Palo Alto City Council
June 20, 2022

that requires a lower density, when the project complies with objective standards. The only exception to this is when a project would have a specific adverse impact, which is narrowly defined. (ARB Staff Report, p. 5.)
The Staff Report accurately summarizes and applies the requirements under Section 65589.5(j) to the project. Notwithstanding the guidance in the Staff Report, the ARB made no finding of any “specific, adverse impact” upon the public health or safety. Furthermore, based on the evidence in the administrative record, there are no grounds to find that the project would have any specific, adverse impact upon the public health or safety. (Gov. Code, § 65589.5(j)(1).) Because of the State’s ongoing housing crisis, the Legislature has strengthened the enforcement provisions of HAA, thereby expanding the field of potential litigants beyond the applicant to include housing organizations and the Attorney General, while increasing a local agency’s penalties for noncompliance with the statute. (Gov. Code, § 65589.5(k)-(n).) SummerHill has worked hard and in good faith to design a high-quality residential community that meets the City’s standards, formally revising and resubmitting the project plans five times to address the City’s comments. SummerHill continues to believe that the project meets or exceeds the City’s criteria for Architectural Review. In addition, SummerHill has identified further changes to the project that would feasibly address some of the ARB’s most recent comments.

SummerHill is available to discuss these potential changes with the City prior to the issuance of the City’s written decision pursuant to Municipal Code section 18.77.070(d). However, if the written decision follows the ARB’s recommendation instead of the governing law, please be advised that SummerHill will exercise all administrative and judicial remedies available under the law, including the immediate filing of an appeal to the City Council in order to exhaust its administrative remedies.

SummerHill looks forward to continuing to work with the City on this project.

Very truly yours,

David H. Blackwell
cc: Jodie Gerhardt, Manager of Current Planning
Albert Yang, Assistant City Attorney
Garrett Sauls, Planning
Elaine Breeze, SummerHill Housing Group
John Hickey, SummerHill Housing Group

30.d
Packet Pg. 816
Attachment F
Project Plans, Environmental, & Supporting Documents
Project plans, Environmental, & Supporting documents are only available to the public online.

Hardcopies of the plan sets have been provided to Board, Commission, and Council members.

Directions to review Project plans online:

1. Go to: bit.ly/PApendingprojects

2. Scroll down to find “2850 W. Bayshore” and click the address link

3. On this project specific webpage you will find a link to the project plans and other important information
Direct Link to Project Webpage:
https://www.cityofpaloalto.org/News-Articles/Planning-and-Development-Services/2850-W.- Bayshore-21PLN-00177

30.e
Packet Pg. 817
City of Palo Alto (ID # 14513)
City Council Staff Report
Meeting Date: 6/20/2022 Report Type: Action Items
City of Palo Alto Page 1
Title: Adoption of Resolutions: (1) Placing a Measure Affirming the Gas Utility Transfer on the November 2022 Ballot; (2) Placing a Business Tax on the November 2022 Ballot; and (3) Adopting a Spending Plan for Business Tax Proceeds
From: City Manager
The City Council is discussing this item on June 13, 2022, this report will be released in the June 16, 2022 City Council packet subsequent to that discussion. 31 Packet Pg. 818
City of Palo Alto (ID # 13964)
City Council Staff Report
Report Type: Information Reports Meeting Date: 6/20/2022 City of Palo Alto Page 1
Summary Title: ADU Quarterly Report (Quarter 1 through Quarter 4 CY 2021) Title: Accessory Dwelling Unit (ADU) Quarterly Report (Quarter 1 through Quarter 4, Calendar Year 2021)
From: City Manager
Lead Department: Planning and Development Services
Recommendation:

This is an informational report and no action is requested.

Executive Summary:

The Accessory Dwelling Unit (ADU) Quarterly Report keeps track of the ADU permit applications received, approved , and finalized yearly by the City, as well as the d etails of quarterly applications received. Since 2015, the City ha s received 391 ADU/JADU building permit applications and have issued a total of 255 permits. The City received and issued more ADU/JADU building permit applications in 2021 than in another year since 2015 with 136 submitted applications and 89 ADU/JADU permits issued. The details of the applications are provided in Attachment A of the staff report.

Background:

In June 2017, the City of Palo Alto amended the Zoning Code (Title 18) to adopt Accessory Dwelling Unit (ADU) regulations to comply with State adopted requirements. At adoption, the City Council directed staff to provide reports on the number of permits filed for the construction of ADUs. The City Council received the last developmen t report for the third and fourth quarter of calendar year 2020 last August 30, 2021 (Report ID # 13410).

Council also adopted the City's ADU Ordinance (Ordinance 5507) on November 2020, which updated the City's ADU regulations to comply with new State requirements in effect as of January 1, 2020. This ordinance replaced the City's Interim Ordinance that was ad opted in January of the same year.
32 Packet Pg. 819
City of Palo Alto Page 2
Staff anticipate further revisions the ordinance coming forward later this year in response to Council’s PTC referral to explore affordable ADUs as well as changes to further clarify ordinance language.

Discussion:

This report tracks the ADU permit applications filed with the City and their status since 2015.

The following table (Table 1) is a “snapshot” of the rise in ADU permit applications and decrease on impact fees collected before and after the adoption of new regulations.

Table 1: Summary of ADU Permits from 2015-2021
Category 2015 2016 2017 2018 2019 2020 2021
New ADU Applications Filed1 10 9 28 55 75 78 136
Permits: Ready to Issue (City
Approved)2 8 5 12 39 62 46 112
Permits: Issued (Permit
Obtained)3 8 5 12 36 62 43 89
Permits: Final Inspection
Approved4 3 4 9 12 33 46 37
Permits Expired 1 1
Detached ADUs (Submitted)5 20 35 52 52 80
Detached ADUs (Issued)5 8 24 41 33 55
Attached ADUs (Submitted)6 8 20 23 20 56
Attached ADUs (Issued)6 4 11 21 9 34
32 Packet Pg. 820
City of Palo Alto Page 3
Junior ADUs (Submitted)7 1 1 1 25
Junior ADUs (Issued)7 1 1 1 9
Average Application Processing
Time (Days Including
Weekends)8
127 214 118 183 135 197 162
Average Construction Time
(Days Including Weekends)9 578 751 330 287 173 262 455 City Impact Fees Collected for
New ADUs10 $451,514 $402,012 $198,962 $44,057 $139,592
Source: City of Palo Alto Accela Data January 2015 through January 2021 Notes:

1. Any ADU/JADU Application SUBMITTED for the year

2. Any ADU/JADU application Permit 'READY TO Issue' for the year (regardless of when it was submitted)

3. Any ADU/JADU Permit ISSUED for the year (regardless of when it was submitted)

4. Any ADU/JADU Permit receiving a Final Inspection (Ready to Occupy) for the year, regardless of when the application was
submitted. Years 2015-2017 data point not available.

5. Any Detached ADU Permit Application submitted for the year/Any Detached ADU Permit Issued for the year, regardless of when the application was submitted. Years 2015-2016 data point not available.

6. Any Attached ADU Permit Application submitted for the year/Any Attached ADU Permit Issued for the year, regardless of when the application was submitted. Years 2015-2016 data point not available.

7. Any JADU Permit Application submitted for the year/Any JADU Permit Issued for the year, regardless of when the application was submitted. Years 2015-2016 data point not available.

8. Average number of days from permit application submittal to when permit is approved and ready to issue. This average includes weekends and days application is pending due to applicant preparation of resubmittal or additional information from applicant.

9. Average number of days from permit issued to final inspection completed. This average includes weekends and days staff is waiting for applicant to schedule the next required inspection.

10.Impact Fees collected for ADU’s permitted for the year. Years 2015-2016 data point not available.

Data from Table 1 shows that the City received 136 new ADU/JADU applications in 2021, which is approximately a 75% increase in the number of ADUs submitted for all of 2020. The City also issued 89 ADU/JADU permits in 2021, twice as many permits issued for calendar year 2020.

The average processing time, the time an application is submitted to the time the permit is issued, fell by approximately 35 days or about an 18% decrease in processing time. On the other 32 Packet Pg. 821
City of Palo Alto Page 4
hand, construction time, the time a permit is issued to begin construction to the time the final inspection is approved, increase d to 455 days or about a 74% increase from year 2020. Supply chain issues , COVID affecting construction workers, and the City’s constrained i nspection resources may have contributed to the increase in construction time for calendar year 2021.

Approximately 49% of the applications submitted in 2021 were located north of Oregon Expressway while 51% of the applications were located south of the expressway. The majority of the ADU applications filed are for one-bedroom units or about 67% of all ADU/JADU’s permitted in 2021. The unit sizes ranged from 178 to 1,218 square feet, with an average unit size of 5 52 square feet.

The increased ADU production will also help the City meet its 2023 -31 Regional Housing Needs Allocation (RHNA). The City’s 2023 -31 RHNA requirement is 6,086 units. The State Department of Housing and Community Development (HCD) allows the average of a jurisdic tion’s past three years of ADU production and use that average to project its ADU production for the next eight years. Therefore, the average annual production of years 2019 -2021 is 64.7 ADUs per year.

Multiplied by eight (the number of years in the planni ng period), the City’s project ADU production for 2023-31 is 517 units. Therefore, the 517 units will be applied towards the City’s RHNA. These units will be included in the “above moderate” category.

Next Steps:

This is a quarterly report published by the Planning and Development Services Department.

Stakeholder Engagement:

This is an Informational Report for the City Council and does not require any stakeholder engagements.

Environmental Review:

Not Applicable.

Attachments:

Attachment32.a: Attachment A: ADU Quarterly Report, 2021 Calendar Year (PDF) 32 Packet Pg. 822
Number of
Applications
Dwelling
Type
Project
Location Zoning Date  Filed Application  Status
Building
Permit
Issued
Attached Detached Atta ched2 Detached2 Garage Other Accessory Structure/Space # of Bedrooms ADU  Size (SF)
1A D U S o u t h R ‐1 (8000) 1/4/2021 Pending  Resubmittal No X        1 500 2A D U N o r t h R ‐1 (10000) 1/14/2021 Permit  Issued Yes X        0 178 3A D U N o r t h R ‐1 1/19/2021 Permit  Issued Yes   X        2 664 4A D U N o r t h R ‐1 1/21/2021 Permit  Issued Yes   X        1 449 5A D U N o r t h R M ‐30 1/22/2021 Pending  Resubmittal No     XX   1 351 6A D U N o r t h R ‐1 1/29/2021 Permit  Issued Yes     XX   1 689 7A D U N o r t h R ‐1 2/1/2021 Permit  Issued Yes     XX   1 267 8A D U N o r t h R ‐1 2/2/2021 Incomplete No     XX   2 589 9A D U S o u t h R ‐1 2/3/2021 Permit  Issued Yes     XX   0 422 10 ADU South R ‐1 (8000) 2/4/2021 Permit  Issued Yes    X   X   2 730 11 ADU North R ‐1 2/11/2021 Permit  Issued Yes X        1 1,218 12 ADU North R ‐1 2/12/2021 Permit  Issued Yes   X        1 455 13 ADU South R ‐1 2/16/2021 Permit  Issued Yes     XX   1 594 14 ADU North R ‐1 2/17/2021 Permit  Issued Yes X        1 799 15 ADU North R ‐1 2/18/2021 Permit  Issued Yes   X        1 691 16 ADU South R ‐1 2/19/2021 Incomplete No     X   X 1 517 17 ADU South R ‐1 2/19/2021 Permit  Issued Yes X        1 687 18 ADU South R ‐1 2/19/2021 Finaled Yes    X   X   1 400 19 ADU North R ‐1 (S) 2/22/2021 Permit  Issued Yes   X        1 383 20 ADU South R ‐1 8000 2/22/2021 Permit  Issued Yes   X        2 745 21 ADU North R ‐1 (S) 2/22/2021 Permit  Issued Yes   X        1 383 22 ADU North R ‐1 3/10/2021 Permit  Issued Yes X        1 314 23 ADU South R ‐1 3/10/2021 Permit  Issued Yes X        1 636 24 ADU South R ‐1 (8000) 3/19/2021 Pending  Resubmittal No    X   X   1 450 25 ADU North R ‐1 3/19/2021 Permit  Issued Yes   X        1 398 26 ADU South R ‐1 (8000) 3/19/2021 Permit  Issued Yes   X        2 1,000 27 ADU South R ‐1 3/23/2021 Permit  Issued Yes X        1 418 28 ADU North R ‐1 3/23/2021 Permit  Issued Yes   X        1 767 29 ADU South R ‐1 3/24/2021 Permit  Issued Yes    X    X 1 261 30 ADU North R ‐1 (7000) 3/25/2021 Finaled Yes     XX   1 543 31 ADU North R ‐1 3/25/2021 Permit  Issued Yes X        1 725 32 ADU South R ‐1 3/29/2021 Permit  Issued Yes    X   X   0 280 33 ADU South R ‐1 4/1/2021 Permit  Issued Yes   X        1 660 34 ADU South R ‐1 4/1/2021 Permit  Issued Yes    X   X   1 484 35 ADU South R ‐1 4/5/2021 Permit  Issued Yes   X        0 385 36 ADU North R ‐1 4/5/2021 Approved No     XX   2 1,000 37 ADU South R ‐1 (7000) 4/6/2021 Permit  Issued Yes    X   X   0 463 38 ADU South R ‐1 (8000) 4/14/2021 Permit  Issued Yes   X        1 579 39 ADU North R ‐1 (10000) 4/15/2021 Permit  Issued Yes X        1 450 40 ADU South R ‐1 4/19/2021 Incomplete No   X        0 390 41 ADU North R ‐1 4/21/2021 Permit  Issued Yes   X        1 676 42 ADU North R ‐1 4/22/2021 Finaled Yes    X    X 1 435 43 ADU South R ‐1 (7000)(S) 4/27/2021 Finaled Yes    X   X   0 240 44 ADU North R ‐1 4/27/2021 Permit  Issued Yes   X        1 897 45 ADU North R ‐1 5/1/2021 Finaled Yes    X   X   1 450 46 ADU South R ‐1 5/6/2021 Permit  Issued Yes X        2 846 47 ADU South R ‐1 5/7/2021 Permit  Issued Yes    X   X   1 420 48 ADU South R ‐1 5/11/2021 Permit  Issued Yes    X   X   0 465 Type of ConversionConversionNew Construction
Building Permits Applied for in 2021
1 of 3

32.a
Packet Pg. 823
Number of
Applications
Dwelling
Type
Project
Location Zoning Date  Filed Application  Status
Building
Permit
Issued
Attached Detached Atta ched2 Detached2 Garage Other Accessory Structure/Space # of Bedrooms ADU  Size (SF)
Type of ConversionConversionNew Construction
Building Permits Applied for in 2021
49 ADU North R ‐1 (10000) 5/12/2021 Permit  Issued Yes X X 1 454 50 ADU North R ‐1 5/14/2021 Pending  Resubmittal No X 1 886 51 ADU South R ‐1 5/17/2021 In  Plan Check No X 1 564
52 ADU South R ‐1 (8000)(S) 5/20/2021 Permit  Issued Yes X 1 565 53 ADU North R ‐1 (10,000) 5/24/2021 Permit  Issued Yes X 0 345 54 ADU North R ‐1 (10000) 5/26/2021 Permit  Issued Yes X 1 519 55 ADU South R ‐1 6/3/2021 Permit  Issued Yes X 0 479
56 ADU North R ‐2 6/3/2021 Finaled Yes X 1 495
57 ADU North R ‐1 6/3/2021 Permit  Issued Yes X 1 560
58 ADU North R ‐1 6/8/2021 Permit  Issued Yes X 2 800
59 ADU South R ‐1 6/11/2021 Incomplete No X 2 749
60 ADU South R ‐1 (8000) 6/15/2021 Permit  Issued Yes X 1 416 61 ADU South R ‐1 6/16/2021 Permit  Issued Yes X X 1 392 62 ADU South R ‐1 6/22/2021 Permit  Issued Yes X X 1 370 63 ADU North R ‐1 6/23/2021 Permit  Issued Yes X 1 294
64 ADU South R ‐1 (S) 6/25/2021 Finaled Yes X 1 390
65 ADU North R ‐1 6/25/2021 Permit  Issued Yes X X 2 998 66 ADU South R ‐1 6/29/2021 Permit  Issued Yes X 1 798
67 ADU South R ‐1 7/2/2021 Permit  Issued Yes X 1 665
68 ADU South R ‐1 7/8/2021 Permit  Issued Yes X 1 665
69 ADU North R ‐1 (10000) 7/8/2021 Permit  Issued Yes XX 1 328 70 ADU South R ‐1 (S) 7/13/2021 Permit  Issued Yes X 2 800 71 ADU South R ‐1 7/14/2021 Pending  Resubmittal No X 2 798 72 ADU North R ‐1 7/14/2021 Permit  Issued Yes X 2 749
73 ADU North R ‐1 7/14/2021 Pending  Resubmittal No X 1 681 74 ADU North R ‐1 7/22/2021 Finaled Yes X X 0 462
75 ADU South R ‐1 7/26/2021 Permit  Issued Yes X 1 621
76 ADU South RE 7/27/2021 Pending  Resubmittal No X 2 1,150 77 ADU South R ‐1 7/28/2021 Permit  Issued Yes X 1 329
78 ADU South R ‐1 7/28/2021 Permit  Issued Yes X 1 329
79 ADU South R ‐1 7/28/2021 Permit  Issued Yes X 1 694
80 ADU South R ‐1 7/28/2021 Permit  Issued Yes X 1 742
81 ADU South R ‐1 7/28/2021 Permit  Issued Yes X 1 742
82 ADU North R ‐1 7/29/2021 Permit  Issued Yes X 1 499
83 ADU North R ‐1 8/2/2021 Incomplete No X 1 495
84 ADU North R ‐1 (S) 8/2/2021 Permit  Issued Yes X 1 565 85 ADU South R ‐1 8/3/2021 Pending  Resubmittal No X 1 482 86 ADU North R ‐1 8/4/2021 Pending  Resubmittal No X 1 509 87 ADU North R ‐1 8/11/2021 Permit  Issued Yes X 1 800
88 ADU North R ‐1 (10000) 8/11/2021 Permit  Issued Yes X 1 495 89 ADU North R ‐1 8/11/2021 Submitted No 00
90 ADU South R ‐1 8/23/2021 Permit  Issued Yes X 1 793
91 ADU South R ‐1 (S) 8/24/2021 Permit  Issued Yes X 1 493 92 ADU North R ‐1 8/25/2021 Permit  Issued Yes X 1 798
93 ADU South R ‐1 8/26/2021 Permit  Issued Yes X 1 470
94 ADU South R ‐1 8/30/2021 Pending  Resubmittal No X X 1 351 95 ADU South R ‐1 8/31/2021 Permit  Issu ed Yes X 1 314 96 ADU South R ‐1 9/1/2021 Permit  Issued Yes X 1 512
2 of 3

32.a
Packet Pg. 824
Number of
Applications
Dwelling
Type
Project
Location Zoning Date  Filed Application  Status
Building
Permit
Issued
Attached Detached Atta ched2 Detached2 Garage Other Accessory Structure/Space # of Bedrooms ADU  Size (SF)
Type of ConversionConversionNew Construction
Building Permits Applied for in 2021
97 ADU North R ‐1 9/1/2021 Incomplete No    X   X   1 418 98 ADU North R ‐1 9/3/2021 Incomplete No    X    X 1 350 99 ADU South R ‐1 9/7/2021 Permit  Issued Yes   X        1 495 100 ADU South R ‐1 9/8/2021 Permit  Issued Yes X        1 499 101 ADU South R ‐1 9/13/2021 Permit  Issued Yes    X   X   0 430 102 ADU North R ‐1 (10000) 9/16/2021 Permit  Issued Yes     XX   1 367 103 ADU South R ‐1 (8000) 9/16/2021 Permit  Issued Yes     XX   1 615 104 ADU North R ‐1 9/17/2021 Permit  Issued Yes     XX   1 298 105 ADU North R ‐1 9/17/2021 Permit  Issued Yes     XX   1 298 106 ADU South R ‐1 (8000) 9/21/2021 Finaled Yes   X        1 495 107 ADU South R ‐1 9/22/2021 Pending  Resubmittal No     XX   1 254 108 ADU North R ‐1 9/22/2021 Permit  Issued Yes   X        1 723 109 ADU North R ‐1 (10000) 9/27/2021 In  Plan Check No   X        1 678 110 ADU North R ‐1 (10000) 9/27/2021 In  Plan Check No   X        1 678 111 ADU North R ‐1 9/28/2021 Permit  Issued Yes X        0 257 112 ADU South R ‐1 9/28/2021 Pending  Resubmittal No X        1 693 113 ADU South R ‐1 (7000) 10/5/2021 Permit  Issued Yes X        1 499 114 ADU North PC ‐3571 10/5/2021 Pending  Resubmittal No   X        0 570 115 ADU South R ‐1 10/5/2021 Pending  Resubmittal No     XX   0 407 116 ADU South R ‐1 (8000) 10/18/2021 In  Plan Check No X        1 474 117 ADU North RMD  (NP) 10/20/2021 Permit  Issued Yes   X        1 426 118 ADU North R ‐1 10/22/2021 Pending  Resubmittal No   X        1 747 119 ADU North R ‐1 10/26/2021 Permit  Issued Yes    X   X   1 200 120 ADU South R ‐1 10/26/2021 Permit  Issued Yes   X        1 260 121 ADU South R ‐1 10/26/2021 In  Plan Check No     XX   1 592 122 ADU North R ‐1 10/27/2021 Pending  Resubmittal No   X        1 798 123 ADU North R ‐1 11/1/2021 Pending  Resubmittal No    X   X   1 231 124 ADU North R ‐1 11/3/2021 In  Plan Check No   X        1 799 125 ADU North R ‐1 (10000) 11/4/2021 In  Plan Check No   X        2 691 126 ADU North R ‐1 (10000) 11/4/2021 Pending  Resubmittal No   X        2 691 127 ADU South 11/10/2021 Permit  Issued Yes X        1 407 128 ADU South R ‐1 11/16/2021 Pending  Resubmittal No    X   X   1 198 129 ADU South R ‐1 (10000) 11/18/2021 Pending  Resubmittal No   X        3 1,000 130 ADU North R ‐1 11/23/2021 Pending  Resubmittal No    X    X 1 798 131 ADU South R ‐1 (8000) 11/29/2021 Pending  Resubmittal No    X   X   1 263 132 ADU South R ‐1 12/6/2021 Pending  Resubmittal No     XX   1 592 133 ADU North R ‐1 12/9/2021 Permit  Issued Yes     XX   1 512 134 ADU South R ‐1 12/15/2021 Permit  Issued Yes X        1 393 135 ADU South R ‐1 (S) 12/15/2021 Incomplete No    X   X   1 365 136 ADU North R ‐1 (10000) 12/22/2021 Permit  Issued Yes X        2 499 3 of 3

32.a
Packet Pg. 825
City of Palo Alto (ID # 14472)
City Council Staff Report
Meeting Date: 6/20/2022 Report Type: Information Reports City of Palo Alto Page 1
Title: Police Response to OIR Report
From: City Manager
Lead Department: Police
Recommendation
This is an informational report, and no Council action is required.

Background
Since 2006, OIR Group has been contracted by the City of Palo Alto to act as an Independent Police Auditor (IPA). The IPA provides an independent review of qualifying administrative investigations and public complaints investigated by the Palo Alto Police Department, publishes a bi-annual report reviewing those investigations, and gives recommendations on ways to improve investigative processes and department practices.

On February 14, 2022, the IPA presented the December 2020-2021 report to the Council.

On March 14, 2022, Council requested the Department prepare written responses to the IPA recommendations. In the future, Department responses will be published as an addendum to the IPA report. For the December 2020-2021 report, which has already been published, the Department is providing these responses as an informational item to the Council.

Discussion
The Department reviewed the IPA recommendations in detail and consulted with the IPA and appropriate staff members about them. In most cases, the Department agreed with the IPA’s recommendations and modified existing policies or procedures accordingly. The Department addresses its responses to each of the IPA recommendations in the attached document. In the interest of public awareness, the Department publishes an updated version of its policy manual on the Department’s website on a quarterly basis. The next quarterly publication is scheduled to occur in August 2022.

Attachments:
• Attachment33.a: PAPD Response to Dec 2020-2021 IPA Recommendations 33 Packet Pg. 826
1 | P a g e

DATE: MAY 26, 2022

TO: ED SHIKADA, CITY COUNCIL

FROM: ASSITANT CHIEF ANDREW BINDER

SUBJECT: POLICE DEPARTMENT RESPONSE TO DEC 2020-2021 IPA RECOMMENDATIONS

RECOMMENDATION ONE: PAPD should go beyond a “letter of the law” assessment when evaluating an allegation that an officer used his discretion in a retaliatory or otherwise improper fashion.

The Department agrees that if there is an allegation an officer used their discretion in a retaliatory or otherwise improper fashion, the Department should interview the officer to determine intent and rationale for the officer’s actions instead of solely relying on the “letter of the law” to reach a conclusion on the officer’s conduct.

RECOMMENDATION TWO: PAPD should address allegations of officer misconduct in straightforward and timely ways, apart from concerns about parallel proceedings that may involve some of the same concerns.

The Department agrees with this recommendation and has revised its administrative procedures to reflect the Department’s commitment and expectation for the prompt resolution of all administrative matters while remaining mindful of parallel court proceedings.

RECOMMENDATION THREE: PAPD should prioritize the timely resolution of cases, and should hold managers accountable as needed to ensure that this occurs.

The Department agrees with this recommendation and will continue to balance the prioritization of the timely resolution of administrative cases with other critical department operations as personnel capacity allows.

RECOMMENDATION FOUR: PAPD should advise its members of the apparent need to obtain a blood draw in order to support a successful prosecution and consider changing policy to require it in cases involving suspected driving while intoxicated (marijuana or other drugs).

The Department agrees with advising its officers of the importance in obtaining a blood sample or other biological (urine) sample when it can be lawfully obtained in support of a successful prosecution. This has been accomplished via a department training memorandum.

RECOMMENDATION FIVE: PAPD should ensure, through documentation, that any recommended verbal counseling does in fact occur.

The Department agrees with this recommendation and has created an Administrative Investigation Disposition memorandum which documents departmental action taken as part of an administrative

33.a
Packet Pg. 827
2 | P a g e
investigation. This memorandum is provided to the involved officer and retained in the administrative case file once the investigation has been completed.

RECOMMENDATION SIX: PAPD should determine how a body-worn camera should be placed that would still successfully video events when wearing a traffic vest and import that knowledge to the involved officer and the Department as a whole.

The Department agrees with this recommendation and has revised the Police Policy Manual to address its expectations for wearing body-worn cameras in conjunction with other articles of clothing so that it is able to successfully capture events.

RECOMMENDATION SEVEN: The Department should assign two investigators to key interviews in its internal affairs cases, and at a minimum should ensure such staffing for the interview of the subject employee.

The Department agrees with this recommendation and has revised its administrative procedures to ensure that two investigators be assigned to key interviews. Although it was not the case for all interviews related to the reviewed investigation, the Department’s typical practice has always been to assign two investigators to such interviews.

RECOMMENDATION EIGHT: PAPD should revise its force review protocols to instruct supervisors that when an initial attempt at a subject interview is not productive as a result of an observed physical or mental condition, the reviewer should attempt to re-interview the subject at a later, more favorable time, or document why such an attempt was not made.

The Department agrees with this recommendation and has revised the Police Policy Manual to ensure investigators attempt to re-interview a subject if the initial attempt to interview is not productive or document why such an attempt was not made.

RECOMMENDATION NINE: PAPD should develop protocols to ensure that body-worn camera evidence of any reportable force be reviewed by the supervisor assigned the force review close in time to the date of the incident.

The Department agrees with this recommendation and has revised the Police Policy Manual to ensure body-worn camera evidence of any reportable force as part of a force review is reviewed by a supervisor or manager close in a timely manner.

RECOMMENDATION TEN: PAPD should ensure that in force cases for which there is a seeming discrepancy in the evidence (as in gaps between officer versions, or between reports and body-worn camera footage), the review is elevated to a formal internal affairs investigation.

The Department agrees with this recommendation. In the reviewed investigation, the Department did not find any apparent discrepancy and the video evidence was comprehensive, so no further investigation was deemed necessary.

RECOMMENDATION ELEVEN: PAPD should revise its protocols to ensure that PAPD personnel assigned to administrative investigations attempt to interview all civilian victims and witnesses, even when they are represented by counsel.

The Department agrees with this recommendation and has revised its administrative procedures to ensure that administrative investigators attempt to interview civilian victims and witnesses, even when represented by counsel and if no interview occurs, provide an explanation as to why.

33.a
Packet Pg. 828
3 | P a g e

RECOMMENDATION TWELVE: PAPD should advise those assigned to conduct internal investigations that witness officers to any force incident should be interviewed, if possible, even if they are employed by another police agency.

The Department agrees that in situations in which a force incident occurs relevant witness officers should be interviewed when feasible but recognizes that, in some cases, comprehensive video evidence may obviate the need to interview all officers present.

RECOMMENDATION THIRTEEN: During internal investigations into uses of force, PAPD should retrieve and review any body-worn cameras of other agency witness officers.

The Department agrees that as part of an administrative force investigation, supervisors should attempt to obtain and review body-worn camera footage of non-PAPD witness officers and has revised the Police Policy Manual.

RECOMMENDATION FOURTEEN: Per its stated intent, PAPD should modify its policy requiring officers to contact residents of yards prior to searching, ensuring that specific questions are asked about potential individuals in the back yard, the Department’s intent to deploy a K-9, an advisement to residents to stay inside during the search, and a follow up contact when the search has been completed.

The Department agrees that, when time and circumstances allow, officers should contact residents of yards prior to searching, ensuring that specific questions are asked about potential individuals in the back yard, the Department’s intent to deploy a K-9, an advisement to residents to stay inside during the search, and a follow up contact when the search has been completed and has revised the Police Policy Manual to reflect this.

RECOMMENDATION FIFTEEN: The K-9 handler and PAPD cover officer should be counseled on the importance of identifying themselves as police officers during any attempts at apprehension.

The Department agrees with this recommendation and has revised the Police Policy Manual to expressly reflect the Department’s existing expectation for officers to identify themselves prior to the use of force.

RECOMMENDATION SIXTEEN: PAPD should revise policy to ensure that any post-incident interview of a person subjected to a K-9 deployment be handled by a supervisor.

Department policy already provides that any post-incident administrative interview of a person subjected to a K-9 deployment be handled by a supervisor. Consistent with best practices, the Department will continue to allow the investigating officer to conduct post-incident interviews of a person subjected to a K-9 deployment in a professional manner unless circumstances provide that such interview is best handled by a supervisor.

RECOMMENDATION SEVENTEEN: PAPD should advise all members of the K-9 program (including the involved officer in this incident) that even when formal announcements are not practicable, officers should provide a modified warning so that the subject and other potential uninvolved individuals are advised of the impending intent to deploy the police dog.

The Department agrees that when formal announcements are not practical, officers should provide a modified warning of the impending intent to deploy the police dog once circumstances make it feasible to do so. This has been addressed in the Police Policy Manual.

RECOMMENDATION EIGHTEEN: PAPD should follow through where possible on obtaining relevant photographs of injuries and medical records in force cases resulting in hospital visits.

33.a
Packet Pg. 829
4 | P a g e

The Department agrees with this recommendation and has revised the Police Policy Manual to ensure that officers should follow through where possible on obtaining relevant photographs of injuries and attempt to obtain medical records in force cases resulting in hospital visits.

RECOMMENDATION NINETEEN: PAPD supervisors should refrain from going beyond the involved officer’s own claims in justifying force through the listing of possible threat-based rationales.

The Department agrees with this recommendation and has revised is administrative procedures to reflect the refrain of supervisory actions beyond the officer’s own claims in justifying force.

33.a
Packet Pg. 830
Schedule of Meetings
Published June 9, 2022
This is a courtesy notice only. Meeting dates, times, and locations are subject to change. Almost all Palo Alto Council and some Standing C ommittee meetings are cablecast live on Channel 26. If there happens to be concurrent meetings, one meeting will be broadcast on Channel 29.

Persons with disabilities who require auxiliary aids or services in using City facilities or programs, or who would like information on the City’ s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact: ADA Coordinator, City of Palo Alto, 650-329-2550 (voice) or 329-1199 (TDD), [email protected]. Listening assistive devices are available in th e Council Chambers. S ign language interpreters will be provided upon request with 72 hours advance notice. Please advise the City Clerk's Office (650-329-2571) of meetings or changes by 3:00 p.m. on Wednesdays for inclusion in the following week’s schedule. 6/9/2022
Meetings are held in-person and by virtual teleconference.

THURSDAY, June 9
Human Relations Commission, 6:00 p.m.

MONDAY, June 13
Sp. Architectural Review Board Meeting, 9:30 a.m.

Sp. City Council Meeting, 5:00 p.m.

TUESDAY, June 14
Sustainability and Climate Action Plan Ad Hoc Committee Meeting, 8:30 a.m.

Policy & Services Committee Meeting, 7:00 p.m.

WEDNESDAY, June 15
City Council Rail Committee Meeting, 1:00 p.m.

THURSDAY, June 16
Architectural Review Board Meeting, 8:30 a.m.

City/School Liaison Committee Meeting, 8:30 a.m.

Public Art Commission Meeting, 7:00 p.m.

MONDAY, June 20
Sp. City Council Meeting, 3:00 p.m.

TUESDAY, June 21
Sp. City Council Meeting, 3:00 p.m.

TUESDAY, June 28
Parks and Recreation Commission, 7:00 p.m.

WEDNESDAY, June 29
Planning & Transportation Commission Meeting, 6:00 p.m.

THURSDAY, July 7
Architectural Review Board Meeting, 8:30 a.m.

WEDNESDAY, July 13
Planning & Transportation Commission Meeting, 6:00 p.m.

THURSDAY, July 14
Historic Resources Board Meeting, 8:30 a.m.

Human Relations Commission Meeting, 6:00 p.m.

a
Packet Pg. 831
(ID # 14528)City of Palo Alto
City Council
Supplemental Report
Meeting Date: 6/20/2022 Report Type: Consent Calendar
City of Palo Alto Page 1
Title: Approval of a Contract with EPI -USE Labs, LLC to Host Online the City's SAP ERP System and Provide Related Services in an Amount Not to Exceed $2,214,140 (including of $2,014,140 for Basic Services and a Contingency of $200,000 for Additional Servic es Approved by City via Task Order) over a Three-and-a-Half-Year Term
From: City Manager
Lead Department: City Clerk
The contract for this item was not included in the original production of the packet and is produced as part of a late packet distribution.

Attachments:
• Attachmenta: C22182051 EPI-USE AWS & SAP Basis Support Svcs Packet Pg. 833
6 Supplement
City
of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

CITY OF PALO ALTO CONTRACT NO. C22182051

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND EPI-USE LABS, LLC
This Agreement for Professional Services (this “Agreement”) is entered into as of the 21st day of June, 2022 (the “Effective Date”) , by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and EPI -USE LABS, LLC , a Wyoming limited liability company , located at 2002 Summit Boulevard, #825, Atlanta, GA, 30319 (“CONSULTANT”).

The following recitals are a substantive portion of this Agreement and are fully incorporated herein by this reference:

RECITALS
A. CITY intends to obtain information technology support to the City’s AWS Cloud and SAP Basis Services (the “Project”) and desires to engage a consultant to provide information technology professional services, cloud computing hosting and support services, and as -needed SAP application technical / functional support services in connection with the Project ( the “Services”, as detailed more fully in Exhibit A).

B. CONSULTANT represents that it, its employees and subconsultants, if any, possess the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services.

C. CITY, in reliance on these representations, desires to engage CONSULTANT to provide the Services as more fully described in Exhibit A, entitled “SCOPE OF SERVICES”.

NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this Agreement, the parties agree as follows:

SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described in Exhibit A in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY.

SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through December 31, 2025, unless terminated earlier pursuant to Section 19 (Termination) of this Agreement. The parties may agree to extend the term of this Agreement via written amendment pursuant to Section 29.4 herein.

SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit B, entitled “SCHEDULE OF PERFORMANCE”. Any Services for which times for performance are not specified in this Agreement shall be commenced and complete d by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 834
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT.

SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Two Million Fourteen Thousand One Hundred Forty Dollars ($2,014,140.00). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY.

Optional Additional Services Provision (This provision applies only if checked and a not-to-exceed compensation amount for Additional Services is allocated below under this Section 4.)
In addition to the not-to-exceed compensation specified above, CITY has set aside the not- to-exceed compensation amount of Two Hundred Thousand Dollars ($200,000.00) for the performance of Additional Services ( as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C , shall not exceed Two Million Two Hundred Fourteen Thousand One Hundred Forty Dollars ($2,214,140.00), as detailed in Exhibit C. “Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A . CITY may elect to, but is not re quired to, authorize Additional Services up to the maximum amount of compensation set forth for Additional S ervices in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this Section . Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum.

To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Section 4 .

CONSULTANT shall only be compensated for Additional Services performed under an authorized Task Order and only up to the maximum amount of compensation set forth for Additional Services in this Section 4 . Performance of and payment for any Additional Services are subject to all requirements and restrictions in this Agreement.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 835
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the Services performed and the applicable charges (including, if applicable, an identification of personnel who performed the Services, hours worked, hourly rates, and reimbursable expenses), based upon Exhibit C or, as applicable, CONSULTANT’s schedule of rates set forth in Exhibit C-1. If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT’s invoices shall be subject to verification by CITY. CONSULTANT shall send all invoices to CITY’s Project Manager at the address specified in Section 1 3 (Project Management) below. CITY will generally process and pay invoices within thirty (30) days of receipt of an acceptable invoice.

SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All Services shall be performed by CONSULTANT or under CONSULTANT’s superv ision. CONSULTANT represents that it, its employees and subcontractors, if any, possess the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subcontractors, if any, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All Services to be furnished by CONSULTANT under this Agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances.

SECTION 7. COMPLIANCE WITH LAWS . CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement, as amended from time to time . CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services.

SECTION 8. ERRORS/OMISSIONS. CONSULTANT is solely responsible for costs, including, but not limited to, increases in the cost of Services, arising from or caused by CONSULTANT’s errors and omissions, including, but not limited to, the costs of corrections such errors and omissions, any change or der markup costs, or costs arising from delay caused by the errors and omissions or unreasonable delay in correcting the errors and omissions.

Notwithstanding the above, nothing in this Section 8 shall be construed to require CONSULTANT to be responsible f or an error/omission arising from the gross negligence, active negligence or willful misconduct of the CITY, its officers, employees, agents or contractors, that is not contributed to by any act of, or by any omission to perform a duty imposed by law or agreement by CONSULTANT, its officers, employees, agents or contractors under this Agreement.

SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs a t each phase of design submittal. If the total estimated construction cost at any submittal exceeds the CITY’s stated construction budget by ten percent (10%) or more , CONSULTANT shall make recommendations to CITY for aligning the P roject design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 836
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

SECTION 10. INDEPENDENT CONTRACTOR. CONSULTANT acknowledges and agrees that CONSULTANT and any agent or employee of CONSULTANT will act as and shall be deemed at all times to be an independent contractor and shall be wholly responsible for the manner in which CONSULTANT performs the S ervices requested by CITY under this Agreement.

CONSULTANT and any agent or employee of CONSULTANT will not have employee status with CITY, nor be entitled to participate in any plans, arrangements, or distributions by CITY pertaining to or in connection with any retirement, health or other benefits that CITY may offer its employees. CONSULTANT wi ll be responsible for all obligations and payments, whether imposed by federal, state or local law, including, but not limited to, FICA, income tax withholdings, workers’ compensation, unemployment compensation, insurance, and other similar responsibilities related to CONSULTANT’s performance of the S ervices, or any agent or employee of CONSULTANT providing same. Nothing in this Agreement shall be construed as creating an employment or agency relationship between CITY and CONSULTANT or any agent or employee of CONSULTANT. Any terms in this Agreement referring to direction from CITY shall be construed as providing for direction as to policy and the result of CONSULTANT ’s provision of the Services only, and not as to the means by which such a result is obtained.

SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT’s obligations hereunder without the prior written approval of the City Manager. Any purported assignment made without the prior written approval of the City Manager will be void and without effect. Subject to the foregoing, the covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, succes sors, executors, administrators and assignees of the parties.

SECTION 12. SUBCONTRACTING.

Option B: Subcontracts Authorized: Notwithstanding Section 11 (Assignment) above, CITY agrees that subcontractors may be used to complete the Services. The subcon tractors authorized by CITY to perform work on this Project are:

Peloton Group LLC
Amazon Web Services, Inc. (“AWS”)
CONSULTANT shall be responsible for directing the work of any subcontractors and for an y compensation due to subcontractors . CITY assumes no responsibility whatsoever concerning compensation of subcontractors . CONSULTANT shall be fully responsible to CITY for all acts and omissions of subcontractors . CONSULTANT shall change or add subcontractors only with the prior written approval of the City Manager or designee.

SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Lyall Hinton , Account Manager, as the CONSULTANT’s Project Manager to have supervisory responsibility for the performance, progress, and execution of the Services and represent CONSULTANT during the day- to-day performance of the Services. If circumstances cause the substitution of the CONSULTANT’s P roject Manager or any other of CONSULTANT’s key personnel for any reason, the appointment of a substitute P roject Manager and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s Project Manager.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 837
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

CONSULTANT, at CITY’s request, shall promptly remove CONSULTANT personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Services or a threat to the safety of persons or property.

CITY’s Project Manager is Jitendra Kulkarni, Information Technology Department, 250 Hamilton Avenue, Palo Alto, CA ,94301, Telephone: (650) 329-2466. CITY’s Project Manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate Project Manager from time to time.

Day-to-day communications by CITY regarding the implementation of the Scope of Services (Exhibit A), including for example and without limitation communications relating to acceptance, escalation or other day-to-day implementation issues, shall be given either in writing or via e-mail to the Key Contact s listed in the Scope of Services (Exhibit A). Notwithstanding the foregoing, any legal notices, including for example and without limitation, notice of alleged breach, suspension and termination, shall be made pursuant to Section 20 (Notices) of this Agreement.

SECTION 14. INTELLECTUAL PROPERTY; DATA. All work product, including without limitation, all writings, drawings, studies, sketches, photographs, plans, reports, specifications, computations, models, recordings, data, calculations, documents, and other materials and copyright interests developed under this Agreement , in any form at or media, as unique to t his engagement with CITY, shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the Scope of Services.

14.1 Intellectual Property Rights in the Consultant Products . The parties understand and agree that pursuant to this Agreement, CONSULTANT will provide online hosting and management for the CITY’s enterprise resource planning (ERP) software system (“ERP system”) which is licensed to the CITY pursuant to separate contract(s) between CITY and the provider(s) of the ERP system and any constituent components thereof. Pursuant to this Agreement, CONSULTANT will host and manage the CITY’s ERP system on CITY’s behalf on Amazon Web Services (“AWS”) utilizing AWS’s platform-as-a- service (“PAAS”) and infrastructure-as-a-service (“IAAS”) capabilities to provide the Services to the CITY and its Authorized Users (defined below) as detailed in this Agreement. In providing the Services to the CITY under this Agreement, CONSULTANT and/or its third-party licensor(s), as applicable, shall retain all right, title, and interest in and to any Consultant Products (as defined below) utilized in providing the Services. CITY acknowledges that any Consultant Products provided pursuant to this Agreement whether separately or included in any deliverable and/or work product, are the exclusive property of CONSULTANT (or its third-party licensor) and remain so notwithstanding the license granted to CITY in the paragraph below. The Consultant Products are the confidential and proprietary information of CONSULTANT or such third-party licensor, and the products also may be protected by the copyright, patent, trade secret and/or intellectual property laws of the United States, United Kingdom and other countries. For purposes of this Agreement, Consultant Product shall mean, CONSULTANT’S (or a third-party’s licensed to CONSULTANT) proprietary software, software products, and any other inventions, intellectual property, know -how, proprietary data and materials supplied by CONSULTANT to CITY under this Agreement (whether as part of the Services, a deliverable, work product or otherwise) including, without limitation any Consultant Product so designated in the Scope of Services and the products marketed under the CONSULTANT brand, including but not limited to: Data Sync Manager DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 838
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

(DSM), DSM Client Sync (CS), DSM Object Sync (OS), DSM Data Secure (DS), DSM System Builder (SB), Variance Monitor (VM), Query Manager (QM), Advanced Time Process Manager (ATPM), and Unified Platform, as well as the AWS PAAS and IAAS utilized in the provision of Services under this Agreement, plus any enhancements or modifications made at any time to any of the above.

14.2 Grant of Right to Use the Consultant Products. Subject to the terms of this Agreement, CONSULTANT hereby grants to CITY a non-exclusive, non-assignable license to access and use the Consultant Products for the term of this Agreement as contemplated herein.

The license granted to CITY hereunder includes the right to provide to the CITY’s Authorized Users access to and use of the Consultant Products in accordance with this A greement. “Authorized User” means a person authorized by CITY to access and use the ERP system and/or Consultant Products, including any CITY employee, contractor, consultant, or agent, or any other individual or entity authorized by CITY. If the Consultant Products provided pursuant to this Agreement consist of, or includes, public-facing functionalities, the license granted hereunder also extends to public users to access and use the public -facing functionalities of the Consultant Products. CONSULTANT warrants that it has the right to provide the foregoing license to access and use the Consultant Products pursuant to this Agreement, that CONSULTANT has obtained any and all necessary permissions from third parties to provide the Consultant Products, and that access to and use of the Consultant Products by CITY and its Authorized Users in accordance with the terms of this Agreement shall not infringe the copyright of any third party.

14.3 Restrictions on Use of Consultant Products.

14.3.1 Title to the Consultant Products . CITY acknowledges that title to the Consultant Products shall at all times remain with CONSULTANT and/or its third-party licensors, and that CITY has no rights in the Consultant Products except those expressly granted under this Agreement.

14.3.2 Proprietary Markings. CITY agrees not to remove, obscure or modify any copyright or other proprietary markings or legends placed upon or contained within the Consultant Products or included in or on the materials, if any, produced by the Consultant Products.

14.3.3 Unauthorized Use . CITY agrees not to knowingly permit anyone other than Authorized Users to access or use the Consultant Products.

14.3.4 Proprietary Information . CITY acknowledges that the Consultant Products are proprietary and confidential in nature to CONSULTANT and/or its third- party licensors. CITY will use commercially reasonable efforts to prevent unauthorized access to and use of the Consultant Products.

14.4 Ownership of Data; Grant of License to City Data . The parties acknowledge and agree that CITY owns the City data, content, documents, materials and other information, in any format or media, collected, stored, imported or inputted into, or gathered by, the ERP system and/or Consultant Products, including without limitation data from third parties (“City Data”); that the CITY has a right to control, access and retrieve City Data at any time during the term of the Agreement, in computer- readable format. The CITY hereby grants to DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 839
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

CONSULTANT and its subcontractors, if any, the limited, non-exclusive, non- transferable, revocable rights to access and use City Data during the term of this Agreement solely for the purposes of performing CONSULTANT’s obligations to CITY hereunder and supporting CITY’s use of the ERP system and/or Consultant Products hereunder, as well as to generate aggregated, system-wide collations of industry and business data in a non- attributed, non-identifiable manner for product improvement and product creation that does not identify CITY or detail of its particular data, and as is otherwise expressly permitted under this Agreement. This Agreement does not grant CONSULTANT or its subcontractors, if any, any intellectual property license or rights in or to the City Data except those expressly granted herein. Upon termination or expira tion, if CITY will leave the ERP system and/or Consultant Products, CONSULTANT and CITY shall work together to provide CITY with a copy of City Data in mutually-agreed computer-readable format(s). CITY shall have the option to choose from one of several methods to obtain a copy of City Data. Once such data has been provided to CITY, CONSULTANT shall use, or cause to be used, industry - standard secure means of destruction or erasure of any City Data remaining in its possession and, at the CITY’s request, certify the same.

14.5. Data Security. CONSULTANT will maintain, or cause to be maintained, a data security program for the ERP system that will include reasonable administrative, physical, technical, organizational and other security measures to protect a gainst unauthorized access to, or destruction, loss, unavailability or alteration of, any City D ata accessed by CONSULTANT and its subcontractors, if any, in the performance of this Agreement including without limitation City Data processed or stored by the ERP system and/or Consultant Products.

Contractor will provide security for its networks and all internet connections consistent with industry best practices, and will promptly install all patches, fixes, upgrades, updates and new versions of any security software it employs. City Data will be encrypted at rest and in transit with controlled access.

14.6. Backup and Recovery of City Data. As a part of the Services, CONSULTANT is responsible for maintaining a backup of City Data and for an orderly and timely recovery of such data in the event of data corruption or interruption of the Services. Unless otherwise described in Exhibit A (Scope of Services), CONSULTANT will maintain a contemporaneous backup of City Data that can be recovered within the requirements in this Agreement and as outlined in the service level obligations detailed in Exhibit A (Scope of Services) and maintain the security of City Data as further described herein. C ONSULTANT’S backup of City Data will not be considered in calculating storage used by City.

14.7. Notification of Legal Requests. CONSULTANT will immediately notify City upon receipt of any subpoenas, service of process, litigation holds, discovery requests and other legal requests (“Legal Requests”) related to City’s Data under this Agreement, or which in any way might reasonably require access to City’s Data, and in no event later than 24 hours after it receives the request. CONSULTANT will not respond to Legal Requests related to City without first notifying City other than to notify the requestor that the information sought is potentially covered under a non-disclosure agreement. CONSULTANT will retain and preserve City Data in accordance with the City’s instruction and requests, including, without limitation, any retention schedules and/or litigation hold orders provided by the City to C ONSULTANT, independent of where the City Data is stored.

SECTION 15. AUDITS . CONSULTANT agrees to permit CITY and its authorized DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 840
6 Supplement6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

representatives to audit, at any reasonable time during the term of this Agreement and for four (4) years from the date of final payment, CONSULTANT’s records pertaining to matters covered by this Agreement, including without limitation records demonstrating compliance with the requirements of Section 10 (Independent Contractor). CONSULTANT further agrees to maintain and retain accurate books and records in accordance with generally accepted accounting principles for at least four (4 ) years after the expiration or earlier termination of this Agreement or the completion of any audit hereunder, whichever is later . For the avoidance of doubt, any such auditing shall be done at CITY’s own cost and upon reasonable notice to CONSULTANT.

SECTION 16. INDEMNITY.

16.1. To the fullest extent permitted by law, CONSULTANT shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorney’s fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 1 6.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from a Claim arising from the gross negligence, active negligence or willful misconduct of an Indemnified Party that is not contributed to by any act of, or by any omission to perform a duty imposed by law or agreement by CONSULTANT, its officers, employees, agents or contractors under this Agreement. 1 6.3. The acceptance of CONSULTANT’s Services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement.

SECTION 16.A. LIMITATION OF LIABILITY.

16.A .1. LIMITATION OF LIABILITY OF CONSULTANT.

NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT

SHALL CONSULTANT BE LIABLE TO CITY, REGARDLESS OF WHETHER ANY CLAIM

IS BASED ON CONTRACT OR TORT, FOR SPECIAL, CONSEQUENTIAL, INDIRECT OR

INCIDENTAL DAMAGES OR FOR ANY LOSS OF PROFIT OR L OSS OF BUSINESS BY

CITY, EVEN IF CONSULTANT HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH POTENTIAL CLAIM, LOSS OR DAMAGE. EXCEPT AS PROVIDED IN THE

IMMEDIATELY FOLLOWING SENTENCE, IN NO EVENT SHALL THE TOTAL

AGGREGATE LIABILITY UNDER THIS AGREEMENT OF CONSULTANT TO CITY EXCEED ONE THIRD THE DOLLAR AMOUNT PROVIDED FOR IN SECTION 4 (“NOT TO EXCEED COMPENSATION”) OF THIS AGREEMENT FOR EACH ANNUAL TERM OF THE AGREEMENT. CONSULTANT'S LIABILITY LIMIT SET FORTH HEREIN SHALL NOT APPLY TO (1) DAMAGES CAUSED BY CONSULTANT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, (2) CONSULTANT'S OBLIGATIONS TO INDEMNIFY AND DEFEND CITY PURSUANT TO SECTION 16 (“ INDEMNIFICATION”) OF THIS AGREEMENT, (3) LIMIT CLAIMS OR GENERAL DAMAGES THAT FALL WITHIN THE DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 841
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

INSURANCE COVERAGE OF THIS AGREEMENT, (4) STATUTORY DAMAGES, AND (5) WRONGFUL DEATH CAUSED BY CONSULTANT.

16.A .2. LIMITATION OF LIABILITY OF CITY. CITY’S PAYMENT

OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE PAYMENT OF THE COMPENSATION PROVIDED FOR IN SECTION 4 (“NOT TO EXCEED COMPENSATION”) OF THIS AGREEMENT. NOTWITHSTANDING ANY OTHER

PROVISION OF THIS AGREEMENT, IN NO EVENT SHALL CITY BE LIABLE,

REGARDLESS OF WHETHER ANY CLAIM IS BASED ON CONTRACT OR TORT, FOR

ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMA GES,

INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, ARISING OUT OF OR IN

CONNECTION WITH THIS AGREEMENT OR THE SERVICES PERFORMED IN CONNECTION WITH THIS AGREEMENT. CITY’S LIABILITY LIMIT SET FORTH HEREIN SHALL NOT APPLY TO (1) DAMAGES CAUSED BY CITY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

SECTION 16.B. WARRANTY LIMITATIONS . CONSULTANT shall not be liable for any system errors, incorrect results or any other damage or malfunction to the extent caused by functionality created by CITY, its employees, its CITY consultants, or its CITY contractors using Consultant Products, nor shall CONSULTANT and CONSULTANT employees and contractors trouble-shoot or repair such non-authorized CITY-created functionality cost-free. In no case shall CITY’s use of any customization option made available by CONSULTANT within its Consultant Products (for example and without limitation a define -your-own ticket type or ticket description within CONSULTANT’s Client Central Consultant Product) be deemed a non- authorized CITY- created functionality for purposes of any warranty limitation provided in this Section 16.B.

Troubleshooting of any non-authorized CITY-created functionality shall be excluded from any existing standard service level agreement between the parties and shall be performed upon execution and approval of a Task Order pursuant to Section 4 (Not to Exceed Compensation) or a written amendment to this Agreement pursuant to Section 29.4 herein, at the same hourly rate (or agreed fixed rate) for services as stated in this Agreement. All Services, deliverables and/or work products will conform materially to the requirements and specifications for such Services, deliverables and/or work products as set forth in this Agreement and any applicable Task Order or amendment hereto. All Services, deliverables and/or work products will be provided in a professional and workmanlike manner in accordance with Section 6 (Qualifications/Standard of Care) of this Agreement.

SECTION 17. WAIVERS. No waiver of a condition or nonperformance of an obligation under this Agreement is effective unless it is in writing in accordance with Section 29.4 of this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance. Any waiver granted shall apply solely to the specific instance expressly stated. No single or parti al exercise of any right or remedy will preclude any other or further exercise of any right or remedy.

SECTION 18. INSURANCE.

18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit D, entitled “INSURANCE REQUIREMENTS”. CONSULTANT and its contractors, if any, shall DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 842
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies.

18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best’s Key Rating Guide ratings of A- :VII or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above.

18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days ’ prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT , CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSUL TANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement.

18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT ’s liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the fu ll and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired.

SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.

19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving sixty (60) days prior written notice thereof to CONSULTANT. If CONSULTANT fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided under this Agreement or at law, the City Manager may terminate this Agreement sooner upon written notice of termination. Upon receipt of any notice of suspension or termination , CONSULTANT will discontinue its performance of the Services on the effective date in the notice of suspension or termination.

19.2. In event of suspension or termination, CONSULTANT will deliver to the City Manager on or before the effective date in the notice of suspension or termination, any and all work product, as detailed in Section 14 (Intellectual Property; Data), whether or not completed, prepared by CONSULTANT or its contractors, if any, in the performance of this Agreement. Such work product is the property of CITY, as detailed in Section 14 (Intellectual Property; Data).

19.3. In event of suspension or termination, CONSULTANT will be paid for the Services rendered and work products delivered to CITY in accordance with the Scope of Services DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 843
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

up to the effective date in the notice of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT’s S ervices provided in material conformity with this Agreement as such determination is made by the City Manager acting in the reasonable exercise of his/her discretion . The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 17, 19.2, 19.3, 19.4, 20, 25, 27, 28, 29 and 30.

19.4. No payment, partial payment, acceptance, or partial acceptance by CITY will operate as a waiver on the part of CITY of any of its rights under this Agreement, unless made in accordance with Section 17 (Waivers).

SECTION 20. NOTICES.

A ll notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows:

To CITY: Office of the City Clerk
City of Palo Alto
Post Office Box 10250
Palo Alto, CA 94303
W ith a copy to the Purchasing Manager
To CONSULTANT: Attention of the P roject Manager at the address of CONSULTANT recited on the first page of this Agreement.

CONS ULTANT shall provide written notice to CITY of any change of address.

SECTION 21. CONFLICT OF INTEREST.

21.1. In executing this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services.

21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subcontractors or other persons or parties having such an interest.

CONSULTANT certifies that no person who has or will have an y financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California, as amended from time to time. CONSULTANT agrees to notify CITY if any conflict arises.

21.3. If the CONSULTANT meets the definition of a “Consultant” as defined by the Regulations of the Fair Political Practices Commission, CONSULTANT will file the appropriate financia l disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act of 1974, as amended from time to time.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 844
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

SECTION 22. NONDISCRIMINATION; COMPLIANCE WITH ADA.

22.1. As set forth in Palo Alto Municipal Code S ection 2.30.510, as amended from time to time, CONSULTANT certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person due to that person’s race, skin color, gender, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, pregnancy, genetic information or condition, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section

2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment.

22.2. CONSULTANT understands and agrees that pursuant to the Americans Disabilities Act (“ADA”), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor or subcontractor, are required to be accessible to the disabled public. CONSULTANT will provide the Services specified in this Agreement in a manner that complies with the ADA and any other applicable federal, state and local disability rights laws and regulations, as amended from time to time. CONSULTANT will not discriminate against persons with disabilities in the provision of services, benefits or activities provided under this Agreement.

SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with t he CITY’s Environmentally Preferred Purchasing policies which are available at CITY ’s Purchasing Department , hereby incorporated by reference and as amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include, first, minimizing and reducing waste; second, reusing waste ; and, third, recycling or composting waste. In particular, C ONSULTANT shall comply with the following Zero Waste requirements:
(a) All printed materials provided by CONSULTANT to C ITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post-consumer material and printed with vegetable-based inks. (b) Goods purchased by C ONSULTANT on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Department’s office.
(c) Reusable/returnable pallets shall be taken back by CONSULTANT , at no additional cost to CITY, for reuse or recycling. CONSULTANT shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed.

SECTION 24. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE.

CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week w ithin the geographic boundaries of the City, CONSULTANT shall pay such DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 845
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

employees no less than the minimum wage set forth in Palo Alto Municipal Code Section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code Section 4.62.060.

SECTION 25. NON-APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code , as amended from time to time. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement are no longer availab le. This Section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement.

SECTION 2 6. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS.

T his Project is not subject to prevailing wages and related requirements.

CONSULTANT is not required to pay prevailing wages and meet related requirements under the California Labor Code and California Code of Regulations in the performance and implementation of the Project if the contract:
(1) is not a public works contract;
(2) is for a public works construction project of $25,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j); or (3) is for a public works alteration, demolition, repair, or maintenance project of $15,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j).

SECTION 27. CLAIMS PROCEDURE FOR “9204 PUBLIC WORKS PROJECTS” . For purposes of this Section 27, a “9204 Public Works Project” means the erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind. ( Cal. Pub. Cont. Code § 9204.) Per California Public Contract Code Section 9204, for Public Works Projects , certain claims procedures shall apply, as set forth in Exhibit F, entitled “Claims for Public Contract Code Section 9204 Public Works Projects”.

T his Project is not a 9204 Public Works Project.

SECTION 28. CONFIDENTIAL INFORMATION.

28.1. In the performance of this Agreement, CONSULTANT may have access to CITY’s Confidential Information (defined below). CONSULTANT will hold Confidential Information in strict confidence, not disclose it to any third party, and will use it only for the performance of its obligations to CITY under this Agreement and for no other purpose.

CONSULTANT will maintain reasonable and appropriate administrative, technical and physical safeguards to ensure the security, confidentiality and integrity of the Confidential Information.

Notwithstanding the foregoing, CONSULTANT may disclose Confidential Information to its employees, agents and subcontractors, if any, to the extent they have a need to know in order to perform CONSULTANT’s obligations to CITY under this Agreeme nt and for no other purpose, DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 846
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

provided that the CONSULTANT informs them of, and requires them to follow, the confidentiality and security obligations of this Agreement.

28.2. “Confidential Information” means all data, information (including without limitation “Personal Information” about a California resident as defined in Civil Code S ection 1798 et seq., as amended from time to time) and materials, in any form or media, tangible or intangible, provided or otherwise made available to CONSULTANT by CITY, directly or indirectly, pursuant to this Agreement. Confidential Information excludes information that CONSULTANT can show by appropriate documentation: (i) was publicly known at the time it was provided or has subsequently become publicly known other than by a breach of this Agreement; (ii) was rightfully in CONSULTANT’s possession free of any obligation o f confidence prior to receipt of Confidential Information; (iii) is rightfully obtained by CONSULTANT from a third party without breach of any confidentiality obligation; (iv) is independently developed by employees of CONSULTANT without any use of or acce ss to the Confidential Information; or (v) CONSULTANT has written consent to disclose signed by an authorized representative of CITY.

28.3. Notwithstanding the foregoing, CONSULTANT may disclose Confidential Information to the extent required by order o f a court of competent jurisdiction or governmental body, provided that CONSULTANT will notify CITY in writing of such order immediately upon receipt and prior to any such disclosure (unless CONSULTANT is prohibited by law from doing so), to give CITY an opportunity to oppose or otherwise respond to such order.

28.4. CONSULTANT will notify City promptly upon learning of any breach in the security of its systems or unauthorized disclosure of, or access to, Confidential Information in its possession or cont rol, and if such Confidential Information consists of Personal Information, CONSULTANT will provide information to CITY sufficient to meet the notice requirements of Civil Code Section 1798 et seq., as applicable, as amended from time to time.

28.5. Prior to or upon termination or expiration of this Agreement, CONSULTANT will honor any request from the CITY to return or securely destroy all copies of Confidential Information. All Confidential Information is and will remain the property of the CITY and nothing contained in this Agreement grants or confers any rights to such Confidential Information on CONSULTANT.

28.6. If selected in Section 30 (Exhibits), this Agreement is also subject to the terms and conditions of the Information Privacy Policy and Cybersecurity Terms and Conditions.

SECTION 29. MISCELLANEOUS PROVISIONS.

29.1. This Agreement will be governed by California law, without regard to its conflict of law provisions.

29.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California.

29.3. The prevailing party in any action brought to enforce the provisions of this DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 847
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Agreement may recover its reasonable costs and attorneys’ fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties.

29.4. This Agreement, including all exhibits, constitutes the entire and integrated agreement between the parties with respect to the subject matter of this Agreement, and supersedes all prior agreements, negotiations, representations, statements and undertakings , either oral or written. This Agreement may be amended only by a written instrument, which is signed by the authorized representatives of the parties and approved as required under Palo Alto Munic ipal Code, as amended from time to time.

29.5. If a court of competent jurisdiction finds or rules that any provision of this Agreement is void or unenforceable, the unaffected provisions of this Agreement will remain in full force and effect.

29.6. In t he event of a conflict between the terms of this Agreement and the exhibits hereto (per Section 30 ) or CONSULTANT’s proposal (if any), the Agreement shall control. In the event of a conflict between the exhibits hereto and CONSULTANT’s proposal (if any), the exhibits shall control.
2 9.7. The provisions of all checked boxes in this Agreement shall apply to this Agreement; the provisions of any unchecked boxes shall not apply to this Agreement.

29.8. All section headings contained in this Agreement are for convenience and reference only and are not intended to define or limit the scope of any provision of this Agreement.

29.9. This Agreement may be signed in multiple counterparts, which, when executed by the authorized representatives of the parties, shall together constitute a single binding agreement.

SECTION 30. EXHIBITS. Each of the following exhibits, if the check box for such exhibit is selected below, is hereby attached and incorporated into this Agreement by reference as though fully set forth herein:

EXHIBIT A: SCOPE OF SERVICES
EXHIBIT A-1 PROFESSIONAL SERVICES TASK ORDER
EXHIBIT B: SCHEDULE OF PERFORMANCE
EXHIBIT C: COMPENSATION
EXHIBIT C-1: SCHEDULE OF RATES
EXHIBIT D: INSURANCE REQUIREMENTS
EXHIBIT E: INFORMATION PRIVACY POLICY
EXHIBIT F: CYBERSECURITY TERMS AND CONDITIONS
EXHIBIT G: ADDENDUM – SUPPLEMENTAL TERMS – AWS SOLUTION

PROVIDER PROGRAM FOR END CUSTOMERS

THIS AGREEMENT IS NOT COMPLETE UNLESS ALL SELECTED EXHIBITS ARE ATTACHED.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 848
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

CONTRACT No. C22182051 SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement as of the date first above written.

CITY OF PALO ALTO
____________________________
City Manager
APPROVED AS TO FORM:
__________________________
City Attorney or designee

EPI-USE LABS, LLC
Officer 1
By:

Name:

Title:

Officer 2 (Required for Corp. or LLC)
By:

Name:

Title:

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 Kevin Mukheibir
Global Managed Services Lead
Lyall HintonLyall Hinton
VP Services, AmericasVP Services, Americas
a
Packet Pg. 849
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT A

SCOPE OF SERVICES
The CONSULTANT will provide Hosting Services in AWS Cloud and SAP Basis Support Services for the City’s ERP system, including the Services detailed below in this Exhibit A, entitled “SCOPE OF SERVICES.”
SCOPE OF SERVICES – OVERVIEW
This scope of services overview summarizes at a high level the Services to be provided, broken out into Tasks 1-5, which carry over to Exhibit B (Schedule of Performance) and Exhibit C (Compensation). Following this overview, the scope of services is provided in greater detail.

A. (TASK 1) Transfer to CONSULTANT the CITY’s existing Amazon Web Services (AWS) hosting account in AWS cloud
CONSULTANT will transfer to CONSULTANT the CITY’s existing Amazon Web Services (AWS) hosting account for the CITY’s ERP system including but not limited to the following activities:
(1) Perform account transfer process in AWS cloud to CONSULTANT from CITY’s current third-party provider to enable the CONSULTANT to assume hosting and management and other services as detailed in this Agreement.

B. (TASK 2) Maintain account with AWS for hosting City’s infrastructure CONSULTANT will maintain the CITY’s account with AWS for hosting the CITY’s ERP system, including but not limited to the following account activities:
(1) Pay annual hosting fees to AWS for maintaining City’s infrastructure.

C. (TASK 3) Perform hosting and networking maintenance services CONSULTANT will provide hosting and maintenance services including but not limited to the following:
(1) Ensure uptime and security of all SAP related servers. (2) Offer Operating System support (SUSE Linux and Windows) on an as needed basis. (3) Offer Networking support on an as needed basis (e.g. opening of firewall ports, etc.). (4) Share AWS pricing details (including AWS billing invoices per month) for all hosted AWS services and help City realize any pricing discounts as and when offered by AWS.
(5) Share Cloudwatch report on a monthly basis and latest resource consumption. (6) Share AWS hosting bill on a monthly basis.
(7) Manage and configure firewall in AWS for Direct Connect and Internet access from AWS.
(8) Manage and configure Site to Site and Client to Site VPN for AWS access. (9) Ensure designated City staff members have full read access to the AWS administrator console for auditing and troubleshooting purposes.
(10) Help with Security Penetration testing services as and when requested. (11) Provide documentation and cross-training to City’s Operations staff as requested.

D. (TASK 4) Perform SAP Basis Services
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 850
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

CONSULTANT will provide SAP Basis Services including but not limited to the following:
(1) Ensure all SAP systems are available in AWS cloud and performing as per SLA. (2) Perform backups regularly [Server level and Database level]. (3) Restore servers and/or databases when necessary [All SAP servers are running on HANA database; one interface application servers are running on MySQL]. (4) Apply SAP Kernel patches as necessary [Once a quarter or six months]. (5) Apply Database patches as necessary [Once a year or so]. (6) Apply SAP HR legal patches and other required support packs/stacks as necessary [Usually once a year].
(7) Monitor SAP applications and resources using SAP Solution Manager [Solution Manager is already configured].
(8) Help with performance tuning of SAP application and/or databases. (9) Provide documentation and cross-training to City’s Basis staff as requested. (10) Provide access to City’s Basis staff at OS and Database level as needed basis and consider them as an extension to your own Basis team.
(11) Share resumes of all potential Basis resources that support City’s SAP environment.

E. (TASK 5 – Additional Services) Perform ad-hoc services on as needed requests that are not covered in the Scope of Services. These services constitute Additional Services under Section 4 (Not to Exceed Compensation) of this Agreement, implemented pursuant to City- approved Task Order as detailed in Section 4. Examples of such Additional Services include without limitation:
(1) Perform ad-hoc (Additional Services per Section 4) hosting and networking services such as enabling additional AWS services, building new application and/or database servers that are not included in the Scope of Services.
(2) Perform ad-hoc (Additional Services per Section 4) Basis services such as installation and configuration of new SAP applications and SAP HANA databases that are not included in the Scope of Services.
(3) Perform other ad hoc (Additional Services per Section 4) services that are not included in the Scope of Services as may be requested by CITY.
(4) Any Managed Services specifically requested by the City of Palo Alto outside normal business hours (except for P1 incidents and in-scope Managed Services production system work).
(THIS SCOPE OF SERVICES IS CONTINUED ON THE NEXT PAGE.) DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 851
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

SCOPE OF SERVICES – IN DETAIL

1. Key Contacts
CONSULTANT’s Key Contacts for this Agreement are as follows below. Day-to-day communications regarding implementation of the Agreement are to be directed to the appropriate Key Contact, as detailed in Section 13 (Project Management) of the Agreement.

Acco
unt Manager:

L
yall Hinton
Americas Services
+1 415 343 5368
[email protected]
B
asis Service Delivery Manager:

A
rno Groenewald
Service Delivery Manager
+1 404 528 4347
[email protected]
A
WS (Cloud) Service Delivery Manager:

S
ethu Manuel
Service Delivery Manager
+91 949 682 4501
[email protected]
A
ddress:
2 002 Summit Blvd,
#300 Atlanta,
Georgia 30319
2 . Managed Services Overview
The purpose of this Scope of Services is to communicate the objectives, deliverables, and activities to carry out this Scope of Services for the provision of AWS Cloud and SAP Basis Support Services (also referred to herein as the “Managed Services”) for the City’s SAP systems, as defined in Section 14 (Intellectual Property; Data) of this Agreement.

The City SAP landscape is used to deliver business critical functions, and it is pivotal that these systems remain reliable and accurate. The Managed Services delivery model is core in supporting such services, which include:
• Cloud services (AWS), which include platform and infrastructure services. • Security services providing network and application security protocols to secure and protect valuable personal and City-specific information.
• Basis services with specialized SAP platform maintenance services.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 852
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

By using EPI-USE developed IP and products, the automated software applications provide the Managed Services team with the ability to proactively monitor, alert and resolve issues before they can cause delays to business-critical functions.

The service delivery framework is made possible with a variety of tasks occurring during a calendar year ranging from daily, weekly, monthly, quarterly, bi-annually, and annual activities. A mixture of run-the- services, proactive support, advisory services, and a centralized ticketing environment ensures this continuity can be achieved. These activities form part of the overall Managed Services solution provided to the City.

To highlight a few:
• 24/7 support, as remote services.
• Daily checks, monitoring, alerts, proactive maintenance and housekeeping. • Incident management.
• Service level agreement (SLA) tracking.
• Operating system, database and SAP system support packs and patching. • System refreshes to non-production systems; and
• Client Central for document repository.

To carry out this service, EPI-USE Labs will have the responsibility to determine and manage all qualified and skilled resources used to provide the solution as a service to the City. EPI-USE shall provide the City with Managed Services as outlined in this Scope of Services. . On completion of a transition and onboarding period, EPI-USE will commence with the Managed Services offering.

Figure 1:EPI-USE Labs Managed Services Scope of Services for the City

3. Operating Model
The EPI-USE Managed Services offering provides basis and platform solution coverage across the SAP areas as depicted in Figure 1. The operating model centers around allocating a dedicated single point of contact (SPOC – Service Delivery Managers) per area (Cloud and Basis) to ensure continuity in EPI-USE Managed Services
Application Managed Services
Basis Managed Services
Security Managed Services
AWS Managed Services
Continuous
Improvement
Upgrades
Patches
Monitor
SLA
Resolve
Advisory
Self-Service
EPI-USE IP (Process, Product, People) as a Foundation
Technical Managed Services
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 853
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

communication and solution delivery standards. The team structure will consist of a variety of lead functions to manage architecture, risk, basis, and platform streams. Additionally, the team has been structured in an agile manner, ensuring the required delivery capability is readily available through peak periods.

To ensure continuity with minimal impact, the Managed Services team members will be selected from the large pool of EPI-USE Labs consultants who will become familiar with the City processes and systems.

Some of the main priorities of the Managed Services model will be on monitoring, housekeeping and incident management, governed by Service Level Agreements (SLAs). Incidents, changes, and requests will be raised by CITY with EPI-USE Labs via the EPI-USE ticketing system, Client Central.

The EPI-USE Support team will assess incidents quickly and recommend approaches to incident resolution or propose changes to the system.

Standby and after-hours support will be provided for production system emergencies and tasks that cannot be executed during normal business hours. An outline of Roles and Responsibilities is outlined in Addendum B, as some activities will be carried out by the City’s internal basis team as detailed therein. Furthermore, SAP basis administration on the Sandbox will be carried out by the City’s internal team, while at the same time, EPI-USE Labs will encourage knowledge transfer activities to the City’s internal Basis team.

3.1 Service Operating hours
Normal service operating hours relating to normal business hours is detailed below. This excludes US federal holidays.

Monday to Friday: 08:00 to 17:00 US Pacific Time

3.2 Governance
The governance structure for EPI-USE’s service delivery will include all stakeholders from EPI-USE and City’s IT department (or other staff as needed) in the service delivery model, along with an escalation process, which will be part of the Managed Services engagement itself. Monthly service review meetings (also referred to as steering committee meetings) will be held to monitor and share information about service delivery, for example, about performance, tickets, incidents, and the status of responses to incidents. The three escalation levels are as follows:
• Level 1 – Service Manager (also referred to as Service Delivery Manager) • Level 2 – Account Executive; and
• Level 3 – Executive Sponsor.

The Service Delivery Manager will resolve most escalations as that role encompasses an overview of all the activities for the City under this Agreement. Issues the Service Delivery Manager cannot resolve will be referred up the escalation structure for resolution at a higher level.

The Service Delivery Manager will be the owner of the monthly service reviews and sit on the steering committee for monthly service reviews. Any additional scope (also referred to herein as Additional Services per Section 4 of this Agreement) items to this Agreement will be outlined and a way forward will be discussed in these meetings, to be implemented in accordance with the provisions of this DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 854
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Agreement, for example, pursuant to a Task Order per Section 4 or a contract amendment per Section

29.4. 3.2.1 Governance and Review reporting
The following reports will be provided at the monthly service review meeting, or when required:
• Platform performance metrics.
• End-user response times and trends.
• Network statistics.
• CPU performance.
• System uptime.
• Incident SLA reports.
• Total number of tickets handled (both AWS- and SAP-related) • Storage and usage.
• Backup/DR reporting; and
• AV reporting.

3.3 Service Levels (or “Service Level Agreements” or “SLAs”) EPI-USE will adhere to the Service Levels detailed below, providing timely resolution of incidents and technical issues, and ensuring that the City’s SAP enterprise resource planning (ERP) system continues to deliver efficient services to the City’ business units. A Service Level may also be referred to herein as a “Service Level Agreement” or “SLA”.

Figure 2:Service Levels (SLA)
Px Definition
Response
time after
Notification
Provide
Solution
Time
Target
Resolution
Time
Escalation Path
P1
Emergency:
• Entire organization is
affected.
• Core business process
cannot be carried out.
• Security violation.
1 hour 4 hours 1 day
Resolution > 1 day
Escalation path:

Email to Service
Manager (1st),
Account Executive
(2nd).

P2
Critical:
• Multiple users or
departments are
directly affected.
• Incident has serious
impact on critical tasks
and no workaround is
available.
4 hours 1 day 3 days
Resolution > 2 days
Escalation path:

Email to Service
Manager (1st),
Account Executive
(2nd).

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 855
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

• Customer affected.

P3
High:
• System cannot
function as designed or
installed.
• Small group of users
are directly affected.
• Compliance timeline is
affected.
1 day 3 days
Requires
resource
estimation,
City's
approval,
prioritization,
and
scheduling
P4
Medium:
• Small number of users
are affected.
• Isolated incident.
• Degraded performance
and/or is difficult to
use.
5 days 2-3
weeks
Requires
resource
estimation,
City's
approval,
prioritization,
and
scheduling
P5
Low:
• User requests general
information, service, or
consultation.
• Cosmetic
enhancements.
• Report enhancements.
5 days 4-6
weeks
Requires
resource
estimation,
City's
approval,
prioritization
and
scheduling
* P2-P5 tickets are subject to core business working hours and exclude out-of-hours, weekends, and public holidays, unless by mutual agreement.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 856
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

3.3.1 System Availability Service Levels
System availability is defined as the availability of any SAP Service. EPI-USE Labs considers a system available, if it can operate the system within the bounds of the services EPI-USE Labs provides.

Table 1: System Availability
System availability (uptime)
Landscape Uptime*
Production 99.5%
Non-Production 99.0%
*Measurement of uptime excludes maintenance windows and other planned downtimes.

S
ystem Availability percentage is calculated as follows:

Sy
stem Availability Percentage = Total Minutes in the Month − Downtime Total Minutes in the Month ∗ 100
S
ystem Availability (“SA”) determines the minimum system uptime commitment.

Downtime excludes Total Minutes in the Month attributable to:
• Scheduled downtime during a regular maintenance window. • Any other scheduled downtime, which the City has been notified of at least five business working days prior to such scheduled downtime; or
• Unavailability caused by factors outside of the Supplier’s reasonable control, such as unpredictable and unforeseeable events that could not have been avoided, even if reasonable care had been exercised.

Regular Maintenance
EPI-USE Labs would preferably like to set a weekly maintenance window for system and infrastructure. During this time, the City should not expect system uptime (downtimes are not SLA relevant) and should not schedule any jobs or processes. The window can be pre-agreed on prior to contract start. All maintenance downtimes (regular or irregular) will be pre-arranged and pre- approved via the change process.

Recommended maintenance window: Weekly, Saturday: 14:00 to 20:00 PST. (TBD) Irregular Maintenance
It is possible that certain intensive maintenance activities may not be possible to achieve within the regular maintenance window. In the case of a longer than regular outage, the supplier will provide five days’ advance notice and work with the City to find a time window that is most suitable for the City users.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 857
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Maintenance exceptions
While EPI-USE will endeavor to accommodate occasional requests for exceptions to these maintenance windows, EPI-USE cannot guarantee that exceptions can be accommodated. The shared nature of many data center facilities dictates certain maintenance requirements. In the case of urgent hardware replacement or security fixes that could otherwise negatively impact the City, as well as the ability of EPI-USE Labs to meet SLA commitments to the City, such changes to maintenance schedules may not always be possible. EPI-USE will consult with the City in the event of these exceptions.

3.3.2 Disaster Recovery Service Levels
A disaster recovery service is applicable to all the production virtual machines. Networking is designed to have a fast recovery time, but in the event of a physical network connectivity failure, the recovery of the production virtual machines can be a manual process. EPI-USE will recover the virtual machines, from replicated backups from the disaster recovery data center. The service levels below are based on the backup and recovery of the SAP systems in the event of a disaster.

Table 2: Disaster Recovery RTO and RPO
Disaster Recovery
Scope Time
RTO Production servers 24 hours
RPO Production servers 24 Hours
T
he recovery time objective (RTO) is the time it will take to recover to the recovery point objective (RPO). The RPO is the point in the past to which the supplier will recover the system.

3.3.3 Backup Frequency and Retention Levels
Backups are broken down into three sections:
• Virtual machine.
• File level; and
• Database.

Below is a summary of the retention policy.

Table 3: Backup and Retention
Backup and Retention policy
Object Frequency Level Landscape Retention Period
Virtual machine (with
Database) Daily Full All 30 days
Virtual machine (with
Database) Monthly Full All 12 months
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 858
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Virtual machine (with
Database) Yearly Full All 3 years (contract
period)
D
atabase backups require the use of the database integration agent that is provided with the backup environment. EPI-USE Labs utilizes a snapshot of the virtual machine, complete with database, which will be taken and retained.

3.4 Managed Services - SAP Systems Inventory
EPI-USE Labs will provide the SAP Service platform in AWS utilizing a virtualized environment as specified below:
• Primary data center location: AWS US-WEST (Oregon)
• The supported City SAP Landscape servers in scope, which will form part of the Managed Services component, are listed in Addendum A: Managed Services SAP Systems Inventory. • Database: HANA; and
• Operating System: Linux, Windows.

Connectivity: The hosted landscape will be accessible over an encrypted point-to-point IPSec terminating on the City’s vWAN hub in AWS and from there into the City environment.

4. Platform (AWS) Managed Services Scope
EPI-USE will deliver a flexible Cloud Managed Service to help the City get the most out of the AWS platform, containing costs and managing complexity.

EPI-USE will be the single provider and administrator to help reduce subscription spend and increase the operational efficiency and effectiveness of the SAP landscape in the cloud.

4.1 Maintain account with AWS
EPI-USE will maintain the AWS account for the City’s AWS infrastructure. EPI-USE will also take care of paying the AWS fees on an annual or monthly basis and charge these fees back to the City at AWS list prices. The exact AWS fees payable will only be available after EPI-USE reviews the services and associated costs in the City’s AWS account. EPI-USE will conduct a Well-Architected Review that includes a full assessment of the City’s AWS spend.

4.2 AWS Platform Support Services
The AWS platform administration will include:
• Subscription and tenancy administration.
• Resource group administration.
• Networking services administration.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 859
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

• Virtual machine administration.
• Storage administration.
• Connectivity administration from AWS to the City network edge; • Platform, connectivity, monitoring and alerting
• Security configuration and administration; and
• Backup and disaster recovery administration.

4.3 Operating System Support Services
The service supporting operating systems administration will include:
• Monitoring the operating system.
• Improving system performance
• Operating system administration
• Capacity planning and monitoring
• Operating system patch management
• Antivirus management
• Backup and restore management
• Disaster recovery workload management and testing; and • General fault and configuration of operating system.

4.4 Deliverables and Frequency
Table 4 refers to the summary deliverable and frequency of platform services.

Table 4: Platform as a Service
Service Area Deliverable Frequency
Cloud Services (Platform) Service desk (Client Central) Daily Incident management Daily
Change management (formal change
approval) Weekly
Request management (small change with no
approval) Daily
Problem management (RCA) Daily
Service level management Monthly
Event management Daily
Platform Housekeeping and monitoring Daily
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 860
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Governance reporting:

Performance metrics.

End-user response times and trends.

Network statistics.

CPU performance.

Backup compliance.

AV compliance.

Vulnerability scanning (Quarterly).

Penetration testing (Annually).

Monthly

4.5 EPI-USE’s AWS Access
There are two operating modes within AWS Organizations: Consolidated Billing and All Features.

All Features will be enabled. The City’s usage and invoices are made available to EPI-USE, and EPI- USE will have full control over what the City’s End Customer Accounts can do in accordance with this Agreement including but not limited to Exhibit G (Addendum – Supplemental Terms – AWS Solution Provider Program for End Customers). Additionally, through AWS Single Sign-On integration with AWS Organizations, EPI-USE will also have access to Client Content. EPI-USE will provide access to their Program Management Account to the City and will work with the City to use only IAM to access the Program Management Account. Further, EPI-USE may choose to restrict its access to the Program Management Account via its root user credentials, by working with the City to implement multi-factor authentication and giving City sole control over one of the factors required for authentication. To access a copy of the AWS Organizations user guide, visit https://docs.aws.amazon.com/organizations/latest/userguide/orgs_introduction.html (or any successor or related location designated by AWS, as may be updated by AWS from time to time).

4.6 AWS Support
In managing the City’s AWS account, EPI-USE will register the City for the support type the City has selected below and will include the City as a named support contact. The City’s named support contact person will be determined during the onboarding process, and, as needed thereafter, may be changed by written notice to EPI-USE from the City’s Project Manager or Chief Information Officer.

The City hereby selects the continued use of AWS Business Support for the performance of this Agreement. Signing this Agreement provides written confirmation of this selection.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 861
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

4.7 [RESERVED]

5. Security Managed Services Scope
EPI-USE Labs will maintain ISO 27001 certification and on an annual basis an SSAE16-SOC 2 report, or their equivalent can be made available to the City on request. EPI-USE will handle the City data according to its information classification and handling standards. The City information is classified as Confidential and appropriate information handling, human resources and technical security measures are in place to reduce the risk of accidental or malicious information disclosure. EPI-USE have adopted the ISO 27001 information security framework, which governs all aspects of information security. EPI- USE have been certified as ISO 27001 compliant by external, accredited auditors.

5.1 Data and Security
EPI-USE Labs uses reasonable security technologies in providing the services. EPI-USE Labs will implement technical and organizational measures to secure personal data processed in the services, in accordance with applicable data protection laws.

The City is responsible for the City data and entering it into the SAP cloud systems.

EPI-USE will be connecting to the City’s AWS environment in two ways and both these processes are transparent as they are logged in detail.
• SSM method through AWS web console. With this method, the complete access is logged by AWS itself and city will have access to these log entries from the AWS console. • Through Openvpn, managed by EPI-USE. The Openvpn server logs these entries in great detail, which may be accessed through the Openvpn server admin web panel. Both services provide the City with complete access to the log records of connected users.

Security responsibilities – Table 5 specifies which of the parties are responsible for the various security areas.

Table 5: Security Responsibilities
Security Area EPI-USE
Responsible City Responsible
Firewall on AWS platform X
Intrusion Detection System on AWS platform X
Virtual Private Connection on AWS platform X
Virtual Private Connection at the City site X
Virtual Private Connection on end user devices X
Access Control and User Management on Operating
System X
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 862
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Access Control and User Management on Database X
Application Access Control and User Management on
SAP X
Patch Management on Operating System X
Infrastructure/Database Access Control and User
Management X
Internal Vulnerability Scanning X
Manage AWS Security Services (Security Hub,
Guardduty, Inspector etc..) X

6. Basis Managed Services Scope
EPI-USE Labs will be responsible for SAP Basis Managed Services for the SAP landscape. The following services are included.

6.1 Daily Checks and Housekeeping
The purpose is to check and maintain to be proactive should any incident or requests arise.

Housekeeping will constitute preventative proactive management and various automation activities will be carried out where applicable. EPI-USE Labs will enable the City to have visibility of critical systems with the use of EPI-USE Labs software or 3rd party software, if required. EPI-USE Labs will carry out these tasks once either daily, weekly, or monthly and the check sheets/reports will be made available to the City on the Client Central Workspace. Where possible, these tasks will be carried out automatically with the use of EPI-USE Labs or 3rd party software.

6.2 Monitoring and Alerts
EPI-USE Labs will monitor all hosted systems and alert on critical events, using EPI-USE Labs and/or third-party software. A critical event is defined as:
• SAP production outage which influences critical business functions.

For critical events, EPI-USE will be alerted (via a paging system to the standby team) of the defined critical event, triggering an automated P1 incident entry in Client Central. This in turn will, initiate the P1 incident response procedure.

The P1 response procedure in client central will add the applicable the City system owners (Defined in Client Central) as watchers to the ticket, which will in turn send an email to all watchers every time new information is added or changed to this P1 ticket. Response times and resolution times will adhere to the defined SLA times.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 863
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

A contact list will be generated for contacting business unit owners (including a backup resource). This will be used to drive any communication via Client Central tickets that would arise during an outage or serious issue.

6.3 SAP Basis Landscape Advisory
EPI-USE will provide SAP landscape advisory services on an ongoing basis. These recommendations will be discussed in the monthly review meetings. This advisory service will pertain to SAP performance enhancements and short, medium, and long-term SAP landscape roadmap guidance. The following are:
• Advice on end of SAP support on SAP versions.
• Advice on target SAP versions available.
• Advice on target SAP kernel.
• Advice on target enhancement pack.
• Advice on latest database version.
• Advice on capacity planning.
• Proactive Basis process and setup improvements
• Large HANA database tables in production; and
• HANA Database sizes/growth.

6.4 Support Pack updates
This function is deemed part-and-parcel of the SAP Basis managed services. EPI-USE Labs will apply the following:
• Database patches annually
• SAP Kernel updates bi-annually
• Security patches, where deemed necessary and as required • SAP service packs annually
• SAP HR legal patches annually
• SAP Notes on request
Major software (OS, DB, Application) release upgrades e.g. a full release upgrade and EHPs are excluded from the scope of work and will be handled as separate projects. Functional and application testing will not form part of the scope of these upgrades and is limited to the technical application.

6.5 System Refreshes (as-needed, upon request)
EPI-USE will help launch the CITY’s separately contracted-for Libelle system refresh tool once per quarter, as a part of the support services. Once launched, the City staff will complete the system refresh operation. SAP system client copies, using the standard SAP tools, are included under the support services.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 864
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

To implement any additions to this Scope of Services, a Task Order for Additional Services pursuant to Section 4 (Not to Exceed Compensation) will be used. As detailed in Section 13 (Addendum C:

Change Request Form) below, a Change Request Form (shown in Addendum C) may only be used pursuant to Section 4 (Not to Exceed Compensation) of this Agreement, regarding Additional Services, as an Attachment A (Scope of Work) to an approved Task Order as detailed in Section 4.

6.6 Deliverables and Frequency
Table 6 refers to the summary deliverable and frequency of Basis Managed Services.

Table 6: Basis as a Service Deliverables
Service Area Deliverable Frequency
Basis Services Service desk (Client Central) Daily
Incident management Daily
Change management (formal change
approval) Weekly
Request management (small change with
no approval) Daily
Problem management (RCA) Daily
Service level management Monthly
Event management Daily
Patches Annual
Basis Housekeeping and monitoring Daily
Governance reporting:

System uptime.

Incident SLA reports.

Performance metrics.

Storage and usage.

Monthly

6.7 Excluded from Scope
The following tasks are specifically excluded from the Scope of Services of this Agreement and, if desired, would need to be implemented via a Task Order as Additional Services pursuant to Section 4 (Not to Exceed Amount), or via contract amendment pursuant to Section 29.4, of this Agreement:
• Major SAP NetWeaver release upgrades.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 865
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

• User access management, SAP Authorizations and Roles. • Although the technical transport management function is part of the responsibility of EPI-USE Labs, the change management process and approval of changes will remain the responsibility of the City.
• End user device support is excluded (e.g., printers, desktops, SAP GUI) • Additional SAP NetWeaver application implementations and the support of these environments after implementation.
• All other services outside the current SAP landscape.

6.8 General Assumptions
• Business days are Mondays to Fridays excluding federal holidays • Business hours are between 8AM and 5PM (PST)
• Support is offered during business hours, except for P1 Incidents, which are, supported 24/7 • Measurement of service levels is suspended for the time that an incident is under the responsibility of the City or any third party or EPI-USE Labs • EPI-USE Labs will assign a Service Delivery Manager to the City who will be responsible for all support- related issues
• If standby is required for P2 to P4 incidents outside of business hours, the City can request this before the time
• After-hours work should be limited to 10 (ten) hours per month, excluding work for P1 incident
• All requests for after-hours support must be submitted 48 hours in advance. These requests must be directed to the applicable Service Delivery Manager • All service requests must be submitted in ticket form, regardless of verbal or email agreements. SLA’s are measured based on tickets only.

7. On-boarding, Transfer and Transitioning
The transition and handover phase will be critical to the success of our support service. The onboarding process starts with the handover between the EPI-USE team and the City team of the existing SAP systems, AWS platform and AWS account. This phase should commence in the month prior to the actual ongoing Managed Services engagement commencing. Service transition will be crucial to ensuring that EPI-USE has a good understanding of:
• City’s latest system platform, landscape, and configuration • to transfer the existing AWS Account and billing responsibility to EPI-USE • the organization and how it operates
• the internal support team’s skills and capabilities
• other vendors that provide support (EPI-USE will require information) • any outstanding and open tickets.

By assessing these elements of the current support service, EPI-USE will be better placed to advise on service management processes, transition steps, and knowledge transfer requirements as part of the transition phase.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 866
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Transition activities will include the review of documentation, facilitated workshops with the City, and system familiarization.

The transition phase consists of three main areas: Assessment (information gathering), Design and Setup, and Handover, as further detailed below.

Assessment (information gathering)
During this phase, EPI-USE will spend time reviewing:
• all documentation (including but not limited to functional, technical, and business process documentation)
• the platform, landscape setup and configuration
• to transfer the existing AWS Account, and this will entail:
o EPI-USE have root access to the AWS account
o The AWS account has been un-linked from the incumbent outgoing provider’s AWS Master Payer account (if applicable)
o EPI-USE’s payment method has been updated in the account o An AWS support plan has been agreed for the AWS account • the current status of outstanding incidents and service requests • skills of the internal support and IT teams
• current support procedures (incident management, change management).

Design and Setup
Given sufficient information, EPI-USE will start designing the support service to be delivered from the start of the contract including:
• Adjusting the support methodology and processes to fit the City’s requirements. This will be done in collaboration with the City.
• Aligning with the City’s incident and change management processes and introducing and knowledge transfer of Client Central.
• Discussing and designing a skills’ matrix and recommending a knowledge transfer plan. • Assessing the gap – if any – in levels of documentation required (for business processes, configuration, and system landscape) and agreeing to an approach to fill this gap. • Agreeing on an approach to handover from the incumbent outgoing provider, ensuring that all outstanding incidents and service requests are addressed.

Handover
Handover to EPI-USE Labs is the last transition phase. EPI-USE will start to take on some elements of the support contract while allowing the outgoing supplier to close existing incidents and service requests. Normally, EPI-USE would recommend a period of joint operation when EPI-USE takes responsibility for the resolution of new issues. This transition period with the incumbent outgoing provider can be up to two weeks. The Design and Setup phase normally ensures that the responsibilities for all parties are clearly agreed and that all parties, including the incumbent outgoing provider, are in agreement with the approach. This is important to ensure continuity of service for the City.

The three-stage process is applied in conjunction with the fundamental principle of People, Process and Technology, which forms the foundation for successful service management. In order to transition DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 867
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

smoothly from the City’s incumbent outgoing provider to EPI-USE, all three key areas need to be carefully considered as part of the transition planning.

8. Ad -hoc Services (as needed, upon request)
Perform ad-hoc services on as-needed requests that are not covered in the Scope of Services. These services constitute Additional Services under Section 4 (Not to Exceed Compensation) of this Agreement, implemented pursuant to City-approved Task Order as detailed in Section 4. Examples of such Additional Services include without limitation:
(1) Perform ad-hoc (Additional Services per Section 4) hosting and networking services such as enabling additional AWS services, building new application and/or database servers that are not included in the Scope of Services.
(2) Perform ad-hoc (Additional Services per Section 4) Basis services such as installation and configuration of new SAP applications and SAP HANA databases that are not included in the Scope of Services.
(3) Perform other ad hoc (Additional Services per Section 4) services that are not included in the Scope of Services as may be requested by CITY.
(4) Any Managed Services specifically requested by the City of Palo Alto outside normal business hours (except for P1 incidents and in-scope Managed Services production system work).

9. Client Central Service Desk
Client Central will be utilized as a service desk for the Managed Services support, with Client Central user and role management included. Further to the service desk (ticketing) offering, a knowledge base and downloads area will be allocated in the workspace for various shared documents and artefacts for e.g., platform information, technical documents, functional documents, how-to, solution suggestions, recorded video trainings and suggestions.

9.1 Service Desk Ticketing
Standard features included:
• Ticket feature to record all incidents, changes or activity with the date and time of change as well as the person responsible for the change.
• Attachments can be added to each ticket. This is stored on the ticket itself (unless removed) and is separate from the downloads mentioned above.
• The ticket records and displays the response and resolution time on the ticket, in relation to the defined SLA.
• Buttons are used to drive the workflow on a ticket and change it from one state to another, e.g., in progress, awaiting info or completed. They can be configured to require a comment or to simply progress the workflow. Buttons can be colored as required to highlight the purpose of the button (e.g., green for approval).
• States in a workflow have the following qualities:

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 868
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

o The name can be defined as required.
o The color can be used to better show the purpose of the status (e.g., green for approved). o The status can either be open (SLA is counting), waiting (SLA is paused, someone is waiting for feedback) or closed (the SLA has been stopped and ticket has been resolved). • Tickets can be linked to each other to quickly navigate between relevant tickets. • Tickets can be filtered based on any of the fields in the ticket, assignee, status, SLA compliance, date updated, and status. This helps to easily find and report on individual tickets. • Big scale reporting can also be done on any of the above-mentioned factors. City can use the information to build graphs in Client Central to display specific data visually. • Custom filters can be built so that reports can be saved and reused as required

9.2 Ticket Type and Description
• Incidents: Incidents happening in the landscape that interrupts daily operation. Typically logged by the City’s users.
• Change request: Scheduled changes, usually preceded by a Service request. A single change request documents the changes made (as specified in a service request) per individual landscape tier as the date and time of each change is different. This results in one Service request and multiple change requests connected to it. • Service requests: non-incidents (typically) logged by Business to implement/change something in the landscape.
• Problem ticket: mainly used for keeping track of RCA investigations. Also used to keep track of performance/service improvement mini projects. Typically, all P1 Incidents require an associated Problem ticket, but multiple Incidents can be linked to the same Problem ticket. • Events: Tickets logged by the Managed Services team to communicate proactive monitoring incidents. This is usually connected to monitoring tool alerts or monitoring/daily health checks performed by the Managed Services.
• Internal KB: Requests for Knowledge base article creation on a certain subject. • Patch: Pro-Active patches/alerts (typically from 3rd party vendors like SAP, OS vendors, etc.) • Define-your-own wherein City can define its own ticket type/description.

9.3 Knowledge Base Area
The Knowledge base consists of documents of a word-type format that can be created by and shared with authorized users. They can also be added to tickets as required by pasting the article link on the ticket.

The structure can be configured by creating nested directories if required. City can search for a knowledge base article by using the search bar. The search bar works with a wildcard search technique to search for matching content in all articles, or City can search for tags that were added to the article during the article creation.

9.4 Downloads Area
Downloads is a dedicated document repository for business relevant documents that can be uploaded to, downloaded from, and shared with authorized users.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 869
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

The structure can be configured by creating nested directories if required. City can search for a file by using the search bar based on the file name or description.

10. Costing and Fees
Costing and fees for this Agreement shall be as detailed elsewhere in this Agreement including but not limited to Section 4 (Not to Exceed Compensation) and Exhibit C (Compensation).

10.1 AWS Fees
Estimated AWS fees are provided in Exhibit C (Compensation) of this Agreement, however, as noted in said Exhibit C, AWS consumption will be invoiced based on actual AWS spend and using AWS’s actual published list prices. AWS fees will be invoiced separately from the Managed Services fees and billed on a monthly basis.

Reserved Instance and Savings Plan purchases will be reviewed on an as-needed basis and these purchases are required to be approved by the City pursuant to a Task Order as Additional Services under Section 4 (Not to Exceed Compensation), or as a contract amendment pursuant to Section 29.4, of this Agreement. Depending on the commitment period these purchases will be paid by the City all upfront or amortized over the duration of the remaining Agreement term, pursuant to a Task Order as Additional Services under Section 4, or as a contract amendment pursuant to Section 29.4, of this Agreement.

Notwithstanding any information received to date; any additional clarifications which may have been provided, or the outcome of any discovery workshops conducted, EPI-USE has calculated its AWS pricing based purely on its current understanding of the City’s requirements. The City therefore acknowledges that, except for items which may arise solely because of EPI-USE’s actions during the engagement, EPI-USE shall be entitled to recover AWS fees for those items which would not have been known at the outset of the engagement, and which increases the AWS spend budget. Any changes outside of the AWS spend budget stated in this Agreement, shall be approved in writing by the City pursuant to a Task Order as Additional Services under Section 4 (Not to Exceed Compensation), or as a contract amendment pursuant to Section 29.4, of this Agreement.

If the City exceeds the usage limits applicable to the AWS Service subscription, the City agrees to pay for the fees and charges for such over-usage pursuant to a Task Order as Additional Services under Section 4 (Not to Exceed Compensation), or as a contract amendment pursuant to Section 29.4, of this Agreement. For any extension of a subscription term within the term of this Agreement or the provision of a Service upgrade, the then-current AWS price will apply. At the beginning of each new subscription term within the term of this Agreement, EPI-USE may, in consultation with the City, increase AWS fees to reflect increased AWS costs imposed by AWS. Not raising fees is not a waiver of EPI-USE’s right to do so if AWS raises its fees. EPI-USE will notify the City as soon as practicable of any changes in AWS fees by e-mail. Failure by the City to pay the fees when due and payable, if not timely cured by City after notice of the failure from Consultant, may result in suspension of access to, or rights to use the Services.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 870
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

11. Addendum A: Managed Services Systems Inventory
The AWS infrastructure services inventory to be included on the AWS managed services:

Table 7: AWS services inventory
Service Configuration summary
S3 Standard
50 TB per month
PRD
Amazon FSx for Windows File
Server
Desired storage capacity (1 TB)
STG
Amazon Virtual Private Cloud
(VPC)
Number of Site-to-Site VPN Connections (10)
QAS
Amazon Elastic File System
(EFS)
Data stored in Standard storage (5 TB per month)
DEV
Amazon S3 Glacier (Glacier API
only)
S3 Glacier storage (10 TB per month)
SBX
Amazon EC2 (r5.large) Quantity
- 12
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
PRD
Amazon EC2 (r5.xlarge)
Quantity - 8
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
STG
Amazon EC2 (x1.16xlarge)
Quantity - 3
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (4000 GB)
QAS
Amazon EC2 (t2.small) Quantity
- 2
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
DEV
Amazon EC2 (t2.xlarge)
Quantity - 1
Operating system (Windows), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
PRD
Amazon EC2 (m5.large)
Quantity - 1
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 871
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

STG
Amazon EC2 (m4.2xlarge)
Quantity - 1
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
QAS
Amazon EC2 (r5a.large)
Quantity - 4
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (150 GB)
DEV
Amazon EC2 (r5.2xlarge)
Quantity - 1
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
PRD
Amazon EC2 (t2.xlarge)
Quantity - 1
Operating system (Linux), Storage for each EC2 instance (General Purpose SSD (gp2)), Storage amount (500 GB)
STG
Th
e corresponding SAP systems relevant within the scope of Managed Services:

Table 8: SAP System inventory
City SAP systems
System type Version Tier Database Operating system
ECC EHP 8 PRD HANA Suse Linux
ECC EHP 8 STG HANA Suse Linux
ECC EHP 8 QAS HANA Suse Linux
ECC EHP 8 DEV HANA Suse Linux
ECC EHP 8 SBX HANA Suse Linux
BW 7.5, SP16 PRD HANA Suse Linux
BW 7.5, SP16 STG HANA Suse Linux
BW 7.5, SP16 QAS HANA Suse Linux
BW 7.5, SP16 DEV HANA Suse Linux
CRM 7.0, EHP4 PRD HANA Suse Linux
CRM 7.0, EHP4 STG HANA Suse Linux
CRM 7.0, EHP4 QAS HANA Suse Linux
CRM 7.0, EHP4 DEV HANA Suse Linux
Gateway PRD HANA Suse Linux
Gateway STG HANA Suse Linux
Gateway QAS HANA Suse Linux
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 872
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

Gateway DEV HANA Suse Linux
ESS/ MSS Portal PRD HANA Suse Linux
ESS/ MSS Portal STG HANA Suse Linux
ESS/ MSS Portal QAS HANA Suse Linux
ESS/ MSS Portal DEV HANA Suse Linux
Solution Manager PRD HANA Suse Linux
NWDI DEV HANA Suse Linux
BSI Taxfactory/Jump Server PRD HANA Suse Linux
Open VPM Server PRD Suse Linux
SAP Router PRD Windows
SAP AD PRD Windows
Fiori Frontend PRD HANA Suse Linux
Fiori Frontend STG HANA Suse Linux
Fiori Frontend QAS HANA Suse Linux
Fiori Frontend DEV HANA Suse Linux
HANA DB Server PRD HANA Suse Linux
HANA DB Server QAS
STG HANA Suse Linux
HANA DB Server DEV HANA Suse Linux
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 873
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

12. Addendum B: City and EPI-USE Labs Responsibilities
The following table will define the high-level responsibilities of the parties in a RACI format.

Table 9: RACI Table
ID
Service
R – Responsible, A - Accountable, C –
Communicated, I – Informed, P- Participate
Frequency EPI-
USE CoPA
1 Service Management

1.1 Account Management

1.1.1 Governance meetings Monthly RAC RAC

1.1.2 Platform capacity planning (usage-based) Ongoing R CI

1.1.3 Platform capacity planning (future project-
based) Quarterly R CI

1.1.4 Provide SLA and usage reports and
performance metrics Monthly RA CI

1.2 Service Request Management

1.2.1 Log service requests in Client Central Ongoing CI RA

1.2.2 Review, approve service requests Ongoing RA RA

1.3 Incident Management

1.3.1 Daily support desk operations Ongoing RA RA

1.3.2 Review, approve, resolve, escalate incidents Ongoing RA RA

1.3.3 Confirm resolved incidents/solutions Ongoing RA RA

1.3.4 Create incidents/solutions Ongoing RA RA

1.4 SAP Online Support Service

1.4.1 Create OSS users Ongoing CI RA

1.4.2 Assign OSS permissions Ongoing CI RA

1.4.3 Manage developer keys Ongoing CI RA

1.4.4 Manage object keys Ongoing CI RA

1.4.5 Support management of S-User ID Ongoing CI RA

1.4.6 Monitor remote support connection to OSS Ongoing CI RA DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 874
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

1.4.7 Open/close SAP remote support connections Ongoing CI RA 2 Infrastructure

2.1 Data Center Management

2.1.1 Infrastructure (AWS) all support Ongoing RA CI

2.1.2 AWS tenancy administration Ongoing RA CI

2.2 Network Management

2.2.1 Proactively monitor data center networks and
utilization Ongoing RA CI

2.2.2 Change data center network configuration Ongoing RA CI

2.2.3 All network maintenance Ongoing RA CI

2.3 Storage Management

2.3.1 Proactively monitor storage performance &
capacity Ongoing RA CI

2.3.1 Manage data files, file systems and disks Ongoing RA CI

2.3.1 Scale storage capacity (additional) Request RA CI

2.4 Operating System

2.4.1 Create/maintain OS users Ongoing RA CI

2.4.2 Monitor for/report security incidents Ongoing RA CI

2.4.3 Configure/change OS parameters Ongoing RA CI

2.4.4 Monitor/remediate OS, logs, file systems Ongoing RA CI

2.4.5 Interact with vendor to remediate OS issues Ongoing RA CI

2.4.6 Proactively monitor swap and paging Ongoing RA CI

2.4.7 Proactively monitor memory usage Ongoing RA CI

2.4.8 Manage OS patches Ongoing RA CI

2.4.9 Perform OS upgrades Ongoing Project CI

2.5 System Startup/Shutdown

2.5.1 Scheduled OS/hardware system startup &
shutdown Request RA CI

2.5.2 Shutdown/restart OS/hardware after
failure/maintenance Ongoing RA CI
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 875
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

2.6 Backup/Restore

2.6.1 Perform periodic file system and database
backups Ongoing RA CI

2.6.2 Requests for ad-hoc backups Ongoing RA CI

2.6.3 Monitor backup processes Ongoing RA CI

2.6.4 Perform periodic backup/restore testing;
include result in the relevant report Biannual RA CI

2.6.5 Perform restore and recovery of file
systems/databases/tables after failure Ongoing RA CI

2.6.6 Perform restore and recovery of file
systems/databases/tables upon request Ongoing RA CI

2.6.7 Perform verification of restored systems Ongoing RA CI

2.6.8 Perform functional verification Ongoing RA CI

2.7 Integration

2.7.1 Configure integration with customer directory
service Ongoing RA CI

2.7.2 Integration with SAP Cloud (Network
connections and VPN) Ongoing RA CI

2.8 SFTP Service

2.8.1 Provide file sharing on hosted systems Request RA CI

2.8.2 User and access management to hosted
systems Request RA CI

2.8.3 Create/maintain shared folders Request RA CI

2.8.4 Implement and maintain antivirus software
on servers Ongoing RA CI

2.8.5 Antivirus software licenses Ongoing RA CI

2.8.6 Backup data on shared folders Ongoing RA CI

2.8.7 Restore data on shared folders Request RA CI
3 Database Management

3.1 SAP HANA

3.1.1 Proactively monitor database health and
resource usage Ongoing RA CI
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 876
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

3.1.2 Monitor table growth to prevent operational
issues Ongoing RA CI

3.1.3 Partition/rebalance tables due to uneven
growth Ongoing RA CI

3.1.4 Plan and perform file system extensions Ongoing RA CI

3.1.5 Perform HANA housekeeping (manage logs,
traces, free up resources) Ongoing RA CI

3.1.6 Maintain HANA configuration parameters
based on best practices Ongoing RA CI

3.1.7 Start/stop database Request RA CI

3.1.8 Add hardware for scale-out configuration Request RA CI

3.1.9 Update/patch database Ongoing RA CI

3.1.10 Configure HANA Transports Management Request RA CI

3.1.11 Implement /maintain additional SAP tools (in
HANA context delivered by SAP) Request RA CI

3.1.12 Analyze and optimize expensive SQL
statements for improved performance Request RA CI

3.1.13 System troubleshooting to resolve issues and
return HANA to normal operation Ongoing RA CI

3.1.14 Create/maintain HANA Studio users Request RA CI

3.1.15 Management of database users Ongoing RA CI

3.1.16 Backups Ongoing RA CI

3.1.17 Recover database after technical issues Ongoing RA CI 4 Basic Operations

4.1 Monitoring

4.1.1 Configuration of basis monitoring tools Ongoing RA CI

4.1.2 Monitoring of alert consoles for different tools Ongoing RA CI

4.1.3 Logging of performance events Ongoing RA CI

4.1.4 Respond to events according to notification
and escalation procedures Ongoing RA CI

4.1.5 Identification, installation, and activation of
monitoring tools Ongoing RA CI
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 877
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

4.2 SAP Upgrades & Enhancement Packs

4.2.1 SAP Major release upgrades Request Project CI

4.2.2 SAP Enhancement Pack upgrades Request Project CI

4.2.3 Upgrade database Request RA CI

4.2.4 Perform functional changes and
developments Request CI RA

4.2.5 Testing of upgraded system and functionality Request CI RA

4.3 SAP Support Packs

4.3.1 Apply SAP kernel upgrades Biannual RA CI

4.3.2 Apply SAP patches Annual RA CI

4.3.3 Apply SAP Notes Request RA RA

4.3.4 Post-support pack testing Request CI RA

4.4 SAP Security Management

4.4.1 Create/maintain/review/audit roles, profiles,
authorizations Ongoing CI RA

4.4.2 Create/maintain/lock/unlock users, assign
roles Ongoing CI RA

4.4.3 Maintain users/roles/profiles in client 000 Ongoing RA CI

4.4.4 Provide customer access to client 000 Request RA CI

4.4.5 Monitor and share information about security
fixes published by SAP Ongoing RA RA

4.5 Client Copies & Refreshes (excludes
repository, to non-production targets) Maximum quarterly

4.5.1 Perform copy/refresh Request CI RA

4.5.2 Perform technical post-processing Request CI RA

4.5.3 Perform validation of copied/refreshed system Request CI RA

4.6 System Copies (to non-production)

4.6.1 Perform system copy Request CI RA

4.6.2 Perform technical post-processing Request CI RA

4.6.3 Perform validation of installed system Request RA CI DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 878
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

4.7 Change Control

4.7.1 Application development, customizing,
configuration, maintenance, support Ongoing CI RA

4.7.2 Planning change requests Ongoing CI RA

4.7.3 Apply SAP notes for applications Ongoing CI RA

4.7.4 Apply SAP security notes Ongoing RA RA

4.8 Printer Management

4.8.1 Create, change, lock, unlock, maintain
printers within SAP Request CI RA

4.8.2 Printers within SAP, configured on the OS
(due to security constraints) Request RA CI

4.8.3 Analyze printing and spool issues Request CI RA

4.8.4 Spool system housekeeping Ongoing CI RA

4.8.5 Design and implement print forms Request CI RA

4.8.6 Troubleshoot issues with printer hardware Request CI RA

4.9 Desktop Support

4.9.1 SAPGUI support Request CI RA

4.9.2 SAP SSO support Ongoing CI RA

4.9.3 Desktop and front-end user support Request CI RA

4.10 Additional Proactive Services

4.10.1 Analyze SAP EarlyWatch Alert reports and
consider technical recommendations Ongoing RA CI

4.10.2 Implement data archiving strategy and
processes Request CI RA

4.10.3 Monitor and maintain data archiving systems Ongoing CI RA

4.11 System Installations / Migrations

4.11.1 Install new systems / migrate from on
premise to cloud Request Project CIP

4.11.2 Technical configuration of all
installed/migrated systems Request Project CIP

4.11.3 Integration of new/migrated systems to cloud
operations environment Request Project CIP
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 879
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

4.11.4 Integrate all hosted systems with customer
Solution Manager in cloud Request Project CIP

4.12 Disaster Recovery

4.12.1 Implement disaster recovery setup according
to architecture blueprint Request RA CIP

4.12.2 Develop plan for disaster recovery (data
center and system infrastructure only) Request RA CIP

4.12.3 Manage and monitor disaster recovery
architecture and replication Ongoing RA CIP

4.12.4 Develop plan for disaster recovery of
applications and connectivity to cloud Request RA CIP

4.12.5 Test disaster recovery system (data center
and system infrastructure only) Quarterly RA CIP

4.12.6 Execute full disaster recovery failover test Annually RA CIP

4.12.7 Technical and connectivity testing for disaster
recovery failover Annually RA CIP

4.12.8 Application testing for disaster recovery
failover Annually RA CI

4.13 Management of Local Area Network

4.13.1 Provide and maintain network at sites Ongoing CI RA 5 NetWeaver ABAP Operations

5.1 General Operations

5.1.1 Proactive availability monitoring of SAP
instances Ongoing RA CI

5.1.2 Troubleshooting SAP instances Ongoing RA CI

5.1.3 Analyze systems logs and fix technical
failures Ongoing RA CI

5.1.4 Proactive monitoring of SAP processes Ongoing RA CI

5.1.5 Analyze update terminations and take
appropriate action Ongoing RA CI

5.1.6 Clean up terminated updates Ongoing RA CI

5.1.7 Analyze lock entries and take appropriate
action Ongoing RA CI
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 880
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

5.1.8 Proactively monitor ABAP short dumps Ongoing RA CI

5.1.9 Troubleshoot performance issues (excludes
ABAP and application issues) Ongoing RA CI

5.1.10 Maintain SAP system profile parameters Ongoing RA CI

5.1.11 Implement/update tools for SAP support
service readiness Ongoing RA RA

5.1.12 Management of web service runtime Ongoing CI RA

5.1.13 Configure RFC connections to SAP and non-
SAP systems Ongoing CI RA

5.2 Interface Administration

5.2.1 Create/execute/monitor/troubleshoot batch
input sessions Ongoing RA CI

5.2.2 Configure/monitor/troubleshoot interfaces
and related (IDOCS, scripts etc.) basis
configuration
Ongoing RA CI

5.3 Job Scheduling

5.3.1 Schedule and monitor standard housekeeping
jobs Ongoing RA CI

5.3.2 Schedule/monitor/change application batch
jobs Request CI RA

5.4 Change Control

5.4.1 Configure and maintain SAP Transport
Management System and routes Request RA CI

5.4.2 Release tasks and transport requests Ongoing CI RA

5.4.3 Import transport requests Request CI RA

5.4.4 Troubleshooting SAP Transport Management
System Ongoing RA CI

5.4.5 Address functional transport issues Ongoing CI RA

5.4.7 Testing of completed transport requests Ongoing CI RA

6.0 Sandbox Basis administration Ongoing RA P

6.1 Knowledge transfer to City basis on Sandbox Ongoing R P DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 881
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

13. Addendum C: Change Request Form
The Change Request Form provided below may only be used pursuant to Section 4 (Not to Exceed Compensation) of this Agreement, regarding Additional Services, as an Attachment A (Scope of Work) to an approved Task Order as detailed in Section 4. The Change Request Form, by itself, is not permitted to be used separate from a Task Order as detailed under Section 4 and any use of a Change Request Form that is separate from and not part of an approved Task Order as detailed under Section 4 shall be void and without effect.

Agreement ref: Originator:

Client name: City of Palo Alto Change request date:

Title of change:

Reason for change:

Include an outline of the reason for the change and the impact of not implementing it. Attach written change request.

Description of
change:

Include full details of the change including any specifications, areas of the Services impacted.

Impact on charges:

Include full details of any charges, if any, for the change, and any revision to the charges.

Impact on
agreement:

Describe the resulting updates to the Clauses and Schedules to the Agreement.

Implementation
schedule:

Assumptions /
additional
information:

Provide any assumptions made at the time of the change and any relevant supporting information.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 882
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

14. [RESERVED]

15. [RESERVED]
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 883
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT A-1

PROFESSIONAL SERVICES TASK ORDER
CONSULTANT shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 are incorporated into this Task Order by this reference. CONSULTANT shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

C
ONTRACT NO.

OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1 A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE):
1B. TASK ORDER NO.:

2. CONSULTANT NAME:

3. PERIOD OF PERFORMANCE: START: COMPLETION:
4 TOTAL TASK ORDER PRICE: $__________________
BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT $_______________

5. BUDGET CODE_______________
COST CENTER________________
COST ELEMENT______________
WBS/CIP__________
PHASE__________

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:_____________________________________

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): _____________________________ I hereby authorize the performance of the
work described in this Task Order.

A
PPROVED:

CITY OF PALO ALTO
B
Y:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have
authority to sign on behalf of Consultant.

A
PPROVED:

COMPANY NAME: ______________________
B
Y:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 884
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT B

SCHEDULE OF PERFORMANCE
CONSULTANT shall perform the Services so as to complete each milestone within the number of days/ weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed (“NTP”) from the CITY. Exhibit A (Scope of Services) also contains deliverable and frequency information for the provision of Services under this Agreement.

Milestones
Completion
Number of Days/Weeks
(as specified below)
from NTP

1. Task 1: Transfer existing AWS hosting account in AWS cloud 5 to 6 weeks

2. Task 2: Maintain account with AWS for hosting City’s infrastructure
Annual ongoing

3. Task 3: Perform hosting and networking maintenance services Annual ongoing

4. Task 4: Perform SAP Basis Services Annual ongoing

5. Task 5: Perform ad-hoc services on as needed requests that are not covered in the Scope of Services. These services constitute Additional Services under Section 4 (Not to Exceed
Compensation) of this Agreement, implemented pursuant to City-approved Task Order as detailed in Section 4.

As-needed basis with the
performance schedule as
provided in the approved
Task Order, as noted in the
checkbox below.

Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on-call agreements per Section 1 or agreements with Additional Services per Section 4.)
The schedule of p erformance shall be as provided in the approved Task Order, as detailed in Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case of Additional Services, provided in all cases that the schedule of performance shall fall within the term as provided in Section 2 (Term) of this Agreement.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 885
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT C

COMPENSATION
CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the rate schedule attached as E xhibit C-1 up to the not to exceed budget amount for each task set forth below.

CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below , provided that the total compensation for the Services, including any specified reimbursable expenses, and the total compensation for Additional Services (if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this Agreement.

CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this /these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY. (CONTINUED ON THE NEXT PAGE.)
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 886
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

BUDGET SCHEDULE

TASK NOT TO EXCEED AMOUNTS

CONTRACT
YEAR 1

CONTRACT
YEAR 2

CONTRACT
YEAR 3

SUBTOTALS
Task 1
(Transfer existing AWS hosting
account in AWS cloud)
$4,500
(One-time)
-- -- $4,500
(One-time)
Task 2
(Maintain account with AWS for
hosting City’s infrastructure. Task 2
costs include estimated AWS costs.

If actual AWS costs are lower than
estimated, Consultant will charge
City the lower costs. If actual AWS
costs are higher, City may apply
Additional Services funds to cover
the overage per Section 4, or the
parties will amend the Agreement
per Section 29.4 for City to add
funds to cover the overage.)
$192,000
(One-time)
$144,000
(Annual)
--
$144,000
(Annual)
--
$144,000
(Annual)
$192,000
(One-time)
$432,000
(Annual)
Task 3
(Perform hosting and networking
maintenance services)
$86,400
(Annual)
$86,400
(Annual)
$86,400
(Annual)
$359,200
Task 4
(Perform SAP Basis Services) $8,640
(One-time Fee)
$
372,600
(Annual)
--
$
372,600
(Annual)
--
$
372,600
(Annual)
$8,640
(One Time)
$
1,117,800
(Annual)
Subtotals for Services (Tasks 1-4) $808,140 $603,000 $603,000 $2,014,140 Reimbursable Expenses (if any) $0 $0 $0 $0
Subtotals for Services and
Reimbursable Expenses (if any) $808,140 $603,000 $603,000 $2,014,140 Task 5
(Additional Services)
(Perform ad-hoc services on as-
needed requests that are not covered
in the Scope of Services. These
services constitute Additional
Services under Section 4 (Not to
Exceed Compensation) of this
Agreement, implemented pursuant
to City-approved Task Order as
detailed in Section 4.)
As needed, per
Task Order, per
Section 4 of this
Agreement, Not
to Exceed
Amount at Far
Right Across All
Contract Years
As needed, per
Task Order,
per Section 4
of this
Agreement,
Not to Exceed
Amount at Far
Right Across
All Contract
Years
As needed, per
Task Order,
per Section 4
of this
Agreement,
Not to Exceed
Amount at Far
Right Across
All Contract
Years
$200,000
Maximum Total Compensation $808,140* $603,000* $603,000* $2,214,140 *Maximum Total Compensation Amounts per each contract year in the table above do not include the cost of Additional Services that may be approved by City per Section 4 (Not to Exceed Compensation); the cumulative amount of which across all contract years shall not exceed the maximum amount for Additional Services in this Agreement.

REIMBURSABLE EXPENSES
CONSULTANT’S ordinary business expenses , such as administrative, overhead, administrative support time /overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in -house printing, insurance and DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 887
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder.

Reimbursable expenses, if any are specified as reimbursable under this section , will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: NONE
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 888
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT C-1

SCHEDULE OF RATES
CONSULTANT’s schedule of rates is as follows:

Position Title Hourly Rate
Senior Basis or AWS Architect $155.00
Basis Engineer or AWS $120.00
Note: Hourly rate range is set for the duration of the engagement.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 889
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT D

INSURANCE REQUIREMENTS
C

ONSULTANTS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT

OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA.

AW
ARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS AS SPECIFIED HEREIN.

REQUIRED TYPE OF COVERAGE REQUIREMENT

MINIMUM LIMITS
EACH

OCCURRENCE AGGREGATE
YES
YES
WORKER’S COMPENSATION
EMPLOYER’S LIABILITY

STATUTORY

STATUTORY STATUTORY STATUTORY

YES GENERAL LIABILITY, INCLUDING PERSONAL

INJURY, BROAD FORM PROPERTY DAMAGE

BLANKET CONTRACTUAL, AND FIRE LEGAL

LIABILITY

BODILY INJURY
PR

OPERTY DAMAGE

BODILY INJURY & PROPERTY
DAMAGE COMBINED.
$2,000,000
$2,
000,000
$2,
000,000
$2,000,000
$2,
000,000
$2,
000,000

YES TECHNOLOGY ERRORS AND OMISSIONS LIABILITY
COVERAGE. THE POLICY SHALL AT A MINIMUM

COVER PROFESSIONAL MISCONDUCT OR LACK OF

REQUISITE SKILL FOR THE PERFORMANCE OF

SERVICES DEFINED IN THE CONTRACT AND SHALL

ALSO PROVIDE COVERAGE FOR THE FOLLOWING
RISKS:
(i) NETWORK SECURITY LIABILITYARISING

FROM UNAUTHORIZED ACCESS TO, USE OF, OR

TAMPERING WITH COMPUTERS OR COMPUTER

SYSTEMS, INCLUDING HACKERS, EXTORTION, AND
(ii) LIABILITY ARISING FROM INTRODUCTION

OF ANY FORM OF MALICIOUS SOFTWARE

INCLUDING COMPUTER VIRUSES INTO, OR
OTHERWISE CAUSING DAMAGE TO THE CITY’S OR
THIRD PERSON’S COMPUTER, COMPUTER SYSTEM,

NETWORK, OR SIMILAR COMPUTER RELATED

PROPERTY AND THE DATA, SOFTWARE AND
PROGRAMS THEREON.

CONTRACTOR SHALL MAINTAIN IN FORCE DURING
THE FULL LIFE OF THE CONTRACT.

T

HE POLICY SHALL PROVIDE COVERAGE FOR

BREACH RESPONSE COSTS AS WELL AS

REGULATORY FINES AND PENALTIES AS WELL AS

CREDIT MONITORING EXPENSES WITH LIMITS
SUFFICIENT TO RESPOND TO THESE OBLIGATIONS.

ALL DAMAGES $5,000,000 $5,000,000
YES CYBER AND PRIVACY INSURANCE.

SUCH INSURANCE SHALL INCLUDE COVERAGE FOR

LIABILITY ARISING FROM COVERAGE IN AN

AMOUNT SUFFICIENT TO COVER THE FULL

REPLACEMENT VALUE OF DAMAGE TO,

ALTERATION OF, LOSS OF, THEFT, DISSEMINATION

OR DESTRUCTION OF ELECTRONIC DATA AND/OR
USE OF CONFIDENTIAL INFORMATION, “PROPERTY”

OF THE CITY OF PALO ALTO THAT WILL BE IN THE

CARE, CUSTODY, OR CONTROL OF VENDOR,

INFORMATION INCLUDING BUT NOT LIMITED TO,

BANK AND CREDIT CARD ACCOUNT INFORMATION

OR PERSONAL INFORMATION, SUCH AS NAME,

ADDRESS, SOCIAL SECURITY NUMBERS,

PROTECTED HEALTH INFORMATION OR OTHER

PERSONAL IDENTIFICATION INFORMATION, STORED
OR TRAMSITTED IN ELECTRONIC FORM.

ALL DAMAGES $5,000,000 $5,000,000
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 890
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

YES A UTOMOBILE LIABILITY, INCLUDING ALL OWNED,

HIRED, NON-OWNED

BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE
PR

OPERTY DAMAGE

BODILY INJURY AND

PROPERTY DAMAGE,

COMBINED
$1,000,000
$1,000,000
$1,000,000
$1,
000,000
$1,
000,000
$1, 000,000
$1,000,000
$1,000,000
$1,
000,000
$1,
000,000

YES PROFESSIONAL LIABILITY, INCLUDING, ERRORS

AND OMISSIONS, MALPRACTICE (WHEN

APPLICABLE), AND NEGLIGENT PERFORMANCE
ALL DAMAGES $1,000,000
YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND

EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF

ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HER

EIN DESCRIBED, INSURING NOT ONLY
CONTRACTOR AND ITS SUBCONTRACTORS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.

I. INSURANCE COVERAGE MUST INCLUDE:

A. A C

ONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONSULTANT’S AGREEMENT TO INDEMNIFY CITY.

II. T

HE CONSULTANT MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING URL: HTTPS://WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569 III. E

NDORSEMENT PROVISIONS WITH RESPECT TO THE INSURANCE AFFORDED TO ADDITIONAL INSUREDS:

A. PRIMARY COVERAGE
W

ITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED,

INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR

CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS.

B. CROSS LIABILITY
T

HE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER

THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE

INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULT IPLE

INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY.

C. NOTICE OF CANCELLATION

1. I

F THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON

OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.

2. I

F THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.

E

VIDENCE OF INSURANCE AND OTHER RELATED NOTICES ARE REQUIRED TO BE FILED WITH THE CITY OF PALO ALTO.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 891
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT E

INFORMATION PRIVACY POLICY
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 892
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 893
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 894
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 895
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 896
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 897
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 898
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 899
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

EXHIBIT F

CYBERSECURITY TERMS & CONDITIONS
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 900
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 901
6 Supplement
C
ity of Palo Alto Professional Services
Contract No. C22182051 Rev. Dec.15, 2020

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 902
6 Supplement
Addendum_AWS_Services_v4-final(5.20.2021EB)__20220609_clean copy (chgs accepted +formatting cleanup) Page 1 Copyright ©2021 Afonza LLC, d/b/a EPI-USE AWS Services – Confidential

EXHIBIT G

ADDENDUM
SUPPLEMENTAL TERMS – AWS Solution Provider Program for End Customers This Addendum (“Addendum”) to the Agreement (“Agreement”) between EPI-USE Labs, LLC (“EPI- USE”) and the CITY OF PALO ALTO, a California chartered municipal corporation (“ Client”), apply solely to the AWS Authorized Services (“Authorized Services”) and Solutions (defined below) and not to any other EPI-USE product or service. EPI-USE is an authorized solution provider and value-added reseller (“Authorized Solution Provider ”) for Amazon Web Services, Inc (“ AWS”). Client desires to obtain these Authorized Services or integrated solutions combining one or more products or services (“Solutions”) from EPI-USE. Client can use the AWS accounts to purchase Solutions from EPI -USE. EPI-USE will be Client’s point of contact for the Solutions on such accounts, including for pr icing and billing. In the event of any ambiguity or conflict between the terms of this Addendum and the terms of the Agreement, the terms and conditions of this Addendum shall prevail.

The Addendum terms, AWS Solution Provider Program Guide for End Customers, is available at:
https://s3-us-west-2.amazonaws.com/solution-provider-program-legal- documents/AWS+Solution+Provider+Program+-+Program+Guide+for+End+Customers.pdf and may be updated by AWS from time to time.

1. Definitions

1.1. “End Customer” is the Client who signed the Agreement, as well as references to “you” and “
your”, in this Addendum.

C
apitalized terms have the meanings set forth in the Services Agreement between End Customer and EPI-USE Labs, LLC, to which this Addendum is an incorporated attachment. 2 . Acces
s to and Use of Authorized Services.

The AWS Solution Provider Program Guide provides information on opening, accessing, and using your own AWS accounts to purchase Authorized Services from your Authorized Solution Provider. The Services Agreement will govern all access to and use of the Services on your AWS accounts, except for fees, payment, pricing, and tax terms for your use of the Services, which are superseded by such terms in your agreement with your Authorized Solution Provider. You will receive your invoice from and pay your Authorized Solution Provider for your use of the Solutions, as well as your use of any other Services on the AWS accounts. You hereby agree that your Authorized Solution Provider is EPI -USE, and you authorize EPI-USE, as your agent, to access your AWS accounts to provide the Authorized Services to you. 3 . P
rogram account Creation.

If you do not already have an AWS account, you can create an AWS account , or EPI-USE can assign an AWS account to you (with AWS’s consent). If EPI-USE creates AWS accounts on your behalf (with your written consent), you should request the root user credentials at the time the accounts are created, unless the account is a Master Payer or Management account , then EPI-USE will retain the root user credentials.

AWS does not disclose root user credentials and cannot release those credentials to you.

DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 903
6 Supplement
Addendum_AWS_Services_v4-final(5.20.2021EB)__20220609_clean copy (chgs accepted +formatting cleanup) Page 2 Copyright ©2021 Afonza LLC, d/b/a EPI-USE AWS Services – Confidential F
or a list of tasks that require root user credentials, please visit:
https://docs.aws.amazon.com/general/latest/gr/aws_tasks-that-require-root.html (or any successor or related location designated by AWS, as may be updated by AWS from time to time per AWS’s discretion).
3 .1 Joining Accounts.

In order to transition your AWS account from a direct account with AWS to a program account in the Solution Provider Program governed by your Services Agreement with AWS (an “ End Customer Account”); (a) you must join the account to the Management Account specified by EPI -USE (“Program Management Account”) using AWS Organizations or any successor or related Service designated by AWS (Service Terms apply), and , (b) for the account, the Tax Settings page in the console must be updated to EPI-USE’s tax settings, including business legal address, tax registration number, and business legal name or if directed pursuant to the Tax Settings page, the Payment Methods page in the console must be updated to EPI-USE’s billing information, including billing address. You can transition additional AWS accounts from direct accounts with AWS to End Customer Accounts in the Solution Provider Program in the same way, or you can authorize EPI-USE in writing to create End Customer Accounts on your behalf. 3 .2 Assigning Accounts.

If you already have AWS Organizations set up for your accounts, you may want to assign your own Management Account to EPI-USE (with AWS’s consent). When you assign your Management Account to EPI-USE, it will become the Program Management Acco unt in the Solution Provider Program, and you will need to provide the root user credentials to the Authorized Solution Provider’s account, but the Member Accounts joined to the Program Management Account will be End Customer Accounts and will remain your own accounts. Refer to section 3.3 (Account Settings) below.

3.3 Account Settings:

The terms governing the Program Management Account are between AWS and EPI-USE. When assigning your Management Account to EPI -USE to become the Program Management Account, you will need to provide the Management Account root user credentials to EPI-USE. To properly assign the account details under the Solution Provider Program, the following party’s information should be included for Program Management Accounts and Program Accounts:

P

ROGRAM MANAGEMENT
ACCOUNT (aka payer account)

END CUSTOMER
ACCOUNTS (aka linked
accounts)
Email/Domain EPI-USE’s End Customer’s (using an email
domain owned by End Customer)
Billing Information EPI-USE’s EPI-USE’s
Tax Settings EPI-USE’s EPI-USE’s
Company Name EPI-USE’s End Customer’s (using your
company’s full legal name)
Root User Credentials EPI-USE’s End Customer
DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 904
6 Supplement
Addendum_AWS_Services_v4-final(5.20.2021EB)__20220609_clean copy (chgs accepted +formatting cleanup) Page 3 Copyright ©2021 Afonza LLC, d/b/a EPI-USE AWS Services – Confidential If you have any special arrangements with AWS with respect to any AWS accounts that you intend to transition from a direct account with AWS to an End Customer Account in the Solution Provider Program, contact your current AWS account manager to discuss any potential impli cations on your special arrangement.

4. A
uthorized Solution Provider Access.

There are two operating modes within AWS Organizations: Consolidated Billing and All Features. You should work with your Authorized Solution Provider to determine which mode is best for you.

If Consolidated Billing is enabled, only your usage and invoices are made available to your Authorized Solution Provider. You can then use AWS Identity and Access Management (IAM) to manage your Authorized Solution Provider’s access to your End Customer Account, AWS resources, and the Services.

For guidance and best practices, visit
https://docs.aws.amazon.com/IAM/latest/UserGuide/best-
practices.html (or any successor or related location designated by AWS, as may be updated by AWS from time to time).

If All Features is enabled, your usage and invoices are made available to your Authorized Solution Provider, and your Authorized Solution Provider will have full control over what your End Customer Accounts can do. Additionally, through AWS Single Sign -On integration with AWS Organizations, your Authorized Solution Provider may also have access to your Content. Your Authorized Solution Provider may provide access to their Program Management Account to you and can work with you to use only IAM to access the Program Management Account. Further, your Authorized Solution Provider may choose to restrict its access to the Program Management Account via its root user credentials, by working with you to implement multi-factor authentication and giving you sole control over one of the factors required for authentication.

If you allow your Authorized Solution Provider to collect, use, transfer, disclose, and otherwise proce ss your Content or Account Information, including personal data, you should familiarize yourself with your Authorized Solution Provider’s relevant privacy practices, which may differ from AWS’s privacy practices.

Note that in accordance with the AWS Organizations user guide, once All Features mode is enabled, you cannot revert to Consolidated Billing mode. To access a copy of the AWS Organizations user guide, visit https://docs.aws.amazon.com/organizations/latest/userguide/orgs_introduction.html (or any successor or
related location designated by AWS, as may be updated by AWS from time to time). 5 . Au
thorized Services
I
f you purchase AWS Managed Services from EPI -USE, you may disclose confidentially to EPI-USE the AWS Managed Services Addendum between you and AWS.

6. A
WS and Authorized Solution Provider Relationship
EPI-
USE and its affiliates are not agents of AWS for any purpose and do not have the authority to bind AWS.

7. L
eaving Your Authorized Solution Provider
If you decide to leave your Authorized Solution Provider; (a) you must unjoin your End Customer Accounts from the Program Management Account you are leaving (or have EPI -USE assign the Program Management Accou nt to you), and (b) for the accounts, the Tax Settings page in the console must be updated to your tax settings, including business legal address, tax registration number, and business legal name (if applicable) or if directed pursuant to the Tax Settings page, the Payment Methods page in the console must be updated to your billing information, including billing address. Consult your A greement DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 905
6 Supplement
Addendum_AWS_Services_v4-final(5.20.2021EB)__20220609_clean copy (chgs accepted +formatting cleanup) Page 4 Copyright ©2021 Afonza LLC, d/b/a EPI-USE AWS Services – Confidential with your Authorized Solution Provider to determine the implications of termination . EPI-USE will continue to bill you for any usage or services reported to EPI-USE until the following steps are completed:
• Provide a valid payment method;
• Agree to the terms of the AWS Customer Agreement for the account; • Verify the account by phone;
• Choose an AWS Support plan for the account; and
• Email EPI-USE a verification of the steps taken to remove/unlink the account from EPI -USE.

Ver
ification must be sent to: [email protected] DocuSign Envelope ID: C06F04C2-1E00-454B-951B-89A65E816AE9 a
Packet Pg. 906
6 Supplement
(ID # 14526)City of Palo Alto
City Council
Supplemental Report
Meeting Date: 6/20/2022 Report Type: Action Items
City of Palo Alto Page 1
Title: PUBLIC HEARING: Adoption of the Community Development Block Grant Funds (CDBG) Fiscal Year 2022 -23 Annual Action Plan and Adoption of a Resolution Approving Use of CDBG Funds for FY 2022 -23; Approval of a Substantial Amendment to the CDBG Fiscal Yea r 2020-21 Annual Action Plan and Adoption of an Associated Resolution; and Budget Amendments in the FY 2023 Operating Budget in the CDBG Fund and the General Fund From: City Manager
Lead Department: Planning and Development Services
Additional Recommendation

1. Approve an amendment to the Fiscal Year 2023 Operating Budget Appropriation for the General Fund (requires 2/3 approval) by:
a. Increasing the expense appropriation in the Planning and Development Services Department by $167,477; and
b. Decreasing the Budget Stabilization Reserve by $167,477.

Executive Summary
This At -Places Memorandum summarizes an issue that arose after publication of the staff report and includes an additional recommendation for a budget amendment in the General Fund. Staff recommends re consideration of federal funding, Community Development Block Grant (CDBG) for Downtown Streets Team (Downtown Streets) and reallocating the funding to the Mitchell Park 525 East Charleston housing project. Staff’s assessment is that Downtown Streets may no longer qualif y as a Community Based Development Organization (CDBO) and therefore CDBG funding should be reallocated. Staff recommends funding Downtown Streets programs in Fiscal Year 2022 -2023 from the General Fund Budget Stabilization Reserve , as reflected in the additional budget amendment recommendation. Funding adjustments for the FY 2021 -2022 period will be brought forward in a subsequent report as part of the FY 2022 Year-End process for Council’s consideration.

Discussion
The Department of Hous ing and Urban Development (HUD) administers of the CDGB program, including all the requirements grantees must meet to receive funding under certain CDBG 34 Packet Pg. 907

29. Supplement
City of Palo Alto Page 2
funding categories. Specifically, funding for the Economic Development, Housing Rehabilitation, Public Improvements and Facilities category can only be allocated to qualified CDBOs.

To qualify for as a CBDO, organizations must meet all the criteria set forth by the Department of Housing and Urban Development (HUD) in §570.204(c)(1), (2), or (3). Staff has consulted with HUD and Downtown Streets to evaluate options for compliance. Downtown Streets has indicated a preference for applying for an exemption, a process defined by HUD. The exemption request letter to HUD would describe that, though Downtown Stree ts does not meet the specific criteria listed above, the Downtown Streets organizations remains sufficiently similar in purpose, function, and scope to qualified CBDOs. An exemption request would be lengthy, and approval is not guaranteed. HUD advised the process could take at least six months.

If the City does not reallocate the $160,477 and Downtown Streets does not get the exemption in time, the potential consequence could be not achieving the HUD timeliness ratio by May 1, 2023. Under the provisions of 24 CFR 570.802 of the CDBG regulations, 60 days prior to the end of the program year (May 1 , 2023), the grantee (City of Palo Alto) is considered timely if the balance in its line of credit does not exceed 1.5 times the annual grant. HUD determines this by calculating the ratio of unex pended funds to the annal grant award . To do this, HUD sums the amount of program income the City has on hand and the funds remaining in the CDBG line of credit and divides it by the amount of the annual grant award. If the ratio is less than or equal to 1.5 times the grant amount, the City would be considered timely. If the ratio is more than 1.5 times the grant amount , then the City would be considered untimely, and in noncompliance.

Not meeting the timeliness test could po tentially cause HUD to reduce the City’s CDBG allocation the following year.

Reallocation
CDBG has three allocation categories:

Category Cap
1 Public Services 15% of City Allocation
2 Planning and Administration 20% of City Allocation
3 Economic De velopment, Housing Rehabilitation,
Public Improvements and Facilities
Uncapped
Downtown Streets falls into category three. If Council concurs with staff recommendation and reallocates these funds, they should be allocated to another organization within category three.

Due to increasing pre -development costs, Eden Housing is interested in receiving additional CDBG funding for its project at 525 East Charleston. Table 2, below, summarizes this year’s recommended allocations including the recommended revision. 34 Packet Pg. 908
3429. Supplement
City of Palo Alto Page 3
Table 2: 2022-23 CDBG Annual Action Plan
Agency/Program Name
2021-22
Funded
Amount
2022-23 Original
Recommended
Amount
2022-23 Revised
Recommended
Amount
Public Services
Alta Housing – SRO Resident Support $24,535 $22,413 $22,413 Catholic Charities/ Ombudsman Program for
the rights of seniors in long term care facilities. $10,000 $10,000 $10,000 LifeMoves (formerly Inn Vision)/Opportunity
Services Center $31,545 $26,660 $26,660
Silicon Valley Independent Living
Center/Housing and Emergency Services $14,020 $14,021 $14,021 Project Sentinel/Fair Housing Services n/a $24,881 $24,881 Public Services Total (Not to Exceed $97,975) $80,100 $97,975 $97,975 Planning & Administration
City of Palo Alto/CDBG Administration $99,304 $121,816 $121,816 Project Sentinel/Fair Housing Services $33,698 $8,817 $8,817 Planning & Administration Total (Not to
Exceed $130,633) $133,002 $130,633 $130,633
Economic Development
Downtown Streets Team/Workforce
Development Program $160,477 $160,477 $0.00
Economic Development Total $160,477 $160,477 $0.00
Rehabilitation
Rebuilding Together Peninsula/ Critical health
and safety related home repair needs for low-
income homeowners.
$73,135 $73,135 $73,135
Mitchell Park – 525 E. Charleston – Affordable
Housing (Construction) n/a $190,948 $351,425
Rehabilitation Total $73,135 $264,083 $424,560
New CDBG-CV Allocation
MOVE Mountain View – Safe Parking Program n/a $160,300 $160,300 LifeMoves – COVID-19 Testing Program n/a $34,201 $34,201 New CDBG-CV Allocation Total n/a $194,501 $194,501
GRAND TOTAL $847,669 $847,669
2 0Tle 1: Revised Allocations21-22 Allocation
34 Packet Pg. 909
3429. Supplement
City of Palo Alto Page 4
Alternate Funding Source for Downtown Streets
Downtown Streets has been essential in the past at providing services to those in need in Palo Alto. Since CDBG funding is not recommended to be allocated to Downtown Streets this year, the City proposes to fund the program using funds from the General Fund Budget Stabilizati on Reserve in FY 2023. A resolution for this issue in FY 2022 funding will be brought forward for Council’s consideration at a later date as part of the FY 2022 Year-End process.

Resource Impact
The recommendation in this report will result in continued financial support of Downtown Streets Team programs and an additional General Fund expense of $167,477 in FY 2023. The General Fund Budget Stabilization Reserve (BSR) was recommended to be $45.4 million or 18.3 percent of the FY 2023 Budget, as part of th e Budget Adoption Report (CMR 14352). This action will reduce the BSR to $45.2 mi llion or 18.2 percent of the FY 2023 Budget, which is within the approved 15 percent to 20 percent range, but slightly below the Council target of 18.5 percent.

Funding adjustments for FY 2022 Downtown Streets Team allocations will be brought forward during the FY 2022 Y ear-End process to ensure the City remains in compliance with HUD requirements.
34 Packet Pg. 910
3429. Supplement
(ID # 13984)City of Palo Alto
City Council
Late Packet Staff Report
Meeting Date: 6/20/2022 Report Type: Action Items
City of Palo Alto Page 1
Title: Adoption of Resolutions: (1) Placing a Measure Affirming the Gas Utility Transfer on the November 2022 Ballot; (2) Placing a Business Tax on the November 2022 Ballot; and (3) Adopting a Spending Plan for Business Tax Proceeds
From: City Manager
Lead Department: Administrative Services

RECOMMENDATION
Staff recommends that the City Council:

1. Adopt the attached Resolution to submit a measure to the voters at the general municipal election on November 8, 2022, to affirm the natural gas utility transfer (Attachment A);

2. Adopt the attached Resolution to submit a measure to the voters at the general municipal election on November 8, 2022, to adopt a business tax (Attachment B); and

3. Adopt the attached Resolution to inform the public of Council’s spending plan for business tax proceeds (Attachment C)

BACKGROUND & DISCUSSION
The City of Palo Alto places a high value on fiscal sustainability and has worked diligently to address this in a variety of areas. The Fiscal Sustainability Workplan of 2019 (CMR 10267) outlines a number of City initiatives, including proactive funding contributions for the city’s long-term liabilities for both pension and Other Post-Employment Benefits (OPEB) and strategies to structurally balance the General Fund’s revenue and expenditures on an ongoing basis. The two revenue measures before Council are important elements in continuing progress towards long term sustainable budgets that meet the public’s needs.

Measure Affirming the Gas Utility Transfer. Palo Alto is fortunate to own and operate its own utilities. In 1950, Palo Alto voters approved a Charter provision authorizing the use of some utility rate revenues for City services. This was a common practice. California cities that started publicly-owned utilities in the post-war era typically set rates at reasonable levels and used some of the proceeds to fund city services. Over the ensuing decades, Palo Alto’s gas and electric utilities have transferred funds each year into the City’s general fund, providing a stable Packet Pg. 911
3431. Late Packet
City of Palo Alto Page 2
revenue source that supports City services, including police protection, fire and emergency medical services, 911 response, parks, and roads.

In 2010, California voters adopted Proposition 26, which added new rules on how cities may set rates and charges for services, and how the funds collected may be spent. The new law did not directly address utility transfers, and most California cities with public utilities continued to make their annual transfers. Since 2010, however, a series of court decisions raised questions about the transfers, and in 2016, a class action lawsuit, Green v. City of Palo Alto, was filed that claimed Palo Alto’s gas and electric transfers are unlawful under Proposition 26. In 2021, the Santa Clara Superior court held that the electric transfer is lawful and may continue. The court also held, however, that a portion of the gas transfer is a tax that requires voter approval to continue. Both sides have appealed.

City leaders believe it is prudent to seek voter affirmation of the gas transfer so that the services funded by the transfer and valued by the community can continue. Voter affirmation of the transfer will continue Palo Alto’s longstanding gas rate-setting practice and will not be the cause of a rate increase.

In the meantime, the City has been reserving funds so that money is available to refund to ratepayers at the appropriate time. Last year, the City cut services to account for the revenue reduction, including firefighters, police officers, and librarians. Next year, the City will use one- time funds to partially restore these services but if the transfer is not ratified by the voters, ongoing service reductions will likely be required.

Measure Adopting a Business Tax. Palo Alto is one of only a few California cities that does not require local businesses to contribute to city services through a business tax. Prior to the COVID-19 pandemic, the Council discussed adding a business tax to enhance long term fiscal sustainability and to help meet significant emerging public needs, particularly with respect to rail grade separations and affordable housing. The Council considered various business tax models. On March 23, 2020, in response to the COVID-19 public health emergency and sharp economic contraction, the City Council directed staff to discontinue work on the development of a local business tax measure for November 2020. In August 2021 (CMR 12381), Council directed City staff to resume this work and designated the Finance Committee as the working body to review and make recommendations on a potential a potential business tax for the November 2022 election. Taken together, over four years the Committee and City Council have met a total of 23 times to discuss a potential business tax, including refinement of the tax structure, a spending plan for revenues, constituent polling, and community and stakeholder engagement. A summary of the City’s work on revenue generating ballot measures can be found in CMR 13983, Attachment G.

Staff returned to the City Council on June 13, 2022 (CMR 13983 and CMR 14501) with draft language for a business tax and a measure to affirm the gas general fund transfer for the Packet Pg. 912
3431. Late Packet
City of Palo Alto Page 3
November 2022 election, and a resolution to establishing Council’s intentions for the use of business tax proceeds. Attached to this report are:
• Resolution of the Council of the City of Palo Alto Calling a Special Election for November 8, 2022 for Submittal to the Qualified Electors of the City a Measure Affirming the City’s Gas Utility General Fund Transfer (which includes the ballot question and ordinance amending the Palo Alto Municipal Code to affirm the gas general fund transfer)
• Resolution of the Council of the City of Palo Alto Calling a Special Election for November 8, 2022 for Submittal to the Qualified Electors of the City a Measure Amending Title 2 of the Municipal Code to Add Chapter 2.37 to Establish a Tax on Businesses Operating in the City of Palo Alto (which includes the ballot question and ordinance amending the Palo Alto Municipal Code to establish a business tax)
• Resolution of the Council of the City of Palo Alto Regarding Uses of Proceeds of a Business Tax to be Submitted to the Voters for Approval in November 2022

TIMELINE
The Santa Clara County Registrar of Voters (ROV) requires measure resolutions be submitted no later than August 12, 2022.

RESOURCE IMPACT
Ballot Measure Placement Resource Impact
The ROV estimates that placing two measures on the November 2022 election ballot will cost approximately $172,000, or $86,000 each. Total costs for the November 2022 election, including Councilmember elections, is estimated at $333,000. Appropriation for these funds is included in the FY 2023 Proposed Budget at the prior estimate of $320,000.

Ballot Measure Revenue Generation Resource Impact
The revenue generated by a potential ballot measure will be directly impacted by the structure and rates approved by the City Council. The revenue estimates are summarized below:
▪ Affirmation of the Gas Utility Transfer: $7 million gross revenues annually This would affirm the current practice of inclusion of this expense in the development of gas utility rates and would not increase gas rates beyond existing forecasted changes.

Current gas utility rates for residential customers remain below comparators such as PG&E. Additional information on gas rate comparisons can be found in the FY 2023 Gas Utility Financial Plan.

Packet Pg. 913
3431. Late Packet
City of Palo Alto Page 4
▪ Business Tax: approximately $19 million gross revenues annually The total estimated net revenue assumes the tax characteristics as directed in Council’s June 13, 2022 meeting and contained in the attached Resolution and Ordinance.

Administrative costs to collect and implement the tax are estimated to range between $500,000 and $1 million.

STAKEHOLDER ENGAGEMENT
Feedback was solicited from the community and stakeholders in the form of an online and mail- in communitywide survey (433 respondents), six focus group sessions, a community listening session, city newsletter and blog posts, utility bill inserts, and three voter polls. A landing page on the City’s website titled, Fiscal Sustainability: A Community Conversation, was also developed.

ENVIRONMENTAL REVIEW
This activity is not a project under the California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, Section 15378, because it has no potential for resulting in either a direct or reasonably foreseeable indirect physical change in the environment. .

Attachments:
• Attachmenta: Attachment A: Resolution Placing Gas Utility Transfer on November 2022 Ballot
• Attachmentb: Attachment B: Resolution Placing a Business Tax on November 2022 Ballot
• Attachmentc: Attachment C: Business Tax Spending Resolution Packet Pg. 914
3431. Late Packet
Not Yet Approved
Resolution No. ______
Resolution of the Council of the City of Palo Alto Calling a Special Election for November 8, 2022 for Submittal to the Qualified Electors of the City a Measure Affirming the City’s Gas Utility General Fund Transfer
R E

C I T A L S
A. P
ursuant to the City of Palo Alto Charter, Article VII, Section 2 (Public Utilities Revenue) the City of Palo Alto annually transfers funds from the natural gas utility to the general fund to fund general city services.

B. I
n 2021, in the case of Green v. City of Palo Alto, Santa Clara County Superior Court No. 16CV300760, the Superior Court determined that the portion of transferred funds that are generated from retail natural gas rates are a tax and therefore unlawful under A rticle XIII C, section 1, subdivision (e)(2) of the California Constitution unless approved by voters.

C. The City depends on the gas utility transfer to fund basic City services such as roads, parks, libraries, climate change reduction, and police, fire, emergency medical, and 9-1-1 response.

D. A pr
oposed ordinance attached hereto and incorporated herein by reference as Attachment “A ” (the “Ordinance”) would amend the Palo Alto Municipal Code to affirm Palo Alto’s existing and decades-old practice of annually transferring up to 18% of the gross revenues of the gas utility (generated by retail natural gas rates) to the general fund to support general city services.

E. B y its Resolution No. 10045 the City Council called a general municipal election for November 8, 2022 (“Election”).

F. Pursuant to Government Code Section 53724 and Election s Code Section 9222, the City Council desires to submit the Ordinance to the voters of the City.

The City Council of the City of Palo Alto RESOLVES as follows:

S
ECTION 1. Findings. The City Council finds and determines that each of the findings set forth above are true and correct.

S
ECTION 2. General Tax Election. The City Council proposes to impose the general tax set forth in the Ordinance and to present this proposal to the vo ters on November 8, 2022.

S
ECTION 3. Measure. Pursuant to Elections Code Section 9222, the City Council hereby submits the Ordinance to the voters at the Election and orders the following question to be submitted to the voters at the Election:
a
Packet Pg. 915
3431. Late Packet

NOT YET APPROVED

2 Shall the measure affirming the City of Palo Alto’s existing and decades-old practice of annually transferring no more than 18% of the gross revenues from the City’s natural gas utility (generated by the City’s retail natural gas rates) to its general fund to support general city services such as roads; parks; libraries; climate change reduction; police, fire, emergency medical, and 9-1-1 response; providing
approximately $7 million annually in existing revenues until ended by voters, be adopted?
YES
NO

This question requires the approval of a majority of those casting votes.

SECTION 4 . Adoption of Measure. The measure to be submitted to the voters is attached to this Resolution as Attachment A and incorporated herein by this reference.

SECTION 5. Notice of Election. Notice of the time and place of holding the E lection is hereby given, and the City Clerk is authorized, instructed and directed to give further or additional notice of the Election, in time, form and manner as required by law.

SECTION 6 . Impartial Analysis. Pursuant to Elections Code Section 9280, the City Council hereby directs the City Clerk to transmit a copy of the measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the effect of the measure on the existing law and the operation of the measure, and transmit such impartial analysis to the City Clerk on or before August 23, 2022.

SECTION 7 . Ballot Arguments . Pursuant to Elections Code Section 9286 et. seq., August 16, 2022 at 5:00 p.m. shall be the de adline for submission of arguments in favor of, and arguments against, any local measures on the ballot. If more than one argument for and/or against is received, the priorities established by Elections Code Section 9287 shall control.

SECTION 8. Rebuttal Arguments. The provisions of Elections Code Section 9285 shall control the submission of any rebuttal arguments. The deadline for filing rebuttal arguments shall be August 23, 2022 at 5:00 p.m.

SECTION 9. Consolidation Request. The Council of the City of Palo Alto requests the governing body of any other political subdivision, or any officers otherwise authorized by law, to partially or completely consolidate such elections and the City Council consents to such consolidation. The Council requests the Board of Supervisors of Santa Clara County to include on the ballots and sample ballots, all qualified measures submitted by the City Council to be ratified by the qualified electors of the City of Palo Alto. The Council acknowledges that the Election will be held and conducted according to procedures in the Elections Code, including Section 10418.

SECTION 10 . Request for County Services. Pursuant to Section 10002 of the Elections Code, the Council of the City of Palo Alto hereby requests the Board of Supervisors of Santa Clara a
Packet Pg. 916

NOT YET APPROVED
3 County to permit the Registrar of Voters to render services to the City of Palo Alto relating to the conduct of Palo Alto’s General Municipal and Special Elections which are called to be held on Tuesday, November 8, 20 22. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections including, but not limited to, checking registrations, mailing ballots, hiring election officers and arranging for polling places, receiving absentee voter ballot applications, mailing and receiving absent voter ballots and opening and counting same, providing and distributing election supplies, and furnishing voting machines.

SE
CTION 11 . Transmittal of Resolution. The City Clerk is hereby directed to submit forthwith a certified copy of this resolution to the Santa Clara County Board of Supervisors and to the Registrar of Voters.

IN
TRODUCED AND PASSED:

AYE
S:

NOE
S:

ABSE
NT:

ABSE
NTIONS:

ATTE
ST: APPROVED:
_____________
________________ ______________________________
City Clerk Mayor
_____________
_________________
APPROVED AS TO FORM: City Manager
_____________
________________ ______________________________
City Attorney Director of Administrative Services
a
Packet Pg. 917
3431. Late Packet

NOT YET APPROVED
4 Attachment A
O
rdinance No. _____
Ordinance of the Council of the City of Palo Alto Amending Chapter 2.28 (Fiscal Procedures) of Title 2 of the Palo Alto Municipal Code to Authorize the City Council to Annually Transfer from the Gas Utility to the General Fund an Amount Equal to 18% of the Gross Revenues of the Gas Utility, Generated by the City’s Retail Natural Gas Rates
T
he People of the City of Palo Alto do ordain as follows:

S ECTION 1 . Chapter 2.28 of the Palo Alto Municipal Code is hereby amended by adding Section 2.28.185 as follows:

Chapter 2.28

FISCAL PROCEDURES

2.28.185 Gas Utility Transfer
Each fiscal year the City Council may transfer from the gas utility to the general fund an amount equal to 18% of the gross revenues of the gas utility received during the fiscal year two fiscal years before the fiscal year of the transfer. At its discretion, the City Council may decide to transfer a lesser amount. The projected cost of the transfer shall be included in the City’s retail gas rates as part of the cost of providing gas service.

SECTION 2 . General Tax. Proceeds of the tax imposed by this Ordinance shall be deposited in the general fund of the City and shall be available for any legal purpose.

SECTION 3. Amendment or Repeal. The City Council may repeal Section 2.28.185 of the Palo Alto Municipal Code or amend that Section without a vote of the people except that any amendment to Section 2.28.185 that increases the amount or rate of tax due from any p erson beyond the amounts and rates authorized by this Ordinance may not take effect unless approved by a vote of the people.

SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, the remaining portions of this Ordinance shall nonetheless remain in full force and effect. The people hereby declare that they would have adopted each section, subsection, sentence, clause, phrase, or portion of this Ordinance, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions of this Ordinance be declared invalid or unenforceable.

SECTION 5. Effective Date. This ordinance shall be effective only if approved by a majority of the voters and shall go into effect immediately after the vote is declared by the City Council. a
Packet Pg. 918
3431. Late Packet

NOT YET APPROVED
5 Attachment A
SECTION 6. Execution. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below.

I he
reby certify that the foregoing Ordinance was PASSED, APPROVED and ADOPTED by the People of the City of Palo Alto voting on the 8th day of November, 2022.

ATTE
ST:
_____________
_____________ ___________________________
City Clerk Mayor
APP
ROVED AS TO FORM: APPROVED:
_____________
______________ ___________________________
City Attorney City Manager
_____________
______________
Director of Administrative Services
a
Packet Pg. 919
3431. Late Packet

NOT YET APPROVED
1 R
esolution No. ______
Resolution of the Council of the City of Palo Alto Calling a Special Election for November 8, 2022 for Submittal to the Qualified Electors of the City a Measure Amending Title 2 of the Municipal Code to Add Chapter 2.37 to Establish a Tax on Businesses Operating in the City of Palo Alto
R E

C I T A L S
A. T
he City of Palo Alto is one of only a few California cities that does not require local businesses to contribute to city services through a business tax. As Palo Alto looks to the future, City leaders have determined that the time has come to seek voter approval to tax businesses operating in the City, so that all do their part to meet the City’s evolving challenges, including the need for long term stable funding for public safety services and the need for significant investments in affordable housing and grade separated train crossings that maintain mobility for vehicles, bicyclists and pedestrians.

B. A
proposed ordinance attached hereto and incorporated herein by reference as Attachment “A” (the “Ordinance”) would amend the Palo Alto Municipal Code to add Chapter

2.37 to Title 2, to establish a general tax on businesses operating in the City of Palo Alto at an annual rate of ten cents/square foot occupied by the business, with annual adjustments for inflation and exemptions for grocery stores and businesses under 5,000 square feet.

C. By its Resolution No. 10045 the City Council called a general municipal election for November 8, 2022 (“Election”).

D. Pursuant to Government Code Section 53724 and Election Code Section 9222, the City Council desires to submit the Ordinance to the voters of the City.

The City Council of the City of Palo Alto RESOLVES as follows:

S
ECTION 1. Findings. The City Council finds and determines that each of the findings set forth above are true and correct.

S
ECTION 2. General Tax Election. The City Council proposes to impose the general tax set forth in the Ordinance and to present this proposal to the voters on November 8, 2022.

S
ECTION 3. Measure. Pursuant to Elections Code Section 9222, the City Council hereby submits the Ordinance to the vote rs at the Election and orders the following question to be submitted to the voters at the Election:
b
Packet Pg. 920

NOT YET APPROVED
2 Shall the measure to raise funds for improving public safety, affordable housing, rail crossing safety, homeless services, and general city services, by levying a tax on businesses in the City of Palo Alto at an annual rate of 10 cents/square foot occupied by the business, with annual adjustments for inflation and exemptions for grocery stores and all businesses under 5,000 square feet, raising
approximately $19 million annually until ended by voters, be adopted?
YES
NO
Th
is question requires the approval of a majority of those casting votes.

SE
CTION 4 . Adoption of Measure. The measure to be submitted to the voters is attached to this Resolution as Attachment A and incorporated herein by this reference.

SE
CTION 5. Notice of Election. Notice of the time and place of holding the election is hereby given, and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in time, form and manner as required by law.

SE
CTION 6. Impartial Analysis. Pursuant to California Elections Code Section 9280, the City Council hereby directs the City Clerk to transmit a copy of the measure to the City Attorney.

The City Attorney shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the effect of the measure on the existing law and the operation of the measure, and transmit such impartial analysis to the City Clerk on or before August 23, 2022.

SECTION 7 . B allot Arguments . Pursuant to Elections Code Section 9286 et. seq., August 16, 2022 at 5:00 p.m. shall be the deadline for submission of arguments in favor of, and arguments against, any local measures on the ballot. If more than one argument for and/or against is received, the priorities established by Elections Code Section 9287 shall control.

SE
CTION 8. Rebuttal Arguments. The provisions of Elections Code Section 9285 shall control the submission of any rebuttal arguments. The deadline for filing rebuttal arguments shall be August 23, 2022 at 5:00 p.m.

SECTION 9. C onsolidation Request. The Council of the City of Palo Alto requests the governing body of any other political subdivision, or any officers otherwise authorized by law, to partially or completely consolidate such elections and the City Council c onsents to such consolidation. The Council requests the Board of Supervisors of Santa Clara County to include on the ballots and sample ballots, all qualified measures submitted by the City Council to be ratified by the qualified electors of the City of Palo Alto. The Council acknowledges that the election will be held and conducted according to procedures in the Elections Code, including Section 10418.

SE
CTION 10. Request for County Services. Pursuant to Section 10002 of the California Elections Code, the Council of the City of Palo Alto hereby requests the Board of Supervisors of Santa Clara County to permit the Registrar of Voters to render services to the City of Palo Alto b
Packet Pg. 921
3431. Late Packet

NOT YET APPROVED
3 relating to the conduct of Palo Alto’s General Municipal and Special Elections which are called to be held on Tuesday, November 8, 2022. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections including, but not limited to, checking registrations, mailing ballots, hiring election officers and arranging for polling places, receiving absentee voter ballot applications, mailing and receiving absent voter ballots and opening and counting same, providing and distributing election supplies, and furnishing voting machines.

SE
CTION 11 . Transmittal of Resolution. The City Clerk is hereby directed to submit forthwith a certified copy of this resolution to the Santa Clara County Board of Su pervisors and to the Registrar of Voters.

IN
TRODUCED AND PASSED:

AYE
S:

NOE
S:

ABSE
NT:

ABSE
NTIONS:

ATTE
ST: APPROVED:
_____________
________________ ______________________________
City Clerk Mayor
_____________
_________________
APPROVED AS TO FORM: City Manager
_____________
________________ ______________________________
City Attorney Director of Administrative Services
b
Packet Pg. 922
3431. Late Packet

NOT YET APPROVED
4 Attachment A
Or
dinance No. _____
Ordinance of the Council of the City of Palo Alto Amending Title 2 of the Municipal Code to Add Chapter 2.37 to Establish a Tax on Businesses Operating in the City of Palo Alto
Th
e People of the City of Palo Alto do ordain as follows:

SECTION 1. T itle 2 (Administrative Code) of the Palo Alto Municipal Code is hereby amended by adding Chapter 2.37 (Business Tax) as follows:

Chapter 2.37

BUSINESS TAX

2.37.010 Title
Thi
s chapter is the “City of Palo Alto Business Tax Ordinance.”

2.37.020 Definitions
The
definitions in this section apply to the words and phrases used in this chapter unless the context clearly indicates otherwise.
(a) “
Business” means any commercial enterprise, trade, calling, art, vocation, profession, occupation, or means of livelihood, whether or not carried on for gain or profit. (b) “
Business operator” means a person who transacts, maintains, manages, operates, controls, engages in, conducts, carries on, or owns a business in the city. It does not include the employee of a business who is not an owner or proprietor of the business. (c) “C
alendar year” means the year beginning January 1 and ending December 31. (d) “
City” means the City of Palo Alto.
(e) “
CPI Index” means the Consumer Price Index—All Urban Consumers for All Items for the San Francisco-Oakland-Hayward Area or any successor to that index designated by the Federal Bureau of Labor Statistics or the City Council. (f) “
Fiscal year” means the year beginning July 1 and ending June 30. (g) “
Fixed place of business” means a place of business located in the city boundaries and occupied for the particular purpose of operating a business. For the business of renting or leasing real property, the real property being rented or leased is part of the fixed place of business.
b
Packet Pg. 923
3431. Late Packet

NOT YET APPROVED
5 (h) “Grocery store” means a business that exists for the primary purpose of selling a range of food items to consumers for consumption off site, such as canned foods; dry goods; fresh produce; fresh meats, fish, and poultry; and any area that is not separately owned within the store where food is prepared and served, including a bakery, deli, and meat and seafood departments, or as otherwise defined in 14 CCR section 18982(a)(3), provided that any store that combines grocery items with other retail products or services is a grocery store for the purpose of this chapter only if two-thirds or more of the occupied space is designated to the sale of grocery items as listed in this section. (i) “
Hotel” has the meaning provided in section 2.33.010.
(j) “O
perate” means to conduct a business and includes all stages of conducting a business from initial planning to the wind-down of a business, whether or not a profit is being made.
(k) “
Person” means any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, receiver, syndicate or other group or combination acting as a unit and includes the plural as well as the singular number. (l) “
Quarter” means the three-month quarter of the fiscal year. The “first quarter” is the months of July, August, and September; the “second quarter” is the months of October, November, and December; the “third quarter” is the months of January, February, and March; and the “fourth quarter” is the months of April, May, and June. The term “same quarter of the previous fiscal year” means the quarter of the same number in the previous fiscal year.
(m) “
Square footage” means the rentable square footage used by a business as specified in a business’s lease or, if the business floor space is owned by the business, as calculated in the same manner as if the area was rented using commonly accepted standards of measurement for leasing purposes such as the Standard Methods of Measurement published by the Building Owners and Managers Association (BOMA). Any method of measurement used must meet the following minimum standards:
(1) I
t shall be computed by measuring to the inside finish of permanent outer building walls and shall include space used by columns and projections necessary to the building.
(2) I
t shall include both the area used by the business and a proportionate share of the building service areas such as lobbies, corridors and other common areas in a building unless assigned to another business for tax calculation purposes or unless agreed otherwise between the landlord and tenant. (3) I
t shall not include vertical penetrations through the building such as stairs, elevators, or heating, ventilation, air conditioning, utility, or telephone systems, except on the lowest floor of stairs and elevators.
b
Packet Pg. 924
3431. Late Packet

NOT YET APPROVED
6 (4
) For the business of renting or leasing property, it shall include area used primarily for the business operator’s offices and operational facilities. (5
) It shall not include residential uses, including multiple-family use as defined in section 18.04.030(102), two-family use as defined in section 18.04.030(141), single-family residential use as defined in section 18.04.030(86)(A)), mobile home park as defined in section18.04.030(97), residential care homes as defined in section 18.04.030(124), supportive housing as defined in section

18.04.030(135.5), transitional housing as defined in section 18.04.030(138), emergency shelter as defined in section 18.04.030(50), and any equivalent residential use defined by the City.
(6
) It shall include hotel as defined in section 18.04.030(73). (7
) Square footage for businesses with multiple locations will be measured and tax assessed will be calculated based on the aggregate square footage for the business for all locations in the City.
(n
) “Tax Administrator” means the Director of Administrative Services, or successor position, or their designee.
(o
) “Transient Occupancy Tax” means the tax imposed under section 2.33.020. (p
) “Transitory business” means a business that operates in the city for less than 90 days in the course of one calendar year (such as seasonal sale lots, special events, concerts/performances/circuses, filming, and party rentals). (q
) “Vacant” means a severable portion of the physical location that a business is occupying, such as an entire floor, a building, or a portion of a floor with independent entrance and exit, that is free from any use, fixtures, furniture, and equipment, and is immediately available for use by a new tenant or owner.

2.37.030 Obligation to Pay Business Tax
(a
) It is unlawful for any business operator, either for themselves or for any other person, to operate in the city any business taxed under this chapter without paying all business tax required by this chapter.
(b
) If a business has more than one business operator, then the payment of the business tax by one business operator excuses any other business operators from the obligation to pay the business tax for that period for which the tax has been paid. (c) T
he requirement to pay business tax is in addition to and separate from the requirement to obtain a business registration certificate under section 4.60.030. b
Packet Pg. 925
3431. Late Packet

NOT YET APPROVED
7 (d) T
he payment of business tax does not authorize the doing of any act which the person or business paying the business tax is not otherwise entitled to do and does not excuse the business from complying with other applicable Code requirements.

2.37.040 Imposition of Business Tax
Any
business operator operating a business at a fixed place of business in the city must pay a business tax at the following rates:
(a) B
eginning January 1, 2023, the tax shall be imposed at the rate of $0.05 per month per square foot of square footage occupied or used by the business at the beginning of the quarter, with no tax being imposed for the first 5,000 square feet. (b) B
eginning January 1, 2024, the tax shall be imposed at the rate of $0.10 per month per square foot of square footage occupied or used by the business at the beginning of the quarter, with no tax being imposed for the first 5,000 square feet. This rate shall be adjusted annually by the CPI Index as provided in section 050.

2.37.050 Annual CPI Adjustment of Tax Rate
(a) B
eginning with the 2025-26 fiscal year, and each fiscal year thereafter, the tax rate shall be automatically increased by a percentage equal to the percentage increase in the CPI Index in the previous calendar year (“the CPI Increase”). (b) N
otwithstanding subdivision (a) of this section, in any year in which the CPI Increase is more than 5%, the increase in the tax rate will be limited to 5%, and the amount of the CPI Increase that exceeds 5% (“the Excess CPI Increase”) shall be added to the following fiscal year’s CPI Increase under subdivision (a) of this section. (c) If
the addition of a previous fiscal year’s Excess CPI Increase to a current fiscal year’s CPI Increase exceeds 5%, then the increase in the tax rate will again be limited to 5%, and the amount that the combination of the CPI Increase and the previous fiscal year’s Excess CPI Increase exceeds 5% will create a new “Excess CPI Increase” to be added to the following fiscal year’s CPI Increase under subdivision (a) of this section.

2.37.060 Disposition of Tax Revenue
The
tax imposed by this chapter is for the purpose of raising revenue for the general governmental purposes of the city. All of the proceeds from the tax imposed by this chapter shall be placed in the city’s general fund.

2.37.070 Exemptions from Tax
(a) T
he following businesses are exempt from the tax imposed by this chapter:
b
Packet Pg. 926
3431. Late Packet

NOT YET APPROVED
8 (1) Any
business exempt from the tax by the laws of the United States or the State of California;
(2) Gro
cery stores;
(3) Bus
inesses that occupy or use 5,000 square feet or less in the city; and (4) Tr
ansitory businesses.
(b) If
a business operator operates a single integrated business that has two or more parts, one or more of which could be exempt from the tax imposed by this chapter if operated as a separate business, the city may, at its discretion, exempt from the tax any part of the business that would be exempt if operated as a separate business, provided the business’s square footage can be reasonably allocated between the parts. If the city determines that the square footage cannot be reasonably allocated between the different parts of the business, then the entire business shall be taxed, unless to do so would violate a law of the United States or the State of California.

2.37.080 Business Tax Offsets
(a) A business operator that operates a hotel in the city may deduct from the business tax it owes
for a quarter for the business of operating the hotel an amount equal to the total transient occupancy tax collected and remitted to the city in the same q uarter of the previous fiscal year from transients staying at the hotel. (b) The business operator of a business that has discretion to determine the location of the place
of sale, place of use or principal place o f negotiation for sales or use t ax purposes and which exercises that discretion and designates the c ity as the place of sale, place of use, or principal place of negotiation for sales or use tax purposes which results in the city
receiving sales or use tax revenues that it would not otherwise have r eceived, but for the business’s exercise of its discretion to designate the city as the place o f sale, place of use or principal place of negotiation for sales or use tax purposes (“Discretionary
Sales or Use Tax Sales”) may deduct from the business tax it owes for a quarter an amount equal to one half of the total sales tax or use tax receive d by the city from the Discretionary Sales or Use Tax Sales of that business in the same quarter of the previous
fiscal year. This offset can offset up to, but no more than, 75% of the business’s quarterly business tax. The city and a business operator may enter into an agreement implementing this section.
(c) A business operator of a business that ha s rights to property due to property o
wnership, a ground lease, or a lease that permits subleasing, and that is offering that property for sale or rent, may deduct from the business ta x owed for the business an amount equal to the business tax associated with the square footage being offered for sale or rent, provided that the area to be sold or rented is completely vacant and av
ailable for
b
Packet Pg. 927
3431. Late Packet

NOT YET APPROVED
9 immediate occupancy.
(d
) A business claiming an offset under this section must claim the offset with its tax filing for the quarter for which the offset is claimed.
(1
) If the information necessary for a business to claim an offset is not available, the business may defer claiming an offset for up to one year or for another period of time set by written agreement with the City.
(2
) The Tax Administrator may require a business claiming an offset to submit additional information to support the claim of the offset. The request for additional information must be made in writing and the information must be provided within thirty (30) days.
(3
) If the Tax Administrator determines that an offset claimed by a business is incorrect, the Tax Administrator may make and Initial Determination of the amount, if any, of the offset and the amount of tax due under section 150(a).

2.37.090 Quarterly Tax Payments
(a
) The tax imposed by this chapter shall be paid quarterly. The tax for each quarter is due the first day of the following quarter and is delinquent thirty (30) days later. (b
) For the first quarter in which a business begins operating in the city, the business’s tax shall be prorated for the number of days that the business was operating in the quarter. (c) Fo
r the last quarter in in which a business operates in the city before closing, the business’s tax shall be prorated for the number of days that the business was operating in the quarter.

2.37.100 Business Tax Filing for a New Business
W
hen a business begins operating in the city for the first time, the business operator must provide the Tax Administrator with the following information, verified by the business operator as true and correct under penalty of perjury of the laws of the State of California, before beginning the operation of the business in the city:
(a
) The name of the business and the address or addresses at which it will be operating in the city;
(b
) The date on which the business will begin operating;
(c) T
he nature of the business’s activities;
b
Packet Pg. 928
3431. Late Packet

NOT YET APPROVED
10 (d) The square footage in which the business will be operating in the city; and (e) An
y other information required by the Tax Administrator.

2.37.110 Quarterly Tax Returns
Wi
th each quarterly tax payment, a business operator must submit a quarterly tax return which contains the following information, verified by the business operator as true and correct under penalty of perjury of the laws of the State of California:
(a) T
he name of the business and the address or addresses at which it will be operating in the city;
(b) T
he nature of the business’s activities;
(c) The
square footage in which the business will be operating in the city; (d) I
f the business operator claims an offset under section 080, sufficient information and documentation to establish the business’s right to the offset and the amount of the offset;
(e) A
ny other information required by the Tax Administrator; and (f) T
he amount of tax due based on the square footage of the business.

2.37.120 Agreements for Installment Payments
Th
e Tax Administrator may enter into an agreement with a business operator to allow a business operator to pay the tax on a more or less frequent basis.

2.37.130 Businesses Operating in the Same Location
(a) E
ach business operator operating a business in a location where one or more other businesses are also operating is obligated to pay business tax measured by the square footage occupied by that business.
(b) T
he payment of business tax by a business operator absolves any other business operator from having to pay business tax measured by the same square footage. (c) Two
or more business operators that are operating businesses in the same square footage may contractually agree which business will pay the business tax measured by that square footage.
b
Packet Pg. 929
3431. Late Packet

NOT YET APPROVED
11 2.37.140 Delinquent Taxes (Penalties and Interest)
(a) W
hen a tax becomes delinquent, a penalty of 10% of the amount of the delinquent tax will be added to the amount of tax due. If the tax remains unpaid sixty (60) days after becoming delinquent, an additional penalty of 25% of the amount of the delinquent tax (excluding accrued interest and the initial penalty) will be added to the amount of tax due.
(b) O
n the first of each month that a tax is delinquent, interest in the amount of 1.5% of the delinquent amount, excluding penalties and interest, will be added to the amount of tax due.
(c) A bu
siness operator may apply to the Tax Administrator for a reduction or waiver of any accrued penalties or interest, and the Tax Administrator may reduce or waive any accrued penalties or interest upon a finding of good cause.

2.37.150 Administrative Procedure to Assess or Correct Tax (a) I
f the Tax Administrator determines that a business operator has incorrectly reported any information to the city or has not paid all or any of the tax, penalties, or interest that are due, the Tax Administrator may, using any information available to the Tax Administrator, issue an Initial Determination stating what the Tax Administrator believes to be the correct information and, if new or additional tax, penalties, or interest are due, how much tax, penalties, or interest are due. An Initial Determination must be issued within five (5) years of the last day of the quarter to which the Initial Determination applies, except in the case of an audit conducted under section 210, in which case it must be issued within ninety (90) days of the completion of the audit and can apply to any of the quarters that were subject to the audit. The Initial Determination shall be served on the business operator either personally or by U.S. mail to the most recent address for the business operator in the Tax Administrator’s records. Service is effective upon deposit of the Initial Determination in the U.S. Mail. (b) A
business operator affected by an Initial Determination may within fifteen (15) days of service of an Initial Determination contest the Initial Determination and request a hearing before the Tax Administrator by filing with the Tax Administrator a written request for a hearing. The further accrual of penalties and interest shall be tolled upon the filing of a request for a hearing. If a business operator does not contest an Initial Determination and request a hearing with the Tax Administrator within fifteen (15) days of service of the Initial Determination, the Initial Determination shall become final and cannot be appealed.
(c) If a
business operator timely contests an Initial Determination and requests a hearing, the Tax Administrator shall set a hearing within thirty (30) days of the filing of the request for a hearing. Notice of the hearing shall be served on the business operator either personally or by U.S. mail to the most recent address for the business operator in b
Packet Pg. 930
3431. Late Packet

NOT YET APPROVED
12 the Tax Administrator’s records.
(d
) At the hearing the business operator may present evidence and argument regarding the Initial Determination to show why the Initial Determination is incorrect and to show what the determination of the Tax Administrator should be. Within sixty (60) day after the close of the hearing, the Tax Administrator shall serve a Final Determination, setting forth the Tax Administrator’s determination of the facts and issues that were the subject of the Initial Determination. The Final Determination shall be served on the business operator either personally or by U.S. mail to the most recent address for the business operator in the Tax Administrator’s records. Service is effective upon deposit of the Final Determination in the U.S. Mail. Unless an appeal of a Final Determination is filed under section 170, any penalties or interest tolled under subdivision (b) of this section will resume accruing ten (10) days after the service of the Final Determination.

2.37.160 General Administrative Remedy
(a) A
ny person affected by a decision of the Tax Administrator (“the challenger”), except for decisions under section 150, may challenge that decision by filing a written objection to the decision with the Tax Administrator. The objection must be filed within fifteen (15) days of the issuance of the decision being challenged. If the Tax Administrator was required to provide notice of the decision, then the time to file an objection to the decision begins to run from the date of service of the notice of the decision. The Tax Administrator shall serve a written response to the objection within thirty (30) days of the filing of the objection, which period can be extended by the Tax Administrator for an additional thirty (30) days. The Tax Administrator’s response to the objection shall be served on the challenger either personally or by U.S. mail to the most recent address for the challenger in the Tax Administrator’s records.
(b
) The challenger may request a hearing on the Tax Administrator’s response to the objection by filing a request for a hearing with the Tax Administrator within fifteen (15) days of service of the response to the objection. If a timely request for a hearing on a response to the objection is filed with the Tax Administrator, the Tax Administrator shall set a hearing within thirty (30) days of the filing of the request for a hearing. Notice of the hearing shall be served on the challenger either personally or by U.S. mail to the most recent address for the challenger in the Tax Administrator’s records. (c) A
t the hearing the challenger may present evidence and argument regarding the decision being challenged to show why the decision is incorrect and to show what it should be. Within sixty (60) days after the close of the hearing, which the Tax Administrator may extend for an additional sixty (60) days, the Tax Administrator shall serve a Final Determination on the decision, setting forth the Tax Administrator’s determination of the decision that was challenged. The Final Determination shall be served on the challenger either personally or by U.S. mail to the most recent address for the challenger in the Tax Administrator’s records. Service is effective upon deposit of the Final Determination in the U.S. mail.
b
Packet Pg. 931
3431. Late Packet

NOT YET APPROVED
13 2.37.170 Appeals
(a) A Fin
al Determination of the Tax Administrator under section 150, subdivision (d), or section 160, subdivision (c), can be appealed to the City Manager by filing a written notice of appeal with the City Manager within fifteen (15) days of service of the notice of the Final Determination being appealed.
(b) O
nly a business operator who files a timely request for a hearing on an Initial Determination under section 150 and participates in the hearing or a challenger who files an objection to a decision and files a request for a hearing on the response to the objection under section 160 and participates in the hearing can file an appeal under this section.
(c) If
a timely appeal is filed with the City Manager, the City Manager, or the City Manager’s designee, shall set a hearing within thirty (30) days of the filing of the appeal, which may be extended by the City Manager for an additional thirty (30) days. Notice of the hearing shall be served on the appellant either personally or by U.S. mail to the most recent address for the challenger in the Tax Administrator’s records. The tolling of the accrual of penalties or interest under section 150, subdivision (b), shall continue upon the timely filing of an appeal under this section.
(d) A
t the hearing the appellant and the Tax Administrator may present evidence and argument regarding the decision being appealed to show why the decision is correct or incorrect and to show what it should be. Within sixty (60) days after the close of the hearing, which the City Manager or the City Manager’s designee may extend for an additional sixty (60) days, the City Manager or the City Manager’s designee shall serve a written decision, setting forth the resolution of the appeal. The decision shall be served on the appellant either personally or by U.S. mail to the most recent address for the appellant in the City Manager’s records. Service is effective upon deposit of the decision in the U.S. Mail. Any penalties and interest that were tolled under section 150, subdivision (b), shall resume accruing ten (10) days after the service of the decision. (e) A d
ecision of the City Manager, or the City Manager’s designee, served under subdivision (d) of this section is subject to judicial review under sections 1094.5 and 1094.6 of the Code of Civil Procedure with a writ petition filed in the appropriate court within ninety (90) days of the service of the written decision. Any tax, penalties, or interest determined by the decision to be owed to the city by the appellant must be paid to the city as a precondition to filing a writ petition challenging the decision, but a claim for a refund under section 200 does not have to be filed before filing a writ petition.

2.37.190 Constitutional Apportionment
(a) N
o tax imposed by this chapter shall be applied to a business operator so as to b
Packet Pg. 932
3431. Late Packet

NOT YET APPROVED
14 constitute an undue burden on interstate commerce or intercity commerce or be violative of the equal protection or due process clauses of the United States or California constitutions.
(b) A
business operator who contends that the application of a tax imposed by this chapter on the business operator constitutes an undue burden on interstate commerce or intercity commerce or violates the equal protection or due process clauses of the United States or California constitutions may apply to the Tax Administrator for an apportionment of the tax imposed on the business operator that would remove the constitutional violation by filing a written request with the Tax Administrator that explains the factual and legal basis for the claimed constitutional violation and proposes a method of apportionment that would resolve the alleged constitutional violations. (c) Th
e Tax Administrator, in consultation with City Attorney, shall review the application and within sixty (60) days of the filing of the application issue a decision on the application. The decision on the application shall be served on the business operator either personally or by U.S. mail to the most recent address for the challenger in the Tax Administrator’s records. The decision can be challenged under section 160.

2.37.200 Refunds
(a) A b
usiness operator who believes that any tax, penalty, or interest has been illegally, erroneously, or mistakenly paid to, collected by, or otherwise received by the city may file a claim for a refund of the amount of tax, penalty, or interest claimed to have been improperly received by the city.
(b) T
he claim must be filed with the Tax Administrator and signed under penalty of perjury by the business operator. The claim must state:
(1) Th
e legal and factual basis for the refund claim;
(2) T
he amount of tax, penalty, or interest allegedly improperly received by the city; (3) T
he date or dates that the improper payments were made to the city; and (4) T
he address of the claimant.
(c) The
claim must be filed with the Tax Administrator within one (1) year of the date of the allegedly improper payment to the city.
(d) Th
e Tax Administrator shall provide a written decision on the claim within thirty (30) days of the filing of the claim by serving the decision on the claimant either personally or by U.S. mail to the address provided in the claim. Service is effective upon deposit of the response in the U.S. Mail.
b
Packet Pg. 933
3431. Late Packet

NOT YET APPROVED
15 (e) A claimant may challenge the Tax Administrator’s decision on a refund claim under section 160.
(f) T
his section does not apply to:
(1) A c
laim for a refund arising out of a decision of the Tax Administrator, City Manager, or City Manager’s designee under sections 150, 160, 170, or 190; or (2) A c
laim that could have been asserted by the claimant, but was not, under sections 150, 160, 170, or 190.

2.37.210 Audits
(a) T
he Tax Administrator may conduct an audit of any business operator to ensure proper compliance with the requirements of this chapter.
(b) To i
nitiate an audit the Tax Administrator shall provide written notice to the business operator that is the subject of the audit of the initiation of the audit by serving the notice personally or by U.S. mail to the most recent address for the business operator in the Tax Administrator’s records. The notice shall state the period of time subject to the audit.
(c) No
tice of the initiation of an audit for a quarter for which either a business tax filing for a new business or quarterly tax return was submitted under section 100 or section 110 must be served within five (5) years of the last day of the quarter to which the filing or return applied.
(d) N
otice of the initiation of an audit for a quarter for which neither a business tax filing for a new business nor a quarterly tax return was submitted under section 100 or section 110, but for which the business was registered as a business under section 4.60.030, must be served within seven (7) years of the last day of the quarter for which the filing or return should have been filed.
(e) N
otice of the initiation of an audit for a quarter for which neither a business tax filing for a new business nor a quarterly tax return was submitted under section 100 or section 110, and for which the business was not registered as a business under section 4.60.030, must be served within ten (10) years of the last day of the quarter for which the filing or return should have been filed.
(f) U
pon completion of an audit, the Tax Administrator may make an Initial Determination under subdivision (a) of section 150 of any taxes, penalties, and interest determined to be owed and not paid for the audit period. The Initial Determination must be issued within ninety (90) days of the completion of the audit. If a business operator subject to audit is unable or unwilling to provide sufficient records to enable the Tax Administrator to verify compliance with this chapter, the Tax Administrator is authorized to make a b
Packet Pg. 934
3431. Late Packet

NOT YET APPROVED
16 reasonable estimate of the amount of tax due and the reasonable estimate shall be entitled to a rebuttable presumption of correctness.

2.37.220 Maintenance and Review of Records
(a) B
usiness operators must maintain for six (6) years records of square footage and information necessary to calculate the tax. If the Tax Administrator serves notice of the initiation of an audit, the information pertinent for the quarters subject to the audit must be maintained until the conclusion of the audit.
(b) T
he Tax Administrator may with reasonable notice inspect the premises and records of the business operator.
(c) Th
e Tax Administrator may request the City Council to issue an administrative subpoena for records of a business operator or other persons with relevant information.

2.37.230 Confidentiality of Records
Al
l documents submitted to the city by a business operator under this chapter and all documents of a business operator inspected by the Tax Administrator in the conduct of an audit are presumed to be confidential and will not be subject to public inspection to the fullest extent allowed by law and must be maintained so that the contents of the documents will not become known except to persons charged with the administration of this chapter. Confidential documents may be shared with consultants retained by the city to aid in the administration of this chapter, provided the consultants agree to maintain the confidentiality of the documents.

However, nothing in this section precludes the city from aggregating information and releasing it in a manner that does not identify any particular business or connect any information with a particular business.

2.37.240 Action to Collect Delinquent Taxes
(a) A
ny tax, penalty, and interest imposed on a business operator under this chapter is a debt owed by the business operator to the city, which may be recovered in an action filed by the city in a court of competent jurisdiction. (b) A
n action under this section shall be filed within three (3) years of an Initial Determination becoming final under subdivision (b) of section 150, the issuance of a Final Determination under subdivision (d) of section 150 that is not appealed, the issuance of a Final Determination under subdivision (c) of section 160 that is not appealed, or the issuance of a decision under subdivision (d) of section 170. (c) Duri
ng the pendency of an action filed under this section, interest will continue to accrue under subdivision (b) of section 140 until the entry of judgment. b
Packet Pg. 935
3431. Late Packet

NOT YET APPROVED
17 (d) Before filing an action, the city may serve the business operator either personally or by U.S. mail at the most recent address for the business operator in the Tax Administrator’s records with notice of the pending action and give the business operator fifteen (15) days to pay all of the delinquent taxes, penalties, and fees. If all of the of the delinquent taxes, penalties, and fees are not paid within the fifteen-day period, then an additional penalty of 25% of the amount of the delinquent tax (including accrued penalties and interest) shall be added to the total delinquency and may be recovered in the action.

2.37.250 Errors Not Binding on the City
No
error by the Tax Administrator or any other officer, employee, or agent of the city in the application of this chapter shall prevent, prejudice, or estop the collection by or for the city of the full amount of tax owed by any person under this chapter.

2.37.260 Dates
If t
he last day for the performance of any act under this chapter is a Saturday, Sunday, or holiday recognized by the city, then the date for the performance of that act is extended to the next day that is not a Saturday, Sunday, or holiday recognized by the city.

2.37.270 Rules and Regulations
(a) T
he Tax Administrator may adopt rules and regulations that are not inconsistent with the provisions of this chapter as may be necessary to aid in the application and enforcement of this chapter.
(b) T
he Tax Administrator may adopt rules providing for the service or filing of any notices, filings, returns, or submittals required by this chapter. These rules may provide alternative means for serving or filing any notice, filing, return, or submittal, and may clarify the method of serving or filing any notice, filing, return, or submittal provided for in this chapter.

2.37.280 City Council Amendments
(a) T
he City Council may amend this chapter in any way it deems necessary without the approval of the electorate, provided the amendment does not increase the amount of tax that any person would pay.
(b) A
ny amendment to this chapter that would reduce the amount of tax any taxpayer would pay, either temporarily or permanently, must be approved by two-thirds (2/3) of the members of the City Council.
(c) No
twithstanding subdivision (a) of this section, the City Council may with the approval of two-thirds (2/3) of its members and without approval of the electorate reduce, revise, or eliminate any of the business tax offsets in section 080. b
Packet Pg. 936
3431. Late Packet

NOT YET APPROVED
18 2.37.290 Severability
I
f any word, phrase, sentence, part, section, subsection, or other portion of this chapter, or any application thereof to any person or circumstance is declared void, unconstitutional, or invalid for any reason, then such word, phrase, sentence, part, section, subsection, or other portion, or the prescribed application thereof, shall be severable, and the remaining provisions of this chapter, and all applications thereof, not having been declared void, unconstitutional or invalid, shall remain in full force and effect. The People of the City of Palo Alto hereby declare that they would have passed this ordinance, and each section, subsection, sentence, clause and phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases had been declared invalid or unconstitutional.

2.37.300 Savings Clause
N
o section, clause, part, or provision of this chapter shall be construed as requiring the payment of any tax that would be in violation of the Constitution or laws of the United States of America or of the Constitution or laws of the State of California.

SECTION 2. Implementation Procedures

1. The new tax imposed by this ordinance will go into effect on January 1, 2023.

2. N
otwithstanding sections 2.37.090, 2.37.100, and 2.37.110 of the codified part of this ordinance, the tax imposed by this ordinance will initially be due on the following schedule:
(a
) The initial tax payment for the tax that has accrued since January 1, 2023 will be due on January 1, 2024, or on a subsequent date established by the Tax Administrator, and will be delinquent 30 days later if not paid.
(b
) With its initial tax payment, each business shall provide the following information:
(1
) The name of the business and the address or addresses at which it will be operating in the city;
(2
) The nature of the business’s activities;
(3
) The square footage in which the business will be operating in the city; (4
) If the business operator claims an offset under section 2.37.080, sufficient information and documentation to establish the business’s right to the offset and the amount of the offset;
(5
) Any other information required by the Tax Administrator; and (6
) The amount of tax due based on the square footage of the business. b
Packet Pg. 937
3431. Late Packet

NOT YET APPROVED
19 (c) A
business that begins operating for the first time after January 1, 2023, must submit its initial tax payment and initial information by the date provided in this uncodified section or by the date provided in codified section 2.37.090, whichever is later.

SECTION 3. General Tax. Proceeds of the tax imposed by this Ordinance shall be deposited in the general fund of the City and shall be available for any legal purpose.

SECTION 4. Effective Date. This ordinance shall be effective only if approved by a majority of the voters and shall go into effect immediately after the vote is declared by the City Council.

SECTION 5. Execution. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below.

I
hereby certify that the foregoing Ordinance was PASSED, APPROVED and ADOPTED by the People of the City of Palo Alto voting on the 8th day of November, 2022.

A
TTEST:
_______
___________________ ___________________________
City Clerk Mayor
AP
PROVED AS TO FORM: APPROVED:
_______
____________________ ___________________________
City Attorney City Manager
_______
____________________
Director of Administrative Services
b
Packet Pg. 938
3431. Late Packet

NOT YET APPROVED
Attachment C
Resolution No. ____
Resolution of the Council of the City of Palo Alto Regarding Uses of Proceeds of a Business Tax to be Submitted to the Voters for Approval in November 2022

R E C I T A L S
A. The City of Palo Alto is a safe, healthy, and vibrant community with a wide array of public services and facilities that support and enhance the lives and experiences of residents, businesses, workers and visitors to the City. These include a network of neighborhood parks and libraries; excellent public and private schools and universities; community centers, museums and theater facilities; high- quality local health care services; walkable, bikeable, safe neighborhoods; an extensive urban forest; two lively downtown areas with indoor and outdoor dining, live music and shopping opportunities; world-leading climate protection programs; and more.

B. The City of Palo Alto is a well-run municipality, with a Triple-A bond rating and a reputation for pro-active fiscal management, strong ongoing investments in public infrastructure, and conservative financial planning.

C. As Palo Alto looks toward the future, City leaders have determined that the time has come to seek voter approval to tax businesses that operate in the City, as the vast majority of California cities do.

A business tax would ensure that organizations that benefit from doing business in Palo Alto do their part to meet the City’s evolving challenges, provide for new and expanding public needs, and maintain the high-quality environment that residents, workers, and visitors enjoy.

D. If a business tax is approved by voters, its proceeds will be placed in the City’s general fund for use on general government services. Council Members elected by the voters will determine the uses of those proceeds that best serve the public interest.

E. With this Resolution, the City Council informs voters of its intentions regarding the public services and programs that would be supported by business tax revenues.

Accordingly the Council of the City of Palo Alto RESOLVES as follows:

SECTION 1. Council hereby adopts the above Recitals as findings of the Council.

SECTION 2. It is the Council’s intention to use proceeds of a business tax—a general tax for general government uses—to fund new and enhanced services and programs that support safety and quality of life. The following uses would be supported by business tax revenues:

One-Third for Transportation and Safe Train Crossings. In the coming years, Palo Alto will need to need to invest substantial local funds in the improvement and safety of train crossings. CalTrain is electrifying and trains are increasing in number. To maintain traffic flow, bicycle and pedestrian mobility, and safety, the City’s four at-grade road crossings must be modified and separated from the train right- of-way. It is estimated that an average investment of $250 million will be needed for the improvements needed at each crossing. City funds will be used as matching funds to secure additional county, state, and federal funds for these investments in transportation infrastructure. The Council plans to spend c
Packet Pg. 939
3431. Late Packet

NOT YET APPROVED
Attachment C
one-third of business tax proceeds on safe and efficient crossings for vehicles, bicyclists, and pedestrians.

One-Third for Housing Affordability and Services for the Unhoused. A balanced and healthy community welcomes families and individuals from all walks of life. In Palo Alto, significant investments are needed to bring housing costs into reach for many moderate earners who work in the City, such as teachers, public safety employees, and workers in the trades and service industries. With few affordable local housing options, these workers must travel long distances between home and work, contributing to green-house gas emissions and traffic congestion. In addition, longtime residents—especially those who rent—are at risk of losing housing and being forced to relocate to other communities or become unhoused. Those who are already living in the City without housing need financial support to transition to stable, safe and clean housing. Substantial funding is needed to advance these goals. The Council plans to spend one-third of business tax proceeds on affordable housing and unhoused services.

One-Third for Public Safety. Rising costs and constrained revenues have limited the City’s ability to provide public safety services—including police, fire, 911, and emergency services—at the level desired by the community. Stable long-term revenues from a business tax will put these highly-valued City services on sound footing into the future. The Council plans to spend one-third of business tax proceeds on public safety.

SECTION 3. The Council finds that adoption of this Resolution is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

ATTEST: APPROVED:
_______
___________________ ____________________________
City Clerk Mayor
AP
PROVED AS TO FORM: ____________________________
City Manager
__________________________
City Attorney
c
Packet Pg. 940
3431. Late Packet