Agenda packet — Palo Alto City Council, June 20, 2022 (part 1 of 5)

1 City Council
Special Meeting
Monday, June 20, 2022
3:00 PM
Council Chamber & Virtual
Amended Agenda
Amended agenda items appear in Red on the agenda below.

Pursuant to AB 361 Palo Alto City Council meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference or in person. To maximize public safety while still maintaining transparency and public access, members of the public can choose to participate from home or attend in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Masks are strongly encouraged if attending in person.

HOW TO PARTICIPATE

VIRTUAL PARTICIPATION
CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900-6833
Th
e meeting will be broadcast on Cable TV Channel 26, live on YouTube at https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center at https://midpenmedia.org.

TIME ESTIMATES
Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public.

REVISED PUBLIC COMMENTS
Public Comments will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. All requests to speak will be taken until 5 minutes after the staff’s presentation. Written public comments can be submitted in advance to [email protected] and
will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referen cing in your email subject line.

P
owerPoints, videos, or other media to be presented during public comment are accepted only by email to [email protected] at least 24 hours prior to the meet ing. Once received, the City Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. 2 Sp ecial Meeting June 20, 2022
Materials related to an item on this agenda submitted to the Board afte r distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

CALL TO ORDER
CLOSED SESSION (3:00 – 4:00 PM)
Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker.

1. CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATION Subject:

Threatened litigation regarding interpretation and application of non- conforming use provi sions for 340 Portage and associated addresses, as set forth in September 10, 2021 letter from Sobrato Organization Authority: Potential Exposure to Litigation Under Go vernment Code Section 54956.9(d)(2) One Case, as Defendant

AGENDA CHANGES, ADDITIONS AND DELETIONS
PUBLIC COMMENT (4:00 – 4:20 PM)
Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes.

CONSENT CALENDAR (4:20 – 4:30 PM)
Items will be voted on in one motion unless removed from the calendar by three Council Members.

2. Approve Minutes from the June 6, 2022 City Council Meeting

3. Approval of Contract Number C23181853A With Accurate Structural Incorporated for a Total Not -to-Exceed Amount of $2,405,369 for the Installation of 9 Electric Station Perimeter Security Lighting/Camera Additions

4. Approval of a Professional Services Agreement With Carollo Engineers , Inc. for Development of a One Water Plan for the City of Palo Alto Contract Number C23183089 in the Total Amount Not- to-Exceed $559,000

5. Approval of the Fiscal Year 2023 Investment Policy

6. 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 Services Approved by City via Task Order) over a Three -and-a-Half-Year Ter m
Supplemental Memo added
Q&A
3 Spec ial Meeting June 20, 2022
Materials related to an item on this agenda submitted to the Board after di stribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

7. Approval of contract number C231833249 with Digitech Computer LLC to provide Ambulance Billing Services in the amount of $140,000 a year not to exceed $700,000.

8. Approval of Amendment No. 2 to Contract No. C18168154 with SWA Services Group, Inc. for Janitorial Cleaning and Maintenance Services in Order to Extend the Term by Six Months through February 28, 2023 and Increase the Compensation by $1,242,777 for a New Total Not -to- Exceed Amount of $12,272,542.

9. Approval of a New Dark Optical Fiber License Agreement With the Palo Alto Unified School District as a Customer, From December 17, 2022 Through June 30, 2027

10. Approval of Early Renewal of Contract Number C20176092 With Equinix LLC for Addition of $53,384 for New Servi ce Connections and Maintenance, Approval of Past Charges of $16,628 for Increased Services, and Approval of Addition of $50,000 for City Manager Authority to Add Fiber Services, for a Total Not- to-Exceed Amount of $745,476 from $625,465

11. Approval of Ame ndment Number 1 to Contract Number C21178372C with C&S Engineers, Inc. for the Airport Apron Reconstruction Project (AP-16000) in the Amount of $215, 023 for a New Total Not -to-Exceed Amount of $1,715,023, and approval of a Budget Amendment in the Airport Fund in Fiscal Year 2022

12. Adoption of a Resolution Implementing the Water Use Restrictions in Stage II of Palo Alto’s Amended 2020 Water Shortage C ontingency Plan in Compliance With the State Water Resources Control Board’s May 24, 2022 Emergency Water C onservation Regulations, and Restricting Potable Irrigation to No More Than Two Days a Week, with Exceptions for Tree Health, Health and Safety, and Certain Non - Residential Zone Irrigation

13. Approval and Authorization for the City Manager to Execute Purc hase Orders for Electric Distribution Transformers With Prequalified Vendors in an Amount up to $2,000,000 Annually Between FY 2022 - FY 2026 in a Total Not-to-Exceed Amount of $10,000,000

14. Policy and Services, Office of the City Auditor and Staff recom mends that City Council Approve the Building and Permit Review Report

15. Consent of the Macias Gini & O’Connell’s Single Audit Report for the Year Ended June 30, 2021
Q&A
Q&A
Q&A
Q&A
Public Letter
4 Spe cial Meeting June 20, 2022
Materials related to an item on this agenda submitted to the Board after d istribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

16. Approval of an Agreement Between Santa Clara Valley Water District and the City of Palo Alto for Administration and Funding of Water Conservation and Stormwater Rebate Programs for a Total -Not-to- Exceed Amount of $675,000 Over a Three Year Term Ending June 30, 2025

17. Approval of Professional Services Contract Number C22184801 with Construction Testing Services for On-Call Construction Dewatering and Deconstruction Services in an Amount Not to Exceed $339,480 Over a 3-year Term.

18. Approval of Contract No. C22184848 with Salas O'Brien Engineers, Inc., for a Total Amount Not to Exceed $11 0,212, for Engineering Design Services for the Municipal Service Center Lighting, Mechanical, and Electrical Improvements Project Capital Improvement Program Project (PF-16006)

19. Approve Contract C22184489 with Martina Entriken Not to Exceed $330,000 for a Term of Three Years to Provide a Preschool/Toddler Program

20. Adoption of a Resolution Proposing the Appropriations Limit for Fiscal Year 2023

21. Approval of Lease Agreement between Palo Alto Unified School District (Landlord) and City of Palo Alto (Tenant) for Extended Day Care Sites for 12 months, Rent Not to Exceed $707,676 per Year

22. Policy and Services Committee Recommendations that the City Council Support a Pending State Bill Regarding Orderly Meeting Conduct (Senate Bill 1100) and Support with Amendments a Bill Regarding Children’s Camp Regulations (Assembly Bill 1737)

23. SECOND READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Section 18.52.070 (Parking Regulations for CD Assessment District) to Continue a Temporary Ban on Eligibility of Commercial Office Uses Above the Ground Floor to Participate in the Downtown Parking In- Lieu Program and Making Clerical Amendments to PAMC Section 16.57.010 (Applicability) in Chapter 16.57 (In -Lieu Parking Fee for New Nonresidential Devel opment in the Commercial Downtown (CD) Zoning District) (FIRST READING: June 6, 2022:

PASSED: 6-1, Tanaka No)

24. SECOND READING: Adoption of Two Ordinances Implementing the Objective Standards Project, Including: 1) New Chapter 18.24, Contextual Design Criteria and Objective Design Standards; 2) Q&A
Q&A
Q&A
Q&A
5 Special Mee ting June 20, 2022
Materials related to an item on this agenda submitted to the Board after distributio n of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

Modifications to Affordable Housing (AH) Overlay District to Eliminate the Legislative Process; 3) Changes to Remove Inconsistencies and Redundancies, and Streamline Project Review Throughout Title 18 (FIRST READ ING: June 1, 2022: PASSED: 5- 1, Cormack No , DuBois absent)

25. SECOND READING: Adoption of an Ordinance Amending the City's Surveillance and Privacy Protection Ordi nance to Exempt the Foothills Fire Early Warning System (PAMC 2.30.680). (FIRST READING: Jun e 6, 2022: PASSED: 7-0)

26. SECOND READING: Adoption of an Ordinance Exempting Some Below - Grade Parking Facilities from Gross Floor Area. Zone District: R - 1(10,000). Environmental Review: Final Environmental Impact Report (EIR) for the Castilleja School Project certified on June 6, 2022. (FIRST READING: June 6, 2022 PASSED: 6-1, Kou no)

27. SECOND READING: Adoption of an Ordinance Amending Title 8 of the PAMC to Expand Tree Protection to Include Additional Protected Tree Species, Revise Grounds for Tree Removal, and Make Clarifying Changes and Amending Titles 2, 9, and 18 to make Clerical Updates (FIRST READING: June 6, 2022 PASSED: 5-2, Cormack, Tanaka no) CITY MANAGER COMMENTS (4:30 – 4:50 PM)
BREAK

ACTION ITEMS
Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters.

28. PUBLIC HEARING: Adoption of the Budget Ordinance for Fiscal Year 2023, Including the Operating and Capital Budgets, Table of Organization, and Municipal Fee Sc hedule; Acceptance of Updates to the Capital Improvement Plan and Sustainability/Climate Action Plan, and the Retiree Healthcare Actuarial Report; and Approval of Contributions for Retiree Healthcare Benefits (4:50 – 6:30 PM)

29. PUBLIC HEA RING: 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 Year 2020-21 Annual Action Plan and Adoption of an Associated Resolution; and Budget Amendment in the FY 2023 Operating Budget in the CDBG Fund (6:30 – 7:15 PM) Supplemental memo, Title updated
Q&A
Public Letters
Presentation
Presentation
At-Places Memo
At-Places Memo
Presentation
6 Special Meeting June 20, 2022
Materials related to an item on this agenda submitted to the Board after distri bution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

30. PUBLIC HEARING / QUASI -JUDICIAL. 2850 West Bayshore [21PLN - 00177]: Appr oval for a Major Architectural Review, Conditional Use Permit, and Vesting Tentative Map to Allow for the Demolition of an Existing Office Building and Construction of 48 Townhomes with Associated Private Streets, Utilities, Landscaping, and Amenities.

Environmental Assessment: Exempt per CEQA Guidelines Sectio n 15332. Zoning District: ROLM (Research Office and Limited Manufacturing). (7:15 – 8:45 PM)

31. 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 Late packe t report added, t itle up dated (8:45 – 10:30 PM)

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS
Members of the public may not speak to the item(s)

ADJOURNMENT

INFORMATION REPORTS
Information reports are provided for informational purposes only to the Council and the public but are not listed for action during this meeting’s agenda.

32. Accessory Dwelling Unit (ADU) Quarterly R eport (Quarter 1 through Quarter 4, Calendar Year 2021)

33. Police Response to OIR Report

OTHER INFORMATION
Standing Committee Meetings - None
Public Co
mment Letters
Schedule
of Meetings
Q&A
Public Letters
Public Letters
Presentation
Presentation
7 Special Meeting June 20, 2022
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

AMENDED AGENDA ITEMS
Items that have been added/modified from the original publication of the agenda are listed below. Any corresponding materials are appended to the end of the initial packet. If full items have been added to the Agenda, they will be denoted with a number staring with AA, meaning Amended Agenda item.

8 Special Meeting June 20, 2022
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.

PUBLIC COMMENT INSTRUCTIONS

Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone.

1. Written public comments may be submitted by email to [email protected].

2. Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom -based meeting. Please read the following instructions carefully.

A. You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure y ou are using a current, up-to-date browser: Chrome 30+, Firefox 27+, Microsoft Edge 12+, Safari 7+. Certain functionality may be disabled in older browsers including Internet Explorer.

B. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak.

C. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak.

D. When called, please limit your remarks to the time limit allotted.

E. A timer will be shown on the computer to help keep track of your comments.

3. Spoken public comments using a smart phone will be accepted through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B-E above.

4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted.

CLICK HERE TO JOIN
Meeting ID: 362 027 238 Phone:1(669)900-6833

Schedule of Meetings

City of Palo Alto (ID # 14506)
Office of the City Clerk
City Council CAO Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

Title: Approve Minutes from the June 6, 2022 City Council Meeting From: Lesley Milton, City Clerk

Staff recommends Council to review and approve the minutes as presented.

ATTACHMENTS:
• Attachment2.a: Attachment A: 20220606amCCsm (PDF)
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CITY COUNCIL

DRAFT ACTION MINUTES

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Special Meeting
June 06, 2022
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:00 P.M.

Present in person: Burt, Cormack, DuBois, Filseth, Kou, Stone, Tanaka Present virtually: None

Absent: None
SPECIAL ORDERS OF THE DAY (5:00 -5:10 PM)

1. Adoption of Resolution for Sascha Priess Upon His Retirement MOTION: Council Member Cormack moved, seconded by Mayor Burt to adopt a resolution celebrating Sascha Priess on his retirement.

MOTION PASSED: 7-0
Agenda Changes, Additions and Deletions
None.

Public Comment
Consent Calendar
Council Member Cormack registered a no vote on Agenda Item Number 3.

Council Member Tanaka registered a no vote on Agenda Item Number 4.

MOTION: Council Member DuBois moved, seconded by Council Member Cormack to approve Agenda Item Numbers 2-9.

2. Approve Minutes from the May 16, 2022 City Council Meeting

3. Adoption of Resolution 10044 Authorizing Use of Teleconferencing for Council Meetings During Covid-19 State of Emergency

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(Sp.) City Council Meeting
Draft Action Minutes: 06/06/2022

4. Approval of the Second Amended and Restated Purchase Order Number 4521000199 with Altec Industries, Inc., to Increase the Purchase Order Amount by $40,024 to a New Not -to-Exceed Amount of $707,092, for the Purchase of Two Peterbilt Crane Trucks through a Cooperative Contract, in the Scheduled Vehicle and Equipment Replacement -Fiscal Year 2020 Capital Improvement Project (VR-20000), with the Not-to-Exceed Amount Including $687,222 for the Two Trucks and a Contingency Amount of $19,870.

5. Adoption of Resolution 10045 Calling for a General Municipal Election to be held November 8, 2022

6. Approval of Amendment No. 4 to Contract Number C18171717 With Perkins + Will for Preparation of the North Ventura Coordinated Area Plan (NVCAP) for a Term Through December 31, 2023.

7. Adoption of the first reading of an Ordinance Amending the City's Surveillance and Privacy Protection Ordinance to Exempt the Foothills Fire Early Warning System (PAMC 2.30.680).

8. Adoption of Side Letter of Agreement and Salary Schedule for the Service Employees International Union (SEIU) -Hourly Unit and Adoption of Salary Schedule for Limited Hourlies

9. Approve a Fiscal Year 2023 Program for Domestic Recycling of Mixed Paper and Mixed Rigid Plastics; Authorize Staff to Negotiate a Corresponding Contract Amendment with GreenWaste of Palo Alto for Program Costs in an Amount Not to Exceed $1.2M

MOTION SPLIT FOR THE PURPOSE OF VOTING
MOTION PASSED for Items 2, 5-9: 7-0
MOTION PASSED for Items 3: 6-1, Cormack no
MOTION PASSED for Item 4: 6-1, Tanaka No

City Manager Comments
Action Items

10. PUBLIC HEARING: Adoption of an Ordinance Amending Palo Alto Municipal Code Section 18.52.070 (Parking Regulations for CD Assessment District) to Continue a Temporary Ban on Eligibility of Commercial Office Uses Above the Ground Floor to Participate in the Downtown Parking In-Lieu Program

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(Sp.) City Council Meeting
Draft Action Minutes: 06/06/2022
and Making Clerical Amendments to PAMC Section 16.57.010 (Applicability) in Chapter 16.57 (In-Lieu Parking Fee for New Nonresidential Development in the Commercial Downtown (CD) Zoning District)

MOTION: Mayor Burt moved, seconded by Council Member Cormack to adopt an ordinance amending:

A. Palo Alto Municipal Code (PAMC) Section 18.52.070 (Parking Regulations for CD Assessment District) to continue a temporary ban for three years on the eligibility of commercial office uses above the ground floor to participate in the Downtown Parking In-Lieu Program; and
B. PAMC Section 16.57.010 (Applicability) in Chapter 16.57 (In-Lieu Parking Fee for New Nonresidential Development in the Commercial Downtown (CD) Zoning District) in Title 16 (Building Regulations) to be consistent with PAMC Section 18.52.070.

MOTION PASSED: 6-1, Tanaka no

11. PUBLIC HEARING: Adoption of a Resolution Providing that the City will Not Levy Assessments for the Downtown Business Improvement District for FY2023
MOTION: Council Member Filseth moved, seconded by Council Member DuBois to adopt Resolution 10046 declining to levy assessments for Fiscal Year 2023 for the Downtown Business Improvement District (BID).

MOTION PASSED: 7-0

12. 1310 Bryant Street (Castilleja School Project) PUBLIC HEARING/QUASI JUDICIAL/LEGISLATIVE: Certification of an Environmental Impa ct Report (EIR) and Approval of Applications for (1) a Conditional Use Permit (CUP) Amendment to Increase Student Enrollment Initially to 450 Students Followed by Phased Conditional Increases to 540 Students; (2) a Parking Adjustment to Enable On-Site Parking Reduction; (3) a Variance to Replace Campus Gross Floor Area; (4) Architectural Review of Campus Redevelopment. Additionally, (5) Adoption of a Zoning Text Amendment Exempting Some Below-Grade Parking Facilities from Gross Floor Area. Zone District: R -1(10,000). Environmental Review: Final Environmental Impact Report (EIR) Published July 30, 2020; Draft EIR Published July 15, 2019 (Item Continued from May 23, 2022 Meeting)

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(Sp.) City Council Meeting
Draft Action Minutes: 06/06/2022
MOTION: Council Member Tanaka moved, seconded by Council Member Cormack to adopt Resolution 10047 certifying the subject project’s environmental impact report (Attachment B).

MOTION PASSED: 6-1, Kou no
FINAL ADOPTED MOTION: Council Member DuBois moved, seconded by Council Member Filseth to incorporate the staff motion to approve the project, approve the CUP, approve the variance, approve the parking adjustment and approve the ARB findings and adopt a record of land use action subject to the following conditions/modifications:

1. Adopt zoning text amendment - C1 for parcels six acres or greater

2. Direct staff to amend the ordinance to state the square footage of below grade parking structures is excluded from gross floor area for purposes of development standards under Title 18 but included for purposes of calculating development impact fees under Title 16.

3. Construction - If students are on the Castilleja campus during construction, maintain enrollment at 416 until construction is completed, then go to 450. If students are moved off site during construction, then can go to 450 immediately.

4. Establish a 3-person Neighborhood Committee (in place of the TDM committee), appointed by council. Committee's role will be to:
a. Review TDM reports, events, noise complaints, and organize twice annual community meetings with the school.
b. Make recommendations to the Planning Director regarding the school's compliance with community conditions of approval. c. Recommend to the Planning Director whether Castilleja has met the conditions that will trigger increases or decreases in enrollment. d. The Planning Director will approve changes in events, enrollment, and TDM changes.

5. Authorize 50 events (50+ attendees) and 5 major events (500+ attendees), the school can request additional events and the Neighborhood Committee can review and make recommendations adjusting if the school demonstrates ability to manage these events well.

6. Approve Alternative E for the garage.

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(Sp.) City Council Meeting
Draft Action Minutes: 06/06/2022

7. Staff to draft detailed TDM and return for a public session with Council, ideally within 6 months. This item can be placed on consent. TDM to be approved before issuing occupancy permit. TDM should include details on measurement and enforcement including but not limited to:
a. Applicant agrees to only use onsite and street parking along the perimeter of school building for all parking.
b. Requirements for satellite parking.
c. Impose conditions that generally no juniors drive to school, school has ability to make up to 5 exceptions for individual cases. d. The school shall be responsible for traffic control, enforcing no parking/drop-offs in unauthorized streets / areas and monitoring of streets around school for student parking or drop-offs. The TDM Firm will provide information on student parking and drop off compliance as part of their reports 3 times per year.
e. Impose condition that applicant agrees they will be excluded from any possible future RPP.
f. Increase the percentage of students within 5-mile radius to 40%, +/- 2%, prior to exceeding 450 students.

8. Clarify conditions of approval to include:
a. No use of pile drivers or exceptionally loud equipment during construction -
b. Use of secant walls if hit groundwater - Conditional of approval. c. Avoid buzzer/ noise when cars exit the garage and use non audio safety measures

9. Record land use action that 540 is the max number of students permitt ed, and no further increase in enrollment shall occur at this property. Staff will work with school leadership to draft a joint statement of intention around a maximum enrollment of students.

MOTION PASSED: 6-1, Kou no

13. Adoption of an Ordinance Amending Title 8 of the PAMC to Expand Tree Protection to Include Additional Protected Tree Species, Revise Grounds for Tree Removal, and Make Clarifying Changes and Amending Titles 2, 9, and 18 to make Clerical Updates

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(Sp.) City Council Meeting
Draft Action Minutes: 06/06/2022
FINAL MOTION: Vice Mayor Kou moved, seconded by Council Member Stone to:

A. Adopt the proposed changes to Palo Alto Municipal Code amending Chapter

8.04 (Street Trees, Shrubs, and Plants); Chapter 8.08 (Weed Abatement); Chapter 8.10 (Tree Preservation and Management Regulations); and Chapter

2.25 (Parks and Recreation Commission); and Making Clerical Changes to Chapter 9.56 (Abatement of Nuisances) and Title 18 (Zoning) of the Palo Alto Municipal Code and
B. Directs staff to evaluate prospective modifications to the ordinance that will come to light over the next year, as well as planning implications to be reviewed by the Planning and Transportation Commission and Parks and Recreation Commission in the following months.

MOTION PASSED: 5-2, Cormack, Tanaka no
Council Member Questions, Comments and Announcements
Adjournment: The meeting was adjourned at 11:17 P.M.

ATTEST: APPROVED:
____________________ ____________________
City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423
, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website.

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City of Palo Alto (ID # 12088)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of Contract Number C23181853A With Accurate Structural Incorporated for a Total Not -to-Exceed Amount of $2,405,369 for the Installation of 9 Electric Station Perimeter Security Lighting/Camera Additions
From: City Manager
Lead Department: U tilities

Recommendation

1. Approve and authorize the City Manager or their designee to execute contract C23181853A with Accurate Structural Incorporated (Linked Document ) in an amount not -to-exceed $1,924,295 over the two-year term of the Agreement for upgrades and new installation of perimeter lighting and cameras at all nine Electric Subs tations as part of the Substation Physical Security (WBS EL-16003) Capital Improvement Project.

2. Authorize the City Manager or designee to negotiate and execute one or more change orders to the contract with Accurate Structural Incorporated for related add itional, but unforeseen work which may develop during the project; the total of which shall not exceed $481,074 or 25% of the contract price; for a maximum total not -to-exceed amount of $2,405,369.

Background
City of Palo Alto Utilities (CPAU) owns and o perates the electric system serving approximately 30,000 customers. The city receives power over PG&E transmission lines at 115,000 volt (115 kV) and transforms this to 60,000 volt (60 kV) to feed the city’s electric sub-transmission system linking nine distribution substations. Security threats to utility infrastructure has become an on - going security issue due to recent attacks on infrastructure across the United States and world - wide. These attacks have taken the form of cyber or physical attacks on the infrastructure. In response, the Federal Government and State regulat ory entities have increased their recommendations for ensuring the safety of utility infrastructure. This project addresses recommendations that were the result of Security Risk Assessme nt performed by Burns and McDonnell on the City’s electric substation infrastructure.

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City of Palo Alto Page 2

Discussion
The Utilities Department commissioned a Security Risk Assessment of all the City’s electric substations by Burns and McDonnell, an engineering / construction company, to determine which measures could be taken to improve the security of the City’s electric utility substation assets. Federal regulations and recommendations have significantly escalated in recent years after the ballistic attack on the PG&E Metc alf electric station in 2013, resulting in the federal North American Electric Reliability Corporation’s (NERC) CIP -14, which the utility is abiding by.

The Burns and McDonnel l study found that the lighting and ability to conduct surveillance and deterrence was in overall poor condition at the Palo Alto stations, and as a result, suggested significant perimeter lighting and camera upgrades / new installations.

The completed system will consist of lighting poles installed at specific perimeter locations at the nine electric substations, with downward facing pendant light fixtures that have prismatic glass to reduce LED glare, intelligent foot-candle control for accurate lighting distribution where directed, dimming features to keep the foot candle level low unless a trespasser is sensed, and visors to limit light pollution. Video cameras will also be mounted on the poles, with present - day analytics added at the Utility Control Center that will allow for alarming, detection, and quick review of camera footage.

Lighting and camera equipment specifications, foot -candle distribution efficacies, and complete construction drawings were developed for the upgrades, and approved by the City of Palo Alto Planning Department’s Architectural Review Board and also by the Stanford Real Estate Architectural Review Board (for Hanover, Hansen Way, and Quarry Road Electric Substations), as the land where these three electric substations are located is owned by Stanford.

These upgrades and new installations will improve the physical security of CPAU’s critical infrastructure and are in line with federal and state recommended guidelines.

Solicitation Process
On March 10, 2022, a notice soliciting Invitation for Bids (IFB) for the Nine Electric Substation Security Upgrades was posted at City Hall and on the Planet Bids portal.

The solicitation was open for four weeks and bids were received from three qualified bidders on April 5, 2022.

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City of Palo Alto Page 3

Summary of Solicitation Process
Proposal Title Electric Substation Security Upgrades
Proposal Number IFB181853A
Proposed Length of Project 24 months
Number of Proposal packages downloaded 21
Total Days to Respond to Proposal 26 days
Number of Proposals Received 3
Bid Range $1,924,295 to $2,444,900
Company Name Location (City, State) Amount
Accurate Structural Inc. Yucaipa, California $1,924,295

The following criteria was used during the evaluation process to identify the successful proposer: Lowest Responsible Bid.

The City has, furthermore, conducted business with Accurate Stru ctural Inc. in the past with satisfaction for a high voltage project well done. Staff is advancing this recommendation as reflected in the City’s adopted budget.

Resource Impact
Funding of $1.1 million is available in the FY 2022 Adopted Capital Budget in the Electric Fund under project Substation Physical Security (EL-16003), which is recommended for reappropriation to FY 2023. The remaining funds are programmed in the FY 2023 Capital Budget in the Electric Fund under project EL -16003. Annual and reappr opriated funding is subject to City Council’s approval through the annual budget process . CPAU Engineering and Operations staff have sufficient capacity to support the installation of the new security equipment with inspections and safety observations.

The larger 25% contingency is due to the reason that the B -Base bid amount represents a potential 10 light poles that may have to be installed later, depending on the approvals, procurement, and construction sequences of the security wall projects at Park Boulevard and Colorado which need to occur first. We anticipated this in this IFB by using the B -Base bid format. The expected price per pole of $32,218 for 10 poles is $322,188. That $322k, added to the standard 10% for un anticipated additional work wou ld be a 27% contingency over the contract price. Utilities requests a 25% contingency to be conservative.

Policy Implications
This contract is on the City’s construction contract template, which permits the City to terminate without cause/for conve nience by providing written notice to the contractor. In the event the City finds itself facing a challenging budget situation, and it is determined that City resources need to be refocused elsewhere, the City can terminate for convenience. Other options include termination due to non -appropriation of funds or amending the contract to 3 Packet Pg. 17

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reduce the cost, for example, by reducing the scope of work. The contract may also be temporarily suspended by written notice of the City Manager.

Environmental Review
Approval of the attached contract is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to section 1530 1 (Existing Facilities) of the CEQA Guidelines (14 CCR section 15301), since additional security features involve negligi ble or no expansion of existing or former use of the substations.
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City of Palo Alto (ID # 13434)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

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Title: Approval of a Professional Services Agreement With Carollo Engineers, Inc. for Development of a One Water Plan for the City of Palo Alto Contract Number C23183089 in the Total Amount Not -to-Exceed $559,000 From: City Manager
Lead Department: Utiliti es

Recommendation
Staff recommends that Council approve and authorize the City Manager or their designee to execute the attached contract C23183089 (Linked Document) with Carollo Engineers, Inc. in an amount not-to-exceed $559,000 for the development of a One Water Plan for the City of Palo Alto.

Executive Summary
The goal of the One Water Plan is Council adoption of a One Water supply plan that is a 20 -year adaptable roadmap for implementation of prioritized water supply and conservation portfolio alternatives. Carollo Engineers, Inc., will conduct evaluations, dev elop criteria, assist with engaging stakeholders, develop, analyze and evaluate water supply and conservation portfolio alternatives. Carollo Engineers Inc., will then deliver a standalone electronic report that can be used as an adaptable water supply pla n a s well as an Excel -based tool for evaluating and prioritizing the water supply and conservation portfolio alternatives. At the end of the project, City staff will have ownership of the tool, so City staff may continue to make updates as conditions chang e and more detailed data emerges in order to provide adaptive recommendations to the City Council. Upon completion, staff will present the One Water Plan report to the City Council for consideration of adoption.

Background
Palo Alto’s Water Supply and Conservation
The City of Palo Alto ( “City” or “Palo Alto ”) receives 100% of its potable water from the San Francisco Public Utilities Commission (SFPUC) through the Regional Water System (RWS). The City also uses some recycled water produced at the Palo Alto -operated Regional Water Quality Control Plant (RWQCP) for irrigation of the municipal golf course, a park, and some other minor applications. A system of local groundwater wells and storage provide emergency water supply 4 Packet Pg. 19

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service. The City partners with Val ley Water to offer a wide -range of water conservation programs to residential and commercial customers.

A key action in the Sustainability and Climate Action Plan (S/CAP) Update is to develop a plan for implementing a One Water portfolio , a water supply plan that will analyze the City’s potential water supply priorities and conservation opportunities . This action aligns with Council’s commitment to developing alternative water supplies to preserve and protect the Tuolumne River.

Palo Alto Council Support of the Bay Delta Plan
In December 2018, the State Water Resources Control Board (SWRCB) adopted amendments to the Water Quality Control Plan for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary (Bay Delta Plan Amendment) to establish water qual ity objectives to maintain the health of the Bay Delta ecosystem. Palo Alto Council expressed support for the Bay Delta Plan Amendment in its August 20, 2018 vote “to support the SWRCB Bay Delta Plan to have 30 -50% of unimpaired flow in the San Joaquin Val ley enter the Delta from February to June and associated Southern Delta salinity objectives; and send a letter expressing this policy position to Bay Area Water Supply and Conservation Agency (BAWSCA), California State Water Resources Control Board, San Francisco Public Utilities Commission (SFPUC), and other stakeholders Staff believes should receive the letter.”1 SFPUC projects that if the Bay Delta Plan Amendment is implemented, the SFPUC will be able to meet Palo Alto’s projected water demands in normal years but will experience supply shortages in single and multiple dry years and will require rationing in all dry years.

Alternative water supplies including water reuse and water conservation are key components in Palo Alto’s local water supply planning in order to prepare for increased frequency and intensity of droughts and water shortages. The One Water Plan will evaluate water supply alternatives and include the impact of long-term water supply shortage on the water supply.

One Water
A key action i n the S/CAP is to develop a plan for implementing a One Water portfolio. A One Water approach takes a broad comprehensive look at water supply options. The US Water Alliance, a national nonprofit organization whose mission is to drive One Water breakthroug hs that positively transform our environment, economy, and society, explains that a One Water approach can take many forms, but all share some unifying characteristics:
• The mindset that all water has value —from the water resources in our ecosystems to our drinking water, wastewater, and stormwater.
• A focus on achieving multiple benefits, meaning that our water -related investments should provide economic, environmental, and societal returns.

1 August 20, 2018 City of Palo Alto City Council Minutes https://www.cityofpaloalto.org/files/assets/public/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/00-archive/2018/08-20-2018-final-ccm-minutes.pdf 4 Packet Pg. 20

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• Approaching decisions with a systems mindset that encompasses the full water cycle and larger infrastructure systems.
• Utilizing watershed -scale thinking and action that respects and responds to the natural ecosystem, geology, and hydrology of an area.
• Relying heavily on partnerships and inclusion, recognizing that real progress will only be made when all stakeholders have a seat at the table.2

The One Water Plan will consider Green Stormwater Infrastructure (GSI), recycled water and other non -potable water sources , as well as groundwater to supplement and preserve th e potable water supply . The One Water Plan will also utilize and build on other completed plans and plans in progress. Two of these important building blocks include the Northwest County Recycled Water Strategic Plan and Green Stormwater Infrastructure (GS I) Plan. Both are described in detail in Attachment B . The One Water Plan will also consider uncertainties and external factors that will impact existing and potential water supply options. Among these are regulatory changes, climate change and the Agreement Between and Among Palo Alto, Mountain View, and the Santa Clara Valley Water District to Advance Resilient Water Reuse Programs in Santa Clara County (Effluent Transfer Agreement), all described in Attachment B.

Discussion
Staff plans to use a One Wate r approach, which takes a broad, comprehensive look at water supply options over a 20 -year planning horizon. The One Water Plan will be an adaptable roadmap for implementation of prioritized water supply and conservation portfolio alternatives. Staff requi res a consultant to conduct evaluations, develop criteria, assist with engaging stakeholders, develop, analyze and evaluate water conservation and supply portfolio alternatives. The One Water Plan project has the following main components:
• Task 1.0 Project Coordination & Administration including Stakeholder Input; • Task 2.0 Become Familiar with Existing Components of the One Water Plan and Identify Gaps
• Task 3.0 Complete Analysis and/or Gather Information on Missing Resources identified in Task 2.0
• Task 4.0 Develop Evaluation Criteria for Assessing Water Supply and Conservation Portfolio Alternatives;
• Task 5.0 Develop and Evaluate Future Water Supply and Conservation Portfolio Alternatives;
• Task 6.0 Final Deliverables to the City including a standalone report that can be used as an adaptable water supply plan for implementing a One Water portfolio for the planning horizon from calendar years 2023 through 2043; and an Excel -based tool for evaluating and prioritizing the Portfolio Alternatives using the criteria developed in Task 4.0.

2 http://uswateralliance.org/sites/uswateralliance.org/files/publications/Roadmap%20Executive%20Summary.pdf

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The City released the Request for Proposals (RFP) for the One Water Plan on November 17, 2021 and received 5 proposals.

Summary of Bid Process
Bid Name/Number One Water Plan/RFP 183089
Proposed End Date of Project June 30, 2023
Number of Prospective Bidders on PlanetBids 28
Total Days to Respond to Bid 63
Date of Pre-Bid Meeting December 2, 2021
Number of Bids Received: 5
Bid Price Range $394,925 to $630,540

An evaluation committee consisting of staff from Public Works and Utilities Departments reviewed the proposals. Three firms were invited to participate in oral interviews on February 16, 2022. The proposals were judged on the following criteria:
o Quality and completeness of the proposal;
o Quality, performance and effe ctiveness of the solution, goods and/or services to be provided by the Proposer;
o Proposer’s experience, including the experience of staff to be assigned to the project, the engagements of similar scope and complexity;
o Cost to the City;
o Proposer’s financial condition and stability;
o Proposer’s ability to perform the work within the time specified; o Proposer’s prior record of performance with City or other local, county or state agency; o Proposer’s compliance with applicable laws, regulations, policies (includi ng City Council policies), guidelines and orders governing prior or existing contracts performed by the contractor.

Carollo Engineers, Inc. was selected as the preferred consultant team due to their demonstrated strong technical knowledge and experience as a national One Water thought leader. Carollo Engineers, Inc. has unmatched national One Water planning experience , including the completion of One Water plans for a variety of cities such as the City of Aspen, City of Santa Barbara, City of South Pasaden a, Denver, and Los Angeles. Additionally, the One Water project leadership team that Carollo Engineers, Inc. proposed for Palo Alto has experience collaborating and leading One Water plans of other cities to a successful outcome.

The quality of Carollo Engineers, Inc. proposal was exceptional in its proposed innovations to encourage and facilitate stakeholder engagement. Carollo Engineers, Inc. will also use Criterium Decision Plus software to present quick sensitivity analysis and visualization of alternatives. The 4 Packet Pg. 22

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consulting team will develop comprehensive supply and conservation option fact sheets, as well as collaboratively develop a stakeholder engagement roadmap to provide for proactive engagement planning. Carollo Engineers, Inc. will develop an Excel-based tool that will evaluate and prioritize portfolio alternatives, facilitate weighted criteria decision making, and display dashboard-style outputs. At the end of the project, City staff will have ownership of the tool , so City staff may continue to make updates as conditions change and more detailed data emerges in order to be able to provide adaptive recommendations to the City Council. Carollo Engineers, Inc. will also deliver a report with a trigger -based implementation roadmap that will help Palo Alto make important and cost -effective water supply decisions. Staff negotiated with Carollo Engineers, Inc. and mutually agreed upon a scope of services not to exceed $559,000.

Timeline
Immediately upon execution of the contract, Carollo Engineers, Inc . will begin work on the project. The final deliverables described below will be completed within 12 months of the City’s Notice to Proceed. Optional subtasks will be completed within 6 months of written authorization to proceed from the City or a mutuall y agreed-upon completion date. The final deliverables are as follows:
1) A standalone electronic report that can be used as an adaptable water supply plan for implementing a One Water portfolio for the planning horizon from calendar years 2023 through 2043. E ach water supply and conservation portfolio alternative will contain planning level life-cycle cost estimates to guide City investments, and priorities into the future as changes occur.
2) Excel-based tool for evaluating and prioritizing the Portfolio Alterna tives using the criteria developed as part of this contract.
3) Any and all other materials created such as workpapers, GIS layers, to produce the standalone electronic report and Excel based tool.

Resource Impact
Funding for year one is available in the FY 2022 operating budget from the following sources:

Water Fund ($459,000), Stormwater Management Fund ($ 25,000), and Wastewater Treatment Fund ($ 25,000). F unding for year two is programmed in the FY 2023 Proposed operating budget, subject to City Council ap proval, in the Stormwater Management Fund ($25,000), and Wastewater Treatment Fund ($25,000).

This contract is on the City’s professional services template, which permits the City to terminate without cause/for convenience by providing written notice to the contractor. In the event the City finds itself facing a challenging budget situation, and it is determined that City resources need to be refocused elsewhere, the City can terminate for convenience. Other options include termination due to non-appropriation of funds or amending the contract to reduce the cost, for example, by reducing the scope of work. The contract may also be temporarily suspended by written notice of the City Manager.

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Staff is advancing this recommendation as reflected in the City ’s adopted budget. Should the City Council wish to defer this project in light of the current pandemic and other priorities related to community and economic recovery, this item may be removed from the Consent Calendar. Staff will then return to Council with this and other projects for reconsideration.

Policy Implications
The project is consistent with Council direction to reduce imported water supplies and limit or reduce diversions from the Tuolomne River. Additionally, t he approval of this contract is consistent with existing City policies and is part of the implementation of a key action in the 2020 S/CAP Update to develop a plan for implementing a One Water portfolio. It is also consistent with the Council approved 2018 Utilities Strategic Plan , specifically Priority 4 “Financial Efficiency and Resource Optimization,” Strategy 4 “Achieve a sustainable and resilient energy and water supply to meet community needs,” and Action 3 “Evaluate recycled water, groundwater, and other non -potable water sources and integrate the results and outcomes with water supply plans.”

The project also aligns with the City’s Comprehensive Plan, which contains Natural Environment Goal N-4: Water resources and infrastructure that are managed to sustain plan and animal life, support urban activities and protect public health and safety. Policy N -4.1 addresses the long - term water supply: maintain a safe, clean and reliable long -term supply of water for Palo Alto and Policy N -4.5 supports the development of a multi -faceted appro ach to ensure resilient supply and management of water in Palo Alto during significant periods of drought.

Additionally, Program N4.17.3 addresses water reuse: investigate ways to reuse non -traditional water sources including recycled, gray, black and stormwater.

Stakeholder Engagement
On July 7, 2021, the Utilities Advisory Commission reviewed a draft scope for the One Water Plan ( Staff Report #12332 ). Task 1.2 in the scope for the One Water Plan is stakeholder engagement; Carollo Engineers, Inc. will assist and support City staff in consistent, robust and meaningful stakeholder engagement throughout the development of the One Water Plan.

Environmental Review
The development of the One Water Plan is not a project requiring California Environmental Quality Act review, because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment.

Next Steps
The goal of the One Water Plan is Council adoption of a One Water supply plan that is a 20 -year adaptable roadmap for implemen tation of prioritized water supply and conservation portfolio alternatives. Upon completion of the One Water Plan report, staff will present it to the City Council for consideration of adoption.

Attachments:
• Attachment4.a: Attachment A: Carollo Engineers, Inc.; Contract C23183089 4 Packet Pg. 24

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• Attachment4.b: Attachment B: One Water Plan Considerations 4 Packet Pg. 25

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CITY OF PALO ALTO CONTRACT NO. C23183089

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND

CAROLLO ENGINEERS, INC.

This Agreement for Professional Services (this “Agreement”) is entered into as of the 20th day of June, 2022 (the “Effective Date”) , by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CAROLLO ENGINEERS, INC. , a Delaware corporation, located at 2795 Mitchell Drive, Walnut Creek, CA 94598 (“CONSULTANT”).

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

RECITALS

A. CITY intends to award a contract for the One Water Plan ( the “Project”) and desires to engage a consultant to provide a water supply plan that is a 20- year adaptable roadmap for implementation of prioritized water supply and conservation portfolio alternatives 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 A greement shall be from the date of its full execution through June 30, 2024 unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.

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 completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT.

CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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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 Five Hundred Fifty- Nine Thousand Dollars ($559,000). 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. CONSULTANT agrees to complete all Services, including reimbursable expenses, listed in Exhibit A entitled “SCOPE OF SERVICES” within this amount including any additional services.

SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the S ervices 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 13 (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 supervision. 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 an d 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 A greement s hall 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 L AWS. 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 u nder 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 order markup costs, or costs arising from delay caused by the errors and omissions or unreasonable delay in correcting the errors and omissions.

DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any s ubmittal 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.

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 re lated 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 C ity 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, successors, executors, administrators and assignees of the parties.

SECTION 12. SUBCONTRACTING.

Option A: No Subcontractor: CONSULTANT shall not subcontract any portion of the Services to be performed under this Agreement without the prior written authorization of the City Manager or designee. In the event CONSULTANT does subcontract any portion of the work to be performed under this Agreement, CONSULTANT shall be fully responsible for all acts and omissions of subcontractors.

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:

CONSULTANT shall be responsible for directing the work of any subcontractors and for any DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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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 Inge Wiersema as the CONSULTANT’s Project Manager , email: [email protected], Mobile Phone number (626)393-7424 and Office Phone (213)489 -1587 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 Project 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.

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 Lisa Bilir, Utilities Department, Resource Management Division, 250 Hamilton Ave., Palo Alto, CA , 94301, Telephone: (650)329-2543. 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.

SECTION 1 4. OWNERSHIP OF MATERIALS . A ll work product, including without limitation, all writings, drawings, studies, sketches, photographs, plans, reports, specifications, computations, models, recordings, data, documents, and other materials and copyright interests developed under this Agreement, in any form or media, shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work product pursuant to this Agreement are vested in CITY, and CONSULTANT hereby waives and relinquishes all claims to copyright or other intellectual property rights in favor of CITY. Neither CONSULTANT nor its subcontractors, if any, shall make any of such work product available to any individual or organization without the prior written approval of the C ity Manager or designee. 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.

SECTION 15. AUDITS . CONSULTANT agrees to permit CITY and its authorized 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, includi ng 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.

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 DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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“Indemnified Party”) from and against any and all third party 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”) to the extent that such Claims arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. CITY will reimburse CONSULTANT for the proportionate percentage of defense costs exceeding CONSULTANT’s proportionate percentage of fault as determined by the final judgment of a court of competent jurisdiction.

16.2. Notwithstanding the above, nothing in this Section 1 6 shall be construed to require CONSULTANT to indemnify an Indemnified Party from a Claim arising from the 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.

16.3. 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 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 32.4 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 partial 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 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) DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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days’ notice to CONSULTANT , CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’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 full 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 ten (10) 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 wi ll 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 (Ownership of Materials), 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 (Ownership of Materials).

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 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 conform ity 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, 32 and 33.

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.

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

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To CITY: Office of the City Clerk
City of Palo Alto
Post Office Box 10250
Palo Alto, CA 94303

With 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.

CONSULTANT 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 any financi al 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 financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act of 1974, as amended from time to time.

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.

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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 bac k 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 tw o (2) hours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay such 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 available. This S ection shall take precedence in the event of a co nflict with any other covenant, term, condition, or provision of this Agreement.

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

26.1. This 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”.

This 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 Agreement and for no other purpose, 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 of confidence prior to receipt of Confidential Information; (iii) is rightfully obtained by CONSULTANT from a third party without breach of any confidentia lity obligation; (iv) is independently developed by employees of CONSULTANT without any use of or access to the DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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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 of 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 control, 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 33 (Exhibits), this Agreement is also subject to the terms and conditions of the Information Privacy Policy and Cybersecurity Terms and Conditions.

SECTION 29. CITY- PROVIDED INFO RMATION. The CITY shall furnish the CONSULTANT available studies, reports and other data it deems necessary for CONSULTANT's performances of Services under this Agreement, which CONSULTANT may use and rely upon to perform those Services, so long as CONSULT ANT’s use of any C onfidential Information complies with Section 28.

SECTION 30. ESTIMATES AND PROJECTIONS. Other than cost estimates addressed in Section 9, CONSULTANT has no control over the cost of labor, materials, equipment or services furnished by others, over the incoming water quality and/or quantity, or over the way the CITY’s plant(s) and/or associated processes are operated and/or maintained. Data p rojections and estimates are based on CONSULTANT’s opinion based on experience and judgment.

SECTION 31. THIRD PARTIES. The Services to be performed by CONSULTANT are intended solely for the benefit of the CITY.

SECTION 32. MISCELLANEOUS PROVISIONS.

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

32.2. 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.

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32.3. The prevailing party in any action brought to enforce the provisions of this 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.

32.4. 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 Municipal Code, as amended from time to time.

32.5. 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.

32.6. In the event of a conflict between the terms of this Agreement and the exhibits hereto (per Section 33) 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.

32.7. 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.

32.8. 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.

32.9. 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.

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SECTION 33. 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 B: SCHEDULE OF PERFORMANCE
EXHIBIT C: COMPENSATION
EXHIBIT C-1: SCHEDULE OF RATES
EXHIBIT D: INSURANCE REQUIREMENTS

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

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CONTRACT No. C23183089

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

APPROVED:

____________________________
Utilities Director

CAROLLO ENGINEERS, INC.

Officer 1

By:_________________________________

Name:______________________________

Title:_______________________________

Officer 2

By:_________________________________

Name:_______________________________

Title:________________________________

DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B Inge Wiersema
Vice President
Vice President
Anne E Prudhel

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EXHIBIT A

SCOPE OF SERVICES

Scope of Services
CONSULTANT will produce the One Water Plan, a water supply plan that is a 20-year adaptable roadmap for implementation of prioritized water supply and conservation portfolio alternatives, by providing the services outlined below.

Task 1.0 Project Coordination & Administration
• CONSULTANT will provide management of all task activities, including project team assignments; meeting preparation and attendance; maintenance and monitoring of the budget and schedule; quality assurance and quality control of all deliverables; and coordination of all sub-consultants.
• CONSULTANT will attend and coordinate routine update meetings with the City and other stakeholders to occur quarterly throughout the project and which will be supplemented with up to eight (8) additional project meetings and twelve (12) project manager meetings between City staff and CONSULTANT. All meetings mentioned in this scope will take place virtually or in a hybrid format at City discretion with MS Teams, Zoom, or a similar platform. • CONSULTANT will d evelop and maintain a c omprehensive o verall p roject budg et tracking system for the project and provide read- only access to the City.

Task 1.1 Project Coordination & Administration Deliverables • CONSULTANT will produce a master schedule for the project including phasing of work, critical paths, and milestones.
• CONSULTANT will provide meeting attendees with meeting agendas, summary minutes and supplemental materials used during the update meetings no later than seven (7) working days after the update meeting.
• CONSULTANT will provide progress, schedule, and budget updates to City on a monthly basis and as requested by the City.
• CONSULTANT will support City staff to collaboratively develop the stakeholder engagement roadmap.

Task 1.2 Stakeholder Input
CONSULTANT will:
• Hold two (2) meetings for City staff from other Divisions and Departments at 50% and 75% project completion
o CONSULTANT will present project progress results to stakeholders o CONSULTANT will incorporate feedback provided
o Stakeholders include, but are not limited to, staff in Utilities, Public Works, Planning, Urban Forestry, Administrative Services, and Legal. • Provide ongoing communication and coordination of key information with City staff with an effort to avoid duplication and be consistent with work efforts in other departments while identifying and focusing on gaps and opportunities that provide water supply benefits.
• Hold three (3) stakeholder meetings for general public, including active community-based organizations and community members at project outset, and approximately 80% and 95% DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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project completion.
o CONSULTANT will present project scope and approach at project outset and project progress results at approximately 80% and 95% project completion o CONSULTANT will incorporate feedback provided
o Stakeholders include, but are not limited to, residents, nongovernmental organizations, the RWQCP partner agencies, Valley Water, and the SFPUC. o CONSULTANT is not responsible for coordinating the arrangements for meeting venues for stakeholder meetings
o CONSULTANT is not responsible for Other Direct Charges related to stakeholder meetings such as venue rent, refreshments, equipment rental, etc. • Provide periodic communication and coordination of key information with rele vant staff from stakeholder agencies or individuals with an effort to avoid duplication and be consistent with work efforts in stakeholder organizations and regional planning efforts, while identifying and focusing on gaps and opportunities that provide water supply benefits, as appropriate for Palo Alto.

Task 1.3 Optional Task Upon Request by City, Stakeholder Input • Upon request by City, CONSULTANT will:
o Support City staff with the preparation of a survey for Palo Alto customers seeking feedback on the One Water Plan; gathering, analysis, and summarizing the result is not included in this task.
o Hold one (1) additional stakeholder meeting with City staff and one (1) additional stakeholder meeting with the general public.

Task 1.4 Optional Task Upon Request by City, Palo Alto Process Support • Upon request by City, CONSULTANT will support staff through City approval process of the One Water Plan including assistance w ith presentation preparation and attendance and responding to questions at
o One (1) Utilities Advisory Commission (UAC) meeting or UAC subcommittee meetings, if applicable
o One (1) Council meeting

Task 2.0 Become Familiar with Existing Components of One Water Plan and Identify Gaps • CONSULTANT will:
o Review the following documents
 2017 WIRP after resource costs are updated by City staff  2019 Effluent transfer agreement with Valley Water and the City of Mountain View
 Phase III Recycled Water Expansion project business case  Groundwater basin study
 2020 Northwest County Recycled Water Strategic Plan
 Technical memos on basement dewatering, using emergency wells to irrigate parks, and increasing flow to RWQCP by diverting permanent dewatering water to plant
 Draft 2020 S/CAP chapter on water
 Palo Alto Sea Level Rise Policy and consultant scope of work  Green Stormwater Infrastructure Plan
and Implementation
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 SFPUC’s climate change impact study “Long Term Vulnerability and Adaptation Plan for the SFPUC Water Enterprise” (once it is released, expected in summer 2021)
 Palo Alto 2020 Urban Water Management Plan

 Palo Alto Urban Forestry Master Plan
 Palo Alto Tree Technical Manual
 Palo Alto Green Building Ordinance and any other relevant ordinances  Existing water conservation Programs and Rebates
o Identify and review missing information for inclusion in One Water Plan.

Task 3.0 Optional Task Upon Request by City, Complete Analysis and/or Gather Information on Missing Resources Identified in Task 2.0

Upon request by City, CONSULTANT will gather information on missing resources and/or complete additional analysis identified in Task 2.0.

Task 4.0 Develop Evaluation Criteria for Assessing Water Supply and Conservation Portfolio Alternatives
CONSULTANT will develop evaluation criteria for assessing water supply and conservation portfolio alternatives that at a minimum consider the
following:
• Planning level cost, capital, O&M and replacement of asset (life cycle costs), avoided costs and unit cost
• Possible sources and availability of funding
• Normal year reliability
• Drought resiliency
• Contribution to canopy health
• Water Quality
• Sustainability
• Equity
• Flexibility to adapt to changing conditions including SFPUC activities, state actions regarding environmental flows or water reuse regulations, Valley Water activities, and climate change
• Complexity
• Alignment with other City and regional initiatives including S/CAP, green stormwater program, sea level rise policy, and Comprehensive Plan • Ease of implementation
• Speed of implementation
• Public acceptance
• Customer impact (e.g., bill impact and mandatory water restrictions) • Other criteria, as directed by City

These evaluation criteria are assumed to be consolidated into up to 8 categories for the DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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evaluation. The supply options screening criteria used will consist of a subset of the portfolio evaluation criteria. The evaluation criteria metrics will be qualitative, with the exception of criteria such as cost. Project benefits will not be monetized but will be evaluated qualitatively or using other quantitative comparison methods.

Task 5.0 Develop and Evaluate Future Water Supply and Conservation Portfolio Alternatives

CONSULTANT will develop basic water supply and conservation descriptions for all supply options to inform the screening process, including planning level cost estimates. New planning level cost estimates will be prepared for up to seven (7) water supply and/or water conservation options. It is assumed that the remaining planning level cost estimates of the remaining options can be prepared using existing documents with Engineering News-Record (ENR) index adjustments.

CONSULTANT will develop up to seven (7) water supply/conservation option factsheets for up to seven (7) supply options that pass the screening process. These detailed factsheets will include location maps, flow schematics, detailed cost estimates, potentia l project partners, benefits, implementation challenges, timeline and other information required for the portfolio evaluation).

As the CONSULTANT develops and evaluates future water supply and conservation portfolio alternatives as described in the first two paragraphs of Task 5.0, CONSULTANT will consider the following:
• Additional demand-side management activities (up to two (2) types of additional demand-side management activities will be identified and described in the plan) o Including the impact of conservation on required drought cutbacks; o Examining Palo Alto’s rules and regulations regarding the ease of customer implementation of gray water
• Up to 10 types of water supply options, including the new water supply enhancement options, but excluding the 2 water conservation options/D emand Management Measure activities listed above and CONSULTANT will consider, at a minimum, screening the following water supply resource options:
o SFPUC water
o Groundwater
o Basement dewatering water
o Valley Water treated water
o Demand management programs (passive and active conservation) - baseline demand equal to most recent BAWSCA demand study projections based upon a Demand Side Management Least Cost Planning Decision Support System (DSS model) in combination with an Econometric Model.
o Water reuse alternatives, potable and non-potable
o Stormwater and rain capture and Green Stormwater Infrastructure o On site (customer) water capture and or reuse projects, gray and black o Storage (local or regional)
o Transfers with other agencies
o Desalination, distributed and centralized
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o Atmospheric water generators
o Other options as may be identified by the Consultant or City, • All possible options to enhance and preserve Palo Alto’s potable water supply, including but not limited to:
o Examining alternatives for serving the needs of Foothills Nature Preserve, including irrigation and filling of Boronda Lake;
o Examining alternatives for irrigating City parks and playing fields and other city facilities;
o Evaluating locally-controlled water supply and demand management projects and identify potential collaboration and regional project opportunities with a particular focus on evaluating any relevant economies of scale from regional project opportunities, if appropriate;
o Evaluating water supply portfolio options that go beyond SFPUC’s LOS of no more than 20% cutbacks during water supply shortage to provide a higher level of water service reliability, if possible.
• The following unknowns
o Bay Delta Plan or Voluntary Settlement Agreements
o SFPUC LOS goal achievement and cost
o Valley Water effluent transfer option exercised
o Climate change impacts
o Demand growth - range of demand projections equal to most recent DSS model output
o Senate Bill 606 (Hertzberg) and Assembly Bill 1668 (Friedman) known as “Making Conservation a California Way of Life” legislation requires implementation of water conservation and drought planning by Palo Alto through guidelines and regulations under development
o Direct potable reuse regulation timing
o Renegotiation outcome of revised method of calculating Tier 2 Allocations • One Water is focused on long-term water supply reliability and not focused on short-term system resilience and emergencies.
• One Water may make recommendations that feed into the development/ refinement of green building policies, requirements or mandates. However, One Water is not focused on development of city policies regarding expanded green building requirements.

Task 5.1 Develop a Methodology and an Excel-Based Model for Evaluating and Prioritizing Portfolio Alternatives
• CONSULTANT will develop an Excel-based model for evaluating and prioritizing the Portfolio Alternatives developed in Task 5.0 using the criteria developed in Task 4. The model will allow portfolio analysis of various supply options for a specified planning year demand condition under DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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average and dry year conditions. CONSULTANT will produce a portfolio analysis that develops, evaluates and prioritizes up to four (4) portfolios, including a “Do Nothing” benchmark alternative.

CONSULTANT will compare the portfolios based on the planning horizon only. However, CONSULTANT will also conduct interim planning year model runs to phase projects for the recommended portfolio. The model methodology may include decision analysis or some other means of identifying expected outcomes and funding likelihood for various scenarios. Specifically, CONSULTANT will prepare and utilize Criterion DecisionPlus to conduct a sensitivity analysis of the criteria used in the supply portfolio evaluation. • CONSULTANT will adjust any numbers (especially costs) from documents in Task 2 or other sources as needed.

Task 5.2 Optional Task Upon Request by City, Funding Identification & Assistance • Upon request by City, CONSULTANT will research and identify possible funding sources for the top priority projects identified under this scope of work.

Task 6.0 Final Deliverables to the City
• CONSULTANT will produce a standalone electronic report that can be used as an adaptable water supply plan for implementing a One Water portfolio for the planning horizon from calendar years 2023 through 2043. Each water supply and conservation portfolio alternative should contain planning level life -cycle cost estimates to guide City investments, and priorities into the future as changes occur. • CONSULTANT will prepare a detailed outline of the One Water Plan. • CONSULTANT will produce an Excel-based tool described in Task 5.1. • CONSULTANT will produce any and all other materials created such as workpapers, GIS layers, to produce the standalone electronic report and Excel-based tool described in Task

5.1. DocuSign Envelope ID: 9D1B4341-C2DC-4E66-9E49-411F722C506B

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EXHIBIT B

SCHEDULE OF PERFORMANCE

CONSULTANT shall perform the Services so as to complete each milestone within the number of months specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed (“NTP”) from the CITY.

Milestones Completion
Number of Months
from NTP or written authorization to proceed for
optional tasks; approximate hours, if applicable

1. Task 1.0 12 months
(Project Coordination & Administration)

2. Task 1.2 12 months
(Stakeholder Input)

3. Optional Task 1.3 6 months from written authorization to proceed from (Stakeholder Input) the City or a mutually agreed-upon completion date

4. Optional Task 1.4 6 months from written authorization to proceed from (Palo Alto Process Support) the City or a mutually agreed-upon completion date

5. Task 2.0 12 months
(Familiarize with Existing Components & Identify Gaps)

6. Optional Task 3.0 6 months from written authorization to proceed from (Analysis and Info. On Missing Resources) the City or a mutually agreed-upon completion date; up to approximately 140 hours.

7. Task 4.0 12 months
(Develop Evaluation Criteria)

8. Task 5.0 12 months
(Develop and Evaluate Portfolio Alternatives)

9. Task 5.1 12 months; for budgeting purposes, the development of (Develop Methodology and Excel-Based Model) the Excel-based model is limited to approximately eighty (80) hours

10. Optional Task 5.2 6 months from written authorization to proceed from (Funding Identification) the City or a mutually agreed-upon completion date; for budgeting purposes the funding identification work is
limited to approximately sixteen (16) hours

11. Task 6.0 12 months
(Final Deliverables to the City, except Detailed Outline)

12. Task 6.0
(Detailed Outline of the One Water Plan) Within 1 month after the project kickoff meeting

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EXHIBIT C

COMPENSATION

CITY agrees to compensate CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1.

The compensation to be paid to CONSULTANT under this Agreement for all services, additional services, and reimbursable expenses shall not exceed the amount(s) stated in Section 4 of this Agreement. CONSULTANT agrees to complete all Services and Additional Services, including reimbursable expenses, 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.

REIMBURSABLE EXPENSES

CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time/overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in -house printing, insurance and other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder.

CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost.

Expenses for which CONSULTANT shall be reimbursed are:

A. Travel outside the San Francisco Bay Area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses for City of Palo Alto employees.

B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost.

All requests for payment of expenses shall be accompanied by appropriate backup documentation and information. Any expense anticipated to be more than $100.00 shall be approved in advance by the CITY’s project manager.

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EXHIBIT C-1

SCHEDULE OF RATES

Hourly Rate Schedule

The hourly rates set forth below are applicable to calendar year 2022. In subsequent years, rates shall be adjusted by a percentage equal to the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco-Oakland-Hayward area, published by the United States Department of Labor Statistics (CPI) which is published most immediately preceding the commencement of the applicable calendar year, which shall be compared with the CPI published most immediately preceding the commencement date of the then expiring term.

Notwithstanding the foregoing, in no event shall CONSULTANT’s compensation rates be increased by an amount exceeding five percent of the rates effective during the immediately preceding term, and in no event shall CPI rate adjustments cause the contract price to exceed the amount described in Section 4, "Not to Exceed Compensation".

PALO ALTO ONE WATER PLAN
(2022 Rate Schedule)

Engineers/Scientists Hourly Rate

Assistant Professional $185.00
Professional 200.00
Project Professional 225.00
Lead Project Professional 275.00
Senior Professional 300.00
Technicians
Technicians 150.00
Senior Technicians 225.00
Support Staff
Document Processing / Clerical 135.00

Other Direct Expenses
Subconsultant cost + 10%
Expert Witness Rate x 2.0

Other Direct Cost, Travel and Subsistence, and Mileage is included in the hourly rate schedule.

This fee schedule is subject to annual revisions due to labor adjustments as described above.

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EXHIBIT D

INSURANCE REQUIREMENTS

CONSULTANTS 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.

AWARD 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

PROPERTY DAMAGE

BODILY INJURY & PROPERTY
DAMAGE COMBINED.
$1,000,000

$1,000,000

YES

AUTOMOBILE LIABILITY,

INCLUDING ALL OWNED, HIRED,

NON-OWNED

BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE

PROPERTY 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

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: CONSULTANT, 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 HEREIN DESCRIBED, INSURING NOT ONLY

CONSULTANT AND ITS SUBCONSULTANTS, 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 CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONSULTANT’S AGREEMENT TO INDEMNIFY CITY.

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

III. ENDORSEMENT PROVISIONS WITH RESPECT TO THE INSURANCE AFFORDED TO ADDITIONAL INSUREDS:

A. PRIMARY COVERAGE

WITH 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.

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B. CROSS LIABILITY

THE 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 MULTIPLE

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

C. NOTICE OF CANCELLATION

1. IF 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. IF 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.

EVIDENCE OF INSURANCE AND OTHER RELATED NOTICES ARE REQUIRED TO BE FILED WITH THE CITY OF PALO ALTO AT THE FOLLOWING URL:

HTTPS://WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569

HTTP://WWW.CITYOFPALOALTO.ORG/GOV/DEPTS/ASD/PLANET_BIDS_HOW_TO.ASP

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Certificate Of Completion
Envelope Id: 9D1B4341C2DC4E669E49411F722C506B
Status: Completed
Subject: Please DocuSign: C23183089 Clean One Water contract final.pdf Source Envelope:

Document Pages: 24
Signatures: 2
Envelope Originator:

Certificate Pages: 2
Initials: 0
Annmarie Romero
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
[email protected]
IP Address: 199.33.32.254
Record Tracking
Status: Original
6/1/2022 12:17:55 PM
Holder: Annmarie Romero
[email protected]
Location: DocuSign
Security Appliance Status: Connected
Pool: StateLocal
Storage Appliance Status: Connected
Pool: City of Palo Alto
Location: DocuSign
Signer Events
Signature
Timestamp
Inge Wiersema
[email protected]
Vice President
Security Level: Email, Account Authentication
(None)

Signature Adoption: Pre-selected Style
Signed by link sent to [email protected]
Using IP Address: 66.214.47.98
Sent: 6/1/2022 12:21:39 PM
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Signed: 6/1/2022 12:33:57 PM
Electronic Record and Signature Disclosure:

Not Offered via DocuSign
Anne E Prudhel
[email protected]
Vice President
Carollo Engineers, Inc.

Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Signed by link sent to [email protected]
Using IP Address: 4.15.122.74
Sent: 6/1/2022 12:33:58 PM
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Signed: 6/1/2022 2:48:00 PM
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Tabatha Boatwright
[email protected]
Utilities Administrative Assistant
City of Palo Alto
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Sent: 6/1/2022 2:48:01 PM
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Carbon Copy Events
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Attachment B

One Water Plan Considerations: Existing Plans, External Factors, and the Effluent Transfer Agreement

This attachment provides additional background on completed plans and plans in progress that the One Water Plan will utilize and build on. Additionally, it provides additional information about uncertainties and external factors that will impact existing a nd potential water supply options including regulatory changes, climate change and the Agreement Between and Among Palo Alto, Mountain View, and the Santa Clara Valley Water District to Advance Resilient Water Reuse Programs in Santa Clara County (Effluent Transfer Agreement).

Northwest County Recycled Water Strategic Plan
The City Council accepted the Northwest County Recycled Water Strategic Plan in 2020 (Council Report #10913). The Northwest County Recycled Water Strategic Plan represents a collaboration between the City of Palo Alto and Valley Water that presents the feasibility of various potable and non -potable opportunities to reuse water from the RWQCP within the plant’s service territory (Palo Alto, Mountain View, Los Altos, Los Altos Hills, Stanford University and East Palo Alto Sanitary District). The report summarizes and ranks water reuse alternatives based on cost and non-cost criteria; it does not recommend specific projects. The study also includes a robust evaluation of the groundwater aquifer in Northwest Santa Clara County.

The Northwest County Recycled Water Strategic Plan evaluated a potential expansion of the recycled water pipeline for non -potable reuse called “Phase 3 Pipeline.” Phase 3 would expand the recycled water system to South Palo Alto to serve landscape irrigation demands and potential dual-plumbed systems mainly within the Stanford Research Park area. An EIR, business plan and preliminary design report for this pipeline are also complete for the Phase 3 Pipeline. For more information, see the City's website on Palo Alto’s Recycled Water Pipeline & Strategic Plan.

The Northwest County Recycled Water Strategic Plan also examined a variety of indirect and direct potable reuse options, and the same work effort developed three technical memorandums examining other possible water sources including:

1. The possible use of groundwater from temporary dewatering systems for irrigation.

2. The possible use of groundwater to irrigate city parks.

3. Increasing flow to RWQCP by redirecting existing permanent dewatering systems at Oregon Expressway and City Hall to increase flows at the RWQCP for a future potable reuse project.

More information about these technical memorandums and findings are also available on the City's website.

Green Stormwater Infrastructure Plan
In a natural environment, rain is absorbed and filtered by plants and soils. But in densely populated urban areas like Palo Alto, impervious surfaces (that make up our buildings, streets, and parking lots) disrupt this natural water cycle. Stormwater collects pollutants when it washes

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Attachment B

over impervious surfaces, which then flows into our local creeks and the San Francisco Bay, causing negative impacts on water quality and wildlife. This stormwater may also cause flooding and erosion, harming properties and wildlife habitat.

By using vegetation, soils, and natural processes, GSI may be built into our urban environment to collect, slow, and clean stormwater runoff. The purpose of the GSI Plan is to describe how the City will gradually integrate GSI features into its urban landscape and stormwater conveyance systems over several decades. While the primary purpose for GSI is pollution control, GSI also represent a water supply option. The One Water Plan will consider this possibility.

Water Supply Reliability and Climate Change
Since the City relies on the SFPUC’s RWS for its potable water supplies, the City’s current water supply reliability mirrors that of the RWS. Palo Alto needs to carefully consider the vulnerabilities and resilience of the Reg ional Water System in its own water supply planning efforts. The One Water Plan will consider uncertainties, such as the outcome of the Water Quality Control Plan for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary (Bay Delta Plan Amendment or Bay Delta Plan). SFPUC’s 2020 UWMP projects that if the Bay Delta Plan is not implemented, SFPUC has sufficient supplies to meet projected demands. However, if the Bay Delta Plan is implemented, this would result in system-wide shortages of up to 54% for Wholesale Customers (the 26 agencies, including Palo Alto, that purchase water from the SFPUC) during multiple years of drought by 2045.

Alternative water supply projects undertaken by the SFPUC to close this gap may take many years to implement and may be costly. In 2020, the SFPUC began implementation of an Alternative Water Supply Planning Program to acquire additional water supplies and explore other projects that would increase overall water supply resilience. SFPUC has budgeted $264 million over the next 10 years to fund water supply projects.

One Water Planning will also consider the effects of climate change. The SFPUC partnered with the Water Research Foundation to complete the “ Long Term Vulnerability Assessment and Adaptation Plan for the SFPUC Water Enterprise – Phase I” in December 2021. The findings and tools developed as part of this assessment will be used by the SFPUC to info rm water supply reliability projections over the 50-year time horizon. Palo Alto’s One Water Plan will use the latest information from this assessment to help frame the issue of climate change impacts on the water supplies delivered via the RWS.

Effluent Transfer Agreement
In 2019, Council approved an Effluent Transfer Agreement with Valley Water and the City of Mountain View (Council Report #10627). The 76-year agreement enables an effluent transfer from the RWQCP to Valley Water to be reused in Santa Clara County, likely south of Mountain View. Under the agreement, Valley Water has approximately 20 years to start using the effluent.

The agreement also provides funding from Valley Water for a salt removal facility in Palo Alto to

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Attachment B

improve the quality of recycled water used in Palo Alto and the City of Mountain View and an at- cost water supply option for Palo Alto. Palo Alto hired Black & Veatch to design the local salt removal facility.1 The cost estimate for the 30% design increased significantly compared with a 2017 cost estimate. Staff will return to Council to discuss next steps and potential options before proceeding.

1 In March 2021, Council approved this project’s design services contract with Black & Veatch (Council Report #11782).

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City of Palo Alto (ID # 13625)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of the Fiscal Year 2023 Investment Policy From: City Manager
Lead Department: Administrative Services

Recommendation
The Finance Committee and Staff recommend the City Council approve the Fiscal Year 2023 Investment Policy (Attachment A).

Discussion
The Investment Policy (Policy) requires that the Policy be reviewed and any changes proposed by Staff be approved by the City Council during the annual budget process. The Finance Committee discussed the Policy at its June 7, 2022 meeting (CMR 14378) and unanimously recommended Council approval. For Fiscal Year 2023, staff is proposing no changes to the Policy.

Resource Impact
There are no budget impacts associated with the approval of the Investment Policy and the City’s investment portfolio continues to be managed in-house with existing staff resources.

Policy Implications
This recommendation does not represent any change to City policies.

Environmental Review
The actions requested in this report do not constitute a project for the purposes of the California Environmental Quality Act (CEQA).
.

Attachments:
• Attachment5.a: Attachment A: Proposed City of Palo Alto Investment Policy - Fiscal Year 2022-23
5 Packet Pg. 55

Fiscal Year 2023 1
Attachment A

PROPOSED CITY OF PALO ALTO
Investment Policy
Fiscal Year 2022-23

With No Changes

INTRODUCTION

The City of Palo Alto invests its pooled idle cash according to State of California law and the charter of the City of Palo Alto. In particular, the City follows “The Prudent Investor Standard” cited in the State Government Code (Section 53600.3). Under this standard, all gove rning bodies of local agencies or persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the prudent investor standar d. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.

INVESTMENT PHILOSOPHY

The basic principles underlying Palo Alto's investment philosophy is to ensure the safety of public funds, provide that sufficient money is always available to meet current expenditures, and achieve a reasonable rate of return on its investments.

The City's preferred and chief practice is to buy securities and to hold them to their date of maturity rather than to trade or sell securities prior to maturity. The City may, however, elect to sell a security prior to its maturity should there be a significant financial need. If securities are purchased and held to their maturity date, then any changes in the market value of those securities during their life will have no effect on their principal value. Under a buy and hold philosophy, the City is able to protect its invested principal. The economy, the money markets, and various financial institutions (such as the Federal Reserve System) are monitored carefully to make prudent investments and to assess the condition of the City’s portfolio.

INVESTMENT OBJECTIVES

The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield:

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1. Safety: Safety of principal is the foremost objective of the investment program.

Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk.

a) Credit risk is the risk that an obligation will not be paid and a loss will result. The City will seek to minimize this risk by:

 Limiting investment to the safest types of securities or minimum credit quality rating as listed in the “Authorized Investment” section  Diversifying its investments among the types of securities that are authorized under this investment policy

b) Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investor’s portfolio. For example, an investor with large holdings in long-term bonds has assumed significant interest rate risk because the value of the bonds will fall if interest rates rise. The City can minimize this risk by:

 Buying and holding its securities until maturity
 Structuring the investment portfolio so that securities mature to meet cash flow requirements

To further achieve the objective of safety, the amount that can be invested in all investment categories, excluding obligations of the U.S. Government and its agencies, is limited either as a percentage of the por tfolio or by a specific dollar amount. These limits are defined under the “Authorized Investments” section.

2. Liquidity: Liquidity is the second most important objective of the investment program. The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by maintaining a portion of the portfolio in liquid money ma rket mutual funds or local government investment pools. In addition, the City w ill maintain one month’s net cash needs in short term and/or liquid investments and at least $50 million shal l be maintained in securities maturing in less than two years. Although the City’s practice is to buy and hold securities to maturity, since all possible cash demands cannot be anticipated, the portfolio will consist of securities with active secondary or resale markets should the need to sell a security prior to maturity arises.

3. Yield: Yield on the City’s portfolio is last in priority among investment objectives.

The investment portfolio shall be designed to obtain a market rate of return that reflects the authorized investments, risk constraints, and liquidity needs outlined in the City’s investment policy. Compared to similar sized cities, the City of Palo Alto should be able to take advantage of its relatively large reserve balances to achieve higher yields through long-term investments. In addition, the City will strive to maintain the level of investment of idle funds as close to 100 percent as possible.

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Fiscal Year 2023 3

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) RESPONSIBILITIES

In addition to and subordinate to the Safety, Liquidity, and Yield investment objectives, investments that support sound environmental, social and governance (ESG) objectives are also considered. While the City’s portfolio is not classified as an ESG portfolio, investments in entities that support community well-being through practices that emphasize safe and environmentally sound objectives; fair labor practices; and equality of rights regardless of sex, race, age, disability, or sexual orientation, is encouraged. Direct investments in entities that manufacture tobacco products, firearms, and engage in direct production or drilling of fossil fuels is discouraged.

This section applies to new investments (after November 5, 2018) only and does not require divestment of existing investments. Investments in Certificates of Deposit (CDs) and Negotiable Certificates of Deposit are exempt from the ESG investing objective.

SCOPE

A. This investment policy shall apply to all financial assets of the City of Palo Alto as accounted for in the Annual Comprehensive Financial Report (ACFR), including but not limited to the following funds:

1. General Fund

2. Special Revenue Funds

3. Debt Service Funds

4. Capital Project Fund

5. Enterprise Funds

6. Internal Service Funds

7. Trust and Agency Funds

B. The policy does not cover funds held by the California Public Employees Retirement System (CalPERS), the California Employers’ Retiree Benefit Trust (CERBT), Deferred Compensation programs (e.g. ICMA, Hartford), the Authority for California Cities Excess Liability (ACCEL), and the Public Agency Retirement Services (PARS) Section 115 Irrevocable Trust.

C. Investments of bond proceeds shall be govern ed by the provisions of the related bond indentures.

GENERAL INVESTMENT GUIDELINES

1. The maximum stated final maturity of individual securities in the portfolio should be ten years.

2. A maximum of 30 percent of the par value of the portfo lio shall be invested in securities with maturities beyond five years.

3. The City shall maintain a minimum of one month’s net cash needs in short term and/or

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liquid investments.

4. At least $50 million shall be maintained in securities maturing in less than two (2) years.

5. Should the ratio of the market value of the portfolio to the book value of the portfolio fall below 95 percent, the Administrative Services Department will report this fact to the City Council within a reasonable time frame and evaluate whether there is any risk of holding any of the securities to maturity.

6. Commitments to purchase securities newly introduced on the market shall be made no more than three (3) working days before pricing.

7. Whenever possible, the City will obtain three or more quotations on the purchase or sale of comparable securities and take the higher yield on purchase or higher price on sale. This rule will not a pply to new issues, which are purchased at market no more than three (3) working days before pricing, as well as to LAIF, City of Palo Alto bonds, money market accounts and mutual fu nds, all of which shall be evaluated separately.

8. Where the Investment Policy specifies a percentage limitation for a particular category of investment, that percentage is applicab le only at the date of purchase. A later increase or decrease in a percentage resulting from a change in the portfolio’s assets or values shall not constitute a violation of that restriction. As soon as possible, percentage limitations will be restored as investments mature in each category.

AUTHORIZED INVESTMENTS

The California Government Code (Sections 53600 et seq.) governs investment of City funds. The following investments are authorized:

1. U.S. Government Securities (e.g. Treasury notes, bonds and bills) Securities that are backed by the full faith and credit of the United States

a) There is no limit on purchase of these securities.

b) Securities will not exceed 10 years maturity.

c) All purchased securities must have an explicit or a de facto backing of the full faith and credit of the U.S. Government.

2. U.S. Government Agency Securities – Obligations issued by the Federal Government agencies (e.g. Federal National Mortgage Association, etc.).

a. There is no limit on purchase of these securities except for:

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Fiscal Year 2023 5
 Callable and Multi-step-up securities provided that:
- The potential call dates are known at the time of purchase - The interest rates at which they “step-up” are known at the time of purchase
- The entire face value of the security is redeemed at the call date - No more than 25 percent of the par value of the portfolio

b. Securities will not exceed 10 years maturity.

3. California State, California Local Government Agencies, and other United States State Bonds

a) Having at time of investment a minimum Double A (AA/Aa2) rating as provided by a nationally recognized rating service (e.g. Moody’s, Fitch, and/or Standard and Poor’s).

b) May not exceed 40 percent of the par value of the portfolio.

c) Investments include:

i) Registered state warrants or treasury notes or bonds of the State of California and bonds, notes, warrant s, or other evidences of indebtedness of any local agency within California, including bonds payable solely out of the reve nues from a reve nue producing property owned, controlled, or operated by the state or local agency or by a department, board, agency, or authority of the state or local agency.

ii) Registered treasury notes or bond of any of the 49 United States in addition to the State of California, including bonds payable solely out of the revenues from a re venue-producing property owned, controlled, or operated by a state or by a department, board, agency or authority of any of the other 49 United States, in addition to the State of California.

4. Certificates of Deposit (CD) - A debt instrument issued by a bank for a specified period of time at a specified rate of interest. Purchase of CD’s are limited to:

a) May not exceed 20 percent of the par value of the portfolio.

b) No more than 10 percent of the par value of the port folio in collateralized CDs in any institution.

c) Purchase collateralized deposits only from federally insured large banks that are rated by a nationally rec ognized rating service (e.g. Moody’s, Fitch, and/or Standard and Poor’s).

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Fiscal Year 2023 6

d) For non-rated banks, deposit should be limited to amounts federally insured (FDIC). – See Appendix C

e) Rollovers are not permitted without specific instruction from authorized City staff.

5. Banker's Acceptance Notes (BA) – Bills of exchange or time drafts drawn on and accepted by commercial banks. Purchase of banker’s acceptances are limited to:

a) No more than 30 percent of the par value of the portfolio.

b) Not to exceed 180 days maturity.

c) No more than $5 million with any one institution.

6. Commercial Paper - Short-term unsecured obligations issued by banks, corporations, and other borrowers. Purchases of commercial paper are limited to:

a) Having highest letter or numerical rating as provided for by a nationally recognized rating service (e.g. Moody’s, Fitch, and/or Standard and Poor’s).

b) No more than 15 percent of the par value of the portfolio.

c) Not to exceed 270 days maturity.

d) No more than $3 million or 10 percent of the outstanding commercial paper of any one institution, whichever is lesser.

7. Local Agency Investment Fund (LAIF) – A State of California managed investment pool may be used up to the maximum permitted by California State Law.

8. Short-Term Repurchase Agreements (REPO) – A contractual agreement between a seller and a buyer, usually of U.S. government securities, whereby the seller agrees to repurchase the securities at an agreed upon price and, us ually, at a stated time.

Purchases of REPO’s must:

a) Not to exceed 1 year.

b) Market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities.

c) A Master Repurchase agreement must be signed with the bank or dealer.

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9. Money Market Deposit Accounts – Liquid bank accounts which seek to maintain a net asset value of $1.00.

10. Mutual Funds which seek to maintain a net asset value of $1.00 and which are limited essentially to the above investments and further defined in note 9 of Appendix A

a) No more than 20 percent of the par value of the portfolio.

b) No more than 10 percent of the par value with any one institution.

11. Negotiable Certificates of Deposit (NCD) issued by nationally or state-chartered banks and state or federal savings institutions and fu rther defined in note 11 of Appendix A. Purchases of negotiable certificates of deposit:

a) May not exceed 20 percent of the par value of the portfolio.

b) No more than $5 million in any one institution.

12. Medium-Term Corporate Notes – Issued by corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating with the United States.

a) Not to exceed 5 years maturity.

b) Securities eligible for investment shall have a minimum rating of AA or Aa2 from a nationally re cognized rating service (e.g. Moody’s, Fitch, and/or Standard & Poor’s).

c) No more than 10 percent of the par value of the portfolio.

d) No more than $5 million of the par value may be invested in securities of any single issuer, other than the U.S. Government, its agencies and instrumentality.

e) If securities owned by th e City are downgraded by Moody’s, Fitch, or Standard & Poors to a level below AA or Aa2, it shall be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio.

13. Supranational Organizations Securities – Supranational organizations refer to International Bank for Reconstruction a nd Development (IBRD), International Finance Corporation (IFC) and Inter-American Development Bank (IADB).

a. Securities will not exceed 5 years maturity.
b. No more than 20 percent of the par value of the portfolio. c. No more than 10 percent of the par value with any one institution.

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d. Securities eligible for investment shall have a minimum rating of AA or Aa2 from a nationally re cognized rating service (e.g. Moody’s, Fitch, and/or Standard & Poor’s).
e. Limited to United States dolla r denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by IBRD, IFC, and IADB.

Appendix A provides a more detailed description of each investment vehicle and its security and liquidity features. Most of the City's short-term investments will be in securities which pay principal upon maturity, while long-term investments may be in securities that periodically repay principal, as well as interest. Most of the C ity's investments will be at a fi xed rate. However, some of the investments may be at a variable rate, so long as that rate changes on specified dates in pre- determined increments.

PROHIBITED INVESTMENTS:

Includes all investments not specified above, and in particular:

1. Reverse repurchase agreements

2. Derivatives, as defined in Appendix B

Appendix B provides a more detailed description of each investment, which is prohibited, for City investment.

AUTHORIZED INVESTMENT PERSONNEL

Idle cash management and invest ment transactions are the res ponsibility of th e Administrative Services Department. The Administrative Services Department is under the control of the Director of Administrative Services (Director), as treasurer, who is subject to the direction and supervision of the City Manager.

The Assistant Directors of Administrative Services (Assistant Director), who reports to the Director, are authorized to make all investment transactions allowed by the Statement of Investment Policy.

The Assistant Director may authorize the Manager of Treasury, Debt & Investments and/or Senior Management Analyst (Manager and/or Analyst) to enter into investments within clearly specified parameters.

The Investment function is under the supervision of the Assistant Director. The Assistant Director is charged with the responsibility to manage the investment program (por tfolio), which includes developing and monitoring the C ity's cash flow model and deve loping long-term revenue and financing strategies and forecasts.

The Manager and/or Analyst are subject to the direction and supervision of the Assistant Director.

The Manager and/or Analyst assist the Assistant Director, in the purchase and sale of securities. The Manager and/or Analyst also prepare the quarter ly report, and record daily all investment transactions as to the type of investment, amo unt, yield, and maturity. Ca sh flow projections are

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prepared as needed.

In all circumstances, approval from the Director of Administrative Services is required before selling securities from the City's portfolio. The Manager and/or Analyst may also transfer no more than a total of $10 million a day from the City's general account to any one financial institution, without the prior approval of the Assistant Director.

No other person has authority to make investment transactions without the written authority of the Director or Assistant Director of Administrative Services.

USE OF BROKERS AND DEALERS

The Administrative Services Department maintains a list of acceptable dealers. A dealer acts as a principal in security transactions, selling securities from and buying securities for their own position.

A dealer must have:

a) At least three years experience operating with California municipalities;

b) Maintain an inventory of trading securities of at least $10 million; and

c) Be approved by the Assistant Director before being added to the City's list of approved dealers; including individual traders or agents representing a dealer:

A dealer will be removed from the list should there develop a history of problems to include: failure to deliver securities as promised, failure to honor transactions as quote d, or failure to provide accurate information.

SAFEKEEPING AND CUSTODY

All securities shall be delivered to the City's safekeeping custodian and held in the name of the City of Palo Alto, with the exception of the following investments:

a) Certificates of deposit, which may be held by the City itself.

b) City shares in pooled investment funds, under contract.

c) Mutual funds

d) Local Agency Investment Fund (LAIF)

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POLICY REVIEW AND REPORTING ON INVESTMENTS

Monthly, the Administrative Services Department will review performance in relation to Council adopted Policy. Quarterly, the Department will report to Council investment activity, including: the portfolio’s performance in comparison to policy, explain any variances from policy, provide any recommendations for policy changes, and discuss overall compliance with the City’s Investment Policy. In addition, the Department will provide Council with:

a) A detailed list of all securities, investments and monies held by the City, and b) Report on the City’s ability to meet expenditure requirements over the next six months.

Annually, the Administrative Services Department will present a Proposed Statement of Investment Policy, to include the delegation of investment authority, to the City Council for review during the annual budget process. All proposed changes in policy must be approved by the Council prior to implementation.

Adopted by City Council October 22, 1984 Amended by City Council June 11, 2001 Monthly reporting effective January 1985 Amended by City Council June 17, 2002 Amended and Adopted by City Council June 24, 1985 Amended by City Council June 17, 2003 Amended by City Council December 2, 1985 Amended by City Council June 28, 2004 Amended by City Council June 23, 1986 Amended by City Council June 20, 2005 Amended by City Council June 22, 1987 Amended by City Council June 12, 2006 Amended by City Council August 8, 1988 Amended by City Council June 11, 2007 Amended by City Council November 28, 1988 Amended by City Council June 09, 2008 Amended by City Council June 26, 1989 Amended by City Council June 15, 2009 Amended by City Council May 14, 1990 Am ended by City Council June 28, 2010 Amended by City Council June 24, 1991 Amended by City Council June 20, 2011 Amended by City Council June 22, 1992 Amended by City Council June 18, 2012 Amended by City Council June 23, 1993 Amended by City Council June 03, 2013 Amended by City Council June 20, 1994 Amended by City Council June 16, 2014 Amended by City Council June 19, 1995 Amended by City Council June 15, 2015 Amended by City Council June 24, 1996 Amended by City Council June 13, 2016 Amended by City Council June 23, 1997 Amended by City Council June 27, 2017 Amended by City Council January 26, 1998 Am ended by City Council November 5, 2018 Amended by City Council June 22, 1998 Amended by City Council June 24, 2019 Amended by City Council June 28, 1999 Adopted by City Council June 22, 2020 Amended by City Council June 19, 2000 Amended by City Council June 21, 2021

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APPENDIX A

EXPLANATION OF PERMITTED INVESTMENTS

1. U.S. Government Securities: United States Treasury notes, bonds, bills, or certificates of indebtedness or those for which the faith and credit of the Un ited States are pledged for the payment of principal and interest.

2. U.S. Government Agency Securities: U.S. Government Agency Obligations include the securities of the Federal National Mortgage Association (FNMA), Federal Land Banks (FLB), Federal Intermediate Credit Banks (FICB), banks for cooperatives, Federal Home Loan Banks (FHLB), Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Student Loan Mark eting Association (SLMA), Small Business Administration (SBA), Federal Farm Credit (FFC), and Federal Agricultural Mortgage Corporation (FAMC or FMAC). Federal Agen cy securities are debt obligations that essentially result from lending programs of the Government. Federal agency securities differ from other types of securities, as well as among themselves. Their characteristics depend on the issuing agency. It is possi ble to distinguish three types of issues: (A) participation certificates (pooled securities), (B) Certificates of interest (pooled loans), (C) notes, bonds, and debentures. The securities of a few agencies are explicitly backed by the full faith and credit of the U.S. Government. All other issues pur chased by the City have the de facto backing from the federal government, and it is highly unlikely that the government would let any agency default on its obligations.

3. Certificates of Deposit: A certificate of deposit (CDs) is a receipt for funds deposited in a bank, savings bank, or savings and loan association for a specified period of time at a specified rate of interest. Denominations are $250,000 a nd up. The first $250,000 of a certificate of deposit is guaranteed by the Federal Deposit Insurance Corporation (FDIC), if the deposit is with a bank or savings bank, or the Savings Association Insurance Fund (SAIF), if the deposit is with a savings and loan. CDs with a face value in excess of $250,000 can be collateralized by U.S. Government Agency and Treasury Depart ment securities or first mortgage loans.

Government securities must be at least 110 percent of the face value of the CD collateralized in excess of the first $250,000. The value of first mortgages must be at least 150 percent of the face value of the CD balance insured in excess of the first $250,000. Generally, CDs are issued for more than 30 days and the maturity can be selected by the purchaser.

4. Bankers' Acceptance: A Banker's Acceptance (BA) is a ne gotiable time draft or bill of exchange drawn on and accepted by a commercial bank. Acceptance of the draft irrevocably obligates the bank to pay the bearer the face amount of the draft at maturity. BAs are usually created to finance the import and export of goo ds, the shipment of goods within the United States and storage of readily marketable staple commodities. In over 70 years of usage in the United States, there has been no known instance of principal loss to any investor in BAs. In addition to the guarantee by the accepting bank, th e transaction is identified with a specific commodity. Warehouse receipts verify that the pledged commodities exist, and, by definition, these commodities are r eadily marketable. The sale of the underlying goods generates the

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necessary funds to liquidate the indebtedness.

BAs enjoy marketability since the Federal Reserve Bank is authorized to buy and sell prime BAs with maturities of up to nine months. The Federal Reserve Bank enters into repurchase agreements in the normal course of open market operations with BA dealers.

As are sold at a discount from par. An accepta nce is tied to a specific loan transaction; therefore, the amount and maturity of the acceptance is fixed.

5. Commercial Paper: Commercial paper notes are unsecured promissory notes of industrial corporations, utilities, and ba nk holding companies. Interest is discounted from par and calculated using actual number of days on a 360-day year. The notes are in bearer form, with maturities up to 270 days selected by the pur chaser, and denominations generally start at $100,000. There is a small secondary market for commercial paper notes and an investor may sell a note prior to maturity.

Commercial paper notes are backed by unused lines of credit from major banks. Some issuer's notes are insured, while some are backed by irre vocable letters of credit from major banks.

State law limits a City to investments in United States corporations having assets in excess of five hundred million dolla rs with an "A" or higher rati ng by a nationally recognized rating service for the issuer's debentures. Cities may not invest more than 25 percent of idle cash in commercial paper.

6. Local Agency Investment Fund Demand Deposit: The Local Agency Investment Fund LAIF) was established by the State to enable treasurers to place funds in a pool for investments. The City is limited to an investment of the amount allowed by LAIF (currently $75 million). LAIF has been particularly beneficial to those jurisdictions with small portfolios.

Palo Alto uses this fund for short-term investment, liquidity, and yield.

7. Repurchase Agreements: A Repurchase Agreement (REPOS ) is not a security, but a contractual arrangement between a financial in stitution or dealer and an investor. The agreement normally can run for one or more da ys. The investor puts up funds for a certain number of days at a stated yield. In return, the investor takes title to a given block of securities as collateral. At maturity, the securities are re purchased and the funds repaid, plus interest.

Usually, amounts are $500,000 or more, but some REPOS can be smaller.

8. Money Market Deposit Accounts: Money Market Deposit Accounts are market-sensitive bank accounts, which are available to depositors at any time, without penalty. The interest rate is generally comparable to rates on money market mutual funds, though any individual bank's rate may be higher or lower. These accounts are insured by the Federal Deposit Insurance Corporation or the Savings Association Insurance Fund.

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9. Mutual Funds: Mutual funds are shares of benefi cial interest issu ed by diversified management companies, as defined by Section 23701 M of the Revenue and Taxation Code.

To be eligible for investment, these funds must:

a) Attain the highest ranking in the highest letter and numerical rating provided by not less than two of the three largest nationally recognized rating services; or

b) Have an investment advi sor registered with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations, as authorized by subdivisi ons (a) to (n), inclusive, of Section 53601 of the California Government Code, and with assets under management in excess of five hundred million dollars; and

c) Invest solely in those securities and obligations authorized by Sections 53601 and 53635 of the California Government Code. Where the Investment Policy of the City of Palo Alto may be more rest rictive than the State Code, the Policy authorizes investments in mutual funds that shall have minimal investment in securities otherwise restri cted by the City's Policy. Minimal investment is defined as less than 5 percent of the mutual fund portfolio; and

d) The purchase price of shares of benefici al interest purchased shall not include any commission that these companies may charge.

e) Have a net asset value of $1.00.

10. Callable Securities and Multi-Step-ups: Callable securities are defined as fixed interest rate government agency securities that give the issuing agency the option of returning the invested funds at a specific point in time to the purchaser. Multi-step-ups are government agency securities in which the interest rate increases ("steps-up") at preset intervals, and which also have a callable option that allows the issuing agen cy to return the invested funds at a preset interval. Callable and multi-step-ups are permitted, provided that:

 the potential call dates are known at the time of purchase;

 the interest rates at which they “step-up” are known at the time of purchase; and

 the entire face value of the security is redeemed at the call date.

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11. Negotiable Certificates of Deposit (NCD): NCDs are large-dolla r-amount, short-term certificate of deposit. Such certificates ar e issued by large banks and bought mainly by corporations and institutional investors. They are payable either to the bearer or to the order of the depositor, and, being negotiable, they enjoy an active secondary market, where they trade in round lots of $5 million. Although they can be issued in any denomination from $100,000 up, the typical amount is $1 million also called a Jumbo Certificate of Deposit.

State law prohibits the investment of local agency funds in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or any person with investment decision maki ng authority in the administrative, manager’s, budget, auditor-controller’s, or treasurer’s offices of the local agency also serves on the board of directors, other credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificate of deposit.

12. Medium-Term Corporate Notes: All corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within th e United States. According to California Government Code Section 53601, “Notes eligible for investment under this subdivision shall be rated in a rating category of “A” or its equivalent or better by a nationally recognized rating service. Purchase of medium-term notes shall include other instruments authorized by this section and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section.”

13. Supranational Securities: California Government Code Section53601 defines allowable supranational securities as United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, the International Finance Corporation, and Inter-American Development Bank. Supranationals are well capitalized and in most cases have strong credit support from contingent capital calls from their member countries. Section 53601 was amended effective January 1, 2015 to allow local agencies to invest in the senior debt obligations of these three supranational issuers which are eligible for purchase and resale within the United States. These entities were established with the purpose of ending poverty and raising the standard of living around the world through sustainable economic growth.

a) The supranationals are international organization owned by member countries.

These are:
 International Bank for Reconstruction and Development (IBRD or World Bank), a member of the World Bank Group, provides direct loans and guarantees to sovereigns and government-backed projects  International Finance Corporation (IFC), a member of the World Bank Group, supports the creation and growth of private companies through direct lending and equity investment, attracting third party capital, and providing advisory services
 Inter-American Development Bank (IADB), a member of the

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Inter-American Development Bank Gr oup, provides loans, grants, and guarantees to sovereigns in Latin America and the Caribbean

b) Additional characteristics shared by the IBRD, IFC, and IADB include:
 Headquartered in Washington, D.C. with the United States as the largest shareholder of each organization
 Rated AAA/Aaa by S&P and Moody’s

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APPENDIX B

EXPLANATION OF PROHIBITED INVESTMENTS

1. Reverse Repurchase Agreements: A Reverse Repurchase Agreement (Reverse REPO) is a contractual agreement by the investor (e.g. lo cal agency) to post a security it owns as collateral, and a bank or dealer temporarily exchanges cash for this collateral, for a specific period of time, at an agreed-upon interest rate. During the period of the agreement, the local agency may use this cash for any purpose. At maturity, the securities are repurchased from the bank or dealer, plus interest.

California law contains a number of restric tions on the use of Reverse REPOS by local agencies.

2. Derivatives: A derivative is a financial instrument created from, or whose value depends on (is derived from), the value of one or more underlying assets or indices. The term "derivative" refers to instruments or features, such as collateralized mortgage obligations, forwards, futures, currency and interest rate swaps, options, caps and floors. Except for those callable and multi- step-up securities as described under Permitted Investments, derivatives are prohibited.

Certain derivative products have characterist ics which could include high price volatility, liquid markets, products that are not market-tested, products that are highly leveraged, products requiring a high degree of sophistication to manage, and products that are difficult to value.

According to California law, a local agency shall not invest any funds in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages.

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APPENDIX C

GLOSSARY OF INVESTMENT TERMS

AGENCIES: Federal agency and instrumentality securities.

ASKED: The price at which securities are offered.

BID: The price offered by a buyer of securities (when one sells securities, one asks for a bid).

See “Offer”.

BROKER: A person or institution that conducts investment transactions on behalf of the buyer and seller of the investment and earns a commission on the transaction.

COLLATERAL: Securities, evidence of deposit, or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.

ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR): The official annual report for the City of Palo Alto. It includes combined financial statements for each individual fund and account group prepared in conformity with Generally Accepted Accounting Principles and pronouncements set forth by the Governmental Accounting Standards Board (GASB). The ACFR also includes supporting schedules that are necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed statistical section.

COUPON: The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value or the certificate attached to a bond evidencing interest due on a payment date.

DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account.

DEBENTURE: A bond secured only by the general credit of the issuer.

DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: (1) delivery versus payment (DVP); and (2) delivery versus receipt (DVR). DVP is delivery of securities with an exchange of money for the securities. DVR is delivery of securities with an exchange of a signed receipt for the securities.

DISCOUNT: The difference between the acquisition cost of a security and its value at maturity when quoted at lower than face value. A security that sells below original offering price shortly after sale, is also is considered to be at a discount.

DISCOUNT SECURITIES: Non-interest-bearing money market instruments that are issued a discount and that are redeemed at maturity for full face value (e.g., U.S. Treasury Bills).

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DIVERSIFICATION: Dividing investment funds among a variety of securities that offer independent returns.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION (“FAMC” or “FMAC”): A federal agency established in 1988 to provide a secondary market for fa rm mortgage loans.

Informally called Farmer Mac.

FEDERAL CREDIT AGENCIES: Agencies of the Federal Government that were established to supply credit to various classes of institutions and individuals (e.g., S&Ls, small business firms, students, farmers, farm cooperatives, and exporters).

FEDERAL DEPOSIT INSURANCE CORPORATION (“FDIC”): A federal agency that insures all types of deposits received at an insured bank, including de posits in a checking account, negotiable order of withdrawal (NOW) account, savings account, money market deposit account (MMDA) or time deposit such as a certificate of deposit (CD). FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's closing, up to the insurance limit.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investments are purchased at an insured bank. The FDIC does not insure U.S. Treasury bills, bonds or notes, but these investments are backed by the full faith and credit of the United States government.

The standard maximum deposit insurance amount is described as the “SMDIA” in FDIC regulations.

The SMDIA is $250,000 per depositor, per insured bank.

FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations.

FEDERAL HOME LOAN BANKS (“FHLB”): Government-sponsored wholesale banks (currently 12 regional banks) which lend funds a nd provide correspondent banking services to member commercial banks, thrift institutions, credit unions, and insurance companies. The mission of the FHLBs is to liquefy the housing-related assets of its members, who must purchase stock in their District Bank.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (“FNMA”): FNMA, like GNMA, was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the ausp ices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is calle d, is a private stockholder-owne d corporation. The corporation’s purchases include a variety of ad justable mortgages and second loan s, in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest.

FEDERAL OPEN MARKET COMMITTEE (“FOMC”): T h e F O M C c o n s i s t s o f s e v e n

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members of the Federal Reserve Board and five of the 12 Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodi cally meets to set Federal Reserve guidelines regarding purchases and sales of government securities in the open market, as a means of influencing the volume of bank credit and money.

FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven-member Board of Gove rnors in Washington, D.C., 12 regional banks, and about 5,700 commercial banks that are members of the system.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (“GNMA” or “Ginnie Mae”):

Securities that influence the volume of bank cred it that is guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings a nd loan associations, and other institutions. A security holder is protected by the full faith and credit of th e U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FMHM mortgages. The term “pass-throughs” is often used to describe Ginnie Maes.

LIQUIDITY: A liquid asset is one that can be convert ed easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow, and reasonable amount can be done at those quotes.

LOCAL GOVERNMENT AGENCY: A local government agency is any city, county, city and county, district, or other local governmental body or corporati on, including the California State Universities (CSU) and University of Califor nia (UC) systems, K-12 schools and community colleges empowered to expend public funds.

LOCAL GOVERNMENT INVESTMENT FUND (“LAIF”): Monies from local governmental units may be remitted to the California State Treasurer for deposit in this special fund for the purpose of investment.

MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.

MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase-reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer (lender) to liquidate the underlying securities in the event of default by the seller (borrower).

MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.

MONEY MARKET: The market in which short-term debt instruments (e.g., bills, commercial paper, and bankers’ acceptances) are issued and traded.

OFFER: The price asked by a seller of securities (when one buys securities, one asks for an offer).

See “Asked” and “Bid”.

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OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Rese rve Bank, as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and cred it; sales have the opposite effect. Open market operations are the Federal Reserve’s most important and most flexible monetary policy tool.

PORTFOLIO: A collection of securities that an investor holds.

PRIMARY DEALER: A group of government securities deal ers that submit daily reports of market activity and positions, and monthly financial statements to the Federal Reserve Bank of New York, and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -- registered securities broker-dealers, banks, and a few unregulated firms.

PRUDENT INVESTOR RULE: An investment standard cited in the California Government Code Section 53600 et seq. Under this standard, all governing bodies of local agencies or persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, rei nvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trus tee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.

QUALIFIED PUBLIC DEPOSITORIES: A financial institution that: (1) does not claim exemption from the payment of any sales, compensating use, or ad valorem taxes under the laws of this state; (2) has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liab ility; and (3) has been approved by the Public Deposit Protection Commission to hold public deposits.

RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price.

SAFEKEEPING: A service to customers rendered by ba nks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection.

SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution.

SECURITIES AND EXCHANGE COMMISSION: An agency created by Congress to administer securities legislation for the purpose of protecting investors in securities transactions.

STRUCTURED NOTES: Notes issued by instrumentalities (e.g., FHLB, FNMA, SLMA) and by corporations, that have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns) in their debt structure. The market perf ormance of structured notes is affected by fluctuating interest rates; the volatility of imbedded options; and shifts in the yield curve.

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SUPRANATIONALS: International institutions that prov ide development financing, advisory services and/or financial services to their member countries to achieve the overall goal of improving living standards through sustainable economic growth. The California Government Code Section 53601 allows local agencies to pu rchase the United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the Interna tional Bank for Reconstruction and Development (IBRD), Interna tional Finance Corporation (IFC), or Inter- American Development Bank (IADB).

TIME CERTIFICATE OF DEPOSIT: A non-negotiable certificate of deposit, which cannot be sold prior to maturity.

TREASURY BILLS: A non-interest-bearing discount security that is issued by the U.S. Treasury to finance the national debt. Most T-bills are issued to mature in three months, six months, or one year.

TREASURY BONDS: Long-term, coupon-bearing U.S. Treasury securities that are issued as direct obligations of the U.S. Government, and having initial maturities of more than 10 years.

TREASURY NOTES: Medium-term, coupon-bearing U.S. Treasury securities that are issued as direct obligations of the U.S. Government, and having initial maturities of two to 10 years.

YIELD: The rate of annual income return on an investment, expressed as a percentage.

YIELD-TO-CALL (YTC): The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date.

YIELD-TO-MATURITY: The current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity.

ZERO-COUPON SECURITIES: Security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity.

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City of Palo Alto (ID # 13994)
City Council Staff 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: IT Department

Recommendation
Staff recommend that Council approve and authorize the City Manager or their designee to execute the attached professio nal services contract with EPI -USE Labs, LLC to provide: online h osting services for the City’s SAP enterprise resource planning (ERP) system on the Amazon Web Services (AWS) cloud platform; related SAP Basis support services; and Additional Services (as n eeded, implemented via City -approved Task Order up to a contingency amount of $200,000 as detailed in the contract), for a total contract not-to-exceed amount of $2,214,140 over a three-and-a-half year term.

Background
The City’s history with SAP began i n 2002, when the City selected SAP as its preferred vendor for an enterprise resource planning (ERP) system. The purpose was to integrate various business processes within the City, which enabled staff to move in the direction of digital government. The SA P ERP system was implemented in 2003 and supports Accounting, Finance, Purchasing, Project Management, Plant Maintenance, Budgeting, Payroll, Human Resource Management, and Service Order Management.

In 2019, the City completed a major upgrade and migrated SAP Infrastructure to Cloud.

The original contract for hosting and related services with Labyrinth Solutions, I nc., (LSI) was approved by Council and signed in 2019 (CMR 10033 ) for a three-year duration covering the upgrade, migration, and cloud hosting and support services. In 2021, a six-month term extension was executed by the City Manager (no change to the compensation), which expire d on April 21, 2022. Amendment two to the LSI contract was approved by Council to further extend the term t hrough October 21, 2022 (no change to the compensation) to ensure sufficient time for the transition to the new vendor.
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Discussion
The SAP ERP system is a highly complex system with processes i ntegrated between various modules and requires a high degree of specialized expertise to provide effective ongoing maintenance and support.

Staff published a request for proposals ( RFP) to procure cloud hosting and support services in May of 2021 (RFP 182051).

Summary of Competitive Solicitation Process:

Table # 1: Summary of Request
for Proposal

Proposal Description AWS Cloud and SAP Basis Support Service RFP182051 Proposed Length of Project  3 years term, 2 additional years by amendment Number of Vendors Notified 476
Number of Proposal Packages
Downloaded
45 Total Days to Respond to
Proposal
44 Pre-Proposal Meeting No
Pre-Proposal Meeting Date  None
Number of Proposals Received  16
Proposal Price Ranges:
- Range of one-time Cloud
account migration and
stabilization costs
- Annual Maintenance and
Hosting range costs
- Ad-hoc hourly rates range

$0 - $200,000

$200,000 - $800,000

$75 - $200 hourly
Public Link to Solicitation https://pbsystem.planetbids.com/portal/25569/bo/bo- detail/82892

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The multi-divisional evaluation team short -listed four vendors and requested that they provide demonstrations of their support offerings based on the following criteria:

1) Having ability to support SAP in AWS cloud and showcase expertise in each domain (Infrastructure, Network, Security, and Basis Administration). 2) Detailing their specific team and staff expertise in each area, including partnerships/consultants.
3) Providing best cost/pricing for support services and a detailed cost break down for the services, by task.
4) Detailing cost/pricing to include additional AWS discount(s), and for any subsequent years.

After the rigorous evaluation process and add itional due diligence performed by Staff, EPI-USE Labs, LLC was identified for award of the contract, considering their domain knowledge, staff expertise, customer references, and pricing.

Transition
The City requested LSI be available for at least four weeks to transfer over the existing AWS account and knowledge to the new provider in order to have a successful transition. This was a key purpose of Amendment Two to the contract with LSI , which was for time only, at no additional compensation as the par ties work through the transition after Council approval of the award of the contract to EPI -USE Labs, LLC as recommended in this staff report.

Resource Impact
Funding for this contract is budgeted in the Technology Fund as part of the Fiscal Year 2022 Adopted Operating Budget. Funding for this contract in Fiscal Year s 2023 and 2024 is subject to annual appropriation of funds.

Budget Summary for Contract with EPI-USE Labs, LLC:

One-Time: $205,140
Year 1 Annual Cost: $603,000
Year 2 Annual Cost: $603,000
Year 3 Annual Cost: $603,000
Additional Services: $200,000
Subtotal: $2,014,140
Total Contract Not-To-Exceed: $2,214,140

Stakeholder Engagement
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RFP 182051 was issued in May 2021 for AWS support and hosting services. Through this competitive solicitation and evaluation process, EPI-USE Labs, LLC was chosen.

Environmental Review
This is not a project under the California Environmental Quality Act (CEQA).

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City of Palo Alto (ID # 14030)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of contract number C231833249 with Digitech Computer LLC to provide Ambulance Billing Services in the amount of $140,000 a year not to exceed $700,000.

From: City Manager
Lead Department: Fire

Recommendation
Staff recommends that Council:

1. Authorize the City Manager, or designee, to execute Contract No. C23183249 with Digitech Computer LLC, DBA Digitech for ambulance service billing for a one-year period starting on September 30, 2022, for an amount not to exceed $140,000 per year, with the option to renew four additional one-year periods, for a total amount not to exceed $700,000 over a five-year period ending September 30, 2027.

Background
The City of Palo Alto Fire Department currently bills for ambulance service through a third-party service provider . Due to the complex and frequent regulatory changes in health care billing, it is necessary to rely on the expertise of a third -party billing service provider.

A process was put in place to have a continuous review of accounts through mon thly meetings with the service provider as per recommendations from the City Auditor regarding oversight of patients’ accounts . The service provider for this contract will be required to comply with that process.

Discussion
Staff completed a competitive bid with three service providers responding. Staff reviewed and compared all bids. Digitech is the Fire Department’s current service provider and they submitted the bid that received the highest objective scores compared to other bids even though they were they also had the highest cost of service.

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With the implementation of this Agreement, the City will coordinate with the service provider, Revenue Collections, and the Emergency Medical Services (EMS) Division of the Fire Department, to the extent the City is allowed to collect revenue through the ambulance program. The current collections are approximately $2,800,000, and the cost of the current agreement is approximately $81,000 annually. Digitech’s proposal is

3.4% with the new agreement. The Fire Department has funding in the current budget to cover the expenses for this agreement.

This Agreement will allow the service provider to bill on behalf of the City for all EMS services. The service provider has the ex pertise and experience to work with, and bill for, medical services. The billing services include the following: the proposed ambulance subscription program, patient transports, and other potential fee programs.

The Affordable Healthcare Act (AHA) includ es ambiguous language that creates uncertainty concerning allowable billing, required documentation, support documentation, new forms, electronic fund transfers, and other complexities. The Fire Department’s emergency medical service model requires experti se in medical billing. A professional third-party service provider maintains vigilance and updated information to allow for maximum cost recovery and collections, while minimizing appeals from Medi - Care and other insurance companies.

Resource Impact
Staff impact is minimized to a monthly meeting to review outstanding EMS bills in consideration for collections, bad de bt, write-off or follow up. ASD processes refunds Summary of Solicitation Process:

Proposal Description/Number RFP 183249
Ambulance Billing
Proposed Length of Project 5 years
Number of service providers notified through City’s
eProcurement system 1,362
Number of solicitation packages downloaded by
service providers 9
Total Days to Respond to Proposal 18
Non-Mandatory or Mandatory Pre-Proposal Meeting
Date:

No pre-proposal meeting
was held
Number of Company Attendees at Pre-Proposal
Meeting 0
Number of Proposals Received 3
Range of Proposal Amounts From 2.35%-3.4% of
collected amounts
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and balances monthly statements. Fire oversees frontline personnel to continue billing information, collection, and signature compliance.

Environmental Review
This activity is not a project under 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:
• Attachment7.a: Attachment A: Digitech Computer LLC, DBA Digitech, medical billing; Contract C23183249
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CITY OF PALO ALTO CONTRACT NO. C23183249

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND DIGITECH COMPUTER LLC

This Agreement for Professional Services (this “Agreement”) is entered into as of the 5th day of April, 2022 (the “Effective Date”) , by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and DIGITECH COMPUTER LLC , a Limited Liability Corporation, located at 480 North Bedford Road, Building 600, 2 nd Floor, Chappaqua, New York, 10514 (“CONSULTANT”).

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

RECITALS

A. CITY intends to offer Medical Billing and Accounts Receivable Management (the “Project”) and desires to engage a consultant to provide medical billing and accounts receivable management services in connection with the Project ( the “Services”, as detailed more fully in Exhibit A).

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 2. TERM.

The term of this Agreement shall be from the date of its full execution through June 30, 2027 unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.

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 completed by CONSULTANT in a reasonab ly prompt and DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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timely manner based upon the circumstances and direction communicated to the CONSULTANT.

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 Eight Hundred Thousand Dollars ($800,000.00). 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.

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.

DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at 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.

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 C ity 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 hei rs, successors, executors, administrators and assignees of the parties.

SECTION 12. SUBCONTRACTING. CONSULTANT shall not subcontract any portion of the Services to be performed under this Agreement without the prior written authorization of the City Manager or designee. In the event CONSULTANT does subcontract any portion of the work to be performed under this Agreement, CONSULTANT shall be fully responsible for all acts and omissions of subcontractors.

CONSULTANT shall be responsible for directing the work of any subcontractors and for any 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 Michael Brook, Senior Vice President, Client Relations, 5820 Stoneridge Mall Road, Suite 117, CA, 94588, (510) DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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904-5713, [email protected] as the CONSULTANT’s Project Manag er 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 Project Manager or any other of CONSULTANT’s key personnel for any reason, the appointment of a substitute Project 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. 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 Kim Roderick, Fire Department, Emergency Services Division, 250 Hamilton Ave., Civic Center Level 6, Palo Alto, CA , 94301, Telephone: (650)329-2220. 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 P roject Manager from time to time.

SECTION 15. AUDITS . CONSULTANT agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for three (3) 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 three (3) years after the expiration or earlier termination of this Agreement or the completion of any audit hereunder, whichever is later.

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 re lated to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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Agreement, regardless of whether or not it is caused in part by an Indemnified Party.

16.2. 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 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.

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 2 9.4 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 partial exercise of any right or remedy will preclude any other or further exercise of any right or remedy.

SECTION 18. INSURANCE.

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 CONSULTANT will provide the Purchasing Manager thirty (30) days’ prior written notice of any cancellation or material reduction in coverage limits. If the insurer cancels or modif ies 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 CONSULTANT’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, DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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CONSULTANT will be obligated for the full 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. Either party may suspend the performance of the Services, in whole or part, or terminate this Agreement, without cause, by giving thirty (30) days prior written notice. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with cause, by giving ten (10) 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 Servi ces on the effective date in the notice of suspension or termination.

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 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 mutually agreed upon by CONSULTANT and 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.

SECTION 20. NOTICES.

All notices hereunder will be given in writing either via email, with confirmation of receipt, or 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

With a copy to the Purchasing Manager
DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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To CONSULTANT: Digitech Computer LLC
480 Bedford Road, Building 600, 2 nd Floor
Chappaqua, NY 10514
Attn: Michael Brook, Project Manager
Email: [email protected]

CONSULTANT shall provide written notice to CITY of any change of address.

SECTION 21. CONFLICT OF INTEREST.

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 any 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.

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, pregna ncy, 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

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.

DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND Z ERO 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) A ll 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 par ticular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay such 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 available. This S ection 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.

DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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(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).

This 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 unauthorized 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.

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 of 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 access 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 of a court of competent jurisdiction or governmental body, provided that CONSULTANT will notify CITY in writing of such order immediately upon DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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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.

28.6. 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 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.

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29.7. 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 B: SCHEDULE OF PERFORMANCE
EXHIBIT C: COMPENSATION
EXHIBIT C-1: SCHEDULE OF RATES
EXHIBIT D: INSURANCE REQUIREMENTS

THIS AGREEMENT IS NOT COMPLETE UNLESS ALL SELECTED EXH IBITS ARE ATTACHED.

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CONTRACT NO. C23183249 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

DIGITECH COMPUTER LLC

Officer 1

By:_____________________________

Name:___________________________

Title:____________________________

Officer 2

By:______________________________

Name:____________________________

Title:_____________________________

DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C President & CEO
Mark Schiowitz
SVP
Joyce Kerulo
Attachment A

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EXHIBIT A

SCOPE OF SERVICES

CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF SERVICES”.

1. C ONSULTANT will provide complete medical billing and accounts receivable management services for CITY’s first responder, ALS paramedic transport, BLS transport, First Responder fees, and Membership Subscription program tracking and adjustment in accordance with the responsibilities outlined below, as required according to business needs.

2. CONSULTANT will have a comprehensive and successful Emergency Medical Services billing and customer service record with significant experience in Prehospital billing, account follow up, Quality Assurance Fee program (QAF), Government Emergency Medical Transport program (GEMT) and Inter-Governmental Transport program (IGT) reporting requirements, and support CITY with needed information for compliance.

Prehospital billing experience shall include 911 system ambulance transports at the ALS / BLS level as well as experience in non-911 system interfacility transports. This level of experience would typically require 5 plus years of EMS / Ambulance billing business at a volume equal to or greater than the City of Palo Alto Fire Department. CONSULTANT must offer leading technology in electronic billing and insurance follow-up, compliance oversite, feedback and excellent customer service. CONSULTANT shall have highly qualified staff with a background in Prehospital billing. CONSULTANT shall provide data on company history of collections including payer mix with percentage of collections for each category. CONSULTANT shall provide the City with customer references.

3. CONSULTANT will provide local support to City and meet on a monthly basis.

4. CONSULTANT will provide general billing and accounts receivable management services to CITY for Emergency and Non-Emergency transport services consistent with the provisions in City’s Municipal Fee Schedule, ensuring that every billable claim is pursued to the following but not limited to:

a) Provide general billing for FRF and/or subscription fees as needed, and track accounts which these services apply to.
b) Maintain up-to-date knowledge of different industry insurance plans and providers, utilize most up-to-date knowledge and information with regard to coding requirements and standards, ensure compliance with applicable Federal, State and local regulations.
c) When a new account is received, assign billing account numbers that provide a cross-reference to the CITY’s assigned incident numbers. d) On a monthly basis, reconcile the number of transports processed with those received.
e) Monthly, have CONSULTANT team meet with/at the City to review accounts, spot audit accounts, and update staff on status of outstanding or DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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standing accounts. This includes but limited to: frozen accounts, accounts over 180 days, missing signatures, closed accounts, etc. f) Maintain responsibility for obtaining missing or incomplete insurance information and billing information.
g) Provide accurate coding of medical claims as set by State and Federal requirements and facilitate proper security of confidential information and proper shredding of all disposed material containing such information in accordance with HIPAA and Red Flag Rules and regulations. h) Make recommendations as requested for fee schedule changes. Regularly advise CITY of changes in statues and industry regulations. Provide Bay Area average billing/fee schedules, as needed. Provide strategies to maximize programs, including company charts that estimate the impact of billing system changes.
i) For any accounts previously returned to the City for follow up or further action or which any payment is received by CONSULTANT, report such payment to ASD within 3 business days of receipt.
j) Pursue payment from international and local patients in the same manner with the same diligence.
k) When necessary, provide subject matter expert to assist with any application process as needed for City representative. (CMS, Worker’s Comp, etc.)

5. CONSULTANT will abide by all local, state and federal laws applicable to medical billing and patient confidentiality.

6. CONSULTANT will maintain current Business Associate Agreement (BAA). Any breech of HIPAA information shall be reported and a plan for any breech of PHI at the expense of the CONSULTANT.

7. CONSULTANT will assist with GEMT, QAF, and IGT, or new State/Federal replacement program, submissions and reports.

8. CONSULTANT will provide report on subscription fee adjustments and report to agency as needed.

9. CONSULTANT will provide a monthly report of performance metrics based on:
a) Collections Formula: (Send sample reports with proposal) b) Collections Percent = collections/charges
c) Collections = Payments Less refunds (Exclude GEMT, IGT and Collections Agency Payments)
d) Charges for:
a. Medicare and Medicaid adjustments taken at time of billing or payment.
b. Include or Exclude?
c. Medicare not medically necessary
d. Medicare Claims with Missing Signatures
e. Self-Pay, Homeless, Transients
f. IMX Various Calculation
g. Gross Collection
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h. Net Collections-adjustment taken at time of payment
i. Adjusted net collections – exclude NMN, missing signatures, etc. j. Account with payments
k. Average Collections/Transport is the better collections performance metric
Patient Account Log

1. CONSULTANT will file and maintain a log (a “patient account log”) for each patient account documenting the complete history of all notices, phone calls, other correspondence, and actions taken to collect insurance payment, including but not limited to:
a) all invoice and billing records,
b) dates of all written and oral correspondence,
c) details of such correspondence,
d) notations of billing contacts and updates,
e) patient contacts,
f) returned mail, phone disconnects, etc.,
g) all records of re-submittals and corrections.
h) all information regarding the patient including CITY’s incident number, name, gender, date of birth, date of service, call type, address i) ● in the case of account write-offs, the reason why the account is uncollectible.
j) ● all required documentation and agreements with payers (including Medicare, Medicaid, Champus, etc)

2. CONSULTANT will provide a copy of the Patient Account Log to City when referring the account back to the City.

Invoices and Billing.

1. Billing cycles will be reset upon billing a different payer and therefore may be extended beyond the 180 period for collections described in sections a through c below.

CONSULTANT shall take all reasonable measures to ensure that patients are billed for services, including establishing contacts with local hospitals to obtain and/or verify patient insurance and demographic information, as necessary.

2. In general, if sufficient billing information is provided by the city, the account shall be invoiced within 3 business days. If insufficient billing information is provided by the city, the CONSULTANT shall pursue information within 10 business days. This includes; skip search, send patient a signature card, request a face sheet from the receiving facility, etc. Once sufficient information is obtained by the CONSULTANT the account shall be invoiced within 3 business days and follow the timelines as detailed below.

3. CONSULTANT will invoice patients according to the following billing cycle. Receipt of account shall be defined as the date the paper PCR or ePCRs received by the vendor.

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a. Self-Pay Cycle – Completed PCR/ePCR:

Correspondence: Action Taken No Later Than:

Coding account within 5 business days of receipt
Initial Invoice no SSN 3 days for ePCR and 5 days for paper PCR from receipt of account
Initial Invoice with SSN 10 days for ePCR
First Letter Contact 15 days from receipt of account
Secondary Letter Contact 45 days from the previous invoice Continued Follow Ups 80 days from receipt of account (Invoice or Letter) 115 days from receipt of account
Final Demand Notice 145 days from receipt of account
Refer to City for action
or report status 180 days from receipt of account

b. Insurance Accounts:

C
orrespondence: Action Taken No Later Than:

Coding account within 5 business days of receipt
Initial Invoice 3 days for ePCR and 5 days for paper PCR from receipt of account
First follow up 45 days after first submission to Insurance Continued Follow Ups 80 days from receipt of account
(Invoice or Letter) 115 days from receipt of account
145 days from receipt of account
Refer/report to City for
action or report status 180 days from receipt of account

c. Incomplete PCR/ePCR
CONSULTANT shall pursue information within 10 business days. Once information is complete, the timelines shall be the same as in Section (a) above.

d. Special Accounts/Modified Payment:

CONSULTANT shall negotiate and arrange modified payment schedules for individuals unable to pay full amount when billed and shall work with customers to establish special payment cycles to accommodate these individual payment needs to accommodate installment payments, liens, bankruptcy, or other special payment arrangements.

Such payment plans shall be established in writing, with the record of the plan, installment invoices, and all payments retained in the Patient Account Log. Installments and other special accounts shall be mailed no later than every thirty (30) days until paid in full. If, after a modified payment plan is arranged and no payments are made for a continuous 60 day period, CONSULTANT shall refer the account to the City for action.

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e. Return Mail and Accounts Requiring Additional Information:

In addition to adhering to the billing cycle deadlines listed above, CONSULTANT shall conduct skip tracing search requests and/or review information acquired from hospitals no Later than 3 days from receipt of return mail/date

f. Communication with patients and customers: All correspondence or phone calls shall identify the CONSULTANT’s name and clearly state they are working on behalf of the City of Palo Alto.

g. Delinquency Notice: All initial and subsequent invoices shall state the date on which the patient’s account will become (or did become) delinquent,

h. Secondary insurance: Secondary insurance provider claims shall be submitted after the primary insurance provider has paid.

i. Return of delinquent and uncollectible accounts to City: Delinquent accounts shall be referred back to the CITY at the 180-day deadline as listed above in sections 13(a) – (c) with a copy of the Patient Account log or as directed by the City.
(1) Legally uncollectible amounts (such as Medicare and Medical approved payments lower than City rates) shall be reported separately and submitted monthly for City review.
(2) In returning delinquent accounts back to Ci ty, CONSULTANT shall provide, with the Patient Account Log, proof and dates of attempts to collect on the account.
(3) CONSULTANT shall hold all accounts transferred back to City in inactive status and shall perform no collection activity unless and until directed in writing by City.

j. Payment progress reports: For accounts in which insurance payment is pending or a modified schedule has been arranged, CONSULTANT shall provide a report to the City at 180 days from receipt of account and every thirty days thereafter that shows status and payment progress.

4. Reports: CONSULTANT will provide reports as requested by the City of Palo Alto. All reports submitted to the City shall be in numerical order of the City’s incident numbers and shall be submitted no later than 10
th day of the following month.

Required reports include:

a. Monthly reports for the Month and Year- to-Date Activity, to City’s Revenue Collections and Accounting:

 Billing Report
 Payment Report
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 Detail Open Items Report including account status by date of service
 Legally Uncollectible Report (Medicare and Medical)
 Delinquent Accounts (referred to City)
 Overpayment Report
 Detailed Report of Collections for Each Service (IFT, Downgrades, ALS)
 Comprehensive Fiscal Year End Report
 Payer Mix Report
 Exception Report on Unbilled Invoices
 Report on payments received on items in collection status

b. Monthly reports to Fire Department EMS Chief:

Itemized Patient Account Report Monthly (Listed: in order of City incident number) should include: date of service, dispatch time, unit number, patient name, age, DOB, status of account, i.e. invoiced or pending information

Incident
#
date of
service
dispatch
time
unit
number
Pt Name Age DOB status

 Detailed Summary Report of Collections for Each Service Monthly (IFT, Downgrades, ALS)

c. Other reports to be provided as requested by City include :

 Comprehensive Fiscal Year End Report Annually (listing: sum of accounts, sum of charges, sum of adjustments, sum of Payments, sum of write-Offs, sum of reimbursement balances by month)  Payer Mix Report as requested
 Miscellaneous Reports as requested

d. Any additional reports requested by the CITY that are not listed in this Section 4 shall be subject to approval by CONSULTANT, which shall not be unreasonably withheld.

5. Electronic records: CONSULTANT shall be able to receive and send data compatible with the CITY’s field data system software (ePCR). CONSULTANT shall interface or have a link that is capable of downloading or uploading information from the CITY’s data collection system. (ESO Solutions is the current ePCR vendor)

CONSULTANT shall provide a billing interface with the CITY’s ePCR program and have it operational within 60 days of the award of the Contract and maintain an electronic interface throughout the Contract at no cost to the City.

CONSULTANT shall also maintain records in an electronic format that is accessible by designated CITY personnel, who will be given direct log on access to the vendor’s database and meets all Federal and State requirements for DocuSign Envelope ID: FD677C8B-0CB3-428A-B182-91395F78E39C Attachment A

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maintaining patient medical records and privacy.

6. Customer inquiries: CONSULTANT shall provide a designated liaison to respond to patient/payer concerns, establish a toll-free telephone number for customers to call for inquiries, and respond to customer questions or concerns as soon as possible but no later than 24 hours of the initial inquiry (excluding holidays and weekends). CONSULTANT shall also provide assistance in responding to inquiries concerning third-party claims.

7. Training: CONSULTANT will keep City apprised of changes to industry regulations and periodically provides training as requested by CITY to CITY’s EMS and/or CITY fire personnel regarding the gathering of the necessary information and proper completion of run tickets

8. Payments and accounting: CONSULTANT will maintain appropriate accounting procedures for reconciling all deposits, receivables, billings, patient accounts, adjustments and refunds. CONSULTANT shall maintain daily deposit control sheets and original documentation of payments. CONSULTANT shall accept cash, checks and credit card payments as acceptable forms of payment for invoiced services. All funds received by CONSULTANT shall be deposited directly into the City’s designated bank account immediately upon receipt.

9. Audits: Cooperate with City as required to complete periodic audits.

10. CONSULTANT will transition to full implementation of services once according to the following schedule: dates and deadlines TBD as provided by CONSULTANT and to be incorporated into this scope

11. Monthly meetings: To ensure that CONSULTANT returns uncollected accounts in a timely manner and provide a check to ensure that CONSULTANT does not continue to bill accounts that have already been returned to City, CONSULTANT’s Account Manager shall meet at least once per month with the City of Palo Alto Staff from the Fire Department and from the Administrative Services Department. To review open accounts, accounts referred back to City, problems and opportunities related to ambulance billing, and other related issues. At each meeting, CONSULTANT shall report on all accounts over 180 days and the status of accounts that have not been invoiced, as well as provide any other updates requested by City. The monthly meetings will be pre-scheduled, and the City of Palo Alto may request additional meetings if deemed necessary.

12. CONSULTANT will assist with completing any applications for EFT (Electronic Funds Transfer), CMS or other applications for the CITY.

13. In the event the City or CONSULTANT dissolves this agreement for any reason, all records will be returned or transferred in an agreed upon format and assist in a smooth transition of accounts to the City or designee.

14. Dissolution of agreement: If either party dissolves this agreement, all current accounts shall be handled as specified through 180 days at which time all accounts would be turned over to the CITY for processing.

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II. Performance Requirements/Penalty for Non-Performance

Detailed below are the CONSEQUENCES for NON-PERFORMANCE for this Agreement.

1. Billing correspondence shall be submitted according to the timelines set forth in Attachment A, Sections 13(a), (b) and (c). Failure to meet the standard with a minimum 95% compliance in that month will result in a 2.5% reduction to the collection amount for the month in which the standard was not met. For example, if the CONSULTANT invoice amount for that month is $15,000, the penalty for that month for noncompliance would be $375.

2. CONSULTANT shall meet the 180-day referral back to the City for non-collection of billing. Failure to meet the standard with a minimum 95% compliance will result in a

2.5% reduction to that month’s collection amount.

3. Submit all reports as required in Attachment B, Section 14 by the 10th of each month to verify satisfactory performance in monthly meetings with Fire and ASD Staff. Failure to meet this standard will result in a 2.5% reduction to that month’s collection amount.

4. CONSULTANT shall initiate follow-up action within 10 days to gather all necessary data when insufficient information exists on initial submission to generate an invoice.

Failure to meet this standard with a minimum 95% compliance will result in a 2.5% reduction to that month’s collection amount.

III. City’s Responsibilities:

1. CITY will provide CONSULTANT with patient information on a timely basis and in sufficient detail to support diagnosis and procedure coding. CITY will also provide patient demographic information necessary for accurate patient identification including name, address, social security number, date of birth, and telephone number, whenever possible.

2. CITY will obtain and provide CONSULTANT with patient health insurance, auto insurance or other insurance information.

3. CITY will provide CONSULTANT with necessary documents required by third parties to allow for the electronic filing of claims by CONSULTANT on City’s behalf.

4. CITY will provide CONSULTANT with its approved billing policies and procedures including municipal fee schedules and collection protocols. CITY will be responsible for engaging any third-party collection service for uncollectible accounts after CONSULTANT has exhausted its collection efforts.

5. CITY will process refunds identified by CONSULTANT in a timely manner for account overpayments.

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6. CITY will cooperate with CONSULTANT in all matters to ensure proper compliance with laws and regulations.

EXHIBIT B

SCHEDULE OF PERFORMANCE

(All work shall be performed as in accordance with EXHIBIT A - Scope of Services.)

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EXHIBIT C

COMPENSATION

CITY agrees to compensate CONSULTANT for the Services performed in accordance with the terms and conditions of this Agreement, including Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4 of the Agreement), based on the hourly rate schedule attached as Exhibit C-1.

The compensation to be paid to CONSULTANT under this Agreement for all S ervices, any specified reimbursable expenses, and Additional Services (if any, per Section 4), shall not exceed the amount(s) stated 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.

REIMBURSABLE EXPENSES

CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time /overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in-house printing, insurance and other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder.

Reimbursable expenses, if any are specified as reimburs able under this section , will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: NONE up to the not-to-exceed amount of: $0.00.

A. Travel outside the San Francisco Bay A rea, including transportation and meals, if specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses.

B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges, if specified as reimbursable, will be reimbursed at actual cost.

All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate backup documentation and information.

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EXHIBIT C-1

SCHEDULE OF RATES

All work related to complete delivery of the identified services as specified in EXHIBIT A – Scope of Services.

3.4% of Net Collections*

*Net collections is defined as total cash collections, less refunds. The price bid herein shall include all expenses of billing and collection including, but not limited to, stationery, forms, envelopes, postage, and phone facilities. Credit card fees are the responsibility of City of Palo Alto.

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EXHIBIT D

INSURANCE REQUIREMENTS

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

AWARD 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

PROPERTY DAMAGE

BODILY INJURY & PROPERTY
DAMAGE COMBINED.
$1,000,000

$1,000,000

YES

AUTOMOBILE LIABILITY,

INCLUDING ALL OWNED, HIRED,

NON-OWNED

BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE

PROPERTY 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

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: CONSULTANT, 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 HEREIN DESCRIBED, INSURING NOT ONLY

I. INSURANCE COVERAGE MUST INCLUDE:

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

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

III. ENDORSEMENT PROVISIONS WITH RESPECT TO THE INSURANCE AFFORDED TO ADDITIONAL INSUREDS:

A. P

RIMARY COVERAGE

WITH 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.

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B. CRO SS LIABILITY

THE 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 MULTIPLE

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

C. NOT

ICE OF CANCELLATION

1. IF 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.

EVIDENCE OF INSURANCE AND OTHER RELATED NOTICES ARE REQUIRED TO BE FILED WITH THE CITY OF PALO ALTO AT THE FOLLOWING URL:

HTTPS://WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569

HTTP://WWW.CITYOFPALOALTO.ORG/GOV/DEPTS/ASD/PLANET_BIDS_HOW_TO.ASP

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City of Palo Alto (ID # 14161)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of Amendment No. 2 to Contract No. C18168154 with SWA Services Group, Inc. for Janitorial Cleaning and Maintenance Services in Order to Extend the Term by Six Months through February 28, 2023 and Increase the Compensation by $1,242,777 for a New Total Not -to-Exceed Amount of $12,272,542.

From: City Manager
Lead Department: Public Works

Recommendation
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 2 to Contract No. C18168154 with SWA Services Group, Inc. (SWA), increasing the total compensation by $1, 242,777 for continued janitorial cleaning and maintenance services, and extending the term through February 28, 20 23, for a new total not to exceed amount of $12,272,542.

Background
On August 14, 2017, City Council approved a five -year contract in the amount of $10,652,615 with SWA (SR #8323 ) for janitorial cleaning and maintenance services after a request for proposal process. On December 12, 2018, City C ouncil approved Amendment No. 1 (SR #9514) to include the addition of services at the Police Department in a new tota l amount of $11,029,765.

On March 21, 2022, speakers at a City Council meeting raised concerns about SWA’s labor conditions and wages associated with th e contract. Staff reviewed the issue and determined there was a discrepancy with the contract require ments pertaining to hourly wage rates.

Following a discussion with SWA management, the issue was addressed.

Discussion
The current five-year contract term is scheduled to end on August 31, 2022 . In the past, the timing of this contract expiration and the services procurement conflicted with the annual budget process in that new contract pricing was not finalized at the time of the budget hearings and approval, leading to the need for immediate budget amendments and contract approval following the Council break. Staff is recommending this six -month extension to the existing 8 Packet Pg. 109

City of Palo Alto Page 2

contract to reset the contract expiration date for better alignment with the budget planning process.

SWA’s original 5-year contract term ends on August 31, 2022. The new compensation and fee schedule for the six-month extension includes a 4% cost increase over year 5 pricing (total price increase over the six- month extension is $45,395). The price increase includes the required 3% hourly wage increase for contract employees for Year 6 per contract terms.

The procurement process that resulted in the current contract with SWA included defined service levels and used selection criteria that prioritized fair wages for the contract employees over the lowest cost to the City. In preparatio n for the upcoming Request for Proposals (RFP), staff is actively evaluating options to structure employee wage requirement s in the RFP. For example, the RFP could simply rely on Palo Alto’s existing minimum wage ordinance requirements, or could use the Ca lifornia Public Utilities Code prevailing wage provisions for Santa Clara County, even though these provisions may not formally apply to the City . (Further research will be conducted to ascertain the applicability of such provisions.)

Staff is currently p reparing the new RFP , and anticipates releasing it and bringing a new contract to Council for approval in late 2022 or early 2023.

Resource Impact
Funding for the six -month contract extension recommended in this report is included in the Fiscal Year 2023 Proposed Budget, pending Council approval, and will cover all but the $ 45,395 cost increase for basic services and any additional services costs. The $45,395 for basic services and any additional services costs will be absorbed by the Public Works, Public Services Custodial operating budget.

Policy Implications
Approval of this amendment is consistent with current City policies.

Stakeholder Engagement
Preparation for soliciting a new contract has already begun and scope of work change requests and related budget considerations from affected City Departments have been collected.

Environmental Review
This is not a project under the California Environmental Quality Act (CEQA). 8 Packet Pg. 110

City of Palo Alto (ID # 14165)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of a New Dark Optical Fiber License Agreement With the Palo Alto Unified School District as a Customer, From December 17, 2022 Through June 30, 2027
From: City Manager
Lead Department: Utilities

Recommendation
Staff recommends that Council approve and authorize the City Manager or their designee to execute a new Dark Optical Fiber Backbone License Agreement (Attachment A) with the Palo Alto Unified School District as a customer, for a term beginning December 17, 2022 t hrough June 30, 2027.

Background
The City of Palo Alto (City) and the Palo Alto Unified School District (PAUSD) previously executed a Dark Optical Fiber Backbone License Agreement (License Agreement) on December 16, 2010. Under this License Agreement the City provided dark fiber service to Terman Middle School (now Ellen Fletcher Middle School). In 2012, City of Palo Alto Utilities (CPAU) collaborated with the PAUSD to rebuild and optimiz e PAUSD’s network by extending the dark optical fiber backbone network to all eighteen (18) PAUSD sites, in addition to supporting Internet connectivity with a link at the Palo Alto Data Center, Equinix SV8.

The availability of CPAU’s communication conduit and dark fiber throughout Palo Alto, combined with the PAUSD’s need to expand its network created an opportunity for both parties. The License Agreement was amended on December 17, 2012 for this network extension ( Amendment No. 1 ), to memorialize t he understanding that the City extended its dark fiber backbone to pass by all school premises and the PAUSD Office (18 sites), in consideration of the PAUSD’s agreement to pay at least one -half of the interconnection fees (i.e., construction costs) attrib utable to the capital improvement benefits to the PAUSD. T he total interconnection fee to be paid by the PAUSD was $199,761, amortized over ten (10) years or 120 months at $1,665/month. Effective March 2022, the remaining balance of the amortized interconnection fee is $19,942. The amended License Agreement and plan to extend the fiber backbone to the PAUSD was presented to the Council in an Informational Staff Report (CMR #3329), dated December 3, 2012.

9 Packet Pg. 111

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The License Agreement was amended again in 2017 (Amendment No. 2), to clarify that the term of the current agreement ends on December 16, 2022.

Discussion
The PAUSD participates in the Federal Communications Commission’s (FCC) E -Rate program, which makes telecommunications and information services more affordable for schools and libraries. With funding from the Universal Service Fund, the E-Rate program provides discounts for telecommunications, Internet access, and internal connections to eligible schools and libraries. The E -rate program is administered for the FCC by the Universal Services Administrative Company (USAC)1. The dark fiber services provided by the City to the PAUSD are eligible for E -rate funding. It is expected that 40% of PAUSD’s dark fiber leasing cost will be reimbursed on an annual basis from the FCC E -rate program. Since the current Lice nse Agreement ended in December 2022, the PAUSD was required by the USAC to issue a Request for Proposals (RFP) for the upcoming E-rate funding year (July 1, 2022, to June 30, 2023).

On December 17, 2021, the PAUSD issued an RFP for “Leased Wide Area Netw ork Services” (#21-IT-12-WAN). Proposals were due February 17, 2022. The RFP asked for either a “leased dark fiber” or “leased lit fiber” solution. Please note that the City uses the term “license” rather than “lease” for dark fiber services. On February 16, 2022, the City submitted a proposal for a dark fiber solution. The proposed agreement term is December 17, 2022, to June 30, 2027.

The monthly recurring charge for the license fee in the proposal is $11,202, which is based on the current Utility Rate Schedule EDF-3 (Dark Fiber Licensing Services ). CPAU has not modified the EDF -3 rate schedule since September 18, 2006. Any future changes to the EDF -3 rate schedule will require a cost of service study and Council’s approval. There are no additional one-time charges in the proposal since the existing dark fiber services provided to the PAUSD are operational.

On March 8, 2022, the Palo Alto Unified School Board voted to award a contract in the amount of $672,120 to City of Palo Alto Utilities for a ter m of 60 months beginning on December 17, 2022. However, PAUSD is requesting to reduce the term of the agreement from 60 to 54 months with a termination date of June 30, 2027 to align with the federal E -rate fiscal calendar.

In the Letter of Agreement ( Attachment B) submitted with the proposal , the City stated that if selected for the award of this RFP, CPAU would obtain approval by its City Council at a publicly noticed meeting before a binding contract can be entered, as required by the City’s Municipal Code. Council’s approval of this action will authorize the City to execute this agreement.

Resource Impact
The PAUSD has been a dark fiber optic customer since 201 0 Since the PAUSD is not requesting any change in the number of dark fiber connections or configuration of the network, the recurring charge for the license fee remains $11,202 monthly or $134,424 annually. The recurring revenue will be included in the FY 2023 Fiber Optic Revenue budget.

1 Universal Services Administrative Company website: https://www.usac.org/ 9 Packet Pg. 112

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Policy Implications
A new Dark Optical Fiber Backbone License Agreement does not represent a change to current City policies.

Environmental Review
The provision of dark fiber to PAUSD under a new Dark Optical Fiber Backbone License Agreement is not subject to the California Environmental Quality Act (CEQA) since existing fiber facilities are categorically exempt from review under Title 14 of the California Code of Regulations Section 15301.

Attachments:
• Attachment9.a: Attachment A: Dark Optical Fiber License Agreement • Attachment9.b: Attachment B: PAUSD Letter of Agreement 9 Packet Pg. 113

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6050167 Rev. Feb 2020

DARK OPTICAL FIBER BACKBONE

LICENSE AGREEMENT

THIS DARK OPTICAL FIBER BACKBONE
LICENSE AGREEMENT (“Agreement”) is entered
into on June 20, 2022, to be effective on _December
17, 2022 (“Commencement Date”) by and between:

CITY OF PALO ALTO (“C
ITY”)
A California chartered city
250 Hamilton Avenue
Palo Alto, CA 94301
and (“CUSTOMER”)
(individually, “Party” and,
collectively, “Parties”).

IN CONSIDERATION OF
the mutual
covenants, terms and conditions set forth in the
Agreement, the Parties agree, as follows:

1. DEFINITIONS. The capitalized terms that are
used in the Agreement and the Exhibits shall have the
meanings set forth in the Palo Alto Municipal Code
and/or the City of Palo Alto Utilities Rules and
Regulations (“Rules and Regulations”), Rule and
Regulation 26, and/or Utility Rate Schedules EDF-2
and EDF-3, which are incorporated herein by
reference and made a part hereof, unless the context
otherwise clearly indicates a different meaning.

2. EXHIBITS TO AGREEMENT. The following
Exhibits are incorporated herein by reference and
made a part hereof:

A Special Terms
B Proposal for Dark Fiber Services
#21-IT-12-WAN
C Fiber License Agreement Investigation Request
Form - Sample
D Insurance Requirements
E Fiber License Agreement Information Request
Form
F Acknowledgement of R eceipt of City of Palo
Alto Utilities Rules and Regulations

3. TERM AND TERMINATION.
( a )Commencement Date, Term, Extension,
Renewal. The Agreement shall commence on the
Commencement Date and shall continue until the
Agreement expires on June 30, 2027 (“initial term”)
or is sooner terminated in accordance with the
covenants, terms and conditions of the Agreement.
( b )Termination. A Party may terminate the
Agreement without cause, p rovided that Party gives
to the other Party ninety (90) days’ prior written
n o t i c e o f t e r m i n a t i o n . A P a r t y m a y t e r m i n a t e t h e Agreement for cause, provided that Party gives to the
other Party the specified prior written notice, or if
none is stated, thirty days’ prior written notice.
( c )Early Termination Fee.

I f t h e C U S T O M E R c h o o s e s t o t e r m i n a t e f o r convenience the Agreement or the term of any
project covered by a Proposa l under the Agreement,
then the CUSTOMER shall pay the applicable
termination payment, equal to the net present value of
the remaining fees of the pr oject term as indicated in each Proposal.

4. TELECOMMUNICATIONS
INFRASTRUCTURE.
(a) W a r r a n t i e s . The CITY makes no
representations, warranties, covenants or assurances:
(1) with respect to the design, construction, durability or suitability of the telecommunications
infrastructure, or any part thereof, whether express or implied, and the CITY specifically disclaims any
implied warranty of merchantability and any imp lied
warranty of fitness for a particular purpose; (2) with
respect to the nature or accuracy of the de scription,
location or measurement of the telecommunications
infrastructure, the telecommunications pathway, or
any part thereof; (3) that the CITY will increase or
decrease the number of dark fibers constituting a part
of the telecommunications infrastructure at any time
during the term hereof; or (4) that the CITY will
obtain the legal right to locate, maintain or use the
telecommunications infrastructure, or any part
thereof, in the Peninsula Corridor Joint Powers Board
(“PCJPB”) right-of-way by means of a license
agreement, an easement ag reement or other w ritten
instrument.
(b) Relocation, Repair or Removal of
Telecommunications Infrastructure. The CITY, at
its sole cost and expense, may upon reasonable notice
t o t h e C U S T O M E R , o r , i n t h e e v e n t o f a n emergency, upon 24 hours’ prior oral notice, relocate,

PALO ALTO UNIFIED SCHOOL DISTRICT
25 Churchill Avenue
Palo Alto, CA 94306
Attachment A

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6050167 Rev. Feb 2020
repair, replace or remove the telecommunications
infrastructure.
(c) Access. The CUSTOMER is prohibited
from accessing the telecommunications infrastructure
(other than accessing that portion of the conduit,
which the CUSTOMER is obligated to maintain), the
transmission pathway, or a ny CITY electric or other
utility facility. O n l y p e r s o n n e l a u t h o r i z e d b y t h e CITY will be allowed to connect the CUSTOMER’s
service to, or disconnect CUSTOMER’s service
from, the fiber optic system on the CITY side of the
demarcation point.

5. GRANT OF LICENSE. T he C I T Y g r a nt s t he
CUSTOMER a nonexclusive license to use the
Licensed Fibers identified in each Proposal, on
condition that the CUSTOMER shall timely pay all
applicable fees, rates, charges and applicable taxes
(“Fees”), and shall be in compliance with all other
covenants, terms and conditions of the Agreement.

All connections to CITY fiber shall be within the
jurisdictional boundaries of the CITY. This grant is
subject to the CITY’S right to occupy and use the
public rights-of-way [including the PCJPB rights-of-
way], public utility easements, private property and
any other property in and on which the CITY’s dark
optical fiber backbone is located, which right may be
delineated in any contract, dedication, deed,
easement, license or other similar form of document.

Nothing in the Agreement shall be deemed to grant,
convey, create, or vest an interest or estate in land,
including but not limited to any fee, leasehold,
easement or franchise, in the CUSTOMER. The
CITY shall not be liable to the CUSTOMER on
account of the PCJPB’s termination of the CITY’s
right to occupy the PCJPB’s rights-of-way, except as
provided herein.

6. LIMITATIONS ON USE . If the CUSTOMER
uses the Licensed Fibers and/or any other portion of
the Backbone to provide, in whole or in part, services
subject to AB 2987 (Ch. 700, Stats. 2006) and/or
Chapters of the Palo Alto Municipal Code relating to
the provision of video services as defined in AB
2987, the CUSTOMER shall apply for a franchise
and pay the franchise fee as required by applicable
law.

7. FEES.
( a ) Types of Fees. The CUSTOMER shall pay
to the CITY the current fees that are identified in
each Proposal and referred to in Utility Rate
Schedules EDF-2 and EDF-3, including the Dark
Fiber Backbone License Fees, Drop Cable
Management Fees, Custom Cable Management Fees,
and any applicable administrative and miscellaneous
charges. The CUSTOMER shall pay the fees
identified in each Propos al without set-off or
recoupment, in accordance with the covenants, terms
and conditions of the Agreement. The CUSTOMER
shall pay, upon the execution of the Proposal, the
Interconnection Fee.
( b ) Method of Payment. The CUSTOMER at
its election shall pay the total Drop Cable
Management Fees (excluding the Interconnection
F e e ) e i t h e r i n a l u m p s u m at the commencement of the term of a Proposal or in equal monthly
installments, as they shall become due and payable
on the first day of the month. The CITY shall issue
to the CUSTOMER, upon request, a monthly billing
statement for the fees (excluding the Interconnection
Fee). If the CUSTOMER elects the monthly
installment payment option, then the CUSTOMER
shall pay the first monthly installment on or before
the execution date of the Agreement and Proposal
#B-1.
( c ) Result of Untimely Payment. The CITY
reserves the right to charge the CUSTOMER interest
on the lump sum or any monthly installment at a rate
not to exceed the maximum rate allowable by law if
the CUSTOMER fails to timely pay the lump sum or
any monthly installment. The CUSTOMER shall
timely pay any and all undisputed portions of the fees
in the event the CUSTOMER disputes in good faith
any other portion of the fees. The CITY, upon two
(2) days’ prior written notice, reserves the right to
temporarily suspend or terminate services to the
CUSTOMER until the CUSTOMER has paid any
and all undisputed fees. An administrative charge of
two hundred dollars ($200) or such other charges as
may be established by CITY by law shall be due and
payable by the CUSTOMER for the cost of
processing and handling the CUSTOMER’s failure to
pay any of the fees required by this Agreement and/or
the Proposal. The CITY reserves the right to modify
the administrative charge by law and charge the
CUSTOMER interest on the administrative charge if
payment is not made within thirty (30) days of its
assessment.

8. INSURANCE. Within five (5) Days after the
CUSTOMER executes the Agreement and initiates
Service with its submission of Proposal B-1 and pays
th
e fees, the CUSTOMER shall obtain and maintain
the policies of insurance described in Exhibit D. The
CUSTOMER shall maintain these policies of
insurance during the term of the Agreement and any
and all unexpired Proposals.

9. INDEMNITY. To the fullest extent permitted by
law and without limitation by the provisions of

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6050167 Rev. Feb 2020
Section 8, relating to insurance, the CUSTOMER
shall indemnify, defend and hold harmless CITY, its
Council members, officers, employees and agents
f r o m a n d a g a i n s t a n y a n d a l l d e m a n d s , c l a i m s , injuries, losses, or liabilities of any nature, including death or injury to any person, property damage or any
other loss and including without limitation all
damages, penalties, fines and judgments, associated
investigation and administrative expenses and
defense costs, including, but not limited to reasonable attorney’s fees, courts costs and costs of alternative
dispute resolution, arising out of, or resulting in any way from or in connection with the performance of
this Agreement. The CUSTOMER’s obligations
under this Section apply regardless of whether or not
a liability is caused or contributed to by any negligent (passive or active) act or omission of CITY, except
that the CUSTOMER shall not be obligated to
indemnify for liability arising from the sole
negligence or willful misconduct of the CITY. The
provisions of this Section survive the expiration or
termination of this Contract.

10. DESTRUCTION.
( a ) CUSTOMER’s Property. In the event of a
total or partial destruction of substantially all of the CUSTOMER’s Property, or any part thereof, where
such casualty occurs as a result of an event of Force
Majeure, whether or not such casualty is covered
under a policy of insurance carried by the
CUSTOMER, this Agreement may be terminated at
the option of the CUSTOMER, or the LICENSEE, at
its sole cost and expense, may commence and
complete as soon as prac ticable the repair or
restoration of the damaged CUSTOMER’s Property,
or any part thereof, to substantially the same
condition immediately before the event of
destruction.
( b ) Telcommunications Infrastructure. In the
event of a total or partial destruction of the
Telecommunications Infra structure, or any part
thereof, including the Licensed Fibers, where such
casualty occurs as a result of an event of Force
Majeure, whether or not such casualty is self-insured
or covered under a policy of insurance carried by the
CITY, this Agreement may be terminated at the
option of the CITY, or the CITY, at its sole cost and
expense, may commence and complete as soon as
practicable the repair or restoration of the damaged
Telecommunications Infra structure, or any part
thereof, including the Licensed Fibers, to
substantially their same condition immediately before
the event of destruction. If the CITY elects to
terminate this Agreement, the CITY shall be relieved
of any obligation to the CUSTOMER, and the
CUSTOMER shall be released from its obligations
under this Agreement.

11. CONDEMNATION. T h e P a r t y r e c e i v i n g a notice of condemnation promptly shall give to the
other Party a copy of the notice of condemnation.
( a ) Total Condemnation. If the property or
premises of a Party is totally taken by condemnation,
this Agreement shall terminate as of the date title to
that Party’s property or premises is taken by the
condemnor.
( b ) Partial Condemnation. If the property or
premises of a Party is partially taken by
condemnation, this Agreement shall not terminate,
provided, however, the Party whose property or
premises is partially tak en, at its option, may
terminate this Agreement for cause if all or
substantially all of the property or premises cannot be used for the purposes for which the Party entered into
this Agreement.
( c ) Termination; Award and Payment. If the
Party whose property or premises is partially taken
elects to terminate this Ag reement, the notice of
termination shall become effective within thirty (30)
Days after the other Party has received notice of
termination. An award and any other payment on
account of a total or partial taking of the
Telecommunications Infra structure, or any part
thereof, including the Licensed Fibers, shall be made
and paid to the CITY.

12. DEFAULT. The non-defaulting Party may
terminate the Agreement and any and all unexpired
Proposals upon the occurrence of an event of default
caused by the defaulting Party, if the defaulting Party fails to cure the event of default within the period of time specified below. In an event of default of a
financial nature, the defaulting Party shall cure the
default within two (2) days of receipt of the notice of default. In the event of default of a non-financial
nature, the defaulting Party shall cure the default
within ten (10) days of receipt of the notice of
d e f a u l t . A f a i l u r e t o c u r e a n e v e n t o f d e f a u l t w i t h i n the specified period of time shall constitute a material breach of the Agreement.
(a) Events of Default . The occurrence of any
of the following shall constitute a material default by the CUSTOMER:
(i) Failure to pay any fee, when due, unless
the CUSTOMER, in good faith, disputes all or any
portion of the fee, in wh ich event the CUSTOMER
shall pay only that portion of the fee that it does not dispute.

(ii) Failure to perform, observe or comply
with any other covenant, term or condition of the
Agreement that the CUSTOMER is required to
observe or perform.

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6050167 Rev. Feb 2020
(iii) Assignment or transfer of the
CUSTOMER’s interest in the Agreement, voluntarily
or by operation of law.
(iv) Assignment or transfer of the
C U S T O M E R ’ s a s s e t s f o r t h e b e n e f i t o f t h e CUSTOMER’s creditors.
(v) Filing of a petition in bankruptcy or a
petition for reorganization or other arrangement
relating to the bankruptcy, insolvency, or
receivership of the CUSTOMER and/or its assets,
unless the same is dismissed within 180 days of the
filing thereof.
(vi) Any representation or warranty of the
CUSTOMER that shall prove to have been incorrect,
false, or misleading in any material respect when
made.
( b ) Obligation to Perform; Payment. The
termination of the Agreement and any and all
unexpired Proposals shall not relieve the defaulting
Party of its obligation to perform its obligations,
including the payment of the fees, prior to the
effective date of termination.
(c) Remedies for Default . T h e C I T Y s h a l l have the following rights and remedies, in addition to
all other rights and remedies provided by applicable
law, to which the CITY may resort cumulatively, or
in the alternative, the CITY may:
( i ) K e e p t h e A g r e e m e n t i n e f f e c t a n d enforce all rights and remedies that it enjoys under
the Agreement, including but not limited to the right
to payment of all fees as they shall become due, by
appropriate legal action.
(ii) Seek specific performance of the
Agreement in addition to other rights and remedies
that available at law or in equity.
(iii) Terminate the A greement for cause.
( d ) DAMAGES. NOTWITHSTANDING

ANY OTHER PROVISION OF THIS

AGREEMENT, NEITHER THE CITY NOR THE

CUSTOMER SHALL BE LIABLE TO THE

OTHER FOR ANY CONSEQUENTIAL,

INCIDENTAL, INDIRECT, LIQUIDATED, OR

SPECIAL DAMAGES, OR FOR LOST REVENUES

OR LOST PROFITS TO ANY PERSON ARISING

OUT OF THIS AGREEMENT OR THE

PERFORMANCE OR NONPERFORMANCE OF

ANY PROVISION OF THIS AGREEMENT, EVEN

IF SUCH PARTY HAS BEEN INFORMED OF
THE POSSIBILITY OF SUCH DAMAGES. THE
CITY’S TOTAL LIABILITY FOR ANY CLAIM

O R D E M A N D O F T H E C U S T O M E R A R I S I N G

OUT OF THIS AGREEMENT SHALL NOT

EXCEED THE AMOUNT OF THE FEES PAID BY

THE CUSTOMER TO THE CITY PRIOR TO THE
DATE OF CLAIM OR DEMAND.

13. REPRESENTATIONS; WARRANTIES. The
CUSTOMER represents and warrants that (i) it is in
compliance with all applicable laws, rules,
regulations and tariffs relating to its activities covered by the Agreement, (ii) it is not in delinquency for
payment of any CITY fees, taxes or charges for
electricity and other utilities and services, (iii) it has the requisite power and authority to carry on the
business it now conducts, (iv) it is a sole
proprietorship or a corporation, partnership, or
limited liability company, duly formed, validly
existing and in good standing under the laws of the
State of California (v) it has the power to enter into
and perform its obligations under the Agreement,
which constitutes a legal, valid and binding
obligation of the CUSTOMER and enforceable
against it in accordance with its covenants, terms and
conditions, (vi) the execution, delivery and
performance of its obligations under the Agreement
have been duly authorized, and (vii) there is no
pending or threatened action or proceeding before
any court or agency affecting the financial condition
or operation of the CUSTOMER or its ability to
perform its obligations under the Agreement.

14. WAIVER. The consent of a Party to any act or
omission of the other Party shall not be deemed to
imply consent to or constitute a waiver of a default or breach of any term or condition of the Agreement or
a continuing waiver of a subsequent default or breach
of the same or different term or condition, nor shall
any custom or practice which may arise between the
Parties in the administra tion of the Agreement be
construed to waive or lessen the right of a Party to
insist upon full performance of the other Party in
strict compliance with the covenants, terms and
conditions of the Agreement.

15. NOTICE. All notices which shall or may be
given pursuant to this Agreement shall be in writing
and delivered by the United States Postal Service, or
by registered mail or certified mail, postage prepaid,
by commercial overnight delivery service, by
facsimile transmission, or b y electronic transmission, t o t h e a d d r e s s o f a n y P a r t y s e t f o r t h i n t h e introductory paragraph of the Agreement and to the
person(s) described below:

CITY: City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
Attn: City Clerk
Telephone: 650-329-2571

Facsimile: 650-328-3631

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6050167 Rev. Feb 2020
CUSTOMER:

16. MISCELLANEOUS.

A. The Agreement and all Exhibits contain the
entire understanding between the Parties as to the
subject matter herein. There are no representations or
warranties, oral or in wr iting, between the Parties
pertaining to the subject matter hereof that are not
fully expressed in the Agreement.

B. The Agreement shall be binding upon and
inure to the benefit of the successors and permitted
assigns of the Parties.

C. The Agreement may not be amended, unless
the Parties first sign a written instrument that amends the Agreement. No amendment of the Agreement
will be deemed effective, unless and until the City
Manager has first approved the amendment, in
writing, and the City Attorney has approved as to
form. A Proposal may be amended by any designated
representative of either Party.

D. The Agreement is governed by and construe d
in accordance with the Calif ornia law without regard
to its conflicts of laws, rules or principles.

E. Trial of any action regarding any disput e
concerning the Agreement and/or any Proposal will
be vested in the state courts of California, County of
Santa Clara, or in the United States District Court,
Northern District of California, in the county of Santa Clara, as appropriate.

F. Each Party and its counsel have reviewed
the Agreement. Accordingly, the normal rules of
construction to the effect that any ambiguity will be
resolved against the drafting party will not be
employed in the construction and interpretation of the
Agreement.

G. The CUSTOMER acknowledges that Fibers
licensed pursuant to this Agreement are subject to the
Rules and Regulations, and acknowledges receipt of
a copy of the Rules and Regulations in electronic
form, effective as of the Commencement Date.

Copies of the Rules and Regulations are available to
the public at the Utilities Customer Service Center,
Second Floor, 250 Hamilton Avenue, Palo Alto,
California 94301, or online at
https://www.cityofpaloalto.org/Departments/Utilities/
Utilities-Services-Safety/Utility-Rules-and-
Regulations
H. Each Party will comply with all lawful
federal, state and local laws, ordinances, resolutions, rate schedules, rules and regulations that may affect
its rights and obligations under the Agreement.

I. The Agreement is subject to the fiscal
provisions of the Charter of the City of Palo Alto and
the Palo Alto Municipal Code. The Agreement will
terminate without any penalty (i) at the end of any
fiscal year in the event that funds are not appropriated for the following fiscal year, or (ii) at any time within a fiscal year in the event that funds are only
appropriated for a portion of the fiscal years and
funds for the CITY’s obligations are no longer made
available. This provision will take precedence in the
event of a conflict with any other term or condition of the Agreement.

J. No payment, partial payment, acceptance or
partial acceptance by the CITY will operate as a
waiver on the part of the CITY of any of its rights
under the Agreement.
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PALO ALTO UNIFIED SCHOOL DISTRICT
25 Churchill Avenue
Palo Alto, CA 94306
650-3293775

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IN WITNESS WHEREOF, the Parties have executed
the Agreement by their duly appointed
representatives on the date first above stated at Palo
Alto, Santa Clara County, California.

CITY OF PALTO ALTO
_____________________________________
Director of Utilities
By: _
__________________________________
Title: __________________________________

PALO ALTO UNIFIED SCHOOL DISTRICT

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6050167 Rev. Feb 2020
EXHIBIT "A": SPECIAL TERMS
"Backbone" means the high-density portion o f the Telecommuni cations Infras tructure consisting of the Dark Fibers, which is designed to serve as th e telecommunications paths at different locations within the jurisdictional boundaries of Palo Alto.

"Commencement Date" means the day on which this Agreement is approved by the CITY.

"Condemnation" means the right of an Agency, including the CITY, to take prope rty for public use, and it shall include a voluntary sale or transfer by the CITY to the condemnor Agency under a threat of a taking under the power of condemnation or during the pendency of formal condemnation proceedings.

"Drop Cable" means any CITY-owned and CITY-installed Fiber cable, one end of w h i c h i s attached at a Junction Site by the CITY, and the other end of which is attach ed to the CUSTOMER's property by the CUSTOMER.

"Drop Cable Management Fee" means the annual fee paid in advance by the CUSTOMER to the CITY for each drop cable licensed by t he CITY to the CUSTOMER. This fee may be waived, in writing, for any period of time by the Utilities Director, acting on behalf of the CITY , for any Drop Cable less than one hundred (100) feet in length.

"Fiber" means a solid core of optical transmission material.

"Fiber-Miles" means a unit of measurement of the product of the number of Lic ensed Fibers and the number of Route-Miles for any element.

"Force Majeure" means the occurrence of any event that has, had or may have an adverse effect on the design, construction, installation, management, o peration, testing, use or enjoyment of the Telecommunications Infrastructure, the CUSTOMER's Property, or the Licensed Fibers , which is beyond the reasonable control of the parties and which event includes, but is not limited to, an Act o f G o d , a n irresistible superhuman cause, an act of a superior governmental authority, an act of a public enemy, a labor dispute or strike or a boycott which could not be reasonably contemplated by the Party affected thereby, a defect in manufactured equipment (including, but not limited to, the Dark Fibers), fire, floods, earthquakes, or any other similar cause.

"Telecommunications Infrastructure" means the Poles, boxes, handholes, manholes, vaults, conduits, innerducts, surface location markers, cables (including coaxial cables, Custom Cables, Drop Cables, Fiber cables and messenger cables), Fibers, wires (incl uding copper wire), circuits, conductors, Splice enclosures, patch panels, cabinets, converters, generators, amplifiers, receivers, switch es, wireless transmitters and receivers, and all other equipment or facilities containing the Dark Fibers or to which the Dark Fibers are attached, owned, controlled or used by the CITY, in existence either at the Commencement Date or during the Term hereof and located overhea d or underground within the Public Right-of-Way, the Public Utility Easements and Licensed Service Properties.

"Term" means the term of this Agreement, as defined in Section 3(a).

"Transmission Pathway" means those areas of the Public Right-of-Way, the Public Utilit y Easements and the Licensed Service Properties in which the Telecommunications Infrastructure is located.

In additional to the foregoing, other terms are defined throughout this Agreement.

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EXHIBIT "B": PROPOSAL FOR DARK FIBER SERVICES

CITY OF PALO ALTO UTILITIES
RESPONSE TO REQUEST FOR PROPOSALS – LEASED WAN FIBER

SERVICES
#21-IT-12-WAN

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RFP # 21-IT-12-WAN 12/17/2021 | 1
Proposer: City of Palo Alto Utilities
Response to Palo Alto Unified School District
RFP # 21-IT-12-WAN
The responses in this document c orrelate to the items required i n t h e a b o v e - n o t e d R e q u e s t f o r Proposals issued on December 17, 2021.

Per the RFP:

REQUIREMENTS (responses are in blue type)

1. Project must be completed by December 17, 2022; vendor cannot begin billing for a circuit until the circuit has been completed to the District’s satisfaction.  City of Palo Alto Utilities (CPAU) acknowledges and agrees.  Beginning in 2012, CPAU collaborated with the Dis trict to rebuild and optimize the District’s net
work by extending CPAU’s dark optical fiber backbone network to all eighteen (18) District sites. CPAU is currently providing dark fiber service to all 18 sites, in addition to supporting Internet connectivity with a link at the Equinix SV8 Palo Alto Data Center.

2. Ongoing Monthly Recurring Costs for Maintenance and Operations for Leased Dark fiber circuits must be specified.
 CPAU can specify existing circuits by Location Z (school site) as all circuits originate at location A, the District’s Hub and Minimum Point Of Entry. This is known as a “spoke and hub network.” Please reference the attached PAUSD Network Diagram of the existing dark fiber WAN links licensed to the District by CPAU. (Addendum #1)

3. For both leased dark fiber and leased lit fiber solutions, the handoff must be compatible with an Aruba 8325 switch with either an Aruba 25G SFP28 LC LR 10km SMF Transceiver or an Aruba 10G SFP+ LC LR 10km SMF Transceiver.
 The hand off is compatible with the switch specified by the District: Aruba 25G SFP28 LC LR 10km SMF Transceiver or an Aruba 10G SFP+ LC LR 10km SMF.

4. For dark fiber proposals, vendor must provide only 2 strands of fiber for each spoke site. If possible, provide a cost allocation showing that only 2 strands will be charged to the District for each fiber run.

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 CPAU proposes that only two (2) dark fiber strands will be used and active for each District site. The fiber conduit may contain more than two (2) dark fiber strands should the District require more fiber in the future or replacement fibers are required. The industry standard fiber counts are typically 6, 12, and 24 fibers per tube. CPAU proposes to utilize the existing two active strands between each site and the MDF. Please reference the attached PAUSD Network Diagram of the existing dark fiber WAN links licensed to the District by CPAU. (Addendum #1)

5. All proposed plans should include detailed billing.

During the 60-month (5 year) term of the proposed contract, CPA U will bill the District monthly for the Monthly Recurring Charge (MRC), in addition to the rema ining monthly balance due for the amortized interconnection fee (i.e., construction costs) it emized in the Dark Optical Fiber Backbone License Agreement (DOFBLA) Amendment No. 2 (which incl udes the original License Agreement and Amendment No. 1) . (Addendum #2) The following is a summary of the current agreement and billing:
 Please refer to Amendment No. 2 to the Dark Optical Fiber Backbone License Agreement (License Agreement) between the City of Palo Alto and the Palo Alto Unified School District, including exhibits F1 and F2
 Amendment No. 2 includes the Proposals for the Dark Fiber Backbone License Fees (Exhibit F-1 - MRC $10,117) and the Drop and Custom Cable Management Fees (Exhibit F-2 -MRC $1,085).
oMRC is $10,117 + $1,085 = $11,202/month
 Per License Agreement Amendment No. 2, the total interconnection fee (i.e., construction cost) to be paid by the District is $199,761, amortized over ten (10) years or 120 months at $1,664.68/month. Effective February 14, 2022, the remaining balance of the amortized amount is $21,606.95.
oCPAU note: If a contract is awarded to CPAU under this RFP, a n ew Dark Optical Fiber Backbone License Agreement (License Agreement) will be re quired, since the current agreement dated December 16, 2010, ends December 16, 2022. The License Agreement was originally entered into by and between th e City of Palo Alto and the Palo Alto Unified School District on December 16, 2010, to extend the fiber backbone to Terman Middle School (now Ellen Fletcher Middle School).

The agreement was amended in 2012 (Amendment No. 1), to memoria lize the understanding that the City extended its dark fiber backbone to pass by all school premises (18 sites), in consideration of the District’s agreeme nt to pay at l east one-half of the interconnection fees (i.e., construction costs) attributable to the capital improvement benefits to the District. The agreement was amended again (Amendment No. 2) in 2017, to clarify that the term of the curr ent License Agreement ends on December 16, 2022.

6. Cost Proposal will include costs for services by site, as outlined in Exhibit B.  Please refere nce Cost Proposal Exhibit B.

7. All Leased Lit Fiber proposals must have the option
to upgrade bandwidth incrementally as
needed during the term of the contract if Leased Lit Fiber option is chosen. Bandwidth options must include 10Gbps, 25Gbps, and 40Gbps connectivity rates.  CPAU is not proposing a Leased Lit Fiber option.

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8. All sites listed must have the option to downgrade bandwidth as needed during the term of the contract if Leased Lit Fiber option is chosen.
 CPAU is not proposing a Leased Lit Fiber option.
 CPAU’s dark fiber option provides flexibility to the District to increase or decrease the speed of the connection as needed for each site

9. Pricing for 60 Month (Five Year) contract terms for Leased Dark Fiber and Leased Lit Fiber.

Unless otherwise agreed upon, the contract start date will be December 17, 2022, contingent upon E-Rate funding.

The current License Agreement between the City and the District ends on December 16, 2022. Contingent on E-Rate funding, CPAU proposes a 60-month (5 year) term for dark fiber. The proposed start date is December 17, 2022. If a contract is awarded to CPAU under this RFP process, a new License Agreement with a 60- month (5 year) term will need to be executed between CPAU and the District.

10. Prices to remain firm through SLD approval, execution, and duration of the proposed contract.

In the event of a price decrease for service or from the manufacturer, said decrease shall be passed on to the District and documented with new price sheet sent to the District Office.  During the 60-month (5 year) term of the proposed contract, CPA U does not anticipate an increase in Utility Rate Schedule EDF-3 ( Dark Fiber Licensing Services). All fees in EDF- 3 are subject to change by the City Council. CPAU has not modi fied the EDF-3 rate schedule since September 18, 2006. This rate schedule applies to all customer accounts created after September 18, 2006. This rate schedule applies to Fiber Optic services pertaining to the City's network (backbone and associated connections). The rate schedule is available at:
https://www.cityofpaloalto.org/files/assets/public/utilities/rates-schedules-for- utilities/commercial-utility-rates/edf-3-effective-9-18-2006.pdf

11. All equipm
ent/services costs must be new and included and identified separately.  CPAU is not proposing any new equipment or services.

12. Manufacturer must warrant all parts and equipment.
 CPAU will provide all necessary parts and maintenance in service of its dark fiber service infrastructure.

13. Vendor must be a certified reseller of parts and equipment.  CPAU does not resell equipment. All equipment required for dark fiber service will be provided by CPAU to support its dark fiber infrastructure.

14. Vendor can provide alternative financing options compatible with the E-Rate program, if available.
 CPAU is a registered service provider with the Universal Service Administrative Company (USAC). CPAU’s service provider identification number (SPIN) i s 143035172. C PAU proposes to follow the requirements of the E-Rate program for p rovisioning dark fiber services to the District and is current with its Form 473 (Annual Service Provider Certification) filings with the USAC. (Addendum #3)
Leased Dark Fiber Maintenance
Overview: CPAU proposes to operate and maintain the District’s dark fiber network to an industry standard that provides optimal network uptime, in addition to timely and best practices maintenance. CPAU looks forward to providing exceptional servic es in these specific areas and operations:

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 Call before you dig locate services:
o CPAU adheres to all rules and regulations regarding c a l l b e f o r e y o u d i g requirements.

CPAU uses in-house fiber locators for accurate fault detection services for its fiber plant and uses “ Call 811 Before You Dig” Underground Service Alerts (USA) to ensure other utilities are not impacted if fiber repairs require any type of excavation.  Routine maintenance and inspection:
o CPAU fiber crews inspect and maintain the physical dark fiber n etwork fiber on an as- needed basis.
 Scheduled maintenance windows and scheduling practices for planned outages:
o Planned outage notices are sent to customers as soon as a maint enance project is approved, typically a month or more in advance. Alternate dates for the outage may be considered by CPAU. Often, fiber path rerouting can be performed to maintain a customer connection during a planned outage.
 Handling of unscheduled outages and customer problem reports, description of what service level agreement is included, and what alternative service levels may be available at additional cost:
o Unscheduled outages are handled by CPAU’s Fiber Operations Crew . The solutions for unscheduled outages include but are not limited to the followin g: telephone diagnosis with the customer’s IT group to determine whether the outage is due to damaged dark fiber or some other cause. Outage escalation procedures include a visit to the customer site by the Fiber Operations Crew and use of an Optical Time Do main Reflectometer (OTDR) to locate fiber breaks. CPAU does not offer alternative service level agreements. o CPAU’s fully equipped mobile splicing truck will resplice and repair the fiber as needed. o All emergency services are provided by CPAU crews.
 What agreements are in place with applicable utilities and utility contractors for emergency restoration:
o The City of Palo Alto owns and operates all utility services in the city. CPAU provisions Electric, Gas, Water, Wastewater and Fiber Optic services. Oper ating all utility s ervices enables CPAU to quickly coordinate emergency responses since i t does not have to rely on other utilities to resolve outages and perform emergency restoration work. o All utility emergency restorations are performed by CPAU Operations crews. o All replacement and repair of damaged fiber is performed by CPAU Fiber Operations Crews.

Leased Dark Fiber Maintenance Service Level Agreement
CPAU Fiber does not offer Service Level Agreements (SLAs). CPAU Fiber is provisioned with the understanding that it provides a “Best Effort Service.” To that point, please see CPAU ’s descriptions of SLA related services below:
 Commitment to proactively monitor fiber 24/7/365:

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o CPAU Fiber does not offer 24/7/365 monitoring; however, CPAU do es have “99.999 percent” fiber uptime and exceeds industry standards for reliability.  In case of outage or service impacting incident, commitment to inform fiber lessee of any fiber outage or cut within 30 minutes of occurrence:
o Fiber customers will be notified as soon as possible after fiber service is impacted.  In case of outage or service impacting incident, commitment to present lessee with a plan for service restoration or improvement within one hour of occurrence. o Fiber customers will be notified as soon as CPAU Fiber Operatio ns Crews are able to do so. A service action plan will be communicated to the customer as soon as the best restoration plan is determined.
 In case of outage or service impacting incident a mean time to repair of 4 hours:
o CPAU does not provide a time-based commitment for repairs. CPAU’s response time is within 4 hours during CPAU Operations business hours (Monday to Friday, 7:00 am - 4:00 pm).
 Provide an escalation list with qualifications summary of each person on the escalation list:
o Customer should contact CPAU’s SCADA service as the first point of contact to resolve a fiber outage. SCADA response phone is 650-496-6914 (24/7/365). o CPAU Operations Dispatch will communicate the outage incident to the Fiber Operations Crew for the purpose of resolving the fiber service issue. o Fiber Operations Crew members are certified by Light Brigade, which provides fiber-optic training courses and certifications.
▪ Light Brigade website: https://lightbrigade.com/
o Palo Alto Fiber Operations crew:
▪ Ryan Johnson, Supervisor, Streetlight, Traffic Signal and Fiber Optics ▪ Richard Anderson, Lead Technician, Fiber Optics
▪ Edward Weston, Fiber Technician
 Provision of a 24/7/365 phone number in case lessee is first to discover outage or service impacting incident:
o Contact SCADA 24/7/365 Operations response phone: 650-496-6914. o All additional CPAU escalations will be performed by the CPAU fiber project managers to ensure the most efficient service, accuracy, and reliability.  Provision of financial or service credit penalty if this service level agreement is violated:

Even though CPAU does not offer a service level agreement, a credit will be issued to the customer for the hours of service interrupted. CPAU will not be liable for customer claims for peripheral damages, such as claimed revenue lost due to an outage or other damage.

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1. Cover Letter
A signed letter of interest (no more than one page) stating the Responder’s interest and qualifications in providing the services as outlined in the RFP. Cover letter should include contact name, address, telephone number, and email address.

2. Exhibit B - Cost Proposal

3. Exhibit C – RFP Form

4. Exhibit D – Letter of Agreement

5. Exhibit E – Fingerprint Certification CPAU will coordinate certifications if additional installations are necessary.

6. Exhibit F – Statement of Non-Conflict of Interest

7. Exhibit G – Insurance Acknowledgement CPAU will provide proof of insurance if additional installations are necessary.

8. Exhibit H – Designated Subcontractors List

9. Exhibit I – Non-collusion Declaration

10. Exhibit J – 2022 E-Rate Supplemental Terms and Conditions

11. Addendums

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Exhibits:

Exhibit B ‐ Cost Proposal – RFP # 21‐IT‐12‐WAN
Responder
Company Name:    City of Palo Alto Utilities__________ _ R e s p o n d e r N a m e : J o s h W a l l a c e Responder Title:  CPAU Key Account Manager
Responder SPIN:   143035172
Responder Phone:   650-329-2275
Responder Email:   [email protected]
Please provide pricing
for 60-month contract terms below. Responders may alternatively include pricing options based on a 36-month contract with 2 one year voluntary extensions using a second copy of this form.

Please include all estimated taxes, fees, and surcharges in all proposals. The District reserves the right to select the most favorable and appropriate solution for each site situation. Include any one-time installation costs, if any. Include costs to extend service from MPOE to the MDF/IDF at each site.

The District is requesting pricing options for Leased Dark Fiber and Leased Lit Fiber as follows:
1) Leased Dark Fiber pricing should be provided as a Non-Recurring Cost (NRC) that includes all installation costs, taxes and fees in the NRC with an ongoing Monthly Recurring Cost (MRC) for Maintenance and Operations
2) Leased Lit Fiber pricing should be provided as a Monthly Recurring Cost (MRC) and should include all installation costs, taxes and fees in the MRC 3) Vendors have the option to provide a Monthly Recurring Cost (MRC) option for Leased Dark Fiber if available. After term pricing must also be provided.

Under a 60-month contract term beginning December 17, 2022, CPAU proposes the following MRC pricing for all District sites currently served by CPAU dark fiber. There are no additional installation costs, taxes, and fees proposed as an NRC for the proposed sites.

After term pricing will be subject to Utility Rate Schedule EDF-3 (Dark Fiber Licensing Services).

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Note: Effective February 14, 2022, the remaining balance of the amortized amount for the interconnection fee (i.e., construction cost) is $21,606.95. There are no additional one-time fees (Non-Recurring Charges) in this Cost Proposal.

Location Name Address Termination Point MRC 60 Months
Addison Elementary 650 ADDISON AVE. PALO ALTO, CA 94301 MDF 357.10$ 21,426.00$ Barron Park Elementary 800 BARRON AVE. PALO ALTO, CA 94306 MDF 307.90$ 18,474.00$ Juana Briones Elementary 4100 ORME ST. PALO ALTO, CA 94306 MDF 307.90$ 18,474.00$ Duveneck Elementary 705 ALESTER AVE. PALO ALTO, CA 94303 MDF 263.71$ 15,822.60$ El Carmelo Elementary 3024 BRYANT ST. PALO ALTO, CA 94306 MDF 748.24$ 44,894.40$ Escondido Elementary 890 ESCONDIDO RD. STANFORD, CA 94305 MDF 521.27$ 31,276.20$ Fairmeadow Elementary 500 E MEADOW DR. PALO ALTO, CA 94306 MDF 194.89$ 11,693.40$ Walter Hays Elementary 1525 MIDDLEFIELD RD. PALO ALTO, CA 94301 M DF 189.28$ 11,356.80$ Herbert Hoover Elementary 445 EAST CHARLESTON ROAD PALO ALTO, CA 94306 MDF 194.89$ 11,693.40$ Lucille M. Nixon Elementary 1711 STANFORD AVE. STANFORD, CA 9430 5 MDF 377.81$ 22,668.60$ Ohlone Elementary 950 AMARILLO AVE PALO ALTO, CA 94303 MDF 568.23$ 34,093.80$ Palo Verde Elementary 3450 LOUIS RD. PALO ALTO, CA 94303 MDF 901.58$ 54,094.80$ Frank S. Greene Jr. Middle 750 N CALIFORNIA AVE. PALO ALTO, CA 9 4303 MDF 577.03$ 34,621.80$ Jane Lathrop Stanford Middle 480 E MEADOW DR. PALO ALTO, CA 9430 6 MDF 877.69$ 52,661.40$ Ellen Fletcher Middle 655 ARASTRADERO ROAD PALO ALTO, CA 94306 MD F 564.38$ 33,862.80$ Henry M. Gunn High 780 ARASTRADERO ROAD PALO ALTO, CA 94306 MDF 780.04$ 46,802.40$ Palo Alto High 50 EMBARCADERO RD. PALO ALTO, CA 94301 MDF 1,704.02$ 102,241.20$ Greendell 4120 MIDDLEFIELD ROAD PALO ALTO, CA94303 MDF 513.62$ 30,817.20$ Equinix SV8 529 Bryant St, Palo Alto, CA Fl-B/Rm-8B055 1,252.42$ 75,145.20$ Total 11,202.00$ 672,120.00$

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Exhibit E – Fingerprint Certification
CPAU will coordinate certifications if additional installations are necessary.

Fingerprint Certification
RFP # 21‐IT‐12‐WAN
Responder Certification
I, _____________________________________________, am an authorize d representative of/doing business as (Name of Responder/consultant) ________________________ _________, and hereby certify that, pursuant to Education Code Section 45125.1, this business entity has conducted the required criminal background check(s) of all its employees who may have contact with District pupils or unsupervised access to any District campus of the Palo Alto Unified School District on behalf of this business entity, and that none of those persons have been reported by the Department of Justice as having been convicted of a serious or violent felony as specified in Penal Code Sections 667.5(c) and/or 1192.7(c).

Failure to comply with these terms or permitting unsupervised access by an employee whose name has not been cleared by DOJ as certified by the Contractor shall constitute grounds for termination of this Agreement.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed this_________ day of ________, 20_______, in________________ County, California. ___________________________________________
Name of Res
ponder/Consultant (please print)
_________________________________________________
Name/Ti
tle of Authorized Representative (printed)
_________________________________________________
(Si
gnature)

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Exhibit G – Insurance Acknowledgement
CPAU will provide proof of insurance if additional installations are necessary.

Insurance Acknowledgement
RFP # 21‐IT‐12‐WAN
Noti
ce to Bidders regarding Indemnity and Insurance Requirements Summary of Indemnification and Insurance Requirements:

1. These are the Indemnity and Insurance Requirements for Contractors providing services or supplies to Palo Alto Unified School District (Buyer). By agreeing to perform the work or submitting a proposal, you verify that you comply with and agree to be bound by these requirements. If any additional Contract documents are executed, the actual Indemnity language and Insurance Requirements may include additional provisions as deemed appropriate by Buyer.

2. You should check with your insurance advisors to verify compliance and determine if additional coverage or limits may be needed to adequately insure your obligations under this agreement.

These are the minimum required and do not in any way represent or imply that such coverage is sufficient to adequately cover the Contractor’s liability under this agreement. The full coverage and limits afforded under Contractor’s policies of Insurance shall be available to Buyer and these Insurance Requirements shall not in any way act to reduce coverage that is broader or includes higher limits than those required. The Insurance obligations under this agreement shall be: 1— all the Insurance coverage and limits carried by or available to the Contractor; or 2—the minimum Insurance requirements shown in this agreement, whichever is greater. Any insurance proceeds in excess of the specified minimum limits and coverage required, which are applicable to a given loss, shall be available to Buyer.

3. Contractor shall provide Buyer with Certificates of Insurance including all required endorsements and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to Buyer before work begins. Buyer reserves the right to require full- certified copies of all Insurance coverage and endorsements.

Certificates and insurance policies shall include the following clause:
"This policy shall not be canceled or reduced in required limits of liability or amounts of insurance until notice have been mailed to PAUSD stating date of cancellation or reduction may not be less than ten (10) days after date of mailing notice."
Certificate of insurance shall state in particular those insured, extent of insurance, location and operation to which insurance applies, expiration date and cancellation and reduction notice.

4. Indemnification & Insurance:

Contractor shall be an independent contractor and not an agent or employee of District under this Agreement. Contractor shall be responsible for any damage, loss, or other claim arising out of the performance of its services under this Agreement.

Prior to commencement of services and during the life of this Agreement, Contractor shall

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provide the District with a current certificate or policy evidencing its professional general liability insurance coverage in a sum not less than $1,000,000 per occurrence, and such certificate or policy shall name the District as an additional insured.

To the fullest extent allowed by law, Contractor shall defend, indemnify, and hold harmless District, its directors, officers, agents, employees, and guests against any claim or demand arising from any actual or alleged act, error, or omission by Contractor or its directors, officers, agents, employees, volunteers, or guests arising from Contractor’s duties and obligations described in this Agreement or imposed by law.

To the fullest extent allowed by law, District shall defend, indemnify, and hold harmless Contractor, its directors, officers, agents, employees, and guests against any claim or demand arising from any actual or alleged act, error, or omission by District or its di rectors, officers, agents, employees, volunteers, or guests arising from District’s duties and obligations described in this Agreement or imposed by law. Contractor is not an employee of the District and District shall not indemnify Contractor in any such claim.

Contractor shall be responsible for carrying its own workers ’compensation insurance and health and welfare insurance. District shall not withhold or set aside income tax, Federal Insurance Contributions Act (FICA) tax, unemployment insurance, disability insurance, or any other federal or state funds whatsoever. It shall be the sole responsibility of the Contractor to account for all of the above and Contractor agrees to hold District harmless from all liability for these taxes.

I have read and understand the above requirements and agree to be bound by them for any work performed for the Buyer.
__________________________________________ Signature
__________________________________________ Printed Name __________________________________________ Title
__________________________________________ Responder
__________________________________________ Date

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Exhibit H – Designated Subcontractors List

Not Applicable: CPAU does not use or propose any subcontractors for this project.

Designated Subcontractors List

S u b c o n t r a c t o r N a m e :

C A C o n t r a c t o r s L i c e n s e # :

P o r t i o n o f W o r k :

S u b c o n t r a c t o r N a m e :

C A C o n t r a c t o r s L i c e n s e # :

P o r t i o n o f W o r k :

S u b c o n t r a c t o r N a m e :

C A C o n t r a c t o r s L i c e n s e # :

P o r t i o n o f W o r k :

S u b c o n t r a c t o r N a m e :

C A C o n t r a c t o r s L i c e n s e # :

P o r t i o n o f W o r k :

S u b c o n t r a c t o r N a m e :

C A C o n t r a c t o r s L i c e n s e # :

P o r t i o n o f W o r k :

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Exhibit J – 2022 E‐Rate Supplemental Terms and Conditions E‐RATE SUPPLEMENTAL TERMS AND CONDITIONS
The Telecommunications Act of 1996 established a fund by which Schools and Libraries across the Country could access discounts on eligible telecommunications products and services. The program is commonly known as the E-rate Program. The eligibility for discounts on internet access, telecommunications products and services, internal connection products, services and maintenance is determined by the Federal Communications Commission (FCC). Funding is made available upon application approval by the Schools and Libraries Division (SLD) of the Universal Service Administrative Company (USAC), which was established by the Act. The amount of discount is based on the numbers of students receiving free and reduced price meals.
1) E-RATE CONTINGENCY
The project herein is contingent upon the approval of funding from the Universal Service Fund’s Schools and Libraries Program, otherwise known as E-rate. Even after award of contract(s) and/or E-rate funding approval is obtained, the District may or may not proceed with the project, in whole or in part.

Execution of the project, in whole or in part, is solely at the discretion of the District. 2) SERVICE PROVIDER REQUIREMENTS
The District expects Service Providers to make themselves thoroughly familiar with any rules or regulations regarding the E-rate program.
a. Service Providers are required to be in full compliance with all current requirements and future requirements issued by the SLD throughout the contractual period of any contract entered into as a result of this RFP.
b. Service Providers are responsible for providing a valid SPIN (Service Provider Identification Number). More information about obtaining a SPIN may be found at this website: https://www.usac.org/e-rate/service-providers/step-1-obtain-a-spin/ c. Service Providers are responsible for providing a valid Federal Communications Commission (FCC) Registration Number (FRN) at the time the bid is submitted. More information about obtaining an FRN may be found at this website:
https://fjallfoss.fcc.gov/coresWeb/publicHome.do
d. Service Providers are responsible for providing evidence of FCC Green Light Status at the time the bid is submitted. Any potential bidder found to be in Red Light Status must provide an explanation of the steps it is undertaking to be removed to Red Light Status and the expected timeframe for resolution. A Service Provider's sustained Red Light Status may be grounds for contract termination as it could prohibit the Service Provider from providing E-rate discounts in a timely manner which would cause harm to the Applicant. More information about FCC Red and Green Light Status may be found at this website: http://www.fcc.gov/debt_collection/welcome.html e. Products and services must be delivered before billing can commence. At no time may the Service Provider invoice before July 1, 2022.

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RFP # 21-IT-12-WAN 12/17/2021 | 18
f. Prices must be held firm for the duration of the associated E-rate Funding Year(s) or until all work associated with the project is complete (including any contract and USAC approved extensions).
g. Goods and services provided shall be clearly designated as “E-rate Eligible”. Non-eligible goods and services shall be clearly called out as 100% non-eligible or shall be “cost allocated” to show the percentage of eligible costs per SLD guidelines. h. Within one (1) week of award, the awarded Service Provider must provide the District a bill of materials using a completed USAC “Item 21 Template”. Subsequent schedules of values and invoices for each site must match Item 21 Attachment or subsequent service substitutions. A summary sheet must also be provided to provide the cumulative amount for all sites.
i. In the event of questions during an E-rate pre-commitment review, post-commitment review and/or audit inquiry, the awarded Service Provider is expected to reply within 3 days to questions associated with its proposal.
j. The awarded Service Provider is required to send copies of all forms and invoices to the District prior to invoicing USAC for pre-approval. Failure to comply with this requirement may result in the District placing the vendor on an “Invoice Check” with the USAC https://www.usac.org/e-rate/applicant-process/invoicing/invoice-check/ k. Services providers must comply with the FCC rules for Lowest Corresponding Price ("LCP"). Further details on LCP may be obtained at USAC's website: https://www.usac.org/e-rate/service-providers/step-2-responding-to- bids/lowest-corresponding-price/
3) SERVICE PROVIDER ACKNOWLEDGEMENTS
a. The Service Provider acknowledges that no change in the products and/or services specified in this document will be allowed without prior written approval from the district and a USAC service substitution approval with the exception of a Global Service Substitutions.
b. The Service Provider acknowledges that all pricing and technology infrastructure information in its bid shall be considered as public and non-confidential pursuant to §54.504 (2)(i)(ii).
c. The Service Provider acknowledges that its offer is considered to be the lowest corresponding price pursuant to § 54.511(b). Further details on LCP may be obtained at USAC's website: https://www.usac.org/e-rate/service-providers/step-2-responding-to- bids/lowest-corresponding-price/. Should it not be the lowest corresponding price, the service provider must disclose the conditions leading to the applicant being charged in excess of lowest corresponding price.
d. BIDDERS are required to comply with the FCC’s Lowest Corresponding Price (“LCP”) Requirement for all equipment and Services. BIDDER acknowledges that BIDDER is solely responsible to comply with LCP requirements. To the extent that USAC finds an LCP violation and reduces the E-rate Funding, BIDDER agrees that it will not hold the

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DISTRICT liable for any shortfall in E-rate funding and will be responsible for any ensuing appeals, COMADS and/or RIDFS.
e. The Service Provider attests that its offer does not violate the FCC’s Supply Chain certifications included in the FCC Form 473. Supply Chain requirements and certifications can be viewed at USAC’s Website: https://www.usac.org/about/reports- orders/supply-chain/.
f. This offer is in full compliance with USAC’s Free Services Advisory https://www.usac.org/e-rate/applicant-process/competitive-bidding/free-servi ces-
advisory/. There are no free services offered that would predicate an artificial discount and preclude the applicant from paying its proportionate non-discounted share of costs.

The service provider agrees to provide substantiating documentation to support this assertion should the applicant, USAC, or the FCC request it. 4) STARTING SE RVICES/ADVANCE INSTALLATION – Cat egory 1 Services The annual E-rate Funding Year begins on July 1 and expires on June 30 of each calendar year.

Regardless of the contract “effective date”, E-rate eligible goods and/or services requested in this RFP shall be delivered no earlier than the start of the 2022 funding year (July 1, 2022). If Category 1 services (Telecommunication Services and Internet access) will begin on or shortly after July 1 of a funding year, the service provider, in some cases, may need to undertake some construction and installation work prior to the beginning of that funding year. Within the limitations indicated below, the infrastructure costs of a service provider can be deemed to be delivered at the same time that the associated Category 1 services begin. That is, if services begin on July 1, then the delivery of service provider infrastructure necessary for those services can be considered as also delivered on July 1. However, NO INVOICING can take place prior to July 1 of the associated Funding Year.

EARLY FUNDING CONDITIONS
Category 1
There are four conditions that must be met in order for USAC to provide support in a funding year for Category 1 infrastructure costs incurred prior to that funding year.  Initiation of installation cannot take place before selection of the service provider pur suant to a posted Form 470 and in any event no earlier than six months prior to July 1 of the funding year.  The Category 1 service must depend on the installation of the i nfra structure.  The und erlying Category 1 service cannot have a service start d at e prior to July 1 of the funding year.
 No invoic es can be submitted to USAC for reimburseme nt prior to July 1 of the funding year.

For more information, please refer to the FCC Order involving the Nassau County Board of Cooperative Educational Services (DA 02-3365 , released December 6, 2002). Th is FCC decision only applies to Priority 1 services (telecommunications services and Internet access).

The complete text can be found at the following URL:

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https://www.usac.org/e-rate/applicant-process/starting-services/advance-installation/ Catego
ry 2
There is one condition that allows USAC to provide support in a funding year for Category 2 installation costs incurred prior to that funding year.
 We also amend our rules for category two non‐recur ring services to permit applicants to seek support for category two eligible services purchased on or after April 1, three months prior to the start of funding year on July 1. This will provide schools with the flexibility to purchase equipment in preparation for the summer recess and provide the maximum amount of time during the summer to install these critical networks.

For more information, please refer to the FCC Report and Order and Further Notice of Proposed Rulemaking (FCC 14-99 , released July 23, 2014). This FCC decision only applies to Category 2 services (Internal Connections).

However, NO INVOICING can take place prior to July 1 of the funding year. 5) INVOICING
a. The Service Provider agrees to bill and receive a portion of the payment for the provisions of goods and services described herein directly from USAC via the Form 474 Service Provider Invoice (SPI). The District will only be responsible for paying its non- discounted share of costs and does not intend to use the BEAR process (Form 472). The maximum percentage the District will be liable for is the pre-discount amount minus the funded amount as shown on the FCC Form 471 Block 5 and any identified ineligible costs. Upon the successful receipt or posting of a Funding Commitment Decision Letter from the SLD and submission, certification and USAC approval of Form 486, the District shall pay only the discounted amount beginning with the billing cycle immediately following said approval. Alternatively, should the District decide that it is in the best interest of the District to file a Form 472, the District will inform the Service Provider of its intent.
b. All Service Provider invoicing to USAC must be completed within 120 days from the last day of
service. Should the Service Provider fail to invoice USAC in a timely manner, the District will only be responsible for paying its non-discounted share. 6) FCC/SLD AU DITABILITY
The E-rate program requires that all records be retained for at least ten (10) years from the last date of service provided on a particular funding request. Respondent hereby agrees to retain all books, records, and other documents relative to any Agreement resulting from this RFP for ten (10) years after final payment. The District, its authorized agents, and/or auditors reserves the right to perform or have performed an audit of the records of the Respondent and therefore shall have full access to and the right to examine any of said materials within a reasonable period of time during said period.

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6050167 Rev. Feb 2020

SAMPLE
EXHIBIT “C”: FIBER LICENSE AGREEMENT INVESTIGATION REQUEST FORM

REQUEST SUBMITTED BY: FIELD INVESTIGATION CONTACT:

Name: Name:

Title: Title:

Company: Company:

Street Address: Street Address:

City, State, Zip: City, State, Zip:

Telephone Number: Cell Phone:

Fax Number: Fax Number:

Email Address: Email Address:

Today’s Date: ____/____/____
Project Description:

Example:

1. 4 fibers from 123 Alma to PAIX

2. Miscellaneous investigation (Attach drawing if applicable)

1. 2.

Desired completion date: __/____/__
NOTE: Please budget 6-8 weeks from installation payment (not this investigation payment) to completion.

FIBER LICENSE AGREEMENT INVESTIGATION REQUEST CONDITIONS:

I am submitting this advance engineering request with the full understanding of the following conditions:

1. The advance engineering fee is a non-refundable fee required to cover the cost of preparing a detailed estimate.

2. The detailed proposal will establish an interconnection fee that must be paid in full prior to the start of construction.

3. The advance engineering fee will be credited against the interconnection fee.

Please Note: You will be invoiced for $650 or by estimate for special conditions, per Utilities Rate Schedule EDF-2. Please do not remit until you receive an invoice.

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Signature: ____________________________________ Date:___/______/____ Please see following page for contact information.

SAMPLE

Please submit the completed form with authorized signature and direct questions to:

City of Palo Alto Utilities
250 Hamilton Avenue
Palo Alto, CA 94301
Phone: (650) 329-2494
Fax: (650) 326-4941
Email: [email protected]

Note that all inquiries of a legal nature must be directed to:

Office of the City Attorney
8th Floor City Hall
250 Hamilton Avenue
P.O. Box 10250
Palo Alto, CA 94303
Attention: Assistant City Attorney

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EXHIBIT "D": INSURANCE REQUIREMENTS

1. During the Term hereof, the CUSTOMER, at its sole cost and expe nse, shall obtain and maintain or cause to be obtained and maintained the following policies o f insurance in the amounts specified herein:

a. Business Interruption insurance policy in amounts deemed reason able and acceptable to the CITY's Risk Manager; and

b. Commercial general liability i nsurance policy with a minimum limit of not less than one million dollars ($1,000,000) p er occurrence (combined singl e limit) for bodily injury and property damage, and not less than one million dolla rs ($1,000,000) aggregate, for each personal injury liability, products-complet ed operations, premises operations, blanket contractual, and owners' and Contractors' protective, and each accident;

c. Workers' Compensation and Empl oyers' Liability insurance policy providing statutory coverage (Coverage A and Coverage B) written in accordance with the Laws of the State of California, providing coverage for all employees of the CUST OMER, and requiring an "ALL STATES" endorsement if the CUSTOMER is domiciled outside the State of California and the policy is written outsi de the State of California.

d. The CUSTOMER shall furnish the CITY with a certificate showing proof of such coverage, and naming the CITY as the certificate holder.

2. The CUSTOMER shall file the required original certificate(s) of insurance with the CITY's Manager of Credit and Collections and Meter Reading, subject to the CITY's prior approval, which shall clearly state:

a. Policy number; name of insurance company; name, address and tel ephone number of the agent or authorized representative; name, address and telep hone number of insured; project name and address; policy expiration date; and specific coverage amounts;

b. If the policy is canceled before its expiration date for any re ason other than the non-payment of premium, the CUST OMER shall ensure that the insu rance company provides CITY at least thirty (30) days written notice before the effect ive date of insurance cancellation; and

3. The certificate(s) of insurance and notices shall be mailed prior to the establishment of fiber optic service, to City of Palo Alto, Department of Utilities, Palo Al to, CA 94301, Attn:

Manager of Credit and Collec tions and Meter Reading, Ground Floor.

4. These insurance requirements shall be subject to the review, an nually performed, by the CITY's Risk Manager. If the CITY's Risk Manager requires any change in coverage, notice thereof shall be given to the CUSTOMER, in writing, and the CUSTOMER shall co mply with such notice within thirty (30) Days of receipt thereof.

5. Prior to the execution hereof, any deductibles or self-insured retentions must be stated on the certificate(s) of insurance , which shall be sent to and approved by the CITY, acting by and through its Risk Manager.

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EXHIBIT “E”: FIBER LICENSE AGREEMENT INFORMATION REQUEST FORM

1. Official business name

2. Is Company certified as a Competitive Local Exchange Carrier (CLEC)?

Yes

[If yes, does the Company intent to offer CLEC services over the Licensed Fiber optic lines of the CITY?]
Yes
No

3. Check this box if you intend to offer commercial video services.

Yes
No

If commercial video services are to be offered, the applicant m ust consult with the Cable Franchise Manager, Administrative Services Department, (650) 329-2208 to discuss obtaining a franchise with the City of Palo Alto.

4. Attach copy of Articles of Incorporation or Fictitious Business Name Certificate, or Limited Liability Partnership Certificate of Registration, if applicable.

5. Attach Insurance certificate in the amounts specified in Exhibi t D with the City of Palo Alto named as an additional insured.

6. Address(es) to which notices should be sent:

MAIN NOTICE: COPY TO (optional):

Company

Street Address

Attention (Name and Title of CEO, CFO or COO)

Attention (Name and Title)

Phone Number (with area code)

Phone Number (with area code)
Mobile Number (with area code)

Mobile Number (with area code)

Email address Email address

Palo Alto Unified School District
x
x
Palo Alto Unified School District
25 Churchill Avenue
Palo Alto, CA 94306
Derek Moore, Chief Technology Officer
650-329-3775
[email protected]

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EXHIBIT “F”: ACKNOWLEDGEMENT OF RECEIPT OF CITY OF PALO ALTO

UTILITIES RULES AND REGULATIONS
The City of Palo Alto Utilities Rules and Regulations, and any amendments thereto, are approved and adopted by resolution of the Palo Alto City Council. Copies are available to the public at the Utilities Customer Service Center, Ground Floor, 250 Hamilton Avenue, Palo Alto, CA 94301.

In addition, the Rules and Regulations are available online via the City of Palo Alto website at https://www.cityofpaloalto.org/Departments/Utilities/Utilities-Services-Safety/Utility-Rules-and- Regulations
By signing, I hereby acknowledge receipt of a copy of the City of Palo Alto Utilities Rules and Regulations, effective date _________________.
_______________________________________________
Signature of CEO, CFO or COO

Company:

Street Address:

Attention (Name and Title of CEO, CFO or COO)
Phone Number (with area code):

Fax Number (with area code):

Palo Alto Unified School District
25 Churchill Avenue
Palo Alto, CA 94306
Derek Moore, CTO
650-329-3775

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Attachment B

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City of Palo Alto (ID # 14166)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of Early Renewal of Contract Number C20176092 With Equinix LLC for Addition of $53,384 for New Service Connections and Maintenance, Approval of Past Charges of $16,628 for Increased Services, and Approval of Addition of $50,000 for City Man ager Authority to Add Fiber Services, for a Total Not-to-Exceed Amount of $745,476 from $625,465
From: City Manager
Lead Department: Utilities

Recommendation
Staff recommends that Council:

1. Approve supplementary costs incurred under Contract C20176092 wit h Equinix LLC (“Equinix”), to associated with additional service connections and maintenance fees already received for the period August 2019 – May 2022 in the amount of $16,628,

2. Approve and authorize the City Manager or their designee to execute an amend ment to contract C20176092 with Equinix to include additional service connections and maintenance fees in the amount of $ 53,384 for the remaining 25 months of the contract, period June 1, 2022 – June 30, 2024, and

3. Authorize the City Manager or their desig nee to execute change orders approving up to five additional service connections, when the City Manager or their designee determines such connections are necessary for the City to provide effective fiber access, up to a maximum amount of compensation of $5 0,000, to be added to the not -to-exceed amount for a total contract amount not to exceed $745,476, inclusive of the $16,62 8 and $53,384 above.

Background
The City of Palo Alto (the City) established a Fiber Optic Utility in 1996 following the design and construction of a dark fiber optic backbone system throughout the city. Operated by the City of Palo Alto Utilities Department (CPAU), the Fiber Optic Utility licenses backbone connections to local businesses and telecommunications resellers requiring acce ss to advanced broadband telecommunications services.

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City of Palo Alto Page 2

There is a highly competitive Palo Alto commercial fiber optic marketplace, in which Palo Alto residences are served by multiple telecommunication companies and Internet Service Providers (ISPs) resel ling fiber connections. Many of these entities control independently owned overhead and/or underground fiber optic systems. These systems are also accessed by third - party ISP-service resellers using leased capacity on the fiber optic networks.

Whether a licensee receives fiber directly from CPAU or from a reseller, the licensee’s, or their third-party provider’s, fiber connection depends on privately-owned electronic equipment which “lights” their leased dark fiber optic cable for on -site data use, buildin g-to-building (campus) communications, and access to internet service outside of Palo Alto.

CPAU fiber optic licensees wishing access to the internet outside of Palo Alto must have their CPAU fiber optic service connected to CPAU -owned lines which terminate at a data center. The only data center in Palo Alto is currently owned by Equinix LLC. This neutral data center, designated as Equinix SV8 and locally known as the “Palo Alto Internet eXchange” (PAIX), is independent of any one ISP or telecommunication s carrier affiliation, and serves as an internet exchange point (IXP) providing the physical infrastructure through which over 70 ISPs and content delivery networks (CDNs) exchange internet traffic between their networks. The City has been leasing fiber op tic access and termination services at PAIX since the inception of the fiber network in 1996.

CPAU’s most recent contract with Equinix, the current owner of PAIX, began in 2019. These services were found exempt from competitive solicitation requirements i n CMR 10203. That is, the service was found to be a sole source under Palo Alto Munic ipal Code 2.30.360 (d) (Exemptions from competitive solicitation requirements). Because of its geographical location, PAIX is the only economically and physically viable co -location internet facility or data center available to CPAU and its fiber optic lic ensees. The nearest alternative IXP data center site is in the City of Santa Clara. Connection to the Santa Clara site from Palo Alto would require miles of multiple underground conduits through several municipal jurisdictions. Such construction would be prohibitively expensive, be significantly less secure than the current Palo Alto location (with greater risk due to construction and contractor dig -ins in other jurisdictions, requiring Palo Alto to contract with remotely -sited, third -party fiber repair com panies), and limit fiber optic utility connectivity to customer sites back in Palo Alto.

Discussion

Supplemental Services Provided by Equinix August 2019 – May 2022 In June 2019, CPAU contracted with Equinix LLC for a term not -to-exceed five years, at a cost not-to-exceed $625,465, to lease five “cabinets” (vertical racks sited next to each other, each capable of holding multiple termination/switching boxes in stacked configurations) located at PAIX (the Contract). All of CPAU’s fiber optic cables termi nate at PAIX, and there is no reasonable alternative supplier of services to the City.

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City of Palo Alto Page 3

Because there were no anticipated changes to the hardware requirements served under the Contract, the original contract did not budget for additional costs that could arise during its term. The City has required several changes to services that have impacted the cost of the original contract. Due to increased maintenance costs and additional interconnections, the City has spent $16,628 in excess of the original contract ’s projected spending. The staff responsible for the tracking retired, it was only when the contract was transferred was the situation brought to our attention. All excess is accounted for in the itemized invoices (Linked Document) and described below.

Normally, the City would require a Contract amendment to make such transactions. Because Equinix insists on using their form documents with little variance, the City’s typical amendment practice is not an option. No other vendor is available to provide the services Equinix provides. (See CMR 10203). As such, Staff recommends Council approve the existing payments for these supplemental parts and services by ratifying the invoice s attached ( Linked Document ). These additional services are summarized in the Table below and described in this section.

Description of Supplemental Services Date of Services Total Cost First additional connection Monthly starting mid-December 2019 $2,842.36 Second additional connection Monthly starting mid-January 2020 4,721.27 Custom parts February 2020 545.00
Maintenance
(“Smart Hands” Support Plan)
August 2019, May 2021, June 2021, and
May 2022 (total of approximately 13 hours) 2,537.50
Third additional connection Monthly starting mid-April 2021 5,481.50 Installation fee for
third additional connection April 2021 500.00
Total $16,627.63

Additional Connections.
• In December 2019, the first interconnects for Information Technology Department (ITD) added services from Equinix utilizing the Utilities contract: one Fiber Connection for SAP System. When the City enterprise system SAP migrated to the cloud AWS (Amazon Web Services) infrastructure, the City needed this direct connection to allow City staff to access SAP in the cloud. • In January 2020, ITD initiated a second interconnect to support the dark fiber connection from the City Hall data center to PAIX for connection to Cogent ISP to provide Internet services to City staff.
• In April 2021, CPAU staff initiated a third interconnect to meet customer demand.

Rates for connections have increased 5% annually

Maintenance. The original contract included certain items of technical and maintenance support which Equinix would provide to their customers at no additional cost. Equinix’s implemented a new business model, remote support ha s been changed to an “a la carte” service payment model called “Smart Hands” Support Plan. The “Smart Hands” Support 10 Packet Pg. 152

City of Palo Alto Page 4

Plan has been in place since August 2019, at which point all maintenance began incurring additional charges. Smart Hands rates have increa sed annually, costing $100 per hour of service in 2019, $200 in 2021, and $225 in 2022.

Miscellaneous costs. The commencement of the April 2021 connection incurred an installation fee of $500. Custom parts necessary for upkeep of City facilities incurred a cost of $545 in February of 2020.

Early Contract Renewal June 1, 2022 – June 30, 2024
In order to expediently incorporate the additional service connections and Smart Hands costs into the existing Contract, Equinix agreed to an early contract renewal, also called a replacement order, (Attachment A). This renewal does not extend the duration of the Contract.

It incorporates the three additional connections described above into the Contract between the City and Equinix for the remainder of its term. The renewal also adds prepaid Smart Hands hours for use by CPAU staff. Due to changing fiber needs, staff anticipates maintenance needs in the next 25 months will far exceed those used in the past. Staff anticipates the City’s Smart Hands maintenance needs will approximate 100 hours of service.

The costs associated with continuing service for the additional connections, plus the prepaid maintenance hours, results in a total increase in costs of $53,384.

Additional Fiber Connections
Fiber needs have evolved over the years, especially as the Covid -19 pandemic has increased the importance o f internet services for all aspects of life. The CPAU and the City’s needs for additional fiber connections grew during the first years of this contract and will likely continue to grow before the term of this Contract completes.

In addition to the servi ces described in the Contract and renewal ( Attachment A ), staff recommends that Council set aside the not-to-exceed compensation amount of $50,000 for the installation and use of up to five additional service connections, as the City Manager or their designee may deem necessary for effective fiber services. Staff recommends that Council authorize, but not require, the City Manager or their designee to approve change orders for additional service connections, which may include installation fees and monthly recurring charges. Total compensation for the installation of or continuing connect ion services provided by these five additional connections shall not exceed $50,000 during the term of this Contract.

Resource Impact
Funding for the 25 -month early renewal term and the August 2019 to May 2022 supplemental services is available in the FY 2022 Adopted Utilities Department Fiber Optic Fund operating budget. The recommendations in this report would result in an increase to contract authority, utilizing existing budget appropriation. Funding for future years is subject to City Council approval through the annual budget process.

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Policy Implications
This recommendation does not represent a change to current City policies.

Environmental Review
Approval of this agreement does not meet the definition of a project under the California Environmental Quality Act (CEQA), pursuant to the California Public Resources Code Section 21065, because it is not an activity that will cause a direct physical change in the environment.

Attachments:
• Attachment10.a: Attachment A: Draft Early Renewal
• Attachment10.b: Attachment B: Original Lease Agreement • Attachment10.c: Attachment C: Smart Hands Support Plan 10 Packet Pg. 154

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Account Name : CITY OF PALO ALTO
Account Number : 110002 Currency : USD PREPARED BY: PREPARED FOR:

Order Number : 1-217364579733 Order Valid Until : 25-Jun-2022 Joel Norgaard Anthony Enerio Version # : 3 [email protected] [email protected] g
Agreement # : 00036759.0 Initial Term (Months) : 25 16503156345 Renewal Period (Months) : 12
Non-renewal notice (Days) : 90

IBX: SV8
Address: 529 Bryant Street, CA, 94301, United States
Section A: Product Additions Unit Pricing Total Charges Effective DateProduct Code Product Description Qty UoM NRC MRC NRC MRC PS00002 Smart Hands Support Plan 1 Each - - 22,500.00 0.00 01-Jun-2022 PS00021 Prepaid Smart Hands Hours 100 Hour 225.00 - 22,500.00 - 01-Jun-2022 Section Total 22,500.00 0.00
IBX: SV8
Address: 529 Bryant Street, CA, 94301, United States
Section C: Product/Element Changes
Qty UoM Action Total Charges
NRC
Current Price
MRC
Amended Price
MRC Effective DateProduct Code Product Description
SPC00005 Secure Cabinet With Circuit Based Power 1 Each Update 0.00 6,178.31 6,487.23 01-Jun-2022 CAB00001 Cabinet - 2.4 kVA - 2 Post Rack (Relay Rack) S/N: 0404-21024209 1 Each Update - 1,181.44 1,240.51 01-Jun-2022 CAB00001 Cabinet - 2.4 kVA - 2 Post Rack (Relay Rack) S/N:
0704-1-73624839,0707-1-73624877,0705-1-73624858 3 Each Update - 3,723.78 3,909.97 01-Jun-2022 CAB00001 Cabinet - 2.4 kVA - 2 Post Rack (Relay Rack) S/N: 0708-10767970 1 Each Update - 1,273.09 1,336.74 01-Jun-2022 CAG00001 Cage - 5 Cabinets - Draw Cap 1 kVA - PEC Cap- 11.52 PEC 1 PEC - - 0.00 0.00 01-Jun-2022 ECX00001 Equinix Fabric Metro Port 1 Each Update 0.00 110.25 115.76 01-Jun-2022 CC00001 Network Cable Connection - Z-side IBX- SV1 S/N: 21279457-B 1 Each - - 0.00 0.00 01-Jun-2022 MC00001 Metro Connect Port - 1G 1 Each - - 0.00 0.00 01-Jun-2022 ECX00001 Equinix Fabric Port - 1G 1 Each - - 0.00 0.00 01-Jun-2022 CC00001 Network Cable Connection - Z-side IBX- SV8 S/N: 21279457-A 1 Each - - 0.00 0.00 01-Jun-2022 CC00001 Network Cable Connection - Z-side IBX- SV5 S/N: 21279457-Z 1 Each - - 0.00 0.00 01-Jun-2022 CC00001 Cross Connect 1 Each Update 0.00 367.50 385.88 01-Jun-2022 CC00001 Network Cable Connection - Single-Mode Fiber - Z-side IBX- SV8 S/N: 21753519
1 Each Update - 367.50 385.88 01-Jun-2022
EXT00006 Innerduct 3 Each Update 0.00 4,221.33 4,432.40 01-Jun-2022 EXT00002 Innerduct Element S/N: 14689531,14689529,14689530 3 Each - - 0.00 0.00 01-Jun-2022 ECX00015 Equinix Fabric Virtual Connection Product 1 Each Update 0.00 220.50 231.53 01-Jun-2022 ECX00015 Equinix Fabric Virtual Connection - SV - SV - 1 Gbps - AWS 1 Each Update - 220.50 231.53 01-Jun-2022 i365#-Yk

EQUINIX ORDER

Equinix Order Number:1-217364579733(V3) Page 1 of 7

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IBX: SV8
Address: 529 Bryant Street, CA, 94301, United States
Section C: Product/Element Changes
Qty UoM Action Total Charges
NRC
Current Price
MRC
Amended Price
MRC Effective DateProduct Code Product Description
Direct Connect - High Capacity
Section Total 0.00 11,097.89 11,652.78
IBX: SV8
Address: 529 Bryant Street, CA, 94301, United States
Section D: Continuing Services
Qty UoM
Unit Pricing Total Charges
Effective DateProduct Code Product Description NRC MRC NRC MRC CC00001 Cross Connect 1 Each - - 0.00 0.00 01-Jun-2022
CC00001 Network Cable Connection - Single-Mode Fiber - Z-side IBX- SV8 S/N: M14057067 1 Each - - - 0.00 01-Jun-2022
CC00001 Cross Connect 1 Each - - 0.00 0.00 01-Jun-2022
CC00001 Network Cable Connection - Single-Mode Fiber - Z-side IBX- SV8 S/N: M13324101 1 Each - - - 0.00 01-Jun-2022
PS00004 Configurable Accessories 3 Each - - 0.00 0.00 01-Jun-2022 CC00001
Patch Panel S/N:

VP:0708:191155,CP:0707:110503,CP:0705:112869,CP:0705:112870,CP:
0705:122350,VP:0708:191979,CP:0707:112871,VP:0708:191978,CP:070 7:122351
9 Each - - 0.00 0.00 01-Jun-2022
PS00004 Configurable Accessories 5 Each - - 0.00 0.00 01-Jun-2022 CC00001
Patch Panel S/N:

CP:0708:1252596,CP:0708:1252595,CP:0708:1252597,CP:0708:1252594 ,CP:0708:1252593
5 Each - - 0.00 0.00 01-Jun-2022
PS00004 Configurable Accessories 1 Each - - 0.00 0.00 01-Jun-2022 CC00001 Patch Panel S/N: CP:0704:137356,CP:0704:122349 2 Each - - 0.00 0.00 01-Jun-2022 Section Total - 0.00
Section Total NRC MRC
Section A: Product Additions 22,500.00 0.00
Section C: Product/Element Changes 0.00 11,652.78
Section D: Continuing Services 0.00 0.00
Grand Total
Monthly recurring charge: $11,652.78
Non-recurring charge: $22,500.00

TERMS AND CONDITIONS
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1. INTRODUCTION
This Replacement Order is governed by and incorporated by reference into the applicable Master Country Agreement or other similar agreement between the Parties (ªAgreementº).

Capitalized terms used but not defined in this Replacement Order shall have the meaning ascribed to them in the Agreement or shall refer to the values listed at the top of this Order.

This Replacement Order replaces and supersedes the Order(s) referenced below (including any Online or Phone Orders related to or incorporated by reference into such Order(s)) and will, as applicable, add those new Products detailed in Section A, terminate the Products detailed in Section B and amend the Products detailed in Section C as further detailed above from the Effective Date stated in the relevant Section.

Unless otherwise stated by this Replacement Order, the Products in the Order(s) detailed in Section D remain(s) unchanged.

2. DEFINITIONS
`Effective Date' as used in this Order shall be:
- For Section A: Product Additions, the date stated above on which the addition to the Licensed Space and Services takes effect or, if no such date is stated above, then the date the Licensed Space is provided or the Services are delivered;
- For Section B: Product Deletions, the date stated above on which the termination of the Licensed Space and Services takes effect; - For Section C: Product Changes, the date stated above on which the change to the Licensed Space and Services takes effect; i365#-Yk

EQUINIX ORDER

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or, if no such date is stated above, then the date the Licensed Space is provided or the Services are delivered of this Replacement Order. `Products' as used in this Order may also be referred to as Licensed Space and Services.

PRODUCT TERMS
Additional terms and conditions applicable to the Products listed above can be found at the following URL: http://www.equinix.com/resources/product-documents and are incorporated by reference into this Order.

3. INITIAL TERM & RENEWAL PERIOD
The Initial Term will commence on the Effective Date and will remain in effect for the Initial Term.

After the Initial Term, the term will automatically renew for the Renewal Period unless either Party terminates the Order by providing written Non-renewal notice prior to the end of the then-current term to the other Party in which event this Order will terminate at the end of the then-current term.

4. POWER LIMITATIONS
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The maximum amount of electrical power that Customer may draw is stated above as Draw Cap or Qty/UoM in kVA or kW ("Draw Cap"). Customer may not draw more power than the Draw Cap. If Customer exceeds the Draw Cap, Equinix will notify Customer and Customer must reduce power draw to be equal to or less than the Draw Cap within 72 hours (or as otherwise agreed) or Equinix may, in its sole discretion, either charge Customer for the power overage at a maximum of twice the MRC/kVA rate for Licensed Space and power Services above, or suspend Customer©s power Services to return to Draw Cap compliance.

5. PRICE AND PRICE INCREASE
Customer will pay the Fees for the Licensed Space and Services from the Effective Date.

Notwithstanding anything in this Order to the contrary, all Fees for those Products in the Price Increase Terms may be subject to the Price Increase with effect from the date stated in the Price Increase Terms and every twelve (12) months thereafter, except where a change in Equinix's direct electrical supply costs exceeds the Price Increase value listed below then Equinix may change the Fees for power Services by such increased cost.

Total spend in Attachment A is based on the current Order's (# 1-217364579733) spend subject to the Price Increase Terms. For the avoidance of doubt, projections do not reflect any future Monthly or Non-Recurring Recurring Charges (MRC or NRC) associated with changes made after this Order has been executed. In addition, the SmartHands plan isn't included therein as it is a pre-paid plan and only has Non-Recurring Charge and not Monthly Recurring Charge.

Price Increase Terms
First Price Increase Applicable After 12 months
All Products Price Increase % 5%
Renewal Price Increase Terms
All Products Price Increase % 5%
Equinix reserves its right to delay any Effective Date for the Licensed Space and Services under this Order unless Equinix receives a signed copy of this Order before the Effective Date stated above. i365#-Yk

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Order Reference Updates
IBX Product Family Order Reference # New Order Reference # SV8 Space & Power 1-186074182635 1-217364579733
SV8 Interconnection 1-194115490284,1-186074182635 1-217364579733 SV8 Services 1-217364579733

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CITY OF PALO ALTO Equinix LLC, on behalf of itself and its U.S. Affiliates Signature:

Name:

Title:

Date:

Billing Contact Name:

Accounts Payable
Billing Address:

PO Box 10250
Palo Alto CA 94303-0862
Palo Alto CA United States
94303-0862
Phone Number: 6503292494
Email Address: [email protected]
Equinix Local Entity Address:

One Lagoon Drive, 4th Floor
Redwood City CA
United States
94065
Signature:

Name: Alex Para
Title: Commercial Finance Senior Director
Date: 02-Jun-2022
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Attachment A
Account Name
Account Number
Agreement
Product Description
Cabinet - 2.4KVA- 2 post relay Rack
Cabinet - 2.4KVA- 2 post relay Rack
Cabinet- 2.4KVA- 2 post relay Rack
Cabinet- 2.4KVA- 2 post relay Rack
Cabinet- 2.4KVA- 2 post relay Rack
Total ($/month )
lnnerduct
lnnerduct
lnnerduct
Total ($/month )
Montlycost
Annual cost
* 5% Annual CPI included in cost
MCR = Monthly Recurring Cost
5 - Yr Lease for Cabinets and lnnerducts at Equinix- SV8 City of Palo Alto Initial Term 60 months
110002
00036759.0
Serial# Quantity MRC MRC
FY 19-20 FY20-21
0705-1-73624858 1 1,126 1,182
0708-10767970 1 1,155 1,212
0704-1-73624839 1 1,126 1,182
0707-1-73624877 1 1,126 1,182
0404-21024209 1 1,072 1,125
$5,604 $5,884
14689530 1 1,276 1,340
14689531 1 1,276 1,340
14689529 1 1,276 1,340
$3,829 $4,020
$9,433 $9,904
$113,193 $118,853
MRC MRC MRC Total
FY 21-22 FY 22-23 FY23-24 Cost
1,241 1,303 1,368 6,221
1,273 1,337 1,404 6,381
1,241 1,303 1,368 6,221
1,241 1,303 1,368 6,221
1,181 1,241 1,303 5,921
$6,178 $6,487 $6,812 $30,965
1,407 1,477 1,551 7,052
1,407 1,477 1,551 7,052
1,407 1,477 1,551 7,052
$4,221 $4,432 $4,654 $21,157
$10,400 $10,920 $11,466 $52,122
$124,796 $131,035 $137,587 $625,465

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EQUINIX ORDER
: CITY OF PALO ALTO
: 110002
: 1-186074182635
: 2
Currency
Order Valld Untll
Account Name
Account Number
Order Number
Version#
Agreement# : 00036759 .0 lnltlal Term (Months)
Renewal Period (Months)
Non-renewal notice (Days)
IBX: SV8
Address: 529 Bryant Street, Palo Alto, United States, 94301 Section C: ProductlElernen Chanaes
Pniduc:t Code Praduct ONcripllon Qty UoM
SPC00005 Secure Cabinet With Circuit Based 1 Each Power CAB00001 Cabinet- 2.4 kVA - 2 Post Rack (Relay Rack) 1 Each CAB00001 Cabinet- 2.4 kVA - 2
Post Rack (Relay Rack) 1 Each
CAG00001 Cage- 5 Cabinets • PEC Cap- 11.52 PEC 11.52 PEC CAB00001 Cabinet- 2.4 kVA. 2 Post Rack (Relay Rack) 1 Each CAB00001 Cabinet- 2.4 kVA • 2 Post Rack (Relay Rack) 1 Each CAB00001 Cabinet- 2.3 kVA • 2
Post Rack (Relay Rack) 1 Each
Section Total
IBX: SV8
Address: 529 Bryant Street, Palo Alto, United States. 94301 Section D: - SiMcea Qty UoM Praduct Cade Praduct
CC00001 Cross Connect 1 Each
CC00001 NetwOl1< Cable Connection- Single-Mode 1 Each Fiber - Z-side IBX- SVB CC00001 Cross Connect 1 Each
CC00001 NetwOl1< Cable Connection- Single-Mode 1 Each Fiber· Z-s1de IBX· SVB EXT00006 lnnerduct 1 Each
EXT00002 lnnerduct Element 1 Each
EXT00006 lnnerduct 1 Each
EXT00002 lnnerduct Element 1 Each
EXT00006 lnnerduct 1 Each
EXT00002 lnnerduct Element 1 Each
:USO
: 11-Jun-2019
60 12
90 Action
Update
Update
UpdaJe
.

Update
Update
Update
Serial#
PREPARED BY:

DavidAmooi
[email protected]
14082091000
Total
Serlall Charges
NRC:
1_1514349 $0.00
0705-1-73624658 .
0706-10767970 .
68055-10678681 .
0704-1-73624639 .
0707-1-73624677 .
0404-21024209 .
$0.00
UnltPncma

NRC MRC
1_ 1531345602 -
M14057067 .
1_1531336843 .

M13324101 .
14689530. -
14689530 .
14689531. -
14689531 .
14689529. .
14689529 .

Equinlx Order Number :1-186074182635(V2)
•• EQU I N I X
111111111111m1111111m
PREPARED FOR:

Raveen Maan
raveen [email protected]
6503292494
CUIT9flt Price 11 Amended Price Effectlw Date MRC MRC
$5,898.87 $5,603.93 01.Jul-2019
$1,165.12 $1,125.86 01.Jul-2019
$1,215.51 $1,154.73 01.Jul-2019
$0.00 $0.00 01.Jul-2019
$1,165.12 $1,125.86 01.Jul-2019
$1,165.12 $1,125.86 01.Jul-2019
$1,128.00 $1,071.60 01.JUl-2019
$5,898.87 $5,603.93
Total Charaes Effective Date

NRC MRC
. $0.00 $0.00 01.Jul-2019
. . $0.00 01-Jul-2019
. $0.00 $0.00 01.Jul-2019
. . $0.00 01.Jul-2019
- $0.00 $1,276.29 01.Jul-2019
. . $0.00 01.Jul-2019
- $0.00 $1,276.29 01.Jul-2019
. . $0.00 01.Jul-2019
- $0.00 $1,276.29 01.Jul-2019
. . $0.00 01.Jul-2019
Pa ge of 5

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UUIJU.

EQ UINIX
EQUINIX ORDER ~111111111111111111010
IBX: SVB
Address: 529 Brvant Street, Palo Alto, United States, 94301 Section D: 8ervlc:N Qty UoM Serial# Unit Pricing - - _Tollll Ctwran .. 11 Effllctlve Date Product Code Product Delle:- NRC MRC j NRC MRC
PS00004 Configurable Accessories 1 Each 1_1511117304 . . $0.00 $0.00 01.Jul-2019 CC00001 Palch Panel 1 Each CP:0705:122350 - - $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each CP:0705:112869 - - $0,00 - 01-Jul-2019 CC00001 Palch Panel 1 Each CP:0705:112870 - - $0.00 - 01-Jul-2019 PS00004 Configurable Accessories 1 Each 1_1511117303 . . $0.00 $0.00 01.Jul-2019 CC00001 Patch Panel 1 Each CP:0704:137356 - - $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each CP:0704:122349 - - $0,00 . 01-Jul-2019 PS00004 Configurable Accessories 1 Each 1_1511117305 . . $0.00 $0.00 01.Jul-20 19 CC00001 Patch Panel 1 Each CP:0707:112871 - - $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each CP:0707:122351 - . $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each CP:0707:122350 - - $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each CP:0707:110503 - - $0.00 . 01-Jul-2019 PS00004 Configurable Accessorie s 1 Each 1_ 1511117306 . . $0.00 $0.00 01.Jul-2019 CC00001 Patch Panel 1 Each VP:0708:191979 - - $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each VP:0708:191155 - - $0.00 - 01-Jul-2019 CC00001 Patch Panel 1 Each VP:0708: 191978 - . $0.00 01-Jul-2019 Section Total . $3,828 .87
11 Section Total - NRC MRC - ----·- - - -
Section C: I Product/Element Changes $0.00 $5,603.93
Section D: I Continuing Services $0.00 $3,828.87
Grand Total - - -
Monthly recurring charge: I $9,432.80
Non-recurring charge: I $0.00

NOTES TO CUSTOMER
Equinix Order Numbe r:1-186074182635(V2) Page 2 of 5

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•• EOUINIX
EQUINIX ORDER IIIHIIIIIIIIIIIIIIIWllffl

TERMS AND CONDITIONS

1. INTRODUCTION
This Replacement Order Is governed by and incorporated by reference into the applicable Master Country Agreement or other similar agreement between the Parties ("Agreement" ).

Capita nzed terms used but not defined in th s Replacement Order shall have the meaning ascribed to them in the Agreement or shall refer to the values listed at the top of this Order.

This Replacement Order replaces and supersedes the Order(s) referenced above (including any Online or Phone Orders related to or incorporated by reference into such Order(s)) and will, as applicable, add those new Products detailed In Section A, terminate the Products detailed in Section B and amend the Products detailed in Section C as further detailed above from the Effective Date stated in the relevant Section .

Unless otherwise stated by this Replacement Order, the Products in the Order(s) detailed in Section D remain(s) unchanged.

2. DEFINITIONS
'Effective Date' as used in this ·order shall be:
- For Section A: Product Additions, the date stated above on which the addition to the Licensed Space and Services takes effect or, if no such date Is stated above, then the date the Licensed Space Is provided or the Services are delivered;
- For Section B: Product Deletions, the date stated above on which the termination of the Licensed Space and Services takes effect; - For Section C: Product Changes, the date stated above on which the change to the Licensed Space and Services takes effect; or, if no such date Is stated above, then the date the Licensed Space is provided or the Services are delivered of this Replacement Order. 'Products' as used In this Order may also be referred to as Licensed Space and Services .

3. INITIAL TERM & RENEWAL PERIOD
The Initial Term will commence on the Effective Date and will remain in effect for the Initial Term.

After the Initial Term, the term will automatically renew for the Renewal Period unless either Party terminates the Order by providing written Non-renewal notice prior to the end of the then-current temi to the other Party In which event this Order will terminate at the end of the then-current term.

4. POWER LIMITATIONS
The maximum amount of electrical power that Customer may draw Is stated above as Draw Cap or Qty/UoM in kVA or kW ("Draw Cap"). Customer may not draw more power than the Draw Cap. If Customer exceeds the Draw Cap. Equinlx will notify Customer and Customer must reduce power draw to be equal to or less than the Draw Cap within 72 hours (or as otherwise agreed) or Equinix may, in Its sole discretion, either charge Customer for the power overage at a maximum of twice the MRC/kVA rate for Licensed Space and power Services above, or suspend Custome~s power Services to return to Draw Cap compliance.

5. PRICE AND PRICE INCREASE
Equinix Order Number:1-186074182635(V2) Page 3 of 5

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UIJIJU.

EOUINIX
EQUINIX ORDER 1111rn111111111111111m
Customer will pay the Fees for the Licensed Space and Services from the Effective Date.

Notwithstanding anything in this Order to the contrary . all Fees for those Products in the Price Increase Terms may be subject to the Pnce Increase with effect from the date stated in the Price Increase Terms and every twelve (12) months thereafter . except where a change in Equinix's direct electrical supply costs exceeds the Price Increase value listed below then Equinix may change the Fees for power Services by such increased cost.

Price Increase Terms - - - -
First Price Increase Applicable After I 12 months
All Products Price Increase % I 5%
I AU Products Price Increase % 5%

GLOSSARY
Order~U-
IBX I Product Famuv In Order. Rafei'etlCII # - - - - IDNew,Order Rifllrence # -- - -- - SV8 I Soace & Power I 105706 I 1-186074182635
SV8 I Interconnection I 105706. 139567 I 1-186074182635 Equinlx Order Number:1-186074182635(V2) Page 4 of 5

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•• EOUINIX
EQUINIX ORDER ~1101111111111111 1110
CITY OF PALO ALTO Equinix LLC, on behalf of itself and its U.S. Affiliates Signature: BIiiing Contact Name: Raveen Maan Equlnlx Local Entity Address Signature:

BIiiing Address
One Lagoon Drive, 4th Floor
1kt ·({4 Ii~ PO BOX 10250 Redwood City CA
Name: United States
PALO AL TO CA United States 94303-0862
Title: Phone Number: 6503292494
94065 Name: Matthew M Monaco
Date: Email Address: [email protected]
Title: Senior Director , Asset Management
Date: 04-Apr-2019
Equinlx Order Number :1-186074182635(V2) Page 5 of 5

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City of Palo Alto (ID # 14277)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Approval of Amendment Number 1 to Contract Number C21178372C with C&S Engineers, Inc. for the Airport Apron Reconstruction Project (AP - 16000) in the Amount of $215,023 for a New Total Not -to-Exceed Amount of $1,715,023, and approval of a Budget Amen dment in the Airport Fund in Fiscal Year 2022
From: City Manager
Lead Department: Public Works

Recommendation
Staff recommends that Council:

1. Approve and authorize the City Manager or their designee to execute Amendment No. 1 to Contract No. C 21178372C with C&S Engineers, Inc. (Attachment A), to increase compensation by $215,02 3 to provide construction administra tion and management services related to Phase III of the Airport Apron Reconstruction project (AP-16000), for a new total not-to-exceed amount of $1,715,023; and

2. Amend the Fiscal Year 2022 Budget Appropriation for the Airport Enterprise Fund , by a 2/3 vote, by:
a. Increasing the contract services expenditure appropriation for the Airport Apron Reconstruction project (AP-16000) by $215,023; and
b. Decreasing the ending fund balance by $215,023.

Background
On December 7, 2020 ( CMR 11654), the City Coun cil approved Contract Number C21178372C with C&S Engineers, Inc. (C&S) for planning and construction management services. Staff recommends amending this contract to add additional funds for C&S construction management services to complete the Apron Reconstruction Project (AP-16000).

Discussion
The construction management services provided by C&S have been vital to the success of all three phases of the Airport Apron Reconstruction Project. Phase III of the Airport Apron Reconstruction project was originall y scheduled for completion in September 2021. However, during the project there has been extensive extra work and delays experienced due to the poor condition of existing subgrade underneath the Airport apron. The original plan for subgrade treatment was a cement treated process in which cement is mixed into the clay mud to build a 11 Packet Pg. 175

City of Palo Alto Page 2

stable platform. This has succeeded on much of the apron project, but there have been areas where the original plan did not produce a stable platform to continue construction. C& S, as the engineer of record, developed additional plans to construct a stable subgrade ; however, this has taken additional time as there is no single solution to solve all the subgrade issues.

The additional funds requested in this report will be required to continue through the expected completion of the project in August 2022. This amendment will allow sufficient funding for C&S to complete As -Builts and documents required for the close out of the Federal Aviation Administration (FAA) grant. Airport staff is working with the FAA on a change order to the grant that will include these additional contract expenses for reimbursement. Since these expenses are eligible for up to 100% reimbursement as part of the FAA Airport Improvement Program, staff expects the FAA change order to be approved shortly after Amendment No. 1 is executed.

Resource Impact
Pending the City Council’s approval of the recommendations in this report , the contract services expenditure appropriation for the Airport Apron Reconstruction project (AP-16000) will increase by $215,023 for FY 2022. This will bring the total cost of the project to approximately $42.2 million. The additional expenses included in the recommended contract amendment are eligible to receive 100% funding from the FA A, and staff is working to complete the FAA change order to incorporate them into the existing FAA grant. This contract adjustment will initially be funded from Fund Balance in the Airport Fund, but Staff anticipates the FAA will approve an amendment to th e grant and the revenue will be reco gnized later to reimburse the Fund Balance.

Stakeholder Engagement
Airport stakeholders have been involved in the Apron Reconstruction project since the beginning of design, and airport staff continues to engage with the Palo Alto Airport Association and Airport businesses to minimize construction impacts.

Policy Implications
The recommendation does not represent any changes to existing City policy.

Environmental Review
The Phase III Airport Apron Reconstruction Proj ect has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Specifically, the project is categorically exempt from the provisions of CEQA per Section 15301 (Existing Facilities).

Attachments:
• Attachment11.a: Attachment A: CS Engineers Inc.; Contract C21178372C Amendment No. 1
11 Packet Pg. 176
AMENDMENT NO. 1 TO CONTRACT NO. C21178372C
BETWEEN THE CITY OF PALO ALTO AND C & S ENGINEERS, INC.

This Amendment No. 1 to Contract No. C21178372C (“Contract”) is entered into June 20, 2022, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and C & S ENGINEEERS, INC., a New York corporation, located at 499 Col.

Eileen Collins Boulevard, Syracuse, New York 13212 (“CONSULTANT”).

R E C I T A L S

A. The Contract was entered into between the parties for the provision of On-call engineering services including planning, design engineering, environmental analyses, grant management and construction management.

B. The parties wish to amend the Contract to increase the compensation to cover additional anticipated task order for Phase III of the Airport Apron Reconstruction Capital Improvement Project; to increase the total not-to-exceed amount of the Contract by an amount not to exceed Two Hundred Fifteen Thousand Twenty Three Dollars ($215,023.00) from One Million Five Hundred Thousand ($1,500,000.00) to a new total not-to-exceed amount of One Million Seven Hundred Fifteen Thousand Twenty Three Dollars ($1,715,023.00); as detailed herein.

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No. C21178372C between CONSULTANT and CITY, dated December 7, 2020 of original contract.

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 4. NOT TO EXCEED COMPENSATION is hereby amended to read as follows:

“The compensation to be paid to CONSULTANT for performance of services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed One Million Seven Hundred Fifteen Thousand Twenty -Three Dollars ($1,715,023.00)”

DocuSign Envelope ID: E10CC326-285D-4926-A6F5-EFF1E37C308B

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SECTION 3. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference:

a. EXHIBIT “A” entitled “SCOPE OF SERVICES, AMENDMENT NO. 1”, AMENDED, REPLACES PREVIOUS.

b. EXHIBIT “C” entitled “COMPENSATION, AMENDMENT NO. 1” (AMENDED, REPLACES PREVIOUS).

c. EXHIBIT “C-1” entitled “HOURLY RATE SCHEDULE” (AMENDED, REPLACES

PREVIOUS)

SECTION 4. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 5 . Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written.

DocuSign Envelope ID: E10CC326-285D-4926-A6F5-EFF1E37C308B

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CITY OF PALO ALTO

_________________________
City Manager

APPROVED AS TO FORM:

_________________________
City Attorney or Designee

_________________________
Director of Public Works

C & S ENGINEERS, INC.

By:__________________________________
Name:_______________________________
Title:_________________________________

Attachments:

EXHIBIT “A” entitled “SCOPE OF SERVICES, AMENDMENT NO. 1 (AMENDED, REPLACES PREVIOUS) EXHIBIT “C” entitled “COMPENSATION, AMENDMENT NO. 1” (AMENDED, REPLACES PREVIOUS) EXHIBIT “C-1” entitled “HOURLY RATE SCHEDULE” (AMENDED, REPLACES PREVIOUS)

DocuSign Envelope ID: E10CC326-285D-4926-A6F5-EFF1E37C308B Managing Engineer
Teddy Ramil
Service Group Manager
Lance McIntosh

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EXHIBIT A

SCOPE OF SERVICES
AMENDMENT NO. 1 (AMENDED, REPLACES PREVIOUS)

Consultant will provide on-call services at Palo Alto Airport in connection with categories associated with the airfield improvements identified on the ACIP: Planning and Construction Management.

Consultant will perform all professional services consistent with the industry-accepted roles of Construction Manager for the following projects:

• Reconstruction Access Road
• AWOS III
• Airfield Electrical Improvements
• Runway and Taxiway Reconstruction and Drainage Improvement • Apron Reconstruction Project Phase III

Consultant may provide other Construction Management services as required.

Consultant will provide planning services to assist Airport and City staff with preparation of the necessary technical detail and analyses involved with airport planning. Specific projects include:

• ALP narrative with Aeronautical Survey
• Business Plan

Consultant may provide other planning services as required.

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EXHIBIT “C”
COMPENSATION, AMENDMENT NO. 1

The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1.

REIMBURSABLE EXPENSES

The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses . CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are:

A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses for City of Palo Alto employees.

B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost.

All requests for payment of expenses shall be accompanied by appropriate backup information.

Any expense anticipated to be more than $250 shall be approved in advance by the CITY’s project manager.

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EXHIBIT “C-1”

HOURLY RATE SCHEDULE (AMENDED, REPLACES PREVIOUS)

C&S ENGINEERS, INC.

Apron Reconstruction, Phase III Project
Rate Schedule

ENGINEERING Hourly Rate
Service Group Manager $301.38
Department Manager $252.00
Project Manager $220.00
Managing Engineer $248.00
Chief Engineer $199.00
Senior Project Engineer $181.00
Project Engineer $158.00
Engineer $129.00
Staff Engineer $123.00
Senior Designer $132.00
Designer $99.00
Resident Engineer $16.00
Grant Administrator $111.00
Administrative Assistant $76.00

PLANNING
Director, Terminal $275.00
Director $220.00
Associate Director, Terminal $255.00
Associate Director $205.00
Principal Consultant $185.00
Senior Consultant $130.00
Consultant $110.00

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City of Palo Alto (ID # 14324)
City Council Staff Report

Meeting Date: 6/20/2022 Report Type: Consent Calendar

City of Palo Alto Page 1

Title: Adoption of a Resolution Implementing the Water Use Restrictions in Stage II of Palo Alto’s Amended 2020 Water Shortage Contingency Plan in Compliance With the State Water Resources Control Board’s May 24, 2022 Emergency Water Conservation Regulatio ns, and Restricting Potable Irrigation to No More Than Two Days a Week, with Exceptions for Tree Health, Health and Safety, and Certain Non -Residential Zone Irrigation From: City Manager
Lead Department: Utilities

Recommended Motion
Staff recommends the Council adopt a Resolution (Attachment A):

1) Implementing the water use restriction s in Stage II of Palo Alto’s Amended 2020 Water Shortage Contingency Plan in compliance with the State Water Resource Control Board’s May 24, 2022 Emergency Water Conservation Regulations (Attachment C); 2) For residential customers, restricting potable irrigation of ornamental landscapes and lawns to two days a week, specifically: Monday s and Thursdays for odd numbered and numberless addresses, and Tuesdays and Fridays for even numbered addresses, except to ensure the health of trees and other perennial non-turf plantings; and 3) For non-residential customers, restricting potable irrigation of ornamental landscapes to two days a week, specifically: Mondays and Thursdays for odd numbered and numberless addresses, and Tuesdays and Fridays for even numbered addresses, with the following exceptions:
a. Potable irrigation of ornamental landscapes i s permitted as necessary to ensure the health of trees and other perennial non -turf plantings or to the extent necessary to address an immediate health and safety need, and b. For non -residential customers who irrigate via zone, potable irrigation of ornamental landscapes is permitted on more than two days per week, so long as each irrigation zone within an individual property is irrigated no more than two days per week.

Executive Summary
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The attached resolution implements the water use restrictions in Stag e II of Palo Alto’s Amended 2020 Water Shortage Contingency Plan (WSCP). These actions are in compliance with the State Board’s May 24, 2022 Emergency Water Conservation Regulations.

The additional water use restrictions in Stage II of Palo Alto’s Amended 2020 WSCP are:
1) Restaurants and other food service operations shall serve water to customers only upon request.
2) Operators of hotels and motels shall provide guests with the option of choosing not to have towels and linens laundered daily. The hotel or mote l shall prominently display notice of this option in each guestroom using clear and easily understood language.

Additionally, in response to recent calls to action by the Valley Water District (Valley Water), the attached resolution restricts potable irri gation of ornamental landscape s and lawns to Mondays and Thursdays for odd numbered and numberless addresses , and to Tuesdays and Fridays for even numbered addresses , except as necessary to ensure the health of trees and other perennial non -turf plantings . In addition, in recognition of the fact that some non- residential properties may irrigate their ornamental landscapes via individual zones within the property, making two day -per-week irrigation infeasible within the City’s existing time of day restrictions, potable irrigation of ornamental landscapes is permitted for non-residential properties on more than two days per week , so long as each irrigation zone within a particular property is irrigated no more than two days per week.

Notably, the State Board ’s May 24, 2022 Emergency Water Conservation Regulations prohibit the potable irrigation of non-functional turf at commercial, industrial, and institutional sites statewide, except as necessary to ensure the health of trees and other perennial non -turf plantings, or to the extent necessary to address an immediate health and safety need . Staff’s recommended water use restrictions are intended to be compatible with the State regulations, rather than duplicate them . Therefore , no additional Council action is needed to implement the State ’s ban on potable irrigation of non -functional turf at commercial, industrial, and institutional sites 1. However, the State’s emergency regulations neither address nor define non-residential “ornamental landscapes” , unlike th e City’s municipal code and Valley Water’s emergency declaration. Thus, the City’s proposed restrictions permit potable irrigation of non- residential ornamental landscapes on two days per week, with certain exceptions. Table 2 summarizes the proposed potable irrigation restrictions for all three landscape types.

Background
The City is working to respond to and comply with a variety of new orders , regulations and calls to action from the Governor, the State Water Resources Control Board (SWRCB), Santa C lara Valley Water District, and San Francisco Public Utility Commission (SFPUC).

1 Except to the extent necessary to ensure the health of trees and other perennial non -turf plantings or to the extent necessary to address an immediate health and safety need. 12 Packet Pg. 184

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On April 21, May 10, July 8, and October 19, 2021 , Governor Newsom issued proclamations declaring a drought emergency in all the state’s 58 counties. On July 8, 2021, Governor Newsom issued Executive Order N -10-21 calling on all Californians to voluntarily reduce water use 15% from 2020 levels.

On November 23, 2021, the SFPUC declared a local water shortage emergency by Resolution No. 21 -0177, per the California Water Code , and called for voluntary systemwide 10% water use reduction.

On January 4, 2022, the State Board found that an emergency exists due to severe drought conditions and adopted an emergency regulation prohibiting certain wasteful water uses in order to preserve urban water supplies.

On March 7, 2022, Council adopted Resolution 10022 amending Palo Alto’s 2020 WSCP in compliance with the State Board’s January 4, 2022 emergency water conservation regulations and implementing the water use restrictions in Stage I of Palo Alto’s Amended 2020 WSCP.

On March 28, 2022 Governor Newsom issued Executive Order N -7-22 directing the Water Board, by May 25, 2022, to consider adopting eme rgency regulations requiring urban water suppliers who have submitted Water Shortage Contingency Plans (WSCP) to implement, at a minimum, the shortage response actions associated with water shortage level of up to 20%; and encouraging urban water suppliers to voluntarily activate more stringent local requirements based upon a shortage level of up to 30%. Additionally, Executive Order N -7-22 requires the Water Board to consider adopting emergency regulations that define “non - functional turf” as ornamental turf that is not otherwise used for human recreation purposes such as school fields, sports fields, and parks, and ban irrigation of non -functional turf in the commercial, industrial, and institutional sectors except as it may be required to ensure the health of trees and other perennial non-turf plantings.

On May 24, 2022, the State Board adopted emergency regulations (see Regulation No. 2022 - 0018) requiring urban water suppliers who have submitted WSCPs to implement, at a minimum, the demand reduction actions associated with water shortage level of 10% to 20% by June 10, 2022. The emergency regulations define “non -functional turf” as turf that is solely ornamental and not regularly used for human recreation purposes or for civic or community events, including sports fields .2 The emergency regulations also prohibit irrigation of non - functional turf with potable water in the commercial, industrial, and institutional sectors except as necessary to ensure the health of trees and other perennial non -turf plantings , or to the extent necessary to address an immediate health and safety need. 3 In addition, the City, as an urban water supplier, is permit ted to approve a request for continued irrigation of non - functional turf where the user certifies that the turf is a low water use plant with a plant factor

2 California Code of Regulations, Title 23, Section 996(a)(5). 3 California Code of Regulations, Title 23, Section 996(e). 12 Packet Pg. 185

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of 0.3 or less, and demonstrates the actual use is less than 40% of reference evapotranspiration.

The Santa Clara Valley Water District (Valley Water) is the groundwater management agency in Santa Clara County. Although the City of Palo Alto obtains 100% of its potable water supply from the SFPUC and does not use groundwater, Palo Alto partners with Valley Water to offer a range of water conservation programs to the City’s residential and commercial customers. On June 9, 2021, Valley Water’s Board declared a water shortage emergency condition pursuant to California Water Code Section 350, called for countywide water use reduction of 15% compared to 2019, and urged Santa Clara County to proclaim a local emergency (Resolution No. 21 -68).

The County ratified its proclamation of a drought emergency on June 22, 2021. On April 12, 2022, Valley Water’s Board amended Resolution No. 21-68 (Attachment D) with additional calls for water conservation, including calling for the County, water retailers and cities to restrict ornamental landscape and lawn irrigation with potable water within their service or jurisdictional areas to no more than two days per week.

Discussion
The various new water use prohibitions and calls to action from the State Water Resources Control Board (SWRCB or State Board) and Valley Water are summarized below in Table 1. The table also shows the relevant City of Palo Alto’s existing water use restrictions (both permanent water use restrictions from Palo Alto Municipal Code ( PAMC) Section 12.32.010 , Stage I restrictions implemented by Council on March 7, 2022 and proposed water use restrictions in the attached draft resolution).
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Table 1: Comparison of Water Waste Prohibitions in the State Water Board’s May 24, 2022 Emergency Regulation, and Valley Water’s April 2022 Amended Resolution No. 21-68, with the City of Palo Alto’s Existing and Proposed Water Use Restrictions Prohibitions in May 2022 State Board Emergency
Regulations and “Calls to Action” in April 2022 Valley
Water Resolution No. 21-68
City of Palo Alto’s Existing and Proposed Water Use
Restrictions
Valley Water’s Amended Resolution No. 21-68, Section 6, Bullet 3 calls for the public to “restrict the application of potable water to outdoor landscapes in a manner that
causes more than incidental runoff such that water does not flow onto adjacent property, non-irrigated areas,
private and public walkways, roadways, parking lots, or structures;”
Permanent water use restriction PAMC Section

12.32.010 (a): “Potable water shall not be allowed to
flood or run off into gutters: driveways, sidewalks,
streets or other unlandscaped areas.”

Valley Water’s Amended Resolution No. 21-68, Section 6, Bullet 4 calls for the public to “restrict the application of water to irrigate turf and ornamental landscapes during and within 48 hours after measurable rainfall.”
Water Use Restriction in Stage I of Palo Alto’s
Amended Water Shortage Contingency Plan, effective
March 7, 2022 via Resolution 10022 “Irrigation with
potable water during and within 48 hours after a
measurable rainfall of at least one fourth of one inch
of rain, as determined by the Director of Utilities, or his or her designee, and posted on the Palo Alto
website, is prohibited.”
Valley Water’s Amended Resolution No. 21-68, Section 9, Bullet 6 supports local adoption and enforcement of water waste restrictions that may include prohibitions against the “[u]se of potable water to irrigate turf, lawns, gardens, or ornamental landscaping by means other than drip
irrigation, or hand watering without quick acting positive action shut-off nozzles, on a specific schedule, for
example: 1) before 9:00 a.m. and after 5:00 p.m.; or 2) selected days of the week;” and

Valley Water’s Amended Resolution No. 21-68, Section 11 Bullet 1 calls for the County, water retailers and cities to “prohibit irrigation of lawns and ornamental landscaping during midday hours”.

Permanent water use restriction PAMC Section

12.32.010 (e): “The irrigation of turf or ornamental
landscapes, which serve purely decorative purposes,
and are distinguished from trees, edible gardens or
landscapes that provide more than a purely aesthetic
function, with potable water shall not be allowed
between 10:00 a.m. and 6:00 p.m., except via hand
watering with a bucket or a hose with an operating
shut-off valve.”
State Board Emergency Regulation Section 996(c): “Each
urban water supplier that has submitted a water shortage contingency plan to the Department of Water Resources
shall implement by June 10, 2022, at a minimum, all
demand reduction actions identified in the supplier’s
water shortage contingency plan adopted under Water
Code 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2).”
Staff recommends Council activate each of the Stage II
water use restrictions included in Appendix H,
“Water Use Restrictions” of the City’s amended 2020
Water Shortage Contingency Plan:
1) Restaurants and other food service operations
shall serve water to customers only upon request.
2) Operators of hotels and motels shall provide
guests with the option of choosing not to have
towels and linens laundered daily. The hotel or
motel shall prominently display notice of this
option in each guestroom using clear and easily
understood language.
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Prohibitions in May 2022 State Board Emergency
Regulations and “Calls to Action” in April 2022 Valley
Water Resolution No. 21-68
City of Palo Alto’s Existing and Proposed Water Use
Restrictions
Valley Water’s Amended Resolution No. 21-68, Section 6, Bullet 1 calls for the public to “restrict outdoor watering of ornamental landscapes and lawns with potable water to
no more than two days a week;” and

Valley Water’s Amended Resolution No. 21-68, Section 6, Bullet 2 calls for the public to “prioritize irrigation of established trees using low-flow irrigation over that of ornamental landscapes and lawns to reduce tree loss”; and

Valley Water’s Amended Resolution No. 21-68, Section 11 Bullet 2 calls for the County, water retailers and cities to “restrict ornamental landscape and lawn irrigation within their service or jurisdictional areas to Mondays and
Thursdays for odd numbered and numberless addresses
and to Tuesdays and Fridays for even numbered
addresses, for those that have not already adopted specific days when irrigation is permitted within their jurisdictional area.”
Staff pr oposes to add this restriction in the attached draft Resolution, Section 3 and Section 4.

Specifically, for residential customers, potable
irrigation of ornamental landscapes and lawns would
be restricted to two days a week, specifically:

Mondays and Thu rsdays for odd numbered and
numberless addresses, and Tuesdays and Fridays for
even numbered addresses, except to ensure the
health of trees and other perennial non-turf plantings.

For non -residential customers, potable irrigation of
ornamental landscape s would be restricted to two
days a week, specifically: Mondays and Thursdays for
odd numbered and numberless addresses, and
Tuesdays and Fridays for even numbered addresses,
with the following exceptions
(i) potable irrigation of ornamental landscapes is
permitted as necessary to ensure the health of
trees and other perennial non-turf plantings; and
(ii) for non -residential customers who irrigate via
zone, potable irrigation of ornamental landscapes
is permitted on more than two days per week, so
long as each irr igation zone within an individual
property is irrigated no more than two days per
week.

State Board Emergency Regulation Section 996(e):
(1): “To prevent the unreasonable use of water and to
promote water conservation, the use of potable water is prohibited for the irrigation of non-functional turf at commercial, industrial, and institutional sites.

(2) Notwithstanding subdivision (e)(1), the use of water is not prohibited by this section to the extent necessary to ensure the health of trees and other perennial non-turf plantings or to the extent necessary to address an
immediate health and safety need.”

Section 996(a)(5) defines “non-functional turf” as “turf that is solely ornamental and not regularly used for human recreational purposes or for civic or community events.

Non-functional turf does not include sports fields and turf that is regularly used for human recreational purposes or These are State requirements and are therefore not
included in Palo Alto’s PAMC or additional water use
restrictions.
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SFPUC Supplier Water Use Reductions
SFPUC supplies 100% of Palo Alto’s potable water supply and on November 23, 2021, SFPUC declared a water shortage emergency calling for voluntary systemwide water use reductions of 10%. Palo Alto’s assigned voluntary water purchase cutback is 7.96% from FY 2019-2020 levels.

For January – April 2022 cumulatively, Palo Alto’s water usage was 17% above the cumulative SFPUC voluntary water budgets.

In response to the SWRCB’s May 24 th emergency regulations, SFPUC also acted on May 24, 2022 via adoption of Resolution No. 22 -0098 to comply with the SWRCB’s requirements, including adopting a systemwide water use reduction of 11% compared to baseline water use during Fiscal Year 2019 -2020, which is associated with Shortage Level 2 of the SFPUC Water Shortage Contingency Plan . Staff expects this to increase Palo Alto’s voluntary water purchase cutback level from 7.96% to approximately 10% for 12 months , beginning in Ju ly (SFPUC has indicated that it will provide the allocations by early June) . Although staff expects the new target to be consistent with Stage I of the City’s WSCP, the State Water Resources Control Board ( SWRCB) regulation requires the City to implement the Stage II restrictions. SFPUC’s cutbacks are currently voluntary, however they could become mandatory in the fall if insufficient water conservation is observed system -wide. Under mandatory cutbacks, Palo Alto would face financial penalties if water usage continues to exceed its assigned water budget.

City of Palo Alto’s Existing Water Use Restrictions
Regardless of which stage of the City’s WSCP is in effect, Palo Alto permanently maintains eight water use restrictions in PAMC Section 12.32.010 that prohibit the following uses of water:

(a) Potable water shall not be allowed to flood or run off into gutters:
driveways, sidewalks, streets or other unlandscaped areas. (b) By means of a hose to wash cars, boats, trailers, buses or other vehicles or to wash sidewalks, building structures, other hard -surfaced areas or parts thereof without an operating automatic shut -off valve. Use of a hose for such purposes should be avoided whenever possible. (c) Potable water for consolidation of backfill and other nondomestic uses in construction shall not be used if other water sources such as reclaimed water are available, as determined by the director of utilities or his or her designee. A pplicants for hydrant permits from the city of Palo Alto shall be deemed to have consented to restrictions on water use which may be imposed by the director of utilities or his or her designee. (d) Any broken or defective plumbing, sprinklers, waterin g or irrigation systems which permit the escape or leakage of water shall be repaired or replaced as soon as possible, but no later than the date established by the 12 Packet Pg. 189

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director of utilities, or his or her designee, as reasonable after observation of the broken or defective system.
(e) The irrigation of turf or ornamental landscapes, which serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provide more than a purely aesthetic function, with potable water s hall not be allowed between 10:00 a.m. and 6:00 p.m., except via hand watering with a bucket or a hose with an operating shut - off valve.
(f) The use of potable water in a fountain or other decorative water feature is prohibited, except where the water is part of a recirculating system.
(g) The use of potable water for street sweepers and washers is prohibited if non-potable water is available, as determined by the Director of Utilities, or his or her designee.
(h) Commercial car washes must u se recycled water systems, if recycled water is available, as determined by the Director of Utilities, or his or her designee, and economically feasible.

Additionally, Palo Alto’s WSCP is designed to achieve various levels of water use reduction. This 2020 WSCP was approved by Council on June 7, 2021 (Resolution 9965) and amended on March 7, 2022 (Resolution 10022). The Amended 2020 WSCP includes six stages of water shortage and includes a suite of water use restrictions available for Council’s consideration in droughts.

On March 7, 2022, Council implemented the water use restrictions in Stage I – “Minimum Water Supply Shortage” of the Amended 2020 WSCP. Stage I applies when target water savings are in the range of up to 10%. This stage includes ongoing informational outreach and audit programs on water saving information. The Stage I water use restrictions currently in effect are:

1. Irrigation with potable water during and within 48 hours after a measurable rainfall of at least one fourt h of one inch of rain, as determined by the Director of Utilities, or his or her designee, and posted on the Palo Alto website, is prohibited.

2. The application of potable water to driveways, sidewalks, buildings, structures, patios, parking lots, or other hard surfaced areas is prohibited, except where necessary to address an immediate health and safety need or to comply with a term or condition in a permit issued by a state or federal agency.

3. Irrigation of ornamental turf on public street medians with pot able water is prohibited.

State Board’s May 24, 2022 Emergency Regulation
The State Board’s May 24, 2022 Emergency Regulation requires urban water suppliers, including Palo Alto, to implement Stage II – “Moderate Water Supply Shortage” for shortages of 10% to 20% by June 10, 2022. The additional water use restrictions in Stage II of Palo Alto’s Amended 2020 WSCP are:
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1) Restaurants and other food service operations shall serve water to customers only upon request.
2) Operators of hotels and motels shall provide guests with the option of choosing not to have towels and linens laundered daily. The hotel or motel shall prominently display notice of this option in each guestroom using clear and easily understood language.

The State Board’s May 24, 2022 Emergency Reg ulation prohibits the use of potable water for the irrigation of “non -functional turf” at commercial, industrial, and institutional sites other than to the extent necessary to ensure the health of trees and other perennial non -turf plantings, or to the ext ent necessary to address an immediate health and safety need. 4 The definition of non -functional turf provided by the State Board is “turf that is solely ornamental and not regularly used for human recreational purposes or for civic or community events. Non - functional turf does not include sports fields and turf that is regularly used for human recreational purposes or for civic or community events.” 5 Although the State Board’s May 24, 2022 Emergency Regulation is silent on irrigation requirements for commer cial, industrial and institutional sites with ornamental landscapes, Section 12.32.010 (e) of the PAMC defines ornamental landscapes as those “which serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provid e more than a purely aesthetic function 6.” Table 2 outlines the requirements for each landscape type.

Since the State Board’s restrictions regarding non-functional turf are now State law, they are not contained in the City’s municipal code or WSCP. Palo Alto staff will communicate this prohibition to commercial, industrial and institutional customers through website, newsletters, bill inserts, email, and social media updates. Additionally, Palo Alto staff will share this information with the business comm unity through the Chamber of Commerce and Downtown Association. Palo Alto will also comply with this prohibition for irrigation of non-functional turf at City facilities.

Valley Water’s County-Wide Call Restricting Outdoor Watering of Non-Tree Ornamental Landscapes and Lawns with Potable Water to Two Days a Week

Valley Water’s April 12, 2022 amended Resolution No. 21 -68 calls for actions as shown in Table

1. Palo Alto has already implemented several of the water use restrictions called for by Valley Water in its April 12, 2022 resolution, including: 1) a prohibition on flooding or runoff of potable water into gutters, driveways, sidewalks, streets or other unlandscaped areas 7; 2) prohibition on irrigation of turf or ornamental landscapes, which serve purel y decorative purposes, and are

4 California Code of Regulations, Title 23, Section 996(e). 5 California Code of Regulations, Title 23, Section 996(a)(5). 6 Green Stormwater Infrastructure, which is infrastructure built into the urban environment that utilizes plants and soil to slow, collect, clean, and infiltrate stormwater runoff through natural processes, is not ornamental landscape. See City of Palo Alto’s Green Stormwater Infrastructure Plan, accepted by Council on May 13, 2019 (Staff Report ID #9883).
7 See Valley Water Amended Resolution No. 21-68 Section 6, 3rd bulleted item, and Palo Alto Municipal Code Section 12.32.010(a).
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distinguished from trees, edible gardens, or landscapes that provide more than a purely aesthetic function, with potable water between 10:00am and 6:00pm, except via hand watering with a bucket or hose with an operating shut -off valve8; and 3) a prohibition on irrigation with potable water during and within 48 hours after a measurable rainfall.9

Although Palo Alto does not utilize groundwater for its water supplies and instead relies on the SFPUC’s Regional Water System for potable water supply, Palo Alto is located in Santa Clara County and supports consistent county -wide messaging regarding water conservation and drought. Palo Alto also encourages water conservation in line with SFPUC’s request. So far in 2022 California experienced the driest conditions in recorded history and this likely contributed to increased water usage for some customers. Further restrictions on potable irrigation outlined above will allow Palo Alto to align with county -wide efforts and messaging as well as assist in meeting the voluntary water budgets of Palo Alto’s water supplier.

Healthy Trees
It is important to maintain the health of the urban canopy in Palo Alto because trees have numerous social and environmental benefits. For this reason, potable irrigation of ornamental landscapes or lawns where irrigation benefits the health of trees and other perennial non -turf plantings is specifically excluded from the proposed two-day per week potable irrigation restriction in Palo Alto. Trees and other perennial non-turf plantings are also excluded from the State’s ban on irrigation of non -functional turf at commercial, industrial and institutional sites .

In addition, Valley Water’s amended Resolution 21 -68 calls for the public to prioritize irrigation of established trees using low -flow irrigation over that of ornamental landscapes and lawns to reduce tree loss . The restrictions included in the attached resolution and summarized below have sufficient protections for tree health as well as the health of perennial non-turf plantings sufficient to avoid detrimental impact on tree health in Palo Alto.

Staff plans to include information about trees and tree care, as well as encouraging responsible tree watering and maintenance in outreach materials and mess ages about the potable irrigation restriction to Palo Alto residents and businesses.

Summary of Proposed Potable Irrigation Restrictions
In summary, the proposed potable irrigation restrictions in Palo Alto are as follows: residential customers should restrict ornamental landscape and lawn irrigation to Mondays and Thursdays for odd numbered and numberless addresses , and to Tuesdays and Fridays for even numbered addresses, except as it may be required to ensure the health of trees and other perennial non - turf plantings. For non -residential customers, the Table 2 outlines the allowed irrigation schedules for each type of outdoor area:

8 See Valley Water Amended Resolution No. 21-68 Section 9, 6th bulleted item, and Palo Alto Municipal Code Section 12.32.010(e).
9 See Valley Water Amended Resolution No. 21-68 Section 6, 4th bulleted item, and Palo Alto’s Amended WSCP Stage 1, 1st water use restriction, made effective on March 7, 2022 by Resolution 10022. 12 Packet Pg. 192

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Table 2: Proposed Potable Irrigation Schedules for Non-Residential Landscape Types Non-Residential Landscape Type Trees or Perennial Non-Turf Plants Included?
Irrigation Schedule
Functional turf (eg: playing
fields and golf courses)
Trees/Perennial Non-Turf Irrigate as necessary for health and safety10 No Trees/No Perennial Non-
Turf
Ornamental landscape11 Trees/Perennial Non-Turf 2 days per week (Mo/Th for odd and numberless, Tu/F for even, 2 days per
week by irrigation zone if applicable);
additional irrigation allowed for
tree/perennial non-turf health
No Trees/No Perennial Non-
Turf
2 days per week (Mo/Th for odd and
numberless, Tu/F for even, 2 days per
week by irrigation zone if applicable)
Non-functional Turf12 Trees/ Perennial Non-Turf Irrigation allowed for tree/perennial non- turf health, or to address an immediate
health and safety need
No Trees/No Perennial Non-
Turf
Irrigation prohibited, except to address
immediate health and safety need

Enforcement
Palo Alto will continue to focus on education and outreach and providing resources to eliminate water waste and achieve efficient water use. Palo Alto’s enforce ment of the restrictions and requirements outlined in Stage II of the amended 2020 WSCP as well as the restriction on outdoor watering included in the attached resolution shall follow the education -based process outlined in Resolution 9460 ( Attachment B). The State Board’s emergency regulations provide that violations of the State’s po table irrigation ban for non -functional turf at commercial, industrial and institutional sites are infractions, punishable by fines of up to $500 per day 13.

However, the State Board has also directed its staff and oth er entities considering enforcement of the State’s regulation to consider warnings and non -monetary penalties. 14 Local agencies retain discretion on enforcement of the State’s regulations and are encouraged to “develop their own progressive enforcement practices to encourage conservation”.15

10 Palo Alto permanently restricts irrigation of turf or ornamental landscapes, which serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provide more than a purely aesthetic function, with potable water between 10:00 a.m. and 6:00 p.m., except via hand watering with a bucket or a hose with an operating shut-off valve.
11 Ornamental landscapes serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provide more than a purely aesthetic function (PAMC 12.32.010(e). 12 The ban on potable irrigation of non-functional turf at commercial, industrial and institutional sites, except to protect trees and perennial non-turf plants, or to address an immediate health and safety need, is a State regulation, see California Code of Regulations, Title 23, Section 996(e).

14 State Water Resources Control Board Regulation No. 2022-0018, recitals 16 and 17. 15 Regulation No. 2022-0018, recital 17.
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Although efforts are currently focused on educating customers, a variety of enforcement options remain available for violations of any of the City’s water use restrictions in the City’s Municipal Code and Utilities Rule s and Regulations including the installation of flow restrictors and termination of service. The following process when addressing violations of the City’s water use restrictions will continue prior to the more drastic options listed above:

• 1st Violation: Doorhanger/Email/Phone call to customer • 2nd Violation: Doorhanger/Email/Phone call to customer • 3rd Violation: Certified letter from the Utility Director notifying customer of violation and potential future fines
• 4th Violation: Fines

The steps outlined above recognize that most violations occur because customers are unaware of the prohibitions. The notification process accounts for normal occurrences (i.e., vacation) and provides reasonable notice and an opportunity for customers to mitigate the problem . The ultimate goal will remain reduced water waste.

Water waste is prohibited in Palo Alto and may be reported via email ([email protected]), by leaving a voicemail (650) 496-6968 or via Palo Alto 311.

Timeline
The State Board’s May 24, 2022 Emergency Regulations are expected to become effective on or about June 10, 2022 when filed with the Secretary of State by th e Office of Administrative Law.

The regulation will remain in effect for one year from the effective date, unless the State Board determines it is no longer necessary, modifies it, or renews the regulation.

Following Council approval, staff will coordina te to ensure that all involved staff (e.g., Utilities, Public Works, Development Services, Community Services, and Fire) are informed of the additional water use restrictions. The term of the City’s Resolution will remain in effect while the State Board’s Emergency Regulation is effective, which is expected to be for one year from the effective date, and/or while the SFPUC’s declared water shortage emergency is in effect, or as directed by Council. When the SFPUC lifts the water shortage emergency or a high er stage of conservation is needed from the City’s 2020 WSCP, or if the State Board determines that the May 24, 2022 Emergency Regulation is no longer necessary, modifies it, or renews the regulation, staff may return to the City Council to implement a hig her stage of the City’s Amended 2020 WSCP or make further modifications, as necessary.

Resource Impact
Staff is in the process of hiring an hourly Water Waste Coordinator. The Water Waste Coordinator will log incidents, coordinate field crews to respond t o reports, track number of incidents per site and help with issuance of certified letters and enforcement. Funding for this position will be covered by the water fund at an estimated cost of $35,000.

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City of Palo Alto Page 13

Environmental Review
Council’s adoption of the proposed resolution implementing water use restrictions in Stage II of the Amended 2020 WSCP and restricting potable irrigation of ornamental landscapes and lawns to Mondays and Thursdays for odd numbered and numberless addresses , and to Tuesdays and Fridays for e ven numbered addresses , with the exceptions noted above does not constitute a project under the California Environmental Quality Act and California Water Code Section 10652, and no environmental assessment is required.

Attachments:
• Attachment12.a: Attachment A: Resolution of the Council of the City of Palo Alto Implementing Water Use Restrictions in Stage II of the City’s 2020 Water Shortage Contingency Plan
• Attachment12.b: Attachment B: Resolution 9460
• Attachment12.c: Attachment C: State Board May 24 2022 Emergency Regulation • Attachment12.d: Attachment D: Valley Water Amended Resolution 21-68 12 Packet Pg. 195
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Resolution No. _________
Resolution of the Council of the City of Palo Alto Implementing Water Use Restrictions in Stage II of the City’s 2020 Water Shortage Contingency Plan in Compliance with the State Water Resources Control Board’s May 24, 2022 Emergency Water
Conservation Regulations, and Restricting Potable Irrigation to Two Days a Week, With Exceptions for Tree Health, Health and Safety and Certain Non-Residential Zone Irrigation

R E C I T A L S

A. Governor Newsom has issued four proclamations dated April 21, May 10, July 8, and October 19, 2021 and Executive Order N-10-21 on July 8, 2021 declaring a drought emergency in all of the state’s 58 counties and calling on all Californians to voluntarily reduce water use 15% from 2020 levels.

B. On November 23, 2021, San Francisco Public Utilities Commission (SFPUC) declared a local water shortage emergency, called for voluntary systemwide 10% water use reduction, and authorized the General Manager to implement actions under the SFPUC’s 2020 Water Shortage Contingency Plan.

C. The City receives 100% of its potable supplies from the San Francisco Public Utilities Commission (SFPUC). Palo Alto’s share of the amount of water allocated to the Wholesale Customers collectively is 7.89%, and Palo Alto’s water purchase cutback from FY 2019-2020 levels is 7.96% for Calendar Year 2022.

D. On June 9, 2021, the Santa Clara Valley Water District (Valley Water) Board declared a water shortage emergency, called for countywide water use reduction of 15% compared to 2019, and urged Santa Clara County to proclaim a local emergency (Resolution No. 21-68). The County ratified its proclamation of a drought emergency on June 22, 2021.

E. On March 28, 2022 Governor Newsom issued Executive Order N-7-22 directing the State Water Resources Control Board (State Board) to consider adopting emergency regulations by May 25, 2022 that require each urban water supplier that has submitted a water shortage contingency plan to the Department of Water Resources to implement, at a minimum, the shortage response actions for a shortage level of up to 20%.

F. On April 12, 2022, Valley Water’s Board amended Resolution No. 21-68 with additional calls for water conservation, including calling for the County, water retailers and cities to: i) prohibit irrigation of lawns and ornamental landscaping during midday hours; and ii) restrict ornamental landscape and lawn irrigation within their service or jurisdictional areas to Mondays and Thursdays for odd numbered and numberless addresses and to Tuesdays and Fridays for even numbered addresses, for those that have not already adopted specific days when irrigation is permitted within their jurisdictional area.

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G. Additionally, Valley Water’s amended Resolution No. 21-68 calls for the public to: i) restrict outdoor watering of ornamental landscapes and lawns with potable water to no more than two days a week; ii) prioritize irrigation of established trees using low-flow irrigation over that of ornamental landscapes and lawns to reduce tree loss; iii) restrict the application of potable water to outdoor landscapes in a manner that causes more than incidental runoff such that water does not flow onto adjacent property, non-irrigated areas, private and public walkways, roadways, parking lots, or structures; and iv) restrict the application of water to irrigate turf and ornamental landscapes during and within 48 hours after measurable rainfall.

H. T he City of Palo Alto has already taken actions, outlined below, that meet or exceed Valley Water’s calls for water conservation except for Valley Water’s call to restrict ornamental landscape and lawn irrigation to two days per week, which are included in Palo Alto’s permanent water use regulations (see Municipal Code Section 12.32.010);

I. On March 7, 2022, the City Council implemented the following additional water use restrictions in Stage I of the Amended 2020 Water Shortage Contingency Plan (see Staff
Report 13843 and Resolution 10022):
(a) Irrigation with potable water during and within 48 hours after a measurable rainfall of at least one fourth of one inch of rain, as determined by the Director of Utilities, or his or her designee, and posted on the Palo Alto website, is prohibited. (b) The application of potable water to driveways, sidewalks, buildings, structures, patios, parking lots, or o ther hard surfaced areas is prohibited, except where necessary to address an immediate health and safety need or to comply with a term or condition in a permit issued by a state or federal agency.
(c) Irrigation of ornamental turf on public street medians wit h potable water is prohibited.

J. On May 24, 2022, the State Water Resources Control Board (State Board) adopted an Emergency Water Conservation Regulation that requires each urban water supplier that has submitted a water shortage contingency plan to the De partment of Water Resources to implement, at a minimum, all demand reduction actions identified in the supplier’s water shortage contingency plan adopted for a shortage level of 10 to 20%.

K. The State Board’s May 24, 2022 Emergency Water Conservation Regulations also prohibit the potable irrigation of non -functional turf at commercial, industrial, and institutional sites statewide, except as necessary to ensure the health of trees and other perennial non- turf plantings, or to the extent necessary to address an immediate health and safety need.

L. In alignment with State requirements, on May 24, 2022 SFPUC adopted a systemwide voluntary water use reduction of 11% compared to baseline water use during Fiscal Year 2019-2020, effective July 1, 2022 (Resolution No. 22-0098). SFPUC will provide Palo Alto’s revised water purchase cutback during June 2022.

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M. The City has responded to the Governor’s voluntary water consumption reduction request and achieved an approximate 2 % reduction in water use from July 1 , 2021 – April 30, 2022 relative to July 1, 2019 – April 30, 2020.

N. January - March 2022 were the driest ever recorded in California and for January through April 2022, Palo Alto’s water usage exceeded its monthly water budgets provided by SFPUC by 17% cumulatively.

O. While a variety of civil and criminal enforcement procedures are available to the City to pr event the waste and unreasonable use of water, the City wishes to continue the education-based enforcement procedure established by Resolution 9460 for violations of the water use restrictions referred to in Section 2 and Section 3 below, by directing staff to first attempt to achieve compliance via educational outreach, followed by the issuance of fines of $100 per violation per day for willful or repeated violations.

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

SECTION 1. Findings:

A. Article 10, Section 2 of the California Constitution declares that waters of the State are to be put to beneficial use, that waste, unreasonable use, or unreasonable method of use of water be prevented, and that water be conserved for the public welfare.

B. Conservation of current water supplies and minimization of the effects of water supply shortages that are the result of drought are essential to the public health, safety and welfare.

C. Under Water Code section 10632(a)(10) the Council has the authority to evaluate the functionality of the WCSP in order to ensure appropriate water shortage mitigation strategies are implemented as needed.

D. The water use restrictions outlined in this resolution are intended to be compatible with, rather than duplicate, the State Water Resources Control Board’s May 24, 2022 ban on potable irrigation of non-functional turf at commercial, industrial, and institutional sites, and no additional Council action is needed to implement the State Board’s regulation.

SECTION 2. Council hereby adopts each of the Stage II water use restrictions included in Appendix H, “Water Use Restrictions” of the City’s amended 2020 Water Shortage Contingency Plan.

SECTION 3. For the City’s residential water customers, potable irrigation of ornamental landscapes and lawns is restricted to two days a week, specifically: Mondays and Thursdays for odd numbered and numberless addresses, and Tuesdays and Fridays for even numbered addresses, except to ensure the health of trees and other perennial non-turf plantings.

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SECTION 4. For the City’s non- residential water customers, potable irrigation of ornamental landscapes is restricted to two days a week, specifically: Mondays and Thursdays for odd numbered and numberless addresses, and Tuesdays and Fridays for even numbered addresses, with the following exceptions:
(i) potable irrigation of ornamental landscapes is permitted as necessary to ensure the health of trees and other perennial non-turf plantings, or to the extent necessary
to address an immediate health and safety need;
(ii) for non -residential customers who irrigate via zone, potable irrigation of ornamental landscapes is permitted on more than two days per week, so long as each irrigation zone within an individual property is irrigated no more than two days per week.

SECTION 5. The water use restrictions in Stage II of the amended 2020 Water Shortage Contingency Plan and the two day per week potable irrigation restrictions and exceptions noted in Sections 3 and 4 will remain in effect while the State Board’s Emergency Regulation is effective, which is expected to be for one year, and while the SFPUC’s declared water shortage emergency is in effect, or as directed by Council.

SECTION 6. Enforcement of the restrictions and requirements outlined in Stage II of the amended 2020 Water Shortage Contingency Plan and the two day per week potable irrigation restrictions and exceptions noted in Sections 3 and 4 shall follow the education-based process outlined in Resolution 9460.
//

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SECTION 7. Council’s adoption of this resolution implementing water use restrictions in Stage II of the 2020 Water Shortage Contingency Plan in compliance with the State Board’s May 24, 2022 emergency regulation and the two day per week potable irrigation restrictions and exceptions noted in Sections 3 and 4 does not constitute a project under the California Environmental Quality Act and California Water Code Section 10652, and no environmental assessment is required.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

___________________________ ___________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

___________________________ ___________________________ Assistant City Attorney City Manager

___________________________
Director of Utilities

___________________________
Director of Administrative Services

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Attachment B
Resolution No. 9460
Resolution of the Council of the City of Palo Alto Establishing the Enforcement Process For Violations of the Three Outdoor Water Use Restrictions Adopted by Council on August 4, 2014 (Resolution 9449)

RECITALS
A. On January 17, 2014, Governor Edmund G. Brown Jr. issued Proclamation No. 1-17- 2014 declaring a State of Emergency to exist in California due to severe drought conditions and calling on Californians to reduce their water usage by 20 percent.

B. On April 25, 2014, the Governor issued an Executive Order to strengthen the state's ability to manage water and directed the State Water Resources Control Board (SWRCB) under its authority in California Water Code Section 1058.5 to adopt emergency regulations as it deems necessary to address water shortage conditions.

C. On July 15, 2014, the State Water Resources Control Board adopted California Code of Regulations, Title 23, Sections 863, 864, and 865, emergency regulations finding a drought emergency in California and imposing water conservation measures on individuals and water suppliers.

D. On August 4, the City Council adopted Resolution 9449, implementing outdoor water use restrictions in compliance with the SWRCB emergency directive.

E. The City has implemented an education-based compliance plan and is working with customers to fully comply with the SWRCB water use restrictions.

F. Chapter 12 of City's Municipal Code, City Utilities Rule and Regulation 21, and the Council-approved Urban Water Management Plan include a variety of tools to encourage responsible management of the City's water resources.

G. Violations of the City's water use restrictions codified in Chapter 12.32 of the Palo Alto Municipal Code, are enforceable as misdemeanors, infractions, administrative penalties, or via the written warning and flow restrictor process outlined in Municipal Code Section 12.32.020(a) through (f).

H. Violations of the City's Utilities Rules and Regulations prohibiting water waste, codified in Rule and Regulation 21, are also enforceable via administrative citations of $500 per day.

I. Violations of the State's emergency water use regulations are enforceable by fines of up to $500 per day, under California Code of Regulations, Title 23, Section 864(b).

J.- The City wishes to establish an enforcement procedure for violations of the three water use restrictions adopted by Resolution 9449 (Exhibit A), by directing staff to first attempt to achieve compliance via educational outreach, followed by the issuance of fines of $100 per violation per day for willful or repeated violations.

The Council of the City of Palo Alto RESOLVES as follows:
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SECTION 1. Findings:

B. Governor Brown issued emergency water shortage declarations on January 17 and April 25, 2014, and conservation of current water supplies and minimization of the effects of water supply shortages that are the result of drought are essential to the public health, safety and welfare.

C. City regulation of the time and manner of certain water use, design of rates, method of application of water for certain uses, and establishment of enforcement procedures for violations of water use restrictions are an effective and immediately available means of conserving water, and is authorized by Palo Alto Municipal Code Section 12.20.010.

SECTION 2. Violations of the following Council-adopted outdoor water use restrictions (Resolution 9449) are punishable by fines of $100 per violation:
a. No outdoor irrigation of ornamental landscapes or turf with potable water is permitted between the hours of 10am and 6pm, except for drip irrigation, soaker hoses and hand watering;
b. The application of potable water to driveways and sidewalks is prohibited, except where necessary to address an immediate health and safety need or to comply with a term and condition in a permit issued by a state or federal agency; and c. The use of potable water in a fountain or other decorative water feature is prohibited, except where the water is part of a recirculating system.

SECTION 3. Each day that a violation of the outdoor water use restrictions described in Section 2 occurs is a separate offense.

SECTION 4. Utilities Department staff shall take primary responsibility for enforcement of the outdoor water use restrictions adopted by Resolution 9449 and described in Section 2, above.

SECTION 5. While nothing in this resolution is intended to limit or otherwise restrict the potential application of all available civil and criminal penalties for violations of the state and local water use restrictions described herein, Council recognizes the value of an education-based approach in encouraging water conservation. Therefore, Council directs staff to first attempt to achieve compliance by providing customers reasonable notice of the alleged violation and an opportunity to correct the problem, before issuing fines for willful and repeated violations.

SECTION 6. If fines are ultimately imposed, the person or persons to whom notice was provided shall have five business days from the date of service of the notice to request a hearing before the city manager or his/her designee in order to present any facts or arguments they may have as to why fines should not be imposed. If a hearing is requested, the city manager or his/her designee shall schedule a date and time for said hearing as soon as possible after the request is filed, but not later than five business days after the filing of such request for hearing. At the hearing, the person who received notice of the water use restriction violation may offer evidence as 140901 jb 6053121 2

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I ,
to why a fine should not be imposed. Utilities personnel shall be allowed to offer whatever evidence they may have as to why the fine should be imposed. The city manager or his/her designee shall make a final determination as to whether or not a fine shall be imposed.

SECTION 7. This resolution will go into effect immediately and will remain in effect for the 270 day term set by the State Water Resources Control Board for the SWRCB's July 15, 2014 emergency water regulations, as extended by the SWRCB, or as directed by Council.

SECTION 8. Council's adoption of the proposed Outdoor Water Use Restrictions is categorically exempt from CEQA under CEQA Guidelines 15307 (Actions by Regulatory Agencies for Protection of Natural Resources).

INTRODUCED AND PASSED: September 15, 2014
AYES: BERMAN, BURT, HOLMAN, KLEIN, KNISS, PRICE, SCHARFF, SCHMID, SHEPHERD NOES:

ABSENT:

ABSTENTIONS:
~ Otyderk
APPROVED AS TO FORM: APPROVED:
·___A__-.~
enior Deputy City Attorney
ervices
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Resolution No. 9449
Resolution of the Co_uncil of the City of Palo Alto Implementing Outdoor Water Use Restrictions in Compliance with the State Water Resources Control Board's July 15, 2014 Emergency Drought Regulations

RECITALS
A. On January 17, 2014, Governor Edmund G. Brown Jr. issued Proclamation No. 1~ 17-2014 declaring a State of Emergency to exist in California due to severe drought conditions and calling on Californians to reduce their water usage by 20 percent.

B. On April 25, 2014, the Governor issued an Executive Order to strengthen the state's ability to manage water and directed the State Water Resources Control Board {SWRCB) under its authority in California Water Code Section 1058.5 to adopt emergency regulations as it deems necessary to address water shortage conditions.

D. Section 864 applies to all Californians and prohibits\certain activities in promotion of water conservation, many of which are already required by Palo Alto Municipal Code 12.32.010.

E. Section 865 requires mandatory outdoor irrigation restrictions and reporting by water suppliers, including urban water suppliers like the City of Palo Alto.

F. The City of Palo Alto receives 100% of its potable supplies from the San Francisco Public Utilities Commission {SFPUC).

G. The SFPUC has requested a 10% voluntary water consumption reduction in response to the drought and their determination of available supplies in the regional water system.

H. The SFPUC has not declared a water shortage emergency nor imposed mandatory cutbacks upon Palo Alto or any of SFPUC's wholesale customers.

I. The City of Palo Alto has responded to SFPUC's voluntary water consumption reduction request and has achieved an approximate 17% reduction in water use relative to 2013.
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J. The City's Municipal Code and Urban Water Management Plan (approved by the City Council on June 13, 2011) include a Water Shortage Contingency Plan and other tools to encourage responsible management of the City's water resources.

K. The City supports the SWRCB's efforts to encourage conservation, with an emphasis on outdoor water use, to the extent it may do so within the context of its Council approved Urban Water Management Plan and the Palo Alto Municipal Code.

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

SECTION 1. The following outdoor water use restrictions are hereby adopted, in compliance with the State Water Resources Control Board's July 15, 2014 emergency drought regulations (collectively, the "Outdoor Water Use Restrictions"):
a.
b.

No outdoor irrigation of ornamental landscapes or turf with potable water is permitted between the hours of 10am and 6pm, except for drip irrigation, soaker hoses and hand watering;
The application of potable water to driveways and sidewalks is prohibited, except where necessary to address an immediate health and safety need or to comply with a term or condition in a permit issued by a state or federal agency; and
The use of potaple water in a fountain or other decorative water feature is prohibited, except where the water is part of a recirculating system.

SECTION 2. The Council finds that the Outdoor Water Use Restrictions implemented as a result ofthis action were taken from Stage II of the City's Water Shortage Contingency Plan, which is itself a part of the City's Urban Water Management Plan, approved by the Department of Water Resources July 8th, 2014. The Outdoor Water Use Restrictions are intended to complement the City's existing and permanent water use restrictions, codified in Palo Alto lylunicipal Code Section 12.32.010.

SECTION 3. The Council finds that adoption of the Outdoor Water Use Restrictions meets the requirements of California Code of Regulations, Title 23, Section 865(b)(l).

SECTION 4. The Outdoor Water Use Restrictions will remain in effect for the 270 day period specified in SWRCB Resolution No. 2014-0038, or as extended by the SWRCB.

SECTION 5. Council directs staff to further promote water conservation by preparing and submitting to the SWRCB the monitoring reports described in California Code of Regulations, Title 23, Section 86S(d). Council also directs staff to monitor compliance and to explore increas~d enforcement in the event the desired response is not being achieved. 140722 jb 0180048

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SECTION 6. Council's adoption of the proposed Outdoor Water Use Restrictions is categorically exempt from CEOA under CEOA Guidelines 15307 (Actions by Regulatory Agencies for Protection of Natural Resources).

INTRODUCED AND PASSED: August 41 2014 ·
AYES: BERMAN, BURT, HOLMAN, KLEIN, KNISS, PRICE, SCHARFF, SCHMID, SHEPHERD NOES:

ABSENT:
. ABSTENTIONS:

ATTEST:

APPROVED AS TO FORM: APPROVED:
nior Deputy City Attorney f9'2£~ Cyanager -
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STATE WATER RESOURCES CONTROL BOARD
RESOLUTION NO. 2022-0018

TO ADOPT AN EMERGENCY REGULATION

TO REDUCE WATER DEMAND AND IMPROVE WATER CONSERVATION
WHEREAS:

1. On April 21, May 10, July 8, and October 19, 2021, Governor Newsom issued proclamations that a state of emergency exists statewide due to severe drought conditions and directed state agencies to take immediate action to preserve critical water supplies and mitigate the effects of drought and ensure the protection of health, safety, and the environment.

2. These proclamations urge Californians to reduce their water use.

3. On March 28, 2022, Governor Newsom signed an Executive Order directing the State Water Resources Control Board (State Water Board or Board) to consider adopting emergency regulations to increase water conservation. The Executive Order includes a request that the Board require urban water suppliers to implement Level 2 of their water shortage contingency plans, establish water shortage response actions for urban water suppliers that have not submitted water shortage contingency plans, taking into consideration model actions that the Department of Water Resources, and establish a ban on the irrigation of non- functional turf by entities in the commercial, industrial, and institutional sectors.

4. Many Californians and urban water suppliers have taken bold steps over the years to reduce water use; nevertheless, the severity of the current drought requires additional conservation actions from urban water suppliers, residents, and the commercial, industrial, and institutional sectors.

5. Water conservation is the easiest, most efficient, and most cost-effective way to quickly reduce water demand and extend limited water supplies through this summer and into the next year, providing flexibility for all California communities.

Water saved is water available next year, giving water suppliers added flexibility to manage their systems effectively over time. The more water that is conserved now, the less likely it is that a community will experience dire shortages that may require water rationing or other emergency actions.

6. Most Californians use more water outdoors than indoors. In many areas, 50 percent or more of daily water use is for irrigation of lawns and outdoor landscaping irrigation. Outdoor water use is generally discretionary, and many irrigated landscapes would not suffer greatly from receiving a decreased amount of water.

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2 7. The use of potable water to irrigate turf on commercial, industrial, or institutional properties that is not regularly used for human recreational purposes or for civic or community events can be reduced in commercial, industrial, and institutional areas to protect local water resources and enhance water resiliency.

8. Public information and awareness are critical to achieving conservation goals, and the Save Our Water campaign (SaveOurWater.com), run jointly by the Department of Water Resources (DWR) and the Association of California Water Agencies, is an excellent resource for conservation information and messaging that is integral to effective drought response.

9. SaveWater.CA.Gov is an online tool designed to help save water in communities.

This website lets anyone easily report water waste from their phone, tablet, or computer by simply selecting the type of water waste they see, typing in the address where the waste is occurring, and clicking send. These reports are filed directly with the State Water Board and relevant local water supplier.

10. Enforcement against water waste is a key tool in conservation programs. When conservation becomes a social norm in a community, the need for enforcement is reduced or eliminated.

11. On March 28, 2022, the Governor suspended the environmental review required by the California Environmental Quality Act to allow State Water Board-adopted drought conservation emergency regulations and other actions to take place quickly to respond to emergency conditions.

12. Water Code section 1058.5 grants the State Water Board the authority to adopt emergency regulations in certain drought years in order to: “prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion, of water, to promote water recycling or water conservation, to require curtailment of diversions when water is not available under the diverter’s priority of right, or in furtherance of any of the foregoing, to require reporting of diversion or use or the preparation of monitoring reports.”

13. On May 13, 2022, the State Water Board issued public notice that it will consider the adoption of the regulation at the Board’s regularly scheduled May 24, 2022 public meeting, in accordance with applicable State laws and regulations. The State Water Board also distributed for public review and comment a Finding of Emergency that complies with State laws and regulations.

14. The emergency regulation exempts suppliers from enforcing connection moratoria, if their Level 2 demand management actions call for them, because new residential connections are critical to addressing the state’s housing supply shortage. However, the Board recognizes connections for other projects may not be appropriate given the shortage conditions and urges water suppliers to carefully evaluate new development projects for their water use impacts.

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3 15. Disadvantaged communities may require assistance responding to Level 2 conservation requirements, including irrigation restrictions, temporary changes to rate structures, and prohibited water uses. State shortage contingency plans aimed at increasing water conservation, and state and local agencies should look for opportunities to provide assistance in promoting water conservation. This assistance should include but not be limited to translation of regulation text and dissemination of water conservation announcements into languages spoken by at least 10 percent of the people who reside in a water supplier’s service area, such as in newspaper advertisements, bill inserts, website homepage, social media, and notices in public libraries.

16. The Board directs staff to consider the following in pursuing any enforcement of section 996, subdivision (e): before imposing monetary penalties, staff shall provide one or more warnings; monetary penalties must be based on an ability to pay determination, consider allowing a payment plan of at least 12 months, and shall not result in a tax lien; and Board enforcement shall not result in shutoff.

17. The Board encourages entities other than Board staff that consider any enforcement of this regulation to apply these same factors identified in resolved paragraph 16. Nothing in the regulation or in the enforcement provisions of the regulation precludes a local agency from exercising its authority to adopt more stringent conservation measures. Moreover, the Water Code does not impose a mandatory penalty for violations of the regulation adopted by this resolution, and local agencies retain their enforcement discretion in enforcing the regulation, to the extent authorized, and may develop their own progressive enforcement practices to encourage conservation.

THEREFORE BE IT RESOLVED THAT:

1. The State Water Board adopts California Code of Regulations, title 23, section 996, as appended to this resolution as an emergency regulation that applies to urban water suppliers, as defined by Water Code section 10617.

2. State Water Board staff shall submit the regulation to the Office of Administrative Law (OAL) for final approval.

3. If, during the approval process, State Water Board staff, the State Water Board, or OAL determines that minor corrections to the language of the regulation or supporting documentation are needed for clarity or consistency, the State Water Board Executive Director or designee may make such changes.

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4 4. This regulation shall remain in effect for one year after filing with the Secretary of State unless the State Water Board determines that it is no longer necessary due to changed conditions or unless the State Water Board renews the regulation due to continued drought conditions, as described in Water Code section 1058.5.

5. The State Water Board directs State Water Board staff to work with the Department of Water Resources and the Save Our Water campaign to disseminate information regarding the emergency regulation.

6. The State Water Board directs staff to, by January 1, 2023, survey urban water suppliers on their experience protecting trees and tree cover during drought, with attention to disadvantaged communities. The survey shall inquire about challenges encountered, strategies used, costs, and successes in protecting trees.

7. Nothing in the regulation or in the enforcement provisions of the regulation precludes a local agency from exercising its authority to adopt more stringent conservation measures. Local agencies are encouraged to develop their own progressive enforcement practices to promote conservation.

CERTIFICATION
The undersigned Clerk to the Board does hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the State Water Resources Control Board held on May 24, 2022.

AYE: Chair E. Joaquin Esquivel
Vice Chair Dorene D’Adamo
Board Member Sean Maguire
Board Member Laurel Firestone
NAY: None
ABSENT: Board Member Nichole Morgan
ABSTAIN: None
Jeanine Townsend
Clerk to the Board

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5 ADOPTED EMERGENCY REGULATION TEXT
Version: May 24, 2022
Title 23. Waters
Division 3. State Water Resources Control Board and Regional Water Quality Control Boards
Chapter 3.5. Urban Water Use Efficiency and Conservation Article 2. Prevention of Drought Wasteful Water Uses
§ 996. Urban Drought Response Actions
(a) As used in this section:
(1) “Commercial, industrial and institutional” refers to commercial water users, industrial water users, and institutional water users as respectively defined in Water Code, section 10608.12, subdivisions (e), (i), and (j), and includes homeowners’ associations, common interest developments, community service organizations, and other similar entities but does not include the residences of these entities’ members or separate interests.
(2) “Common interest development” has the same meaning as in section 4100 of the Civil Code.
(3) “Community service organization or similar entity” has the same meaning as in section 4110 of the Civil Code.
(4) “Homeowners’ association” means an “association” as defined in section 4080 of the Civil Code.
(5) “Non-functional turf” means turf that is solely ornamental and not regularly used for human recreational purposes or for civic or community events. Non- functional turf does not include sports fields and turf that is regularly used for human recreational purposes or for civic or community events. (6) “Plant factor” has the same meaning as in section 491. (7) “Separate interest” has the same meaning as in section 4185 of the Civil Code.
(8) “Turf” has the same meaning as in section 491.
(9) “Urban water supplier” has the same meaning as Water Code section 10617. (10) “Water shortage contingency plan” means the plan required by Water Code section 10632.
(b) Each urban water supplier shall submit to the Department of Water Resources a preliminary annual water supply and demand assessment consistent with section

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6 10632.1 of the Water Code no later than June 1, 2022, and submit a final annual water supply and demand assessment to the Department of Water Resources no later than the deadline set by section 10632.1 of the Water Code. (c) (1) Each urban water supplier that has submitted a water shortage contingency plan to the Department of Water Resources shall implement by June 10, 2022, at a minimum, all demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2).
(2) Notwithstanding subdivision (c)(1), urban water suppliers shall not be required to implement new residential connection moratoria pursuant to this section. (3) Notwithstanding subdivision (c)(1), an urban water supplier may implement the actions identified in subdivision (d) in lieu of implementing the demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code section 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2), provided the supplier meets all of the following:
(i) The supplier’s annual water supply and demand assessment submitted to the Department of Water Resources demonstrates an ability to maintain reliable supply until September 30, 2023.
(ii) The supplier does not rely on, for any part of its supply, the Colorado River, State Water Project, or Central Valley Project, and no more than ten (10) percent of its supply comes from critically overdrafted groundwater basins as designated by the Department of Water Resources.
(iii) The supplier's average number of gallons of water used per person per day by residential customers for the year 2020 is below 55 gallons, as reported to the Board in the Electronic Annual Report.
(d) Each urban water supplier that has not submitted a water shortage contingency plan to the Department of Water Resources shall, by June 10, 2022, and continuing until the supplier has implemented all demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2), implement at a minimum the following actions:
(1) Initiate a public information and outreach campaign for water conservation and promptly and effectively reach the supplier’s customers, using efforts such as email, paper mail, bill inserts, customer app notifications, news articles, websites, community events, radio and television, billboards, and social media. (2) Implement and enforce a rule or ordinance limiting landscape irrigation with potable water to no more than two (2) days per week and prohibiting landscape irrigation with potable water between the hours of 10:00 a.m. and 6:00 p.m. (3) Implement and enforce a rule or ordinance banning, at a minimum, the water uses prohibited by section 995. Adoption of a rule or ordinance is not required if the supplier has authority to enforce, as infractions, the prohibitions in section 995 and takes enforcement against violations.

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7 (e) (1) To prevent the unreasonable use of water and to promote water conservation, the use of potable water is prohibited for the irrigation of non-functional turf at commercial, industrial, and institutional sites.
(2) Notwithstanding subdivision (e)(1), the use of water is not prohibited by this section to the extent necessary to ensure the health of trees and other perennial non-turf plantings or to the extent necessary to address an immediate health and safety need.
(3) Notwithstanding subdivision (e)(1), an urban water supplier may approve a request for continued irrigation of non-functional turf where the user certifies that the turf is a low water use plant with a plant factor of 0.3 or less, and demonstrates the actual use is less than 40% of reference evapotranspiration. (f) The taking of any action prohibited in subdivision (e) is an infraction punishable by a fine of up to five hundred dollars ($500) for each day in which the violation occurs. The fine for the infraction is in addition to, and does not supersede or limit, any other remedies, civil or criminal.
(g) A decision or order issued under this section by the Board, or an officer or employee of the Board, is subject to reconsideration under article 2 (commencing with section 1122) of chapter 4 of part 1 of division 2 of the Water Code.

Authority: Section 1058.5, Water Code.

References: Article X, Section 2, California Constitution; Sections 4080, 4100, 4110, and 4185, Civil Code; Section 8627.7, Government Code; Sections 102, 104, 105, 275, 350, 377, 491, 1122, 10608.12, 10617, 10632, and 10632.1, Water Code; Light v. State Water Resources Control Board (2014) 226 Cal.App.4th 1463; Stanford Vina Ranch Irrigation Co. v. State of California (2020) 50 Cal.App.5th 976.

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RL14826 1

BOARD OF DIRECTORS

SANTA CLARA VALLEY WATER DISTRICT
RESOLUTION NO. 22-XX
RESOLUTION AMENDING RESOLUTION NO. 21-68 RESCINDING
RESOLUTION 17-43, DECLARING A WATER SHORTAGE EMERGENCY

CONDITION CALLING FOR WATER USE RESTRICTIONS, AND URGING

THE COUNTY OF SANTA CLARA TO PROCLAIM A LOCAL EMERGENCY WHEREAS, on June 9, 2021, the Board of Directors (Board) of the Santa Clara Valley Water District (Valley Water) adopted Resolution No. 21-68 (Attachment 1) declaring a water shortage emergency condition pursuant to Water Code Section 350 and calling for water use restrictions; and
WHEREAS, the Board’s call for water use restrictions included, but was not limited to: (i) a restriction to outdoor watering of ornamental landscapes or lawns with potable water to a maximum of three days a week, and (ii) support of local adoption and enforcement of additional water waste restrictions by cities, retailers, and the County to achieve a 15% water use reduction target compared to 2019 water use; and
WHEREAS, Santa Clara County’s Director of Emergency Services has proclaimed a local drought emergency on June 15, 2021, which was ratified by the Santa Clara County Board of Supervisors on June 22, 2021; and
WHEREAS, Santa Clara County was included in the Governor’s drought emergency proclamation on July 8, 2021, and the entire state of California was included on October 19, 2021; and
WHEREAS, on January 4, 2022, the State Water Resources Control Board adopted an emergency regulation by Resolution No. 2022-0002, which contains restrictions to prevent the wasteful and unreasonable use of water, promote water conservation, and set forth monetary penalties for its violation; and
WHEREAS, the first three months of Calendar Year 2022 were the driest on record for Santa Clara County, and Valley Water’s Federal and State imported water allocations have been reduced to historic lows; and
WHEREAS, on March 28, 2022, Governor Gavin Newsom issued Executive Order N-7-22 to call on local water suppliers to move to Stage 2 of their water shortage contingency plans, at a minimum, and directed the State Water Resources Control Board to evaluate the adoption of regulations banning irrigation of decorative grass around commercial, industrial and institutional buildings, which is estimated to result in potential water savings of several hundred thousand acre-feet; and
WHEREAS, trees and shrubs can be responsibly planted and maintained during drought, even one as historic and severe as the current one; and that trees, especially drought-tolerant, native species, can provide many social and environmental benefits; and WHEREAS, because of persistent and unyielding drought conditions, the Board seeks to amend and add a number of restrictions to those previously adopted under Resolution No. 21-68, Supplemental Attachment 4

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Palo Alto City CouncilJune 20, 2022

Palo Alto City Council
June 20, 2022