June 30, 2022 given anticipated workloads through Spring.

If approved, the term of the Employment Agreement commences on May 1, 2022 and terminates upon the start date of the new City Manager, unless terminated sooner in accordance to the terms of the agreement. The agreement also provides a minimum six month right of return to his prior Assistant City Manager position.

Fiscal Impact
Mr. Heisinger’s proposed salary as Interim Assistant City Manager is less than the current City Manager’s salary, and it is anticipated that any interim staffing for the Assistant City Manager role will also be paid less, creating a net annualized savings to the City of $5,000 to $10,000 for the duration of the interim appointments. All costs are budgeted within the General Fund.

Attachments

1. Resolution Interim City Manager

2. Exhibit A Interim City Manager 2

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ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO

APPOINTING PATRICK HEISINGER AS INTERIM CITY MANAGER AND

APPROVING THE INTERIM CITY MANAGER EMLOYMENT AGREEMENT
WHEREAS, Jaime Fontes, the current City Manager, will be concluding his existing contract with the City of East Palo Alto effective April 30, 2022; and WHEREAS, the City of East Palo Alto is in need of interim city manager services to fulfill the duties of the position of city manager while the City Council conducts an executive search to fill the permanent position; and
WHEREAS, Mr. Heisinger has 19 years of local government management experience and nearly 4 years with the City of East Palo Alto, including serving as Assistant City Manager since Fall 2019; and
WHEREAS, the City Council desires to appoint Patrick Heisinger as Interim City Manager and Mr. Heisinger agrees to accept the appointment subject to the terms of the Interim City Manager Employment Agreement.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY appoints Patrick Heisinger as the Interim City Manager and approves the Interim City Manager Employment Agreement attached hereto as Exhibit A.

PASSED AND ADOPTED this 5th day of April 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

SIGNED:

Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:

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

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Packet Pg. 97
Attachment: Resolution Interim City Manager (2183 : Interim City Manager Employment Agreement)

INTERIM CITY MANAGER EMPLOYMENT AGREEMENT
This INTERIM CITY MANAGER EMPLOYMENT AGREEMENT ("AGREEMENT") for reference dated April 4, 2022 by and between PATRICK HEISINGER ("HEISINGER") and THE CITY OF EAST PALO ALTO, a municipal corporation ("CITY"), is made with reference to the following facts:

RECITALS:

WHEREAS, the CITY is in the process of conducting a search for a City Manager to perform all management and administrative services as required; WHEREAS, the appointment of an Interim City Manager is necessary to facilitate a smooth transition period through the appointment of a new City Manager; WHEREAS, prior to the effective date, HEISINGER was employed by the CITY as the CITY’s Assistant City Manager;
WHEREAS, the CITY, acting by and through its City Council, desires to employ the services of HEISINGER as Interim City Manager; and
WHEREAS, HEISINGER is agreeable to performing the duties of Interim City Manager in accordance with the terms and conditions set forth in this AGREEMENT.

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

AGREEMENT:

1. Employment. CITY hereby appoints HEISINGER, and HEISINGER hereby accepts employment with the CITY as the Interim City Manager, to serve at the will of the City Council subject to the terms set forth in this AGREEMENT.

2. Scope and Duties.
a. HEISINGER hereby accepts such at-will status, and agrees to perform all obligations and responsibilities diligently within the parameters indicated by the City Council, applying the highest degree of professionalism, ethics, integrity and competency to the discharge of every aspect of the obligations of the position of Interim City Manager and/or described in this AGREEMENT. b. The services to be provided by HEISINGER will include, but are not limited to, those enumerated under Chapter 2.12 and Section 2.08.180 of the East Palo Alto Municipal Code, as they may be amended from time to time, or as

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Attachment: Exhibit A Interim City Manager 2 (2183 : Interim City Manager Employment Agreement) specifically enumerated in this AGREEMENT and any amendment thereto entered into by the mutual agreement of HEISINGER and the CITY. c. HEISINGER may submit an application for the position of City Manager during the recruitment process for the position and may proceed as a candidate in accordance with the procedures established for all candidates. However, HEISINGER shall otherwise refrain from influencing the recruitment process as Interim City Manager including supervising, managing or directing City staff and/or the executive search firm retained to perform the recruitment.

3. Term. The term of this AGREEMENT shall commence at 5:01 pm on April 30, 2022 (“Effective Date”) and shall terminate upon the start date of the new City Manager, unless terminated sooner in accordance to the terms in this AGREEMENT.

4. Compensation. For and in exchange for the services provided herein, HEISINGER shall be compensated at an annual base salary of Two Hundred Twenty Thousand Dollars ($220,000) during the term of this AGREEMENT. HEISINGER shall be paid on a prorated basis bi-weekly in accordance with the CITY’s payroll practices and paid at the same time as other employees of the CITY are paid, effective the first full pay period after the Effective Date of this AGREEMENT.

5. Benefits. HEISINGER shall continue to receive the same benefits provided to other Executive Management Employees of the City during the course of this AGREEMENT.

6. Automobile Allowance. HEISINGER shall be entitled to an automobile allowance of $300 per month during the term of this AGREEMENT.

7. Cash Out of Accrued Vacation Leave. HEISINGER shall retain the right to "cash out" an additional week of accrued but unused vacation leave applicable to the position of Assistant City Manager prior to June 30, 2022 at the hourly rate applicable to the position of Assistant City Manager. He retains the right to cash out other accrued but unused vacation leave. The hourly rate upon which the amount of such "cash out" is to be calculated shall be based on the time served in each position.

8. At-Will Status. HEISINGER is, and at all times shall remain, an at-will employee of City. HEISINGER understands and agrees that he has no constitutional or legally protected property or other interest in his appointment to Interim City Manager and serves at the pleasure of the City Council. HEISINGER waives any and all rights to challenge or appeal any such termination from the position of Interim City Manager or to invoke any due process rights or protections as a condition to the City’s right to terminate this Agreement.

9. Assignment and Subcontracting. The services to be provided hereunder shall be rendered by HEISINGER. HEISINGER agrees not to assign or subcontract to any other party the performance of any services described in this AGREEMENT.

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Attachment: Exhibit A Interim City Manager 2 (2183 : Interim City Manager Employment Agreement)

10.Outside Employment. HEISINGER shall not engage in any incompatible work or other enterprise for compensation.

11.Termination by City.
a. The City Council has the right, upon thirty (30) days advance written notice to HEISINGER, to terminate this AGREEMENT at any time during the term of this AGREEMENT with or without cause, and nothing in this AGREEMENT shall prevent, limit or otherwise interfere with the right of the City Council to terminate the AGREEMENT at any time without cause, subject only to the provisions set forth in this section.
b. Notwithstanding the foregoing, the City Council may immediately terminate the AGREEMENT at any time upon written notice for any one or more of the following causes:

1. Conviction of, or plea of guilty or nolo contendere to a felony, or a misdemeanor involving moral turpitude;

2. Violation of Government Code section 1090, or violation of any conflict of interest laws or regulations as determined by a court or an administrative agency;

3. A final judicial or administrative decision finding that HEISINGER committed unlawful acts of sexual harassment or discrimination against a City official or employee;

4. Any material breach of this Agreement, if that breach continues for a period of thirty (30) business days from the date of his receipt of notice from the City Council specifying the acts or omissions deemed to be a material breach of this Agreement;

5. Conviction of any crime involving an "abuse of office or position," as that term is defined in Government Code Section 53243.4;

6. Possession of, use of, or working while under the influence of alcoholic beverages or other non-prescribed controlled substances or abuse/misuse of lawfully prescribed controlled substances during working hours;

7. Violation of State or federal discrimination laws concerning race, religious creed, color, national origin, ancestry, physical or mental

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Packet Pg. 100 Attachment: Exhibit A Interim City Manager 2 (2183 : Interim City Manager Employment Agreement) disability, marital status, sex or age concerning either members of the general public or City employees;

8. Repeated and protracted unexcused absences from work;

9. Any grossly negligent action or inaction by HEISINGER that materially and adversely: (i) impedes or disrupts the operations of City or its organizational units; or

10. Refusal to comply with any lawful direction, decision or order given or made by a majority of the City Council.

12.Termination by Employee. HEISINGER may, upon giving the CITY thirty (30) days advance written notice, resign from the position of Interim City Manager and return to the position of the Assistant City Manager. Upon reinstatement as Assistant City Manager, HEISINGER shall enjoy those benefits and be subject to the terms and conditions of employment applicable to the position of Assistant City Manager. The CITY shall not terminate the employment of HEISINGER for a period of one hundred twenty (120) days after the date of reinstatement to Assistant City Manager, unless the termination is for a cause identified in Section 11(b).

13.Notices. All notices that are required to be given by one party to the other under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or enclosed in a properly addressed envelope and deposited in a U.S. Post Office for delivery by registered or certified mail addressed to the parties at the following addresses:

To CITY: Mayor and City Council
City of East Palo Alto
2415 University Avenue
East Palo Alto, CA 94303
To HEISINGER: Patrick Heisinger
2415 University Avenue
East Palo Alto, CA 94303

14.Insurance. HEISINGER shall obtain automobile insurance for the use of his personal automobile for City use, and maintain such insurance in force at all times during the term and performance of this AGREEMENT.

15.Indemnification.
a. The City shall defend, hold harmless and indemnify HEISINGER against any tort, professional liability claim or demand or other legal action arising out of any alleged act or omission arising out of HEISINGER's services to the CITY including, without limitation, claims arising out of personnel actions, but

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Packet Pg. 101 Attachment: Exhibit A Interim City Manager 2 (2183 : Interim City Manager Employment Agreement) excluding liability arising from an (1) intentional tort or gross negligence committed outside the course and scope of employment; or (2) a criminal act.

CITY shall defend, and may elect to compromise and settle any such claim or suit, and shall pay the amount of any settlement or judgment rendered thereon.

Notwithstanding any other provision herein, CITY reserves the right to determine whether to indemnify for punitive damages.
b. Notwithstanding the foregoing, such indemnification shall be limited as follows:

In accordance with California Government Code Sections 3511.1, 3511.2, 53243, 53243.1 and 53243.2, the following limitations apply to CITY's obligations to HEISINGER.

1. In the event HEISINGER is placed on paid leave pending an investigation, HEISINGER shall reimburse such pay to CITY if he is subsequently convicted of a crime that constitutes "abuse of office or position."

2. In the event City pays for HEISINGER's legal criminal defense, he shall fully reimburse such funds to the CITY if he is subsequently convicted of a crime that constitutes "abuse of office or position."

3. If this AGREEMENT is terminated, any cash settlement related to the termination that HEISINGER may receive from CITY must be fully reimbursed to CITY if he is subsequently convicted of a crime that constitutes "abuse of office or position."

4. For the purposes of this AGREEMENT, "abuse of office or position" shall be defined as in California Government Code Section 53243.4."

16.Waiver. Any failure of a party to insist upon strict compliance with any term, undertaking, or condition of this AGREEMENT shall not be deemed to be a waiver of such term, undertaking, or condition. To be effective, a waiver must be in writing, signed and dated by both parties.

17.Governing Law and Venue. This AGREEMENT shall be governed by and construed in accordance with the laws of the State of California. HEISINGER and CITY agree that venue for any litigation arising out of this AGREEMENT shall be Superior Court for San Mateo County.

18.Counterparts. This AGREEMENT may be executed in counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute one and the same instrument.

19.Severability Clause. Should any provision of this AGREEMENT ever be deemed to be legally void or unenforceable, all remaining provisions shall survive and be enforceable to the greatest extent permitted by law.

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Packet Pg. 102 Attachment: Exhibit A Interim City Manager 2 (2183 : Interim City Manager Employment Agreement)

20.Ambiguity. The parties acknowledge that this is a negotiated AGREEMENT and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this AGREEMENT or any amendment or schedule hereto.

21.Headings. The section headings contained in this AGREEMENT are inserted for convenience only and shall not affect in any way the meaning or interpretation of this AGREEMENT.

22.Entire Agreement. This AGREEMENT constitutes the entire understanding and AGREEMENT between the parties as to those matters contained in it, and supersedes any and all prior or contemporaneous Agreements, representations and understandings of the parties. This AGREEMENT may be amended at any time by mutual agreement of the parties, but any such amendment must be in writing, dated, and signed by the parties.

IN WITNESS WHEREOF, the parties have entered into this AGREEMENT on the day and year shown below the name of each of the parties.

CITY OF EAST PALO ALTO, PATRICK HEISINGER,
A municipal corporation An individual
BY: BY:

Ruben Abrica, Mayor Patrick Heisinger
DATE: DATE:

ATTEST: APPROVED AS TO FORM:

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

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Packet Pg. 103 Attachment: Exhibit A Interim City Manager 2 (2183 : Interim City Manager Employment Agreement)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Patrick Heisinger, Assistant City Manager
SUBJECT: 2022-2023 City Council Priorities
Recommendation
Adopt a Resolution (Attachment 1) approving the 2022-2023 City Council Priorities.

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. 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 Saturday, January 8, 2022, the City of East Palo Alto hosted the FY 2022-2023 Priority Setting session, an annual City Council retreat, via Zoom. The retreat, conducted as a workshop, provided an opportunity for the City Councilmembers and executive staff to review and discuss top priorities and workplans for the current year, discuss priorities for the next two years, celebrate recent accomplishments, and strengthen teamwork between City Council and City staff.

For the third year in a row, the retreat was facilitated by consultant Greg Larson. Please see Attachment 2, “2022 City Council Priority Setting Workshop Report,” provided by the consultant.

At the conclusion of the retreat, staff committed to returning to the City Council in Spring 2022 to seek formal adoption of the City Council Priorities for the years 2022 and 2023.

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For the last several years the City Council has adopted five to seven Priorities with three to six more specific Goals under each Priority. While the Priorities and Goals are reviewed, modified and adopted every year, it is generally understood that most of the Goals will take two years to complete given the complexity, funding needs, and public process required for each item.

Consequently, after the Council provides direction on the Priorities and Goals, City staff then incorporate funding for the Goals as possible in the next budget adoption cycle and develops more detail work plans to achieve each Goal.

Analysis
During the Priority Setting session on January 8, 2022, the City Council reviewed the progress on the adopted Priorities as listed below. This chart also provides the staff lead for each Priority to both manage workloads and to ensure accountability.

CITY COUNCIL PRIORITIES for FY 2022-2023
Priority Policy Area Staff Lead
Enhance Community Services and Parks for Residents Heisinger/McKenzie Advance Housing and Workforce Development Chen
Develop/Implement a Comprehensive Facilities Master Plan Fallaha/Heisinger Ensure Health and Public Safety Fallaha/Liu/Heisinger
Develop Comprehensive Strategy to Address City’s Structural Deficit Oku
Establish/Implement a Transportation Mobility Plan Fallaha/Chen Improve the City’s Water Infrastructure Fallaha
As part of the interview process before the workshop, the City Council had ranked the Priorities and the Goals under each Priority for presentation purposes. The balance of the workshop was then spent going through each of the Priority areas and modifying the Goals to mee the community’s and Council’s expectations for the next two years. In addition, the facilitator provided examples of language modifications that would be necessary to have consistency between the Priorities and their associated Goals.

The recommended set of Priorities and Goals for 2022 – 2023 provided in Exhibit A of Attachment 2 – the Facilitators Workshop Report . The most significant changes and additions are noted below:
• The ordering of the Priorities and Goals has been modified throughout to reflect the Council’s input and direction;
• The COVID-19 Priority added last year has been moved to a Goal under Promote Public Health and Safety;
• Several Goals moved from planning or other preparatory work to implementation; • With the pending completion of the Housing Element in 2022, then focus on the City’s next affordable housing project and the funding needed; • Creation of an Economic Development Strategy with a particular focus on small and micro businesses;
• Prioritize the construction of the University Overpass for the current calendar year; • Consider funding strategies for street improvements and other public infrastructure; • Implement a parking and enforcement program
• Resolve the Sanitation District incorporation matter
• Broaden the Financial Health Priority to include broader organizational issues such as

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staff morale, retention, recruitment and succession planning, as well as implementation of the work-intensive Enterprise Resource Planning system; • Prioritize the University 12” water main project;
• Finalize the Veolia lease negotiations;
• Explore the Tanklage site to meet temporary or ongoing Police facility needs; • Engage with the County regarding the University and Beech Street properties; • Prioritize the design of the MLK Jr. and Bell Street park projects.

A full presentation of the Council’s workshop discussion is included in the facilitator’s Workshop Report (Attachment 2)
Next Steps
Once the City Council has confirmed the FY 2022-2023 City Council Priorities as described in this staff report, staff will update the City’s website that provides all relevant information to the public and other stakeholders regarding the status of the City Council Priorities. Additionally, staff will provide semi-annual updates regarding the FY 2022-2023 Priorities to the City Council in December 2022.

Fiscal Impact
There are no fiscal impacts associated with this staff report.

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 Palo Alto.

Attachments

1. Resolution

2. Exhibit A - Workplans for Each FY 2022-2023 City Council Priority

3. 2022 City Council Priority Setting Workshop Report

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ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO

ADOPTING THE CITY COUNCIL PRIORITIES INCLUDING DETAILED WORKPLANS FOR EACH PRIORITY AREA FOR FISCAL YEAR 2022-2023
WHEREAS, on January 8, 2022, the City Council hosted a Priority Setting Session (“Priority Setting”) to initiate the process of establishing City Council priorities for FY 2022- 2023; and
WHEREAS, on April 5, 2022, the City Council received a report drafted by Consultant Greg Larson titled “Summary of the Results of the City Council’s 2022-2023 Priority Setting Retreat.”

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY adopts the FY 2022-2023 City Council Priorities and Work Plan, attached hereto as Exhibit A to this Resolution and incorporated by this reference.

PASSED AND ADOPTED this 5th day of April 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_________________________________
Ruben Abrica Mayor
ATTEST: APPROVED AS TO FORM:
_____________________________ ________________________________ James Colin, Interim City Clerk Valerie Armento, Interim City Attorney

9.2.a
Packet Pg. 107 Attachment: Resolution (2173 : 2022-2023 City Council Priorities) DEPT: COMMUNITY AND ECONOMIC DEVELOPMENT LEAD: Chen
1 GOAL: Implement Measure HH Employment & First Source Hiring Programs STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.1 Identify Consultant to Research and Provide Recommendations to the City Done X

1.2 City Council Study Session on Measure HH/First Source Hiring Options Done X X

1.3 City Council Consideration of Measure HH/First Source Hiring Policies Done X

1.4 If Applicable, Identify Partner to Enforce Council-Established Policies Doing X

1.5 Community Outreach Doing X X X X X X X X
2 GOAL: Provide Assistance to Small Local Businesses STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Identify Consultant to Provide Options for 9,000 sq/ft Office Building Provided by the Sobrato Organization To Do X

2.2 Obtain Cost Estimate for Tenant Improvements of City-Controlled Space in Cummings Loft Done X

2.3 Identify Funding Source for Tenant Improvements of City-Controlled Space in Cummings Loft Done X

2.4 Consultant to Provide Council with Options for the 9,000 sq/ft Office Building To Do X X

2.5 Finalize Concepts for Both Office Spaces To Do X X

2.6 Investigate Approaches to Supporting Local Small Businesses Doing X X 3 GOAL: Continue to Implement the City's Affordable Housing Strategy Through 2023 STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

3.1 Semi-Annual Update at City Council Done X X X X

3.2 Advance Concept of TOPA/COPA and Other Homeownership Opportunities Doing X

3.3 Complete the Housing Element Update Doing X

3.4 Identify the City's Next Affordable Housing Project NEW 4 GOAL: Investigate Potential Ballot Measure to Support Affordable Housing STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4.1 If Applicable, Obtain Final Direction from Council to Pursue Measure Doing X FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
CC PRIORITY: PROMOTE HOUSING, ECONOMIC & WORKFORCE DEVELOPMENT FY 2020-2021 FY 2021-2022 GOAL

ACTIONS
STATUS

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Packet Pg. 108 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: COMMUNITY AND ECONOMIC DEVELOPMENT LEAD: Chen
FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
CC PRIORITY: PROMOTE HOUSING, ECONOMIC & WORKFORCE DEVELOPMENT FY 2020-2021 FY 2021-2022 GOAL

ACTIONS
STATUS

4.2 Draft Ballot Language Doing X

4.3 Submit Appropriate Documents to the County to Finalize Ballot Requirements Doing X 5 GOAL: Create an Economic Development Strategy w/ Focus on Small/Micro Businesses STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW

9.2.b
Packet Pg. 109 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: PUBLIC WORKS DEPARTMENT/COMMUNITY & ECONOMIC DEVELOPMENT LEAD: Fallaha/Chen 1 GOAL: Develop a Comprehensive Transportation and Mobility Plan STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.1 Circulate Final Administrative DRAFT of the Mobility Study Done X

1.2 Present the Final Report of the Mobility Study to the City Council/Approve/Adopt the Study Done X

1.3 Implement Short-term Improvements as Identified in the Final Mobility Report Doing X

1.4 Implement Mid-term Improvements as Identified in the Final Mobility Report To Do X

1.5 If Approved by CC, Initiate a Parking Permit Pilot Program To Do X

1.6 Complete and Adopt Transportation Demand Management (TDM) Ordinance Done X 2 GOAL: Expand Pedestrian/Bicycle Facilities and Interconnectivity STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Impement the City Bicycle Transportation Plan with Next Street Resurfacing Project Done X

2.2 Implement Bike Lane Striping with AHSC Funding Doing X 3 GOAL: Begin Construction of the University Overpass Project STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW
4 GOAL: Investigate University Avenue Improvements/Changes STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4.1 Install Turn Restricting Signage along University Avenue To Do X

4.2 Complete a Feasability Analysis Report on Congestion Pricing along University Avenue To Do X 5 GOAL: Analyze Funding Strategies for Public Infrastructure Including Streets, Parks, & Utilities STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW
FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
GOAL
ACTIONS CC PRIORITY: Implement the Comprehensive Transportation and Mobility Plan STATUS FY 2020-2021 FY 2021-2022

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Packet Pg. 110 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: PUBLIC WORKS DEPARTMENT/POLICE DEPARTMENT LEAD: Fallaha/Liu 1 GOAL: Effectively Respond to the COVID-19 Pandemic STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2 GOAL: Enhance Flood Protection for Residents, Businesses, and Property Owners STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Implement $22M Safer Bay Project CALOES/FEMA Grant w/ San Francisquito Creek JPA - Design & Doing X

2.2 Implement $22M Safer Bay Project CALOES/FEMA Grant w/ San Francisquito Creek JPA - Construction To Do X

2.3 Coordinate with City of Palo Alto on the Construction of Newell Street Bridge Replacement Project Done X

2.4 Update Hazard Mitigation Plan Done X
3 GOAL: Resolve Sanitation District Incorporation Matter STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW
FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
GOAL
ACTIONS CC PRIORITY: Promote Health & Public Safety STATUS FY 2020-2021 FY 2021-2022

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Packet Pg. 111 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: FINANCE DEPARTMENT LEAD: Oku/Heisinger
1 GOAL: Address Structural Deficit Through Fiscal Resiliency Measures STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.1 Perform Risk-based Study of General Fund Reserves Done X

1.2 Adopt a General Fund Reserve Policy Done X

1.3 Perform Actuarial Study of CalPERS Pension Obligations Done X

1.4 Adopt a CalPERS Funding Plan Done X

1.5 Perform Engineering and Other Studies as Necessary to Pursue Revenue Resources To Do

1.6 Prepare for & Manage Increasing Complexity of Utility Related Systems & Resources Doing X X X X 2 GOAL: Develop 10 Year Financial Projections STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Issue RFP to Hire Financial Projection Consultant Done X

2.2 Perform Study of Financial Projections Doing X

2.3 Prepare and Present Projections Doing X
3 GOAL: Plan and Implement an Enterprise Resource Planning (ERP) System STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

3.1 Select ERP Vendor Done X

3.2 ERP Implementation Doing X X X X X X

3.3 ERP Fully Implemented To Do X
4 GOAL: Focus on Staff Morale, Retention, Recruitment & Succession Planning STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW
5 GOAL: Analyze Funding Strategies for & Community Perspectives on Public Infrastructure Improvements STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW
FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
GOAL
ACTIONS CC PRIORITY: Ensure Our Financial & Organizational Health STATUS FY 2020-2021 FY 2021-2022

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Packet Pg. 112 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: PUBLIC WORKS DEPARTMENT LEAD: Fallaha
1 GOAL: Improve Operations and Infrastructure of Water System STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.1 Release RFP and Award Consultant Contract to Update the City Water Master Plan Done X

1.2 Complete Update of the City Water Master Plan Doing X

1.3 Update the City Urban Water Management Plan (2020 UWMP) as Required by State Law Done X

1.4 Finalize City Water Asset Management Plan NEW X
2 GOAL: Advance Key Water Infrastructure Projects STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Complete Upgrade of the O'Brien Turnout Done X

2.2 Initiate and Design 12" Watermain across University Ave to Fill a Missing Gap in the Water System Done X

2.3 Apply for Infill Infrastructure Grant (IIG) for the 12" Water Transmission Line on University/Cooley Ave Done X X

2.4 Issue RFP for the Design of 12" Water Transmission Line on University/Cooley, Award a Design Contract Done X

2.5 Design 12" Water Transmission Line on University/Cooley Ave. Done

2.6 Identify and Commit Funding for 12" Water Transmission Line on University/Cooley Ave. Done X

2.7 Complete Construction of 12" Water Transmission Line on University/Cooley Ave. To Do X

2.8 Complete an Agreement with Palo Alto to Re-establish the Water Intertie at University/Woodland Done X *2.9 Design of Water Intertie at University/Woodland with Palo Alto Done

2.1 Complete Construction of Water Intertie at University/Woodland with Palo Alto Doing X

2.11 Identify Potential Locations for Additional Water Storage Doing X

2.12 Investigate State and Federal Water Funding Opportunities, including WIFIA and DWSRF Doing X

2.13 Proactively Design Additional Water Improvement Projects Doing 3 GOAL: Finalize Veolia Lease Negotiations STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NEW
FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
GOAL
ACTIONS CC PRIORITY: Improve the City's Water Infrastructure STATUS FY 2020-2021 FY 2021-2022

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Packet Pg. 113 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: PUBLIC WORKS DEPARTMENT/CITY MANAGER'S OFFICE LEAD: Fallaha/Heisinger 1 GOAL: Completion of the City's Comprehensive Facilities Master Plan STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.1 Provide a Plan for City Council Adoption Done X

1.2 Initiate City Hall/Council Chambers Tenant Improvement Project Doing X 2 GOAL: Investigate Potential Options for Developing County Vacant Property Located on Beech Street STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Initiate Discussion with County on the Beech Street Property Done X

2.2 Based on Discussions with County, Embark on Process to Solicit Input from the Community Done X

2.3 City Council to Host a Study Session to Discuss Options for Beech Street Property Done X

2.4 If Applicable, Draft Formal Recommendations for City Council Consideration Done X

2.5 Endeavor to Finalize Acquisition of County-Owned Beech Street Property NEW 3 GOAL: Coordinate with County Library District Regarding the Potential New Library in East Palo Alto STATUS Q1 Q2 X Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

3.1 Initiate Discussion with Goldman Foundation, the Library JPA, and County on Potential New Library Done X X

3.2 Based on Discussions with Stakeholders, Provide the City Council with Update on Potential New Library Done X 4 GOAL: Develop a Detailed Strategy for the Location of the Future Police Department STATUS Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4.1 Investigate Potential Opportunities for Future Proposed Development Projects Doing X

4.2 Provide the City Council with Update on Options for Future Proposed Development Projects Doing X 5 GOAL: Complete the City Hall Tenant Improvement Project [ON HOLD] STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

5.1 Investigate Potential Partnership Opportunities for Future Development Projects Doing X

5.2 Explore Partnership with County Regarding Future Use of 2415 University Avenue Doing X FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
GOAL
ACTIONS CC PRIORITY: Develop and Implement a Comprehensive Facilities Master Plan STATUS FY 2020-2021 FY 2021-2022

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Packet Pg. 114 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City DEPT: CITY MANAGER'S OFFICE/ADMINISTRATIVE SERVICES DEPT LEAD: Heisinger/McKenzie 1 GOAL: Foster Community Cultural Events & Activities STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.1 Implement Summer Programming for East Palo Alto Residents Done X X

1.2 Facilitate City Sponsored Events on On-going Basis Doing X X X X X X X X X X X 2 GOAL: Completion of a Parks Master Plan STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2.1 Draft, Issue, and Evaluate Park Master Plan RFP/Q and Subsequent Responses Done X

2.2 City Council Consideration of Agreement with Firm to Provide Master Plan Services Done X

2.3 Partner with Selected Consultant to Conduct Community Outreach on Park Master Plan Done X X

2.4 City Council Consideration of Final Park's Master Plan Doing X

2.5 Draft Recommendations Regarding: Potential Dog Park, Security, & Wi-Fi as Part of Parks Master Plan Doing X

2.6 Pursue Proposition 68 Grant Funds to Expand Recreation Opportunities Done X

2.7 Advance Design of Martin Luther King, Jr. (MLK) Park Expansion Project NEW

2.8 Advance Design of Bell Street Park Project in Partnership with Magical Bridge Foundation NEW 3 GOAL: Complete Information Technology (IT) Strategic Plan STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

3.1 Issue RFP to Identify Consultant to Faciliate Strategic Plan To Do

3.2 Develop Recommendations To Do

3.3 City Council Consideration of Recommendations To Do 4 GOAL: Engage with Community & Partner Agencies to Improve Educational Resources/Outcomes STATUS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4.1 Explore Partnerships with School District & Other Entities Regarding Potential Joint Use NEW

4.2 Build Relationships with Foundations and Other Philanthropic Organizations to Identify Partnerships Doing X

4.3 Pursue Enhanced Youth & Multigenerational Engagement & Perspectives NEW FY 2022-2023

EAST PALO ALTO CITY COUNCIL PRIORITY WORKPLAN
GOAL
ACTIONS CC PRIORITY: Enhance Community Services and Parks for Residents STATUS FY 2020-2021 FY 2021-2022

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Packet Pg. 115 Attachment: Exhibit A - Workplans for Each FY 2022-2023 City Council Priority (2173 : 2022-2023 City March 2022
City of East Palo Alto
City Council Workshop Report
Held January 8, 2022

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Packet Pg. 116 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities)

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Packet Pg. 117 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
1 Table of Contents
Introduction .................................................................................................. 2 Opening Comments..................................................................................... 5 Workshop Overview ................................................................................... 5 Celebrating Recent Accomplishments ...................................................... 6 Public Comment........................................................................................... 7 Review Each Priority Area and Associated Goals................................... 7 Review Workload and Funding Constraints and Possible Solutions. 13 Wrap-up and Next Steps........................................................................... 14 Attachment A: 2022-23 Priority Areas and Goals.......................................... 15

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Packet Pg. 118 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
2 Workshop Report
The City of East Palo Alto held a City Council workshop on Saturday, January 8, 2022, from 8:30 a.m. to 12:30 p.m. via Zoom. The workshop provided an opportunity for the Councilmembers and executive staff to review and discuss top priorities and workplans for this year, discuss priorities for next year, celebrate recent accomplishments, and strengthen teamwork between Council and staff. This report contains a summary of the results of the retreat.

Greg Larson facilitated the workshop.

Introduction
Objectives
• Strengthen the Council and staff collaborative relationship • Celebrate recent accomplishments
• Review existing City priorities and workplan
• Provide direction on priorities for the next two years Discussion Outline
A. Opening Comments
B. Workshop Overview
C. Celebrate Recent Accomplishments
D. Public Comment
E. Consider Each of the Seven Priority Areas and Goals
F. Review Workload and Funding Constraints and Possible Solutions G. Next Steps and Wrap-up

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Packet Pg. 119 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
3 Workshop Ground Rules
At the start of the workshop, the facilitator suggested several ground rules to help the group have a successful workshop.
• Seek consensus
• Everyone listens to each other
• Everyone participates
• Disagree agreeably
• Focus on issues, not the person
• Seek to gain understanding
Bike Rack
The facilitator explained that items that were brought up but not resolved or prioritized during the workshop would be added to a “bike rack.” The following ___ are included in the bike rack:

1. Planning a community engagement initiative for development of the City’s budget.

2. Providing monthly updates on the University Overpass project.

3. Provide a status report on the Addison Street improvement project.

4. Provide an update on implementation of the Mobility Plan.

5. Table creation of a Police parking enforcement division until after a new Chief is hired.

6. Table the City Hall tenant improvement project for the time being.

7. Table development of an information technology master plan.

8. What is the city doing to help small businesses and retail centers recover from COVID?

9. Complete the City’s Housing Element update as required by State law.

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Packet Pg. 120 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
4 Participants
City Council
Mayor
Ruben
Abrica
Vice Mayor
Lisa
Gauthier
Council Member
Regina
Wallace-Jones
Council Member
Antonio
López
Council Member
Carlos
Romero
Staff
• Jaime Fontes, City Manager
• Patrick Heisinger, Assistant City Manager
• Rafael E. Alvarado Jr., City Attorney
• James Colin, Executive Assistant, Acting City Clerk
• Amy Chen, Community and Economic Development Director • Kamal Fallaha, Public Works Director
• Jeff Liu, Acting Chief of Police
• Marie McKenzie, Administrative Services Director
• Tomo Oku, Finance Director
• Azalea Renfield, Community Services Manager

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Packet Pg. 121 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
5 Opening Comments
After the Council meeting was called to order, the Council first heard, discussed, and adopted a proclamation Commemorating the Contributions of the Reverend Dr. Martin Luther King, Jr., in the Fight for Equality.

At the start of the Priority Setting workshop, Mayor Abrica thanked the public, Council, and staff for attending. The Mayor discussed the importance of reaching consensus on the future direction of the City given the ongoing pandemic, significant projects, and challenging economic times.

City Manager Jaime Fontes also offered some opening comments. He explained the importance of the day’s retreat and the value of staff staying focused on Council’s top priorities.

Workshop Overview
Following the opening comments, facilitator Greg Larson introduced himself and provided an overview of the workshop, including a review of the objectives, discussion outline, ground rules and bike rack, as discussed previously.

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Packet Pg. 122 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
6 Celebrating Recent Accomplishments
The City Council reviewed a list of recent accomplishments that Councilmembers identified during their interviews and others raised by staff, as shown on the following slides
The Council was asked what factors made these accomplishments possible, and the Council member responses included:
• Strong staff work and responsiveness
• Clear goals and detailed work plan
• Council’s focus and collaboration
• Available financial resources
• Strong community engagement and partnerships

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Packet Pg. 123 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
7 Public Comment
The Mayor invited members of the public participating in the Zoom meeting to provide their comments related to the City’s priorities for the years ahead. Only one member of the public spoke and her comments included appreciation of the hard work of the Council and staff and a request to always consider the needs of those who may be facing financial or housing-related challenges.

Review Each Priority Area and Associated Goals
Following a brief break, the Council received a presentation on the top priorities for the next year or two as identified during the Council member interviews prior to the workshop, as well as listings of additional potential priorities previously identified by Council or City staff over the past year, as summarized on the following slides.

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Packet Pg. 124 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
8 The City Council then proceeded to the substantive review and discussion of the existing and potential Goals within each of the seven Priority Areas identified in prior years. Please note that during the course of the Council interviews, the Council had ranked the Priority Areas for presentation purposes, as follows:

1. Housing & Economic/Workforce Development

2. Establish/Implement a Transportation Mobility Plan

3. Ensure Health & Public Safety

4. Develop Comprehensive Strategy to Address City’s Structural Deficit

5. Improve the City’s Water Infrastructure

6. Develop and Implement a Comprehensive Facilities Master Plan

7. Enhance Community Services and Parks for Residents
For each of the Priority Areas, the Council reviewed a slide with the prior and potential Goals listed and heard any additional comments from staff.

The Council then provided direction on the Goals for the next two years and the relative priority of those Goals compared to each other.

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Packet Pg. 125 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
9 Following Council discussion, the revised Priority Area and Goals are:
1 - Promote Housing, Economic and Workforce Development 1 A Implement Measure HH Employment and First Source Hiring Programs 1 B Finalize the Ravenswood Business District direction 1 C Pursue November tax measure and other revenues for housing support 1 D Create an Economic Development Plan with support for small and micro businesses
1 E Identify the City's next potential affordable housing project Following Council discussion, the revised Priority Area and Goals are:
2 - Implement the Comprehensive Transportation and Mobility Plan 2 A Begin construction of the University Overpass project by December 2022 2 B Analyze funding strategies for public infrastructure including streets, parks and utilities
2 C Implement a parking and enforcement program

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Packet Pg. 126 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
10 Following Council discussion, the revised Priority Area and Goals are:
3 - Promote Public Health and Safety
3 A Continue the City's strong response to COVID impacts and community needs 3 B Resolve the Sanitation District incorporation matter 3 C Enhance flood protection for residents, businesses, and property owners Following Council discussion, the revised Priority Area and Goals are:
4 - Ensure Our Financial and Organizational Health
A Focus on staff morale, retention, recruitment, and succession planning B Implement an Enterprise Resource Planning (ERP) System C Continue fiscal resiliency efforts with ten-year financial forecasts

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Packet Pg. 127 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
11 Following Council discussion, the revised Priority Area and Goals are:
5 - Improve the City's Water Infrastructure
5 A Prioritize the University 12' water main project
5 B Finalize the Veolia lease negotiations
5 C Complete the design of the next key water infrastructure projects 5 D Update the Water Master and Management Plans
Following Council discussion, the revised Priority Area and Goals are:
6 - Develop and Implement a Facilities Master Plan
6 A Explore the Tanklage site for a future or temporary Police headquarters 6 B Engage in discussions with County regarding University and Beech Street properties 6 C Support continued progress by the Library District for a new library

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Packet Pg. 128 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
12 Following Council discussion, the revised Priority Area and Goals are:
7 - Enhance Community Services and Parks
7 A Complete the design of the MLK Jr. and Bell Street park projects 7 B Engage with community partners to improve educational resources and outcomes
7 C Pursue enhanced youth and multi-generational engagement and perspectives A summary of all of the revised Priority Areas and Goals is provided as Attachment A

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Packet Pg. 129 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
13 Review Workload and Funding Constraints and Possible Solutions The last substantive item for the workshop was to review workload and funding constraints that were discussed in the staff report for the workshop, as well as additional research conducted by the facilitator.

Most City resources, including financial and staffing, are targeted for the day-to-day delivery of services in every department. For most cities, only 15% of capacity is available for new projects or initiatives, as depicted in these two slides.

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Packet Pg. 130 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) City Council Workshop Report
14 The facilitator then shared the final Council interview results highlighting Council member suggestions for better managing organizational workload constraints, including for the City Council itself. The two bolded items at top were being pursued by the Mayor and Vice Mayor for implementation as part of the agenda-setting process.

Wrap-up and Next Steps
The facilitator explained that he would prepare this summary report. The City Manager noted that staff will incorporate direction on the priorities in the budget. He will also direct staff to develop work plans pertaining to each priority area for Council approval in May or June.

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Packet Pg. 131 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities) Workshop Report
15 G
1 - Promote Housing, Economic and Workforce Development 1 A Implement Measure HH Employment and First Source Hiring Programs 1 B Finalize the Ravenswood Business District direction 1 C Pursue November tax measure and other revenues for housing support 1 D Create an Economic Development Plan with support for small and micro businesses 1 E Identify the City's next potential affordable housing project 2 - Implement the Comprehensive Transportation and Mobility Plan 2 A Begin construction of the University Overpass project by December 2022 2 B Analyze funding strategies for public infrastructure including streets, parks and utilities 2 C Implement a parking and enforcement program
3 - Promote Public Health and Safety
3 A Continue the City's strong response to COVID impacts and community needs 3 B Resolve the Sanitation District incorporation matter 3 C Enhance flood protection for residents, businesses, and property owners 4 - Ensure Our Financial and Organizational Health
A Focus on staff morale, retention, recruitment, and succession planning B Implement an Enterprise Resource Planning (ERP) System C Continue fiscal resiliency efforts with ten-year financial forecasts 5 - Improve the City's Water Infrastructure
5 A Prioritize the University 12' water main project
5 B Finalize the Veolia lease negotiations
5 C Complete the design of the next key water infrastructure projects 5 D Update the Water Master and Management Plans
6 - Develop and Implement a Facilities Master Plan
6 A Explore the Tanklage site for a future or temporary Police headquarters 6 B Engage in discussions with County regarding University and Beech Street properties 6 C Support continued progress by the Library District for a new library 7 - Enhance Community Services and Parks
7 A Complete the design of the MLK Jr. and Bell Street park projects 7 B Engage with community partners to improve educational resources and outcomes 7 C Pursue enhanced youth and multi-generational engagement and perspectives

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Packet Pg. 132 Attachment: 2022 City Council Priority Setting Workshop Report (2173 : 2022-2023 City Council Priorities)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 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.

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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

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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.

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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. 136
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. 137
City of East Palo Alto
Evaluation of Selected Housing Trust
Fund Revenue Source
March 9, 2022

9.3.a
Packet Pg. 138 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. 139 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. 140 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. 141 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. 142 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. 143 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. 144 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. 145 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. 146 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. 147 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. 148 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.

9.3.a
Packet Pg. 149 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 9

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.

9.3.a
Packet Pg. 150 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 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.

9.3.a
Packet Pg. 151 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 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

9.3.a
Packet Pg. 152 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 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.

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.

9.3.a
Packet Pg. 153 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 13

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.

9.3.a
Packet Pg. 154 Attachment: David Rosen & Associates 2022 Report (2155 : Potential Ballot Measure for Affordable Housing Revenue) City of East Palo Alto
Housing Trust Fund Revenue Sources
Public Review Draft
February 3, 2020

9.3.b
Packet Pg. 155 Attachment: David Rosen & Associates 2020 Housing Trust Fund Revenue Sources Report (2155 : Potential Ballot Measure for Affordable City of East Palo Alto February 3, 2020
New Revenue Sources
PREPARED FOR:

City of East Palo Alto
PREPARED BY:

9.3.b
Packet Pg. 156 Attachment: David Rosen & Associates 2020 Housing Trust Fund Revenue Sources Report (2155 : Potential Ballot Measure for Affordable City of East Palo Alto February 3, 2020
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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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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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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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.

County participation is an important factor when considering the feasibility of an EIFD. By securing a contribution of County property tax increment, the City leverages its own investment of increment. Another important consideration when forming an EIFD is to identify specific policy issues that the EIFD will address. A theme-based EIFD will be more likely to attract County participation if it resonates with County policy concerns.

4.5 Pay-For-Performance and Social Impact Bonds
Under a typical pay-for-performance model, a government agency contracts with an independent service provider to provide social services, and agrees to provide incentive payments to the provider if it achieves agreed-upon performance targets.

The government agency funds the incentive payments from cost savings realized by the government when outcomes exceed benchmarks based on historic norms. (An independent third party will typically verify outcomes.) The contractual agreement between the government agency and the social service provider is sometimes referred to as a pay-for-performance contract.

The service provider can obtain a loan from an investor to pay for capital expenditures and operations associated with services it provides under the pay-forperformance contract and pledge a share of the of the incentive payments it receives from the government agency towards repayment of the loan. These loans are referred to as Social Impact Bonds (SIBs).

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The Los Angeles County Department of Health Services (DHS) has developed an innovative and well performing health and social service delivery program called Flexible Housing Subsidy Pool (FHSP). The FHSP model represents an innovation that appears to produce a more efficient outcome than would result from the use of social impact bonds (SIB) and other pay-for-performance financing strategies.

Through the FHSP, DHS contracts with owners of rental properties to provide longterm rent subsidies to house DHS patients who are chronically homeless. Providing stable, service-enriched, housing for homeless individuals dramatically reduces County health care expenditures, the savings from which are redirected into the long-term rent subsidies.

4.6 Business Fees and Taxes
California cities are afforded wide latitude in the assessment of various kinds of business fees and taxes, subject to the potential election and other requirements of Proposition 62. Business taxes can be imposed or increased under Proposition 13, because they are not taxes on real property. However, if legislatively earmarked for housing when imposed by a city or county, they would be special taxes requiring a two-thirds vote of the electorate under Proposition’s 13’s terms.

Existing business taxes generally take one or more of the following forms:
n Flat business license fee;
n Employee head tax;
n Gross receipts tax;
n Payroll tax.

Table 1 summarizes the business license tax applied to all businesses in East Palo Alto except owners of five or more rental 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 the potential use of funds for housing-related purposes was emphasized. 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.

Hardship exemptions may be granted.

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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.

4.7 Transient 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.

Transient occupancy tax revenues could be allocated to housing assistance. This may be justified, for instance, by the large number of low-paid hotel workers who need affordable housing.

An alternative to increasing the tax for housing assistance would be securing dedication for housing assistance from existing TOT revenues, or any increased revenues occurring at current tax rates, as a result of a growing hotel economy. It appears to be legally possible to rededicate all or portions of TOT revenues derived from assessments that existed prior to the passage of Proposition 13 (1978).

However, East Palo Alto does not appear to have any hotels that fall into this category.

Any new or increased TOT as a general tax requires a majority vote. To dedicate TOT for special purposes, such as affordable housing, requires two-thirds voter approval.

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Most cities set the rate of their TOT as a percentage of the hotel room rate.

Generally, TOT rates range from 8% to 14%1. Some cities set it as a cap, for example 12% or at any lesser rate that the city council shall determine by resolution. 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 voter-approved. Of the TOT collected, the General Fund keeps 80%, 10% goes to the TOT-Affordable Housing Fund (for affordable housing development), and 10% goes to Children Youth Family Fund (for local grants).

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 shortterm 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. However, an article published in the Silicon Valley Business Journal2 showing the top ten AirBNB listings that appeared most often on site uses’ “wish lists” including two properties in East Palo Alto, then listing for $209 per night and $96 per night, respectively.
1 Source: League of California Cities.
2 “These are Silicon Valley’s top 10 most wished for Airbnb listings,” by Olivia Schaber, July 18, 2017.

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4.8 General Occupancy, Parcel and Municipal Service Taxes 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. 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.1 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.

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administer the ordinance and provide annual reports on the amount of funds collected and expended, and the status of any project.

4.9 Utility User Tax
A Utility User Tax (UUT) may be imposed by a city on the consumption of utility services, including but not limited to electricity, gas, water, sewer, telephone (including dell phone and long distance), sanitation and cable television1. As long as the tax is enacted as a general tax, the two-thirds vote requirement of Proposition 13 does not apply. Such taxes are typically a flat percentage of total utility charges collected by the utility. Proposition 218 requires voter approval of any change in the “methodology” by which a tax is administered if the change increases the amount of the tax paid by the taxpayer.

Charged at a flat rate, a utility user tax is inherently regressive. Lower income households pay a tax that represents a higher percentage of their more modest incomes. A number of cities provide exemptions or credits from their utility user tax for low income households.

Approximately 157 cities and 4 counties in California impose Utility Users Tax, primarily for telephone, electricity and gas.2 All of these UUTs are general taxes except two. Voters in the City of Desert Hot Springs approved a UUT in June 2003 which dedicated 50% of the proceeds to resolving the City’s bankruptcy-related debt, while voters in the City of Mammoth Lakes approved the extension of the City’s sun-setting UUT and earmarked it for mobility, recreation, arts and culture.3 The City of East Palo Alto currently changes a UUT of 5% on water, cable television, gas and electricity.

4.10 Utility Franchise Fee
No person, unless exempted, may construct, install, or operate facilities in the public rights-of-way, or provide service using any facilities installed in the public rights-of-way, without a franchise that authorizes each and every service provided.

In consideration of the cost incurred to construct, install, operate or provide services using facilities in the public rights-of-way, franchisees pay the City a fee 1 General Law cities: Cal. Government Code Section 37100.5 2 Source: California City Finance.com, updated January 2017. 3 Source: ibid.

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expressed as a percentage of gross revenues. A franchise agreement (a contractual obligation) specifies the fee to the paid and the gross revenue to be included in the fee calculation. Electric, gas, and cable television are among the common franchises charged a franchise fee. Telephone utilities are specifically exempted from franchise fees by State law.

The Public Utilities Code regulates the franchise fees that general-law cities charge, but charter cities are not bound by those restrictions. The Public Utilities Commission ("PUC") regulates the way that privately owned utilities recover the cost of the franchise fees that exceed regional averages, but plays no role in establishing the validity of those fees.

California courts have always viewed franchise fees as negotiated compensation for the valuable use of public property, not as taxes. In Jacks v. City of Santa Barbara (Case No. S225589) (2017), the California Supreme Court confronted this issue of taxes versus fees in the context of franchise fees. The Supreme Court reversed a ruling by the Second District Court of Appeal that had found that a portion of the City of Santa Barbara’s electrical franchise fee was a tax because its purpose was to generate general revenue for the City. The Supreme Court held that “a fee paid for an interest in government property is compensation for the use or purchase of a government asset rather than compensation for a cost.

Consequently, the revenue generated by the fee is available for whatever purposes the government chooses rather than tied to a public cost." Moreover, the court acknowledged that the negotiated agreement between Santa Barbara and Southern California Edison could constitute evidence of the franchise’s value, so long as that agreement was reached through bona fide negotiations. It also indicated that unspecified “other indicia of value” could be used. However, it did not explain who would bear the burden of proving the value of a franchise. As a result, cities with existing franchise fees, and especially those with franchise surcharges, should evaluate what evidence they have available for their existing fees and prepare their records of decisions for new fees with this consideration in mind.

The City of East Palo Alto charges a franchise fee of 5% on water, cable television, gas, electricity and billboards.

4.11 Housing Conversion and Preservation Taxes and Fees Cities may charge development a tax not earmarked for any purpose or service, as opposed to a fee, which is justified by and earmarked for a specific need.

Examples include condominium conversion taxes.

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For taxes, the courts have allowed wider latitude to local government, not requiring a showing of nexus. Revenue-raising “taxes” need not be proportionate to any particular benefit or burden created by a particular activity. By taxing the “business” of development, cities may substitute taxes for fees, and avoid the need to show a reasonable relationship between the development and the need to be filled by the fees. They may then spend the proceeds for any general fund purpose, so long as they do not earmark the tax. There is not a nexus requirement for taxes that go into the general fund, even if the taxes apply to specific types of development. If earmarked for housing, such a tax would require a two-thirds voter approval.

A number of cities concerned about the loss of affordable housing stock have adopted housing preservation fee ordinances. Generally, these existing ordinances focus on residential hotels. Such ordinances generally require applicants who seek to demolish or convert residential housing that complies with a stated definition to either replace the units or pay a fee to help replace the lost housing. Fee levels may be set to encourage either paying the fee or developing a comparable unit.

Where a fee is charged, there must be a nexus between the requirement placed on development and the problem to be addressed. In the case of a residential hotel replacement requirement, the nexus appears clear: because affordable housing is lost, some contribution to replacing it is directly related.

There is a more serious legal obstacle than the nexus requirement to imposing fees on conversion of residential hotels or other affordable housing. The Ellis Act is a provision in California Law (Government Code section 7060-7060.7) that provides landlords with a legal way to go out of the rental housing business. The Ellis Act was adopted by the California legislature in 1985 after the California Supreme Court decision in the case of Nash v. City of Santa Monica (1984) 37 Cal.3d 97.

Therefore, a city may not impose a prohibitive price on choosing to develop the property for another use, particularly through demolition. In light of this legal issue, it might be helpful before instituting a fee on demolition or conversion of residential hotels or other affordable housing, to perform a study not only substantiating the nexus but also establishing that the fee is not “prohibitive” of conversions. The possibility of imposing a business tax on revenue-generating activities following demolition might avoid the legal hurdles facing a preservation fee.

The City of East Palo Alto currently has a condo conversion ordinance and charges a condominium conversion fee of $28,362 per unit (effective 10/1/2016).

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4.12 Sales and Use Tax
An increase in sales taxes to support a housing trust fund requires a two-thirds approval from the electorate. In some instances, it may be possible to include affordable housing as a component of a local proposition for raising or extending sales taxes.

Sales taxes fall under the restrictions imposed by Article 13. A local sales tax dedicated to a special purpose is considered a special tax and must be approved by two-thirds of the voters for adoption.

The California Department of Tax and Fee Administration (formerly part of the State Board of Equalization) administers the statewide general tax on the retail sale or use of merchandise or goods within the State. Tax Administration also collects the Bradley-Burns tax on behalf of cities and counties and distributes the revenue to those local governments. The Bradley-Burns tax imposes a statewide rate of

1.25%, or which 1% is allocated to counties or incorporated cities and the remainder is distributed to county local transportation funds (LTFs) to support transportation program.

In 2016, voters in the City of East Palo Alto passed, with 84.6% approval, Measure P, which authorized an additional 0.5% sales tax to provide funds for general city services. Measure P was placed on the ballot to address identified community priorities including:
• Maintaining East Palo Alto’s financial stability;
• Maintaining rapid police response times;
• Ensuring a reliable supply of drinking water;
• Upgrading storm drains to prevent flooding; and
• Maintaining street maintenance and pothole repair services.

Currently, the City of East Palo Alto collects a Bradley-Burns tax rate of 1.0% (which nets 0.95% to the City after a 0.05% administration fee) and the Measure P local sales tax of 0.50%. The combined total of state, county and city sales tax rates in East Palo Alto is 9.75%.

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4.13 General Obligation Bonds
General obligation (GO) bonds are commonly used to finance capital improvements that benefit the community, such as roads, bridges, water, sewer, schools and affordable housing. GO bonds are secured by the full faith and credit and taxing power of the issuing municipality. For California local governments, a GO pledge means that all unrestricted resources of the issuer may be used to meet debt service, including an unlimited property tax on all taxable property within the district. Local government GO bonds must be approved at an election by twothirds of voters (except for bonds issued by a school district or community college district, which require a 55% majority). Because GO bonds are very secure, they offer the lowest available interest rates.

4.14 Automobility (Rideshare) Taxes
Municipal officials in cities across the country are grappling with how to respond to the unexpected arrival and rapid growth of new mobility services. These include ride services such as Uber and Lyft (also called Transportation Network Companies, or TNCs), “microtransit” companies such as Via and Chariot and more recently dockless bikeshare and electric scooter offerings. Issues include managing general traffic congestion, as well as curbside use for pick-ups and dropoffs. Since the curbside is a scarce resource, many communities are exploring the imposition of user fees and congestion pricing to manage demand for curbside use as well as provide resources for ensuring road user safety.

For example, the District of Columbia raised taxes on ride-hailing services from 1 to 6 percent in July, 2018. Other cities and states that have enacted similar fees include New York state, Chicago, Seattle and Massachusetts.

Opponents of the taxes argue that they are regressive and disadvantage low income residents. A 2017 report from researchers at the University of California at Davis studied seven metropolitan areas and found that ride-hailing services were disproportionately used by wealthier passengers and are drawing passengers away from local bus and light-rail systems that serve a broader clientele. Proponents of the taxes argue that if rideshare companies are draining revenues from public transit and exacerbating traffic problems, they should play a part in the solution.

Some argue for maintaining lower taxes on pooled rides, which could keep ride share options affordable for low income residents.

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5.0 Foundation and Corporate Support
Foundations and private businesses can be sources of funding for a housing trust fund, although these sources of funds are not ongoing. Because these sources are not ongoing, private support in the form of grants should be considered supplemental, and not primary, sources of funds for a housing trust fund. A more appropriate strategy is to use corporate and foundation funds as “seed” funding for the establishment of the housing trust fund.

Private foundations have a long history of supporting affordable housing development. Foundations such as the Marin Community Foundation, the Koret Foundation, the Ford Foundation, the Irvine Foundation, the Fannie Mae Foundation, the Rockefeller Brothers Fund, the Mott Foundation, San Francisco Foundation, and the MacArthur Foundation, have been active in supporting affordable housing.

For the most part, foundations support affordable housing development through direct funding of developments or, more typically, funding of financial intermediaries such as the Low Income Housing Fund (LIHF), The Enterprise Foundation, or the Local Initiatives Support Corporation (LISC). Intermediaries such as LIHF or LISC then provide direct funding of affordable housing development through grants or loans to nonprofit affordable housing developers.

When foundations directly fund affordable housing developments, the funding is often in the form of a program-related investment (PRI). A PRI is a loan, not a grant, and therefore must be repaid. PRI’s typically carry below market rate interest loans but do not represent a funding source for a housing trust fund because the loans must be repaid.

Alternatively, foundations provide “capacity building” grants to nonprofit organizations to improve the nonprofits’ ability to develop and support affordable housing. Typically, these grants are small and are not used for directly financing affordable housing developments.

In rare instances, foundations have contributed funds to support housing trust funds under the control of a governmental agency. For example, the Hennepin County (Minnesota, including Minneapolis) Housing and Redevelopment Authority administers the Affordable Housing Incentive Fund, which has dedicated $8.4 million in local government money and $3 million from the McKnight Foundation to help finance affordable housing development in the County. Contributions from

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private foundations to housing trust funds administered by a government agency are rare and should not be considered a viable resource. DRA is not aware of an instance where a foundation has funded a government agency-controlled housing trust fund in California.

Private corporations do not typically contribute funds to housing trust funds. DRA is not aware of any circumstance where a corporation contributes to a housing trust fund administered by a government agency. In some instances, corporations have helped create housing trust funds administered by non-governmental entities.

Because of Community Reinvestment Act requirements, private financial institutions often provide loans to affordable housing developments. In addition, private corporations often make equity investments for the benefit of low income housing tax credits. These loans and investments are at market rates, however.

Similar to private foundations, private corporations often support affordable housing development through financial intermediaries. Private corporations, especially financial institutions, support intermediaries such as LISC, LIHF, and the Enterprise Foundation. In some instances, the funds provided by private corporations to these financial intermediaries is below market rate funding.

Below we describe existing foundation and corporate support for affordable housing and related activities in the San Francisco Bay area.

5.1 HOUSING TRUST SILICON VALLEY
Led by the County of Santa Clara and the Silicon Valley Leadership Group, Housing Trust Silicon Valley was created in 2000 to combine public and private resources to support housing solutions addressing needs including homeownership, rental housing, and homelessness prevention. Housing Trust’s foundation was built upon an initial $2 million grant from the County that was matched three-fold with $1 million each from Intel, Adobe, Cisco Systems, Applied Materials, Solectron and KB Homes. The Trust exceeded its $20 million fundraising goal within two years, and has since invested over $257 million in affordable housing, becoming one of the largest housing trusts in the nation and the first nonprofit Community Development Financial Institution (CDFI) to receive a Standard & Poor’s rating, AA-.

5.2 SILICON VALLEY COMMUNITY FOUNDATION
Silicon Valley Community Foundation (SVCF) was formed in 2007 to provide leadership, expertise and capital to help address the social, economic and

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environmental challenges facing communities in the region. There are four primary ways in which SVCF seeks to contribute:
• Commission research: To commission research to identify emerging issues, monitor trends and provide analysis.
• Conduct public discussions: To bring people together to engage in discussion and problem solving. These events often stimulate new insights while encouraging diverse perspectives.
• Advocate: To take principled positions on critical issues and advocate policy outcomes.
• Create initiatives: To launch initiatives and special projects, partnering with other foundations, corporations, nonprofits, donors and government agencies to work on specific topics or issues.

Since its inception, SVCF has awarded more than $6 billion in grants locally, nationally and globally, of which more than $3 billion has gone to support charities in the nine-county Bay Area in California.

The Silicon Valley Regional Fund was established in October 2015 to raise funds to expand housing and transportation strategies that link nonprofit organizations in San Francisco, San Mateo and Santa Clara counties. SVCF is currently working with regional organizations, including those in San Francisco, on issues relating to land use and housing transportation and public transit, and civic engagement of residents to participate in decision-making around these issues.

5.3 CHAN ZUCKERBERG INITIATIVE
The Chan Zuckerberg Initiative (CZI) was founded by Priscilla Chan and Mark Zuckerberg in 2015 with a mission to build a more inclusive, just and healthy future for everyone. Across three core Initiative focus areas--Science, Education and Justice & Opportunity—CZI pairs engineering with grantmaking, impact investing, policy work and advocacy to help accelerate the pace of social progress.

Since inception, CZI has awarded approximately $1.6 billion in grants and has made approximately $110 million in venture investments.

As one example of CZI’s work, Priscilla Chan founded The Primary School in East Palo Alto in August, 2018. CZI also works with local providers such as Life Moves, StarVista and Samaritan Housing in San Mateo County to increase their capacity to provide responsive and community-informed services to homeless and unstably housed community members.

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5.4 FACEBOOK
In October 2019 Facebook pledged to give $1 billion in a package of grants, loans and land with a goal of building 20,000 housing units for lower and middle income households in California. The package includes:
• a $250 million partnership with the state for mixed-income housing on excess state-owned land,
• $150 million for subsidized and supportive housing for homeless people in the San Francisco Bay Area,
• $225 million worth of land near its headquarters in Menlo Park for the construction of 1,500 units of mixed-income housing,
• $25 million for teacher housing in San Mateo and Santa Clara Counties, and
• $350 million for additional commitments based on the rollout and effectiveness of the other initiatives and to support affordable housing in other communities where Facebook has offices.

5.5 GOOGLE FOUNDATION
The Google Foundation (Google.org), the charitable arm of Alphabet, Inc. and its subsidiary, Google, was established in 2005. Googles efforts are focused in three main areas: Education, Economic Opportunity and Inclusion.

In June, 2019 Google announced it would commit $1 billion to boost housing construction in the San Francisco Bay Area. This includes repurposing $750 million of company-owned land from commercial to residential use on which an estimated 15,000 units will be built across all income levels. Google also committed to creating a $250 million fund for loans and other types of financing to preserve affordable housing and build new homes, including at least 5,000 new below-market-rate units.

5.6 SALESFORCE FOUNDATION
The Salesforce Foundation (Salesforce.org) is a tax-exempt 501(c)(3) nonprofit organization whose mission is to put technology in the hands of nonprofits and educational institutions. It provides technology, grants, and volunteering programs in three main areas:

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• Nonprofit Cloud: to help nonprofits track donor and donation data, engage with constituents, deliver programs and measure impact. • Education Cloud: to help deliver outstanding service, build lifelong alumni and donor relationships, and deliver a personalized experience for each student.
• Philanthropy Cloud: to connect companies and their employees with causes they are passionate about and measure and report impact.

5.7 EMPLOYER-ASSISTED HOUSING
Another form of housing assistance provided by corporations is employer-assisted housing.

Some major employers have participated in employer-assisted housing programs to further affordable housing opportunities in their communities. Employers may provide assistance in the form of downpayment assistance, credit enhancement, or leveraged banking/institutional relationships to assist employees with the purchase of homes. For the most part, employers that participate in these programs are municipalities and universities, although a few corporations, such as Computer Associates, Tyson Foods, Honeywell, Harley-Davidson, Kaiser Permanente, and the GMAC companies, have also participated in these programs (according to research by the Fannie Mae Foundation).

In California, there are examples of partnerships between local government agencies and corporations to further homeownership opportunities. In Santa Barbara, the Coastal Housing Partnership (CHP) collaborates with financial institutions and local employers to provide special mortgage financing. Created in 1987, CHP is a nonprofit organization that has 65 local employers as members.

These members are both corporations and local government agencies. Through financial institution partners, CHP offers low downpayment mortgages with no requirement for mortgage insurance. In addition, these loans allow for second mortgages to lower the monthly payments to homebuyers.

The California Housing Loan Insurance Fund (CaHLIF) has created partnerships between private corporations and local governments to assist homebuyers.

Through entities such as the Orange County Affordable Homeownership Alliance (OCAHA) or the California State Teachers’ Retirement System (CalSTRS), homebuyers are offered low downpayment loans as well as downpayment assistance loans. For example, OCAHA offers three percent (of purchase price)

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deferred payment loans at five percent interest that can be used for downpayments or to buy down the interest rate on the first mortgage. Additionally, OCAHA offers a two percent (of purchase price) deferred payment loan at five percent interest to buy down the mortgage insurance rate. OCAHA was created by large businesses and nonprofit organizations operating in Orange County. Members include Merrill Lynch, the Orange County Business Council, the Orange County Housing and Community Development Department, the Building Industry Association of Orange County, Wells Fargo Bank, GMAC Commercial Mortgage, and The Olson Company.

With CalSTRS, low downpayment loans with no out of pocket expenses for recurring and non-recurring closing costs are offered. In addition, second mortgages from a local government agency or employer-assisted housing program are allowed.

The AFL-CIO developed a Housing Investment Trust to promote affordable housing opportunities. For the most part, the AFL-CIO programs provide market rate financing that can be leveraged with affordable housing subsidies from other resources.

Each of these programs represents a form of partnership between corporations and local government agencies. Although none of these programs result in contributions to a local government housing trust fund, each program requires some form of financial participation by a corporation. Generally, these programs should be viewed as sources of leverage for affordable housing subsidies rather than resources for affordable housing subsidies.

9.3.b
Packet Pg. 191 Attachment: David Rosen & Associates 2020 Housing Trust Fund Revenue Sources Report (2155 : Potential Ballot Measure for Affordable Housing Trust Fund Revenue Sources February 3, 2020
Administrative Review Draft Report 33

6.0 Estimated Revenue from New/Increased Revenue Sources Table 2 summarizes current tax rates and budgeted annual revenues for FY 2019/20 from key existing revenue sources to the City.

Table 2
Budgeted Annual Revenues from Selected Key Revenue Sources City of East Palo Alto
FY 2019/2020
Source
City
Tax
Rate
General Fund
and Internal
Reserves
Special
Revenue and
Enterprise
Funds
City Operating
Total
Sales Tax 1.45% $5,900,000 -- $5,900,000
Utility Users
Tax
5% $1,570,000 -- $1,570,000
Transient
Occupancy Tax
12% $2,300,000 $575,000 $2,875,000
Franchise Fees 5% $1,050,000 -- $1,050,000
Gross Rental
Receipts
Business
License Tax

1.5% $550,000 -- $550,000
Source: City of East Palo Alto Operating Budget Fiscal Year 2019-2020; City of East Palo Alto.

DRA estimated the projected increase in revenue generation to the City that would result from raising tax or fee rates in these categories. These estimates are summarized in Table 3. Additional potential sources that DRA was not able to estimate but the City may want to explore include:
• TOT tax on short-term rentals (AirBNB, VRBO, HomeAway, etc.); • Increasing the City’s condo conversion fee;
• Soliciting increased foundation support of affordable housing in East Palo Alto;
• Seeking employer-assisted housing commitments.

9.3.b
Packet Pg. 192 Attachment: David Rosen & Associates 2020 Housing Trust Fund Revenue Sources Report (2155 : Potential Ballot Measure for Affordable Housing Trust Fund Revenue Sources February 3, 2020
Administrative Review Draft Report 34
Table 3
Estimated Annual Revenue Potential from Increased Tax Rates Selected East Palo Alto Revenue Sources
Source
Existing Tax
Rate
Estimated Increase
in Annual Revenue
At Assumed New
Tax Rate of:

Sales Tax 1.45% $2,238,000 2.0%
Utility Users Tax 5% $314,000 6.0%
Transient
Occupancy Tax
12% $460,000 14%
Franchise Fees 5% $210,000 6%
Gross Rental
Receipts Business
License Tax

1.5% $183,000 2.0%
Source: DRA estimates based on current revenue generation.

9.3.b
Packet Pg. 193 Attachment: David Rosen & Associates 2020 Housing Trust Fund Revenue Sources Report (2155 : Potential Ballot Measure for Affordable

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager Patrick Heisinger, Assistant City Manager
SUBJECT: Proposed Strategy for Providing Housing for the Unhoused Currently Residing at Bell Street Park
Recommendation
It is recommended that the City Council take the following actions:
1) Accept the staff report; and
2) Provide staff with direction regarding the proposed strategy for housing the unhoused individuals currently residing at Bell Street Park.

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

Priority No. 6: Create a Healthy and Safe Community
Background
Since June 1, 2021, staff has provided the City Council with updates regarding the homeless encampment located at Bell Street Park. Through these discussions, the City Council has directed staff to implement several actions to improve the conditions, while restoring traditional community use, at Bell Street Park, including:
1) Installing temporary bathroom facilities;
2) Providing regular litter/debris removal for park inhabitants; and 3) Enhancing coordination with the County of San Mateo and homeless service providers to ensure that the individuals living at Bell Street Park have access to wrap-around services and gain entry into the County’s Coordinated Entry System.

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As of the date of this staff report, there have been the following successes at Bell St. Park1 :
• At least 8 individuals secured housing placements by working with LifeMoves, Project WeHOPE, and County outreach teams
• Six individuals completed paperwork for their emergency housing vouchers and had appointments to view their housing before setting a move-in date • Virtually all individuals living at Bell St. are CES-assessed, and more individuals are accepting shelter or hotel placement while awaiting housing On February 1, 2022, the Mayor and Vice Mayor stated they would partner with staff to engage with the County to address the issues facing the City’s unhoused residents.

Elsewhere on tonight’s City Council Agenda, the City Council will consider approaches that may be used to house homeless residents. The purpose of this staff report is to provide recommendations specific to supporting the unhoused individuals currently residing at Bell Street Park.

Analysis
Since the City Council meeting on February 1, 2022, representatives from the City and County, including the Mayor, Vice Mayor, and Supervisor Warren Slocum, have met to discuss ways in which the two entitles could partner to house the City’s unhoused residents. In the case of Bell Street Park, these efforts will have the added benefit of ensuring the community has access to outdoor recreation facilities.

The County has worked with several jurisdictions to establish specific action plans which aim to provide housing opportunities to homeless individuals living in a specific encampment. After several discussions with the County, staff recommends the City advance the approach described below.

Proposed Approach
Key elements of the proposed approach are detailed in Table 1:

TABLE 1
Proposed Approach to Restoring Community Use at Bell Street Park Element Rationale
Lead Organization City of East Palo Alto
Partners County of San Mateo and designated homeless service providers including Project WeHOPE
Target Date May 23, 2022
Housing Assistance All residents of the Bell Street Park encampment will be offered a type of housing subsidy
Storage of Personal
Property
City will coordinate efforts to store any personal
property left at Bell Street Park
Debris Removal City will be responsible for providing the necessary 1 Had the City dismantled the encampment at Bell Street Park back in June of 2021, none of the outcomes above would have been realized.

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tools and ensuring that all debris at the park is removed on or before May 23, 2022
Next Steps
If the City Council is supportive of the proposed approach, City staff will immediately work with the County and service providers to begin notifying the unhoused at Bell Street Park about 1) the housing subsidies that are available to them, and 2) the park use transition that is planned for May 23, 2022. In addition, staff will begin preparing the detailed plan to ensure that the Bell Street Park clean-up/transition activities are managed appropriately.

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.

9.4 Packet Pg. 196

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Rachel Horst, Housing and Economic Development Manager Patrick Heisinger, Assistant City Manager
SUBJECT: Update and Recommendations Regarding the City's Unhoused Residents Recommendation
It is recommended that the City Council take the following actions:

1. Accept staff’s report regarding the City’s unhoused residents.

2. Direct staff to return to the City Council on May 3, 2022 to establish a Master Temporary Use Permit process to allow temporary housing for unhoused individuals on private and public property; and

3. Provide direction on whether to pursue a contract with the Downtown Streets Team to support the unhoused as further described in the staff report.

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

Priority No. 6: Create a Healthy and Safe Community
Background
At the February 1, 2022 City Council meeting, staff presented several recommendations for how to address the growing number of unhoused residents in East Palo Alto.1 The City Council agreed with staff’s recommendations for Recreational Vehicles (“RVs”) parked in the public right of way and for unhoused residents in encampments. City Council direction is summarized below:

For RVs:

1. Conduct a bi-monthly “windshield” survey to obtain a current count of RVs and 1 Please see the February 1 staff report at:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=None&MeetingID=1487&MediaPosition=8744.755&ID=2088&Cs sClass=

9.5 Packet Pg. 197
Oversized Vehicles parked in public right-of-way.

2. Provide information to owners of Oversized Vehicles in the public right-of-way about the City’s parking regulations and debris removal. Where necessary, staff will remove debris from right-of-way.

3. Extend the License & Grant Agreement with Project WeHOPE for the RV Safe Parking Program at 1798 Bay Rd. and a $250,000 grant for the program. A program extension requires Planning Commission approval of an Interim Use Permit and City Council approval of the License & Grant Agreement, tentatively scheduled for April 11 and April 19, respectively.

For unhoused residents in encampments:

1. Maintain temporary bathroom facilities at Bell St. Park through April 30, 2022. The contract with National Construction Rental expires June 29, 2022.

2. Engage the County Manager to discuss potential options for receiving County assistance to support and house the unhoused encampment residents.

3. Return to City Council with options for providing temporary housing to more immediately address the shortage of permanent affordable and supportive housing and alleviate the negative impacts of homelessness on unhoused individuals and the community at large.

County Efforts on Homelessness
The County has named 2022 the “Year to End Homelessness in San Mateo County.” The goal of the County’s strategy is to bring homelessness down to “functional zero,” or a state in which the number of units is sufficient to house everyone who is experiencing homeless.

The County’s efforts include investing in Project Homekey conversions of hotels and motels into temporary and supportive housing in Half Moon Bay, Redwood City, San Mateo, and unincorporated County, and releasing hundreds of vouchers for emergency and permanent housing. Another Project Homekey-funded Navigation Center, or low-barrier shelter with 240 units in Redwood City, is scheduled for completion by fall of 2022.

The purpose of this staff report is to provide an update on conversations with the County and to obtain City Council direction on the options presented for temporary housing solutions.

Analysis
Update on Collaboration with the County of San Mateo
Since the February 1, 2022 City Council meeting, City staff has held the March monthly meeting with County Human Services Agency (“HSA”), LifeMoves, and Project WeHOPE and held multiple meetings with counterparts at the County of San Mateo.

At the monthly City-County meeting, staff reviewed all known encampment sites in East Palo Alto with County partners and learned that outreach workers and case managers are frequenting each of these sites a minimum of once per week, and up to four times per week at more established sites. LifeMoves and Project WeHOPE staff have established clients at all sites.

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On March 17, the Mayor and Assistant City Manager met with Supervisor Warren Slocum and members of the County Manager’s team to identify a specific strategy for the current encampment located at Bell St. Park. Further meetings on this topic were scheduled for March 25 and March 29. Staff is providing information and seeking direction on actions related to the Bell St. encampment via a separate agenda item at tonight’s City Council meeting.

City Regulatory Actions to Streamline Temporary Housing Declaration of Shelter Crisis
On July 17, 2018, by Resolution No. 4998, the City Council declared a shelter crisis pursuant to Government Code 8698 et seq.2 This action enables a jurisdiction to provide “emergency housing” in public facilities, as defined, for the duration of the shelter crisis and to suspend most state and local design and building standards to the extent that they hinder the development of the emergency housing. The City declared the shelter crisis in conjunction with establishment of the RV Safe Parking Program, though it may apply to other types of emergency housing. Several neighboring cities have declared shelter crises to support similar programs. Resolution No. 4998 also categorically exempted the RV Safe Parking Program from CEQA.

Temporary Use Permit and Streamlined Permitting Process for Temporary Housing Drawing from examples of other jurisdictions such as San Francisco, Menlo Park, Palo Alto, Oakland, and San Jose, the City may facilitate the creation of temporary housing options through a streamlined permitting process. Specifically, the City can allow private property owners, such as religious institutions or developers with an active development project in the City, to provide temporary housing opportunities by way of a Temporary Use Permit (“TUP”) and streamlined permitting process.

These temporary housing opportunities could take one, or a combination, of the following three forms, each with its own regulatory requirements:

1.) Permitting overnight parking of a limited number of vehicles, RVs, and Oversized Vehicles on private or City property
Overnight parking for individuals in their cars, RVs, or Oversized Vehicles on City property or private property may be permitted as a temporary use.

The RV Safe Parking Program at 1798 Bay Rd. is an example of a City-owned property where the permitted temporary, or interim, use is the operation of an overnight safe parking program by a nonprofit organization (Project WeHOPE).3 Temporary safe parking use may also be of interest on sites owned by faith communities with large parking lots, or on vacant or underutilized sites with a pending development application.

Existing TUP Process in Development Code
Staff believes that the existing TUP process provided for in Section 18.40 of the City’s 2 Please see the full list of provisions that apply when a shelter crisis is declared:
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?division=1.&chapter=7.8.&lawCode=GOV&title=2 3 In the Ravenswood/4 Corners Specific Plan Area, such uses are permitted through a Special Use Permit. With Resolution No.

PC2021-04, the Planning Commission made key findings about the program to confirm that the interim use does not impede or contradict the goals of the Specific Plan or have any impact on the long-term intended use of the site..

9.5 Packet Pg. 199
Development Code4
is sufficient to allow for overnight parking as a temporary housing solution.

TUPs are permitted across all zoning designations and allow for short-term use that is compatible with the subject zone and with adjacent and surrounding uses.

The TUP may be approved through a Director’s Hearing but must be renewed on an annual basis. The basic findings that the approval body must make to approve temporary use are outlined in Section 18.94.080, though they may differ based on the zoning of the parcel where the overnight parking would be permitted.

The approval process for a TUP includes review by all City Divisions and Menlo Park Fire Protection District (“Menlo Fire”), all of which may impose conditions on an overnight parking program, such as: maximum number of vehicles per square foot, proper spacing between vehicles, hours of operation, waste and stormwater management, facilities connections, site security, and compliance with applicable Building and Fire Code requirements. Applicable site standards and types of conditions that may be imposed for a TUP are provided in Section

18.94.090.

To streamline this process, staff recommends creating standardized site standards and conditions for an overnight parking program and making these available to any parties interested in providing overnight parking spaces as a temporary housing solution.

2.) Permitting temporary shelter in existing buildings on private property Some jurisdictions allow local faith communities, in partnership with a service provider, to provide temporary residence within an existing building, so long as certain health and safety requirements are met. Staff believes that local faith communities may provide such temporary shelter utilizing one of two existing City processes: Emergency Housing or the TUP.

Under the Development Code, emergency shelters are a permitted use in the Ravenswood/4 Corners Specific Plan Area on parcels zoned IT (“Industrial Transition Zone”); site standards and time limits are specified in Section 18.04.080. These include:
• Maximum number of persons/beds
• Off-street parking requirements
• Interior “waiting and intake” space
• Private outdoor open space
• Distance from other shelters
• Limitation on length of stay
• Exterior lighting requirement
• Security Plan requirement
• Management Plan requirement
On parcels not zoned IT, or in areas outside of the Ravenswood/4 Corners Specific Plan Area, it is possible to permit a temporary shelter program through the TUP process, as outlined in Chapter 18.94 of the Development Code.
4 Please see:
https://library.municode.com/ca/east_palo_alto/codes/code_of_ordinances?nodeId=EAPAALDECO2018EDCUORNO09- 2020ADDE152020_TIT18DECO_ART7PEPRPR_CH18.94TEUSPE

9.5 Packet Pg. 200
However, each TUP application requires review by all City Divisions, including the Planning and Building Divisions, in addition to Menlo Fire, and then requires a Building permit. Staff recommends creating interior and exterior site standards and an inspection process specifically for temporary shelter spaces for clarification and to avoid delays in permit processing. Standards could include minimum spacing, setbacks, access to bathroom facilities, utilities, hours of operation, and other minimum requirements to comply with California Building Standards Code.

Applicants would be prompted to provide basic site plans with required information. Staff also recommends creating parameters for programming of temporary shelter sites that potential applicants must be prepared to meet, such as providing meals, case management, and site supervision.

3.) Permitting temporary housing structures placed on private or City property Some jurisdictions in the Bay Area, including San Francisco, Oakland, and San Jose, have created special permitting processes for temporary housing structures on public and private property. This type of temporary housing, such as “tiny homes,” manufactured housing, container homes, or other non-traditional living spaces, is differentiated from permanent housing by the types of building materials used, lack of permanent foundation, limited amenities, and short-term use.

Jurisdictions that allow this type of housing have taken legislative action, including adopting a resolution declaring a shelter crisis and making various updates to their respective municipal codes by defining an entirely new housing type5; adopting voluntary appendices of the California Building Standards Code6that pertain to tiny homes or other interim housing types; setting standards for modular or manufactured housing in their development codes; or allowing emergency housing in more zoning designations.

The City can draw from the experiences of these other jurisdictions to create the most efficient temporary housing permitting process for East Palo Alto. However, it should be noted that any amendments made to the City’s Municipal Code would require staff to return with an ordinance for City Council consideration.

Master TUP Application
As noted above, staff recommend creating a single application process containing all applicable site standards and conditions for these temporary housing options to streamline the TUP approval process. This single “Master TUP” application would be available on the City’s website, could be adapted to all property types, and would include a checklist for applicants to follow and to simplify review by all City Divisions and outside agencies, including Menlo Fire.

As a temporary use, temporary housing permit application likely would be categorically exempt from the California Environmental Quality Act (CEQA), pursuant to Section 15183 Zoning and Section 15304(e) Projects Consistent with a Community Plan, General Plan, or Minor Alterations to Land (Class 4). However, a TUP would be subject to environmental review prior 5 The City of Oakland created a “Vehicular Residential Facility” type, which allows for RVs and tiny homes without a permanent foundation to function as housing.
6 The California Building Standards Code includes emergency housing standards and specifications for tiny homes.

9.5 Packet Pg. 201
to entitlement.

Summary of “Master TUP” for Temporary Housing Permitting Process Program Type Permit Type Level of Approval
Overnight Parking Temporary Use Permit Planning Director Hearing Existing Structures as
Temporary Shelter on
Private Property
Temporary Structures on
Private or Public Property
Ministerial (Emergency
Housing on parcels zoned
IT in RBD only)
OR
Temporary Use Permit
(outside of RBD, or parcels
not zoned IT)
Planning Director Hearing
Building Permit (all) Building Permit Approval
Clean-Up of Encampment & Parked RV Sites
The City Council also expressed interest in updates from staff on efforts to dispose of trash and waste from public spaces, where some RVs are parked, and to “activate” recreational spaces such as Bell St. Park. Public Works staff continues to monitor sites multiple times per week and to respond to reported cases of illegal dumping or trash buildup in the public right of way.

Most recently, on Tuesday, March 29, Public Works and Maintenance staff cleared an area containing approximately 20 cubic yards of garbage and construction debris from along the San Francisquito Creek channel adjacent to Woodland Ave. The City is coordinating with Recology of San Mateo to dispose of the materials. No personal belongings were retrieved, as this did not appear to be an encampment area, and all items were in the public right-of-way.7 As a reminder, the City continues to adhere to guidelines issued by the CDC and recent case law regarding removal of unhoused individuals, including parked RVs, from public areas in the absence of viable housing alternatives.8 The legal concerns detailed in the June 1 and October 19, 2021, staff reports, associated with activities such as “sweeping” of unhoused encampments or enforcing certain programs that target unhoused populations, continue to inform staff’s approach to these issues.

Potential Agreement with the Downtown Streets Team
7 Notices were posted prior to the clean-up and arrangements were made to store any personal belongings retrieved during the clean-up at 150 Tara Rd. for 90 days.
8 The City adheres to guidelines issued by the Centers for Disease Control and Prevention (“CDC”) that discourage breaking up encampments to prevent the spread of COVID-19, unless alternative housing is available. Relevant recent rulings include Martin v.

City of Boise, by the United States Court of Appeals, Ninth Circuit, which limits the ability of jurisdictions to remove homeless individuals from public areas, such as encampments, when there are no safe and adequate shelter alternatives available. Law Foundation v. Mountain View is also relevant for its effect on local bans on overnight parking of RVs and other vehicles. Please see the February 1, 2022 staff report for more information.

9.5 Packet Pg. 202
City staff has been researching street clean-up programs to find a solution to the trash and debris accumulating throughout the city. A specific example emerged among some other cities that may serve as a potential solution to the ongoing need for clean-up of public areas and outreach to unhoused individuals in East Palo Alto.

An organization by the name of Downtown Streets Team engages unhoused individuals in clean-up activities for four hours per day on Mondays through Fridays, weekly team meetings, and case management to secure permanent housing. Members of Downtown Streets Team work alongside a jurisdiction’s public works and maintenance departments on beautification efforts across the city. Jurisdictions typically fund the cost of Downtown Streets Team through a variety of public and philanthropic sources.

The estimated annual cost of Downtown Streets Team, including staffing and operating expenses in East Palo Alto, is $390,000. If the City Council chooses to pursue this type of program, staff recommend that the City share the cost with the County and other agencies for one year.

Staff has had initial conversations with the Midpeninsula Regional Open Space District, the San Francisquito Creek Joint Powers Authority, and the County of San Mateo to determine the potential of a cost sharing arrangement for a contract with the Downtown Streets Team. If the Council were to direct staff to move forward with an agreement with the Downtown Streets Team, staff would include these assumptions in the upcoming budget process.

Next Steps
City staff continues to meet regularly with County representatives to discuss current conditions in East Palo Alto and determine next steps for collaboration between the City and County.

Meetings related to the Bell St. Park encampment are detailed in that agenda item for tonight’s City Council meeting.

If directed, staff will begin drafting an application and template documents for a Master TUP program for temporary housing for unhoused individuals.

If the City Council directs staff to negotiate an agreement with Downtown Streets Team, staff will return with a refined cost estimate and draft agreement for consideration at the next City Council meeting.

Fiscal Impact
If the City were to fund one year of Downtown Streets Team, this investment will require an appropriation from the City General Fund reserve of approximately $117,000 (one-third of the total cost for one year). Staff would return with the exact funding breakdown and request City Council appropriation at that meeting.

Staff is currently pursuing additional funding sources from the County and other agencies to share the costs of providing a service such as Downtown Streets Team or other investments in meeting the needs of the unhoused population in East Palo Alto.

Public Notice
The public was provided notice by making the agenda and report available on the City’s

9.5 Packet Pg. 203
website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.

9.5 Packet Pg. 204

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Adrian Biggs, Associate Engineer
Humza Javed, City Engineer
SUBJECT: Pavement Management Plan Presentation and Annual Street Resurfacing Project 2022
Recommendation
Receive a presentation on the City's Pavement Management Plan (PMP) and adopt a resolution approving the Plans, Specifications, and Estimates for the Annual Street Resurfacing Project 2022 and authorizing the City Manager to advertise the project to solicit bids for the construction phase
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:

Priority No. 2: Enhance Economic Vitality
Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
City streets and roads are one of the major capital investments of the City. The condition of City streets can be a reflection on the community and affect the quality of life and property values in the City. Without a well-maintained street system, the transportation needs of the public cannot be met.

The City of East Palo Alto maintains approximately 83 lane miles of streets. To effectively manage the streets network, the City utilizes the Pavement Management Program/Plan (PMP) to review the condition of every City-owned street and maximizes the number of streets that can be repaired based on available funding. Priority is given to the busier roadways (arterials and collectors), streets that do not need full reconstruction, and streets eligible for slurry seal (a preventative maintenance treatment) that extends the life of the pavement.

9.6 Packet Pg. 205
Streets that are planned for underground infrastructure improvements, such as water, storm drain, or sewer improvements, are not rehabilitated until the planned underground work is complete. Also, streets with known subgrade failures, high groundwater table, or other miscellaneous underground conditions cannot be rehabilitated until additional design work or a geotechnical evaluation is performed.

Analysis
Pavement Management Plan
Staff has prepared a presentation to demonstrate the Pavement Management Plan process for street selection. At their core, Pavement Management Plans (PMP’s) are a systematic method to assess pavement condition, to identify maintenance and rehabilitation (M&R) needs, and to plan improvements as necessary. This method utilizes key indicators and criteria to determine the most useful and cost-effective street to improve the overall condition of the City’s road network. These criteria and indicators are fully explained in the attached presentation. 2022 Annual Street Resurfacing Project
The Capital Improvement Program includes funding for the ongoing Annual Street Rehabilitation/Preventive Maintenance Program, with this year being named the Annual Street Resurfacing and Maintenance Project 2022 (CIP Project ST-07-22).

The Annual Street Resurfacing Projects are generally designed in-house by Engineering staff.

This way, all of the available funds are able to be expended towards the construction phase.

The upcoming 2022 project combines multiple capital improvement projects (CIP) from Fiscal Year 21/22 and 22/23 in order to create a larger project that will deliver more competitive bids.

The proposed Annual Street Resurfacing project to be bid includes the following sub-projects:

Annual Street Resurfacing (ST-07), Annual signage and striping (ST-15), Annual sidewalk repair (ST-11), Safe route to school (ST-03), and Bicycle and pedestrian improvements (ST09).

The project will consist of rehabilitation and preventive maintenance of City streets including pothole/base repairs, crack sealing, slurry seals, and pavement overlays. Rehabilitation and maintenance work on public streets needs to be coordinated with other City projects, utility company excavations and private development projects on a cycle that sustains a high Pavement Condition Index (PCI) for all City streets.

The streets to be rehabilitated in 2022 were identified as needing rehabilitation in the Pavement Management Program Budget report prepared as part of MTC’s Technical Assistance Program P-TAP in March 2021. The list, which was further analyzed and refined by Public Works staff, was approved by both PWTC and City Council. These streets have been added to the original scope of the 2021 Annual Street Resurfacing Project to create the Plans, Specifications, and Estimates (PS&E) for the 2022 project. The full set of 100% Plans can be found on the City’s website under the Annual Street Resurfacing page:
https://www.cityofepa.org/publicworks/project/annual-street-resurfacing.

In addition to pavement rehabilitation, the project will also include improved striping configurations for bicycle facilities. The bicycle improvements will follow the plans outlined in

9.6 Packet Pg. 206
the City Bicycle Master Plan for the streets south of Bay Road. The new striping improvements will include, but are not limited to, re-configuration of bicycle lane transitions at intersections, buffered bicycle lanes, green thermoplastic bicycle facilities, and improved pavement markings for Class 2 and 3 bicycle facilities. Every crosswalk that is re-surfaced in the project areas will be re-striped to improve pedestrian safety. Moreover, the project will include curb ramp improvements in accordance with Americans with Disability Act (ADA) regulations, pedestrian network gap closures, and sidewalk replacement/repair.

The project also includes an Alternate bid for speed calming bulb-outs along various streets as listed in the Mobility Study which was approved by City Council in 2020.

The Public Works and Transportation Commission, at its February 16, 2022 meeting, approved the Plans, Specifications and Estimates for the Annual Street Resurfacing Project, 2022.

A summary of the proposed improvements and roadway sections can be seen in Attachment

2. Fiscal Impact
The Engineer’s estimate for the project is $3.7million. The project will be financed from multiple sources as indicated in the table below:

Source Cost
Measure A $1,000,000
Measure M $600,000
Gas Tax $1,100,000
Measure W $400,000
AHSC $775,000
Total $3,875,000
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

2. Summary of Improvements

9.6 Packet Pg. 207
RESOLUTION NO. XX – 2022

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF EAST PALO ALTO

APPROVING THE PLANS, SPECIFICATIONS, AND ESTIMATES FOR THE ANNUAL STREET RESURFACING PROJECT 2022 AND AUTHORIZING THE CITY MANAGER TO ADVERTISE THE

PROJECT TO SOLICIT BIDS FOR THE CONSTRUCTION PHASE
WHEREAS, the Capital Improvement Program includes funding for the ongoing Annual Street Rehabilitation/Preventive Maintenance Program, for this year named the Annual Street Resurfacing and Maintenance Project 2022 (CIP Project ST-07-22); and WHEREAS, the proposed project includes pavement rehabilitation, signage, striping, sidewalk, bicycle and pedestrian improvements city wide; and
WHEREAS, the Public Works and Transportation Commission, at its February 16, 2022 meeting, approved the Plans, Specifications and Estimates (PS&E) for the Annual Street Resurfacing Project, 2022; and
WHEREAS, Staff recommends approval of the PS&E for the Annual Street Resurfacing and Maintenance Project 2022 (CIP Project ST-07-22).

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO HEREBY approves the Plans, Specifications, and Estimates for the Annual Street Resurfacing and Maintenance Project 2022 and authorizes the City Manager to advertise the project to solicit bids for the construction phase.

PASSED AND ADOPTED this 5th day of April 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

9.6.a
Packet Pg. 208 Attachment: Resolution (2169 : PMP Presentation and ASRP 2022)

ASTER WY

WISTERIA DR

JASMINE WY

CAMELLIA DR
LOTUS

DAPHNE WY

ABELIA WY

CAMELLIA
CT

VERBENA DR

CAMELLIA DR GARDENIA WY

GAILLARDIA AZALIA DR

WISTERIA DR

GARDENIA O'CONNOR ST DAISY LN

LARKSPUR DR

PULGAS AVE

AZALIA DR

WISTERIA DR SAGE ST BEECH ST CYPRESS ST GARDEN ST RUNNYMEDE ST VERONICA

MANDELA WEEKS ST

PULGAS AVE

TERRA-VILLA AVE

BRENTWOOD CT

SPARROW MYRTLE ST O'CONNOR ST GATES ST WILKS ST MOUTON CIR MOUTON CIR OAKES ST McNAIR ST TINSLEY ST GARDEN ST BUCHANAN CT RUNNYMEDE ST

RUTH WEEKS ST BAINES ST

CLARKE AVE CLARKE AVE CLARKE AVE CLARKE AVE

ILLINOIS ST

ILLINOIS ST DONOHOE ST

SALAS CT GREEN ST

CAMPHOR BELL ST
HENRY CT BELL CT SCHEMBRI LN\

BLUEJAY CT RUNNYMEDE ST WEEKS ST

CAROLE CT

PAUL ROBESON CT

JAMIE LN

PULGAS AVE

PULGAS AVE
BAY RD
BAY RD

BAY RD BAY RD

PULGAS AVE

TARA ST

DEMETER ST

COOLEY AVE COOLEY AVE

CAPITOL SCOFIELD

COOLEY CIRCLE DR

NEWELL RD

CLARKE AVE

WOODLAND AVE WOODLAND AVE

WOODLAND AVE

MANHATTAN AVE

UNIVERSITY CR

EUCLID AVE

EAST O'KEEFE ST O'CONNOR ST
RALMAR

ADDISON

OAKWOOD

DUMBARTON

DONOHOE ST

POPLAR GREEN

SARATOGA

WESTMINISTER

JERVIS AVE

LAUREL AVE

MENALTO AVE

POPLAR AVE

MELLO ST

NEWBRIDGE STRALMAR AVE
LAUREL

BRADLEY WY

MENALTO AVE

POPLAR AVE

RALMAR AVE

ADDISON AVE

HOLLAND

OAKWOOD DR
GARDEN
GARDEN

DUMBARTON AVE

WEEKS ST

LILAC LN

PALO VERDE

BELL ST BELL ST

GLEN WY

LINCOLN ST

GREEN ST
GARDEN

LINCOLN ST

GLEN WY

RUNNYMEDE

PALO VERDE AVE WEEKS ST SACRAMENTO ST RUNNYMEDE ST

EUCLID AVE

EUCLID AVE DONOHOE ST

CAPITOL AVE

UNIVERSITY AVE

GRACE AVE HAZELWOOD WY

URSULA WY

GLORIA WY

FARRINGTON WY

EMMET WY KAVANAUGH DR

KIRKWOOD

CLARENCE

GERTRUDE

FORDHAM ST

FORDHAM ST GONZAGA ST

STEVENS TEMPLE DREW
PURDUE
PURDUE

TULANE AVE HUNTER ST

GEORGETOWN ST
XAVIER

RUTGERS NOTRE DAME MICHIGAN AVE

ANNAPOLIS ST

BAYLOR ST

GONZAGA ST

ALBERNI ST

TATE ST

EAST BAYSHORE RD

WEST BAYSHORE RD

UNIVERSITY AVE

GARDENIA CTDAPHNE CT
OAKDALE SCALE: NTS

WILLOW RD

OAK COURT WOODLAND AVE
1 ANNUAL STREET RESURFACING 2022 CITY OF EAST PALO ALTO, CA DEPARTMENT OF PUBLIC WORKS ANNUAL STREET RESURFACING PROGRAM 2021/22 TITLE: CITY OF EAST PALO ALTO, CALIFORNIA DATE: JOB NO. : SHEET

CITY OF EAST PALO ALTO

ENGINEERING DEPARTMENT SAN MATEO COUNTY, CALIFORNIA
PREPARED BY: DESIGNED BY: DRAWN BY: HJAB NO. REVISIONS DATE ANNUAL STREET RESURFACING AND MAINTENANCE PROJECT 2022 9.6.b Packet Pg. 209
Attachment: Summary of Improvements (2169 : PMP Presentation and ASRP 2022) 2 CONSTRUCTION NOTES WATER SUPPLY : AMERICAN WATER SANITARY SEWER : EAST PALO ALTO SANITARY DISTRICT & WEST BAY SANITARY DISTRICT STORM DRAIN : CITY OF EAST PALO ALTO GAS: PG&E ELECTRIC : PG&E TELEPHONE : AT&T CABLE TELEVISION : COMCAST 1. STATIONING HEREON IS ALONG STREET CENTERLINE UNLESS OTHERWISE SHOWN OR INDICATED. 2. ALL CURB, GUTTER, SIDEWALK & PAVEMENT TO BE REMOVED SHALL BE SAWCUT AT THE CONFORM LIMITS. 3. EXACT LIMITS AND LOCATIONS OF AC PATCHING (DIG-OUT REPAIR) WILL BE MARKED IN THE FIELD BY THE CITY ENGINEER. 4. THE CONTRACTOR SHALL BE RESPONSIBLE FOR MATCHING STREETS, SURROUNDING LANDSCAPE AND OTHER IMPROVEMENTS WITH A SMOOTH TRANSITION IN PAVING, CURBS, GUTTERS, SIDEWALKS, GRADING, TO AVOID ANY ABRUPT OR APPARENT CHANGES IN GRADES OR CROSS SLOPE, LOW SPOTS OR HAZARDOUS CONDITIONS. PAVING CONFORMS SHALL BE MADE AT A SMOOTHLY TRIMMED BUTT JOINT. DO NOT OVERLAP EXISTING PAVEMENT. 5. PAVEMENT STRIPING AND MARKING SHALL BE RESTORED AND REPLACED AFTER APPLYING SURFACE TREATMENT TO EXISTING PAVEMENT. ALL PAVEMENT MARKINGS AND STRIPES SHALL BE INSTALLED TO THE ORIGINAL CONFIGURATIONS UNLESS OTHERWISE NOTED. ALL STRIPING AND PAVEMENT MARKINGS SHALL BE THERMOPLASTIC UNLESS OTHERWISE NOTED. 6. ALL STRIPING SHALL BE CAT-TRACKED BY THE CONTRACTOR AND APPROVED BY THE CITY ENGINEER PRIOR TO FINAL INSTALLATION. A MINIMUM OF 48 HOURS NOTICE IS REQUIRED. 7. AT A MINIMUM, THE FOLLOWING SPECIFIED PERCENTAGES OF THE WASTE TONNAGE GENERATED FROM SITE ACTIVITIES SHALL BE DIVERTED FROM GOING INTO A LANDFILL THROUGH USE OF RECYCLING, REUSE AND DIVERSION PROGRAMS: · DEMOLITION: 60% OF WASTE TONNAGE INCLUDING CONCRETE AND ASPHALT, AND 25% OF WASTE TONNAGE EXCLUDING CONCRETE AND ASPHALT, · CONSTRUCTION: 55% OF WASTE TONNAGE INCLUDING CONCRETE AND ASPHALT, AND 20% OF WASTE TONNAGE EXCLUDING CONCRETE AND ASPHALT. DEMOLITION DIVERSIONS AND CONSTRUCTION DIVERSIONS SHALL BE CALCULATED SEPARATELY. 1. CONTRACTOR TO EMPLOY BEST MANAGEMENT PRACTICES (BMP'S) IN ACCORDANCE WITH THE LATEST EDITION OF THE STATE OF CALIFORNIA CONSTRUCTION SITE BMP MANUAL AND THE SAN MATEO STORMWATER POLLUTION PREVENTION PROGRAM. 2. ALL CONSTRUCTION ACTIVITIES SHALL MEET THE REQUIREMENTS OF THE CITY OF EAST PALO ALTO NPDES PERMIT. 3. EROSION CONTROL MEASURES SHALL BE INSTALLED AS NECESSARY TO PREVENT SEDIMENT RUNOFF TO PUBLIC ROADWAYS, DRAINAGE FACILITIES, AND ADJACENT PROPERTIES. 4. ALL LOOSE SOIL AND DEBRIS SHALL BE REMOVED FROM THE STREET AREAS UPON STARTING OPERATIONS AND NO LESS OFTEN THAN DAILY THEREAFTER. INSPECTOR MAY REQUIRE MORE FREQUENT CLEANING AS WEATHER CONDITIONS DICTATE. 5. EXCEPT AS OTHERWISE DIRECTED BY THE INSPECTOR, ALL EROSION CONTROL DEVICES SHALL BE IN PLACE AT THE END OF EACH WORKING DAY WHEN THE FORECAST OF RAIN PROBABILITY EXCEEDS 40% AND MAINTAINED THROUGHOUT THE YEAR. 6. ALL PAVED AREAS WILL BE KEPT CLEAR OF EARTHEN MATERIAL AND DEBRIS. THE SITE WILL BE MAINTAINED SO THAT SEDIMENT-LADEN RUNOFF DOES NOT ENTER THE STORM DRAINAGE SYSTEM. 7. ALL STORM DRAIN STRUCTURES AND INLET PIPES SHALL BE PROTECTED FROM INFLOW OR SILT BY GRAVEL BAG SILT BARRIERS OR SIMILAR DEVICE. 8. CONTRACTOR SHALL HAVE TOOLS, EQUIPMENT, AND MATERIALS TO PROVIDE EROSION CONTROL MEASURES MADE NECESSARY BY A CONSTRUCTION OPERATION, ON THE JOB SITE BEFORE BEGINNING THAT OPERATION. 9. ADJACENT PROPERTIES SHALL BE PROTECTED FROM STORM WATERS, MUD, SILT, ETC. ON A DAILY BASIS. 10. DUST CONTROL SHALL BE MAINTAINED AT ALL TIMES DURING CONSTRUCTION AND UNTIL FINAL COMPLETION, THE CONTRACTOR WHEN HE OR HIS SUBCONTRACTOR ARE OPERATING EQUIPMENT ON-SITE, SHALL PREVENT THE FORMATION OF ANY AIRBORNE NUISANCE BY WATERING AND/OR TREATING THE SITE OF THE WORK IN SUCH A MANNER THAT WILL CONFINE DUST PARTICLES TO THE IMMEDIATE SURFACE OF THE WORK. ADDITIONAL WATERING SHALL BE PROVIDED ON DRY OR WINDY DAYS. THE CONTRACTOR WILL BE RESPONSIBLE FOR ANY DAMAGE CAUSED BY DUST FROM THEIR OWN ACTIVITIES OR THEIR SUBCONTRACTORS ACTIVITIES IN PERFORMING THE WORK UNDER THIS CONTRACT AND SHALL BE RESPONSIBLE FOR ANY CITATIONS, FINES, OR CHARGES RESULTING FROM DUST NUISANCE. DUST CONTROL WILL BE DONE ON A DAILY BASIS. 11. CONCRETE WASH AREA SHALL BE CONSTRUCTED IN ACCORDANCE WITH CALIFORNIA STORM WATER BEST MANAGEMENT PRACTICES DETAIL WM-8. 12. STORE, HANDLE AND DISPOSE OF CONSTRUCTION MATERIALS AND WASTES SO AS TO PREVENT THEIR ENTRY TO THE STORM DRAIN SYSTEM. CONTRACTOR MUST NOT ALLOW CONCRETE, WASH WATERS, SLURRIES, PAINT OR OTHER MATERIALS TO ENTER CATCH BASINS OR TO ENTER SITE RUNOFF. 13. USE FILTRATION OR OTHER MEASURES TO REMOVE SEDIMENTS FROM DEWATERING EFFLUENT. 14. NO CLEANING, FUELING, OR MAINTAINING VEHICLES ON SITE SHALL BE PERMITTED TO ALLOW DELETERIOUS MATERIALS FROM ENTERING CATCH BASINS OR TO ENTER SITE RUNOFF. 15. CONTRACTORS AND SUBCONTRACTORS SHALL TO BE PROPERLY TRAINED AND MADE AWARE OF THE STORM WATER POLLUTION PREVENTION PROGRAM MEASURES. FAILURE TO COMPLY WITH THE APPROVED BMPS COULD RESULT IN A FINE OF $1,000 FOR FIRST VIOLATION, INCREASING WITH EACH SUBSEQUENT VIOLATION. SEE LAYOUT PLANS AND GRADING AND DRAINAGE PLANS FOR LOCATIONS OF UTILITY STRUCTURES TO BE ADJUSTED. 1. ALL UTILITY STRUCTURE WORK SHALL BE IN ACCORDANCE WITH THE UTILITY DISTRICT OWNER'S STANDARD PLANS AND SPECIFICATIONS. 2. NO UTILITY WORK SHALL BE DONE UNTIL AUTHORIZED BY THE UTILITY OWNER. THE CONTRACTOR SHALL NOTIFY THE UTILITY OWNER AT LEAST TWO (2) WORKING DAYS PRIOR TO STARTING ANY WORK. 3. ALL UTILITY COVERS, BOXES, AND MANHOLES SHALL BE ADJUSTED TO FINISH GRADE PRIOR TO COMPLETION OF THE PROJECT. 4. WATER METER COVERS, GAS VALVE COVERS, WATER VALVE COVERS, JOINT UTILITY BOXES, AND SANITARY SEWER CLEANOUT COVERS SHALL BE REPLACED WITH TRAFFIC RATED FRAMES AND COVERS WHEN FALLING WITHIN A VEHICULAR TRAVEL WAY, INCLUDING ROADWAYS, PARKING AREAS, AND DRIVEWAYS. 5. CONTRACTOR SHALL INSTALL CURB ALIGNMENT ADJUSTMENT AROUND EXISTING UTILITY STRUCTURE AT ALL WATER METERS, GAS VALVES, WATER VALVES, SANITARY SEWER CLEANOUTS, AND UTILITY POLES THAT CONFLICT WITH THE PROPOSED CURB ALIGNMENT AS DETERMINED IN THE FIELD. CURB ALIGNMENT ADJUSTMENT SHALL BE REVIEWED AND APPROVED IN THE FIELD BY THE ENGINEER. 6. FIRE HYDRANTS SHALL BE ADJUSTED TO FINISH GRADE BY REPLACING THE RISER PIPE SUCH THAT THE HYDRANT HAS THE PROPER EXPOSURE IN ACCORDANCE WITH SAN MATEO COUNTY STANDARD DETAIL W-5. EXISTING HYDRANTS SHALL BE RE-USED. 7. FIRE HYDRANTS IN SIDEWALKS SHALL HAVE THEIR BOLLARDS REMOVED. 8. ADJUST SANITARY SEWER MANHOLES TO FINISH GRADE BY ADDING OR SUBTRACTING GRADE RINGS. RE-SET EXISTING FRAME AND COVER IN ACCORDANCE WITH SAN MATEO COUNTY STANDARD DETAIL C-1 9. ADJUST STORM DRAIN MANHOLE TO FINISH GRADE BY ADDING OR SUBTRACTING GRADE RINGS. RE-SET EXISTING FRAME AND COVER IN ACCORDANCE WITH SAN MATEO COUNTY STANDARD DETAIL B-10. 1. THE CONTRACTOR AGREES THAT IN ACCORDANCE WITH GENERALLY ACCEPTED CONSTRUCTION PRACTICES, THEY SHALL ASSUME SOLE AND COMPLETE RESPONSIBILITY FOR THE JOB SITE CONDITIONS DURING THE COURSE OF CONSTRUCTION OF THIS PROJECT, INCLUDING SAFETY OF ALL PERSONS AND PROPERTY, THAT THIS REQUIREMENT SHALL APPLY CONTINUOUSLY AND NOT BE LIMITED TO NORMAL WORKING HOURS AND THAT THE CONTRACTOR SHALL DEFEND, INDEMNIFY AND HOLD THE OWNER AND THE ENGINEER HARMLESS FROM ANY AND ALL LIABILITY, REAL OR ALLEGED, IN CONNECTION WITH THE PERFORMANCE OF WORK ON THIS PROJECT, EXCEPTING FOR LIABILITY ARISING FROM THE SOLE NEGLIGENCE OF THE OWNER OR THE ENGINEER. 2. THE ENGINEER ASSUMES NO RESPONSIBILITY BEYOND THE ADEQUACY OF THE DESIGN CONTAINED HEREIN. 3. THE CONTRACTOR SHALL COMPLY WITH THE RULES AND REGULATIONS OF THE CAL/OSHA STATE OF CALIFORNIA CONSTRUCTION SAFETY ORDERS. 4. SHOULD IT APPEAR THAT THE WORK TO BE DONE, OR ANY MATTER RELATIVE THERETO, IS NOT SUFFICIENTLY DETAILED OR EXPLAINED ON THESE PLANS THE CONTRACTOR SHALL CONTACT THE PROJECT ENGINEER FOR SUCH FURTHER EXPLANATIONS AS MAY BE NECESSARY. 5. ALL WORK SHALL BE PERFORMED IN CONFORMANCE WITH THE PROJECT SPECIFICATIONS, SPECIAL PROVISIONS, SAN MATEO COUNTY STANDARD PLANS, AND REQUIREMENTS SET FORTH IN THE COUNTY OF SAN MATEO'S ENGINEERING STANDARDS. 6. THE CONTRACTOR SHALL SUBMIT TO THE CITY AND HAVE IN THE SUPERINTENDENT'S VEHICLE, EMERGENCY TELEPHONE NUMBERS FOR POLICE, FIRE, AMBULANCE, AND THOSE AGENCIES RESPONSIBLE FOR MAINTENANCE OF UTILITIES IN THE VICINITY OF THE JOB SITE. 7. EMERGENCY PHONE NUMBERS TO REACH CONTRACTOR SHALL BE GIVEN TO CITY OF EAST PALO ALTO PUBLIC WORKS. 8. THE CONTRACTOR SHALL PROVIDE ALL LIGHTS, SIGNS, BARRICADES, FLAGMEN OR OTHER DEVICES NECESSARY TO PROVIDE FOR PUBLIC SAFETY. 9. EXCAVATIONS SHALL BE ADEQUATELY SHORED, BRACED AND SHEETED SO THAT THE EARTH WILL NOT SLIDE OR SETTLE AND SO THAT ALL EXISTING IMPROVEMENTS OF ANY KIND WILL BE FULLY PROTECTED FROM DAMAGE. ANY DAMAGE RESULTING FROM A LACK OF ADEQUATE SHORING, BRACING AND SHEETING SHALL BE THE RESPONSIBILITY OF THE CONTRACTOR AND THEY SHALL AFFECT NECESSARY REPAIRS OR RECONSTRUCTION AT THEIR OWN EXPENSE. WHERE THE EXCAVATION FOR A CONDUIT TRENCH AND/OR STRUCTURE IS FIVE FEET OR MORE IN DEPTH, THE CONTRACTOR SHALL PROVIDE ADEQUATE SHEETING, SHORING AND BRACING OR EQUIVALENT METHOD FOR THE PROTECTION OF LIFE OR LIMB, CONFORMING TO THE APPLICABLE CONSTRUCTION SAFETY ORDERS OF THE DIVISION OF INDUSTRIAL SAFETY OF THE STATE OF CALIFORNIA. THE CONTRACTOR SHALL ALWAYS COMPLY WITH OSHA REQUIREMENTS. 10. NO WORK SHALL BE DONE ON THIS PROJECT PRIOR TO A PRE-CONSTRUCTION CONFERENCE TO BE HELD WITH THE CITY ENGINEER. 11. CONTRACTOR SHALL CONFINE HIS OPERATIONS AND ACTIVITIES TO WITHIN THE PROJECT LIMITS, CONSISTING OF ROAD RIGHT-OF-WAY, RIGHTS OF ENTRY AND/OR PROJECT CONFORMS, AS SHOWN ON THE PLANS AND AS DIRECTED BY THE ENGINEER. 12. THE CONTRACTOR SHALL INFORM THE CITY ENGINEER 48 HOURS IN ADVANCE OF THE TIME HE REQUIRES AN INSPECTOR, INCLUDING FORM WORK REVIEW AND APPROVAL. 13. THE FOLLOWING CONTROL MEASURES FOR GRADING AND CONSTRUCTION ACTIVITIES SHALL BE ADHERED TO, UNLESS OTHERWISE APPROVED BY THE CITY: A. GRADING AND CONSTRUCTION ACTIVITIES SHALL BE LIMITED TO THE HOURS OF 8 AM TO 5 PM ON WEEKDAYS; THERE SHALL BE NO GRADING OR CONSTRUCTION ACTIVITIES ON THE WEEKENDS OR CITY HOLIDAYS. B. GRADING AND CONSTRUCTION EQUIPMENT SHALL BE PROPERLY MUFFLED. C. UNNECESSARY IDLING OF GRADING AND CONSTRUCTION EQUIPMENT IS PROHIBITED. D. NOISE-GENERATING STATIONARY CONSTRUCTION EQUIPMENT, SUCH AS COMPRESSORS, SHALL BE LOCATED AS FAR AS PRACTICAL FROM OCCUPIED RESIDENTIAL HOMES. E. CONSTRUCTION TRASH AND DEBRIS SHALL BE CLEANED UP DAILY. F. ALL UNPAVED ACCESS ROADS, PARKING AREAS AND CONSTRUCTION STAGING AREAS SHALL BE WATERED OR TREATED WITH (NON-TOXIC) SOIL STABILIZERS, AS NECESSARY TO PREVENT AIRBORN DUST. G. CONSTRUCTION SITES SHALL BE KEPT CLEAN AT ALL TIMES. AT NO TIME SHALL THE CONTRACTOR OR PERMIT HOLDER BE ALLOWED TO LEAVE THE SITE PRIOR TO THOROUGHLY CLEANING SIDEWALKS, CURBS, GUTTERS, AND STREET SURFACES. H. ADJACENT STREETS & APPROVED HAUL ROUTES SHALL BE SWEPT DAILY BY MECHANICAL SWEEPERS EQUIPPED WITH VACUUM UNITS AND THOROUGHLY FLUSHED AFTER SWEEPING IS COMPLETED. I. CONSTRUCTION ACCESS ROUTES SHALL BE APPROVED IN ADVANCE BY THE CITY OF EAST PALO ALTO. 14. THE CONTRACTOR SHALL COORDINATE DIRECTLY WITH ALL UTILITY COMPANIES WHEN PERFORMING ANY EXCAVATION TO ENSURE UTILITY MAINS AND SERVICE LATERALS MAINTAIN ADEQUATE COVER. 15. PRIOR TO CONSTRUCTION, THE CONTRACTOR SHALL PREPARE A DUST CONTROL PLAN FOR SUBMITTAL TO THE COMMUNITY DEVELOPMENT DEPARTMENT. THE DUST CONTROL PLAN SHALL INCLUDE A SCHEDULE FOR WATERING AREAS OF EXPOSED SURFACES DURING THE CONSTRUCTION AND GRADING PROCESS (EARLY MORNING AND EARLY EVENING). OVERFILLING OF WATER TRUCKS WILL NOT BE ALLOWED. 16. THE CONTRACTOR SHALL BE RESPONSIBLE FOR ANY DAMAGE TO THE SITE OR SURROUNDING AREA DUE TO DUST OR EROSION, RESULTING FROM WORK DONE BY THE CONTRACTOR. CONTRACTOR SHALL PROVIDE A SEVEN (7) DAY PHONE NUMBER TO RECEIVE AND RESPOND TO DUST COMPLAINTS RESULTING FROM ALL CONSTRUCTION OPERATIONS AND SHALL BE MAINTAINED UNTIL CONSTRUCTION IS COMPLETE. 17. PRIOR TO CONSTRUCTION, CONTRACTOR SHALL PROVIDE A TRAFFIC CONTROL PLAN FOR REVIEW TO THE COMMUNITY DEVELOPMENT DEPARTMENT. 18. EXISTING UNDERGROUND UTILITIES AND IMPROVEMENTS ARE APPROXIMATE LOCATIONS BASED UPON RECORD INFORMATION AVAILABLE TO THE ENGINEER AT THE TIME OF PREPARATION OF THESE PLANS. IT IS THE CONTRACTOR'S RESPONSIBILITY TO VERIFY THE LOCATION AND DEPTH OF ANY EXISTING UNDERGROUND UTILITY AND IMPROVEMENT WITH APPROPRIATE AGENCIES PRIOR TO START OF CONSTRUCTION IN THAT VICINITY. ANY CONFLICTS SHALL BE REPORTED IMMEDIATELY TO THE CITY AND TO THE ENGINEER. NEITHER THE CITY NOR THE ENGINEER ASSUMES RESPONSIBILITY THAT THE OBSTRUCTIONS INDICATED ON THE PLANS WILL BE THE OBSTRUCTIONS ENCOUNTERED. THE CONTRACTOR SHALL NOTIFY UNDERGROUND SERVICE ALERT 811 TWO WORKING DAYS PRIOR TO START OF CONSTRUCTION. 19. AT THE TIME OF CONSTRUCTION ALL EXISTING MONUMENTATION, INCLUDING PROJECT SURVEY CONTROL POINTS, SHALL BE PRESERVED. IF MONUMENTS BECOME DAMAGED DURING CONSTRUCTION, THEY SHALL BE RESTORED AT THE CONTRACTORS EXPENSE. 20. THE CONTRACTOR SHALL IMMEDIATELY REPORT ANY SOIL OR WATER CONTAMINATION NOTICED DURING CONSTRUCTION TO THE CITY OF EAST PALO ALTO FIRE DEPARTMENT HAZARDOUS MATERIALS DIVISION, THE SAN MATEO COUNTY DEPARTMENT OF HEALTH, AND THE CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD. 21. ALL EXCAVATIONS SHALL BE BACKFILLED AND COMPACTED AT DAY'S END. A MINIMUM OF TWO INCHES OF TEMPORARY PAVING SHALL BE INSTALLED AND COMPACTED BY MECHANICAL MEANS TO PRODUCE A SMOOTH SURFACE FOR PEDESTRIAN AND VEHICULAR TRAFFIC. 22. IT IS THE CONTRACTOR'S RESPONSIBILITY TO RESTORE STREET AND SIDEWALK SUBGRADES DISTURBED DURING UNDERGROUND CONSTRUCTION. ALL EXISTING STREET IMPROVEMENTS DAMAGED DURING CONSTRUCTION SHALL BE REPAIRED TO THE SATISFACTION OF THE CITY ENGINEER. 23. ALL EXISTING UTILITIES AND IMPROVEMENTS THAT BECOME DAMAGED DURING CONSTRUCTION SHALL BE COMPLETELY RESTORED TO THE SATISFACTION OF THE CITY ENGINEER AND THE UTILITY OWNER, AT THE CONTRACTOR'S SOLE EXPENSE. 24. THE CONTRACTOR SHALL NOT STOCKPILE DEBRIS ONSITE UNLESS APPROVED BY THE ENGINEER IN WRITING AND IN ADVANCE. GENERAL NOTES CONSTRUCTION NOTES EROSION CONTROL NOTES EXISTING UTILITY NOTES UTILITIES AP ANGLE POINT AC ASPHALT CONCRETE BEG BEGIN BOW BACK OF WALK C&G CONCRETE CURB & GUTTER CL CHAIN LINK Conc CONCRETE DI DRAINAGE INLET Dwy DRIVEWAY Ex EXISTING P/L PROPERTY LINE Pvmt PAVEMENT Reconst RECONSTRUCTION Rel RELOCATE Rem REMOVE SL SLOPE Sht SHEET SM SAN MATEO COUNTY STANDARD DETAILS SW SIDEWALK Trans TRANSITION Tot TOTAL TYP TYPICAL UTP UTILITY POLE WCR WHEEL CHAIR RAMP VG VALLEY GUTTER Var VARIES ABBREVIATIONS:

ANNUAL STREET RESURFACING PROGRAM 2021/22
TITLE:

CITY OF EAST PALO ALTO, CALIFORNIA DATE: JOB NO. : SHEET

CITY OF EAST PALO ALTO

ENGINEERING DEPARTMENT

SAN MATEO COUNTY, CALIFORNIA
PREPARED BY:

DRAWN BY:

HJ
AB
NO. REVISIONS DATE

9.6.b
Packet Pg. 210
Attachment: Summary of Improvements (2169 : PMP Presentation and ASRP 2022)

EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Amy Chen, Community & Economic Development Director SUBJECT: Developer Payment Obligations Connected to the RBD Specific Plan Update Recommendation
It is recommended that the City Council:
1) Affirm previous direction that the three developers seeking an amendment to the RBD Specific Plan pay an equal share (or one third) of the associated costs related to the environmental review process in addition to a pro rata share of the City’s investment if the of the RBD Specific Plan is updated and projects are approved; and 2) Direct staff to only process and/or consider projects where the developer’s payment obligations are up to date and in good standing.

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

Priority No. 2: Enhance Economic Vitality
Priority No. 6: Create a Healthy and Safe Community
Background
At the beginning of 2019, the City started to receive strong interest to develop projects in the Ravenswood Business District/Four Corners Transit Oriented Development Specific Plan Area (also known as the “Ravenswood Business District” or “RBD”). With those proposals, the RBD’s original projected development capacity in the Specific Plan would be exceeded, rendering the initial Plan in need of an update.

On February 25, 2020, the City Council provide direction on the Ravenswood Business District Specific Plan and directed City staff to return with a proposed workplan for amending the Specific Plan and EIR, including time and cost estimates. On June 2, 2020, City staff returned with a proposal for the Plan Amendment Project Manager and a firm to serve as the RBD Project Manager responsible for processing development projects in the RBD.

9.7 Packet Pg. 211
On September 15, 2020, the City Council authorized the City to enter into a contract with Raimi + Associates (R+A), in an amount not to exceed $1,326,829 to provide the analysis, community engagement, and environmental review necessary for the City Council to consider an amendment to the Ravenswood Business District (RBD) Specific Plan and potentially increase the amount of development approved in the EIR. The staff report linked online1 details the phases of the analysis and the scope of work.

The City Council’s actions on September 15, 2020 also committed the City to fund some of the analysis necessary for the specific plan update and established the repayment obligations of all entities engaged for both the up front costs as well as how the City will recapture its investment if/when the specific plan is updated and projects move forward. The table below provides more details on those actions:

Up Front Costs
Activity Responsible Entity Cost Estimate* % of Obligation Data Refresh,
Analysis,
Community
Engagement
City of East Palo
Alto
$490,164 100%
Environmental
Review
Emerson
Collective, Harvest
Properties, Sand
Hill
$737,665 Developer to pay
33% of each cost
*All cost estimates will include an additional payment towards the City’s 10% administrative fee2
Reimbursement of the City’s Initial Investment
At the September 15, 2020 meeting, Council accepted staff’s recommendation to set up a process to recapture a proportionate amount of the City’s initial investment to be structured as follows:

A) The new project’s square footage would be represented as a percentage of the total additional capacity allowed by the RBD Specific Plan amendment, once approved.

B) The developer contribution would then be calculated as an equal percentage of the total costs to the City of completing the RBD Specific Plan amendment, plus an administrative fee.

Example:

A) Additional Capacity in the RBD Specific Plan 1,500,000* sq ft Size of Project X 400,000 sq ft
1 September 15, 2020 City Council meeting, agenda item 11.1:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&MeetingID=1283&MediaPosition=15 893.831&ID=1306&CssClass=
2 These figures do not include the additional City investment approved by the City Council on January 18, 2022.

9.7 Packet Pg. 212
Project Size as Percentage of Additional Capacity 27%
B) City’s Contribution to the RBD Specific Plan Amendment $400,000* Project Contribution ($400,000 X 27%) $108,000
Administrative fee (15% of project contribution) $16,200 Total obligation for Project X $124,200
*Amount provided for illustrative purposes only; Actuals will not be known until RBD Specific Plan amendment is completed.

On October 6, 2020, the City Council authorized the City to enter into reimbursement agreements with certain developers within the RBD to fund a share of the associated costs for the environmental review portion of the R+A contract3. Three developers have contributed installments towards the reimbursement of the environmental review portion of the R+A contract (further referred to as the RBD CEQA portion or Exhibit B). Those three developers include the Emerson Collective, Harvest Properties, and Sand Hill Property Company. The 2020 Bay Road project is not included towards the reimbursement of the environmental review portion of the R+A contract because the project was submitted before the RBD Specific Plan process initiated and the project application can continue to be reviewed and processed, and is not dependent on the outcome of the RBD Specific Plan process.

On January 18, 2022, the City Council authorized the City Manager to amend the Raimi + Associates contract with an addition of $508,308 in order to add more analysis, community engagement, and environmental review necessary for the City Council to consider an amendment to the RBD Specific Plan4. The contract amendment is nearly complete, and a table in the Analysis section below summarizes the original and first amendment.

Although certain developers are funding a portion of the R+A contract, the City Council maintains full land use authority regarding decisions about the RBD. Entering into developer reimbursement agreements does not commit the City to amend the RBD or to any project approvals.

Developers Installment Progress
The R+A contract was fully executed and work initiated in early 2021 starting with the data refresh, analysis, and community engagement phase of the RBD Specific Plan process. The RBD CEQA phase of the R+A contract commenced in July 2021 with preparation for Fall Council study sessions and conducting initial analysis to support the environmental review process. In August 2021, City staff requested each of the three developers to submit the first installment towards the RBD Specific Plan update on the environmental review phase. All three developers submitted their installment payment to the City on-time and each also signed the City initiated letter acknowledging they were aware and willing to make the installment payment towards the RBD Specific Plan update during that time. One developer submitted their payment but added onto the acknowledgement letter they were only willing to 3 October 6, 2020 City Council meeting, agenda item 6.11:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&MeetingID=1284&MediaPosition=31

41.636&ID=1416&CssClass=
4 January 18, 2022 City Council meeting, agenda item 3.4:
http://eastpaloalto.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=None&MeetingID=1471&MediaPositio n=&ID=2074&CssClass=

9.7 Packet Pg. 213
conditionally fund the estimated costs of the RBD Specific Plan Update as long as the Specific Plan update continues to study its project as proposed. That one developer stated that it will not make further contributions to the RBD Specific Plan Update and the City will reimburse them for any amounts contributed in excess of their then-current share of the studied growth capacity.

At this time, this one developer is the only developer with an outstanding installment that would go towards the RBD CEQA portion and an outstanding payment under their DRA that would go towards their project processing. They have expressed their dissatisfaction with the formula and would prefer it be based on sq/footage of entitlement vs. the 1/3 split. The developer made an argument that the public record and their DRA is not clear on how the payment obligations were established for the first phase of the RBD process (for which the City is currently fronting the costs), and that they would prefer a prorated formula be used for the entire repayment scheme.

The purpose of this staff report is to confirm with the City Council that it would like to proceed with the reimbursement equation as set forth in the original DRA’s.

Analysis
The City has invested significant time and resources into the potential RBD Specific Plan Update. To date, the City has held four City Council Study Sessions and three community meetings, hosted office hours, and set up several key stakeholder roundtable discussions on the topic. Staff is gratified by the level of community engagement and progress with this aspect the project to date.

As the repayment obligations have previously been approved by City Council, staff recognizes the additional conversations disputing these obligations are requiring a disproportionate level of limited staff resources. Therefore, staff recommends: 1) A discussion and re-affirmation of the previous City Council direction that the three developers seeking an amendment to the RBD Specific Plan pay an equal share (or one third) of the associated costs related to the environmental review process, and 2) The City only process and/or consider projects where the developer’s payment obligations are up to date and in good standing.

Staff’s Recommendation/Rational
Staff recommends the City Council affirm previous direction that the three developers seeking an amendment to the RBD Specific Plan pay an equal share (or one third) of the associated costs related to the environmental review process in addition to a pro rata share of the City’s investment if the of the RBD Specific Plan is updated and projects are approved. It is staff’s position that it would be presumptions to use the square footage of the developers proposed project to establish the payment formula for the RBD CEQA costs. The City Council, community, and other stakeholders have already expressed concerns with the amount of square footage being proposed in the RBD, therefore, the more appropriate approach is to spread the obligation across the three projects, equally.

Fiscal Impact
There are no fiscal impacts associated with this staff report.

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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 Palo Alto.

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EAST PALO ALTO

CITY COUNCIL

STAFF REPORT
DATE: April 5, 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: COVID-19 Vaccination Program Regular Update
Recommendation
Discuss the COVID-19 vaccination program update and provide direction to staff.

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

Ø Priority #5: Improve Communication and Enhance Community Engagement Ø Priority #6: Create a Healthy and Safe Community
Background
On a weekly basis the Mayor and Vice Mayor meet with key staff to discuss and coordinate City of East Palo Alto COVID-19 Vaccination Program efforts and progress.

The purpose of this report is to present the information regarding the abovementioned program and efforts in an open forum engaging all members of the Council and the public.

Analysis
See Attachment 1.

The attachments included in this report routinely cover the items typically discussed at the COVID-19 vaccination briefing with the Mayor and Vice Mayor as well as key staff.

The format is discussed as follows:

1. Review of previous week vaccination efforts. This item identifies each event by the date

9.8 Packet Pg. 216
at which it occurred, the time, the location provider, the address, and the vaccination numbers (sometimes by vaccination type and 1st or 2nd dose).

2. Review of upcoming vaccination events for the week. This follows the same content format as number 1 but concentrates on the efforts to make the upcoming event organized and successful.

3. Outreach efforts (not always discussed). This item typically involved a review of outreach efforts as discussed in item 2 but in more detail and/or a change in strategy as circumstances may change.

4. Future Efforts

5. Incentives (Previously considered).

Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin outside City Hall and making the agenda and report available at the City’s website and the San Mateo County Library at 2145 University Avenue, East Palo Alto.

Fiscal Impact
N/A as this is an informational report.

Environmental
The action being considered by the City Council is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” pursuant to 15378(b)(4) because it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.

Attachments

1. Draft Vaccination Meeting Agenda 4-5-2022

9.8 Packet Pg. 217
Vaccination Meeting Agenda
Tuesday, April 5, 2022

1. Review of previous week vaccination efforts:

Ravenswood Family Health Clinic
City of
EPA Pfizer Adult Pfizer Pedi Moderna J & J Total
1st 2nd 3rd 1st 2nd 3rd 1st 2nd 3rd 1st 2nd
Thurs 4 3 15 0 0 0 0 0 5 0 0 27
Sat 5 0 7 0 2 0 0 1 4 0 0 19
Total 9 3 22 0 2 0 0 1 9 0 0 46

9.8.a
Packet Pg. 218 Attachment: Draft Vaccination Meeting Agenda 4-5-2022 (2180 : COVID-19 Vaccination Program Regular Update)

2. Review of Upcoming Vaccination Events Through April 30, 2022

3. Review of Testing Sites
*The Ravenswood City School District and the Sequoia Union High School District each have additional COVID testing capabilities for students of the districts. Any student or caregiver may contact either District’s main office to learn about how to secure a rapid test for the student.

4. City’s COVID-19 Response Moving Forward
The data indicates that fewer and fewer residents are seeking COVID-19 vaccines at this time.

As part of the City’s annual budget process, staff is in the process of developing recommendations on the next steps of the City’s COVID-19 recovery process. On April 19, 2022, the City Council will review the City Manager’s Budget Message for FY 2022-2023. In the Budget Message, staff will make preliminary recommendations on the City’s role regarding COVID-19 as we move into the next fiscal year.

Day Partners Pop.

Age Time Location Address
Tuesday County of San
Mateo/Lookout Health 5+ 3:00 am – 7:00 pm
Lewis & Joan Platt
East Palo Alto Family
YMCA
2180 Euclid
Ave.

Thursday County of San Mateo 12+ 6:00 am – 9:00 pm
Lewis & Joan Platt
East Palo Alto Family
YMCA
2180 Euclid
Ave.

Saturday Ravenswood Family
Health Clinic 5+ 9:00 am – 11:00 am Ravenswood Family Health Clinic 1885 Bay Rd.

Saturday County of San Mateo/
Stanford 5+ 11:00 am – 6:00 pm Woodland Park Apartments 45 Newell Rd.

Date Time Location Address
Tuesday - Sunday 11:00am –
4:00pm Ravenswood Shopping Center 1781 E Bayshore Rd, Palo Alto, CA 94303
Wednesday, Thursday 6:00pm –
9:00pm
Lewis And Joan Platt East Palo
Alto Family YMCA 2180 Euclid Ave, East Palo Alto, CA
Monday - Friday
12:00pm7:00pm
(weekends
10am-4pm)
(Stanford) North Fair Oaks -
Drive Through 2685 Bay Road, Redwood City, CA
Thursday Only 8:00am8:00pmNorth Fair Oaks Library 2500 Middlefield Rd, Redwood City

9.8.a
Packet Pg. 219 Attachment: Draft Vaccination Meeting Agenda 4-5-2022 (2180 : COVID-19 Vaccination Program Regular Update)

East Palo Alto City CouncilApril 5, 2022

East Palo Alto City Council
April 5, 2022