Palo Alto City Council
February 13, 2023

CITY COUNCIL
Special Meeting
Monday, February 13, 2023
Council Chamber & Hybrid
3:30 PM
Amended Agenda
Amended Agenda items appear below in RED

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. The meeting will be broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to MidpenMedia Center https://midpenmedia.org.

VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900‐6833

PUBLIC COMMENTS
Public 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 referencing in your subject line. PowerPoints, 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 meeting.

Once received, the 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.

TIME ESTIMATES
Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, 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.

CALL TO ORDER

AGENDA CHANGES, ADDITIONS AND DELETIONS

2 Special Meeting February 13, 2023

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.

SPECIAL ORDERS OF THE DAY (3:30 -3:35 PM)

1. Recognition of the Palo Alto Library as a Five Star Library

CONSENT CALENDAR (3:35-3:40 PM)

4. Approval of Minutes from the January 28, 2023 and January 30, 2023 City Council Meeting

5. Adoption of a Resolution Adopting Updated Guidelines for the Submission and Tabulation of Protests in Connection with Rate Hearings Conducted Pursuant to Article XIIID, Section 6 of the California Constitution and Repealing and Replacing Resolution 8815; CEQA status—not a project.

6. Approval of a 6-year Contract with Manesco Corporation in an Amount Not-to-Exceed $697,326 to Conduct Annual Walking and Mobile Gas Leak Surveys and Annual Resurveys of Existing Gas Leaks to Begin March 2023 ($633,932) and Authorization of Contract Contingency ($63,393); CEQA status—exempt under CEQA Guidelines sections 15301(c) and 15308.

7. Approval of a Purchase Order with Interstate Truck Center in an Amount Not to Exceed $297,244 for the Purchase of Two 2023 International CV Chipper Body Trucks, Utilizing a Cooperative Purchase Agreement, Funded by Capital Improvement Program Project VR-23000

CONTINUED ACTION ITEM FROM FEBRUARY 6, 2023 (3:40 - 5:10 PM)

AA1. Approval of the 2023 City Council Priority Focus Areas, and Objectives Areas, Objectives, and Respective Major Projects for Calendar Year 2023

STUDY SESSION
Study Sessions will start at the times certain listed below. If the previous items are longer than anticipated, they will be continued to the end of the meeting.

2. Comprehensive Economic Development Strategy Update and Study Session Supplemental Report (5:10 - 6:40 PM)

3. Buena Vista Mobile Home Park Update from the Santa Clara County Housing Authority (6:40 -8:10 PM)

PUBLIC COMMENT (8:10 - 8:35 PM)

CITY MANAGER COMMENTS (8:35 - 8:50 PM)

3 Special Meeting February 13, 2023

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.

ACTION ITEMS

AA2. Review and Accept the FY 2023 - FY 2032 Long Range Financial Forecast (LRFF) and FY 2023 Budget Development Guidelines (Item continued from February 6, 2023 Meeting) (8:50 - 9:50 PM)

8. Discuss the FY 2023 Mid-Year Budget Review and Approve 1) FY 2023 Budget Amendments in Various Funds, and 2) Amendments to the FY 2023 Table of Organization to add 5.25 full-time and 2.43 part-time Full Time Equivalent (FTE) Positions Supplemental Report (9:50 - 10:50 PM)

9. Discussion and Possible Revision to 2023 Standing Committee Topics Removed From Consideration

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS

ADJOURNMENT

INFORMATION REPORTS

10. Investment Activity Report for the Second Quarter, Fiscal Year 2023

11. ADU Quarterly Report for Q1 & Q2 of 2022

AMENDED AGENDA ITEMS

AA1. Approval of the 2023 City Council Priority Focus Areas, and Objectives Areas, Objectives, and Respective Major Projects for Calendar Year 2023 (Item continued from February 6, 2023 Meeting)

2. Comprehensive Economic Development Strategy Update and Study Session Supplemental Report

8. Discuss the FY 2023 Mid-Year Budget Review and Approve 1) FY 2023 Budget Amendments in Various Funds, and 2) Amendments to the FY 2023 Table of Organization to add 5.25 full-time and 2.43 part-time Full Time Equivalent (FTE) Positions Supplemental Report

AA2. Review and Accept the FY 2023 - FY 2032 Long Range Financial Forecast (LRFF) and FY 2023 Budget Development Guidelines (Item continued from February 6, 2023 Meeting)

4 Special Meeting February 13, 2023

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 hybrid meetings via email, in person, teleconference, or by phone.

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

2. In person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item.

3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom-based meeting. Please read the following instructions carefully. a. You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser:

Chrome 30 , Firefox 27, Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below
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.

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.

5. Click to Join Zoom Meeting ID: 362‐027‐238 Phone: 1(669)900‐6833

AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 48 hours or more in advance.

Item No. 2. Page 1 of 6

CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: Study Session
Lead Department: City Manager
Meeting Date: February 13, 2023
TITLE
Comprehensive Economic Development Strategy Update and Study Session

RECOMMENDATION
Staff recommends that the Council receive this report and provide feedback on critical focus areas for inclusion in the drafting of a Comprehensive Economic Development Strategy.

EXECUTIVE SUMMARY
This report and accompanying study session represent the next step in the City’s creation of a Comprehensive Economic Development Strategy. The City’s consultant, Streetsense, ‘diagnostic’ is attached to this report and will be the focus of the study session. The purpose of the study session is Council discussion and feedback on the diagnostic findings and draft Guiding Principles. Both of these and the general consensus of the City Council through its discussion will be used to inform the next and final step of drafting the comprehensive economic development strategy.

Streetsense is working to “develop a market-informed economic development strategy that will ensure Palo Alto's post-COVID competitiveness by identifying impactful public sector interventions, policies and investments for which there is both need and consensus for action.” Streetsense was selected as the consultant to create the Comprehensive Economic Development Strategy and presented their first impressions to Council on November 7, 2022.

The first phase of their work was focused on learning and gathering data and speaking with stakeholders. This second phase of their work, the diagnostic, is focused on analyzing and synthesizing the information they gathered to accurately assess and discuss the issues we are facing as a City.

BACKGROUND
This study session is the second of three planned discussions between Streetsense and the City Council regarding the creation of a comprehensive economic development strategy. On November 7, 2022, Streetsense presented their in-progress work to City Council. At that meeting, they discussed the purpose and goals of the comprehensive economic development Item 2
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strategy, the phases and timeline of their project, and preliminary considerations and findings from their work to date.

The report for the November 7, 2022 study session is available online1, as is the presentation2, and the video of City Council’s discussion3, and the summary minutes from the meeting4.

Following their discussion with the City Council in November, Streetsense continued their information collection and research phase. Streetsense has since completed the diagnostic, the second phase of the project, which is the focus of this report and accompanying study session.

The third and final phase will be the creation of a comprehensive economic development strategy with recommendations. This third phase will also be brought to the City Council for consideration and adoption.

ANALYSIS
Before reaching the third and final phase of Streetsense’s work, it is important that stakeholders – including the City Council – share a collective understanding of the challenges at hand within the city limits of Palo Alto. The attached diagnostic is important to establish consensus on the areas that Streetsense will target in its a comprehensive economic development strategy. Recommendations in this strategy will be guided by this diagnostic and the stakeholder feedback surrounding it, ultimately leading to support through City investments, interventions, policies, and programs.

Streetsense’s work focuses on six study areas that have been classified into three categories. •‘Regional/super-regional centers’:

1. Downtown/University Avenue

2. Stanford Shopping Center,
•‘Community-serving centers’:

3. California Avenue

4. Town & Country Village, and
•‘Neighborhood-serving’ areas:

5. Midtown

6. Charleston shopping Center.

This ‘Diagnostic,’ phase two of the contracted project, comprehensively analyzes the City’s current condition through four areas. The full diagnostic is included as Attachment A to this report and will be discussed in greater detail by Streetsense on February 13, 2023. A summary 1 City Council Staff Report November 2, 2022 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2022/20221107/20221107pccsm-amended-linked-q.a-

2.pdf#page=8
2 Presentation From November 2, 2022 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/item-presentations/2022/20221107/20221107pptccsm-item-2.pdf 3Video From November 2, 2022 https://www.youtube.com/live/VdBcadUd_Fc?feature=share&t=945 4 Summary minutes From November 2, 2022 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2022/20221114/20221114smccsm.pdf Item 2
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of highlights is below; the full Diagnostic concludes with findings and guiding principles on slide

62. 1. Market Assessment (begins on Streetsense slide 13) a. Competition Assessment
b. Retail Demand Assessment

2. Business Environment (begins on Streetsense slide 26) a. Sales Tax Analysis
b. Hospitality/Tourism Assessment

3. Administrative Assessment (begins on Streetsense slide 37) a. Regulatory Framework
b. Organizational Capacity and Stewardship

4. Physical Assessment (begins on Streetsense slide 48) a. City-Wide Connectivity and Accessibility
b. District SWOT Analysis

1. Market Assessment
Market Assessment reviews retail uses and groups them into Neighborhood Goods and Services (includes grocery stores, neighborhood markets, dry cleaners, barber shops, and others), Food and Beverage (includes restaurants, bars, cafes, and others), and General merchandise, apparel, furniture and other (includes apparel stores, clothing stores, hardware stores, sports stores, and others). Non-retail uses, such as financial, educational, religious, or governmental institutions are not factored into the retail demand model.

Competition Assessment: Streetsense has measured retail competition for Palo Alto on two levels; Convenience, access, visibility, tenant quality, and a variety of offerings are all factors that inform the assessment of market influence by each retail competitor. •Locally-Serving neighborhood centers for convenience-based trips: Palo Alto faces strong competition for groceries and has a number of big-box retailers clustered along the periphery of City limits in neighboring jurisdictions.
•Regionally-serving destination hubs for experience-based trips: the City faces competitive downtown environments in nearby cities as well as traditional malls.

Additionally, there is competition even within Palo Alto with University Avenue, Stanford Shopping Center, and, to some extent, California Ave. all operating as regional hubs.

Annual retail rents and vacancies in Palo Alto based on Streetsense’s analysis:
•Retail rents are high, with rental rates 80% higher than the national average of $27.55 per Square Foot. Stanford Shopping Center is the most expensive ($77.48/sf), followed closely by University Ave ($76.68/sf) and Town and Country ($72.00/sf). •Overall retail vacancy rate in Palo Alto was about 8% at the end of 2022; University Avenue is estimated to be running a 10% vacancy rate in retail space and California Ave.

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Item No. 2. Page 4 of 6
was higher at 15% vacancy. The National Average is 6.5% retail vacancy for the same period.

Retail Demand Assessment: Streetsense’s market assessment looked at the demand for retail in Palo Alto. As the City continues to navigate the transition from COVID-19 pandemic, the level of retail demand is an important factor in developing a comprehensive economic development strategy. Through Streetsense’s analysis, they concluded that:
•Hybrid work has reduced the demand for retail in Palo Alto by more than 100,000 square feet (roughly equivalent to the amount of combined retail space at Midtown and Charleston Shopping Centers).
•Retail demand will steadily increase, especially as new developments continue in the region, but according to their calculations the demand will not catch up to the existing retail supply for more than 10 years.

2. Business Environment
As a subcontractor to Streetsense, HdL conducted a sales tax analysis as part of examining the local business environment. Streetsense also examined the current state of the City’s hotels and visitors through its Hospitality/Tourism Assessment.

Sales Tax Analysis: HdL found that small and locally owned business were the hardest hit during COVID-19, with restaurants, retailers, and personal service providers being particularly impacted. Highlights of HdL findings include:
•Local businesses are still not back to pre-pandemic cash flow nor revenue margins, however sales tax has increased from pandemic lows. This suggests that inflation, labor shortages, and other disruptions continue to adversely impact these vulnerable businesses.
•Declines in sales tax revenues were occurring before the pandemic, which may be an indicator of broader trends that were at work and then worsened by the COVID-19 pandemic.
•Palo Alto’s downtown areas of University and California Avenue have had the slowest sales tax recoveries from the COVID-19 pandemic, while Stanford Shopping Center and Town and Country Village have better recovered.
•Neighborhood Goods and Services were the least affected by the pandemic from a sales tax perspective. This category makes up only 4% of total sales tax for the six focus districts of the study (2% of Citywide Sales Tax), and therefore its resilience was not impactful to overall revenues. Additionally, Palo Alto has the lowest sales dollar per capita for Neighborhood Goods and Services businesses compared to neighboring cities.

Hospitality/Tourism Assessment: found that Palo Alto’s lodging sector was recovering consistent with the national pace. However, since the largest contributors to occupancy are Item 2
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Item No. 2. Page 5 of 6
medical, education, and business travelers, this sector remains vulnerable in the face of recession concerns.
•Weekday occupancy of hotels is showing signs of improvement. •Even prior to the COVID-19 pandemic, hotels in Palo Alto historically had higher vacancy rates over the weekends. This suggests that growing weekend occupancy rates with non-business travelers may be an area for further work.

3. Administrative Assessment
Streetsense also looked at various elements of the City to inform the Administrative Assessment including a review of the regulatory environment and understanding the ecosystem of partner organizations to inform organizational capacity and stewardship.

Regulatory Assessment: Recent trends in retail and changing work patterns may warrant revisiting certain sections of Palo Alto’s zoning code; Streetsense noted in particular the highly regulated environments of Downtown and California Avenue. In contrast, Stanford Shopping Center and Town & Country Village provide centralized ownership resulting in more flexibility and clarity around what is allowed and what is not allowed to aid tenants.

Organizational Capacity and Stewardship: When Streetsense examined the ecosystem of partner organizations, they found that the City has different arts, culture, and entertainment organizations that provide options at both a City level and at a district level. However, there is a lack of partner organizations to help serve as stewards and partners in economic development for California Ave and University Avenue.

4. Physical Assessment
Streetsense included some of their preliminary thoughts on the Physical Assessment of Palo Alto when they discussed the project with City Council on November 7, 2022. This work was expanded as the fourth component of the diagnostic.

Accessibility and Connectivity: Streetsense explored the accessibility and connectivity of the City’s roadway and transit networks. Some important gaps identified by Streetsense are already in the process of being addressed, notably the areas of grade separation and on-demand shuttle service to help improve transit access.

Focus Area SWOT Analysis: Streetsense performed a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis of the physical infrastructure for Downtown, California Avenue, Stanford Shopping Center, Town and Country, Midtown, and Charleston Shopping Center. This analysis looked at access/connectivity, parking, wayfinding/signage, sidewalks and street furniture, gathering spaces and building. This analysis is presented in Attachment A; positive attributes in each area are highlighted in green and areas for improvement are highlighted in red.

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Through the Diagnostic, Streetsense has developed their ‘guiding principles’ that will be used to help address the third and final phase of the project, which is the creation of a comprehensive Economic Development Strategy through recommendations.

The guiding principles developed by Streetsense are:
•Reinforce hierarchy of place
•Improve accessibility
•Adopt policies that reflect changing market conditions Discussion of the guiding principles and the City Council feedback and consensus of priority principles will be an important part of the study session on February 13, 2023. This discussion will directly impact the third and final stage of this project, the drafting of a comprehensive Economic Development Strategy with recommendations for future actions.

FISCAL/RESOURCE IMPACT
The discussion on February 13 is not expected to affect immediate resource needs, the resources allocated to Economic Development are an important consideration for ongoing work. The City has ongoing funding for the Economic Development coordinator role and some ongoing funding for limited consultant support (less than $25,000 annually).

As the City refines the scope of its economic development function through Streetsense’s work, scaling resources to align with that scope will require further resources and budgetary actions.

Staff will work with Streetsense to develop proposals that appropriately scale the City’s economic development function to align with Council’s feedback throughout the process and will return with proposals for consideration through the development of the FY 2024 budget.

STAKEHOLDER ENGAGEMENT
Community stakeholders, including residents and representatives from various business sectors, including restaurants, retailers, hoteliers, property owners, and others, have been engaged consistently through the City’s recent work on economic development. As the City transitions out of the pandemic, staff will continue to engage residents and businesses in meaningful dialogue to help inform and maintain the City’s economic vibrancy.

ENVIRONMENTAL REVIEW
Holding a study session on economic development will not directly or indirectly cause physical changes to the environment and therefore this study session is not a project under the California Environmental Quality Act (CEQA).

ATTACHMENTS
Attachment A: Streetsense Diagnostic
APPROVED BY:

Ed Shikada, City Manager
Report #: 2302-0915
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN

DRAFT FOR INTERNAL REVIEW ONLY

PALO ALTO

ECONOMIC DEVELOPMENT

STRATEGY

DIAGNOSTIC
PHASE 2 DELIVERABLE

PREPARED FOR PALO ALTO, CA
FEBRUARY 13, 2023
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 2 v

TABLE OF CONTENTS
01 PROJECT OVERVIEW
02 STUDYAREAS
03 MARKET ASSESSMENT
04 BUSINESS ENVIRONMENT
05 ADMINISTRATIVE ASSESSMENT
06 PHYSICAL ASSESSMENT
07 GUIDING PRINCIPLES
08 APPENDIX

CONTACT
Larisa Ortiz
Managing Director
Streetsense
[email protected]
641 S ST NW
WASHINGTON, DC 20001
STREETSENSE.COM
@REALSTREETSENSE
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 3 01

PROJECT

OVERVIEW
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 4 PROJECT TIMELINE
We are here

IMMERSION & DISCOVERY
• Kick off session
• Field work
• Stakeholder engagement
• Focus groups and interviews with business
owners, hotel operators, residents, City Staff
• Council presentation

DIAGNOSTIC
• Retail market analysis
• Administrative capacity assessment
• Business environment assessment
• Physical assessment
• Coordination with California Ave/Ramona St
Consultant
• Council presentation

ECONOMIC DEVELOPMENT

STRATEGY
• Draft work plan development
• Final work plan development
Before advancing to a discussion of strategic interventions, the Diagnostic phase of this exercise ensures that we share a collective understanding of the challenges at hand. This milestone is important to establish consensus for action and precedes a discussion of recommendations that will be led or supported by public sector investments, policies and programs. 1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 5 PHYSICAL ENVIRONMENT
→ City-Wide Connectivity & Accessibility
→ District SWOT Analysis
Phase 1–2:

IMMERSION & DISCOVERY/DIAGNOSTIC
TODAY’S PURPOSE
• Present and Discuss Diagnostic Findings
• Confirm alignment on key take aways and
guiding principles before advancing to
recommendations

BUSINESS ENVIRONMENT
→ Sales Tax Analysis
→ Hospitality/ Tourism Assessment

ADMINISTRATIVE CAPACITY
→ Regulatory Framework
→ Organizational Capacity & Stewardship

MARKET ASSESSMENT
→ Competition Assessment
→ Retail Demand Assessment
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 6 Phase 1–2:

IMMERSION & DISCOVERY/DIAGNOSTIC

A FRAMEWORK FOR SUCCESSFUL RETAIL PLACES

MANAGED
…with leadership
and capacity to
engage merchants
and property
owners and
implement
improvements
SAFE
…but more
importantly
perceived as safe

ACCESSIBLE
…to a customer base
…with little friction
for arrival/departure
regardless of mode

VISIBLE
…by potential
customers either
as they drive,
bike or walk by

CHAMPIONED
…with demonstrated
signs of maintenance
and investment

ANCHORED
…by retail
destination driver(s)
… by culture,
institutional or
entertainment uses

PEDESTRIAN

FRIENDLY
…co-located
businesses that
encourage cross
shopping
…walkable and
with few
disruptions in
continuity
BRAND

RESONANCE
…with clear
branding strategy
and identity
Beloved, "best-in-class" streets share characteristics that correlate to successful economic development outcomes, including but not limited to community satisfaction, business profitability, and contribution to the municipal tax base. Based on the over three decades of research, these characteristics include:
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 7 Phase 1–2:

IMMERSION & DISCOVERY/DIAGNOSTIC

THE RETAIL ECOSYSTEM
• Perspectives range among key stakeholders
• Priorities unique from one another
• Highly symbiotic relationship structure
Retail viability deteriorates when a given stakeholder's priorities and needs are not being met.

TENANT
Confidence in Sales
Rent Commensurate with
Sales
Co-tenancy
Brand Alignment

LANDLORD/

MANAGEMENT
Return on Investment
Tenant Stability
Risk Mitigation

CONSUMER
Sense of Place
Tenants
Events | Community
Safety | Cleanliness
Accessibility | Convenience
Value (Money & Time)
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 8 Phase 1–2:

IMMERSION & DISCOVERY/DIAGNOSTIC

THE RETAIL ECOSYSTEM
Where does the public sector play a role in influencing or directing the actions of key stakeholders?

PUBLIC SECTOR TOOLS
• Regulatory framework influences co-tenancy
• Financial incentives can help mitigate risk
• Funding and coordination of events to build community • Investments in enhanced safety/cleanliness
• Improvements to access/convenience
• District marketing & branding campaigns
• Investments in public realm to improve sense of place TENANT
Confidence in Sales
Rent Commensurate with
Sales
Co-tenancy
Brand Alignment

LANDLORD/

MANAGEMENT
Return on Investment
Tenant Stability
Risk Mitigation

CONSUMER
Sense of Place
Tenants
Events | Community
Safety | Cleanliness
Accessibility | Convenience
Value (Money & Time)
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 9 SMALL STORE FOOTPRINTS BUY ONLINE, PICK-UP IN STORE (BOPIS)

GUIDESHOP MODEL MICRO-FULFILLMENT COMPONENTS
• Changing retail footprints
• Changing spending patterns
• Tenants are in the driver's seat
• Implications of hybrid work

GLOBAL AND NATIONAL
TRENDS
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 10 02

STUDYAREAS
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 11 MAP
All 6 districts
The diagnostic focuses on areas within Palo Alto where
this is an existing concentration of retail activity.

STUDY
AREAS
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 12 Using shopping center industry classifications, Palo Alto has three (3) categories of shopping districts as follows:

REGIONAL/SUPER-REGIONAL CENTERS
• most significant tax base contributors
• face the greatest competition for visitors within the region • must maintain "best-in-class" status to remain competitive

COMMUNITY-SERVING CENTERS
• moderate tax base impacts
• local promotion and marketing strategies, if any
• tend to benefit from activations that meet
community interests and needs

NEIGHBORHOOD-SERVING
• minimal tax base impacts
• least affected by COVID, typically the most stable
asset class
• local customer base with little need for promotion

DEFINING PALO ALTO'S
"SHOPPING DISTRICTS"

DISTRICT

DESTINATION

DRIVERS
ICSC

CATEGORIZATION RETAIL SF
NO. SALES
TAX

PRODUCING

BUSINESSES
TRADE
AREA
Downtown/
University
Ave
F&B,
Entertainment,
Fashion &
Apparel
Regional
(400k – 800k) 916,400 432
Primary,
Secondary
Tertiary
Stanford
Shopping
Center
Department
Stores, Fashion &
Apparel
Super Regional Mall
(800+ sf) 1,348,000 151
Primary,
Secondary
Tertiary
California
Ave
Specialty Grocer,
F&B, Farmer's
Market, Fitness
Community/
Neighborhood
Center
(125k – 400k sf)
202,500 99 Primary,
Secondary
Town &
Country
Village
Grocery,
Pharmacy, F&B
Community Center
(125k – 400k sf) 171,000 59 Primary,
Secondary
Midtown
Grocery,
Pharmacy, Quick
Service F&B
Neighborhood
Center
(30k – 125k sf)
52,000 42 Primary
Charleston
Shopping
Center
Specialty Grocer
Neighborhood
Center
(30k – 125k sf)
46,000 10 Primary
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 13 → METHODOLOGY & APPROACH
→ COMPETITION ASSESSMENT
→ RETAIL DEMAND ASSESSMENT
03 RETAIL MARKET

ASSESSMENT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 14 Retail market assessment:

INDUSTRY TERMINOLOGY
Given their extraordinary nuance,
ancillary tenants (e.g. financial,
educational, religious, governmental
institutions, etc.) and entertainment
establishments (e.g. arcades, movie
theaters, bowling alleys, escape
rooms, etc.) are considered to be
non-retail uses and are not factored
into the retail demand model or
included in retail demand
calculations.

Neighborhood
goods &
services
(NG&S)
Food & beverage
(F&B)
General
merchandise,
apparel, furniture,
and other
(GAFO)
• Grocery store
• Neighborhood market
• Pharmacy/drug store
• Dry cleaner/laundromat
• Tailor/seamstress
• Nail/hair salon
• Barber shop
• Spa
• Fitness
• Gyms
• Sit-down restaurant
• Full-service restaurant
• Fast-casual restaurant
• Fast food restaurant
• Carry-out restaurant
• Ice cream shop
• Coffee shop
• Café
• Apparel store
• Clothing store
• Electronics store
• Furniture store
• Pet store
• Sports store
• Book store
• Music store
Non Retail Uses
Retail Uses
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 15 COMPETITION

ASSESSMENT
Giventheurban-suburbantypologyofthePaloAltomarket,retailcompetitionforthesiteismeasuredontwolevels– locally-servingneighborhoodcentersforconvenience-basedtripsandregionally-servingdestinationhubsforexperience- basedtrips. Retailcustomerbehaviorsare rootedin convenience,access,and visibilityas wellas tenantquality andvarietyofofferings.Thesefactorsareconsideredwhenassessingthemarketinfluenceofeachretailcompetitor. 1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 16 Retail market assessment:

REGIONAL RETAIL COMPETITION

TAKEAWAYS
• Downtown retail environments are
highly competitive.
• Two competing downtown
environments within Palo Alto,
University Ave and California Ave,
spreading retail thin.
• Traditional malls are less prevalent
to the west. There are five regional
malls of varying quality closer to San
Jose. Hillsdale Shopping Center is the
only traditional mall to the west. The
top performing mall in the region is
Stanford Shopping Center.

Regionally-serving, experience-based retail
centers are characterized by a dominant mix
of good-based retail, including malls, power
centers, and walkable downtowns and
lifestyle centers. These retail centers attract
customers from a larger regional trade area
and feature a cluster of full-service
restaurants and entertainment.

Source: Streetsense analysis Q4 2022.
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 17 Retail market assessment:

LOCALLY-SERVING RETAIL

COMPETITION

TAKEAWAYS
• Grocery competition is strong throughout the
region.
• Big box retailers are not allowed in Palo Alto
by regulation. However, they are
concentrated along the periphery of Palo
Alto, cannibalizing the retail offering
within the city.
• Target and Costco are particularly prevalent
in the region, with nine and seven stores,
respectively within the examined area.

Neighborhood serving retail centers are character
ized by a dominant mix of Neighborhood Goods
& Services tenants, often grocery-anchored.

These retail centers primarily meet the need for
convenience-based shopping trips, competing on
a geographically smaller scale.

Source: Streetsense analysis Q4 2022.
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 18 Retail market assessment:

PALO ALTO RETAIL DISTRICT STACKUP – ASKING RENTS
Retail rents in the region are high. The average asking rent in Palo Alto is $63.52 per SF – 80% higher than the national average of $27.55 per SF.* Stanford Shopping Center has the highest average asking rents in Palo Alto.

However, average asking rents within Town and Country Village and University Ave are comparable, with rents along University Ave reaching up to $99.00 per SF.

Disparity between average asking rents of the two downtown environments in Palo Alto, is a reflection of the higher quality environment and regional pull of University Ave.

Source – REIS, Loopnet, Michael Baker, CoStar 2022
* National average asking rent for malls and other retail environments, not including strip centers, neighborhood serving centers, and power centers as of Q4 2022.

TAKEAWAYS
• According to local brokers, there is a perception that asking rents along University Ave are highly elevated and do not reflect the state of the retail market, which greatly favors tenants over landlords 1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 19 Retail market assessment:

RETAIL VACANCY
Vacancy among the six retail districts totals 243,000 SF, or about 8% vacancy rate as of year-end 2022.
• Majority of vacant space is concentrated along University Avenue, accounting for about 88,000 SF.
• California Avenue has the highest vacancy rate among all districts at 15%, accounting for 31,000 SF.
• There is about 57,000 SF currently vacant within Stanford Shopping Center, which equates to a very low vacancy of 4%, due to the mall's large size. This vacancy is caused by smaller tenants inside the mall rather than by the loss of any major anchors.

Source: Loopnet, REIS, Michael Baker
*Q4 2022 Moody's Analytics

TAKEAWAYS
• Retail is being spread thin by a finite consumer base within Palo Alto • Stanford Shopping Center cannibalizes retail in other districts within Palo Alto, offering attractive co-tenancy opportunities and retail-appropriate spaces.

Vacancies are exacerbated by University Avenue’s high rentsand less desirable retail spaces, often in need of tenant improvement investments. 1/27/2023 DRAFT
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 20 RETAIL DEMAND

ASSESSMENT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 21 Retail market assessment:

TRADE AREAS
Based on the competitive landscape, natural and
psychological boundaries, travel patterns, and
population trends, Streetsense defined the
following trade areas:

PRIMARY TRADE AREA
Users: Palo Alto residents, employees, students,
overnight guests, and daytime visitors
Frequency: High - at least once or twice per
week
Purpose: Convenience-based shopping and
dining

SECONDARY TRADE AREAS
Users: Nearby residents (Mountain View, Los
Altos, Melo Park, Redwood City)
Frequency: Modest - once or twice every two
weeks
Purpose: Change up from options closer to
home, work, or school

TERTIARY TRADE AREAS
Users: Regional residents (San Mateo, San
Bruno, Burlingame, Sunnyvale, Santa
Clara/Western San Jose, Fremont, Newark)
Frequency: Low - once or twice every month
Purpose: Experience-based shopping and dining
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 22 Retail market assessment:

SHIFTS IN DEMAND POST-COVID
114,826
Total employees working within Palo Alto
69,889
Non-office-based employees working within Palo Alto
44,937
Office-based employees working within Palo Alto
37% of office-based employees are going into an office (San Jose metro area) In Palo Alto, hybrid work has reduced the demand for retail by over 100,000 SF, roughly equivalent to the amount of retail space at Midtown Shopping Center and Charleston Shopping Center combined.

Resident -generated
demand
697,275 SF
Resident-generated
demand
697,275 SF
Visitor-generated
demand
147,605 SF
Visitor-generated
demand
147,605 SF
Employee-generated
demand
452,085 SF Employee-generated
demand
340,620 SF
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
PTA Demand - No Remote Work PTA Demand - Adjusted for Work from Home PTA Retail Demand Hybrid Work Scenario - 2022
- 111,465
SF of lost
retail
demand

TAKEAWAYS
• Palo Alto's daytime population can no longer support the same level of retail it did pre-covid, with fewer on shoppers coming from Stanford Research Park and other office-centric areas to generate foot traffic during the work week • Shifts in daytime population and the balance between residents and employees require a right-sizing of retail
Source: Sitewise, 2022; Bureau of Labor Statistics 2022; Kastle Systems 2022. 1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 23 Retail market assessment:

DEVELOPMENT PIPELINE
Significant development pipeline in the
surrounding markets.

At full build out, these projects will add
17,700 residential units

15.8 million SF of office/life science space
2,300+ hotel keys
* Map shows multi-family residential developments over 50 units and office/life sciences developments over 25,000 SF

TAKEAWAYS
• Menlo Park, Redwood City, and Mountain
View have robust office/life science pipelines,
growing density and building future daytime
populations.
• Fueling the retail ecosystem - density and
daytime populations drive retail spending,
thereby growing retail demand.
• Retail in districts like California Ave would
benefit from increased density and daytime
populations
Source: Moody's Analytics, 2022.
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 24 Retail market assessment:

RETAIL DEMAND PROJECTIONS
Based on resident, employee, overnight guest, and daytime visitor spending, local and regional competition, and projected population growth, the site can support the following:
2,571,970 SF
Total retail demand in 2022
2,627,980 SF
Total retail demand in 2027
2,687,030 SF
Total retail demand in 2032
3,032,900 SF
2,571,970 SF 2,627,980 SF 2,687,030 SF
Supply 2022 Demand 2027 Demand 2032 Demand
Retail Supply and Demand Projections
460,930 SF
oversupply

TAKEAWAYS
• Retail needs to be right-sized -- Retail demand will steadily increase however, without intervention, demand will not reach parity with the existing retail supply over the next 10 years
• Oversupply > vacancy, indicating that vacancy will continue to rise among lower quality or poorly positioned space
• Potential interventions to the retail ecosystem –
• Broadening the mix of uses to increase daytime customer base with office and residential uses
• Supplementing with non-traditional retail uses like entertainment, civic, and cultural uses to activate the ground plane
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 25 Retail market assessment:

DEMAND BREAKDOWN
By 2032, total retail demand can be broken out into the three major retail categories :
• Neighborhood goods & services (NG&S) – 15% of
total retail demand
• Food & Beverage (F&B) – 22% of total retail
demand
• General merchandise, apparel, furniture, and other
(GAFO) – 63% of total retail demand

TAKEAWAYS
• General merchandise uses makes-up more than half of
demand, driven by Stanford Shopping Center, which
consumes 80% of that demand, with a remaining 321,730 SF of general merchandise demand to be distributed among the other districts
• Neighborhood-serving retail demand is constrained by the presence of big box retailers, considered ”category killers” in the region. However, given the population density and high spending levels, the market may be able to support additional neighborhood-serving retail on a small scale.
• Healthy demand for food & beverage, both fast casual serving student and employee populations, as well as full-service 1/27/2023 DRAFT
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 26 04

BUSINESS

ENVIRONMENT
→ SALES TAX ANALYSIS
→ HOSPITALITY/ TOURISM ASSESSMENT
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 27 SALES TAX

ANALYSIS
→ NATIONAL AND LOCAL SALES TAX REVENUE TRENDS
→ FOCUS AREA SALES TAX REVENUES
→ COMPETING CITIES
→ KEY TAKEWAYS
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 28 Business environment:

NATIONAL & LOCAL SALES TAX REVENUE TRENDS
The graphic above is representative of sales tax revenues by Fiscal Year for all sales tax producing businesses in Palo Alto​

NATIONAL SALES TAX TRENDS
Small, locally owned businesses were the hardest hit during the COVID-19 Pandemic, particularly restaurants, retailers and personal service providers. Sales Tax revenues are mostly back to pre-pandemic (FY 2018-19) numbers by the end of FY 2021-22, but many small, locally owned businesses are not back to pre-pandemic cash flow and required revenue margins.

Common economic influences / macro conditions forcing increased cost of doing business across tax generating groups include:
• Inflation and increasing costs of doing business, such as high labor and raw material costs (by December 2022, the Consumer Price Index for All Urban Customers (CPI-U) in the U.S. increased by 6.5% for the prior 12 months)
• Supply chain and manufacturing disruptions
• Employment/ labor shortages
• Shift to online shopping
• COVID-19 safety protocols and compliance
• Interest rates rising

PALO ALTO SALES TAX
Total sales tax revenues are bouncing back from the Pandemic. Palo Alto’s total FY 2021-22 sales tax revenues increased by 20% from the FY 2020-21. However, FY 2021-22 revenues were still 6% below pre-pandemic sales tax in FY 2018-19. CPI-U for the San Francisco Area increased by 4.9% from the 12 months prior to December 2022. Food prices alone advanced 10.2% for the two months ending December 2022.

Note: The dollar amount listed for sales tax revenue here forward represent the 1% sales tax revenue issued to the City of Pa lo Alto Sources: HdL Companies; bls.gov
Even though sales tax appears to be increasing from the Pandemic, local businesses aren’t back to pre-Pandemic cash flow and revenue margins. 1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 29 Business environment:

FOCUS AREA SALES TAX REVENUES BY FISCAL YEAR
Sales tax revenues in the neighborhood centric areas, Charleston and Midtown, were the least impacted during the Pandemic. Neighborhood focused areas produce a low amount of sales tax relative to the other shopping areas and there is a higher volume of essential stores like grocery stores, markets, pharmacies, etc. Combined, Charleston and Midtown Shopping Centers made up about 1% of the City's total sales tax revenue in FY 2021-22.

University Ave, which makes up 12% of total sales tax revenue in the City, has experienced decreasing sales since before the Pandemic. University Ave has been the slowest to recover from the Pandemic & sales are still not above pre- Pandemic levels. University Avenue FY 2021-22 sales tax revenues are 25% below pre-Pandemic FY 2016-17 sales.

California Avenue makes up 2.2% of total sales tax in the City. Sales tax on California Avenue is 12.8% below pre-Pandemic sales in FY 2018-19, and still 9% below FY 2016-17.

Town and Country Village experienced a 21% decrease in sales tax in FY 2019-20, though the shopping area is recovering from the Pandemic. Town and Country Village sales tax makes up 3% of the total sales tax revenue in Palo Alto for FY 2021-22.

Stanford Shopping Center is the largest and most resilient sales tax producer of the six focus areas. While Stanford Shopping Center sales decreased during the Pandemic, FY 2021-22 sales were 25% above pre-Pandemic FY 2016-17 sales tax revenues. Stanford Shopping Center makes up 25% of total sales tax revenue, mainly from retail sales.

Source: HdL Companies
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Millions
Sales Tax Revenues for Fiscal Years 2016-17 to 2021-22
Charleston Shopping Center Midtown Shopping Center California Ave Town and Country Village Downtown Palo Alto Stanford Shopping Center 1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 30 Business environment:

NG&S – Neighborhood Goods & Services
NG&S makes up 4% of total sales tax revenue for the six focus districts (2% of total sales tax for the City of Palo Alto). Most NG&S businesses are not big sales tax producers (I.e., personal services, grocery stores, gyms). For example, Grocery Store taxable sales are roughly 25-30% of their total sales. Charleston and Midtown Shopping Centers show the highest percentage of NG&S relative to the total sales tax revenue in those shopping districts (40% and 54%, respectively).

F&B – Food & Beverage
F&B makes up 27% of total sales tax revenue for the six focus districts (11.4% of total sales tax for the City). University Ave produces the highest value of F&B sales tax revenue, likely due to the higher concentration of restaurants compared to the other focus areas.

GAFO – General Merchandise, Apparel, Furniture, Other
GAFO makes up 58% of the total sales tax revenue for the six focus districts (24% of total sales tax for the City). Retail sales produce the largest amount of sales tax revenue. Stanford Shopping Center and University Avenue combined make up 95% up GAFO sales tax for the six focus areas ($5.1M and $1.1M, respectively).

NON-RETAIL
Non-retail sales tax revenue in the six focus areas include automotive sales, automotive rentals and repairs, business services, medical/biotech businesses, and textile and furnishings. Non-retail makes up 11.4% of total sales tax revenue for the six focus districts (4.8% of total sales tax for the City).

FOCUS AREA SALES TAX REVENUES BY RETAIL CATEGORY FISCAL YEAR 2021-22 District Number of
Businesses*​ NG&S​ F&B​ GAFO​ Non Retail​ Totals​
Charleston
Shopping Center​ 10​ $36,161​ $23,525​ $30,590​ - $90,276​ Midtown 42​ $109,320​ $74,929​ $6,305​ $11,397 $201,951​ California Ave​ 99​ $56,322​ $437,306​ $38,449​ $58,149 $590,226​ Town and Country
Village​ 59​ $87,101​ $328,968​ $274,874​ $3,237 $694,180​ University Avenue​ 432​ $147,868​ $1,640,977​ $1,118,451​ $291,371 $3,198,667​ Stanford Shopping
Center​ 151​ $5,980​ $574,954​ $5,063,008​ $934,975 $6,578,917​ Totals​ 793​ $442,752​ $3,092,536​ $6,531,677​ $1,299,129 ​ $11,354,217​ *Number of businesses is only representative of those that are sales tax producing. Non sales tax producing businesses that are not accounted for in this table may include offices, medical centers, certain business and personal services, and certain fitness centers or gyms.

Ranked in order of lowest to highest sales tax revenue producing for FY 2021-22 Source: HdL Companies
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 31 Business environment:

KEY TAKEAWAYS
Palo Alto is the largest sales tax producer
compared to the competing cities identified here,
largely due to GAFO and Non-Retail sales tax
revenues.

GAFO is dominated by Stanford Shopping
Center's sales tax revenue, which makes up 90%
of total GAFO sales at $6.6 million for FY 2021-

22. Non-retail-sales mostly come from auto and
transportation related businesses (12 of which are
in the top 100 sales tax producing businesses in
the City).

Palo Alto is lacking in NG&S businesses in
comparison to Redwood City, Mountain View and
Menlo Park.

Palo Alto's F&B sales tax revenue is second
behind the City of Mountain View.

COMPETING CITIES: TOTAL SALES TAX REVENUE FISCAL YEAR 2021-22 $27,060,912
$19,778,575
$18,795,098
$11,780,240
$5,390,935
$2,458,455
Source: HdL Companies
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 32 Business environment:

NG&S – Neighborhood Goods & Services
Palo Alto residents are likely shopping for neighborhood goods and services in competing areas. Palo Alto has the lowest NG&S SDPC, even lower than Burlingame and Los Altos who bring in less NG&S sales tax revenue compared to Palo Alto. Menlo Park has the highest SDPC in the NG&S category even though Redwood City and Mountain View receive a significantly higher amount of NG&S sales tax revenue.

F&B – Food & Beverage
Palo Alto is doing better than most competing cities in bringing people to the City for F&B, including Menlo Park, Redwood City, and Los Altos. Burlingame and Mountain View have slightly higher SDPC for F&B.

GAFO 0 General Merchandise, Apparel, Furniture, Other
Palo Alto has the highest SDPC in the GAFO category, largely due to the Stanford Shopping Center.

NON-RETAIL
Palo Alto is likely bringing consumers from outside the area to shop for non- retail sales tax producing goods and services, like auto and transportation businesses, as well as from the Stanford Research Park. Burlingame has the highest SDPC in non-retail sales, which likely comes from the auto and transportation industry (new and used car sales, rentals, repairs, etc.).

COMPETING CITIES: RETAIL SALES DOLLAR PER CAPITA (SDPC) FISCAL YEAR 2021-22 SDPC is a macro approach to identify possible trends within a city or region regarding to spending habits. Average SDPC is derived by multiplying out the 1% total point of sales tax dollars and then dividing them by the population size of their community.
• Below Average: Suggests resident do some shopping outside of the area; lack of local supply by preferred retailer and restaurant concepts • Above Average: Suggest consumers from outside the area are attracted to the local retail market; have preferred retailer and restaurant concepts.

Source: HdL Companies
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 33 Business environment:

KEY TAKEAWAYS
Palo Alto’s University and California Avenues are not
recovered and back to pre-Pandemic FY 2016-17 sales tax revenues.

Most competing downtowns, excluding Mountain View’s
Castro Street, have exceeded their FY 2016-17 sales tax.

Despite the slow recovery, University Ave produces the most sales tax revenue compared to the competing downtowns
identified here.

California Ave sales tax revenue is more comparable to Los Altos Downtown in terms of sales tax revenue (Note: While sales tax may be comparable, there is a clear difference in terms of ownership and management when comparing
California Avenue to Downtown Los Altos).

COMPETING DOWNTOWNS: SALES TAX REVENUES FISCAL YEAR 2021-22 Source: HdL Companies
California Ave Los Altos
Downtown
Menlo Park
Downtown
Mountain View
Downtown
Redwood City
Downtown
Burlingame
Downtown University Ave
FY 2016-17 $649,364 $646,304 $1,264,170 $1,550,566 $1,948,910 $2,211,606 $4,245,314 FY 2021-22 $590,226 $801,157 $1,378,004 $1,422,879 $2,315,975 $2,724,840 $3,198,667 $0.65 $0.65
$1.26
$1.55
$1.95
$2.21
$4.25
$0.59
$0.80
$1.38 $1.42
$2.32
$2.72
$3.20
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50Millions
Competing Downtown Sales Tax Revenues
Fiscal Year 2016-17 compared to 2021-22
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 34 Business environment:

Total sales tax revenues are bouncing back from the Pandemic, but recovery from the COVID-19 Pandemic is uneven across key tax generating districts and the local economy is not fully recovered. • Fiscal year 2021-22 sales tax revenues Midtown and Charleston Shopping Centers, California Avenue, and University Avenue are below FY 2016-17 sales. • Palo Alto's downtown areas (University Ave and California Ave) have had the slowest recovery following the COVID-19 Pandemic. • University Ave has been in a decline since pre-Pandemic, for at least the last five years. • Stanford Shopping Center & Town and Country Village have been able to better maintain sales tax revenue compared to other areas of the city. Both shopping centers have a central management team, which may contribute to the success of their businesses. • Shopping Center is a regional attraction that brings consumers in from all throughout the Peninsula; it's the largest sales tax producer in Palo Alto and when compared to GAFO sales tax in competing cities.
• Palo Alto has the highest sales tax revenue compared to competing cities, largely as a result of GAFO sales (Stanford Shoppin g Center) and non-retail sales (from auto & transportation related businesses).
• Neighborhood goods and service (NG&S) businesses appeared to be the least impacted by the Pandemic in terms of sales tax revenue, however NG&S business types produce the least amount of sales tax revenues.
• The comparative analysis showed that Palo Alto has the lowest sales dollar per capita for NG&S businesses and compared to competing cities.

While sales tax recovery is important, it's not a true reflection of recovery and profitability of small businesses that are still struggling with cash flow and margins from the Pandemic.

KEY TAKEAWAYS
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 35 HOSPITALITY/

TOURISM

ASSESSMENT
→ LODGING
→ VISITORS
→ OPPORTUNITIES
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 36 Business environment:

HOSPITALITY/TOURISM: LODGING
BARRING RECESSION, FULL RECOVERY BY 2023*
Palo Alto’s lodging industry is recovering at the national pace and is currently approaching 2019 levels. Palo Alto’s Occupancy Rate is highest mid-week, slightly lower than either U.S. or California Average.

STABLE BUSINESS TRAVELER BASE
Palo Alto’s largest contributors to occupancy are medical, education and business travelers who fill approximately 2,200 hotel rooms, including about 300 via the two new Marriott properties.

RECESSION CONCERNS
Oxford Economics expects the US to enter a recession in the first half of 2023. This is an ominous prospect as travel spending falls by roughly twice the rate of the economy in a typical recession.

Source: STR
Source: Tourism Economics
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 37 Business environment:

HOSPITALITY/TOURISM: VISITORS

INTERNATIONAL
Lag in recovery from international
travelers will continue to impact Palo
Alto more than most cities.

Of particular note, Chinese visitors had
been the largest source of international
visitors to Palo Alto, and that nation’s
slow recovery lags all other major
inbound traveler sources to California.

BUSINESS
Less business travel as virtual meetings
grow. The transition to virtual meetings, caused
by the pandemic, generally worked well and
contributes to California's (and the U.S.') slower
business travel recovery. Cost savings
to businesses was meaningful, and lower
company carbon footprints was and remains
important to many.

Business travel and the related impact on Palo
Alto’s economy will eventually recover to pre
pandemic levels, but it will likely be different
than in the past, and in ways yet to be confirmed.

DOMESTIC LEISURE
Palo Alto is not a typical, overnight
tourist destination as it lacks
major destination attractions. However, there are
unique local destinations to be celebrate.

Palo Alto’s largest audience sector for
hospitality spending (restaurants, attractions,
shopping) and tax revenues is a combination of
residents and workforce. Its next largest
includes residents and workforces from neighboring
Bay Area communities, such as Mountain View,
Menlo Park, Sunnyvale, Redwood
City, Burlingame and Los Altos.

OPPORTUNITIES
• Incentivize longer business travel or
“Bleisure” travel
• Grow weekend occupancy rates with non-
business travel
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 38 05

ADMINISTRATIVE

ASSESSMENT
→ REGULATORY ASSESSMENT
→ ORGANIZATIONAL CAPACITY & STEWARDSHIP
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 39 REGULATORY

ASSESSMENT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 40 Administrative Capacity:

TAKING OUR CUE FROM THE COMPREHENSIVE PLAN
The existing 2030 Comprehensive Plan is the primary tool for guiding preservation and development of Palo Alto.

There are three sections in the plan which provide economic development directives...
• Business & Economics – "business friendly and thriving" • Land Use – Updates to the municipal code that support a "diversification of land uses", including "retail that caters to daily needs of residents"; "stimulates housing near
retail"; and allows for the "conversion of non-retail
commercial FAR to residential FAR, where appropriate"
• Transportation – Improve Walkability & Bikability by
"improving connectivity between businesses, parking and transit stops", including "public art in alleyways" to
encourage walking
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 41 Administrative Capacity:

Municipal codes are often an accumulation of general
controls that were used to solve specific problems in
specific places including:
• Concerns over rising retail rents from use groups (i.e. office, chain stores, storage facilities, etc.) perceived as contributing to rent inflation for "more desirable" uses • Conflicts between residents and industrial or
entertainment uses
• Rules that restrict uses with a low-income or
transient customer base, like laundromats
• Concerns over “bad actors”, like bars and dance clubs

ZONING CODE BASICS
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 42 Administrative Capacity:

ZONING CODE BASICS

GROWTH IN ON-LINE

SHOPPING
Retailers are using stores for local distribution, which may be restricted as “warehousing & distribution”

TECHNOLOGICAL

ADVANCES
Breweries, specialty food manufacturing and maker
spaces are restricted as “Manufacturing & Processing”

DEMOGRAPHICS AND

LIFESTYLE
Wellness and medical services are restricted as
“Medical Office”
Recent trends in retail and changing work patterns can render some sections of the Zoning Code outdates, E.G.

Customer Pick-Up/Returns within Store
Urgent Care, Adams Morgan, Washington, DC
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 43 Administrative Capacity:

OVERVIEW OF APPLICABLE ZONING CONTROLS GOVERNING USES
Each overlay delineates separate permitting and use requirements and can make it difficult for an applicant to determine what rules apply.

DISTRICT BASE DISTRICT OVERLAY 1 OVERLAY 2 OVERLAY 3 OVERLAY 4 OVERLAY 5

CALIFORNIA
AVE
CC – Community
Commercial
Retail
Preservation
R – Retail
Shopping
P – Pedestrian
Shopping
PTOD – Cal Ave
Pedestrian and
Transit Oriented
Cal Ave Parking
Assessment
District

MIDTOWN &

CHARLESTON

SHOPPING
CENTER
CN – Neighborhood
Commercial
Retail
Preservation
GF – Ground
Floor
P – Pedestrian
Shopping
Special Regulations
governing proximity
to Residential

DOWNTOWN
(University Ave)
CD – Downtown
Commercial
Retail
Preservation
GF – Ground
Floor
P – Pedestrian
Shopping

DOWNTOWN
(Lytton)
CD – Downtown
Commercial
Retail
Preservation
P – Pedestrian
Shopping
TOWN &

COUNTRY

VILLAGE
CC – Community
Commercial
Retail
Preservation

STANFORD

SHOPPING
CENTER
CC – Community
Commercial
Retail
Preservation
Highly Regulated
Environments
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 44 Administrative Capacity:

ZONING OVERVIEW: CALIFORNIA AVENUE
CrossFit – Restricted due to size. Typical SF 2k
– 2,500k sf
Pottery Making – Restricted under Learning
Centers and/or Industrial
Drybar – Restricted under both Salon and Formula Ordinance Pediatrician – Restricted under Medical Office
C C ( 2 )( R )( P )
Along California Avenue, many Retail and “Retail-Like” uses face regulatory barriers to entry, including businesses with 10 or more locations nationwide
CONDITIONAL USE PERMITS REQUIRED FOR:
• Beauty Salons exceeding 1,800 SF
• Nail Salons exceeding 1,800 SF
• Barber Shops exceeding 1,800 SF
• Fitness or Exercise exceeding 1,800 sf
• Learning Centers for Individual or Small Group Settings • Laundry & Dry Cleaning
• Financial Services (Except Drive-In) on ground floor
• Medical Offices up to 5k only when fronting Cal Ave.
• Commercial Recreation Uses up to 5k only when fronting Cal Ave • Formula retail (with more than 10 stores nationally)

UNMENTIONED AND THEREFOR NOT ALLOWED
• Light Industrial as accessory uses (i.e., maker spaces)

RESTRICTED GROUND FLOOR USE
• Residential
Fitness – Restricted by Square Footage
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 45 Administrative Capacity:

OPPORTUNITY
Right-size the Retail Preservation Ordinance to focus on targeted areas of concentrated retail activity

CITY-WIDE RETAIL PRESERVATION ORDINANCE
Source: Kastle Systems Back to Work Barometer
In 2015, zoning protections were passed to restrict ground floor retail conversions to non-retail uses in the face of significant competition for space from higher paying office tenants. 2015 MARKET CONDITIONS
• At the time, Palo Alto was experiencing “record high
commercial rental rates” (average $61.44 psf) and “low office vacancy rates” (2.83%)
2021-2022 MARKET CONDITIONS
• 2022 Q3 Silicon Valley Office Vacancy: 17.7% (Source:JLL); 2021 Palo Alto Office vacancy rates 13.64%
(Source: CommercialCafe, 2021)
• 2021 office average asking rents: $93.75 (Class A
Space); $37.04 (Class B Space)
• Office occupancy rates for San Jose metro are between 27.3% -

41.7%, the lowest of the top ten metro area measured by Kastle Systems nationwide.
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 46 Administrative Capacity:

ADDITIONAL REGULATIONS AND POLICIES

FORMULA ORDINANCE
Formula Retail Businesses have 10 or more business
locations in the United States that maintain uniformity across merchandise, décor, scheme, trademark, etc.

OPPORTUNITY
Consider a cap (i.e. Arcata, CA), a focus on restaurants (i.e. Carmel-by-the-Sea) a restriction by size (i.e.

Coronado)

SANDWICH & A-FRAME SIGNS
The Palo Alto Municipal Code defines dictates that these signs must be located on private property. This effectively renders nearly all signs along University Avenue and
California Avenue non-compliant.

OPPORTUNITY
Allow as-of-right merchandising, benches, and signage
within 2' of storefront (i.e. NYC)

ARB ARCHITECTURAL REVIEW
ARB provides aesthetic controls and design approval,
required for the issuance of building permits, to address the visual impact of projects on adjacent properties and public streets.

OPPORTUNITY
Clarify role of ARB and provide illustrative or plain
language design guidelines to offer businesses
predictability in the approval process
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 47 ORGANIZATIONAL

CAPACITY &

STEWARDSHIP
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 48 Administrative Capacity:

Arts, Culture & Entertainment
Palo Alto is well served by Arts, Culture &
Entertainment at both the City and District
Level.

Palo Alto's Economic Development service
delivery mechanisms are limited to the City
and the Palo Alto Chamber, which is a city-
wide membership organization.

At this time neither University
Ave/Downtown nor California Avenue have
active stewards to lead marketing, promotion,
event coordination, enhanced sanitation and
security (above and beyond what a city
provides).

ORGANIZATIONAL LANDSCAPE
Palo Alto
Chamber of
Commerce
District City
Economic Development
City of
Palo Alto
Palo Alto Art
Center/
Foundation
Palo Alto
Junior
Museum
and Zoo
Lucie Stern
Community
Center/ Palo
Alto's
Children'
Theatre
Albert &
Janet
Schultz
Cultural Arts
Hall
Elizabeth F.

Gamble
Gardens
Downtown
Library
Pacific Art
League of
Palo Alto
Cal Avenue
Merchants
Association
(Defunct)
The
Museum of
American
Heritage
Downtown
Palo Alto
BID
(Suspended)
University Ave
Parking
Committee
(overseen by
Chamber)
(Defunct)
Destination
Palo Alto
(Terminated)

OPPORTUNITY
Reactivate and support improvements to
stewardship along University and Cal Ave
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 49 → PUBLIC AND PRIVATE REALM ELEMENTS
→ ACCESSIBILITY & CONNECTIVITY
→ FOCUS AREA SWOT ANALYSIS
06 PHYSICAL

ASSESSMENT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 50 Physical environment:

SIDEWALKS

TRANSPORTATION

NETWORKS

WAYFINDING/

SIGNAGE
ALLEYS

GATHERING
SPACES

BUILDINGS

PARKING

ELEMENTS INFORMING CHARACTERISTICS OF

BEST-IN-CLASS RETAIL PLACES

MANAGED
…with leadership
and capacity to
engage merchants
and property
owners and
implement
improvements
SAFE
…but more
importantly
perceived as safe

ACCESSIBLE
…to a customer base
…with little friction
for arrival/departure
regardless of mode

VISIBLE
…by potential
customers either
as they drive,
bike or walk by

CHAMPIONED
…with demonstrated
signs of maintenance
and investment

PEDESTRIAN

FRIENDLY
…co-located
businesses that
encourage cross
shopping
…walkable and
with few
disruptions in
continuity
BRAND

RESONANCE
…with clear
branding strategy
and identity

ANCHORED
…by retail
destination driver(s)
… by culture,
institutional or
entertainment uses
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 51 CITY-WIDE

ELEMENTS
→ ACCESSIBILITY & CONNECTVITY
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 52 Physical environment:

CITY-WIDE ACCESSIBILITY & CONNECTIVITY: CONCEPTS
Regional and local transportation systems
will be relied upon by consumers within the
trade areas, near and far.
01 Regional Systems should be accompanied by
last-mile options (i.e. shuttles, bicycle,
scooters, delineated infrastructure)
02 Last-mile options are often first (and only)
options for local residents, workers, and
students.
03 Are there any physical barriers to overcome?
Are there accessibility gaps?
Is navigation made easy?
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 53 Physical environment:

CITY-WIDE ACCESSIBILITY & CONNECTIVITY:

ROADWAY & TRANSIT NETWORKS

KEY TAKEAWAYS
• Road Network:
• Robust road network, which provides good regional
and local connectivity - Around 90% of households
own at least one vehicle.
• Network hindered by lack of grade separated
railway crossings, but there are Comprehensive
Plan policies to implement more in the future.
• Transit Network:
• Low to moderate (30 to 57) transit scores for all
districts.
• Line redundancy (mostly regionally serving) for
regional and community centers while neighborhood
centers have no service redundancy.
• Most of Palo Alto, from a geographic standpoint,
does not have access to transit within a ¼ mile
walk, including areas with lower median income
and higher existing and planned density.
• Future shuttles will provide last mile options in
places with limited transit access.
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 54 Physical environment:

CITY-WIDE ACCESSIBILITY & CONNECTIVITY:

PEDESTRIAN & CYCLING NETWORKS

AREAS LACKING
SIGNAGE/ MARKINGS*
* Focuses on key locations
relevant to focus areas

KEY TAKEAWAYS
• Pedestrian Network:
• While overall robust with walk scores from 77 to
97, some areas lack sidewalks of proportionate
scale to adjacent roadway, adequate pedestrian
crossings and median refuges, or (well-maintained)
planted buffer areas.
• Bicycle Network:
• Cycling infrastructure is robust with more planned
connectivity (bike score of 97 to 100) but
navigating by signage/markings is difficult as it is
lacking in key locations.
• Currently no micromobility programs in place.
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 55 FOCUS AREA

SWOT ANALYSIS
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 56 Physical environment:

DOWNTOWN: KEY FINDINGS

ELEMENTS STRENGTHS WEAKNESSES
Access/
Connectivity
Good transit access and
redundancy
Generally good pedestrian
connectivity throughout
Unsupported pedestrian access/desire
lines from Caltrain Station
Biking navigation hindered by lack of
signage/markings
Parking Large amount and underutilized Complicated for all and cost prohibitive for certain populations
Wayfinding/
Signage Ample signage throughout No cohesive branding or gateway features
Sidewalks &
Street
Furniture
Adjacent parklets increase
sidewalk space for more use
Poorly maintained and/or mismatch
furniture and bike racks
Gathering
Spaces
Good amount of public and private
gathering spaces with private
spaces being well designed
Expansive public gathering spaces with
little programming or defining
features
Alleys
Mostly around 20 ft wide with
exposure to main streets
Several blank walls
Mostly utilitarian for trash pick-up
with inconsistent lighting sources
Buildings
Good mix of eclectic architecture
Room for more bulk and density
Several existing narrow buildings with
100 ft + depth
Inconsistent treatments of storefront
vacancies
Narrow on side with angled parking
Good mix of eclectic architecture
Opportunities
Threats
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 57 Physical environment:

CALIFORNIA AVE: KEY FINDINGS

ELEMENTS STRENGTHS WEAKNESSES
Access/
Connectivity
Good transit access & redundancy
Planned BRT with improvements
Good bicycle connectivity
Multi-jurisdictional coordination
required for BRT/stop improvements
Parking
Large amount and underutilized
Digital wayfinding in new garage
Surface parking and structures take up
large portions of developable blocks
Wayfinding/
Signage
Public art consistently provided
along the street
No cohesive branding or memorable
gateway features
Sidewalks &
Street
Furniture
Wide sidewalks along California
Avenue with well-maintained
landscaping and street furniture
Sidewalks along El Camino Real out of
proportion with street
Gathering
Spaces
Nicely designed/ maintained
station plaza
Closed street and bulb outs provide
additional public gathering space
Closed street looks and feels
temporary
Alleys
Mostly around 20 ft wide with
access to/from main streets
Heavily used rear access
Mostly utilitarian for trash pick-up
with inconsistent lighting sources
Buildings
Building facades consistently align
California Avenue with most
providing uncovered/ transparent
windows
Unremarkable architecture – some
with limited permeability
Large gap of engaging building facades
from station plaza
120 ft ROW
Opportunities
Threats
El Camino Real hostile biking/ pedestrian
experience - no median refuge for crossing
20 ft ROW
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 58 Physical environment:

STANFORD SHOPPING CENTER: KEY FINDINGS

ELEMENTS STRENGTHS WEAKNESSES
Access/
Connectivity
Good transit access and redundancy
Good pedestrian and bicycle access
to/from the district Limited bicycle connectivity once
inside the district
Parking
Large amount, well maintained with
mature landscaping and high visibility
"Park once and walk" environment
Expansive parking lots and
structures located on the periphery
creating an island effect
Wayfinding/
Signage
Ample amount of
Diverse, yet cohesive, types (including
digital)
N/A
Sidewalks &
Street
Furniture
Wide, well-maintained with generous
landscaping within district
Adequately sized along exterior roads
with planted buffers
Exterior sidewalks between
roadway and parking areas –
passthrough environment
Limited bus shelters/ seating
Gathering
Spaces
Variety of nicely designed and
maintained spaces with plush
landscaping, shade, seating, and
lighting
No gathering spaces along the
periphery
Buildings
High-quality, engaging storefronts
throughout the district, some with
spill-over
Storefronts mostly insular -
Outwardly facing storefronts are
100 - 450 feet from street
Opportunities
Threats
Most direct pedestrian Caltrain
connection could use maintenance
Wide, well-maintained with generous
landscaping within district
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 59 Physical environment:

TOWN & COUNTRY VILLAGE: KEY FINDINGS

ELEMENTS STRENGTHS WEAKNESSES
Access/
Connectivity
Robust vehicular access & adequate transit
access
Well-connected, reasonably sized
sidewalks, including delineated crossings,
and bike parking within district
Two separated north/south ped/bike paths
El Camino Real hostile
biking/ pedestrian experience -
no median refuge for crossing
No east/west bicycle
connection
Parking
Ample, highly visible parking with
generous, well-maintained landscaping/
shade
"Park once and walk" environment
Expansive parking along
exterior roads detracts from
visibility of the buildings
Wayfinding/
Signage
Ample signage/wayfinding with consistent
branding
Charming signage under arcades
Not every store provides
signage on exterior of building,
limiting awareness
Sidewalks &
Street
Furniture
Comfortable sidewalk dimensions within
the district
Tree-lined sidewalks along exterior roads
Limited bus shelters/ seating
Gathering
Spaces
Utilitarian/passthrough spaces thoughtfully
design to be used as publicly accessible
gathering spaces
Lacks central gathering space
Buildings
Regionally responsive architectural style –
large arcade
Curated vacant storefronts
Subtle scale
Opportunities
Threats
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 60 Physical environment:

MIDTOWN: KEY FINDINGS

ELEMENTS STRENGTHS WEAKNESSES
Access/
Connectivity
Good access for all modes
Comfortable sidewalks for
walking/waiting with bus seating
Good surrounding bicycle
connectivity
Lacks transit redundancy and bus
shelters
Several curb cuts along Middlefield
disrupting pedestrian connectivity
Inconsistently placed bicycle parking
Parking
Adequate parking provided with
connected parking across
independent parcels
Good visibility
Weak "Park once and walk"
environment
Minimal parking lot
landscaping/shade
Wayfinding/
Signage Eclectic mix of business signage No gateway signage/ features Sidewalks &
Street
Furniture
Adequately sized and maintained
sidewalks along Middlefield Road
with space for landscape buffers
Planted areas along Middlefield could
be improved
Buildings set back from the road lack
delineated pedestrian paths through
parking lots
Gathering
Spaces
A few privately owned gathering
spaces seamlessly connect to public
sidewalk
Lacks a central gathering space
No publicly owned/maintained
gathering spaces
Buildings
Eclectic mix of buildings styles,
materials, and colors – authenticity
Most storefronts permeable along
Middlefield Rd.

Unremarkable and
outdated/tired architecture
Inconsistent building wall along
Middlefield Rd.

Opportunities
Threats
Planted areas along Middlefield need
improvement
1/27/2023 DRAFT
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 61 Physical environment:

CHARLESTON SHOPPING CENTER: KEY FINDINGS

ELEMENTS STRENGTHS WEAKNESSES
Access/
Connectivity
Good vehicular access
Some transit access
Colorado Rd has good bicycle and
pedestrian infrastructure
Limited bus access – no redundancy
Lacks adequate bicycle and pedestrian
infrastructure along Middlefield Rd
Parking
Ample, underutilized parking with
high visibility
"Park once and walk" environment
Majority of lot used for parking/
maneuvering
Lightly landscaped with little shade
Wayfinding/
Signage
Consistent, well-maintained
signage Outdated shopping center signage
Sidewalks &
Street
Furniture
Adequately sized and maintained
sidewalks along Charleston Rd.

Sidewalks along Middlefield out of
scale with size of street with no
vegetated buffer
Narrow pedestrian space along
storefronts in some areas
Gathering
Spaces
Underutilized space repurposed to
gathering space
Arcade along building provides
intimate seating option
Few gathering spaces, overall - Limited
space around coffee shop
Repurposed space feels exposed/ lacks
shade - Places where shade exists not
suited for gathering
Buildings Buildings well maintained with
consistent treatments
Insignificant, outdated architecture
Suburban form/scale not conducive to
longer durations of stay
Opportunities
Threats
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 62 07

GUIDING

PRINCIPLES
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PALO ALTO, CA ——————————ECONOMIC DEVELOPMENT STRATEGIC PLAN 63 Administrative Capacity:

REINFORCE HIERARCHY OF PLACE
• Stabilize and reinforce Downtown as a destination through improvements and stewardship
• Embrace California Avenue as a community and neighborhood serving place by increasing opportunities for new businesses and support for existing businesses

IMPROVE ACCESSIBILITY
• Embrace walking and biking solutions by fixing broken links and reinforcing walkability to/from all of the City's commercial districts • Address parking policies and systems that add complexity and cost burden on low-wage, part-time workers

ADOPT POLICIES THAT REFLECT CHANGING MARKING CONDITIONS • Ease the regulatory burden for businesses and revise outdated restrictions that create hurdles to tenancy
• Focus retail and retail-like uses in places where they are market-supported

GUIDING PRINCIPLES
1/27/2023 DRAFT
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PALO ALTO, CA —————————— ECONOMIC DEVELOPMENT STRATEGIC PLAN 64 THANK YOU
1/27/2023 DRAFT
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Item No. 3. Page 1 of 3

CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: Study Session
Lead Department: City Manager
Meeting Date: February 13, 2023

TITLE
Buena Vista Mobile Home Park Update from the Santa Clara County Housing Authority

RECOMMENDATION
Staff recommends that the Council receive this report and discuss the update by the Santa Clara County Housing Authority (Housing Authority) regarding the Buena Vista Mobile Home Park (Park).

EXECUTIVE SUMMARY
The Santa Clara County Housing Authority (Housing Authority) will present on (1) its efforts to date (including Park upgrades and improvements, ongoing compliance and property management) and (2) its plan for redeveloping the Park.

The Housing Authority is moving forward with a major redevelopment of the Park. As a first step, the Housing Authority is soliciting feedback on initial site concepts. Park residents were invited to attend a meeting in late January to learn about the site concepts and provide feedback on proposed design, amenities, security, and living spaces. The Housing Authority is presenting the site concepts to the Palo Alto City Council and the Santa Clara County Board of Supervisors as an additional way to receive resident feedback in addition to hearing from elected representatives.

The Housing Authority has provided some contextual documents included as attachments to this report.

BACKGROUND
The Park, located at 3980 El Camino Real, is related to a tri-party agreement between the City of Palo Alto, Santa Clara County and the Santa Clara County Housing Authority. These three parties came to a multiyear three-party agreement 1 focused on maintaining affordable housing, enhancing the habitability of the property, avoiding resident displacement, and investing in 1 City of Palo Alto, City Council Staff Report, ID#7125, June 27, 2016, BV MOU SIGNATURE FINAL (HACSC June 14 2016) (cityofpaloalto.org)
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Item No. 3. Page 2 of 3
rehabilitation and improvements. The tri-party agreement includes an improvements timeline and some expected outcomes. Due to a variety of reasons, further explained in Attachment A, the improvements and outcomes are behind schedule. The City, as a party to that agreement, committed to providing $14.5 million from its affordable housing fund to aid in acquisition and preservation of the site for affordable housing. Since the onset of the agreement, the Housing Authority has:
•Relocated Park residents as needed (e.g., to new mobile homes), •Removed trash and abandoned cars,
•Conducted necessary home repairs,
•Installed new utilities,
•Replaced aged sewer and water lines,
•Replaced paving,
•Demolished abandoned coaches (i.e., mobile homes),
•Capped unused utilities for safety,
•Provided spaces for services and an afterschool program, and •Worked to bring the Park into compliance with various laws.

FISCAL/RESOURCE IMPACT
Funding for site acquisition and Park improvements was approved in June 2016. No additional funding is requested at this time.

STAKEHOLDER ENGAGEMENT
The Housing Authority held a general information community meeting with Park residents in November 2022 attended by approximately 50 residents. This was followed by another meeting in January 2023, attended by approximately 45 residents, to share redevelopment plans and site concepts and receive resident feedback. Additionally, the Housing Authority has indicated its intention to meet individually with residents to discuss specific situations and concerns. In terms of broader outreach, the Housing Authority is sharing plans and site concepts with the City Council to receive public feedback.

ENVIRONMENTAL REVIEW
The City Council discussion of the Park’s site concepts will not cause physical changes to the environment and does not constitute a “project” under the California Environmental Quality Act (CEQA).

ATTACHMENTS
Attachment A: Buena Vista Mobile Home Park Project Summary Item 3
Item 3 Staff Report

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Item No. 3. Page 3 of 3
Attachment B: Site Concept
Attachment C: Sample GIN
Attachment D: January 2023 Resident Meeting Handout
APPROVED BY:

Ed Shikada, City Manager
Report #: 2212-0560
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Santa Clara County Housing Authority
505 West Julian Street
San José, CA 95110
408.275.8770
scchousingauthority.org

Study Session on the Buena Vista Mobile Home Park

Background Information
Buena Vista Mobile Home Park (Park) is located at 3980 El Camino Real, on 4.5 acres in Palo Alto, CA. In 2017, the Santa Clara County Housing Authority (Housing Authority), the County of Santa Clara (County), and the City of Palo Alto (City) came together as partners to purchase the Buena Vista Mobile Home Park (Park) in order to preserve affordable housing in one of the most cost-prohibitive and highly-resourced cities in the Bay Area. The Park’s acquisition by the Housing Authority and its partners secured existing affordable housing stock and prevented the potential displacement of residents by the previous owner. The property was purchased for $40,375,000, with $14,500,000 contributed by the City, $14,500,000 from the County and $12,075,000 from the Housing Authority. The Housing Authority also committed an additional $19,925,000 towards the renovation and improvement of the Park. After the Park was acquired, all three parties entered into a joint Regulatory Agreement, which requires that the Park be improved, and the rents are affordable for each family based on their income. At present, the Park consists of 77 occupied homes, with variety of income levels, housing types, family sizes, as well as homeowners and renters. In total, the Park provides housing for approximately 270 Palo Alto residents.

It is important to note that when the Housing Authority took ownership of the Park in late 2017, the intention was to lease it to an operator/developer who would quickly stabilize the Park and commence with renovations. Unfortunately, this plan was impacted greatly by the difficult realities of the Park’s condition, including the state of the infrastructure systems, the physical condition and age of the units, a significant relocation project within the Park, and the varying degree of barriers facing each household. While not insurmountable, these difficult realities have slowed down our efforts significantly while the Housing Authority carefully and methodically move forward with Park relocations, renovations and site upgrades, while balancing the needs and desires of residents with financial and legal considerations, code requirements, and physical constraints. The Housing Authority’s goal continues to be the preservation and improvement of the Park, and the stability and success of its residents.

Below, please find the investments the Housing Authority has made in time and resources over the past five years into the Park. The work, efforts, and partnership with the City, County, and Housing Authority has allow us to get to this point to move forward redevelopment.

Park Upgrades & Improvements
Since 2017, the Housing Authority has been making substantial investments to improve the infrastructure and quality of life for residents of Buena Vista. Early on, the Housing Authority undertook a major relocation project, moving several families from a dilapidated motel on the property and relocating mobile homes from a portion of land that was retained by the original owner of the Park. In 2020 and 2021, 18 new RVs and Manufactured Homes were brought into Item 3
Attachment A - Buena
Vista Mobile Home Park
Project Summary

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Santa Clara County Housing Authority
505 West Julian Street
San José, CA 95110
408.275.8770
scchousingauthority.org

the Park as part of a Replacement Housing Pilot Program, creating better quality housing for 61 Park residents. Other substantial investments include the clearing of trash and abandoned cars, repairing homes, installing new electrical and gas utilities, replacing aged sewer and water lines, replacing paving, demolishing abandoned coaches, capping unused utilities for safety, and providing space for onsite services and the afterschool program.

On-Going Compliance & Property Management
At the same time, the Housing Authority was tasked with bringing the Park and its residents into compliance with the new regulatory agreement and rental housing laws. The Housing Authority and its partners, including The John Stewart Company, worked towards completing Housing Quality inspections on the units, ensuring the units were up to code and Health & Safety standards, issuing compliant leases, and certifying household income levels. This work continues today as residents adjust to the new management and policies of the Park.

Redevelopment Plan
In late 2019, the Housing Authority assumed the role of Developer and owns the Park through its affiliated non-profit, Poco Way HDC, Inc. In its capacity as Developer, the Housing Authority is working towards creating a feasible plan to redevelop the Park into quality, affordable housing. The major goals of this redevelopment plan are to:

1) Ensure there is quality housing for all current Buena Vista residents at the Park 2) Provide new, comparable housing units for all current residents 3) Ensure all current owners retain their homeownership rights 4) Ensure rents at Buena Vista Park are affordable for the current and future residents based on income levels
5) Increase community and amenity space
6) Remove the gas lines and upgrade all utilities and coaches to electric

Currently, the plan includes maintaining a portion of the Park as a mobile home park and carving out a portion that will become a rental apartment building, thus serving existing coach owners, as well as current and future renters. The Housing Authority is in the process of completing a construction phasing plan which will determine if and how long any temporary relocation may be necessary. As required under the Uniform Relocation Act, a General Information Notice (GIN) will be issued to residents in order to inform them of their rights in relation to any potential relocation that may happen as part of the redevelopment. A draft GIN is included as an attachment to this report.

Future Engagement Opportunities
Starting in January 2023, the Housing Authority anticipates sharing plans and feasible design concepts with residents, City and County partners, and local elected officials. Our goal is to solicit feedback from residents through June 2023 to help determine the future amenities, design, security and living spaces. The Housing Authority anticipates submitting design plans Item 3
Attachment A - Buena
Vista Mobile Home Park
Project Summary

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Santa Clara County Housing Authority
505 West Julian Street
San José, CA 95110
408.275.8770
scchousingauthority.org

for entitlements with the City of Palo Alto and California Department of Housing and Community Development in Summer 2023, with construction commencing on the future mobile home park in late 2023 or early 2024.

More information on the history of the Park and the redevelopment plan will be presented at the Study Session.

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Vista Mobile Home Park
Project Summary

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03 / Site Concept
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When the Housing Authority purchased the Park in 2017, we entered into a Regulatory Agreement with the City of Palo Alto and the County of Santa Clara.The Regulatory Agreement requires that we:1.Improve the Park,and2. Apply affordable rentsas defined in the Regulatory AgreementAs we start with the redevelopment of the Park, our goalremains the same:Provide new housing for all current Park residents Item 3
Attachment B - Site Concept

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Redevelopment Goals
Improve amenities and utilitiesPreserve ownershipHousing remains affordableHousing for all current residents/families#1 #2 #3 #4 Item 3
Attachment B - Site Concept

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Site Constraints
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Site Constraints / Restricciones del Sitio
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Proposed Layout- BasisExisting
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Proposed Layout- BasisProposed Apartment building + Upgraded Mobile Home Park MHP with new unitsNew Apt Bldg
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Proposed Layout- BasisMobile Home Park to be replacedPotential for creating green spacesMaintains existing circulationMHP Item 3
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Proposed Layout- BasisProposed location for Apartment building site + Mobile Home Park to be replacedMHPApt Bldg SiteNeighboring site has similar building scale Motel being demolished means the least number of residents impacted The least disruption to the park by underground utilities construction Item 3
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Redevelopment Timeline
Submit to City and State for ApprovalMotel Deconstruction and New SpaceResident Options, Site Tours and More Design EngagementFinal Design and ConstructionToday’s Resident Meeting -ReconnectingSummer 2023March 2023February 20232023-2024January 2023 Redevelopment Timeline
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To: ________
From: Santa Clara County Housing Authority and Poco Way HDC Date: 1/23/2023
Re: General Information Notice

The Santa Clara County Housing Authority (Housing Authority) and its partners, the City of Palo Alto and the County of Santa Clara, are working to preserve affordable housing at Buena Vista Mobile Home Park (Park). The Housing Authority, through one of its affiliated non-profits, Poco Way HDC, Inc. (Poco), purchased the Park in 2017. The Park’s purchase and future development is funded with a combination of Federal, State and Local sources, which may trigger certain requirements including the Uniform Relocation Act.

The Housing Authority and Poco are working diligently to maintain long-term, safe, high quality affordable housing for the residents of Buena Vista. The purpose of this notice is to provide open communication about what is happening at the park, about your rights as current residents, and about the process of developing a plan for your household. This is not a notice to vacate the premises and this is not a notice of relocation eligibility.

What is happening at the Park? The Housing Authority and its partners are focused on implementing a long-term stabilization plan that will include replacing all mobile homes with new units, constructing new apartments to replace units that were previously onsite, and replacing and upgrading all Park infrastructure. There will be significant onsite activity as a result.

What are your rights as Park occupants? Please see the attached information sheet about your rights as Park occupants as the Park is redeveloped. In addition, we will meet individually with all households to review your rights in detail as they relate to your personal housing circumstances.

What is the current plan for each household? Each family residing in the Park faces a set of circumstances that are unique to the particular household depending upon their household characteristics. We will schedule in person or virtual meetings between your household and your BV Advisor to discuss and help create an Individual Housing Plan for your household.

If you have any questions at any time, please contact your BV Advisor, Ms. Lorena Serrano. Ms. Serrano can assist you in English or Spanish, and will be available to meet you by phone, virtual meeting, or in- person. You can reach her by calling 925-691-2806 or by email at [email protected] .

Thank you for working with us as we plan to redevelop the Park and improve the quality of life at Buena Vista.

This General Information Notice was sent via USPS First Class Certified Mail (Return Receipt Requested) and email to ______________ on ______________.

Signature: ____________________________
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GIN

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General Information Notice

Persons who are required to move personal property or who are required to move from a residence may be eligible to receive relocation advisory services and payments in accordance with federal and state relocation laws and applicable local ordinances

1. Poco has retained Associated Right of Way
Services, Inc. (AR/WS) to provide you with relocation advisory assistance. We invite you to meet with your BV Advisor, Ms. Lorena Serrano of AR/WS, who can provide additional information concerning the project and your rights to receive relocation assistance.

This notice does not require you to move at this time. This is not a notice to vacate. Please contact your BV Advisor before you make any moving plans. Failure to do so could jeopardize the relocation assistance that may be available to you.

Please also be advised that you should continue to pay your rent and meet all other obligations as specified in your lease agreement. If you are required to move temporarily because of Poco’s redevelopment work, Poco will pay your temporary housing costs, but you will need to continue to pay your current rent to Poco both prior to any temporary move and during the time that you are in temporary housing. Failure to continue paying your current rent may be cause for eviction. If you choose to move or if you are evicted prior to receiving a formal notice of relocation eligibility you will not be eligible to receive relocation assistance.

Poco’s Housing Assistance Program has been developed in accordance with federal and state laws and applicable local ordinances. The Housing Assistance Program is briefly described below.

Advisory Assistance . A BV Advisor is available to help Park residents as the Park is being redeveloped. Your BV Advisor will provide you with information concerning your eligibility for housing assistance, moving payments, available housing options, the project scheduling, and how to file a claim for payment.

Moving Expenses . If Poco asks your household to move because of Poco’s redevelopment work, you will receive assistance with moving and storage costs.

Temporary Housing Costs . If Poco asks you to move temporarily because of Poco’s redevelopment work, Poco will cover the reasonable cost of your temporary housing. You will need to continue to pay your rent to Poco while you are living in temporary housing.

Replacement Housing Costs . Poco does not intend to permanently displace any households. However, if the phasing of onsite replacement housing requires an off-site move for more than 12 months, then Poco will cover your replacement housing costs for 42 months, and your BV advisor will help create an Individual Housing Plan for your household to move you into comparable replacement housing that is within your financial means.

Timing of Payments . Fully documented and reasonable relocation claims will be processed within 30 days of submission. Poco will pay approved claims, and will advise claimants if any portion of a claim is not approved.

1The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 USC §4601 et seq.) (Federal law), California Relocation Assistance Law, (Gov Code §7260 et seq.) (State Law), and local ordinances.

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GIN

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Your Right to Appeal . You may appeal if you believe Poco has failed to properly determine eligibility, or the amount of payments authorized by applicable law. You have the right to be represented by legal counsel, but legal representation is not required. You may seek judicial review if you are not satisfied with the final determination.

Poco will administer all services and benefits without regard to race, color, or national origin, in compliance with Title VI of the 1964 Civil Rights Act. Federal law requires persons seeking federally funded relocation assistance to certify that they are a United States citizen or national, or an alien lawfully present in the United States. Alternative assistance may be available for eligible persons who are not able to document residency status. BV Advisors will work closely with each household to establish eligibility under federal, state, and applicable local assistance programs.

Again, if you have any questions about this notice or the proposed project, please contact: Lorena Serrano, BV Advisor with ARWS. You can reach her by calling 925-691-2806 or by email at [email protected]
. Ms. Serrano can assist you in English or Spanish, and will be available to meet you by phone, virtual meeting, or in-person.

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GIN

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Buena Vista
Design Town Hall 3
Jan. 26, 2023
When the Housing Authority purchased the Park in 2017, we entered into a Regulatory Agreement with the City of Palo Alto and the County of Santa Clara. The Regulatory Agreement requires that we:

1. Improve the Park, and

2. Adjust to rents as defined in the Regulatory Agreement As we start with the redevelopment of the Park, our goal remains the same:

Provide new housing for all current Park residents
Improve
amenities
and utilities
Preserve
ownership
Housing
remains
affordable
Housing for
all current
residents/
families
#1
#2 #3 #4
01 Stay at Buena Vista
and purchase a new
coach
02 Stay at Buena Vista, sell
your home, and become
an apartment renter
03 Move from Buena
Vista and request a
voluntary relocation
assistance
$
Information we will provide to help make your decision:

1. Estimated space rent amount, estimated mortgage amount (if any), utility information, estimated taxes/registration/insurance, unit size and bedroom configuration

2. Estimated apartment rent, utility information, unit size and bedroom configuration

3. Voluntary relocation assistance amount
Options for current Owners
Redevelopment Goals for Buena Vista
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2023 Resident Meeting
Handout

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You have a home at Buena Vista
Project Timeline
Stay Connected

1. Feel free to email us at [email protected]

2. Keep an eye out for emails and for the invitation to our next community meeting 01 Stay at Buena Vista, sell
your home, and become
an apartment renter
02 Move from Buena
Vista and request a
voluntary relocation
assistance
$
Information we will provide to
help make your decision:

1. Estimated apartment rent,
utility information, unit
size and bedroom
configuration

2. Voluntary relocation
assistance amount
Since we are using public funds on the redevelopment of the Park, we must comply with the Uniform Relocation Assistance and Real Properties Acquisition Policies Act (URA). The URA requires us to notice you of your relocation rights. What are the noticing requirements under the URA? ● General Information Notice (GIN) Informs you of the project and that you may be displaced by the project. GINs will be provided tonight and posted for all residents tomorrow. ● Notice of Relocation Eligibility If you are being relocated, this notice informs you of your eligibility for relocation assistance and payments. To be determined ● 90-Day Notice If you are being relocated, this notice informs you of the earliest date by which you will be required to move. This notice may not be issued unless a comparable replacement dwelling is available and you are informed of its location. To be determined Resident Rights
Options for current Renters
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2023 Resident Meeting
Handout

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Buena Vista
3ra Junta de diseño del
Ayuntamiento
26 de enero, 2023
Cuando la Autoridad de Vivienda compró el Parque en 2017, entramos en un Acuerdo Regulatorio con la Ciudad de Palo Alto y el Condado de Santa Clara. El Acuerdo Regulatorio requiere que:

1. Hagamos mejoras al Parque, y que

2. Nos ajustemos a los alquileres según se definen en el Acuerdo Regulatorio Al comenzar con la remodelación del Parque, nuestro objetivo sigue siendo el mismo:

Proporcionar nuevas viviendas para todos los residentes actuales del Parque Mejorar las
instalaciones
y los
servicios
públicos
Preservar la
propiedad
Las viviendas
siguen
siendo
asequibles
Vivienda
para todos
los
residentes
/familias
actuales
#1
#2 #3
#4
01 Quédese en Buena
Vista y compre una
nueva casa
prefabricada
02 Quédese en Buena Vista,
venda su casa, y conviértase
en un inquilino de los
apartamentos
03 Múdese de Buena Vista
y solicite asistencia de
reubicación
voluntaria
$
Información que le proporcionaremos para ayudarle a tomar su decisión:

1. Monto estimado del alquiler del espacio, monto estimado de la hipoteca (si corresponde), información de servicios públicos, impuestos estimados / registro / seguro, tamaño de la unidad y configuración de habitaciones

2. Alquiler estimado del apartamento, información de servicios públicos, tamaño de la unidad y configuración de habitaciones

3. Monto de la ayuda para la reubicación voluntaria
Opciones para propietarios actuales
Objetivos de reurbanización para Buena Vista
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2023 Resident Meeting
Handout

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Usted tiene un hogar en Buena Vista
Cronograma del proyecto
Manténgase conectado

1. No dude en enviarnos un correo electrónico a [email protected]

2. Esté atento a los correos electrónicos y a la invitación a nuestra próxima reunión de la comunidad 01 Quédese en Buena Vista,
venda su casa, y conviértase
en un inquilino de los
apartamentos
02 $
Información que le
proporcionaremos para ayudarle a
tomar su decisión:

1. Alquiler estimado del
apartamento, información de
servicios públicos, tamaño de
la unidad y configuración de
habitaciones

2. Monto de la ayuda para la
reubicación voluntaria
Dado que estamos utilizando fondos públicos en la reurbanización del Parque, debemos cumplir con la Ley Uniforme de Asistencia de Reubicación y Políticas de Adquisición de Bienes Inmuebles (URA por sus siglas en inglés). La URA requiere que le notifiquemos sus derechos de reubicación. ¿Cuáles son los requisitos de notificación bajo la URA?
● Nota de información general (GIN por sus siglas en inglés) Le informa del proyecto y que puede ser desplazado por el proyecto. Los GIN se proporcionarán esta noche y se publicarán para todos los residentes mañana.
● Aviso de Elegibilidad Para la Reubicación Si está siendo reubicado, este aviso le informa de su elegibilidad para asistencia y pagos de reubicación. Por determinarse ● Aviso de 90 días Si está siendo reubicado, este aviso le informa de la fecha más temprana en la que se le pedirá que se mude. Este aviso no puede emitirse a menos que haya una vivienda de reemplazo comparable disponible y se le informe de su ubicación. Por determinarse Derechos de los residentes
Opciones para inquilinos actuales
Múdese de Buena Vista y
solicite asistencia de
reubicación voluntaria
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2023 Resident Meeting
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1 5
8 8

CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: February 13, 2023

TITLE
Approval of Minutes from the January 28, 2023 and January 30, 2023 City Council Meeting

RECOMMENDATION
It is recommended that the minutes be reviewed and approved.

ATTACHMENTS
Attachment A: Draft Minutes January 28, 2023
Attachment B: Draft Minutes January 30, 2023
APPROVED BY:

Lesley Milton
Report #: 2301-0833
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CITY COUNCIL

DRAFT ACTION MINUTES

Special Meeting
January 28, 2023
The City Council of the City of Palo Alto met on this date at 9:09 AM at Mitchell Park Community Center and by virtual teleconference.

Present in Person: Burt, Kou Lauing, Lythcott-Hames, Stone, Tanaka Veenker Participating Remotely: None

Absent: None

2023 Annual Council Retreat Program

1. Welcome from Mayor Kou

2. City Council 2023 Retreat: Discussion and Selection of the 2023 City Council Priorities

2A. Overview of the 2022 City Council Priorities

PUBLIC COMMENTS

BREAK LUNCH

2B. Selection of the 2023 City Council Priorities

MOTION: Motion by Council Member Lauing, seconded by Council Member Burt to approve the four approved strategic priorities and have staff return on February 6 th with suggested objectives derived from Council Comments at the Annual Retreat to achieve the below strategic priorities:

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DRAFT SUMMARY MINUTES

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• Economic Recovery and Transition
• Climate Change and the N atural Environment: Protection and Adaptation
• Housing for Social/ Economic Balance
• Community Health and Safety
MOTION PASSED: 7-0

2C. Discussion and Possible Revision to 2023 Standing committee Topics

MOTION: Motion by Council Member Burt and Seconded by Vice Mayor Stone to agendize a discussion of prospective referrals to the Policy and Services, Finance Committee and Boards and Commissions.

MOTION PASSED: 7-0

2D. Retreat Debrief, Take away and Next Steps

Adjournment: The meeting was adjourned at 2:58 PM

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 COUNCIL

DRAFT ACTION MINUTES

Special Meeting
January 30, 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, Kou, Lauing, Lythcott-Haims, Stone, Tanaka, Veenker Present Remotely: None

Absent: None

Agenda Changes, Additions and Deletions

Public Comment

Consent Calendar
Council Member Tanaka registered a no vote on Agenda Item Number 2.

Council Members Lythcott-Haims, Tanaka registered a no vote on Agenda Item Number 3.

MOTION: Vice Mayor Stone moved, seconded by Council Member Kou to approve Consent Agenda Item Numbers 1-3.

1. Approval of Minutes from December 12, 2022, December 19, 2022 and January 9, 2023

2. Approval of Amendment Number One (1) with Insight Public Sector, C20177991 Extending the Term by Three Years and Compensation by $1,686,615 Utilizing a Riverside County Agreement for Citywide Microsoft Licensing and Approve a Contingency in the Amount of $100,000 Annually, for a new Total Not-to-Exceed Contract Amount to $3,628,317; CEQA Status—not a project

3. SECOND READING: Adoption of Amendments to Palo Alto Municipal Code Chapter

18.09, Accessory and Junior Accessory Dwelling Units due to State Law Changes and Item 4
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DRAFT ACTION MINUTES

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Direction from the California Department of Housing and Community Development.

Environmental Assessment: Exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines sections 15061(b)(3), 15301, 15302 and 15305.

Planning and Transportation Commission Recommended Approval of the Ordinance.

MOTION PASSED FOR Item 1: 7-0
MOTION PASSED FOR Item 2: 6-1 Tanaka No
MOTION PASSED FOR Item 3: 5-2 Lythcott-Haims, Tanaka No

City Manager Comments

Action Items
AA1. City Council discussion and direction regarding wage requirements for the contract for next Janitorial services (Continued from the 1/23/23 Meeting) A. Review and Provide Direction on Wage and Benefits Requirements for Inclusion in a New Janitorial Services Request for Proposal (RFP)
B. Responsible Contracting Standards Colleague's Memo (Stone & Burt)

MOTION: Council Member Tanaka moved, to look at this proposal and all contracts for services during the budget review cycle.

Motion died for lack of a second.

MOTION: Council Member Burt moved, seconded by Vice Mayor Stone adopt Option 3 as stated in the staff report and to scale the new wage set in proportion to classifications included in Option 1 using the PUC base custodian prevailing wage as a baseline.

MOTION PASSED: 6-1, Tanaka no

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4. Review and Adoption of the Policy and Services Committee Recommendations on the Revised Council Procedures and Protocols Handbook (previously discussed on December 19, 2022)
MOTION: Moved by Council Member Tanaka, seconded by Council member Lythcott- Haims to approve Section 1 with the following amendments:

A. Keep the existing language in 1.1 Organization of City Council & schedule an action item discussion later this year
B. Revise the redline in 1.2.1 Function of Committees to read: Actions of the committee shall be advisory recommendations only to the full Council, except as to matters expressly delegated to the committee by Council.

C. Add this language to Section 1.2 B: Policy and Services Committee: “Other standing committees may be adopted by the Council.”
D. The Chair may set public speaking time to 3 minutes
E. Proposing to amend to read “ Council members who are not on a committee may attend the committee meeting but only as an observer; they may not speak or otherwise participate in the committee meeting”
MOTION FAILED: 4-3, Lauing, Stone, Kou, Burt no

MOTION: Vice Mayor Stone moved, seconded by Council Member Burt to approve Section 1 with the following amendments:

A. Keep the existing language in 1.1 Organization of City Council B. Revise the redline in 1.2.1 Function of Committees to read: Actions of the committee shall be advisory recommendations only to the full Council, except as to matters expressly delegated to the committee by Council.

C. Add this language to Section 1.2 B: Policy and Services Committee: “Other standing committees may be adopted by the Council.”
D. The Chair may set public speaking time to 3 minutes
E. Proposing to amend to read “ Council members who are not on a committee may attend the committee meeting but only as an observer; they may not speak or otherwise participate in the committee meeting”
MOTION PASSED:7-0
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MOTION Moved by Mayor Kou , seconded by Council Member Burt to approve Section 2 with the following amendments:

A. Number of remote appearances to me no more than 3 times per year B. Modify General Procedures for Appearing Remotely iii “after five tries to reconnect that the Council Member is considered absent”
C. Council Members nearing the end of their term desiring to submit a Colleagues’ memo should consider submittal timing and steps needed in order to ensure Council discussion prior to the end of their term

MOTION: Moved by Council member Lythcott-Haims and seconded by Council member Veenker to remove Item A: Number of remote appearances to me no more than 3 times per year MOTION PASSED/FAILED: 6-1, Kou No

MOTION: Moved by Council Member Tanaka, seconded by Council Member Lythcott- Haims to add to Section 5 to explore the ability to enable video for members of the public.

MOTION PASSED: 4-3, Kou, Lauing, Stone no

FINAL MOTION Moved by Mayor Kou , seconded by Council Member Burt to approve section 2 with the following amendments:

A. Number of remote appearances to me no more than 3 times per year B. Refer to Policy and Services Committee to explore modifications to General Procedures for Appearing Remotely iii “after fifteen minutes attempting to reconnect that the Council Member attending remotely is encouraged to declare him/herself absent for the remainder of the meeting”.

C. Council Members nearing the end of their term desiring to submit a Colleagues’ memo should consider submittal timing and steps needed in order to ensure Council discussion prior to the end of their term . Staff will make best efforts to agendize such memos prior to the end of the Council term.

D. Add to Section 5 to explore the ability to enable video for members of the public.

MOTION PASSED: 7-0
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MOTION Moved by Council Member Burt , seconded by Council Member Lythcott- Haims to approve section 3 with the following amendments:

A. Section 3.4: Council members who intend to request to remove an item, add “strive to” inform the City Manager’s Office
B. Move the section Council Comments to occur after City Manager Comments C. Move the section City Manager Comments to occur before the Consent Agenda MOTION PASSED: 7-0

MOTION Moved by Council Member Burt, seconded by Vice Mayor Stone to approve section 4 with the following amendments:

A. Modify A1: Should Seek permission of the Mayor before making a motion B. Modify 4.3.15: The Council shall be guided by the speaking times set by the presiding officer and shall conclude comments at the direction of the Presiding Officer. The presiding officer shall endeavor to treat all members equitably MOTION PASSED: 7-0

MOTION Moved by Council Member Burt , seconded by Council Member Veenker to approve section 5 with the following amendments:

A. Under 5.1C Time Limits: Replace “ …are many speakers or items on the agenda” with “ …are many speakers, number of items on the agenda, or items anticipated to be lengthy” B. Modify 5.1D to Add: “Approximately 5 minutes before cutting off submission for the public to request to speak on an item, the Mayor will endeavor to announce the pending cut off time.”
MOTION PASSED: 7-0

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Draft Action Minutes: 01/30/2023
MOTION Moved by Council Member Burt, seconded by Council Member Lauing to approve section 6 with the following amendments:

A. Add language to Section 6.1: Council Members are strongly discouraged from asking questions already addressed in the staff report.

B. Add language at the end of Section 6.1: “If the staff report is incomplete by 5:00 PM Thursday, that there is an extension to submit Council Questions until 5:00 PM on Friday”.

MOTION PASSED: 7-0

ORIGINAL MOTION Moved by Council Member Veenker seconded by Council Member Lythcott- Haims to approve Section 7 with the following amendments:

A. Revise Item 7.1 to say “Guideline of 3 or 4 priorities per year” B. Add Item 7. 3 in the Guidelines for Selection of Priorities Secti on to read: “2 -3 specific objectives within a priority may be selected and generally have a 2-year time limit”

SPLIT MOTION Moved by Council Member Burt seconded by Mayor Kou to incorporate the following in the motion:

B. Revise Item 2 to say “Priorities should be targeted for up to a 3-year timeframe” MOTION FAILED: 4-3 Burt, Stone Kou no

FINAL MOTION Moved by Council Member Veenker seconded by Council Member Lythcott- Haims to approve Section 7 with the following amendments:

A. Revise item 1 to say “Guideline of 3 or 4 priorities per year” B. Revise item 2 to say “Priorities should be targeted for up to a 3-year timeframe” C. Add Item 3 in the Guidelines for Selection of Priorities Section to read: “2 -3 specific objectives within a priority may be selected and generally have a 2-year time limit” D. Revise the statement of shared values and move it to the Introduction Section a. Update the prologue statement “The Palo Alto City Council universally holds these values to help guide our decisions and the work we do. These values include that:

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DRAFT ACTION MINUTES

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1. We will make decisions that balance revenues and expenses, now and in the future.

2. We will make decisions that are environmentally sustainable now and in the future.

3. We will integrate equity into our decisions, considering how decisions affect people differently based on their identity or circumstances.

4. We will make decisions that create a healthy, safe and welcoming community for all.

6. We will safeguard public trust through transparent practices and open communication.

7. We embrace innovation.

MOTION PASSED: 7-0

MOTION Moved by Vice Mayor Stone , seconded by Mayor Kou to approve S ection 8 with the following amendments:

A. Exclude the censure language and refer to Policy & Services Committee for language modifications
MOTION PASSED: 7-0

Council Member Questions, Comments and Announcements

Adjournment: The meeting was adjourned at 11:36 P.M. in memory of Tom Jordan.

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 min utes (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 COUNCIL

STAFF REPORT
From: City Manager
Report Type: Consent
Lead Department: City Attorney’s Office
Meeting Date: February 13, 2023

TITLE
Adoption of a Resolution Adopting Updated Guidelines for the Submission and Tabulation of Protests in Connection with Rate Hearings Conducted Pursuant to Article XIIID, Section 6 of the California Constitution and Repealing and Replacing Resolution 8815; CEQA status—not a project.

RECOMMENDATION
Staff recommends that Council adopt a resolution adopting updated guidelines for accepting signed, written protests via email in connection with Utility rate hearings conducted pursuant to Article XIIID, Section 6 of the California Constitution, repealing and replacing Resolution 8815.

EXECUTIVE SUMMARY
The California Constitution requires local governments to provide notice and a hearing before increasing or imposing certain types of utility rates, and ratepayers may protest the proposed rates until the close of the hearing. The relevant constitutional provisions also require protests to be signed. In 2008 the City Council adopted guidelines for the submission and tabulation of these protests, which did not permit protests to be emailed. The City Attorney’s office recommends that Council adopt updated guidelines to permit ratepayers to submit signed protests via email, as well as by mail and in person.

ANALYSIS
The California Constitution requires local governments to provide a special form of mailed notice and hold a public hearing before imposing or increasing property related fees, including many types of utility rates. This constitutional provision, adopted by voters in 1996 as Proposition 218, also permits ratepayers to submit signed protests with respect to proposed fee increases. If a majority of ratepayers protest the proposed fee, it may not be adopted.

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California courts have interpreted the term “property related fee” to include fees that have a direct relationship to property ownership, such as water, wastewater and refuse rates. The constitutional provisions covering the applicable notice and protest process for these fees are relatively brief, and do not make it absolutely clear how local agencies should conduct the hearings and tabulate the signed protests they receive. Consequently, in 2008, the City Council adopted guidelines (CMR 232:081) governing how the City provides notice and conducts protest proceedings for property-related rate changes.

The original guidelines required signed protests to be submitted by mail or in person. Section 3 and 4 of the attached revised guidelines permit signed protests to be emailed as well, either on a document that has been signed and scanned as a PDF file, or via an electronically signed document. Both options are constitutionally compliant.

The revised guidelines are found in Exhibit A to this report’s Attachment A.

FISCAL/RESOURCE IMPACT
No additional staff resources are required to accept emailed protests, conduct hearings and tabulate results as required by Article XIIID, Section 6 of the California Constitution.

STAKEHOLDER ENGAGEMENT
While no direct stakeholder engagement was conducted prior to this guideline revision process, updating the City’s procedures to permit the acceptance of signed protests submitted via email is likely to facilitate greater public participation in future rate hearings.

ENVIRONMENTAL REVIEW
Adoption of this resolution 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
Attachment A:Resolution Adopting Updated Guidelines for the Submission and Tabulation of Protests in Connection With Rate Hearings Conducted Pursuant to Article XIIID, Section 6 of the California Constitution; Repealing and Replacing Resolution 8815 APPROVED BY:

Molly Stump, City Attorney
Report #: 2211-0377
1 City Council, May 12, 2008 Item #6:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2008/cmr-232-08.pdf
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RESOLUTION NO. _____

Resolution of The City Council of The City of Palo Alto Adopting Guidelines For The Submission And Tabulation of Protests In Connection with Rate Hearings Conducted Pursuant To Article XIIID, Section 6 of The California Constitution; Repealing And Replacing Resolution 8815

WHEREAS, Article XIII D, Section 6 of the California Constitution requires the City to consider written protests to proposed increases to certain utility rates; and

WHEREAS, this constitutional pr ovision does not offer specific guidance as to who is allowed to submit protests, how written protests are to be submitted, or how the City is to tabulate the protests; and

WHEREAS, in 2008 by its Resolution No. 8815, this Council ado pted guidelines to go vern these matters; and

WHEREAS, the City Co uncil desi res to update those guid elines to permit protests to be submitted by email, and to repeal and replace Resolution No. 8815.

NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows:

SECTION 1 . The City Council adopts the guidelines for the submission and tabulation of protests attached as Exhibit “A” and incorporated by reference.

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SECTION 2. The City Council repeals Resolution No. 8815 and directs that it be replaced by the Resolution adopted today.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST: APPROVED:

________________________________ ________________________________ City Clerk Mayor

________________________________ ________________________________ Assistant City Attorney City Manager

________________________________
Director of Utilities

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EXHIBIT A

City of Palo Alto, California

GUIDELINES FOR THE SUBMISSION AND TABULATION OF PROTESTS

Where notice of a public hearing with respect to a utility rate increase has been given by the City pursuant to Article XIII D, Section 6 of the California Constitution, the following shall apply:

Submission of Protests

1. Any property owner or uti lity customer may su bmit a written protest to the City Clerk, either by delivery to the Office of the City Clerk during its business hours or by submitting the protest to the City Clerk (or his or her designee) at t he public hearin g. Protests must be rece ived no later than the end o f the public t estimony portion of the public hearing . Protests re ceived a fter that deadline, even if postmarked or emailed prior to the deadline, cannot be accepted.

2. Each protest mus t (i) state that it is a protes t against the utility rate increas e, (ii) identify the property owner or utility customer making the pro test, (iii) identify the affected property or service location (by assessor’s parcel number , street address, or utility account number) and (i v) include the signature of the person making the protest.

3. The notice of the public hearing may designat e an email address at which written protests will be accepted. If an ema il address is so designated , the City will treat PDF files sent to the em ail address as written prot ests so long as (i) the PDF file contains all information (in cluding a signature) required by these guidelines to be included in a writte n protest, and (ii) the PDF file is received at the ema il address no later than the date and t ime indicated on the noti ce as the deadline for email submissions.

4. To be valid, s ignatures on protests sent via email must be pr ovided via either (i) a document that has been signe d and s canned, or (ii) an e lectronically signed document. Emails that do not contain a valid signature, for example emails that close with a typed name, will not be accepted.

5. Although oral comments at t he public hearing will not qualify as a formal protest unless accompanied by a written protest, the City Counc il welcomes inpu t from the community duri ng the public hearing on the proposed fees.

6. If a parcel of property served by the City has multiple pr operty owners or customers, a maximum of one written protest will be co unted for the pa rcel and any one written protest submitted in accordance with these rules will be sufficient to count as a protest for that property.

7. If more than one type of fee ( i.e., water, refuse) is proposed for increase on the notice of public hearing, then a person submitting a protest may indicate whether the protest is submitted with respect to all fees proposed for increase or only some of the fees proposed for increase.

8. Any per son who submits a protest may withdraw it by submitting to the City Clerk a writ ten request tha t the protest b e withdrawn. Th e withdrawal of a protest shall contain sufficient information to identify the affected parcel and the name of record owner or customer who submitted both the protest and the request that it be withdrawn.

9. A fee protest proceeding is not an election.

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10. To ensure transparency and acco untability in the fe e protest tabulation, protests are disclosable public records once they are received by the City.

11. For purposes of these guidelines, property ownership includes tenancies of real property as is set forth in Article XIII D, Section 2(g) of the California Constitution.

12. If the person submitting the protest was not the addressee of a mailed notice of public hearing, he or she should include with the protest an explanation (and written proof if available) of how he or she is an owner or customer of the parcel of real property for which the protest was submitted.

Tabulation of Protests

1. The City Clerk shall determine the validity of all protests. The City Clerk shall not accept as valid any protest if the City Clerk determines that any of the following conditions exist:
a. The protest does not identify a property receiving the utility service that is the subject of the hearing.
b. The protest do es not bear the signature of an owner of the parcel identified on the protest or a customer with respect to the parcel identified on the protest. c. The protest does not state its opposition to the proposed fees. d. The protest was not timely received by the City Clerk. e. A request to withdraw the protest is received prior to the close of the public input portion of the hearing on the proposed fees.

2. If a protest does not state that it is limited to a specific utility service (i.e. water, sewer), then the City Clerk shall consider it to be a protest with respect to all services set forth on the notice of public hearing that are provided to the property.

3. The City Clerk’s decision that a protest is not valid or does not appl y to a specific fee shall constitute a final action of the City and shall not be subject to any internal appeal.

4. A majority protest exists if written protests are timely submitted and not withdrawn by the record owners of, or customers with respect to, a m ajority (50% plus one) of the parcels of real property subject to the proposed fee.

5. At the conclusion of the public hearing, the City Clerk shall com plete the tabulation of all protests timely received and shall report the results of the tabulation to the City Co uncil upon completion.

If review of the protests timely received demonstrates that the number received is manifestly less than one-half of the parcels served by the City with r espect to the fee which is the subject of the protest, then the Clerk may advise the City Council of the absenc e of a majority pro test without determining the validity of all protests. If, owing to the number of protests received, the City Clerk determines that he or she will n ot be able to complete the tabulation at the Council meeting a t which the hearing was co nducted, the City Clerk may an nounce a time an d place at which he or she will tabulate t he protests and may del ay his or her announcements of the results to a subsequent meeting of the City Council. Any tabulation must be done in a location wh ere it can be observed by the public.

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Item No. 6. Page 1 of 4

CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: Action
Lead Department: Utilities
Meeting Date: February 13, 2023

TITLE
Approval of a 6-year Contract with Manesco Corporation in an Amount Not-to-Exceed $697,326 to Conduct Annual Walking and Mobile Gas Leak Surveys and Annual Resurveys of Existing Gas Leaks to Begin March 2023 ($633,932) and Authorization of Contract Contingency ($63,393); CEQA status—exempt under CEQA Guidelines sections 15301(c) and 15308.

RECOMMENDATION
Staff recommends that the City Council:

1. Approve and authorize the City Manager or designee to execute Contract No. C23185369 with Manesco Corporation in the amount of $633,933 to conduct annual walking and mobile gas leak surveys and annual resurveys of existing gas leaks for a six-year term to begin March 2023 through February 2028; and

2. Approve a 10% contingency of $63,393 in addition to the contract amount.

BACKGROUND
The City of Palo Alto owns and operates five utilities (water, gas, wastewater collection, electric, and fiber optic) and delivers gas to over 24,000 residential and commercial meters. The Utilities Department maintains and operates over 210 miles of distribution main and approximately 17,395 individual gas service pipelines. The distribution main pipeline material is comprised of polyethylene (PE) pipe, coated steel, polyvinyl chloride (PVC), and acrylonitrile butadiene styrene (ABS).

Maintenance of the gas distribution system includes the annual walking and mobile gas leak surveys in accordance with federal regulations established by the United States Department of Transportation (DOT) in Title 49 of the Code of Federal Regulations (CFR) Part 192.723. Federal regulations require leaks surveys be performed (1) in business districts at intervals not exceeding 15 months, but at least once each calendar year and (2) outside business districts as frequently as necessary, but at least once every five calendar years at intervals not exceeding 63 months.

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Palo Alto Utilities completes leak surveys in the City’s business districts annually but takes a more proactive approach to leak identification outside of business districts by surveying the entire system every two years instead of the DOT-mandated minimum of every five years. The leak survey enables the City to improve its infrastructure, increase safety, and reduce the inadvertent discharge of greenhouse gasses. Gas surveying has been contracted out by the Utilities Department for over the past 20 years due to internal resource constraints and lack of specialized leak detection equipment for mobile surveys.

DISCUSSION
The gas distribution system is split into a grid system by northern and southern sections. Each year the annual gas leak survey is performed using four methods: (1) a mobile survey of all gas mains, northern and southern sections of the distribution system; (2) a walking survey of each gas service in either the northern or southern section of the City; (3) a walking survey of each of the City’s business districts; and (4) a re-check of all grade 3 (or non-hazardous leaks) gas leaks carried over from the previous year.

Each section is leak surveyed annually, for one complete survey of the City every two years. The fourteen principal business districts throughout the City (consisting of over 1,870 gas services) are surveyed annually. Lastly, all non-hazardous leaks that were not repaired the previous year are carried over to the next year for leak surveying. These carry over leaks consist of approximately 120 annually. Grade 3 leaks are considered as non-hazardous at the time of detection and can be reasonably expected to remain non-hazardous.

The City’s gas operations division within the Utilities Department conducts an annual mobile survey that checks every gas main in the City and walks every service line in each of the fourteen identified business districts. The mobile survey includes tests of the atmosphere near gas mains; in gas, electric, telephone, sewer, and water system manholes; at cracks in the pavement and sidewalks; and at other locations offering an opportunity to find gas leaks.

Natural movement in the ground as well as human impacts can cause small leaks in the system that would not necessarily be identified until they became larger and more hazardous. The walking leak survey involves a qualified technician carrying gas detection equipment and walking every gas service line and evaluating every gas meter in the portion of the City being surveyed.

BID PROCESS DISCUSSION
On July 12, 2022 the City posted a notice inviting formal bids (IFB) for the Gas Leak Survey on the City’s electronic procurement system, PlanetBids. The bidding period was 15 calendar days. The City received three bids from qualified contractors on July 27, 2022 as listed in Attachment B, bid summary.

Summary of Solicitation Process
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Item No. 6. Page 3 of 4
Proposal Description/Number RFQ #185369
Proposed Length of Project 6 Years
Number of Bid Packages Downloaded by proposers 17
Number of Websites 1 (PlanetBids)
Total Days to Respond to Proposal 15
Number of Proposals Received 3
Base Bid Price Range $ 487,104 to $3,405,342
Public Link to Solicitation PlanetBids Link
Bids
Company Name Address
Heath Consultants Inc 9030 Monroe Rd, Houston, TX 77061 Manesco Corporation 28301 Industrial Blvd. # Q, Hayward, CA 94545 Southern Cross 192 Technology Parkway Suite 500, Peachtree Corners, GA 30071 Staff reviewed the three bids and deemed one of the bids as nonresponsive, due to the contractors’ errors in the calculations of all the bid in accordance with the requirements of the invitation for bids. Those contractors were notified that their bids were nonresponsive, and no bid protests were received. Manesco Corporation was determined to be the lowest responsible bidder.

TIMELINE, RESOURCE IMPACT, POLICY IMPLICATIONS
Funding for the 2023 gas leak rechecks survey, which is scheduled to begin in March 2023, as well as the walking and mobile surveys in 2023, is available in the FY 2023 Gas Operating budget.

Funding for contract years two through six are contingent upon Council appropriation and approval of funds through the annual budget process.

Authorization of this contract does not represent any change to existing policy.

STAKEHOLDER ENGAGEMENT
The City will provide notification of the Gas Leak Survey via the City website and social media platforms.

ENVIRONMENTAL REVIEW
Council’s approval of this term agreement for gas leak surveys and gas leak rechecks is categorically exempt from the California Environmental Quality Act (CEQA) under CEQA Guidelines 15301(c) (operation, repair, maintenance of existing facilities), and 15308 (actions by regulatory agencies for protection of the environment), thus no environmental review is required.

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ATTACHMENTS
Attachment A: Manesco Corporation; Contract #C23185369
Attachment B: Gas Leak Survey Summary Bid Table
APPROVED BY:

Dean Batchelor, Director Utilities
Report #: 2212-0473
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City of Palo Alto General Services Agreement 1 Rev. March 29, 2018

CITY OF PALO ALTO CONTRACT NO. C23185369

GENERAL SERVICES AGREEMENT

THIS AGREEMENT made and entered into on the 23
rd day of January, 2023 by and
between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and MANESCO CORPORATION , a California corporation, located at 28301 Industrial Blvd., #Q, Hayward, CA 94545, Telephone Number: (510)293-8700 (“CONTRACTOR”). In consideration of their mutual covenants, the parties hereto agree as follows:

1. SERVICES. CONTRACTOR shall provide or furnish the services (the “Services”) described in the Scope of Services, attached at Exhibit A.

2. EXHIBITS. The following exhibits are attached to and made a part of this Agreement:

“A” - Scope of Services
“B” - Schedule of Performance
“C” - Schedule of Fees
“D” - Insurance Requirements
“E” - Gas Meter Leak/AOC Survey Tag
“F” - Gas Leak Survey Ground Leak Report
“G” - Gas Leak Survey Notice of Need for Access
“H” - City of Palo Alto E-Grid Map

CONTRACT IS NOT COMPLETE UNLESS ALL INDICATED EXHIBITS ARE ATTACHED.

3. TERM.

The term of this Agreement is from March 1, 2023 to February 29, 2028 inclusive, subject to the provisions of Sections R and W of the General Terms and Conditions.

4. SCHEDULE OF PERFORMANCE. CONTRACTOR shall complete the Services within the term of this Agreement in a reasonably prompt and timely manner based upon the circumstances and direction communicated to CONTRACTOR, and if applicable, in accordance with the schedule set forth in the Schedule of Performance, attached at Exhibit B. Time is of the essence in this Agreement.

5. COMPENSATION FOR ORIGINAL TERM. CITY shall pay and CONTRACTOR agrees to accept as not-to-exceed compensation for the full performance of the Services and reimbursable expenses, if any:











  

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T h e t o t a l m a x i m u m l u m p s u m c o m p e n s a t i o n o f d o l l a r s ( $ ) ; OR

T h e s u m o f d o l l a r s ( $ ) p e r h o u r , n o t t o e x c e e d a t o t a l m a x i m u m c o m p e n s a t i o n a m o u n t o f d o l l a r s ( $ ) ; OR

A sum calculated in accordance with the fee schedule set forth at Exhibit C, not to exceed a total maximum compensation amount of Six Hundred Thirty-Three Thousand Nine Hundred Thirty-Two dollars and Twenty-Four cents ($633,932.24).

CONTRACTOR agrees that it can perform the Services for an amount not to exceed the total maximum compensation set forth above. Any hours worked or services performed by CONTRACTOR for which payment would result in a total exceeding the maximum amount of compensation set forth above for performance of the Services shall be at no cost to CITY.

C I T Y h a s s e t a s i d e t h e s u m o f d o l l a r s ( $ ) f o r A d d i t i o n a l Services. CONTRACTOR shall provid e Additional Services only by advanced, written authorization from the City Manager or designee.

CONTRACTOR, at the CITY’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONTRACTOR’s proposed maximum compensation, including reimbursable expense, for such services. Compensation shall be based on the hourly rates set forth above or in Exhibit C (whichever is applicable), or if such rates are not applicable, a ne gotiated lump sum. CITY shall not authorize and CONTRACTOR shall not perform any Additional Services for which payment would exceed the amount set forth above for Additional Services. Payment for Additional Services is subject to all requirements and restrictions in this Agreement.

6. COMPENSATION DURING ADDITIONAL TERMS.

CONTRACTOR’S compensation rates for each additional term shall be the same as the original term; OR

CONTRACTOR’s compensation rates shall be adjusted effective on the commencement of each Additional Term. The lump sum compensation amount, hourly rates, or fees, whichever is applicable as set forth in section 5 above, 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- San Jose area, published by the United States Department of Labor Statistics (CPI) which is published most immediately preceding the commencement of the applicable Additional Term, which 









  

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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 CONTRACTOR’s compensation rates be increased by an amount exceeding five percent of the rates effective during the immediately preceding term. Any adjustment to CONTRACTOR’s compensation rates shall be reflected in a written amendment to this Agreement.

7. CLAIMS PROCEDURE FOR “9204 PUBLIC WORKS PROJECTS”. For purposes of this Section 7, 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. Public Contract Code Section 9204 mandates certain claims procedures for Public Works Projects, which are set forth in “Appendix __ Claims for Public Contract Code Section 9204 Public Works Projects”.

This project is a 9204 Public Works Project and is required to comply with the claims procedures set forth in Appendix __, attached hereto and incorporated herein.

OR

This project is not a 9204 Public Works Project.

8. INVOICING. Send all invoices to CITY, Attention: Project Manager. The Project Manager is: Diamond Perkins, Dept.: Utilities, Telephone: (650)838-2838. Invoices shall be submitted in arrears for Servic es performed. Invoices shall not be submitted more frequently than monthly. Invoices shall provide a detailed statement of Services performed during the invoice period and are subject to verification by CITY. CITY shall pay the undisputed amount of invoices within 30 days of receipt.

GENERAL TERMS AND CONDITIONS

A. ACCEPTANCE. CONTRACTOR accepts and agrees to all terms and conditions of this Agreement. This Agreement includes and is limited to the terms and conditions set forth in sections 1 through 8 above, these general terms and conditions and the attached exhibits.

B. QUALIFICATIONS . CONTRACTOR represents and warrants that it has the expertise and qualifications to complete the serv ices described in Section 1 of this Agreement, entitled “SERVICES,” and that every individual charged with the performance of the services under th is Agreement has sufficient skill and 









  

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experience and is duly licensed or certified, to the extent such licensing or certification is required by law, to perf orm the Services. CITY expressly relies on CONTRACTOR’s representations regarding its skills, knowledge, and certifications.

CONTRACTOR shall perform all work in accordance with generally accepted business practices and performance standards of the industry, including all federal, state, and local operation and safety regulations.

C. INDEPENDENT CONTRACTOR. It is understood and agreed that in the performance of this Agreement, CONTRACTOR and any person employed by CONTRACTOR shall at all times be considered an independent CONTRACTOR and not an agent or employee of CITY. CONTRACTOR shall be responsible for employing or engaging all persons necessary to complete the work required under this Agreement.

D. SUBCONTRACTORS. CONTRACTOR may not use subcontractors to perform any Services under this Agreement unless CONTRACTOR obtains prior written consent of CITY. CONTRACTOR sha ll be solely responsible for directing the work of approved subcontractors and for any compensation due to subcontractors.

E. TAXES AND CHARGES. CONTRACTOR shall be responsible for payment of all taxes, fees, contributions or charges applicable to the conduct of CONTRACTOR’s business.

F. COMPLIANCE WITH LAWS. CONTRACTOR shall in the performance of the Services comply with all applicable federal, stat e and local laws, ordinances, regulations, and orders.

G. PALO ALTO MINIMUM WAGE ORDINANCE. CONTRACTOR shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONTRACTOR 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, CONTRACTOR shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060.

H. DAMAGE TO PUBLIC OR PRIVATE PROPERTY. CONTRACTOR sha ll, at its sole expense, repair in kind, or as the City Manager or designee shall direct, any damage to public or private property that occurs in connection with CONTRACTOR’s performance of the Services. CITY may decline to approve and may withhold payment in whole or in part to such extent as may be necessary to protect CITY from loss because of defective work not remedied or other damage 









  

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to the CITY occurring in connection with CONTRACTOR’s performance of the Services. CITY shall submit written documentation in support of such withholding upon CONTRACTOR’s request. When the grounds described above are removed, payment shall be made for amounts withheld because of them.

I. WARRANTIES. CONTRACTOR expressly warrants that all services provided under this Agreement shall be performed in a professional and workmanlike manner in accordance with generally accepted business practices and performance standards of the industry and the requirements of this Agreement. CONTRACTOR expressly warrants that all materials, goods and equipment provided by CONTRACTOR under this Agreement shall be fit for the particular purpose intended, shall be free from defects, and shall conform to the requirements of this Agreement. CONTRACTOR agrees to prompt ly replace or correct any material or service not in compliance with these warranties, including incomplete, inaccurate, or de fective ma terial or service, at n o further cost to CITY. The warranties set forth in this section shall be in effect for a period of one year from completion of the Services and shall survive the completion of the Services or termination of this Agreement.

J. MONITORING OF SERVICES. CITY may monitor the Services performed under this Agreement to determine whether CONTRACTOR’s work is completed in a satisfactory manner and complies with the provisions of this Agreement.

K. CITY’S PROPERTY. Any reports, information, data or other material (including copyright interests) developed, collected, assembled, prepared, or caused to be prepared under this Agreement will become the property of CITY without restriction or limitation upon their use and will not be made available to any individual or organization by CONTRACTOR or its subcontractors, if any, without the prior written approval of the City Manager.

L. AUDITS. CONTRACTOR 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, CONTRACTOR’s records pertaining to matters covered by this Agreement. CO NTRACTOR agrees to maintain accurate books and records in accordance with generally accepted accounting principles for at least three (3) following the terms of this Agreement.

M. NO IMPLIED WAIVER. No payment, partial payment, acceptance, or partial acceptance by CITY shall operate as a waiver on the part of CITY of any of its rights under this Agreement.

N. INSURANCE. CONTRACTOR, at its sole cost, sh all purchase and maintain in full force during the term of this Agreemen t, the insurance coverage described at Exhibit D. Insurance must be provided by companies with a Best’s Key Rating of A- 









  

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:VII or higher and which are otherwise acceptable to CITY’s Risk Manager. The Risk Manager must approve deductibles and self-insured retentions. In addition, all policies, endorsements, certificates and/or binders are subject to approval by the Risk Manager as to form and content. CONTRACTOR shall obtain a policy endorsement naming the City of Palo Alto as an additional insured under any general liability or automobile policy. CONTRACTOR shall obtain an endorsement stating that the insurance is primary coverage and will not be canceled or materially reduced in coverage or limits until after providing 30 days prior written notice of the cancellation or modification to the Risk Manager. CONTRACTOR shall provide certificates of such policies or ot her evidence of coverage satisfactory to the Risk Manager, together with the required endorsements and evidence of payment of premiums, to CITY concurrently with the execution of this Agreement and shall throughout the term of this Agreement provide current certificates evidencing the required insurance coverages and endorsements to the Risk Manager. CONTRACTOR shall include a ll subcontractors as insured under its policies or shall obtain and provide to CITY separate certificates and endorsements for each subcontractor that meet all the requirements of this section. The procuring of such required policies of insurance shall not operate to limit CONTRACTOR’s liability or obligation to indemnify CITY under this Agreement.

O. HOLD HARMLESS. To the fullest extent permitted by law and without limitation by the provisions of section N relating to insurance, CONTRACTOR shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents from and against any and all demands, claims, 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. CONTRACTOR’s obligations under this Section apply rega rdless of whether or not a liability is caused or contributed to by any negligent (passive or active) act or omission of CITY, except that CONTRACTOR shall not be obligated to indemnify for liability arising from the sole negligence or willful misconduct of CITY. The acceptance of the Services by CITY shall not operate as a waiver of the right of indemnification.

The provisions of this Section surviv e the completion of the Services or termination of this Agreement.

P. NON-DISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONTRACTOR certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial stat us, weight or height of such person.

CONTRACTOR acknowledges that it has read and understands the provisions of 









  

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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.

Q. WORKERS' COMPENSATION . CONTRACTOR, by executing this Agreement, certifies that it is aware of the provisions of the Labor Code of the State of Califor- nia which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that Code, and certifies that it will comp ly with such provisions, as applicable, before commencing and during the performance of the Services.

R. TERMINATION. The City Manager may terminate this Agreement without cause by giving ten (10) days’ prior written notice thereof to CONTRACTOR. If CONTRACTOR fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided by law, the City Manager may terminate this Agreement immediately upon written notice of termination.

Upon receipt of such notice of term ination, CONTRACTOR shall immediately discontinue performance. CITY shall pay CONTRACTOR for services satisfactorily performed up to the effective date of termination. If the termination is for cause, CITY may deduct from such payment the amount of actual damage, if any, sustained by CITY due to CONTRACTOR’s failure to perform its material obligations under this Agreement. Upon termination, CONTRACTOR shall immediately deliver to the City Manager any and all copies of studies, sketches, drawings, computations, and other material or products, whether or not completed, prepared by CONTRACTOR or given to CONTRACTOR, in connection with this Agreement. Such materials shall become the property of CITY.

S. ASSIGNMENTS/CHANGES. This Agreement binds the parties and their successors and assigns to all covenants of this Agreement. This Agreement shall not be assigned or transferred without the prior written consent of CITY. No amendments, changes or variations of any kind are authorized without the written consent of CITY.

T. CONFLICT OF INTEREST. In accepting this Agreement, CONTRACTOR 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 this Agreement. CONTRACTOR further covenants that, in the performance of this Agreement, it will not employ any person having such an interest. CONTRACTOR certif ies that no CITY officer, employee, or authorized representative has any financial interest in the business of CONTRACTOR and that no person associated with CONTRACTOR has any interest, direct or indirect, which could conflict with the faithful performance of this Agreement. CONTRACTOR agrees to advise CITY if any conflict arises.











  

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U. GOVERNING LAW. This Agreement shall be governed and interpreted by the laws of the State of California.

V. ENTIRE AGREEMENT. This Agreement, including all exhibits, represents the entire agreement between the parties with respect to the services that may be the subject of this Agreement. Any variance in the exhibits does not affect the validity of the Agreement and the Agreement itself controls over any conflicting provisions in the exhibits. This Agreement supersedes all prior agreements, representations, statements, negotiations and undertakings whether oral or written.

W. 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. 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 Section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement.

X. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE
REQUIREMENTS. CONTRACTOR shall comply with CITY’s Environmentally Preferred Purchasing policies which are av ailable at CITY’s Purchasing Division, which are incorporated by reference and may be amended from time to time.

CONTRACTOR shall comply with waste redu ction, 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, CONT RACTOR shall comply with the following zero waste requirements:
x All printed materials provided by CONTRACTOR to CITY 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.
x Goods purchased by Contractor 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 Division’s office.
x Reusable/returnable pallets shall be taken back by CONTRACTOR, at no additional cost to CITY, for reuse or recycling. CONTRACTOR shall provide documentation from the facility accepting the pallets to verify that pallets 









  

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are not being disposed.

Y. AUTHORITY. The individual(s) executing this Agreement on behalf of the parties represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities.

Z. PREVAILING WAGES

This Project is not subject to prevailing wages. CONTRACTOR is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7, if the Agreement is not a public works contract, if Agreement does not include a public works construction project of more than $25,000, or the Agreement does not include a public works alteration, demolition, repair, or maintenance (collectively, ‘improvement’) project of more than $15,000.

OR

Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the Agreement for this Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the Purchasing Division’s office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages.

AA. DIR REGISTRATION. In regard to any public work construction, alteration, demolition, repair or maintenance work, CITY will not accept a bid proposal from or enter into this Agreement with CONTRACTOR without proof that CONTRACTOR and its listed subcontractors are registered with the California Department of Industrial Relations (“DIR”) to perform public work, subject to limited exceptions. City requires CONTRACTOR and its listed subcontractors to comply with the requirements of SB 854.

CITY provides notice to CONTRACTOR of the requirements of California Labor Code section 1771.1(a), which reads:











  

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“A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the Agreement is awarded.”

CITY gives notice to CONTRACTOR and its listed subcontractors that CONTRACTOR is required to post all job site notices prescribed by law or regulation and CONTRACTOR is subject to SB 854-compliance monitoring and enforcement by DIR.

CITY requires CONTRACTOR and its listed subcontractors to comply with the requirements of Labor Code section 1776, including:

Keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by, respectively, CONTRACTOR and its listed subcontractors, in connection with the Project.

The payroll records shall be verified as true and correct and shall be certified and made available for inspection at all reasonable hours at the principal office of CONTRACTOR and its listed subcontractors, respectively.

At the request of CITY, acting by its project manager, CONTRACTOR and its listed subcontractors shall make the certified payroll records available for inspection or furnished upon request to the project manager within ten (10) days of receipt of CITY’s request.

[For state- and federally-funded projects] CITY requests CONTRACTOR and its listed subcontractors to submit the certified payroll records to the project manager at the end of each week during the Project.

If the certified payroll records are not produced to the project manager within the 10-day period, then CONTRACTOR and its listed subcontractors shall be subject to a penalty of one hundred dollars ($100.00) per calendar day, or portion thereof, for each worker, and CITY shall withhold the sum total of penalties from the progress payment(s) then due and payable to CONTRACTOR.











  

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Inform the project manager of the location of CONTRACTOR’s and its listed subcontractors’ payroll records (street address, city and county) at the commencement of the Project, and also provide notice to the project manager within five (5) business days of any change of location of those payroll records.

BB. CONTRACT TERMS. All unchecked boxes do not apply to this Agreement. In the case of any conflict between the terms of this Agreement and the exhibits hereto or CONTRACTOR’s proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONTRACTOR’s proposal, the exhibits shall control.










  

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IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written.

CITY OF PALO ALTO

____________________________
City Manager

APPROVED AS TO FORM:

__________________________
City Attorney or designee

MANESCO CORPORATION

By:__________________________________

Name:_______________________________

Title:________________________________

By:__________________________________

Name:_______________________________

Title:________________________________











  




















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EXHIBIT A

SCOPE OF SERVICES

The CONTRACTOR will furnish all professional services necessary to perform as follows:

Qualifications

1. CONTRACTOR will provide a minimum of two Gas Leak Surveyors (GLSs) to perform leak surveys. At least one GLS will have a minimum of 5-years’ experience and a second GLS will have a minimum of 2-years’ experience performing natural gas leak surveys and leak grading on gas distribution or transmission pipelines using flame ionization (FI) and remote methane leak detector (RMLD) units. GLSs will be experienced and qualified in use of the approved leak survey equipment.

2. CONTRACTOR will be required to test and will qualify for the following Industrial Training Services (ITS) Operator Qualification task list:

ITS
Task # Task Name
Re-Qual.

Frequency
Qual.

Method
Span
of
Control
141 Visual Inspection for Atmospheric
Corrosion 3 Years~ K&S 1:0*
191 Measure Atmospheric Corrosion 3 Years~ K&S 1:0*
1241 Outside Gas Leak Investigation 3 Years~ K&S 1:0*
1261 Walking Gas Leak Survey 3 Years~ K&S 1:0*
1271 Mobile Gas Leak Survey: Flame Ionization 3 Years~ K&S 1:0* 1311 Inspect Pipeline Surface Conditions:

Patrol Right of Way or Easement 3 Years~ K&S 1:0*

~ Re-qualification frequency is once every three years, not to exceed 39 months. City reserves the right to reduce qualification frequency and require CONTRACTOR to qualify on one or more tasks more frequently.

* City will not approve span of control for CONTRACTOR personnel. Each GLS will be required to test and obtain qualification prior to performing any task listed above.

3. CONTRACTOR’s personnel will be entered and stored into ITS database. City will upload a maximum of two technicians in City’s ITS database; any additional technicians will be uploaded into CONTRACTOR’s ITS database. City will be granted rights to access CONTRACTOR’s ITS database to review and download qualifications of CONTRACTOR’s personnel performing task for City for duration of the agreement.

4. CONTRACTOR will maintain qualification records for personnel who perform covered tasks for a minimum period of 5 years after the individual is no longer performing them. The City has the right to review and receive such records upon request, for up to 5 years after the completion of the agreement. 









  

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Equipment

1. Prior to beginning the leak survey each year, which is typically done in March/April, CONTRACTOR will submit an annual inventory list of each FI or RMLD unit that may be used. The list will identify survey usage (mobile or walking), model and serial number, CONTRACTOR’s identification number, age of unit, last calibration date, and next calibration due date.

2. CONTRACTOR will supply industry standard equipment for the duration of the contract. City reserves the right to accept or reject the equipment. Only units listed on the annual inventory list will be reviewed for approval by the City for use on this project.

3. CONTRACTOR will immediately remove from service any unit not calibrated in the appropriate intervals or not approved by City and replace such units with approved calibrated units.

4. While performing walking surveys, CONTRACTOR will provide each GLS with a handheld flame ionization unit or RMLD unit.

5. CONTRACTOR will supply gas canisters for FI units and ensure RMLD units are operational and fully charged.

6. While performing mobile surveys, CONTRACTOR will provide a vehicle, computer and approved mobile methane leak detector. The vehicle will be equipped with a multiple intake system of adequate length to obtain samples of air from an area at least eight (8) feet wide along the path of the survey.

Mobile Survey

1. CONTRACTOR will furnish all labor and equipment necessary to conduct a mobile gas leak survey of approximately but not limited to Two Hundred Ten (210) miles of distribution mains, annually, through the City.

2. CONTRACTOR will operate the approved motor vehicle for use in conducting the survey.

3. CONTRACTOR will conduct the survey at speeds that allow an adequate sample to be continuously obtained by intakes as the vehicle passes over venting locations, considering the location of the gas main and any adverse conditions which may exist. Adverse conditions may include heavy traffic, parked vehicles, road closures, or other obstacles that may arise on public streets. The GLS will be accommodate such adverse conditions as the GLS conducts the survey or inform the Project Manager if additional aid is required.










  

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City of Palo Alto General Services Agreement 3 Rev. March 29, 2018

4. CONTRACTOR will veri
fy all detected all leak indications by a walking survey and will classify the leak indications in accordance with Table 1 at the end of this document.

5. CONTRACTOR will establish the spread and concentration of each leak indication, and enter the ground leak detection details on a ground leak survey report form (see Exhibit F).

6. CONTRACTOR will enter information on the report that documents:
a. The date and by whom the survey was conducted
b. Each leak will be identified by:
i. Numerical sequence
ii. Address, grade
iii. Percentage (%) or part per million (PPM) gas reading c. The location of the leak with diagram of property addresses, street intersections, valve locations, etc....

7. CONTRACTOR will mark all leaks in yellow paint upon verification.

8. CONTRACTOR will take care to prevent overspray or damage to customer property.

Walking Survey

1. CONTRACTOR will survey
the entire gas distribution system in a two (2) year
cycle. In even numbered years CONTRACTOR will conduct the walking survey on the north side of the City and in odd numbered years CONTRACTOR will conduct the walking survey on the south side of the City. Contractor’s 2023 walking gas leak survey (the first year of this contract) will cover the south side of the City and will include approximately 9,000 commercial and residential gas services.

Maps of both the north and south sides of the City are included in (see Exhibit H).

2. In addition to either the north or south side of the City, CONTRACTOR will also include the following fourteen principal business districts in the annual walking survey:

Business Districts:

1. East Meadow Circle

2. Golf Course

3. St. Francis










  

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City of Palo Alto General Services Agreement 4 Rev. March 29, 2018

4. San A
ntonio / Fabian

5. Charleston Center

6. Midtown

7. Downtown / Town & Country

8. Alma Center

9. El Camino Real

10. Stanford Shopping Center

11. VA Hospital

12. Bayshore

13. Stanford Industrial Park

14. Palo Alto Country Club

3. CONTRACTOR will be able to recognize and react appropriately according to their Contractor Operator Qualification certification to Abnormal Operating Conditions (AOCs) that may indicate a dangerous situation or a condition exceeding design limit.

4. CONTRACTOR will mark all leaks in yellow paint upon verification.

5. CONTRACTOR will take care to prevent overspray or damage to customer property.

6. The CONTRACTOR will furnish all professional services necessary to perform the tasks.

7. Provide a minimum of two technicians to be tested and qualified for performing leak surveys and completing visual inspections to identify abnormal operating conditions and atmospheric corrosion per the City’s Operator Qualification Plan.

8. Furnish all labor, equipment, material, travel and all necessary incidentals to conduct a mobile gas leak survey of all distribution mains.

9. Conduct a mobile survey of all gas distribution mains.

10. Check detection instruments for proper operation and calibrate each instrument with a known gas sample per the manufacturer’s specifications, before using the instruments to conduct the surveys. Submit proof of calibration each year to the Utilities Project before beginning the survey and as requested during the duration of the survey.










  

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City of Palo Alto General Services Agreement 5 Rev. March 29, 2018

11. Furnish
all labor, equipment, material, travel and all necessary incidentals to conduct a walking gas leak survey of all commercial and residential gas services, up to and including the meter sets in the fourteen principal business districts and either the North or South side of the City (in alternating years).

12. Survey each service line from the back of the curb up to and including the meter set.

13. Use gas detection equipment capable of detecting the concentration of at least 50 PPM of gas in the air at any sampling point. Equipment will analyze for methane content by using a flame ionization detector. The instrument will be equipped with a visual display of concentration levels and an audible detection alarm.

14. Document any Abnormal Operating Conditions (AOCs) found during the survey on a City-provided form (see Exhibit E), including photographs.

15. Revisit sites as described below on any initially inaccessible service lines and meter sets.

16. Conduct a recheck of all existing gas leaks identified on the survey maps each year.

17. Submit all completed forms to the Project Manager no later than 7:30 A.M. on the next regular business day following the day of the survey.

18. City will provide no carbon required (NCR) forms for all leak documentation (see Exhibits E & F) and locked gate doorhangers (see Exhibit G).

1. CONTRACTOR will conduct the walking survey every year on alternating sides (north and south) of the City. Maps of both the north and south sides of the City are included in (see Exhibit H).

2. CONTRACTOR will survey the entire gas distribution system in a two (2) year cycle. In even numbered calendar years, CONTRACTOR will conduct the walking survey on the north side of the City and in odd numbered years, CONTRACTOR will conduct the walking survey on the south side of the City. The 2023 walking 









  

Walking Survey Details
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City of Palo Alto General Services Agreement 6 Rev. March 29, 2018 gas leak
survey (the first year of this contract) will cover the south side of the City and will include approximately 9,000 commercial and residential gas services.

3. In addition to either the north or south side of the City, the annual walking survey also includes the following fourteen principal business districts:

Business Districts:

1. East Meadow Circle

2. Golf Course

3. St. Francis

4. San Antonio / Fabian

5. Charleston Center

6. Midtown

7. Downtown / Town & Country

8. Alma Center

9. El Camino Real

10. Stanford Shopping Center

11. VA Hospital

12. Bayshore

13. Stanford Industrial Park

14. Palo Alto Country Club

4. CONTRACTOR will survey each gas service, up to and including the meter set.

5. CONTRACTOR will conduct the survey at walking speeds sufficiently slow to allow an adequate sample to be continuously obtained by the instrument intake as it passes over venting locations. In performing the leak survey of gas services, CONTRACTOR will survey the area to be covered along the route of the service line from the back of the curb, up to and including the meter set.

6. CONTRACTOR will address any leaks found during the walking survey as described below:
a. Upon detection, CONTRACTOR will verify all leak indications and classify them in accordance with Table 1 at the end of this Exhibit. CONTRACTOR will establish the spread and concentration of each leak indication and enter the ground leak detection details on a ground leak survey report form (see Exhibit F). CONTRACTOR will enter information on the report form to document:
i. When and by whom the survey was conducted
ii. Each leak will be identified by:
i. Numerical sequence










  

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City of Palo Alto General Services Agreement 7 Rev. March 29, 2018 ii. Addres
s
iii. Grade
iv. Percentage (%) or part per million (PPM) gas reading v. Leak location, including a hand drawn map
b. CONTRACTOR will complete meter leak/AOC forms supplied by the City, or a City approved equivalent (see Exhibit E), to assess compliance with City’s utility standards. CONTRACTOR may take the sample through the reading lid and is not required to remove the lids of curb meter boxes. i. CONTRACTOR will number the meter leak forms consecutively and separately from the ground leaks. CONTRACTOR will also conduct a visual inspection of the gas riser, gas meter and the regulator for defects, corrosion and illegal grounding by other utilities (including, but not limited to, telephone and cable companies). CONTRACTOR will complete a City-provided Abnormal Operating Condition (AOC) Survey form (see Exhibit E) for each location identified as an AOC.

CONTRACTOR will provide a photograph of all reported AOCs.

CONTRACTOR will ensure the address of the location will be visible in the photograph.
c. CONTRACTOR will describe all ground leaks and meter leaks and note them on the City-provided Map at the appropriate address. CONTRACTOR’s notes will include leak number, leak concentration, leak location and Palo Alto Meter # from the meter, if applicable. CONTRACTOR will verify all addresses where leaks are found by checking the physical address on the building. i. In cases where there are inconsistencies between the physical addresses and the address in the Map, CONTRACTOR will consider the address on the building correct and note that on the Map and on the Survey Report Form.
d. CONTRACTOR will mark each service with a red check ( ) on the Map and enter each service on the City-provided reporting format (spreadsheet or database) to report the data electronically.
e. Any service not checked will be considered not surveyed and CONTRACTOR must be re-survey in order to adequately perform the tasks required in this Agreement (see subsection “f” immediately below for additional information on completing surveys).
f. A location is considered completed/surveyed by CONTRACTOR only when CONTRACTOR’s GLS has leak tested the service line and meter set for gas leaks, and verified, classified and documented the findings. 









  

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City of Palo Alto General Services Agreement 8 Rev. March 29, 2018 g. CONTRACTOR will mak
e every reasonable effort to complete the survey upon
the initial site visit. If the GLS is unable to conduct or complete the survey at any location because of an inability to access the premise, CONTRACTOR will take the following actions:
i. Complete the “Special Instructions” section of the Gas Meter Leak/AOC Survey Tag (see Exhibit E). CONTRACTOR’s GLS will indicate on the form the reason the survey was not completed at the location (locked gate, dog, etc.).
ii. A City-provided door hanger (see Exhibit G) will be attached to the door. The door hanger will advise the resident to contact the City to schedule a date/time for the survey to be conducted on the service/meter.
iii. If CONTRACTOR’s GLS is unable to access a location to conduct a complete survey, CONTRACTOR will make up to two additional attempts. The Project Manager may assist in setting up appointments with residents for the two additional attempts. CONTRACTOR’s GLS will be courteous and on time for appointments.
iv. CONTRACTOR’s GLS will be available at the conclusion of each survey to work with the City’s meter reading group to access any locations where the GLS was unable to complete the survey due to
inaccessibility or any other reason.
v. If, after an initial visit and two additional visits as arranged by the Project Manager the site is still inaccessible, the City will consider the contractor’s obligation fulfilled and eligible for payment.

Re-survey of Existing 3 Gas Leaks
A list of existing Grade 3 Gas Leaks will be provided to the CONTRACTOR’s GLS each year.

CONTRACTOR will re-survey leaks and reassess them annually and provide a revised Leak Survey form (see Exhibit F) to the Project Manager. Leak resurveying is a time sensitive task and CONTRACTOR will observe department implemented timelines.

As of December 2021 there were 115 existing gas leaks (Grade 3) identified in the gas distribution system. Known leaks are located throughout the City and are identified on the Maps with a red colored asterisk (*). The specific locations of existing leaks will be provided upon award of the contract.










  

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City of Palo Alto General Services Agreement 9 Rev. March 29, 2018 Work Hours
CONTRACTOR will not conduct overtime, weekend or holiday work, unless receiving prior approval by City. The workday is M-TH 7:30 AM and 4:00 PM.

1. CONTRACTOR’s GLS will immediately report all leaks of a hazardous nature (Grade 1) to Utility Dispatch at (650) 329-2579, to have the leak recorded in the dispatch log and to dispatch a Utility Field Services Representative to the location. The GLS will remain on site until Utility staff arrives. All houseline leaks discovered are considered grade 1 and CONTRACTOR will call them into dispatch. The GLS will wait on scene until a Field Service Representative or other City representative arrives and will communicate findings.

2. CONTRACTOR will deliver completed Survey Report forms, Gas Meter Leak / AOC Survey forms, and Maps to the City no later than 7:30 A.M. on the next regular workday following the survey, unless other arrangements are specifically identified by the City.

CONTRACTOR’s employees who perform operating, maintenance, or emergency response functions on natural gas pipelines are subject to the provisions of Title 49 CFR Part 199, “Drug and Alcohol Testing”, including the requirements for drug testing, record keeping, education, and training. CONTRACTOR will ensure that its affected employees are given drug testing in accordance with the regulations.

CONTRACTOR will submit a copy of its “Drug and Alcohol Testing Policy” before performing any work under this Agreement.

Final Report
CONTRACTOR will prepare a final report, which provides documentation of the entire survey and the results of such survey. One (1) hard copy of the report submitted to the City within thirty (30) days of the survey completion date. CONTRACTOR will provide an electronic copy of the report if available.

See next page for Table 1 – Identification of Leak Grades 









  

General Reporting Requirements
Drug Testing Requirements
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City of Palo Alto General Services Agreement 10 Rev. March 29, 2018 Table 1
Grad
ing and Identification of Gas Leaks
Grade Definition Priority of Leak Repair Examples
3 Non-Hazardous –
Leaks that are non-
hazardous at the
time of detection
and can
reasonably be
expected to
remain non-
hazardous.

Leaks will be scheduled for re-
evaluation during the next scheduled
leakage survey or within 15 calendar
months of detection, whichever
occurs first, until the leak is re-graded
or no longer results in a reading.

Grade 3 leaks may include, but are not limited to:

1. A leak that naturally vents to the atmosphere.

2. Any indication of gas < 4% gas-in-air (80% Low
Explosive Level LEL) in small gas associated
substructures such as valve boxes.

3. A leak with minimal migration.

4. Any indication of gas <1% gas-in-air (20% LEL) in a
confined space.
2 Intermediate -
Leaks that are not
hazardous at the
time of detection,
justify scheduled
repair based on
probable future
hazard.

Leaks should be repaired within one
year but no later than 15 months from
the date reported. In determining the
repair priority, criteria such as the
following should be considered:

1. Amount of and migration of gas.

2. P
roximity of gas to buildings and
subsurface structures.

3. Extent of pavement.

4. A
ny leak, which in the judgment of
company personnel at the scene, is of
sufficient magnitude to justify
schedule repair
Grade 2 leaks may include, but are not limited to:

1. Any leak requiring action prior to any adverse
changes in venting conditions.

2. Any leak that would likely migrate into or under
buildings.

3. Any indication of gas > 2% gas-in-air (40% LEL)
under a sidewalk in a wall-to-wall paved area that is
not a Grade 1 leak.

4. Any indication of gas > 5% gas-in-air (100% LEL)
under a street in a wall-to-wall paved area.

5. Any indication of gas < 4% gas-in-air (80% LEL) in
small substructures associated with gas facilities that would likely migrate creating a probable future
hazard.

6. Any indication of gas between 1% and 4% gas-in-
air (20% - 80% LEL) in a confined space.
1 Hazardous - Leaks
that pose an
immediate hazard
to persons or
property and
requires
continuous action
until conditions
are no longer
hazardous.

Prompt remedial action must be
undertaken for leaks classified as
hazardous. Prompt remedial action
may include, but not be limited to the
following:

1. Implementation of the CPAU
Emergency Operating Plan.

2. Evacuation of buildings.

3. Blocking off/barricading an area.

4. Rerouting traffic.

5. Eliminating ignition sources.

6. Venting the area and/or buildings.

7. Stopping the flow of gas by closing
valves or other means.

8. Notifying Fire, Police and/or other
emergency responders.

Grade 1 leaks may include, but are not limited to:

1. Any gas leak that can be seen, heard, or felt.

2. Any leak which, in the judgment of company
personnel at the scene, is considered as an immediate
hazard.

3. Escaping gas that has ignited.

4. Any indication of gas that has migrated into or
under a building.

5. Any indication of gas at the outside wall or where
gas would likely migrate to an outside wall due to
surface conditions or cover and/or subsurface
structures or a building.

6. Any indication of gas > 4% gas-in-air (80% LEL) in a confined space.

7. Any indication of gas > 4% gas-in-air (80% LEL) in
small substructures not associated with gas facilities
where gas would likely migrate to the outside wall of
a building.

8. A
ll leaks inside a building(s)

9. A
ll leaks inside enclosures containing electrical
equipment.

10. All houseline leaks










  

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City of Palo Alto General Services Agreement 11 Rev. March 29, 2018

EXHIBIT B

SCHEDULE OF PERFORMANCE

CONTRACTOR shall perform the Services according to the following schedule, with clarifications by the Project Manager where needed:

1. Re-survey of all existing grade 3 leaks to be completed before their annual review date (between April 6
th and May 15th of each year).

2. Walking Survey to be completed by December of each year, start date to be determined each year usually around June, dependent on the completion of the resurveying leak survey.

3. Mobile Survey to be performed during October/November each year.

4. The complete gas survey to be completed by December 31 of each year.











  

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City of Palo Alto General Services Agreement 12 Rev. March 29, 2018

EXHIBIT C

SCHEDULE OF FEES

CITY shall pay CONTRACTOR according to the following rate schedule . The maximum amount of compensation to be paid to CONTRACTOR, including both payment for services and reimbursable expenses, shall not exceed the amounts set forth in Sections 5 and 6 of the Agreement. Any services provided or hours worked for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to CITY.

DETAILED RATE SCHEDULE

Year 1 (2023)
Description Cost Qty. Total
Walking Gas Survey $ 6.15

9,000 $ 55,350.00
Mobile Gas Survey $ 34,944.00 1 $ 34,944.00
Gas Resurvey $ 26.00 120 $ 3,120.00
Grand Total $ 93,414.00

Year 2 (2024)
Description Cost Qty. Total
Walking Gas Survey $ 6.39

9,000 $ 57,510.00
Mobile Gas Survey $ 36,341.75 1 $ 36,341.75
Gas Resurvey $ 27.04 120 $ 3,244.80
Grand Total $ 97,096.55

Year 3 (2025)
Description Cost Qty. Total
Walking Gas Survey $ 6.70

9,000 $ 60,300.00
Mobile Gas Survey $ 38,158.83 1 $ 38,158.83
Gas Resurvey $ 28.49 120 $ 3,418.80
Grand Total $ 101,877.63

Year 4 (2026)
Description Cost Qty. Total
Walking Gas Survey $ 7.03

9,000 $ 63,270.00
Mobile Gas Survey $ 40,066.77 1 $ 40,066.77
Gas Resurvey $ 29.91 120 $ 3,589.20
Grand Total $ 106,925.97











  

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City of Palo Alto General Services Agreement 13 Rev. March 29, 2018

Year 5 (2027)
Description Cost Qty. Total
Walking Gas Survey $ 7.45

9,000 $ 67,050.00
Mobile Gas Survey $ 42,470.77 1 $ 42,470.77
Gas Resurvey $ 31.70 120 $ 3,804.00
Grand Total $ 113,324.77

Year 6 (2028)
Description Cost Qty. Total
Walking Gas Survey $ 7.97

9,000 $ 71,730.00
Mobile Gas Survey $ 45,443.72 1 $ 45,443.72
Gas Resurvey $ 34.33 120 $ 4,119.60
Grand Total $ 121,293.32











  

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City of Palo Alto General Services Agreement 14 Rev. March 29, 2018

EXHIBIT D

INSURANCE REQUIREMENTS

CONTRACTORS 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, BELOW:

REQUIRED TYPE OF COVERAGE REQUIREMENT

MINIMUM LIMITS
EACH

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

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

$1,000,000

$1,000,000

$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

$1,000,000

$1,000,000

NO

PROFESSIONAL LIABILITY,

INCLUDING, ERRORS AND

OMISSIONS, MALPRACTICE (WHEN

APPLICABLE), AND NEGLIGENT

PERFORMANCE

ALL DAMAGES $1,000,000

YES
THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED : CONTRACTOR, AT

ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND

EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE

INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONTRACTOR S, 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 PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND

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

C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL.

II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE.

III. ENDORSEMENT PROVISIONS, WITH RESP ECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS”










  

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City of Palo Alto General Services Agreement 15 Rev. March 29, 2018

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.

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 BEFO RE ITS EXPIRATION DATE FOR ANY

REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY 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 ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.

NOTICES SHALL BE MAILED TO:

PURCHASING AND

CONTRACT ADMINISTRATION

CITY OF PALO ALTO
P . O . B O X 1 0 2 5 0
PALO ALTO, CA 94303











  

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*$60(7(5/($.$2&6859(<7$*
Report Date: Location:

PA#: Meter Location: 5LJKW /HIW )URQW %DFN &XUE
Special Instructions: (QWHU5LJKW (QWHU/HIW /RFNHG*DWH 0DQLIROG 'RJ&DXWLRQ Performed By:

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REPAIR INFORMATION (FOR GAS SHOP PERSONNEL ONLY)
Connection Object Device Location Route #
Equipment Used
FI Gas Det. Soap
UG Sample
____________
Leak Found At:

Level
PPM
LEL
GAS _____________
Corrosion Leak:

Yes No
Field Action Taken RME TTR RUS RUC RRE NLF RTO
RME=Req. Meter Exchange TTR=Tightened to Repair
RUS=Rebuilt to Utility Standard RRE=Req. Reg. Exchange
NLF=No Leak Found RTO=Referred to Ops
Meter Read Install Date Multiplier Meter Type
Performed by Call Sign Time Arrived Time Departed
Resolved Date Comments
Entered into GIS/AVEC Closed in GIS/AVEC

 (;+,%,7(










  

Item 6
Attachment A - Manesco
Corporation, Contract
#C23185369

Item 6: Staff Report
Pg.
32 Packet Pg. 145 of 269

2017
Map
2022
Date/Time
Weather:

Test
Equipment: FI CG Soap Other
Walking Mobile
Performed by:

Leak # Grade Reading Location
Recheck Log
Date Grade Reading Technician Initials
Technician Signature:

City of Palo Alto Gas Leak Survey
Ground Leak Report
Emergency Dispatch: 650-329-2579
Work Order #
 (;+,%,7)










  

Item 6
Attachment A - Manesco
Corporation, Contract
#C23185369

Item 6: Staff Report
Pg.
33 Packet Pg. 146 of 269

Gas Leak Survey
Notice of Need for Access
Gas Leak Survey
Notice of Need for Access
Gas Leak Survey
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IMPORTANT NOTICE IMPORTANT NOTICE
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Date
 Time

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 (;+,%,7*










  

Item 6
Attachment A - Manesco
Corporation, Contract
#C23185369

Item 6: Staff Report
Pg.
34 Packet Pg. 147 of 269

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Item 6
Attachment A - Manesco
Corporation, Contract
#C23185369

Item 6: Staff Report
Pg.
35 Packet Pg. 148 of 269

CPAU GAS LEAK SURVEY BID TABLE
3% 3.75% 3.75% 3.75% 3.75% 3.75%
Bid Schedule A: Walking Gas (Methane) Leak Survey
Cost Per
Service
Surveyed Year
1 Cost Per
Service
Surveyed
Year 2
Cost Per Service
Surveyed Year
3 Cost Per Service
Surveyed Year
4 Cost Per
Service
Surveyed
Year 5
Cost Per
Service
Surveyed
Year 6
Bid Schedule A
Total - Years 1
through 6
Cost Per Service
Surveyed Year 1
Cost Per Service
Surveyed Year
2 Cost Per
Service
Surveyed
Year 3
Cost Per Service
Surveyed Year
4 Cost Per Service
Surveyed Year
5 Cost Per
Service
Surveyed
Year 6
Bid Schedule A
Total - Years 1
through 6
Cost Per Service
Surveyed Year 1
Cost Per
Service
Surveyed
Year 2
Cost Per
Service
Surveyed
Year 3
Cost Per
Service
Surveyed
Year 4
Cost Per
Service
Surveyed
Year 5
Cost Per
Service
Surveyed
Year 6
Bid Schedule A
Total - Years 1
through 6
Walking Gas Leak Survey. All labor, equipment,
material, travel and all necessary incidentals to
conduct an annual walking gas leak survey of
approximately 9,000 residential & commercial gas
services, up to and including the meter set including
appropriate documentation and repeat visits when
neccesary. The walking gas leak survey also consists of other gas distribution system facilities that may not be surveyed via mobile and the survey of 14 business
districts including appropriate documentation.
55,350.00$ 57,510.00 $ 60,300.00 $ 63,270.00 $ 67,050.00 $ 71,730.00 $ $ 375,210.00 362,970.00 $ 396,090.00 $ 432,720.00 $ 468,540.00 $ 518,580.00 $ 568,710.00 $ $ 2,747,610.00 123.17 $ 127.79 $ 132.58 $ 137.55 $ 142.70 $ 148.05 $ $ 349,091.20 Bid Schedule B: Mobile Gas (Methane) Leak Survey
Mobile Survey
W/ Business
Districts
Year 1
Mobile Survey
W/ Business
Districts
Year 2
Mobile Survey
W/ Business
Districts
Year 3
Mobile Survey
W/ Business
Districts
Year 4
Mobile Survey
W/ Business
Districts
Year 5
Mobile Survey
W/ Business
Districts
Year 6
Bid Schedule B
Total- Years 1
through 6
Mobile Survey
W/ Business
Districts
Year 1
Mobile Survey
W/ Business
Districts
Year 2
Mobile Survey
W/ Business
Districts
Year 3
Mobile Survey
W/ Business
Districts
Year 4
Mobile Survey
W/ Business
Districts
Year 5
Mobile Survey
W/ Business
Districts
Year 6
Bid Schedule B
Total- Years 1
through 6
Mobile Survey
W/ Business
Districts
Year 1
Mobile Survey
W/ Business
Districts
Year 2
Mobile Survey
W/ Business
Districts
Year 3
Mobile Survey
W/ Business
Districts
Year 4
Mobile
Survey W/
Business
Districts
Year 5
Mobile
Survey W/
Business
Districts
Year 6
Bid Schedule B
Total- Years 1
through 6
Mobile Gas Leak Survey. All labor, equipment,
material, travel and all necessary incidentals to
conduct a mobile gas leak survey of the City's gas
distribution system mains including appropriate
documentation.
34,944.00$ 36,341.75 $ 38,158.83 $ 40,066.77 $ 42,470.77 $ 45,443.72 $ $ 237,425.84 31,460.10 $ 34,326.60 $ 37,501.80 $ 41,027.70 $ 44,940.00 $ 49,291.20 $ $ 238,547.40 123.17 $ 127.79 $ 132.58 $ 137.55 $ 142.70 $ 148.05 $ $ 97,420.80 Bid Schedule C: Gas Leak Resurvey - Citywide.

Cost Per
Service
Resurveyed
Year 1
Cost Per
Service
Resurveyed
Year 2
Cost Per Service
Resurveyed
Year 3
Cost Per Service
Resurveyed
Year 4
Cost Per
Service
Resurveyed
Year 5
Cost Per
Service
Resurveyed
Year 6
Bid Schedule C
Total - Years 1
through 6
Cost Per Service
Resurveyed Year
1 Cost Per Service
Resurveyed
Year 2
Cost Per
Service
Resurveyed
Year 3
Cost Per Service
Resurveyed
Year 4
Cost Per Service
Resurveyed
Year 5
Cost Per
Service
Resurveyed
Year 6
Bid Schedule C
Total - Years 1
through 6
Cost Per Service
Resurveyed Year
1 Cost Per
Service
Resurveyed
Year 2
Cost Per
Service
Resurveyed
Year 3
Cost Per
Service
Resurveyed
Year 4
Cost Per
Service
Resurveyed
Year 5
Cost Per
Service
Resurveyed
Year 6
Bid Schedule C
Total - Years 1
through 6
All labor, equipment, material, travel and all necessary incidentals to resurvey approximately 120 existing gas
leaks, up to and including the meter set including
appropriate documentation.
3,120.00$ 3,244.80 $ 3,418.80 $ 3,589.20 $ 3,804.00 $ 4,119.60 $ $ 21,296.40 15,729.60 $ 17,163.60 $ 18,752.40 $ 20,514.00 $ 22,470.00 $ 24,645.60 $ $ 119,275.20 123.17 $ 127.79 $ 132.58 $ 137.55 $ 142.70 $ 148.05 $ $40,592.00 Total 93,414.00$ 97,096.55 $ 101,877.63 $ 106,925.97 $ 113,324.77 $ 121,293.32 $ $ 633,932.24 409,538.36 $ 446,861.95 $ 488,210.14 $ 534,074.33 $ 585,010.38 $ 641,647.42 $ $ 3,405,342.58 73,902.00 $ 76,674.00 $ 79,548.00 $ 82,530.00 $ 85,620.00 $ 88,830.00 $ $ 487,104.00 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total 6 Years Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total 6 Years Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total 6 Years HEATH CONSULTANTS INC.MANESCO CORPORATION SOUTHERN CROSS &nbsp;
<td style="background-color: rgb(211,211,211); border-color: rgb(101, 176, 176); text-align: center; border: 1px solid black; border-radius: 10px;">
Item&nbsp;6
Attachment B - Gas Leak Survey Bid Summary
&nbsp;
&nbsp;
&nbsp;
Item 6: Staff Report&nbsp;Pg.&nbsp;36
&nbsp;
Packet Pg. 149 of 269&nbsp;

Item No. 7. Staff Report Page 1 of 3
1 5
5 9

CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: February 13, 2023

TITLE
Approval of a Purchase Order with Interstate Truck Center in an Amount Not to Exceed $297,244 for the Purchase of Two 2023 International CV Chipper Body Trucks, Utilizing a Cooperative Purchase Agreement, Funded by Capital Improvement Program Project VR-23000

RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or their designee to execute a purchase order with Interstate Truck Center LLC dba Valley Peterbilt in the amount of $270,244 and an approximate 10% contingency in the amount of $27,000 for potential price increases, for a total not to exceed amount of $297,244 for the purchase of two (2) 2023 International CV515 trucks with chipper bodies, utilizing a cooperative purchase agreement via Sourcewell, a cooperative purchasing agency serving government and not-for-profit organizations.

BACKGROUND
The Vehicle and Equipment Use, Maintenance, and Replacement Policy section 4-1 provides for the on-going replacement of City fleet vehicles and equipment. Replacements are scheduled using guidelines based on age, mileage accumulation, and obsolescence. Policy 4-1 prescribes a replacement interval for trucks with service bodies of ten years or 100,000 miles. The replacement of the two (2) chipper body trucks recommended in this report was programmed in the FY 2023 Scheduled Vehicle and Equipment Replacement Capital Improvement Program project (VR-23000).

ANALYSIS
Urban Forestry operates a total of four Ford F-550 trucks with chipper bodies. Two of these trucks, both 2001 Ford F-550s, are now scheduled for replacement. Vehicle 3520 has 71,218 miles, with lifetime maintenance and operation costs exceeding $146,000, of which $60,189 (41 percent) has been incurred in the last 5 years. Approximately 60 percent of the total downtime for this vehicle has occurred in the last 5 years. Vehicle 3521 had similar mileage and Item 7
Item 7 Staff Report (3)

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maintenance and operation costs but was totaled in an accident in March 2022. These trucks do not have hour meters that would indicate additional engine wear while they are in use but not traveling. These are specialty vehicles used by the department primarily for towing brush chippers and transporting wood chips and large pieces of wood. Other daily functions include towing a tree planting trailer, towing a spray rig, and towing arrow boards for traffic control purposes. The chipper trucks are also relied upon frequently to respond to emergency calls after hours, weekends, and on holidays in response to downed trees or limbs on the public right-of-way, structures, and electrical power lines.

Procurement Process
Palo Alto Municipal Code section 2.30.360 (j) allows the use of cooperative purchasing agreements in lieu of conducting a competitive solicitation. Navistar, Inc. dba International Truck was awarded a contract by Sourcewell, a cooperative purchasing agency serving governmental, higher education, K-12 education, not-for-profit, tribal government, and other public agencies. Sourcewell conducted a Request for Proposals under which Navistar, Inc. dba International Truck was an awarded vendor (Sourcewell Contract) through which Interstate Truck Center LLC dba Valley Peterbilt is an authorized dealer.

To participate under the cooperative agreement, a Request for Quotation was sent to Sourcewell, and staff received a quote from Interstate Truck Center LLC dba Valley Peterbilt on January 17, 2023 (Attachment A).

If this request is not approved, these replacements would have to be worked into a future year’s replacement schedule, and staff would have to request a new specification and quote for a later model chassis and return to Council for approval. Delaying the replacement of these vehicles would lead to increased maintenance costs and downtime, and result in a higher replacement cost.

The purchase order version provided in Attachment B (Purchase Order 45230001561) has been reduced for printing purposes and does not include all exhibits. The full contract with all exhibits can be found here.

1 https://www.cityofpaloalto.org/files/assets/public/public-works/fleet/contractpo/po-4523000156-final-po- packet.pdf
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FISCAL/RESOURCE IMPACT
As approved in the FY 2023 Adopted Capital Budget, funding is available in the FY 2023 Scheduled Vehicle and Equipment Replacement capital project (VR-23000) for the purchase of two 2022 International CV515 trucks with chipper bodies recommended in this report.

STAKEHOLDER ENGAGEMENT
Requests for vehicle replacements are presented to the Fleet Review Committee (FRC) for approval. FRC approved the replacement of these two vehicles through the FY 2023 Adopted Capital Budget and review of the scheduled five-year vehicle replacement plan.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the purchase of fleet vehicles is a continuing administrative or maintenance activity. CEQA Guidelines section 15378(b)(2).

ATTACHMENTS
Attachment A: Quote from Interstate Truck Center LLC dba Valley Peterbilt Attachment B: Excerpt from Purchase Order #4523000156
APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
Report #: 2301-0806
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Item 7
Attachment A - Quote
from Interstate Truck
Center LLC dba Valley
Peterbilt

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This City of Palo Alto (City) Purchase Order agreement (PO) with Valley Peterbilt dba Interstate Truck Center LLC is made pursuant and subject to Sourcewell Contract #060920-NVS for the procurement of the equipment detailed in this PO.

This PO is governed by California law without regard to conflict of law principles. The venue for any dispute under this PO is Santa Clara County, California.

This PO hereby attaches and incorporates the following contract documents into this PO by reference as though fully set forth herein:

1. Sourcewell Contract No. 060920-NVS

2. Interstate Truck LLC Pricing Sheet for Sourcewell Contract No. 060920-NVS

3. Interstate Truck Center LLC Quote (including pricing and specifications)

4. City of Palo Alto Purchase Order Terms and Conditions for Goods
0010 Chipper Truck w Intl chassis 114,260 USD 1.00 114,260.00 Purchase two (2) new 2023 Chipper Trucks with International Chassis and associated fees. First truck with fees is on line items 10, 20, and

30. Second truck with fees is on line items 40, 50, and 60.

Delivery: 12 months upon receipt of PO
Vendor Address

INTERSTATE TRUCK CENTER LLC

VALLEY PETERBILT
2110 S SINCLAIR AVE
STOCKTON CA 95215
Tel: 209-656-7584
Bill To:

Equipment Management Division
City of Palo Alto
3201 East Bayshore Road
Palo Alto CA 94303
Ship To:

Equipment Management Division
City of Palo Alto
3201 East Bayshore Road
Palo Alto CA 94303
Item Material/Description Quantity UM Net Price Net Amount ______________________________________
Interim Chief Procurement Officer
THIS P.O. IS SUBJECT TO THE TERMS AND CONDITIONS STATED BELOW AND ON THE LAST PAGE SPECIFICATIONS - Any specification and /or drawings referred to and/or attached hereto are expressly made a part of this Purchase Order.

DELIVERY - Please notify the City promptly if delivery cannot be made on or before the date specified. If partial shipment is authorized, so indicate on all documents. Complete packing lists must accompany each shipment.

INVOICE - A separate invoice is required for each order. Send to address indicated above.

City of Palo Alto
Purchasing and Contract Administration
P.O.Box 10250
Palo Alto CA 94303
Tel:(650)329-2271 Fax:(650)329-2468
Purchase Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4523000156
Date 10/31/2022
Vendor No. 107843
Payment Terms Payment Due 30 days
FOB Point F.O.B Destination
Ship via Vendor to ship best method
Required Date 11/01/2023
Buyer/Phone Sergio Vazquez / 650-329-2485
Email [email protected]
DELIVERIES ACCEPTED ONLY BETWEEN 7:00 AM & 3:00 PM UNLESS OTHER

ARRANGEMENTS ARE INDICATED HEREIN

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Attachment B - Excerpt
from Purchase Order
#4523000156

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TOTAL: $270,243.45 = (114,260 chassis+body + 10,300
surchg+transp +freight+flooring + 125 DMV + 10.50 tire fee + 10,426.23 sales tax (9.125%)) x 2
new unit 3528 (replaces 3520) PWO-Trees
new unit 3527 (replaces 3521) PWO-Trees
contact person: Danitra Bahlman 650-496-5920
0020 Tire Fee 11 USD 1.00 10.50
**Vendor to handle the DMV registration
FLEET MANAGER: Danitra Bahlman 650-496-5920
[email protected]
SEND INVOICE TO: EQUIPMENT MANAGEMENT
0030 DMV fees 125 USD 1.00 125.00
0040 sup surchg, transp, freight 10,300 USD 1.00 10,300.00 0050 Chipper Truck w Intl chassis 114,260 USD 1.00 114,260.00 Vendor Address

INTERSTATE TRUCK CENTER LLC

VALLEY PETERBILT
2110 S SINCLAIR AVE
STOCKTON CA 95215
Tel: 209-656-7584
Bill To:

Equipment Management Division
City of Palo Alto
3201 East Bayshore Road
Palo Alto CA 94303
Ship To:

Equipment Management Division
City of Palo Alto
3201 East Bayshore Road
Palo Alto CA 94303
Item Material/Description Quantity UM Net Price Net Amount ______________________________________
Interim Chief Procurement Officer
THIS P.O. IS SUBJECT TO THE TERMS AND CONDITIONS STATED BELOW AND ON THE LAST PAGE SPECIFICATIONS - Any specification and /or drawings referred to and/or attached hereto are expressly made a part of this Purchase Order.

DELIVERY - Please notify the City promptly if delivery cannot be made on or before the date specified. If partial shipment is authorized, so indicate on all documents. Complete packing lists must accompany each shipment.

INVOICE - A separate invoice is required for each order. Send to address indicated above.

City of Palo Alto
Purchasing and Contract Administration
P.O.Box 10250
Palo Alto CA 94303
Tel:(650)329-2271 Fax:(650)329-2468
Purchase Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4523000156
Date 10/31/2022
Vendor No. 107843
Payment Terms Payment Due 30 days
FOB Point F.O.B Destination
Ship via Vendor to ship best method
Required Date 11/01/2023
Buyer/Phone Sergio Vazquez / 650-329-2485
Email [email protected]
DELIVERIES ACCEPTED ONLY BETWEEN 7:00 AM & 3:00 PM UNLESS OTHER

ARRANGEMENTS ARE INDICATED HEREIN

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from Purchase Order
#4523000156

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0060 Tire Fee 11 USD 1.00 10.50
0070 DMV fees 125 USD 1.00 125.00
0080 sup surchg, transp, freight 10,300 USD 1.00 10,300.00 -------------------------
Sub-Total 249,391.00
Sales Tax 20,852.46
*** ORDERING VIA EMAIL ***
**** PRICE HAS BEEN QUOTED ****
Vendor Address

INTERSTATE TRUCK CENTER LLC

VALLEY PETERBILT
2110 S SINCLAIR AVE
STOCKTON CA 95215
Tel: 209-656-7584
Bill To:

Equipment Management Division
City of Palo Alto
3201 East Bayshore Road
Palo Alto CA 94303
Ship To:

Equipment Management Division
City of Palo Alto
3201 East Bayshore Road
Palo Alto CA 94303
Item Material/Description Quantity UM Net Price Net Amount ______________________________________
Interim Chief Procurement Officer
Total 270,243.46
THIS P.O. IS SUBJECT TO THE TERMS AND CONDITIONS STATED BELOW AND ON THE LAST PAGE SPECIFICATIONS - Any specification and /or drawings referred to and/or attached hereto are expressly made a part of this Purchase Order.

DELIVERY - Please notify the City promptly if delivery cannot be made on or before the date specified. If partial shipment is authorized, so indicate on all documents. Complete packing lists must accompany each shipment.

INVOICE - A separate invoice is required for each order. Send to address indicated above.

City of Palo Alto
Purchasing and Contract Administration
P.O.Box 10250
Palo Alto CA 94303
Tel:(650)329-2271 Fax:(650)329-2468
Purchase Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4523000156
Date 10/31/2022
Vendor No. 107843
Payment Terms Payment Due 30 days
FOB Point F.O.B Destination
Ship via Vendor to ship best method
Required Date 11/01/2023
Buyer/Phone Sergio Vazquez / 650-329-2485
Email [email protected]
DELIVERIES ACCEPTED ONLY BETWEEN 7:00 AM & 3:00 PM UNLESS OTHER

ARRANGEMENTS ARE INDICATED HEREIN

Item 7
Attachment B - Excerpt
from Purchase Order
#4523000156

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CITY OF PALO ALTO
GDS Rev. 06/22/2016

TERMS AND CONDITIONS OF PURCHASE
PAGE 1 OF 3
ACCEPTANCE/AGREEMENT: City of Palo Alto (City) reserves the right to reject any and all quotations, to waive any informalities, and, unless otherwise specified by Seller, to accept any item in a quotation. By accepting or filing this Purchase Order (P.O.), Seller agrees to the terms and conditions herein which shall prevail over any inconsistent provision in any form or other paper submitted by Seller. All shipments or services performed shall be deemed to have been made pursuant hereto. No other terms are acceptable. This P.O., including all specifications and drawings, shall constitute the entire agreement between the parties unless modified in writing by City.

CITY'S PROPERTY: Seller agrees that the information, tools, jigs, dies, or materials, and drawings, patterns, and specification supplied or paid for by City shall be and remain City property and shall be held by Seller for City unless directed otherwise. Seller shall account for such items and keep them protected, insured, and in good working conditions without expense to City.

DELIVERY: The terms of delivery are as stated on the reverse side hereof. The obligation of Seller to meet the delivery dates, specifications, and quantities set forth herein is of the essence of this P.O. No boxing, packing, or cartage charge will be allowed unless authorized by this P.O. Deliveries are to be made both in quantities and at times specified herein or, if not, such quantities and times are specified pursuant to City's written instruction. Items not delivered may be canceled without penalty to City. Shipments in greater or lesser quantity that ordered may be returned at Seller's expense unless written authorization is issued by City.

PRICES: The price which Seller charges in filling this P.O. shall not be higher than Seller's most recent quote or charge to City for such materials, supplies, services and/or installations unless City expressly agrees otherwise in writing. Notwithstanding the prices set forth the P.O. City shall receive the benefit of any general reduction in the price of any item(s) listed herein which may be made by Seller at any time prior to the last delivery of goods or services covered by this P.O.

TERMINATION: City shall have the right to terminate this P.O. or any part thereof upon ten (10) days notice in writing to Seller.
(1) Without Cause. City may terminate all or any part of this P.O. without cause. Any claim by Seller for damages due to termination without cause must be submitted to City within thirty (30) days after effective date of termination. (2) For Cause. If Seller fails to make any delivery in accordance with the agreed delivery date, delivery schedule, or otherwise fails to observe or comply with any of the other instructions, terms, conditions or warranties applicable to this P.O., City may, in addition to any other right or remedy provided by this P.O. or by law, terminate all or any part of this P.O. in writing without any liability of City with respect to Seller at any time during the term of this P.O. In the event of termination for cause, City may purchase supplies or services elsewhere on such terms or in such manner as City may deem appropriate and Seller shall be liable to City for any cost and other expenses incurred by City, which is charged to City.

CHANGES: City shall have the right at any time by written notice via P.O. Change Order to Seller to make changes in the specifications, the quantity of items called for, delivery schedules, and requirements covering testing, packaging, or destination. Any claim by Seller for adjustment under this clause shall be deemed waived unless made in writing with then (10) days after receipt by Seller of notice of such change. Price increases or extensions of time for delivery shall not be binding on City unless evidenced by a P.O. Change Order issued by City's Purchasing Manager.

INSPECTION: City shall have the right to inspect and approve or reject any materials, supplies, services and/or installations upon arrival of notice of completion prior to payment without regard to the manner of shipment, completion, or any shipping or price terms contained in this P.O. All materials, supplies, services and/or installations must be furnished as specified.
(1) Defective, damaged, and nonconforming materials and/or supplies may be returned for credit or refund, at Seller's expense. City may charge Seller for all expenses of unpacking, examining, repacking and reshipping of such materials and/or supplies. (2) Defective, incorrect and nonconforming services and/or installations may be returned for credit or refund, at Seller's expense. All of the above notwithstanding prior payment by City.

WARRANTY: Seller expressly warrants that all materials, supplies, services and/or installations covered by this P.O. shall:
(1) conform to the specifications, drawings, samples, or other descriptions specified by City or if none are so specified, to Seller's standard specification or the standards of the ASTM or ANSI or other national standard organizations;
(2) be new and unless specified to the contrary on the face hereof, will be free from defects in material and workmanship and will be free of all liens and encumbrances and will conform to any affirmation of facts made on the container or label; (3) be adequately contained, packaged, marked, labeled and/or provided in compliance with all applicable federal and state laws and regulations (including materials deemed hazardous);
(4) be performed within the rules and regulations of the Occupational Safety and Health Act of 1970 (as amended);
(5) be produced or transferred or disposed of as required by federal and state laws and regulation under the conditions of the Toxic Substances Control Act; the Hazardous Materials Control and Hazardous Waste Regulations; and other toxic laws and programs.

Seller further expressly agrees to protect, indemnify, and hold harmless City, its employees and agents for any loss, damage, fine, liability, fee (including reasonable charges and fees) or expense arising in connection with or resulting from Seller's failure to furnish materials or supplies or perform services that conform with any warranty contained herein. (6) have good marketable title.

GOVERNING LAW: This P.O. shall be governed by the laws of the State of California.

INDEPENDENT CONTRACTOR, INSURANCE: Seller certifies, by acceptance, that he/she is an independent contractor. Seller shall protect, defend, and indemnify and hold City harmless against all damages, liability, claims, losses and expenses (including attorney's fees) arising out of , or resulting in any way from Seller's negligence in providing the goods or services purchased hereunder or from any act or omission of Seller, its agents, employees, or subcontractors, Seller shall maintain such public liability insurance, including contractual liability, automobile and general public liability, (including non-owned automobile liability) Worker's Compensation, and employer's liability insurance as well adequately protect City against such damage, liabilities, claims, losses, and expenses (including attorney's fees).

Seller agrees to submit certificates of insurance, evidencing its insurance coverage when requested by City.

EQUAL OPPORTUNITY CLAUSE: By acceptance of this P.O., Seller certifies it is in compliance with the Equal Opportunity Clause required by Executive Order 11246, as amended, and the Palo Alto Municipal Code, as amended, including Affirmative Action Compliance Programs for Veterans; Handicapped; and Minority Business, and other equal opportunity programs.

FORCE MAJEURE: City may delay delivery or acceptance occasioned by causes beyond its control. Seller shall hold such materials, supplies, services and or installations at the direction of City and shall deliver them when the cause affecting the delay has been removed. City shall be responsible only for Seller's direct additional costs in holding the goods or delaying performance of this P.O. and City's request. Seller shall also be excused if delivery is delayed by unforeseen events beyond its reasonable control, provided Seller notifies City as soon as they occur. City may cancel this P.O. if such delay exceeds thirty (30) days from the original delivery date. Seller shall use its best efforts to grant preference to this P.O. over those of other customers, which were placed after this P.O.

AUTHORITY OF AGENT OR FACTOR: Seller represents that, whenever it executes this P.O. on behalf of a third party as an agent or factor, it shall disclose the existence of the agency or factor relationship to City. Seller shall be deemed to have the legal authority to enter into this P.O. with City on behalf of the third party.

INTERPRETATION OF CONTRACT DOCUMENTS: In the event of a conflict between the terms of this P.O. and the attached specification with respect to any obligation of Seller, the provision which impose the greater obligations upon Seller shall prevail.

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Attachment B - Excerpt
from Purchase Order
#4523000156

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CITY OF PALO ALTO
GDS Rev. 06/22/2016

TERMS AND CONDITIONS OF PURCHASE
PAGE 2 OF 3
ENVIRONMENTALLY PREFERRED PURCHASING REQUIREMENTS: Seller agrees to comply with the City's Environmentally Preferred Purchasing Requirements. (1) Hazardous Waste:

Seller shall take-back all spent or otherwise discarded hazardous products sold to the City by the Seller if the spent or discarded products are classified as hazardous or universal wastes by State or Federal regulations. Seller shall provide convenient collection and recycling services (or disposal services if recycling technology is unavailable) for all universal wastes, which originate from the Vendor. Hazardous waste manifests or bills of lading must be provided to City staff upon request. Recycling and reuse of hazardous wastes must occur within the United States. Universal waste lists and information are available www.dtsc.ca.gov/HazardousWaste/UniversalWaste/. A hazardous waste list is available at http://www.calrecycle.ca.gov/LEA/Training/wasteclass/yep.htm. Additional information can be obtained by contacting the City of Palo Alto Hazardous Waste Department at (650) 496-6980.
(2) Zero Waste and Pollution Prevention:

Per Palo Alto City Council policy, the City is targeting to achieve Zero Waste by 2021. The City must also meet Municipal Regional Stormwater Permit requirements requiring no visible impact from litter via stormdrains by 2022. To that end the vendor, manufacturer and or contractor must individually or collaboratively comply with the waste reduction, reuse and recycling requirements of the City's Zero Waste and Pollution Prevention Programs. Seller acknowledges and agrees that if Seller fails to fully and satisfactorily comply with these requirements, the City will suffer, as a result of Seller's failure, substantial damages which are both extremely difficult and impracticable to ascertain. Therefore, the Seller agrees that in addition to all other damages to which the City may be entitled, in the event Seller fails to comply with the below requirements Seller shall pay City as liquidated damages the amounts specified below. The liquidated damage amount is not a penalty but considered to be a reasonable estimate of the amount of damages City will suffer as a result of such non-compliance.

Sellers shall adhere to the standard that all printed materials provided to the City that are generated from a personal computer and printer including, proposals, quotes, invoices, reports, and public education materials shall be double-sided, printed on a minimum of 30% post-consumer content paper or greater unless otherwise approved by the City's Environmental Services Division (650) 329-2117. Materials printed by a professional printing company shall be a minimum of 30% post-consumer material or greater and printed with vegetable based inks. Liquidated damages of $30 per document will be assessed by City for failure to adhere to this requirement.

All paper packaging must be Forest Stewardship Council (FSC) Certified.

All primary, secondary and shipping (tertiary) packaging be minimized to the maximum extent feasible while protecting the product being shipped.

All primary, secondary and shipping packaging shall be recyclable in the City's recycling program. A complete list of items accepted for recycling are found at www.zerowastepaloalto.org or by calling (650) 496-5910. If any portion is received that does not meet this requirement, liquidated damages of $235 or a minimum of $50 if the combined product and shipping cost is $235 or less will be assessed by City for failure to adhere to this requirement.

Expanded foam plastics (e.g., foam or cushion blocks, trays, packing 'peanuts'), such as but not limited to polystyrene (aka Styrofoam[tm]), polypropylene, or polyurethane shall not be used as primary, secondary or tertiary/shipping packaging with the following exceptions:
o Primary packaging made from these materials may be used if the vendor, manufacturer, contractor individually or collaboratively does one of the following:
(a) takes the material back at the City's convenience and at no cost to the City, or (b) pays the City of Palo Alto's disposal costs via payment of liquidated damages of $235, or a minimum of $50 if the combined product and shipping cost is $235 or less. o Bioplastics that meet ASTM D6400 standards for compostability may be accepted with approval from the City's Environmental Services Division subject to local municipal compost facility requirements.
o If approved by the City's Environmental Services Division, a packaging requirement may be waived if no other viable packaging alternative exists.

Reusable/returnable pallets shall be used and taken back by the Seller, at no additional cost to the City. Seller shall provide documentation upon request ensuring reuse of pallets and/or recycling of broken pallets. Liquidated damages of $262 or a minimum of $50 if the combined product and shipping cost is $262 or less will be assessed by City for failure to adhere to this requirement.
(3) Energy and Water Efficiency:

Seller shall provide products with an ENERGY STAR, Water Sense or State of California standard rating, whichever is more efficient, when ratings exist for those products. A life cycle cost analysis shall be provided to the City upon request and shall at minimum include:
first cost, operating costs, maintenance costs, and disposal costs.

Contacts for additional information about City of Palo Alto Hazardous Waste, Zero Waste and Utilities programs:

Hazardous Waste Program (Public Works)
(650) 496-6980
Zero Waste Program (Public Works)
(650) 496-5910
Watershed Protection
(650) 329-2117
Energy Efficiency
(650) 496-2244
(4) Liquidated Damages:

Seller agrees that failure to comply with the City's Environmentally Preferred Purchasing Requirements will result in Liquidated Damages, according to the table marked Liquidated Damages on page 3 of this P.O.

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#4523000156

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Event of Non-Performance
Recycled Paper Use
Failure to use 30% recycled content paper
Recyclable Packaging Materials
Failure of Seller to use secondary and shipping packaging that is recyclable in the City's recycling program.

Expanded Foam Plastics
Unapproved use of expanded foam plastics for secondary or shipping packaging
Pallet Use
Failure of Seller to take-back and reuse pallets, recycling only broken pallets, at no additional cost to the City.

Acceptable Performance Level
(Allowed events per Fiscal Year)
1 1
0 1
Liquidated Damage Amount
$30 per each document
$235 or a minimum of $50 if the combined product
and shipping cost is $250 or less will be incurred if
this is not adhered to.
$235 or a minimum of $50 if the combined product
and shipping cost is $235 or less
$262 or a minimum of $50 if the combined product
and shipping cost is $2 or less

CITY OF PALO ALTO
GDS Rev. 06/22/2016

TERMS AND CONDITIONS OF PURCHASE
NONCOMPLIANCE WITH ENVIRONMENTALLY PREFERRED PURCHASING REQUIREMENTS, LIQUIDATED DAMAGES:

The following table lists the events that constitute breaches of the Agreement's standard of performance warranting the imposition of liquidated damages; the acceptable performance level, and the amount of liquidated damages for failure to meet the contractually required standards of performance.

PAGE 3 OF 3
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#4523000156

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Item No. 8. Page 1 of 18
1 1
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CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: Action
Lead Department: Administrative Services
Meeting Date: February 13, 2023
TITLE
Discuss the FY 2023 Mid-Year Budget Review and Approve 1) FY 2023 Budget Amendments in Various Funds, and 2) Amendments to the FY 2023 Table of Organization to add 5.25 full-time and 2.43 part-time Full Time Equivalent (FTE) Positions

RECOMMENDATION
Staff recommends that the City Council review, discuss, and approve:
1) Amendments to the Fiscal Year 2023 Budget Appropriation for various funds and various capital projects, as identified in Attachment A and Attachment A, Exhibit 1 and 2 (requires a supermajority, 2/3 approval); and
2) Amend the FY 2023 Table of Organization in Attachment B consistent with the budget amendments in Attachment A, adding 5.25 full time and 2.43 part time FTE positions.

EXECUTIVE SUMMARY
This report provides and extensive update on the City’s financial status as of December 31, 2022, halfway (6 months) through the current fiscal year. Included in this report are (1) recommended budget adjustments to FY 2023 that reflect urgent / high priority fiscal needs or technical adjustments, (2) recommended changes in staffing levels in FY 2023 adding 5.25 positions and

2.43 part-time FTE, (3) updated information on the City’s financial position in and outlook in FY 2023 including positioning for the upcoming FY 2024 budget process, and (4) FY 2023 2nd quarter financial status updates (Attachment C). The next significant financial planning and budget discussions will be the review of the FY 2024 proposed operating and capital budgets and municipal fee schedule (May 2023 – June 2023) and recommended utility rates (March 2023 – June 2023).

Each year staff bring forward recommendations to adjust the budget as part of the Mid-Year Budget review. The City continues to reinvest in the most immediate needs of the City in order to maintain high quality services for residents and position the City to proactively position itself Item 8
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Item No. 8. Page 2 of 18
1 1
8 6
financially in alignment with the 2024-2033 Long Range Financial Forecast 1. Recommended adjustments address measured investments for immediate needs to be addressed in FY 2023, rather than waiting for the FY 2024 budget process. Revenue adjustments align the FY 2023 budget for major tax revenue sources with current projections and proactively fund reserves to sustain the City through the next forecasted 2 years of projected deficits.

The City Council may amend the annual budget through appropriate motion; Attachment A and B, if approved as recommended, provide the necessary transactional information for official amendment of the annual budget. The budget appropriation actions require a supermajority approval by the City Council (PAMC 2.28.080(c)(1)), or five (5) votes. The staff report provides discussion of the balancing strategy as well as key highlights from the detailed adjustments. This report is organized as follows:
1) FY 2023 Mid-Year Budget Adjustments
a) General Fund
i) Mid-Year Budget Review Balancing Strategy Summary
ii) Reinvestment Actions, Recommended Adjustments to the Budget iii) Position/Table of Organization Changes Summary
iv) Technical Adjustments and Previous Council Direction v) Budget Balancing Actions and City’s Financial Position in FY 2023 and FY 2024 b) Other Funds
c) Enterprise Funds
d) Capital Funds
2) Preliminary Q2 Financial Status & public safety overtime (Attachment C & D) 3) Timeline and Next Steps
Staff continues to manage resource availability and demands for extreme flexibility and nimbleness in an environment that requires increased resources to deliver the same quality of service. Passage of Measure L (Utility Transfer) and Measure K (Business Tax) by voters on the November ballot will help to bolster revenues to pay for the increased cost of the services but are not enough to cover the projected gap between revenues and expenses for the next several years.

The balancing strategy works to continue the practice of funding ongoing activities with ongoing revenue sources to proactively establish an uncertainty reserve at a level to offset projected deficits for the next several years. Staff will continue to monitor these estimates and may bring forward a year-end budget adjustment report in June with any additional refinements to budgeted levels based on the most current information available. 12024-2033 Long Range Financial Forecast
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The economic outlook remains uncertain with national, state, regional, and local economic indicators in transition. The economy exited 2021 in overdrive, but that growth combined with global supply chain constraints pushed inflation higher than expected. The federal reserve began raising the fed funds interest rate in March 2022 and is expected to continue in 2023, though at a slower pace, which is intended to tame inflation. It remains unknown if the federal reserve will achieve a “soft landing” where a slowdown in economic growth stems the rate of high inflation but avoids a recession. The UCLA Anderson Forecast for California paints a generally positive picture for the state as compared to national economic concerns. The local economy continued to show strong performance in the latter half of the calendar year 2022, but “headwinds” will likely slow the pace of economic growth. Finally, there are several issues across the City continuing to impact the ability to transition beyond impacts of the pandemic including staff turnover, recruitment and retention, and supply chain issues and inflation that continue to increase costs across all aspects of the City.

BACKGROUND
Annually, staff brings forward the Mid-Year Budget Review to report the financial status of major funds and the Capital Improvement Program as of the second quarter (Q2) of the current fiscal year and recommends adjustments to the Adopted Budget. Adjustments to the City’s budget may become necessary as revenues and expenditures vary from the original budget plan and are typically ministerial. Staff has modified this Mid-year Budget Review to be more robust and include adjustments that proactively reinvest in City services and priority initiatives in advance of the FY 2024 budget process in alignment with expressed priorities by the City Council.

Additionally, this report aligns estimates for significant changes that have occurred in FY 2023, including projections for major tax revenues and the status of new labor agreements.

Where possible, budget change recommendations are brought forward for City Council consideration as part of the approval of the Mid-Year Budget Report to consolidate requests and streamline changes to budget appropriations. These adjustments are necessary as revenues and expenditures vary from the original budget plan for many reasons, including, but not limited to, changes in economic factors, project estimates and scope, and City Council policy and direction.

The Mid-Year Budget Report reflects adjustments to align with prior City Council approved direction, clean-up actions based on FY 2022 actual experience or current FY 2023 actual activities.

As discussed in the FY 2024-2033 Long Range Financial Forecast (LRFF)2, the City made significant service reductions in FY 2021 and FY 2022 Adopted Budgets to align expenses with losses of nearly $40 million in General Fund tax revenues due to economic impacts resulting from the COVID-19 pandemic. During this time, many services were reduced or eliminated across the 2 2024-2033 Long Range Financial Forecast
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organization and essential services were prioritized. In FY 2022, the City began to see gradual signs of improvement and a positive economic outlook that supported initial reinvestments.

Further reinvestments were made in the FY 2023 Adopted Budget to restore services that were previously reduced and provide resources to support priority initiatives. Additionally, the budget continued proactive funding of long-term retiree benefits and initiated a three-year plan to recover capital infrastructure investments to pre-pandemic levels.

In the first half of FY 2023, staff brought forward the FY 2022 Annual Comprehensive Financial Report (ACFR) (Staff Report 2301-0715)3 for Council approval and the First Quarter (Q1) FY 2023 Financial Report (Staff Report 14630) 4 for Finance Committee review. Staff reported higher annual earnings for general fund revenues in FY 2022 as compared to the budget primarily due to a faster recovery of major tax revenues in the last two quarters of the fiscal year. This recovery trend continued in the first and second quarter of FY 2023, with several major tax revenue categories tracking to exceed budgeted levels; actual year end results may vary due to continued economic uncertainty. Staff anticipates using this additional one-time funding and reserves to support near-term reinvestments and bridge projected shortfalls in the LRFF. Ongoing, staff expects that continued economic recovery and a more diverse revenue base will help to stabilize the fiscal outlook.

A list of prior staff reports providing various fiscal updates for Council deliberations can be found in Attachment E for ease of reference.

ANALYSIS
This item serves as a continuation of the many touch points as the City balances responding to emergent priorities with following through on established commitments. This report highlights several areas of staff work ahead and outlines next steps and timing for a series of City Council conversations planned to focus on fiscal monitoring, community and economic recovery, and more. Further strategic work continues aside from the financial reporting discussed above, focused on a Community and Economic Recovery Strategy. Findings and recommended adjustments in this report are based on the data available at the time of reporting and reflect preliminary 2 nd Quarter financial activity in FY 2023 (Attachment C). Final Q2 data is typically available at the end of March 2023, though material differences are not expected.

The following is an overview of the status for the General Fund, Enterprise Funds, and other funds including recommended budget adjustments as they pertain to the City’s FY 2023 Operating and Capital Budgets.
3 City Council Staff Report 2301-0715 January 23, 2022
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General Fund
Mid-Year Budget Review Balancing Strategy Summary
The General Fund ended FY 2022 with funding more than the 18.5% target level for the Budget Stabilization Reserve (BSR) in FY 2023. The BSR is currently at $59.8 million or $14.2 million above the 18.5% Council target level. Use of this excess BSR funding is recommended to fund actions in this memorandum as discussed in the 2024-2033 LRFF report 5. Use of several other reserves is also recommended to fund actions in this report and consolidate reserve funding into one Budget Uncertainty Reserve to proactively address the estimated deficits over the next several years. In addition to this funding, a few of the major tax revenue categories are tracking at or above the FY 2023 budget, most significantly Property Tax, Sales Tax, and Transient Occupancy Tax.

Adjustments to these Major Tax revenues are recommended to align the budget with current projections for these categories, and staff will continue to monitor other more volatile revenue sources. Finally, there are also potential risks and benefits associated with this balancing strategy that should be considered when looking beyond FY 2023. The risks would further reduce the City’s ability to fund the current level of services over the next several years, while the benefits could offset costs for a longer period or even increase available funding sources. These are discussed further in the Proposed Balancing Solutions section of this report.

The following table outlines the major drivers of the General Fund mid-year recommended balancing strategy to offset the collective impact of these activities:

Table 1: General Fund Mid-Year Adjustments and Balancing Solutions Summary of General Fund Adjustments
Net $ Impact
(Cost)/Benefit
Reinvestment Actions:

Neighborhood, Community and Library Services $(0.4) M
Public Safety $(0.4) M
Planning and Transportation Services $(0.2) M
Internal Services/Strategic Support $(0.1) M
Subtotal Reinvestment Actions: $(1.1) M

Technical Adjustments:

Major Tax Revenues
(Property Tax, Sales Tax, Transient Occupancy Tax)
$6.0 M
General Fund Reserves
(2023 Service Reinvestments, Utility Transfer Litigation, Transition Costs, Administrative Support, COVID-19)
$7.8 M
52024-2033 LRFF report
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Program Funding
(Race and Equity, Rent Forgiveness)
$0.8 M
Labor Negotiation Alignment (Net-Neutral Action)
($2.6M for new labor agreements, offset by $0.9M Labor and Inflation Reserve and $1.7M Vacancy Savings)
$0.0 M
Establish a Budget Uncertainty Reserve
($5.0M of the excess FY22 Budget Stabilization Reserve) $(14.0) M
Supplemental Pension 115 Trust Contribution
($5.0M of the excess FY22 Budget Stabilization Reserve) $(5.0) M
Capital Improvement Funding
($4.0M of the excess FY22 Budget Stabilization Reserve) $(4.0) M
Electricity and Gas Commodity Purchases/Utility Allocated Charges $(0.6) M Utility Equity Transfer $(0.6) M
Legal Services
(Utility Equity Transfer Case, Personnel Investigations, Wireless Ordinance Update) $(0.4) M
Public Safety Revenue
(FireMed Program, First Responder Fee, Stanford Fire Services) $(0.3) M
Golf Course Revenue Alignment $(0.2) M
Flood Response $(0.1) M
Subtotal Technical Adjustments $(10.6) M
Use of Budget Stabilization Reserve (BSR)
(BSR remains at 19.4% and $2.5 M above the 18.5% target level) $11.7 M
Total Net Impact General Fund Mid-Year Adjustments $0.0 M Reinvestment Actions
This report includes budget adjustments, grouped by service area, to continue to realign resources with the priorities identified by the City Council. Major changes are recommended as directed by the City Council and/or recommended by staff are below, and all transactions can be found in greater detail in Attachment A. It should be noted that recommended budget adjustments have been prorated for the remainder of the fiscal year, or approximately five (5) months.

Neighborhood, Community and Library Services:
$17,000 revenue, $388,000 expense; 1.25 full-time, 2.43 part-time staffing The Community Services Department’s recommendations reflect strategic investments in its operations and represent current community needs. The restoration of 1.00 FTE Division Manager of Park Open Space & Golf is due to the need for additional administrative support for the department from the growing list of capital projects where extensive project monitoring and specialized expertise are required. Additional trash pickup at parks is reflective of community Item 8
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feedback for increased service levels and the current popularity of the City’s open spaces. The reopening Junior Museum & Zoo (JMZ) has been successful; however, challenges exist regarding a myriad of issues including staffing, ticket and membership pricing, and utilization of technology to improve operations. The organization study requested by the department represents the City’s commitment to operating efficient high-quality youth facilities and services for the community.

Other recommendations include providing financial aid to Team Sheeper (the City’s contractors providing community swim classes) while the Rinconada Pool resurfacing project (Building System Improvements PF-01003) is being completed, funding for an overnight warming shelter, and small community grants to teachers.

The Library Department has completed its organizational assessment and staffing analysis approved in the FY 2023 Adopted Budget and actions to restructure operations in two divisions:

Community Engagement & Support Services and Branch Management & Operations are recommended in this report. The reorganization will allow the department to provide more administrative support and leadership for staff. The new service model also prioritizes efficiency by hiring/reclassifying staff that enables the library to cross-train and lead initiatives that improve community wellbeing. The new model also will strengthen and broaden community partnerships.

Larger and more strategic programming initiatives aligned with City and community priorities and needs like sustainability, climate action, DEI (Diversity, Equity and Inclusion) and technology will be supported. In addition, the library will also have resources to support services to underserved communities. In addition, the department is recommending increasing expenditures by $30,000 to increase its current collection of materials related to DEI, along with materials in foreign languages common in the community and expand its web-based collections.

Public Safety Services:
$0 revenue, $374,000 expense; 1.00 full-time, 0.00 part-time staffing The Police Department recommendation includes the addition of 1.00 FTE Court Liaison Officer to support criminal justice reforms, changes in reporting standards, and staff attrition causing significantly higher staff time needed to process arrests and pursue successful prosecutions in coordination the District Attorney’s Office.

Additionally, this report includes recommendations funding in the Fire Department for new fire fighter hiring costs such as uniforms, personal protective equipment (PPE), academy fees, and background checks as 16 entry-level fire fighters have been hired in FY 2023. The Department is also shifting $1.5M in salary and benefits savings to offset overtime costs associated with the academy. For more information, see the technical adjustments section below. Recruitment and retention remain the top priorities in the immediate term for the Fire Department. These investments are focused on ensuring the Department can continue to provide suppression and rescue services for the City while meeting necessary staffing levels and training requirements.

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Planning and Transportation Services:
$34,000 revenue, $173,000 expense; 2.00 full-time, 0.00 part-time staffing This report includes recommendations to recognize the impacts of expanding the Building Inspection and Plan Review staffing classifications to include a senior level. These new classifications will be brought forward to be legitimized in the FY 2024 budget cycle. It also includes recommendations to reclassify administrative staff in accordance with a recent classification study and recommendations to increase Long Range Planning capacity to continue to support work on Council priorities including housing and coordinated area plans.

For the Office of Transportation, this report recommends the reclassification of a 1.00 FTE Management Analyst to a Senior Management Analyst, consistent with the classification study’s finding that the duties of the position are better aligned with the senior-level position. The Senior Management Analyst will be responsible for higher level oversight of the department budget and contracts for projects and programs including Rail Grade Separation, Safe Routes to School, Parking, Traffic Operations and Safety, and the Bike and Pedestrian Plan. This position will also provide administrative support for staffing needs, prepare staff reports, and act as a liaison for cross-departmental assignments. The cost of the reclassification will be absorbed by vacancy savings from the current budget and will therefore have no budgetary impact in FY 2023.

Internal Services/Strategic Support:
$0 revenue, $125,000 expense; 0.00 full-time, 0.00 part-time staffing Included in this report are recommendations to add one-time funding for two outside counsel agreements in the amount of $125,000 for legal work associated with the Roth Building Rehabilitation.

Position/Table of Organization Changes Summary
Critical staffing challenges remain citywide. This report includes recommendations to add 5.25 full-time and 2.43 part-time positions. The recommendations in this report increase full-time staffing levels in the General Fund Table of Organization from the FY 2023 adopted level of 552.81 FTE to 557.06 FTE (1,017.85 FTE to 1,023.10 FTE Citywide). See Attachment B, an amended Table of Organization, for additional detail regarding the full-time position changes.

Technical Adjustments and Previous Council Direction
This report includes actions that are technical in nature and are needed to align budget with current trends, and previous direction approved by the Council. Major changes are recommended as directed by the City Council and/or recommended by staff are below, and all transactions can be found in greater detail in Attachment A.

Major Tax Revenue: $6,000,000 additional revenue
Staff evaluated departmental and major tax revenue through Q2 and recommends actions that result in a net $6.0 million increase. As noted in the Q1 Financial Report, major tax revenue categories are trending higher than budgeted in FY 2023, and a $6.0 million increase is Item 8
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recommended to increase Transient Occupancy Tax ($4.0 million), Sales Tax ($1.5 million), and Property Tax ($0.5 million).

General Fund Reserves: $8,700,000 expense savings
A number of reserves in the General Fund are being reduced in order to fund actions recommended in this report and consolidate reserve funding to ease administration and clarity. •The 2023 Service Reinvestments Reserve ($3.8 million) is being eliminated in order to consolidate the funding into the Budget Uncertainty Reserve as discussed below. •The Utility Transfer Litigation (Equity Transfer) Reserve is being reduced by $3.5 million due to the passage of Measure L on the November 2022 ballot. This funding was set aside for potential future costs related to the Green v. City of Palo Alto (Santa Clara Superior Court, Case No. 1-16-CV-300760) if Measure L did not pass. The reserve will still have $17.5 million to fund the estimated settlement of the case. •The Transition Costs ($0.2 million) and Administrative Support ($0.2 million) Reserves are being eliminated in order to fund various actions in this report as well as consolidate reserve funding within the General Fund.
•The COVID-19 Reserve is being reduced by $0.1 million to fund flood response needs around the City. This reserve will still have approximately $0.4 million to fund any remaining COVID-19 related costs such as technology equipment for hybrid operations.

Any remaining funding in this reserve is anticipated to be liquidated at the end of FY 2023.

Program Funding (reconciliation): $800,000 expense savings These technical corrections reduce funding for programs that have already spent funding or have been completed and the funding is no longer needed. As part of the FY 2022 Reappropriations to FY 2023 (Staff Report 14728) 6, unspent funding was moved from FY 2022 to FY 2023 for the Advancing Racial Equity program ($0.5 million) and the Rent Forgiveness program ($0.7 million).

After further analysis, it was determined that $0.1 million had been spent on contracts related to Advancing Racial Equity work, and the Rent Forgiveness program had been completed in FY 2022. As a result, technical corrections are needed in this report to reduce the funding for Advancing Racial Equity work to $0.4 million and eliminating the $0.7 million funding for Rent Forgiveness to reconcile budget estimates with program activities.

Labor Negotiation Alignment: $2,600,000 expense; $2,600,000 expense savings (Net-Neutral Action)
All labor agreements were scheduled to expire on December 31, 2022, except for the Service Employees International Union Hourly Unit (SEIU-H) agreement, which is extended through June 30, 2023. This net-neutral adjustment increases departmental salary and benefit 6City Council Staff Report 14728 October 24, 2022 https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2022/20221024/20221024pccsm-amended.pdf Item 8
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expenditures to align with the status of City and labor group economic proposals for all contracts, including compensation adjustments and other terms of employment. An additional $2.6 million in estimated expense increases is expected for new labor terms and is fully offset by the elimination of the Labor and Inflation Reserve ($900,000) and projected departmental vacancy savings ($1.7 million) based on current expense tracking.

Budget Uncertainty Reserve (establish): $14,000,000 expense This adjustment establishes a $14.0 million Budget Uncertainty Reserve to proactively set aside funding to address estimated deficits over the next two years. This action consolidates the City Council prior actions for a two-year budget strategy adopted in FY 2023 and additional funds approved by the City Council in the FY 2022 Annual Comprehensive Financial Report (ACFR).

Excess BSR of $5.0 million was directed to establish an Economic Uncertainty Reserve. The remaining funding is coming from the liquidation of the 2023 Service Reinvestments Reserve ($3.8 million) and appropriating a portion of the excess FY 2023 major tax revenue ($5.2 million) both discussed as part of the City’s FY 2024-2033 LRFF.

Supplemental Pension Trust Contribution: $5,000,000 expense This adjustment adds a $5.0 million transfer to the General Benefits Fund for an additional contribution to the City’s Section 115 Pension Trust, bringing total principal contributions to $55.0 million ($36.8 million from the General Fund) since inception in 2017. This action was approved by the City Council in the FY 2022 Annual Comprehensive Financial Report (ACFR) for BSR exceeding target levels of 18.5% and reflects General Fund contributions only and is consistent with the City’s Retiree Benefits Funding Policy. Staff will include adjustments for proportional contributions from other (non-General Fund) funds as part of the FY 2023 year-end or FY 2024 proposed process consistent with past practice and policy guidelines.

Capital Improvement Funding: $4,000,000 expense
This adjustment formalizes City Council actions to allocate $4.0 million resulting from FY 2022 year-end excess BSR, bringing the total base General Fund transfer to the Capital Improvement Fund to $12.8 million in FY 2023 and is consistent with the Council policy guiding use of surplus funds. This funding will be used to fund projects that are anticipated to exceed their current budget such as the Downtown Automated Parking Guidance Systems project (PL-15002) as well as increasing the fund balance in the Capital Improvement Fund for use in the development of the upcoming 2024-2028 five-year Capital Improvement Plan.

Utility Equity Transfer: $583,000 expense
This action reduces the equity transfer to the General Fund from the Electric ($101,000) and Gas ($482,000) Funds in FY 2023 as a result of lower than anticipated fixed assets (depreciation) in FY 2022, and increased commodity and operation and maintenance costs, as well as the passage of Item 8
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Measure L in November 2022. This action is in alignment with the FY 2022 Annual Comprehensive Financial Report (ACFR) as of June 30, 2022 (CMR 2301-0715)7.

Gas Commodity Purchases/Utility Allocated Charges: $228,000 expense Gas commodity purchases increased in the Gas Fund consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. This action aligns revenue in the Gas Fund and City gas expenses accordingly.

Electric Commodity Purchases/Utility Allocated Charges: $427,000 expense Electric commodity purchases increased in the Electric Fund consistent with the preliminary electric supply forecast, which reflects fluctuating market prices and anticipated demand. This action aligns revenue in the Electric Fund and City electric expenses accordingly.

Legal Services Contractual Support: $395,000 expense
Recommendations are included to add ongoing funding of $250,000 for employee-specific personnel investigations and one-time funding for outside counsel agreements in the amounts of $120,000 for the Utility Transfer Litigation (Equity Transfer) and $25,000 for a wireless ordinance update.

Public Safety Revenue: Stanford Fire Service Agreement and FireMed/First Responder Programs $140,000 revenue, $461,000 expense
This report includes technical actions to realize FY 2022 and FY 2023 Stanford fire and communications services revenue, Fire Station 8 overtime reimbursements from the County, and a realignment of revenue estimates for Fire Department programs.

Per the agreement with Stanford, at the second quarter of each year actual expenditures are calculated and reconciled against budgeted levels for the prior fiscal year, resulting in either an additional payment or a reimbursement. For FY 2022 actuals, an additional payment of $495,000 has been made by Stanford based on this reconciliation. An adjustment of $539,000 for FY 2023 Stanford revenue is also included to align the forecasted budget for fire prevention services with the actual amounts being invoiced. Additionally, the City has an agreement in place with Santa Clara County to staff Fire Station 8 on alternate months during high fire season months. As a result, the County has provided a reimbursement of $177,000 for overtime from staffing the station on behalf of the City of Los Altos Hills. Also included in this report is a reduction of $1.4 million to Fire Department revenue estimates for the FireMed Program and discontinuation of the First Responder Fee Program. Lastly and net neutral adjustment of revenue and matching expenses is recommended to recognize reimbursement from the State for medical transportation costs through the Ground Emergency Medical Transportation (GEMT) program. 7 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=1061 Item 8
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Golf Course Services: $255,000 expense
This adjustment increases contract expenditure by $255,000 for City Golf Course operations owed to the management company, OB Sports. The terms of agreement include a revenue share equivalent to 20% of the calculated FY 2022 difference between Gross Revenue and Target Revenue for that fiscal year.

Flood Response: $100,000 expense
Floods caused by multiple atmospheric rives in California beginning on December 31, 2022 caused periods of heavy rainfall that resulted in flooding, property damage, loss of power, and evacuations across the state. The City provided regular updates and communication to residents during this time, including opening a Community Resource Center at Rinconada Library to provide a warm and dry location to relocate and gather. This action increases associated expenses for materials and equipment rentals, lodging for displaced residents, and additional staffing to provide consistent coverage.

Budget Balancing Actions and City’s Financial Position in FY 2023 and FY 2024 With the approval of these amendments the BSR would be reduced by $11.7 million. The projected ending balance of the General Fund Budget Stabilization Reserve is anticipated to be $48.1 million, which is above the City Council recommended 18.5 percent level of $45.6 million by $2.5 million.

This balancing solution follows the City Council approved budget guiding principles as presented annually with the approval of the City’s LRFF and seeks to:
1) Develop a structurally balanced budget that brings ongoing revenues and expenses into alignment. Develop a plan for any structural imbalance to ensure that the City maintains fiscal sustainability over the short, medium, and long-term. 2) Allocate one-time resources for one-time needs rather than committing one-time resources to ongoing services. Examine appropriate uses of revenue surpluses that exceed forecasted levels such as planning for recession needs, restoration needs, and strategic investments.
3) Ensure appropriate resource allocation for City Council’s existing priorities. 6) Continue to thoroughly analyze non-personnel/equipment/other costs, such as contract services, for cost savings opportunities or realignment with current needs. 9) Continue to prioritize proactively funding long term liabilities including but not limited to debt obligations, pension obligations, and capital infrastructure in accordance with City policies as approved by Council.

When bringing forward budget actions, staff works to align recommendations with the guiding principles for budget balancing as approved by the Council The above principles most closely align with this FY 2023 Mid-Year Budget Review. Establishing a $14 million Budget Uncertainty Item 8
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Reserve ensures that in the short and medium term, the City has a stable financial plan to address current service levels while investing in core priority service areas. Although it does not fully fund all identified priority projects, it does continue to focus reinvestment in areas that support the Council’s priorities. A number of adjustments continue to align revenues and expenses with current tracking including use of vacancy savings for increase labor contract costs and excess revenues for proactive planning for the future. Lastly, the City continues to maintain its policies for use of excess BSR through continued proactive funding of pension liabilities and a transfer to support capital investment. Lastly, the BSR remains above target levels by $2.5 million allowing for further investment in priority areas as part of the FY 2024 annual budget process or may be used to assist should economic challenges become more apparent due to recessionary trends.

With any forecast and adjustments based on projections, there are inherent risks and benefits.

Staff seeks to conservatively position the City in order to provide organizational stability, while acknowledging the service and resource needs, capacity to implement, and project pipeline to continue to reinvest at a pace the organization can support. Potential risks and benefits associated with this balancing solution that should be considered when looking beyond FY 2023.

The risks would further reduce the City’s ability to fund the current level of services over the next several years, while the benefits could offset costs for a longer period of time or even increase available funding sources.

Risks
•Unresolved Gap beyond FY 2025 – The Uncertainty Reserve recommended in this report will cover estimated deficits in the first two years of the forecast (FY 2024 and FY 2025); however, at this time the estimated deficits in FY 2026 and FY 2027 (approximately $7 million in total) would still need to be resolved.
•Labor Out of Contract – The current labor contracts would also be up for renegotiation around the time of developing the FY 2026 budget, which may further increase the current costs estimated for that year and years beyond. •A more severe economic recession would cause increased deficits over the next several years and likely shorten the period of time the Uncertainty Reserve could be used to maintain services requiring reductions in costs, new revenues, and/or use of additional reserves such as the BSR. The LRFF is currently modeled with limited underlying economic growth but growth as a result of inflation in the near term (based on the most recent economic forecasts for California).

Benefits
•Establishing a Budget Uncertainty Level at $14 million reserves enough funding to cover the estimated deficits and maintain services for at least the next two fiscal years. This stability is provided both to the community and the workforce supporting the goal to attract and retain employees who deliver the services.

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•Major Tax revenue estimates are measured, depending on economic variables, additional revenue above these modified budgeted levels may materialize. •Reserve accounts health - The City’s Pension 115 Trust and California Employers’ Retiree Benefit Trust (CERBT) accounts have the potential to fund annual pension and retiree healthcare costs to provide short-term relief to City funds in order to maintain funding to pay for services.
•A more robust economic recovery and the influx of Measure K (Business Tax) funding would provide additional sources of funding to reduce the current forecasted deficits.

General Fund: Budget Stabilization Reserve
The General Fund Budget Stabilization Reserve is anticipated to be $48.1 million, which is above the City Council recommended 18.5% level of $45.6 million by $2.5 million.

Should the Council approve the actions recommended in this report, there will be three (3) reserves that remain in the General Fund; this is a consolidation from the current seven (7):

1. Reserve: Utility Transfer Litigation (Equity Transfer) $17.5 million, from $21.0 million

2. Budget Uncertainty Reserve $14.0 million, from $0

3. Reserve: COVID-19 $400,000, from $500,000

4. Reserve: 2023 Service Reinvestments $0, from $3.8 million

5. Reserve: Labor and Inflation $0, from $900,000

6. Reserve: Transition Costs $0, from $210,000

7. Reserve: Administrative Support $0, from $175,000
Other Funds – Mid-Year Budget Adjustments
Information Technology Fund
The Technology Fund will add 1.00 FTE Senior Technologist to serve as an additional project manager. The City has 34 technology projects in process with 23 future projects in the pipeline.

The additional staffing will allow the City to keep up with its increasingly complex and demanding technology initiatives. In addition, adjustments for contracts that were implemented, amended, or omitted during the current fiscal year have also been included as technical adjustments. These costs will be allocated across the City’s departments and funds in alignment with the allocation methodology used as part of the FY 2023 Adopted Budget; however, for General Fund related charges, those costs will be absorbed the Technology Reserve in FY 2023.

Investments in cybersecurity initiatives have also been recommended. As security incidents such as phishing, data breaches, and viruses become more prevalent online, the need to further insulate the City from cyber threats is needed and been advised by the Baker Tilly audit assessments. These costs will be absorbed by Technology Fund in FY 2023.

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Public Art Fund – Code Art
The Public Art Fund to increase expenditures for continued support for Code:ART, a three- evening interactive media art festival produced by the City of Palo Alto Public Art Program, which re-imagines Palo Alto’s underutilized plazas, alleys, and public spaces through interactive light, sound, and motion. The festival features a major interactive media artwork anchoring the festival and six Urban Interventions activating downtown storefronts, alleys, parking lots or blank walls in new and inventive ways. The artworks will invite play and participation, engaging area locals in an event that outwardly reflects the creative community and culture that thrives here. The Public Art Commission approved the use of $60,000 from the Public Art Fund to support Code:ART at the September 15, 2022 meeting.

Supplemental Law Enforcement Services Fund – Opioid Grant The City has received grant funding tied to Opioid Settlements. The Police Department will spearhead new community initiatives for substance abuse treatment. The Department will provide additional details regarding future programming as federal and state regulators provide guidance on restrictive uses of the funding. This report includes a net-neutral adjustment in the Supplemental Law Enforcement Service Fund to recognize the annual funding of $44,291 and appropriate the corresponding expense.

Gas Tax Fund
The City receives revenues from California’s Highway Users Tax Account (HUTA) and the Road Maintenance and Rehabilitation Account (RMRA SB1). In January, the Department of Finance’s updates for estimated revenues from these accounts indicated that receipts would be lower than what is currently in the City’s budget. To align with the new estimates, gas tax revenues will be reduced by $271,000, and transfers to the Capital Improvement Fund for the Street Maintenance project (PE-86070) will be reduced by $136,600 with the remaining gap to be funded by the Infrastructure Reserve.

Enterprise Funds – Mid-Year Budget Adjustments
Mid-year actions being recommended in these funds are primarily related to the alignment of the Utilities Department budgets with current market conditions for revenues and expenses related to the purchase of commodities and the operation of utilities. The actions recommended for FY 2023 mid-year will align revenues and expenses for the contract for tree and vegetation clearing from the overhead electric distribution system; Electric and Gas Fund revenue projections and commodity costs; interfund transfers for the Gas and Electric Fund Utilities Equity Transfers; a Fiber Fund transfer to the Electric Fund; legal support contract services; and increased membership fees for the Bay Area Water Supply and Conservation Agency (BAWSCA).

See Attachment A, Exhibit 1 for further information regarding the recommended changes in the Enterprise Funds.

Capital Budget – Mid-Year Budget Adjustments
Several Capital Improvement Program projects require adjustments in FY 2023. For a detailed view of all project adjustments by Fund, see Attachment A, Exhibit 2.

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- Funding of $100,000 will be appropriated in both the Capital Improvement Fund Administration project (AS-10000) and the Plant Repair, Retrofit, and Equipment Replacement project (WQ-19002) in the Wastewater Treatment Fund. This action will fund legal costs associated with capital projects in these funds instead of funding the costs in the Attorney’s Office General Fund budget.
- The Benches, Signage, Walkways, Perimeter Landscaping, and Site Amenities project (PG- 06003) requests $35,000 to replace the aging slide and pool covers at the Rinconada Kids Pool. Approving this action at midyear will allow the slide to be replaced before summer. - The Charleston/Arastradero Corridor project (PE-13011) will appropriate revenues, including $37,200 of grant funding from the State for rubberized asphalt and $35,000 of Charleston/Arastradero Development Impact Fees to offset costs for this project. - The Roth Building Rehabilitation project (PF-23001) also has new revenue: $353,000 from Santa Clara County, $50,000 from the Palo Alto Museum, and $978,825 from a Housing and Urban Development (HUD) grant. The combined $1,381,825 of additional funds will allow the project to increase appropriation for construction costs by $848,825 and free up $533,000 in the Capital Improvement Fund to be used for other capital project needs. - The Street Maintenance project (PE-86070), on the other hand, will need to decrease revenue and appropriation by $136,600 due to the reduced gas tax revenue estimates discussed in the Gas Tax Fund section above.
- Two projects require technical adjustments: the Byxbee Park Completion project (PE- 18006) needs to correct a -$1,300,000 revenue reappropriation from FY 2022 to FY 2023 that was entered in error as part of the Reappropriation actions. The Civic Center Fire Life Safety Project (PE-18016) needs a correction to address a $142,000 year-end encumbrance error that occurred while moving from FY 2022 to FY 2023 in order to appropriately fund the project for the scope of work.
- The budget for the Wastewater Collection System Rehabilitation/Augmentation Project 31 (WC-19001) will be increased in FY 2023 by $5.7 million in order to expedite the timeline for completion of the project. The overall project will only increase by $2.1 million, with the other funding coming from savings ($825,000) in the Sewer/Lateral/Manhole Rehabilitation and Replacement project (WC-99013) and funding programmed for WC-19001 in FY 2024 being moved to FY2023. This will allow the project to be competed earlier and avoid higher costs related to night construction.

TIMELINE AND NEXT STEPS
Staff is actively working on the FY 2024 budget and regular reporting activities over the coming months. Below is a list of expected reports and Council updates planned for the remainder of FY Item 8
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2023. The Council and Finance Committee will continue to be updated through these planned discussions with adjustments brought forward as necessary. Expected upcoming financial status and budget reporting include:

March/April 2023:
•Utility Advisory Commission (UAC) and Finance Committee Meetings – Five Year Utility Financial Plans and FY 2024 Rate Recommendations
May 2023:
•Release of the FY 2024 Proposed Operating and Capital Budgets & Municipal Fee Changes •Public Budget Hearings on the Proposed Budgets with Finance Committee, including Utility Rates, Municipal Fees, and the 5-Year Capital Improvement Plan June 2022:
•FY 2023 Third Quarter (Q3) Fiscal Analysis Report (information) •FY 2024 Operating and Capital Budget Adoption
•FY 2024 Municipal Fee Adoption
•FY 2024 Utility Rates adoption
In addition, routine information reports including but not limited to utilities risk management, investment reports, contracts and lease reporting will continue.

FISCAL/RESOURCE IMPACT
Approval of the attached transactions is required to amend the FY 2023 budget appropriation.

With the approval of these amendments, the Budget Stabilization Reserve (BSR) would be reduced by $11.7 million and the projected ending balance of the General Fund BSR is anticipated to be $48.1 million, which is within the target range of 15% to 20% of the General Fund Budget expenses and is above the City Council target level of 18.5%, or $45.6 million, by $2.5 million. The projected changes to the fund balance for all other funds including Enterprise Funds, Internal Services Funds, Special Revenue Funds, and Capital Funds are outlined in Attachment A and accompanying exhibits and impacts to fund balance summarized as follows:

Table 6: Resource Impact (Non-General Fund)
Fund Type Fund Amount
Capital Capital Improvement Fund $5.6 M
Enterprise Airport Fund $(23,000)
Electric Fund $8.9 M
Fiber Optics Fund $(0.2 M)
Gas Fund $6.2 M
Refuse Fund $(11,000)
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Fund Type Fund Amount
Stormwater Management Fund $(17,000)
Utility Administration Fund $(0.1 M)
Wastewater Collection Fund $(4.7 M)
Wastewater Treatment Fund $(0.4 M)
Water Fund $(0.5 M)
Internal Service Information Technology Fund $(0.4 M)
Print and Mail Services Fund $(1,000)
Vehicle Replacement Fund $(0.1 M)
Special Revenue California Avenue Parking Fund $(4,000) Charleston/Arastradero Development Impact
Fee Fund
$(35,000)
Gas Tax Fund $(0.1 M)
Parkland Dedication Fee Fund $1.1 M
Public Art Fund $(60,000)
University Avenue Parking Fund ($25,000)

STAKEHOLDER ENGAGEMENT
The Office of Management and Budget has coordinated with all departments city-wide and the City Manager’s Office, as appropriate, to bring forward the changes discussed and recommended in this report.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the amendments to the FY 2023 Budget Appropriation and FY 2023 Table of Organization are fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).

ATTACHMENTS
Attachment A, Exhibit 1: FY 2023 Recommended Operating Budget Adjustments Attachment A, Exhibit 2: FY 2023 Recommended Capital Budget Adjustments Attachment B: Amended FY 2023 Table of Organization
Attachment C: Preliminary FY 2023 2nd Quarter Financial Status Attachment D: Public Safety Overtime Analysis
Attachment E: Summary of Financial Status Reports in FY 2023 [for reference only] APPROVED BY:

Kiely Nose, Administrative Services Director
Report #: 2212-0515
Item 8
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Revenues
Department FTE Adjustment Adjustment
GENERAL FUND (102)
City Attorney Legal Support
This action adds ongoing funding of $250,000 for employee-specific personnel investigations and one-time funding for outside counsel agreements in the amounts of $125,000 for the Roth Building Rehabilitation, $120,000 for Green case litigation, and $25,000 for a wireless ordinance update. (Ongoing Cost: $250,000) - -$ 520,000$
City Clerk City Clerk Staff Training
This action provides one-time funding of $6,000 to the staff training budget for technical and leadership and succession planning skills development. Funding is being shifted from Management Development Training Funds in Non-Deparmental to cover the traiing needs. (Ongoing costs: $0) - -$ 6,000$
Community
Services
Art & Sciences Division: Public Art Studio Staffing Reorganization This action increases Art Center capacity to meet community demand for adult ceramic classes that are held at the Art Center. This proposal adds one Junior Museum & Zoo Educator position (0.75 FTE) and eliminates two hourly Instructor positions (0.40 FTE), for a net decrease of 0.05 FTE. Additionally, this action increases revenues by $8,000 for fees generated by new Ceramics classes, which will become available if this action is approved. This proposal creates greater staffing sustainability for this revenue-generating program, helping to meet the increased community demand (Ongoing net costs: $0) (0.05) 8,000$ (7,200)$
Community
Services
Transfer from the Child Care Fund/Human Services Division: Early Education Professional Development This action would transfer funds from the Child Care Trust Fund to the General Fund and appropriate funding for professional development for early education providers via a mini-grant program. This aligns with the previous Council Action (CMR 13553) on October 4, 2021 for the same purpose (Ongoing net costs: $0) - 5,000$ 5,000$
Community
Services
Human Services Division : Overnight Warming Location (OWL) Funding This action increases funding to provide shelter beds for Palo Alto unhoused at an Overnight Warming Location (OWL) operated by a community partner. Costs will include shelter space (bed and food costs), outreach and referral services to unhoused individuals, and transportation. (Ongoing costs: $15,000) - -$ 15,000$
Community
Services
Art & Sciences Division: Junior Museum & Zoo (JMZ) Business and Operating Plan This action will provide funding for a consultant to 1) perform an operational analysis of the JMZ and to 2) prepare a business plan to inform ongoing operational and budgetary decisions. This will include an analysis of the JMZ’s financial, operational, organizational, and programmatic performance for the first year of operations, and recommendations for ongoing/future operations based on attendance and revenue projections. (Ongoing costs: $0)
- -$ 50,000$
Community
Services
Open Space, Parks, & Golf Division: Management Staffing This action adds 1.00 FTE Division Manager of Parks, Open Space, and Golf Position to manage large projects such as the family wellness center, skatepark, 10.5 acres at the Baylands, and urgent and unplanned projects like the Mayfield soccer complex infill replacement and Lytton Plaza fountain repair. This would allow the Assistant Director to focus on complex policy issues, division leadership, and environmental regulatory obligations. (Ongoing costs: $220,000)

1.00 -$ 71,000$
Community
Services
Recreation Division: Team Sheeper Operations Assistance – Rinconada Lap Pool This action will provide funding for Team Sheeper (Palo Alto Swim & Sport) to continue to pay employees for 45 days while the City re-plasters the Rinconada Lap Pool and Kiddie Pool, which is anticipated to begin in early March 2023. During this Capital Improvement Project, Team Sheeper will be unable to offer programming. (Ongoing costs: $0).
- -$ 85,000$
Community
Services
Open Space, Parks, & Golf Division: Weekend Trash Pickup This action increases the park maintenance contract service levels by adding weekend trash removal service at ten of the most impacted parks. The amount requested for approval is prorated for the current Fiscal Year.

Current services under this contract include landscape maintenance of parks, athletic fields, courts, roadsides, medians, City buildings, community centers, and other facilities throughout Palo Alto. (Ongoing costs:
$125,000)
- -$ 125,000$
Community
Services
Open Space, Parks, & Golf Division: Golf Course Green Fee Contract Services Alignment This action increases expenditures related to City Golf Course operations. Contract expenditures are increased by $255,000 to reflect amounts owed to OB Sports per the terms of the agreement with the City for the calculated FY 2022 revenue share, or 20% of the difference between Gross Revenue and Target Revenue for that fiscal year. (Ongoing costs: $0)
- -$ 255,000$
Fire First Responder Fee and FireMed Program Revenue
This action discontinues the First Responder Fee Program, eliminating $1.0 million in projected revenue, following an external consultant's review and also reduces FireMed Program revenue by $375,000 due to delayed advertising and reduced public interest. (Ongoing costs: $1,075,000). - (1,380,000)$ -$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

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Revenues
Department FTE Adjustment Adjustment
GENERAL FUND (102)

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Fire Overtime: Fire Station 8 Reimbursement
This net-neutral action recognizes reimbursment revenue from the County for staffing Fire Station 8 on alternate months during high fire season months on behalf of the City of Los Altos Hills. This revenue is used to offset incurred Fire Department overtime costs. (Ongoing net costs: $0) - 177,000$ 177,000$
Fire Fire Fighter New Hire Costs
This action adds one-time funding of $330,000 for new hire uniforms, personal protective equipment (PPE), academy fees, and background checks as the Department has hired 16 entry-level fire fighters in FY 2023. These costs are not budgeted as part of the adopted budget and typically funded as part of Mid-Year, because the number of new hires can vary from year to year. Additionally, this action shifts $1.5 million from salaries to overtime to realign budget estimates for vacant positions that are backfilled on overtime. (Ongoing costs: $0) - -$ 330,000$
Fire Stanford Fire Service Agreement: Revenue True-Up
This action recognizes $1,033,000 in revenue from the Stanford University for the fire and communication services agreement. At the second quarter of each year actual expenditures are calculated and are reconciled against budgeted levels for teh prior year, resulting in either an additional payment or a reimbursement. For FY 2022 actuals, an additional payment of $495,000 has been made by Stanford. An adjustment of $539,000 for FY 2023 Stanford revenue is also included to align the forecasted budget for fire prevention services with the actual amounts being invoiced. (Ongoing savings: $0)
- 1,033,000$ -$
Fire State Paramedic Rembursement Program
This action is a net neutral adjustment of revenue and matching expenses to recognize reimbursement from the State for medical transportation costs through the Ground Emergency Medical Transportation (GEMT) program. After contributing matching funds, this program reimburses the City for costs associated with transporting patients in an abulance. (Ongoing savings: $0). - 310,000$ 284,000$
Library Pacific Library Partnership Innovation and Technology Grant This action recognizes $4,300 in revenue and expenditures related to the receipt of the Pacific Library Partnership Innovation and Technology Opportunity Grant to support the purchase of ten drones for the Mitchell Park Library program, Light Up the Library with Drones. (Ongoing costs: $0) - 4,300$ 4,300$
Library Library Staffing Reorganization
This action reorganizes the Library Department organizational structure to reflect recommendations in the completed staffing analysis and organizational assessment. This involves the reclassification of several full-time and part-time positions, including a net addition of 2.73 FTE positions, to allow for a new service model that meets community needs by providing additional programming and services while maintaining current operating hours. (Ongoing costs: $165,000)

2.73 -$ 4,600$
Library Library Collections
This action adds $30,000 in ongoing funding for Library collections development. The Library strives to continue to maintain a viable, well-rounded library collection to meet customers’ perennial needs, as identified in the Library’s Collection Development Plan. (Ongoing costs: $75,000) - -$ 30,000$
Office of
Transportation
Management Staffing Adjustment
This action reclassifies 1.00 FTE Management Analyst to a Senior Management Analyst (0.50 FTE in the General Fund, 0.30 FTE in Parking Funds, and 0.20 FTE in the Capital Fund). This action is the result of a classification analysis which found that the duties of the position are better aligned with a Senior Management Analyst. The work performed is critical to the department and cannot be distributed to another position. The cost of the reclassification will be absorbed by vacancy savings from the current budget and will therefore have no budgetary impact in FY 2023. (Ongoing costs: $13,000)
- -$ -$
Planning and
Development
Building Inspection and Plan Review Staffing Support
This action increases salary and benefits expenses and offsetting revenue to the Planning and Development Services Department to recognize proposed reclassification of 3.00 FTE Building Inspector Specialist positions and 1.00 FTE Plans Check Engineer position to new classifications of Senior Building Inspector and Senior Plans Check Engineer, respectively. These Senior level classifications are being dicussed with labor and if approved, will be legitimized in the FY 2024 budget process. The Senior Building Inspector classification is recommended to attract more qualified and experienced candidates in an effort to meet high levels of inspection service demand. Palo Alto's code is complex and often inspections require a higher level of inspection services that is better reflected by a Senior level classification. The Senior Plans Check Engineer classification is recommended to allow capacity for quality control of plan reviews and will be assigned the most complex permitting projects.

Establishing these new Senior level classifications is anticipated to increase the level of support in Building Inspection and Plan Review services and improve recruitment and retention efforts by establishing a path for advancement. This action is anticipated to be fully offset by revenue. (Ongoing net costs: $0) - 21,000$ 21,000$
Planning and
Development
Administrative Staffing Adjustment
This action reclassifies 1.00 FTE Adminstrative Associate II to an Administrative Associate III. This action is the result of a classification study which found that the duties of the position are better aligned with an Administrative Associate III. The work accomplished by this position is critical to customer service functions in the Development Center and cannot be reallocated to other staff. (Ongoing net costs: $0) - 13,000$ 13,000$
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

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Revenues
Department FTE Adjustment Adjustment
GENERAL FUND (102)

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Planning and
Development
Planning Long Range Staffing
This action adds 2.00 FTE Senior Planner positions to the Long Range Planning Team to support a variety of Council-directed policies and projects. Long Range Planning is currently working on a wide breadth of initiatives that require additional support and resources and over the past few years, the work plan for this team has grown significantly with major projects. Some of these initiatives include: Rental Protection, Coordinated Area Plans, Housing Element Implementation, State Law Updates and Implementation, and other Council-directed policy. These positions will lead and manage progress on these complex and significant initiatives. (Ongoing costs: $342,000)

2.00 -$ 139,000$
Police Public Safety Information Management Staffing Augmentation This action adds 1.00 FTE Court Liason Officer position. The position will supplement the City's current court liaison officer and provides the following essential services: 1 ) Being the primary coordinator of court cases for criminal, traffic, and administrative matters. This includes pre-trial and mid-trial coordinating with city attorney, defense attorney, District Attorney's Office (DAO), and police officers. 2) Quality control for police reports issued by this department in adherence to standards. 3) Informing staff of policy and protocol changes from the State or County including DAO, Department of Motor Vehicles, Courts, Probation, and jails or detention facilities. In addition, the position can assist the Police Record's Division which has seen significant turnover (Ongoing costs: 134,000)

1.00 -$ 44,000$
Non-
Departmental
General Fund Reserves
This action consolidates various reserves in the General Fund, including the FY 2023 Service Reinvestment Reserve - Year 2 ($3.8 million), FY 2023 Utility Transfer Litigation or Equity Transfer Reserve ($3.5 million), Transition Costs Reserve ($0.2 million), Administrative Support Reserve ($0.2 million), and COVID-19 Reserve ($0.1 million). (Ongoing costs: $0)
- -$ (7,785,000)$
Non-
Departmental
Major Tax Revenue Alignment
This action recognizes adjustments to estimates for Property Tax ($0.5 million), Sales Tax ($1.5 million), and Transient Occupancy Tax (TOT) ($4.0 million), based on trends experienced through the first half of FY 2023.

This would bring the total estimate for Property Tax revenue to $61.3 million, Sales Tax revenue to $34.1 million, and TOT revenue to $23.2 million. (Ongoing savings: $0) - 6,000,000$ -$
Non-
Departmental
Rent Forgiveness and Race & Equity Program Funding
This action reduces funding for programs that have already spent funding or have been completed and the funding is no longer needed. As part of the FY 2022 Reappropriations to FY 2023 (CMR 14728), unspent funding was moved from FY 2022 to FY 2023 for the Advancing Racial Equity program ($0.5 million) and the Rent Forgiveness program ($0.7 million). After further analysis, it was determined that $0.1 million had been spent on contracts related to Advancing Racial Equity work, and the Rent Forgiveness program had been completed in FY 2022. As a result, technical corrections are needed in this report to reduce the funding for Advancing Racial Equity work to $0.4 million and eliminating the $0.7 million funding for Rent Forgiveness. (Ongoing savings: $0) (841,000)$
Non-
Departmental
Management Development Funds
This action uses Management Development Training Funds to offset recommendations to increase the City Clerk staff training budget for technical and leadership and succession planning skills development. With this adjustment, a total of $281,000 remains unspent in Management Development Funds (Ongoing savings: $0) - -$ (6,000)$
Non-
Departmental
Storm and Flood Response
This action allocates funding for community assistance during the significant storm sytems beginning December 31, 2022, including materials an equipment rentals, lodging for displaced residents, and additional staffing to provide consistent coverage. (Ongoing costs: $0)
100,000$
Non-
Departmental
Utilities Equity Transfer to the General Fund
This action reduces the equity transfer to the General Fund from the Electric ($101,000) and Gas ($482,000) Funds in FY 2023 as a result of lower than anticipated fixed assets (depreciation) in FY 2022, and increased commodity and operation and maintenance costs, as well as the passage of Measure L in November 2022. (Ongoing costs: $0)
- (583,000)$ -$
Non-
Departmental
Transfer to the Capital Improvement Fund
This action transfers $4.0 million to the Infrastructure Reserve in the Capital Improvement Fund, as approved by the City Council in the FY 2022 Annual Comprehensive Financial Report (ACFR) for BSR exceeding target levels of 18.5%. (Ongoing costs: $0)
4,000,000$
Non-
Departmental
Transfer to the General Benefits Fund for Supplemental Pension Contributions This action transfers $5.0 million to the General Benefits Fund to increase the contribution to the City's Section 115 Pension Trust Fund, as approved by the City Council in the FY 2022 Annual Comprehensive Financial Report (ACFR) for BSR exceeeding target levels of 18.5%. (Ongoing costs: $0) - -$ 5,000,000$
Non-
Departmental
Budget Uncertainty Reserve
This action allocates $14.0 million for a Budget Uncertainty Reserve to proactively set aside funding to address estimated deficits over the next several years, including the Uncertainty Reserve approved in the FY 2022 Annual Comprehensive Financial Report (ACFR) ($5.0 million), liquidation of the FY 2023 Service Reinvestments Reserve ($3.8 million), and appropriation of a portion of the excess FY 2023 major tax revenue adjustment ($5.2 million). (Ongoing costs: $0)
14,000,000$
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

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Revenues
Department FTE Adjustment Adjustment
GENERAL FUND (102)

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Various Labor Negotiation Adjustments
This net-neutral action recognizes increased expenses in departmental salary and benefits ($2.6 million), which are offset by the use of the Labor and Inflation Reserve ($900,000) and projected year-end vacancy savings ($1.7 million). This year the City is engaging in labor negotiations with various groups. This report recognizes $2.6 million in estimated expense increases commensurate with the status of economic proposals for all groups, including compensation adjustments and other terms of employment. This expense increase is fully offset by the elimination of the Inflation and Salary Reserve ($900,000) and projected departmental vacancy savings ($1.7 million). (Ongoing costs: $12.5 million)
- -$ -$
Various Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E- HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing costs: $0) - -$ 228,000$
Various Gas Commodity Purchase Utilities Allocated Charges Expenses for gas commodity purchases increased by $19.8 million in the Gas Fund. This adjustment is consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. The City's cost of gas is budgeted as allocated charges in citywide departments and funds; therefore, corresponding increases in various departments' allocated charges are recommended. The impact to the General Fund in FY 2023 is approximately $427,000; other funds $186,000. (Ongoing costs: $0) - -$ 427,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (11,686,400)$
GENERAL FUND (102) SUBTOTAL 6.68 5,608,300$ 5,608,300$ CHILD CARE FUND (193)
Community
Services
Transfer to the General Fund for Human Services Division: Early Education Professional Development This action would transfer funds from the Child Care Trust Fund to the General Fund and appropriate funding for professional development for early education providers via a mini-grant program. This aligns with the previous Council Action (CMR 13553) on October 4, 2021 for the same purpose (Ongoing costs: $5,000) - -$ 5,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (5,000)$
CHILD CARE FUND (193) SUBTOTAL - -$ -$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

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Revenues
Department FTE Adjustment Adjustment

CAPITAL IMPROVEMENT FUNDS
GENERAL FUND CAPITAL IMPROVEMENT FUND (471)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 2. 2,617,425$ 989,225$
Office of
Transportation
Management Staffing Adjustment
This action reclassifies 1.00 FTE Management Analyst to a Senior Management Analyst (0.50 FTE in the General Fund, 0.30 FTE in Parking Funds, and 0.20 FTE in the Capital Fund). This action is the result of a classification analysis which found that the duties of the position are better aligned with a Senior Management Analyst. The work performed is critical to the department and cannot be distributed to another position. The cost of the reclassification will be absorbed by vacancy savings from the current budget and will therefore have no budgetary impact. (Ongoing costs: $4,000)
- -$ -$
Transfer to the Capital Improvement Fund
This action recognizes a transfer of $4.0 million from the General Fund to increase the contribution to the Capital Improvement Fund, as approved by the City Council in the FY 2022 Annual Comprehensive Financial Report (ACFR). This brings the total base General Fund transfer to $12.8 million in FY 2023. This funding will be used to fund projects that are anticipated to exceed their current budget such as the Downtown Automated Parking Guidance Systems project (PL-15002) as well as increasing the fund balance in the Capital Improvement Fund for use in the development of the upcoming 2024-2028 five-year Capital Improvement Plan. (Ongoing costs: $0)
- 4,000,000$ -$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ 5,628,200$
GENERAL FUND CAPITAL IMPROVEMENT FUND (471) SUBTOTAL - 6,617,425$ 6,617,425$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

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Revenues
Department FTE Adjustment Adjustment

ENTERPRISE FUNDS
AIRPORT ENTERPRISE FUND (530)
Public Works Gas Commodity Purchase Utilities Allocated Charges Expenses for gas commodity purchases increased by $19.8 million in the Gas Fund. This adjustment is consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. The City's cost of gas is budgeted as allocated charges in citywide departments and funds; therefore, corresponding increases in various departments' allocated charges are recommended.

The impact to the General Fund in FY 2023 is approximately $427,000; other funds $186,000. (Ongoing costs: $0)
- -$ 7,000$
Public Works Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing costs: $0). - -$ 14,000$
Public Works Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $2,000) - -$ 1,523$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (22,523)$
AIRPORT ENTERPRISE FUND (530) SUBTOTAL - -$ -$ ELECTRIC FUND (513 & 523)
Utilities Electric Line Clearing Services
This one-time action increases Contract Services from $2.9 million to $4.5 million to align the FY 2023 Electric Line Clearing budget with anticipated overhead line tree clearing work from the City's contractor, Davey Tree. This increase meets the cumulative authorized spending approved by Council for the overhead line tree clearing contract and allows an increase from four 2-person crews to six 2-person crews. The City has experienced an increased number of outages in the past year caused by tree limbs falling on overhead power lines, and this will address a backlog of routine work and respond to urgent issues in a timely manner (Ongoing costs: $0)
- -$ 1,566,000$
Utilities Electric Hydro Rate Revenue/Electric Commodity Adjustments This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0) - 20,564,000$ 10,359,000$
Utilities Transfer to the Electric Fund for Foothills Work This one-time action will transfer funds from the Fiber Fund to the Electric Fund, to purchase 25% or 12 strands of fiber installed by the Electric Utility at the Foothills, for the Adobe Creek connection to enable SCADA services to monitor the Foothills reservoirs. The Fiber Utility plans to offer its Commercial Dark Fiber service to Fiber service provider(s) in the Foothills area and use service providers to add internet services to “light” the fiber for the residents. The Electric Utility does not foresee a use for the 12 fibers and this is a much more cost effective solution to installing additional fiber in the area. (Ongoing costs: $0) - 163,000$ -$
Utilities Utilities Equity Transfer to the General Fund This action reduces the equity transfer to the General Fund from the Electric Fund as a result of lower than anticipated fixed assets (depreciation) in FY 2022, and increased commodity and operation and maintenance costs. (Ongoing savings: $0)
- -$ (101,000)$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
24 Packet Pg. 183 of 269

Revenues
Department FTE Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Utilities Personnel Investigations Utilities Allocated Charges The number of personnel investigations has increased over the last several years, and this action increases the amount allocated for this work from $100,000 to $170,000. This will allow the Department and the Attorney's Office to conduct these investigations without impacting funds allocated for other services.

These costs are allocated in the Utilities Adminstation Fund and allocated proportionatly based on the adopted budget across the various Utilities Funds. (Ongoing costs: $32,000) - -$ 32,000$
Utilities Gas Commodity Purchase Utilities Allocated Charges Expenses for gas commodity purchases increased by $19.8 million in the Gas Fund. This adjustment is consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. The City's cost of gas is budgeted as allocated charges in citywide departments and funds; therefore, corresponding increases in various departments' allocated charges are recommended.

The impact to the General Fund in FY 2023 is approximately $427,000; other funds $186,000. (Ongoing costs: $0)
- -$ 18,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ 8,853,000$
ELECTRIC FUND (513 & 523) SUBTOTAL - 20,727,000$ 20,727,000$ FIBER OPTICS FUND (533)
Utilities Transfer to the Electric Fund for Foothills Work This one-time action will transfer funds from the Fiber Fund to the Electric Fund, to purchase 25% or 12 strands of fiber installed by the Electric Utility at the Foothills, for the Adobe Creek connection to enable SCADA services to monitor the Foothills reservoirs. The Fiber Utility plans to offer its Commercial Dark Fiber service to Fiber service provider(s) in the Foothills area and use service providers to add internet services to “light” the fiber for the residents. The Electric Utility does not foresee a use for the 12 fibers and this is a much more cost effective solution to installing additional fiber in the area. (Ongoing costs: $0) - -$ 163,000$
Utilities Personnel Investigations Utilities Allocated Charges The number of personnel investigations has increased over the last several years, and this action increases the amount allocated for this work from $100,000 to $170,000. This will allow the Department and the Attorney's Office to conduct these investigations without impacting funds allocated for other services.

These costs are allocated in the Utilities Adminstation Fund and allocated proportionatly based on the adopted budget across the various Utilities Funds. (Ongoing costs: $2,000) - -$ 2,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (165,000)$
FIBER OPTICS FUND (533) SUBTOTAL - -$ -$ GAS FUND (514 & 524)
Utilities Net Sales Revenue/Gas Commodity Purchase
Expenses for gas commodity purchases increased by $19.8 million in the Gas Fund. This adjustment is consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. The City's cost of gas is budgeted as allocated charges in citywide departments and funds; therefore, corresponding increases in various departments' allocated charges are recommended.

The impact to the General Fund in FY 2023 is approximately $427,000; other funds $186,000. (Ongoing costs: $0)
- 25,400,000$ 19,822,000$
Utilities Utilities Equity Transfer to the General Fund This action reduces the equity transfer to the General Fund from the Gas Fund as a result of lower than anticipated fixed assets (depreciation) in FY 2022, and increased commodity and operation and maintenance costs, as well as the passage of Measure L in November 2022. (Ongoing costs: $0) - -$ (482,000)$
Utilities Transfer to the Water Fund for Water, Gas, Wastewater Utility GIS Data Capital Project (WS-02014) The Gas and Wastewater Collection Funds pay a portion of the WS-01014 capital project costs through transfers to the Water Fund. This funding cover ongoing conversion activity to bring maps into the new GIS platform. Transfers were completed in prior years; however, GIS conversion work was not completed in the prior years. Since this is an ongoing project, the FY23 transfers are being reduced to align total cumulative transfers more closely based on work performed to date. (Ongoing savings: $0) - -$ (166,000)$
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
25 Packet Pg. 184 of 269

Revenues
Department FTE Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Utilities Personnel Investigations Utilities Allocated Charges The number of personnel investigations has increased over the last several years, and this action increases the amount allocated for this work from $100,000 to $170,000. This will allow the Department and the Attorney's Office to conduct these investigations without impacting funds allocated for other services.

These costs are allocated in the Utilities Adminstation Fund and allocated proportionatly based on the adopted budget across the various Utilities Funds. (Ongoing costs: $15,000) - -$ 15,000$
Utilities Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0). - -$ 50$
Fund Balance Adjustment to Fund Balance

- -$ 6,210,950$
GAS FUND (514 & 524) SUBTOTAL - 25,400,000$ 25,400,000$ REFUSE FUND (525)
Utilities Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0) - -$ 3,300$
Public Works Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $8,000) - -$ 8,036$
Fund Balance Adjustment to Fund Balance

- -$ (11,336)$
REFUSE FUND (525) SUBTOTAL - -$ -$ STORMWATER MANGEMENT FUND (528)
Public Works Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0) - -$ 9,000$
Public Works Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $8,000) - -$ 7,598$
Fund Balance Adjustment to Fund Balance

- -$ (16,598)$
STORMWATER MANGEMENT FUND (528) SUBTOTAL - -$ -$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
26 Packet Pg. 185 of 269

Revenues
Department FTE Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
UTILITIES ADMINISTRATION FUND (521)
Utilities Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $98,000) - -$ 98,180$
Utilities Personnel Investigations Utilities Allocated Charges The number of personnel investigations has increased over the last several years, and this action increases the amount allocated for this work from $100,000 to $170,000. This will allow the Department and the Attorney's Office to conduct these investigations without impacting funds allocated for other services.

These costs are allocated in the Utilities Adminstation Fund and allocated proportionatly based on the adopted budget across the various Utilities Funds. (Ongoing net costs: $0) - 70,000$ 70,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (98,180)$
UTILITIES ADMINISTRATION FUND (521) SUBTOTAL - 70,000$ 70,000$ WASTEWATER COLLECTION FUND (527)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 2.
- -$ 4,825,000$
Utilities Transfer to the Water Fund for Water, Gas, Wastewater Utility GIS Data Capital Project (WS-02014) The Gas and Wastewater Collection Funds pay a portion of the WS-01014 capital project costs through transfers to the Water Fund. This funding cover ongoing conversion activity to bring maps into the new GIS platform. Transfers were completed in prior years; however, GIS conversion work was not completed in the prior years. Since this is an ongoing project, the FY23 transfers are being reduced to align total cumulative transfers more closely based on work performed to date. (Ongoing savings: $0) - -$ (166,000)$
Utilities Personnel Investigations Utilities Allocated Charges The number of personnel investigations has increased over the last several years, and this action increases the amount allocated for this work from $100,000 to $170,000. This will allow the Department and the Attorney's Office to conduct these investigations without impacting funds allocated for other services.

These costs are allocated in the Utilities Adminstation Fund and allocated proportionatly based on the adopted budget across the various Utilities Funds. (Ongoing costs: $8,000) - -$ 8,000$
Public Works Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0) - -$ 140$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (4,667,140)$
WASTEWATER COLLECTION FUND (527) SUBTOTAL - -$ -$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
27 Packet Pg. 186 of 269

Revenues
Department FTE Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
WASTEWATER TREATMENT FUND (526)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 2.
- -$ 100,000$
Public Works Gas Commodity Purchase Utilities Allocated Charges Expenses for gas commodity purchases increased by $19.8 million in the Gas Fund. This adjustment is consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. The City's cost of gas is budgeted as allocated charges in citywide departments and funds; therefore, corresponding increases in various departments' allocated charges are recommended.

The impact to the General Fund in FY 2023 is approximately $427,000; other funds $186,000. (Ongoing costs: $0)
- -$ 25,000$
Public Works Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0) - -$ 282,000$
Public Works Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $38,000) - -$ 38,332$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (445,332)$
WASTEWATER TREATMENT FUND (526) SUBTOTAL - -$ -$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
28 Packet Pg. 187 of 269

Revenues
Department FTE Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
WATER FUND (522)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 2.
- (332,400)$ -$
Utilities Bay Area Water Supply and Conservation Agency (BAWSCA) Membership This action increases membership fees for BAWSCA from $321,000 to $416,000. BAWSCA is a government agency that was created by special legislative action to represent the water supply and conservation interests of Palo Alto and other Wholesale Customers of the San Francisco Public Utilities Commission (SFPUC). An assessment increase of 25% for membership fees is needed for a catch up because BAWSCA relied on the use of the General Reserve and Balancing Account to fund its operating budget. (Ongoing costs: $95,000)
- -$ 95,000$
Utilities Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing costs: $0) - -$ 85,000$
Utilities Personnel Investigations Utilities Allocated Charges The number of personnel investigations has increased over the last several years, and this action increases the amount allocated for this work from $100,000 to $170,000. This will allow the Department and the Attorney's Office to conduct these investigations without impacting funds allocated for other services.

These costs are allocated in the Utilities Adminstation Fund and allocated proportionatly based on the adopted budget across the various Utilities Funds. (Ongoing costs: $13,000) - -$ 13,000$
Fund Balance Adjustment to Fund Balance
This action increases/decreases the fund balance to offset adjustments recommended in this report. -$ (525,400)$
WATER FUND (522) SUBTOTAL (332,400)$ (332,400)$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
29 Packet Pg. 188 of 269

Department FTE Adjustment Adjustment

INTERNAL SERVICE FUNDS
GENERAL BENEFITS FUND (687)
Non-
Departmental
Transfer from the General Fund for Supplemental Pension Contributions This net-neutral action recognizes a transfer of $5.0 million from the General Fund to increase the contribution to the City's Section 115 Pension Trust Fund, as approved by the City Council in the FY 2022 Annual Comprehensive Financial Report (ACFR). A corresponding adjustment is made to recognize pension expense. This brings total contributions to $55.0 million through FY 2023 ($36.8 million from the General Fund). Staff will include proportional contributions from other funds as part of the FY 2023 year-end or FY 2024 Proposed Budget process. (Ongoing costs: $0)
- 5,000,000$ 5,000,000$
GENERAL BENEFITS FUND (687) SUBTOTAL - 5,000,000$ 5,000,000$ INFORMATION TECHNOLOGY FUND (682)
Information
Technology
IT Project Services Administration Staffing
This action adds 1.00 FTE Senior Technologist to serve as a project manager and appropriates an additional $67,838 in funding. Currently, the ITD has 34 projects with 23 additional projects in the pipeline. The additional staffing will allow the City to keep up with the increasingly complex technology demands of the City. (Ongoing costs: $209,000)

1.00 -$ 67,838$
Information
Technology
Cybersecurity Initiatives
This action adds $250,000 towards Citywide cybersecurity initiatives which include but are not limited to disaster recovery, management framework, and endpoint controls. This funding will allow for investments in solutions to protect the City against cyber threats and to address recommendations from the Baker Tilly audit assessments. (Ongoing costs: $500,000) - -$ 250,000$
Information
Technology
Charges to Other Departments/Information Technology Contract Services This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $279,000)
- 162,013$ 279,285$
Information
Technology
Electric Hydro Rate Utilities Allocated Charges
This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing costs: $0)
- -$ 1,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (436,110)$
INFORMATION TECHNOLOGY FUND (682) SUBTOTAL 1.00 162,013$ 162,013$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET p
ATTACHMENT A, EXHIBIT 1
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
30 Packet Pg. 189 of 269

Department FTE Adjustment Adjustment

INTERNAL SERVICE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET p
ATTACHMENT A, EXHIBIT 1
PRINT AND MAIL SERVICES FUND (683)
Administrative
Services
Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $1,000)
- -$ 956$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (956)$
PRINT AND MAIL SERVICES FUND (683) SUBTOTAL - -$ -$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681)
Public Works Gas Commodity Purchase Utilities Allocated Charges Expenses for gas commodity purchases increased by $19.8 million in the Gas Fund. This adjustment is consistent with the preliminary gas supply forecast, which reflects fluctuating market prices and anticipated demand. The City's cost of gas is budgeted as allocated charges in citywide departments and funds; therefore, corresponding increases in various departments' allocated charges are recommended. The impact to the General Fund in FY 2023 is approximately $427,000; other funds $186,000. (Ongoing costs: $0) - -$ 136,000$
Public Works Electric Hydro Rate Utilities Allocated Charges This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $228,000; other funds $437,000. (Ongoing Cost: $0)
- -$ 30$
Public Works Information Technology Contract Services Allocated Charges This action increases expenses in the Information Technology Fund by $279,000 for software, subscriptions, and technology licensing costs contracts that were implemented, renegotiated, omitted or amended during the current fiscal year. Services include Neogov ($9,000), Sherpa ($20,000), Monday.com ($9,250), Microsoft 365 ($116,000), Team Dynamix ($17,500), and Code42 ($64,600). The costs of these services are budgeted as allocated charges in citywide departments; therefore, corresponding increases in various departments’ allocated charges for internal services provided by the Information Technology Department are also recommended to offset this expense. The impact on the General Fund in FY 2023 is $117,000 and will be funded by the annual Technology Surcharge transfer to the Technology Fund. The impact to other funds is $162,000. (Ongoing costs: $7,000)
- -$ 7,388$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (143,418)$
VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL - -$ -$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
31 Packet Pg. 190 of 269

Revenues
Department FTE Adjustment Adjustment

SPECIAL REVENUE FUNDS
BELOW MARKET RATE FUND (230)
Non-
Deptartmental
Electric Hydro Rate Utilities Allocated Charges
This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $223,000; other funds $437,000. (Ongoing Cost: $0) - -$ 60$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (60)$
BELOW MARKET RATE FUND (230) SUBTOTAL - -$ -$ CALIFORNIA AVENUE FUND (237)
Non-
Deptartmental
Electric Hydro Rate Utilities Allocated Charges
This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $223,000; other funds $437,000. (Ongoing Cost: $0) - -$ 3,800$
Office of
Transportation
Management Staffing Adjustment This action reclassifies 1.00 FTE Management Analyst to a Senior Management Analyst (0.50 FTE in the General Fund, 0.30 FTE in Parking Funds, and 0.20 FTE in the Capital Fund). This action is the result of a classification analysis which found that the duties of the position are better aligned with a Senior Management Analyst. The work performed is critical to the department and cannot be distributed to another position. The cost of the reclassification will be absorbed by vacancy savings from the current budget and will therefore have no budgetary impact in FY 2023. (Ongoing Costs: $1,000) - -$ -$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (3,800)$
CALIFORNIA AVENUE FUND (237) SUBTOTAL - -$ -$ CHARLESTON/ARASTRADERO DEVELOPMENT IMPACT FEE FUND (213) Public Works Transfer to the Capital Improvement Fund for the Charleston/Arastradero Corridor Project (PE- 13011)
This action transfers Charleston/Arastradero Impact Fee funds to the Capital Improvement Fund for use by the Charleston/Arastradero Corrideor Project (PE-13011). This action should transfer the remaining fee funds in order to close out this Fund. (Ongoing costs: $0) - 35,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (35,000)$
CHARLESTON/ARASTRADERO DEVELOPMENT IMPACT FEE FUND (213) SUBTOTAL - -$ -$ GAS TAX FUND (231)
Public Works Gas Tax Revenues/Transfers to the Capital Improvement Fund for Streets Improvement Project (PE- 86070)
This action reduces Fund 231 Gas Tax revenue by $270,900, and reduces the transfer to the Capital Improvement Fund by $136,600 for teh Streets Improvement project (PE-86070). This is based on the State's updated January HUTA and SB1 gas tax revenue estimates. (Ongoing costs: $0) - (271,000)$ (136,600)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (134,400)$
GAS TAX FUND (231) SUBTOTAL - (271,000)$ (271,000)$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
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Revenues
Department FTE Adjustment Adjustment

SPECIAL REVENUE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
PARKLAND DEDICATION FUND (209)
Public Works Transfer to the Capital Improvement Fund for the Boulware Park Project (PE-17005) This technical correction aligns the transfer for a reappropriation of funds from FY 2022 to FY 2023 involving a transfer from the Parkland Dedication Fund to the Capital Improvement Fund for the Boulware Park Project (PE-17005). The transfer into the Capital Improvement Fund was recorded, but tthe transfer from the Parkland Dedication Fund was not, so this adds the missing portion of the transfer to align both sides. (Ongoing costs: $0)
- -$ (1,100,000)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ 1,100,000$
PARKLAND DEDICATION FUND (209) SUBTOTAL - -$ -$ PUBLIC ART FUND (207)
Community
Services
Art & Sciences Division: Annual Funding for Code Art
This action adds funding to continue support for Code:ART, a three-evening interactive media art festival produced by the City of Palo Alto Public Art Program, which re-imagines Palo Alto’s underutilized plazas, alleys, and public spaces through interactive light, sound, and motion. The festival features a major interactive media artwork anchoring the festival and six Urban Interventions activating downtown storefronts, alleys, parking lots or blank walls in new and inventive ways. The artworks will invite play and participation, engaging area locals in an event that outwardly reflects the creative community and culture that thrives here. The Public Art Commission approved the use of $60,000 from the Public Art Fund to support Code:ART at the September 15, 2022 meeting (Ongoing costs: $60,000)
- -$ 60,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (60,000)$
PUBLIC ART FUND (207) SUBTOTAL - -$ -$ RESIDENTIAL PARKING PERMIT FUND (239)
Office of
Transportation
Management Staffing Adjustment This action reclassifies 1.00 FTE Management Analyst to a Senior Management Analyst (0.50 FTE in the General Fund, 0.30 FTE in Parking Funds, and 0.20 FTE in the Capital Fund). This action is the result of a classification analysis which found that the duties of the position are better aligned with a Senior Management Analyst. The work performed is critical to the department and cannot be distributed to another position. The cost of the reclassification will be absorbed by vacancy savings from the current budget and will therefore have no budgetary impact. (Ongoing Costs: $6,500) - -$ -$
RESIDENTIAL PARKING PERMIT FUND (239) SUBTOTAL - -$ -$ SUPPLEMENTAL LAW ENFORCEMENT SERVICES FUND (248)
Police Annual Opioid Settlement Funding
This net-neutral action appropriates $44,291 in revenues and expenditures in the Supplemental Law Services Fund. The City has applied for and received grant funding from National Opioid Settlement which will be administered by the Police Department. Many program terms and conditions are in discovery as this is the first year offered, but outreach and intervention are expected uses of the funding. Funding of the program is expected to last for the next 18 years and will be cost netural (Ongoing net costs: $0)
- 44,291$ 44,291$
SUPPLEMENTAL LAW ENFORCEMENT SERVICES FUND (248) SUBTOTAL - 44,291$ 44,291$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
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Revenues
Department FTE Adjustment Adjustment

SPECIAL REVENUE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
UNIVERSITY AVENUE FUND (236)
Non-
Deptartmental
Electric Hydro Rate Utilities Allocated Charges
This action aligns the budget for potential revenue impacts from changes in the electric hydro rate adjuster (E-HRA). Per CMR 14874, the allowable rate increased from $0.013/kWh to $0.048/kWh and results in revenue impacts are anticipated to increase from $4,050,000 to $23,980,000. The impact to the General Fund in FY 2023 is approximately $223,000; other funds $437,000. (Ongoing costs: $0) - -$ 25,000$
Office of
Transportation
Management Staffing Adjustment This action reclassifies 1.00 FTE Management Analyst to a Senior Management Analyst (0.50 FTE in the General Fund, 0.30 FTE in Parking Funds, and 0.20 FTE in the Capital Fund). This action is the result of a classification analysis which found that the duties of the position are better aligned with a Senior Management Analyst. The work performed is critical to the department and cannot be distributed to another position. The cost of the reclassification will be absorbed by vacancy savings from the current budget and will therefore have no budgetary impact in FY 2023. (Ongoing costs: $1,300) - -$ -$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. - -$ (25,000)$
UNIVERSITY AVENUE FUND (236) SUBTOTAL - -$ -$ Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
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Project
Number Title Revenue Expense Comments
AS-10000 Capital Improvement Fund Administration
$ - $ 100,000 This action will fund legal costs associated with capital projects in the Capital Improvement Fund
instead of the City Attorney's Office General
Fund budget.

PG-06003 Benches, Signage, Walkways, Perimeter
Landscaping, and Site Amenities
$ - $ 35,000 This action adds funding to replace the aging slide and pool covers at the Rinconada Kids Pool.

Approving this action at midyear allows for the
slide to be replaced before summer.

PE-18006 Byxbee Park Completion $ 1,300,000 $ - This action corrects a reappropriation from FY 2022 to FY 2023 in this capital project. The
operating budget was not impacted so no
correction is needed.

PE-13011 Charleston/Arastradero Corridor Project $ 37,200 $ - This action appropriates rubberized asphalt grant revenue from the State to offset costs for
this project.

PE-13011 Charleston/Arastradero Corridor Project $ 35,000 $ - This action appropriates funding from the Charleston/Arastradero Development Impact
Fee Fund to offset costs in this project.

PE-18016 Civic Center Fire Life Safety Project $ - $ 142,000 This action is a technical correction to fully fund this project in FY 2023 as there was an issue
moving an encumbrance FY 2022 to FY 2023.

PF-23001 Roth Building Rehabilitation $ 1,381,825 $ 848,825 This action aligns the FY 2023 budget with updated cost and revenue amounts in the Roth
Building Tenant Work Letter.

PE-86070 Street Maintenance $ (136,600) $ (136,600) This action aligns the FY 2023 budget with the State's updated January HUTA & SB1 Gas Tax
revenue estimates.

Total $ 2,617,425 $ 989,225
WC-19001 Wastewater Collection System
Rehabilitation/Augmentation Project 31
$ - $ 5,650,000 This action increases WC-19001 with savings from WC-99013 ($825k), moves funding in WC-
19001 programmed in FY24 to FY23 ($3.3M),
and increases the overall project budget by
$2.1M. The project can be expedited to save
costs related to night constuction.

WC-99013 Sewer Lateral/Manhole Rehabilitation and
Replacement
$ - $ (825,000) This action shifts savings from this project to WC- 19001 in order to complete work in that project
in FY 2023.

Total $ - $ 4,825,000
WQ-19002 Plant Repair, Retrofit, and Equipment
Replacement
$ - $ 100,000 This action will fund legal costs associated with capital projects at the Regional Water Quality
Control Plant instead of the City Attorney's Office
General Fund budget.

Total $ - $ 100,000 WS-02014 Water, Gas, Wastewater Utility GIS Data $ (332,400) $ - This action reduces the transfers from the Gas and Wastewater Collection Fund and allocated
funding for this project to align the funding with
work completed in previous fiscal years.

Total $ (332,400) $ - TOTAL CIP ADJUSTMENTS $ 2,285,025 $ 5,914,225

WATER FUND

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2023 CAPITAL IMPROVEMENT PROGRAM

WASTEWATER COLLECTION FUND

WASTEWATER TREATMENT FUND
ATTACHMENT A, EXHIBIT 2

CAPITAL IMPROVEMENT FUND
Item 8
Attachment A - Exhibits 1
and 2 Recommended
Budget Adjustments

Item 8: Staff Report
Pg.
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TABLE OF

ORGANIZATION
1 Table of Organization
Attachment B is the Table of Organization, as amended by the recommended actions impacting full-time staffing in the FY 2023 Mid-Year Budget Review. In this report, net 5.25 FTE full-time and 2.43 FTE part-time positions are recommended to be added. Position additions, reclassifications, and realignments include:

1. Add 1.00 Division Manager Open Space, Parks, and Golf

2. Add 0.75 FTE Junior Museum and Zoo Educator, offset by the elimination of

0.40 FTE Arts & Science Professional I - H and 0.40 FTE Arts & Science Professional II - H

3. Add 1.00 Senior Technologist

4. Reclassify 1.00 Management Analyst to 1.00 Senior Management Analyst

5. Reclassify 1.00 Administrative Associate II to 1.00 Administrative Associate III

6. Add 2.00 Senior Planner

7. Add 1.00 Court Liaison Officer

8. Reclassify 1.00 Administrative Associate III to 1.00 Administrative Assistant

9. Add 3.23 part-time positions (0.15 FTE Librarian – H, 2.99 FTE Library Clerk – H, 0.09 FTE Library Page – H), partially offset by the elimination of 1.00 Librarian and 0.50 FTE Library Specialist

10.Reclassify 1.00 Business Analyst to 1.00 Senior Business Analyst

11. Reclassify 1.00 Assistant Director to 1.00 Division Head Library Services

12. Add 3.00 Coordinator Library Programs, offset by the elimination of 2.00 Senior Librarian

13. Reclassify 1.00 Librarian to Senior Librarian

14.Reclassify 3.00 Library Specialist to 3.00 Library Associate t
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
36 Packet Pg. 195 of 269

TABLE OF ORGANIZATION
2 Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
General Fund
Administrative Services
Account Specialist 4.63 4.63 4.13 4.13 — —%
Account Specialist-Lead 3.45 3.45 3.45 3.45 — —%
Accountant 3.00 3.00 2.00 2.00 — —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 1.00 1.00 0.50 0.50 — —%
Administrative Associate III 1.00 1.00 1.00 1.00 — —%
Assistant Director Administrative Services 1.65 1.65 1.65 1.65 — —% Buyer 1.00 1.00 2.00 2.00 — —%
Chief Procurement Officer 1.00 1.00 1.00 1.00 — —%
Contracts Administrator 2.70 2.70 1.70 2.70 1.00 58.8%
Director Administrative Services/CFO 0.80 0.80 0.80 0.80 — —% Director Office of Management and Budget 1.00 1.00 1.00 1.00 — —% Management Analyst 2.00 2.00 2.00 2.00 — —%
Manager Budget 2.00 2.00 2.00 2.00 — —%
Manager Real Property 1.00 1.00 1.00 1.00 — —%
Manager Revenue Collections 0.62 0.62 0.62 0.62 — —%
Manager Treasury, Debt & Investments 0.60 0.60 0.60 0.60 — —% Manager, Finance 1.00 1.00 1.00 1.00 — —%
Payroll Analyst 2.00 2.00 2.00 2.00 — —%
Performance Auditor II — 1.00 — — — —%
Senior Accountant 3.00 3.00 3.00 3.00 — —%
Senior Buyer 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 2.30 2.30 2.30 2.30 — —%
Storekeeper 1.00 1.00 1.00 2.00 1.00 100.0%
Storekeeper-Lead 0.20 0.20 0.20 0.20 — —%
Warehouse Supervisor 0.20 0.20 0.20 0.20 — —%
Total Administrative Services 39.15 40.15 37.15 39.15 2.00 5.4% City Attorney
Assistant City Attorney* 3.00 3.00 3.00 4.00 1.00 0.33% Chief Assistant City Attorney 1.00 1.00 1.00 1.00 — —%
City Attorney 1.00 1.00 1.00 1.00 — —%
Claims Investigator 1.00 1.00 1.00 1.00 — —%
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
37 Packet Pg. 196 of 269

TABLE OF ORGANIZATION
3 Deputy City Attorney* 1.00 1.00 1.00 — (1.00) (100.0)% Legal Fellow 1.00 1.00 1.00 1.00 — —%
Secretary to City Attorney 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Total City Attorney 10.00 10.00 10.00 10.00 — —%
City Auditor
City Auditor 1.00 1.00 — — — —%
Performance Auditor II 2.00 — — — — —%
Senior Performance Auditor 1.00 2.00 — — — —%
Total City Auditor 4.00 3.00 — — — —%
City Clerk
Administrative Associate III 2.00 2.00 2.00 2.00 — —%
Assistant City Clerk 1.00 1.00 1.00 1.00 — —%
City Clerk 1.00 1.00 1.00 1.00 — —%
Deputy City Clerk 1.00 1.00 1.00 1.00 — —%
Total City Clerk 5.00 5.00 5.00 5.00 — —%
City Manager
Administrative Assistant 2.00 2.00 2.00 2.00 — —%
Assistant City Manager 1.00 1.00 1.00 1.00 — —%
Assistant to the City Manager* 2.00 2.00 1.00 3.00 2.00 200.0% Chief Communications Officer 1.00 1.00 1.00 1.00 — —%
City Manager 1.00 1.00 1.00 1.00 — —%
Deputy City Manager 1.00 1.00 1.00 1.00 — —%
Executive Assistant to the City Manager 1.00 1.00 1.00 1.00 — —% Management Analyst 0.75 — — — — —%
Manager Communications 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst — — — 1.00 1.00 —%
Total City Manager 10.75 10.00 9.00 12.00 3.00 33.3%
Community Services
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate III 1.00 1.00 — — — —%
Assistant Director Community Services 2.00 2.00 1.00 1.00 — —% Building Serviceperson 1.25 1.00 1.00 1.00 — —%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
4 Building Serviceperson-Lead 0.60 0.60 0.60 0.60 — —%
Coordinator Recreation Programs 4.00 4.00 4.00 4.00 — —% Director Community Services 1.00 1.00 1.00 1.00 — —%
Division Manager Open Space, Parks and
Golf***

1.00 — — 1.00 1.00 —%
Heavy Equipment Operator 0.07 0.07 — — — —%
Inspector, Field Services 2.00 2.00 2.00 2.00 — —%
Junior Museum & Zoo Educator*,*** 3.60 3.60 3.25 4.85 1.60 49.2% Management Analyst 1.00 1.00 1.00 1.00 — —%
Management Assistant 1.00 1.00 1.00 1.00 — —%
Manager Community Services 5.00 5.00 5.00 5.00 — —%
Manager Community Services Senior Program 4.00 4.00 4.00 4.00 — —% Manager Human Services 1.00 1.00 1.00 1.00 — —%
Park Maintenance Person 6.00 6.00 6.00 6.00 — —%
Park Maintenance-Lead 1.00 1.00 1.00 1.00 — —%
Park Ranger 5.00 5.00 5.00 6.00 1.00 20.0%
Parks/Golf Crew-Lead 2.00 2.00 2.00 2.00 — —%
Producer Arts/Science Program 11.00 12.00 11.00 12.25 1.25 11.4% Program Assistant I 8.00 7.00 3.00 3.00 — —%
Program Assistant II 3.00 4.00 4.00 4.00 — —%
Project Manager 0.10 0.10 0.10 0.10 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Sprinkler System Representative 4.00 4.00 4.00 4.00 — —% Superintendent Community Services 2.00 2.00 2.00 2.00 — —% Superintendent Recreation 1.00 1.00 — — — —%
Theater Specialist 2.00 2.00 2.00 2.00 — —%
WGW Heavy Equipment Operator — — 0.07 0.07 — —%
Total Community Services 75.62 75.37 67.02 71.87 4.85 7.2% Fire
40-Hour Captain** — — — 0.20 0.20 —%
40-Hour Training Battalion Chief 1.00 1.00 1.00 1.00 — —% 40-Hour Training Captain 1.00 1.00 1.00 1.00 — —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 2.20 2.20 2.20 2.20 — —%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
39 Packet Pg. 198 of 269

TABLE OF ORGANIZATION
5 Administrative Associate III — — — 0.20 0.20 —%
Battalion Chief 3.00 3.00 3.00 3.00 — —%
Business Analyst 0.80 0.80 0.80 0.80 — —%
Deputy Chief/Fire Marshal 0.05 0.05 0.05 — (0.05) (100.0)% Deputy Director Technical Services Division* 0.20 0.20 — 0.20 0.20 —% Deputy Fire Chief 2.00 2.00 1.00 2.00 1.00 100.0%
Emergency Medical Service Director 1.00 1.00 1.00 1.00 — —% Emergency Medical Services Data Specialist 1.00 1.00 1.00 1.00 — —% Fire Apparatus Operator 26.00 26.00 26.00 26.00 — —%
Fire Captain 21.00 21.00 20.00 20.00 — —%
Fire Chief 1.00 1.00 1.00 1.00 — —%
Fire Fighter* 34.00 34.00 29.00 34.00 5.00 17.2%
Fire Fighter Trainee** — — — 3.00 3.00 —%
Fire Inspector 0.80 0.80 0.40 0.40 — —%
Fire Marshal** — — — 0.05 0.05 —%
Geographic Information System Specialist 0.50 0.50 0.50 0.50 — —% Hazardous Materials Inspector 0.30 0.30 0.30 0.70 0.40 133.3% Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Total Fire 97.85 97.85 90.25 100.25 10.00 11.1%
Human Resources
Assistant Director Human Resources 1.00 1.00 1.00 1.00 — —% Director Human Resources/CPO 1.00 1.00 1.00 1.00 — —%
Human Resources Representative 3.00 3.00 2.00 2.00 — —% Human Resources Technician* 4.00 4.00 3.00 4.00 1.00 33.3% Manager Employee Benefits 1.00 1.00 1.00 1.00 — —%
Manager Employee Relations 1.00 1.00 1.00 1.00 — —%
Senior Human Resources Administrator 3.00 3.00 3.00 3.00 — —% Senior Management Analyst 2.00 2.00 2.00 2.00 — —%
Total Human Resources 16.00 16.00 14.00 15.00 1.00 7.1% Library
Administrative Assistant*** — — — 1.00 1.00 —%
Administrative Associate III*** 1.00 1.00 — — (1.00) (100.0)% Assistant Director Library Services*** 1.00 1.00 — — — —% Business Analyst*** 1.00 1.00 1.00 — (1.00) (100.0)%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
6 Coordinator Library Programs*** 1.00 1.00 1.00 5.00 4.00 400.0% Director Libraries 1.00 1.00 1.00 1.00 — —%
Division Head Library Services*** 1.00 1.00 1.00 2.00 1.00 100.0% Librarian*** 6.00 6.00 6.00 5.00 (1.00) (16.7)%
Library Associate*** 7.00 7.00 6.00 9.00 3.00 50.0%
Library Specialist*** 11.50 11.50 10.50 9.00 (1.50) (14.3)% Management Analyst 1.00 1.00 1.00 1.00 — —%
Manager Library Services 3.00 3.00 3.00 3.00 — —%
Senior Business Analyst*** — — — 1.00 1.00 —%
Senior Librarian*** 8.00 8.00 6.00 5.00 (1.00) (16.7)%
Supervising Librarian 4.00 4.00 4.00 4.00 — —%
Total Library 46.50 46.50 40.50 46.00 5.50 13.6%
Office of Emergency Services
Director Office of Emergency Services 1.00 1.00 1.00 1.00 — —% Office of Emergency Services Coordinator 1.00 1.00 1.00 1.00 — —% Program Assistant II 1.00 1.00 — — — —%
Total Office of Emergency Services 3.00 3.00 2.00 2.00 — —% Office of Transportation
Administrative Assistant 0.50 0.50 0.60 0.60 — —%
Associate Engineer 0.30 0.30 0.35 0.35 — —%
Associate Planner 0.30 0.45 0.40 0.40 — —%
Chief Transportation Official 0.70 0.70 0.70 0.70 — —%
Coordinator Transportation Systems
Management

1.25 1.25 0.65 0.65 — —%
Management Analyst*** 0.50 0.50 0.50 — (0.50) (100.0)%
Parking Operations-Lead — — 0.05 0.05 — —%
Project Engineer 0.45 0.45 0.25 0.25 — —%
Senior Engineer* 0.20 0.20 0.20 0.55 0.35 175.0%
Senior Management Analyst*** — — — 0.50 0.50 —%
Senior Planner 0.50 0.50 0.15 0.15 — —%
Traffic Engineering-Lead* 0.35 0.35 0.35 — (0.35) (100.0)% Transportation Planning Manager 1.15 1.15 1.00 1.00 — —% Total Office of Transportation 6.20 6.35 5.20 5.20 — —% Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
7 Planning and Development Services
40-Hour Captain** — — — 0.80 0.80 —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate I 1.00 1.00 1.00 1.00 — —%
Administrative Associate II*** 2.80 2.80 2.80 1.80 (1.00) (35.7)% Administrative Associate III*,*** 4.00 4.00 3.00 5.80 2.80 93.3% Assistant Chief Building Official 1.00 1.00 1.00 2.00 1.00 100.0% Assistant Director PCE 1.00 1.00 1.00 1.00 — —%
Associate Engineer 0.22 0.20 — — — —%
Associate Planner 3.15 3.00 3.25 1.25 (2.00) (61.5)%
Building Inspector Specialist 4.00 6.00 6.00 8.00 2.00 33.3% Building/Planning Technician 3.00 3.00 2.00 2.50 0.50 25.0% Chief Building Official 1.00 1.00 1.00 1.00 — —%
Chief Planning Official 1.00 1.00 1.00 1.00 — —%
Code Enforcement Officer* 2.00 2.00 — 1.00 1.00 —%
Code Enforcement-Lead 1.00 1.00 1.00 1.00 — —%
Deputy Chief/Fire Marshal 0.80 0.80 0.80 — (0.80) (100.0)% Development Project Coordinator II 2.00 2.00 2.00 2.00 — —% Development Project Coordinator III 3.00 3.00 3.00 3.00 — —% Director Planning/Community Environment 1.00 1.00 1.00 1.00 — —% Engineer 0.64 0.52 0.52 0.52 — —%
Engineering Technician III 1.78 1.50 1.50 1.50 — —%
Fire Inspector 3.20 3.20 1.60 1.60 — —%
Fire Marshal** — — — 0.80 0.80 —%
Hazardous Materials Inspector 1.60 1.60 1.60 3.20 1.60 100.0% Industrial Waste Inspector 0.01 — — — — —%
Industrial Waste Investigator 0.35 0.35 0.35 0.35 — —%
Inspector, Field Services 0.68 0.68 0.68 0.68 — —%
Landscape Architect Park Planner 0.50 0.50 0.50 0.50 — —% Management Analyst 0.01 — — — — —%
Manager Environmental Control Program* 0.10 — — — — —%
Manager Planning 5.00 4.00 4.00 4.00 — —%
Manager Urban Forestry 0.04 — — — — —%
Planner 4.00 4.00 4.00 5.00 1.00 25.0%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
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TABLE OF ORGANIZATION
8 Plans Check Engineer — — — 1.00 1.00 —%
Principal Management Analyst 1.00 — — — — —%
Principal Planner 2.00 2.00 1.00 2.00 1.00 100.0%
Program Assistant 1.00 1.00 — — — —%
Project Engineer 0.13 0.10 — — — —%
Project Manager — — — 0.50 0.50 —%
Senior Business Analyst 1.00 1.00 1.00 1.00 — —%
Senior Engineer* 0.46 0.40 0.40 0.45 0.05 12.5%
Senior Industrial Waste Investigator 0.01 — — — — —%
Senior Management Analyst 2.00 2.00 2.00 2.00 — —%
Senior Planner*** 3.60 3.60 3.65 6.65 3.00 82.2%
Supervisor Inspection and Surveying 0.27 0.25 0.25 0.25 — —% Traffic Engineering-Lead* 0.10 0.10 0.05 — (0.05) (100.0)% Transportation Planning Manager — — 0.05 0.05 — —%
Total Planning and Development Services 62.45 61.60 54.00 67.20 13.20 24.4% Police
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 3.00 3.00 2.00 2.00 — —%
Animal Control Officer 3.00 3.00 2.00 2.00 — —%
Animal Control Officer-Lead 1.00 1.00 1.00 1.00 — —%
Assistant Police Chief 1.00 1.00 1.00 1.00 — —%
Business Analyst 1.20 1.20 1.20 2.20 1.00 83.3%
Code Enforcement Officer 1.00 1.00 1.00 1.00 — —%
Communications Manager 1.00 1.00 — — — —%
Communications Technician 1.00 1.00 — — — —%
Community Service Officer 7.50 7.50 5.63 5.63 — —%
Court Liaison Officer*** 1.00 1.00 1.00 2.00 1.00 100.0% Crime Analyst 1.00 1.00 1.00 1.00 — —%
Deputy Director Technical Services Division* 0.80 0.80 — 0.80 0.80 —% Geographic Information System Specialist 0.50 0.50 0.50 0.50 — —% Police Agent 19.00 19.00 19.00 19.00 — —%
Police Captain 2.00 2.00 2.00 2.00 — —%
Police Chief 1.00 1.00 1.00 1.00 — —%
Police Lieutenant 5.00 5.00 4.00 4.00 — —%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
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TABLE OF ORGANIZATION
9 Police Officer 50.00 50.00 39.00 43.00 4.00 10.3%
Police Records Specialist II 6.00 6.00 6.00 6.00 — —%
Police Records Specialist-Lead 1.00 1.00 1.00 1.00 — —% Police Sergeant 14.00 14.00 14.00 14.00 — —%
Program Assistant II 1.00 1.00 1.00 1.00 — —%
Property Evidence Technician 2.00 2.00 2.00 2.00 — —%
Public Safety Communications Manager* 1.00 1.00 — 1.00 1.00 —% Public Safety Dispatcher 16.00 16.00 12.00 14.00 2.00 16.7% Public Safety Dispatcher-Lead 4.00 4.00 4.00 4.00 — —%
Public Safety Program Manager 2.00 2.00 1.00 1.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Total Police 149.00 149.00 124.33 134.13 9.80 7.9%
Public Works
Administrative Assistant 1.00 1.00 0.50 0.50 — —%
Administrative Associate I 0.10 0.10 — — — —%
Administrative Associate II 2.65 2.65 2.65 2.65 — —%
Administrative Associate III 0.01 0.01 — — — —%
Assistant Director Public Works 0.73 0.73 0.73 0.73 — —% Building/Planning Technician — — — 0.50 0.50 —%
Building Serviceperson-Lead 1.00 1.00 1.00 1.00 — —%
Cement Finisher 2.00 2.00 2.00 2.00 — —%
Cement Finisher-Lead 0.26 0.26 0.26 0.26 — —%
Coordinator Public Works Projects 1.50 1.50 1.50 1.50 — —% Director Public Works/City Engineer 1.00 1.00 1.00 1.00 — —% Electrician 0.80 0.80 0.80 0.80 — —%
Engineer 0.36 0.48 0.48 0.48 — —%
Engineering Technician III 1.47 1.75 1.75 1.75 — —%
Environmental Specialist* — — — 0.33 0.33 —%
Equipment Operator 2.46 2.46 2.46 2.46 — —%
Facilities Carpenter 1.00 1.00 1.00 1.00 — —%
Facilities Maintenance-Lead 1.85 1.85 1.85 1.85 — —%
Facilities Painter 1.75 1.75 1.75 1.75 — —%
Facilities Technician 4.05 4.05 4.05 4.05 — —%
Heavy Equipment Operator 2.33 2.33 2.10 2.10 — —%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
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TABLE OF ORGANIZATION
10 Heavy Equipment Operator-Lead 0.85 0.85 0.85 0.85 — —% Inspector, Field Services 0.11 0.11 0.11 0.11 — —%
Landscape Architect Park Planner 0.60 0.60 0.60 0.60 — —% Management Analyst* 0.70 1.45 1.45 0.70 (0.75) (51.7)%
Manager Environmental Control Program* — — — 0.33 0.33 —% Manager Facilities 0.90 0.90 0.90 0.90 — —%
Manager Maintenance Operations 1.20 1.20 1.20 1.20 — —% Manager Urban Forestry 0.96 1.00 1.00 1.00 — —%
Manager Watershed Protection 0.05 0.05 0.05 0.05 — —%
Project Manager 2.65 2.65 2.00 2.50 0.50 25.0%
Senior Engineer 0.59 0.60 0.60 0.60 — —%
Senior Management Analyst 1.11 1.11 1.11 1.11 — —%
Supervisor Inspection and Surveying 0.10 0.10 0.10 0.10 — —% Surveyor, Public Works 0.33 0.33 0.33 0.33 — —%
Traffic Controller Maintainer I 1.94 1.94 1.94 1.94 — —% Traffic Controller Maintainer II 2.00 2.00 1.00 1.00 — —% Tree Maintenance Person 1.00 1.00 1.00 1.00 — —%
Tree Trim/Line Clear 7.00 7.00 7.00 7.00 — —%
Tree Trim/Line Clear-Lead 1.00 1.00 1.00 1.00 — —%
WGW Heavy Equipment Operator — — 0.23 0.23 — —%
Total Public Works 49.41 50.61 48.35 49.26 0.91 1.9%
Total General Fund 574.93 574.43 506.80 557.06 50.26 9.9% Enterprise Fund
Public Works
Account Specialist 0.30 0.30 — — — —%
Accountant 0.40 0.40 0.70 0.70 — —%
Administrative Associate I 0.10 0.10 — 1.00 1.00 —%
Administrative Associate II 2.15 2.15 2.15 2.15 — —%
Administrative Associate III 0.10 0.10 0.20 0.20 — —%
Assistant Director Public Works 1.30 1.30 1.30 1.30 — —% Assistant Manager WQCP 2.00 2.00 2.00 2.00 — —%
Associate Engineer 2.99 3.00 3.00 3.00 — —%
Chemist 3.00 3.00 2.00 2.00 — —%
Deputy Chief/Fire Marshal 0.07 0.07 0.07 — (0.07) (100.0)% Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
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TABLE OF ORGANIZATION
11 Electrician 3.00 3.00 3.00 3.00 — —%
Electrician-Lead 2.00 2.00 2.00 2.00 — —%
Engineer 0.90 0.90 0.90 0.90 — —%
Engineering Technician III 0.25 0.25 0.25 0.25 — —%
Environmental Specialist* 2.00 2.00 2.00 2.33 0.33 16.5% Equipment Operator 0.54 0.54 0.54 0.54 — —%
Facilities Maintenance Lead 1.00 1.00 1.00 1.00 — —%
Facilities Technician 1.50 1.50 1.50 2.50 1.00 66.7%
Fire Marshal** — — — 0.07 0.07 —%
Hazardous Materials Inspector 0.04 0.04 0.04 0.04 — —%
Heavy Equipment Operator 0.90 0.90 0.90 0.90 — —%
Heavy Equipment Operator-Lead 1.15 1.15 1.15 1.15 — —%
Industrial Waste Inspector 2.99 3.00 3.00 3.00 — —%
Industrial Waste Investigator 1.15 1.15 1.15 1.15 — —%
Laboratory Technician WQC 3.00 3.00 3.00 3.00 — —%
Landfill Technician 1.00 1.00 1.00 1.00 — —%
Management Analyst 2.30 2.30 2.30 2.30 — —%
Manager Airport 1.00 1.00 1.00 1.00 — —%
Manager Environmental Control Program* 4.90 5.00 5.00 5.33 0.33 6.6% Manager Laboratory Services 1.00 1.00 1.00 1.00 — —%
Manager Maintenance Operations 1.96 1.96 1.96 1.96 — —% Manager Solid Waste 1.00 1.00 1.00 1.00 — —%
Manager Water Quality Control Plant 1.00 1.00 1.00 1.00 — —% Manager Watershed Protection 0.95 0.95 0.95 0.95 — —%
Plant Mechanic 7.00 7.00 7.00 7.00 — —%
Program Assistant I 1.00 1.00 1.00 1.00 — —%
Program Assistant II 2.00 2.00 2.00 2.00 — —%
Project Engineer 1.83 1.83 1.83 1.83 — —%
Project Manager 1.35 1.35 1.35 1.35 — —%
Senior Accountant 0.30 0.30 0.30 0.30 — —%
Senior Buyer 1.00 1.00 1.00 1.00 — —%
Senior Chemist 1.00 1.00 2.00 2.00 — —%
Senior Engineer 3.76 3.76 3.76 3.76 — —%
Senior Industrial Waste Investigator 0.99 1.00 1.00 1.00 — —% Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
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TABLE OF ORGANIZATION
12 Senior Management Analyst 0.21 0.21 0.21 0.21 — —%
Senior Mechanic 1.00 1.00 1.00 1.00 — —%
Senior Operator WQC 6.00 6.00 6.00 6.00 — —%
Senior Technologist 1.00 1.00 1.00 1.00 — —%
Storekeeper 1.00 1.00 1.00 1.00 — —%
Street Maintenance Assistant 1.00 1.00 1.00 1.00 — —%
Street Sweeper Operator 1.63 1.63 1.63 1.63 — —%
Supervisor WQCP Operations 3.00 3.00 3.00 3.00 — —%
Surveyor, Public Works 0.12 0.12 0.12 0.12 — —%
Technologist 1.00 1.00 1.00 1.00 — —%
Traffic Controller Maintainer I 0.06 0.06 0.06 0.06 — —% WQC Plant Operator II 16.00 16.00 16.00 16.00 — —%
Zero Waste Coordinator 1.00 1.00 1.00 1.00 — —%
Total Public Works 101.19 101.32 101.32 103.98 2.66 2.6% Utilities
Account Specialist 1.70 1.70 1.00 1.00 — —%
Accountant 0.60 0.60 1.30 1.30 — —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 6.00 6.00 6.00 6.00 — —%
Assistant City Attorney* — — — 1.00 1.00 —%
Assistant Director Administrative Services 0.25 0.25 0.25 0.25 — —% Assistant Director Utilities Customer Support
Services

1.00 1.00 1.00 1.00 — —%
Assistant Director Utilities Engineering 1.00 1.00 1.00 1.00 — —% Assistant Director Utilities Operations 1.00 1.00 1.00 1.00 — —% Assistant Director Utilities/Resource
Management

1.00 1.00 1.00 1.00 — —%
Associate Sustainability Program
Administrator**
— — — 1.00 1.00 —%
Business Analyst 6.00 6.00 6.00 6.00 — —%
Cathodic Protection Technician Assistant 1.00 1.00 1.00 1.00 — —% Cathodic Technician 1.00 1.00 1.00 1.00 — —%
Cement Finisher 2.00 2.00 2.00 2.00 — —%
Contracts Administrator 0.70 0.70 0.70 0.70 — —%
Coordinator Utilities Projects* 6.00 6.00 6.00 8.00 2.00 33.3% Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
13 Customer Service Representative 7.00 7.00 7.00 7.00 — —% Customer Service Specialist 2.00 2.00 2.00 2.00 — —%
Customer Service Specialist-Lead 2.00 2.00 2.00 2.00 — —% Deputy Chief/Fire Marshal 0.08 0.08 0.08 — (0.08) (100.0)% Deputy City Attorney* 1.00 1.00 1.00 — (1.00) (100.0)%
Director Administrative Services/CFO 0.20 0.20 0.20 0.20 — —% Electric Heavy Equipment Operator — 2.00 2.00 1.00 (1.00) (50.0)% Electric Project Engineer* 4.00 4.00 4.00 8.00 4.00 100.0% Electric Underground Inspector 2.00 2.00 2.00 2.00 — —% Electric Underground Inspector-Lead 1.00 1.00 1.00 1.00 — —% Electrical Equipment Technician 1.00 1.00 1.00 1.00 — —% Electrician Assistant I 3.00 3.00 3.00 3.00 — —%
Engineer 4.00 4.00 4.00 4.00 — —%
Engineering Manager - Electric 1.00 1.00 1.00 1.00 — —% Engineering Manager - WGW 1.00 1.00 1.00 1.00 — —%
Engineering Technician III 3.00 3.00 3.00 3.00 — —%
Environmental Specialist* — — — 0.34 0.34 —%
Equipment Operator — — — 1.00 1.00 —%
Fire Marshal** — — — 0.08 0.08 —%
Gas and Water Meter Measurement and
Control Technician

4.00 4.00 4.00 4.00 — —%
Gas and Water Meter Measurement and
Control Technician - Lead

1.00 1.00 1.00 1.00 — —%
Hazardous Materials Inspector 0.06 0.06 0.06 0.06 — —%
Heavy Equipment Operator 6.70 — — — — —%
Heavy Equipment Operator - Install/Repair 4.00 4.00 4.00 4.00 — —% Human Resources Representative — — 1.00 1.00 — —%
Industrial Waste Investigator 0.50 0.50 0.50 0.50 — —%
Inspector, Field Services 5.00 5.00 — — — —%
Inspector, WGW Utilities Field Svc — — 5.00 5.00 — —%
Lineperson/Cable Specialist 11.00 10.00 10.00 10.00 — —% Lineperson/Cable Specialist-Lead 4.00 4.00 4.00 4.00 — —% Maintenance Mechanic-Welding 2.00 2.00 2.00 2.00 — —%
Management Analyst** — — — 1.00 1.00 —%
Manager Communications 1.00 1.00 1.00 1.00 — —%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
14 Manager Customer Service 1.00 1.00 1.00 1.00 — —%
Manager Electric Operations 1.00 1.00 1.00 1.00 — —%
Manager Environmental Control Program* — — — 0.34 0.34 —% Manager Treasury, Debt & Investments 0.40 0.40 0.40 0.40 — —% Manager Utilities Compliance 1.00 1.00 1.00 1.00 — —%
Manager Utilities Credit & Collection 1.00 1.00 1.00 1.00 — —% Manager Utilities Operations WGW 1.00 1.00 1.00 1.00 — —% Manager Utilities Program Services* 1.00 1.00 1.00 2.00 1.00 100.0% Manager Utilities Strategic Business 1.00 1.00 1.00 1.00 — —% Manager Utilities Telecommunications 1.00 1.00 1.00 1.00 — —% Meter Reader 6.00 6.00 6.00 6.00 — —%
Meter Reader-Lead 1.00 1.00 1.00 1.00 — —%
Metering Technician* 3.00 3.00 3.00 2.00 (1.00) (33.3)% Metering Technician-Lead 1.00 1.00 1.00 1.00 — —%
Offset Equipment Operator 0.48 0.48 0.48 0.48 — —%
Overhead Underground Troubleman 2.00 2.00 2.00 2.00 — —% Power Engineer* 1.00 1.00 1.00 — (1.00) (100.0)%
Principal Business Analyst 1.00 1.00 1.00 1.00 — —%
Principal Utilities Program Manager** — — — 1.00 1.00 —% Program Assistant I 1.50 1.50 1.50 1.50 — —%
Program Assistant II 1.00 1.00 1.00 — (1.00) (100.0)%
Project Engineer 5.00 5.00 5.00 5.00 — —%
Project Manager 0.75 0.75 0.75 0.75 — —%
Resource Planner 5.00 5.00 5.00 5.00 — —%
Restoration Lead 1.00 1.00 1.00 1.00 — —%
SCADA Technologist 2.00 2.00 2.00 — (2.00) (100.0)%
Senior Accountant 0.70 0.70 0.70 0.70 — —%
Senior Business Analyst 3.00 3.00 3.00 3.00 — —%
Senior Electrical Engineer 4.00 4.00 5.00 5.00 — —%
Senior Engineer* 5.00 5.00 5.00 6.00 1.00 20.0%
Senior Management Analyst 0.70 0.70 0.70 0.70 — —%
Senior Mechanic 1.00 1.00 1.00 1.00 — —%
Senior Performance Auditor 1.00 1.00 — — — —%
Senior Resource Planner 6.50 6.50 6.50 7.00 0.50 7.7%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
15 Senior Utilities Field Service Representative 1.00 1.00 1.00 1.00 — —% Senior Water Systems Operator 2.00 2.00 2.00 2.00 — —%
Storekeeper 1.00 1.00 1.00 1.00 — —%
Storekeeper-Lead 0.80 0.80 0.80 0.80 — —%
Street Light, Traffic Signal & Fiber Technician 5.00 5.00 5.00 4.00 (1.00) (20.0)% Street Light, Traffic Signal & Fiber-Lead 2.00 2.00 2.00 2.00 — —% Substation Electrician 6.00 6.00 6.00 6.00 — —%
Substation Electrician-Lead 2.00 2.00 2.00 2.00 — —%
Supervising Electric Project Engineer 1.00 1.00 — — — —% Sustainability Programs Administrator — — 4.00 5.00 1.00 25.0% Tree Maintenance Person 1.00 1.00 1.00 1.00 — —%
Utilities Chief Operating Officer 1.00 1.00 1.00 1.00 — —% Utilities Compliance Technician 2.00 3.00 3.00 3.00 — —% Utilities Compliance Technician-Lead 1.00 1.00 1.00 1.00 — —% Utilities Credit/Collection Specialist 2.00 2.00 2.00 2.00 — —% Utilities Director 1.00 1.00 1.00 1.00 — —%
Utilities Engineer Estimator 5.00 5.00 5.00 5.00 — —%
Utilities Field Services Representative 5.00 5.00 5.00 5.00 — —% Utilities Install Repair-Lead-Welding Certified 2.00 2.00 2.00 3.00 1.00 50.0% Utilities Install Repair-Welding Certified 3.00 3.00 3.00 3.00 — —% Utilities Install/Repair 10.00 10.00 10.00 10.00 — —%
Utilities Install/Repair Assistant 1.00 1.00 1.00 1.00 — —% Utilities Install/Repair-Lead 5.00 5.00 5.00 4.00 (1.00) (20.0)% Utilities Key Account Representative 3.00 3.00 3.00 3.00 — —% Utilities Locator 3.00 3.00 3.00 3.00 — —%
Utilities Marketing Program Administrator 4.00 4.00 — — — —% Utilities Safety Officer 1.00 1.00 1.00 1.00 — —%
Utilities Supervisor 12.00 12.00 12.00 12.00 — —%
Utilities System Analyst** — — — 2.00 2.00 —%
Utilities System Operator 5.00 5.00 5.00 6.00 1.00 20.0% Utility Engineering Estimator - Lead 1.00 1.00 1.00 1.00 — —% Warehouse Supervisor 0.80 0.80 0.80 0.80 — —%
Water System Operator II 4.00 4.00 4.00 4.00 — —%
WGW Heavy Equipment Operator — 4.70 4.70 4.70 — —%
Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
16 Total Utilities 257.42 257.42 257.42 267.60 10.18 4.0% Total Enterprise Fund 358.61 358.74 358.74 371.58 12.84 3.6% Other Funds
Capital Project Fund
Administrative Assistant 0.15 0.15 0.65 0.65 — —%
Administrative Associate I 0.80 0.80 — — — —%
Administrative Associate III 0.89 0.89 0.80 0.80 — —%
Assistant Director Public Works 0.72 0.72 0.72 0.72 — —% Associate Engineer 2.49 2.50 1.65 1.65 — —%
Associate Planner 0.30 0.30 0.35 0.35 — —%
Building Serviceperson 0.75 1.00 1.00 1.00 — —%
Building Serviceperson-Lead 1.40 1.40 1.40 1.40 — —%
Cement Finisher-Lead 0.74 0.74 0.74 0.74 — —%
Chief Transportation Official 0.30 0.30 0.30 0.30 — —%
Contracts Administrator 0.60 0.60 0.60 0.60 — —%
Coordinator Public Works Projects 1.30 1.30 1.30 1.30 — —% Coordinator Transportation Systems
Management

0.75 0.75 1.35 1.35 — —%
Engineer 3.10 3.10 2.10 3.10 1.00 47.6%
Engineering Technician III 0.50 0.50 0.50 0.50 — —%
Facilities Technician 1.50 1.50 1.50 1.50 — —%
Inspector, Field Services 1.21 1.21 1.21 1.21 — —%
Landscape Architect Park Planner 0.90 0.90 0.90 0.90 — —% Management Analyst*** 0.94 0.95 0.95 0.80 (0.15) (15.8)% Manager Facilities 0.10 0.10 0.10 0.10 — —%
Manager Maintenance Operations 0.65 0.65 0.65 0.65 — —% Parking Operations-Lead 0.40 0.40 0.30 0.30 — —%
Project Engineer 7.59 7.62 7.92 7.92 — —%
Project Manager 1.15 1.15 0.80 0.80 — —%
Senior Engineer* 2.99 4.04 4.04 4.64 0.60 14.9%
Senior Management Analyst*** 0.60 0.60 0.60 0.75 0.15 25.0% Senior Planner 0.50 0.50 0.80 0.80 — —%
Senior Project Manager 1.00 — — — — —%
Supervisor Inspection and Surveying 0.63 0.65 0.65 0.65 — —% Surveyor, Public Works 0.55 0.55 0.55 0.55 — —%
Traffic Engineering-Lead* 0.55 0.55 0.60 — (0.60) (100.0)% Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

Item 8: Staff Report
Pg.
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TABLE OF ORGANIZATION
17 Transportation Planning Manager 0.35 0.35 0.45 0.45 — —% Total Capital Project Fund 36.40 36.77 35.48 36.48 1.00 2.8% Printing and Mailing Services
Manager Revenue Collections 0.10 0.10 0.10 0.10 — —%
Offset Equipment Operator 1.52 1.52 1.52 1.52 — —%
Total Printing and Mailing Services 1.62 1.62 1.62 1.62 — —% Special Revenue Funds
Account Specialist 1.87 1.87 1.37 1.37 — —%
Account Specialist-Lead 0.55 0.55 0.55 0.55 — —%
Administrative Assistant 0.35 0.35 0.25 0.25 — —%
Administrative Associate II 0.20 0.20 0.20 0.20 — —%
Associate Planner 0.25 0.25 — — — —%
Community Service Officer 0.50 0.50 0.37 0.37 — —%
Coordinator Public Works Projects 0.20 0.20 0.20 0.20 — —% Electrician 0.20 0.20 0.20 0.20 — —%
Facilities Maintenance-Lead 0.15 0.15 0.15 0.15 — —%
Facilities Painter 0.25 0.25 0.25 0.25 — —%
Facilities Technician 0.45 0.45 0.45 0.45 — —%
Management Analyst*** 0.35 0.35 0.35 — (0.35) (100.0)%
Manager Community Services Senior Program 1.00 1.00 1.00 1.00 — —% Manager Maintenance Operations 0.19 0.19 0.19 0.19 — —% Manager Revenue Collections 0.28 0.28 0.28 0.28 — —%
Parking Operations-Lead 0.60 0.60 0.65 0.65 — —%
Senior Management Analyst*** — — — 0.35 0.35 —%
Senior Planner 0.40 0.40 0.40 0.40 — —%
Street Maintenance Assistant 2.00 2.00 2.00 2.00 — —%
Street Sweeper Operator 0.37 0.37 0.37 0.37 — —%
Transportation Planning Manager 0.50 0.50 0.50 0.50 — —% Total Special Revenue Funds 10.66 10.66 9.73 9.73 — —%
Technology Fund
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Assistant Director Administrative Services 0.10 0.10 0.10 0.10 — —% Business Analyst 1.00 1.00 1.00 1.00 — —%
Desktop Technician 6.00 6.00 6.00 6.00 — —%
Director Information Technology/CIO 1.00 1.00 1.00 1.00 — —% Manager Information Technology 3.00 3.00 3.00 3.00 — —% Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

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Manager Information Technology Security 1.00 1.00 — — — —% Principal Business Analyst 1.00 1.00 — — — —%
Senior Business Analyst 2.00 2.00 2.00 2.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Senior Technologist*,*** 18.00 18.00 14.00 17.00 3.00 21.4% Technologist 1.00 1.00 — — — —%
Total Technology Fund 36.10 36.10 29.10 32.10 3.00 10.3% Vehicle Replacement and Maintenance Fund
Assistant Director Public Works 0.25 0.25 0.25 0.25 — —% Assistant Fleet Manager 1.00 1.00 1.00 1.00 — —%
Equipment Maintenance Service Person 2.00 2.00 1.00 1.00 — —% Fleet Services Coordinator 1.00 1.00 1.00 1.00 — —%
Management Analyst 0.20 0.20 0.20 0.20 — —%
Management Assistant 1.00 1.00 1.00 1.00 — —%
Manager Fleet 1.00 1.00 1.00 1.00 — —%
Motor Equipment Mechanic II 6.00 6.00 5.00 5.00 — —%
Motor Equipment Mechanic-Lead 2.00 2.00 2.00 2.00 — —%
Project Manager 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 0.08 0.08 0.08 0.08 — —%
Total Vehicle Replacement and
Maintenance Fund

15.53 15.53 13.53 13.53 — —%
Workers' Compensation Program Fund
Senior Human Resources Administrator 1.00 1.00 1.00 1.00 — —% Total Workers’ Compensation Program
Fund

1.00 1.00 1.00 1.00 — —%
Total Other Funds 101.31 101.68 90.46 94.46 4.00 4.4%
Total Citywide Positions 1,034.85 1,034.85 956.00 1,023.10 67.10 7.0% *The FY 2022 Adopted Budget does not include City Council actions to amend staffing levels approved in the Preliminary Q1 FY 2022 Financial Status Update (CMR 13439), Staffing for Adequate Fire and Emergency Response (SAFER) Grant Acceptance (CMR 13643), and FY 2022 Mid-Year Budget Review (CMR 13801). These positions appear as a base adjustment in the FY 2023 Amended Budget. **The FY 2023 Amended Budget includes new job classifications that require completion of appropriate review and potential discussions with bargaining groups. Proposals in this budget include estimated funding levels for financial planning purposes only and do not reflect the final terms of the proposed classifications.
***Indicates position adjustments subsequent to the adoption of the FY 2023 budget.

Table of Organization
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Adopted
Budget
FY 2023
Amended
Budget
FY 2023
Change
FTE
FY 2023
Change %
Attachment B
Item 8
Attachment B - Amended
FY 2023 Table of
Organization

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Attachment C
Attachment C – Page 1 of 7
Preliminary FY 2023 2nd Quarter Financial Status
General Fund
Overall, the General Fund is tracking closely to adopted estimated revenues and at or below adopted expenses. Positive revenue trends continue to persist in the second quarter, with overall revenues exceeding the same period in the prior year. Although the City has experienced positive economic trends in recent periods, staff remains cautious to mixed economic indicators of potential recession. Though data continues to be uncertain, staff believe that these recommended adjustments are measured and align more closely with the current financial outlook.

General Fund: Revenues:

The FY 2023 Adopted Operating Budget approved a $215.2 million estimate for revenue sources (excluding Operating Transfers-in), of which $90.9 million has been collected to date, or 42% of the budgeted estimate. The overall tax revenue estimates in the FY 2023 Adopted Budget are higher than FY 2022 Adopted Budget levels by $23 million, from approximately $110 million to $133 million. Adjustments to realign revenue estimates such as increasing estimates for Property Tax, Sales Tax receipts, and Transient Occupancy Tax receipts were adopted in FY 2023 to align with a recovering economy. Highlights of current data on major revenue sources are included below. Overall, staff is optimistic that revenues will exceed FY 2023 Adopted Budget levels and adjustments are included in this report to align with the higher estimates.

Table 2
Property Tax
The FY 2023 Adopted Budget is $59.8 million, a $6.5 million or 16.7% increase from the FY 2022 adjusted budgeted level of $53.2 million. Property Tax receipts of $59.4 million were received in % change FY 2023 % FY 2022 %
Property Tax 7.8% $59,770 32.6% $51,228 35.3%Sales Tax 23.1% 32,580 35.8% 28,184 33.7%Charges for Services 27.1% 30,786 49.1% 24,515 48.5%Transient Occupancy Tax 95.9% 18,199 53.9% 8,428 59.4%Utility User Tax 10.3% 15,579 51.4% 14,370 50.5%Permits and Licenses 3.4% 9,794 31.9% 8,273 36.5%Documentary Transfer Tax -46.5% 7,217 34.1% 7,137 64.6%All Other Revenue Sources -4.1% 41,851 50.7% 42,434 52.1% Total Revenue 11.6% $215,776 42.1% $184,569 44.1%$90,887 $81,454 3,121 3,0192,464 4,60821,204 22,103
15,105 11,8859,809 5,0088,011 7,261
$19,499 $18,08511,674 9,485
2nd Quarter Actuals Adjusted BudgetFY 2023 FY 2022
General Fund RevenueFY 2023 2nd Quarter (000's)
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Attachment C
Attachment C – Page 2 of 7
FY 2022 due to higher than anticipated assessed value growth and payment of disputed excess Educational Revenue Augmentation Fund (ERAF) distributions ($1.7 million) contributed to these increased receipts. Consistent with the County of Santa Clara Assessor’s Office, revenues are expected to meet or exceed FY 2023 budget levels due to higher than conservatively budgeted revenues. In November 2021, the County of Santa Clara notified the cities that the California School Boards Association and its Education Legal Alliance filed a lawsuit against the Controller of the State of California arguing that the settlement reached with the counties in the excess ERAF calculation methodology is unlawful. The County estimates that 20% to 25% of excess ERAF in FY 2022, FY 2023, and beyond are at risk due to this litigation. The FY 2022 disputed amount that has been received has been reserved and the FY 2023 adopted budget excludes this amount ($1.5 million). The FY 2023 adopted budget is anticipated to be higher, therefore staff is recommending increasing this budget by $0.5 million in this report.

Sales Tax
The FY 2023 Adopted Budget is $32.6 million, an assumed growth of 15.6% from the FY 2022 adjusted budgeted of $28.2 million. Actual Sales Tax receipts of $32.7 million in FY 2022 were above year end estimated levels; however, overall receipts remained 10.4% below pre- pandemic actuals of $36.5 million in FY 2019.

Sale Tax for the first six months of FY 2023 is 23.1% higher than the same period of the prior year.

During this period, business sectors with strong growth where apparel, department, and furniture/appliance stores, restaurants, food markets, auto parts/repair, service stations, health, and auto leasing. Higher prices due to the elevated inflation contributed to their sales tax performance. Sectors that didn’t do as well include auto sales, office and electronic equipment, drug stores, recreation products, and business services. Should the federal reserve achieve its goal of further taming inflation, sales tax receipts are anticipated to be negatively impacted. As a result, staff is forecasting a little over 10% decrease for the remainder of FY 2023 due to the expected slowdown in the economic growth in the latter half of FY 2023. Even with the anticipated economic slowdown, Sales Tax is anticipated to generate more than the conservatively budgeted amount in FY 2023, therefore staff recommends increasing the budget by $1.5 million in this report.

Transient Occupancy Tax (TOT)
The FY 2023 Adopted Budget assumed an estimate of $18.2 million, a 6.9% increase from FY 2022 actual receipts of $16.9 million or $ 1.3 million above. FY 2022 actual receipts were higher than adopted budget levels of $8.4 million by $8.5 million but remained significantly lower than pre- pandemic actuals of $25.7 million in FY 2019. Current receipts indicate that this revenue category continues to have significant growth from the unprecedented lows seen during the pandemic.

TOT is anticipated to generate more than the budgeted 18.2 million in FY 2023 and staff recommends increasing the budget by $4.0 million in this report.

Transient Occupancy Tax for the first six months of FY 2023 is 95.9% higher than the same period of the prior year. For this period, the average occupancy rate is 73.2% (prior year it was 59.7%) Item 8
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Attachment C
Attachment C – Page 3 of 7
and the average room rate is $270 (prior year it was $180). Staff is conservatively forecasting a 10% increase over the prior year for the remainder of FY 2023.

Charges for Services & Permits and Licenses
The FY 2023 Adopted Budget assumed an estimate of $30.8 million in Charges for Services, a $6.3 million or 25.6% increase from FY 2022 adjusted levels. The FY 2023 Adopted Budget assumed an estimate of $9.8 million in permit and license revenue, a $1.5 million or 18.4% increase from the FY 2022 adjusted level. Together, these revenue categories make up nearly half of all non-tax revenues. In total, $37.7 million was received during FY 2022, above the revised budget estimates by $4.5 million. These revenue categories consist of charges to Stanford for fire services and paramedic services, fees related to the City’s golf course, arts and science classes, plan check fees, and payments to the City for issuance of Building Permits, Fire Permits, and miscellaneous health and safety-related licenses. Several adjustments to revenue in Charges for Service are recommended in this report; however, overall revenues in these categories are in line with activity levels anticipated thus far. •Community Services (CSD): The demand for CSD programming remains at elevated levels.

Total departmental revenue through the end of the second quarter is approximately $5.8 million or 46% of the FY 2023 total budgeted revenue. At this same time last year, CSD’s total revenue was tracking at 41% of FY 2022 budgeted revenue levels through the second quarter. CSD is recommending adjustments to several programs with high demand. Due to the popularity of ceramics classes, the Public Art Studio has requested a strategic reorganization that is anticipated to increase the number of classes while being cost- neutral. As tennis programs have increased in popularity, the department has amended the contract in FY 2023 to accommodate additional classes. As part of the FY 2024 budget, the department is also exploring increasing subsidies for low-income youth (17 & under), seniors (60+), and/or disabled adult residents. The current policy allows a 25 percent or 50 percent fee discount through the Fee Reduction Program up to $300 annually. Income eligibility is determined using the Community Development Block Grant (CDBG) Low- Income Guidelines.
•Golf Course: Golf revenue continues to perform well in the first and second quarters of FY 2023 but is down roughly 5% from this time last year. This could be attributed to several weeks of heavy rains which would deter play both at the course and the driving range. Revenue guidance is recommended to remain at its current budgeted level due to the unpredictability of winter storms in the coming months. The proposed FY 2024 budget will reassess golf revenue and expenditures based on additional information from third- quarter results. In addition, the division is working with purchasing to draft a contract to study the feasibility of adding a second story to the driving range with the additional potential revenue as an element of the study. Once completed, those projections will be included as a part of future revenue estimates if that potential project moves forward.

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Quarter Financial Status

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Attachment C
Attachment C – Page 4 of 7
•Junior Museum & Zoo (JMZ): Through the first two quarters of FY 2023, revenue is roughly at 35% of budgeted levels (approximately $0.9 million in actual revenue vs. $2.5 million in budgeted revenue). FY 2023 revenues should easily exceed the FY 2022 total of $1.48 million, however, FY 2023 represents the first full year of operations, as the JMZ opened its doors in October 2021. Memberships remain the best-performing revenue category (60% of FY 23 target), while facilities rentals are the lowest performing (19% of FY 23 target), reflecting similar trends as the prior year.

Staff has requested funding for a comprehensive operational analysis of the newly opened Palo Alto Junior Museum and Zoo and to prepare a business plan to inform ongoing operational and budgetary decisions as a part of Mid-Year recommendations ($50,000). The study will examine financial, operational, and programmatic status and make recommendations for future operations to include ticket and membership prices, and how pricing will impact consumer demand. Once the study is completed, staff will review the results and present recommendations for financial and operational efficiencies to Council. In addition, Staff is currently working with purchasing for a new reservation and ticketing platform for the JMZ. Funding this technology initiative was a part of the Community Services Department FY 2023 Adopted Operating Budget ($50,000). •Development Services: Preliminary FY 2023 Development Services revenue is up 42.0% compared to last year and is currently at 54.7% of the FY 2023 revenue target. This is mainly driven by increased permit activity in the last quarter of 2022 due to a code change year. Department-managed expenses are currently under or on pace to meet the budget.

The table below articulates Development Services revenues from January through December from 2020 to 2022.

Table 3: Development Services Revenue – 2021 vs 2022

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Attachment C
Attachment C – Page 5 of 7
General Fund: Expenses
Overall General Fund expenses are currently expected to remain within the FY 2022 Adjusted budget levels of $248.4 million. General Fund expenses (excluding operating transfers) for second quarter are 11.2% higher than the prior year and are tracking at 38.0% of the Adjusted Budget (excluding encumbrances). This is slightly lower than the percent expended through the second quarter in FY 2022 and can be attributed to the continued vacancies across the City in particular in the Community Services, Planning and Development Services, and Library Departments.

Table 4
Salaries and Benefits
As a service driven organization, the largest expenses are salaries and benefits. Preliminary salary and benefits expenditures through December 2022 are approximately $71.3 million, or 48.1% of the $148.4 million FY 2023 Adopted Budget, compared to $64.3 million in the same period in the prior year. The City continues to maintain vacancies of approximately 154 positions, though this changes frequently, which reflects approximately a 15.1% vacancy rate. When comparing staff capacity to deliver services to the community beyond the authorized staffing levels, looking at December 2021 to December 2022, the City has 30 more full-time employees, however staffing is still approximately 8% below pre-pandemic benefitted employee (typically full-time) counts. If looking at all employees, including part-time staffing from March 2020 (pre-pandemic) to December 2022, the total number of City employees is down over 10%. Use of leaves 2 also impacts service capacity. Looking at the six-month period ending December 2022 versus that same period in December 2021, use of leave is nearly identical year over year but represents a 23% increase as compared to December 2020.

This year the City is engaging in labor negotiations with various bargaining groups and unrepresented management professionals to negotiate new agreements. Tentative agreements Expenditures FY 2023 FY 2022 % change FY 2023 % FY 2022 % Police 23,934$ 21,025$ 13.8% 47,723$ 50.2% 43,739$ 48.1%Fire 20,420 18,289 11.7% 41,479 49.2% 36,446 50.2%Community Services 13,379 13,262 0.9% 34,690 38.6% 32,508 40.8%Public Works 9,264 7,844 18.1% 22,764 40.7% 20,124 39.0%Planning and Development Services 8,916 7,691 15.9% 26,426 33.7% 20,447 37.6%Library 4,272 4,073 4.9% 10,524 40.6% 9,011 45.2%Administrative Services 4,705 4,263 10.4% 10,107 46.6% 9,401 45.3%All Other Departments 9,609 8,522 12.8% 54,672 17.6% 38,926 21.9% Total Expenses 94,499$ 84,969$ 11.22% 248,385$ 38.0% 210,602$ 40.3% General Fund ExpensesFY 2023 2nd Quarter(000's)2nd Quarter Actuals Adjusted Budget Item 8
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Quarter Financial Status

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Attachment C
Attachment C – Page 6 of 7
have been reached with MGMT, IAFF, and SEIU, and the remaining four labor groups (PAPOA, PMA, FCA, UMPAPA) are pending. This report recognizes $2.6 million in estimated expense increases commensurate with the status of economic proposals for all groups, including compensation adjustments and other terms of employment. This expense increase is fully offset in FY 2023 by the elimination of the Inflation and Salary Reserve ($900,000) set aside by the City Council during the FY 2023 budget process in anticipation of these agreements, and department vacancy savings ($1.7 million). Final agreements with the City’s remaining labor groups are pending.

Public Safety Overtime
Table 5
As shown in Table 4 above, Police Department overtime is trending higher compared to FY 2022 due to a number of factors, including backfilling shifts due to vacancies, benefited leave or industrial injuries and training a higher than usual volume of new hires. As of this writing, 7% of positions are vacant, another 10% of staff are unavailable to work due to benefited leave or industrial injury, and 13% of filled positions have new staff in training (in-house or at the police academy). The Department is anticipating overtime to continue trending over FY 2022 with a leveling off if the active hiring cycle continues to stay ahead of departures. For more information on vacancy and overtime staffing, see Attachment D.

Fire Department overtime expenses are tracking lower compared to FY 2022. The Department hired nine entry level fire fighters in February 2022 but continues to experience increased turnover and employee injuries which create vacancies requiring backfill overtime. Seven sworn Police and FireSalaries and Overtime ExpenseFY 2023 2nd Quarter YTD (000's) FY 2023 FY 2022% change FY 2023 % FY 2022 %Inc (Dec)
Police - Salaries 9,148$ 8,192$ 12% 20,026$ 46% 17,586$ 47%Police - Overtime 1,509 1,011 49% 973 155% 944 107%Total Police 10,657 9,203 16% 20,999 51% 18,530 50% Fire - Salaries 7,450 6,451 15% 15,997 47% 13,936 46%Fire - Overtime 1,816 2,374 -24% 2,124 85% 1,931 123%Total Fire 9,266 8,825 5% 18,121 51% 15,867 56% Total Public SafetySalaries & Overtime 19,923$ 18,028$ 11% 39,120$ 51% 34,397$ 52% 2nd Quarter YTD Actuals Adjusted Budget
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Attachment C
Attachment C – Page 7 of 7
employees have voluntarily left the Department during FY 2023. A current job posting accepting entry level firefighters is active, and those new recruits will begin an academy in April 2023. The report includes an adjustment moving $1.5 million from salaries to overtime to help mitigate impacts, as well as recognizing income and expense offsets for the shared staffing of Fire Station 8 with the Santa Clara County during the high fire risk season. Table 4 above does not show these recommended adjustments; however, please see Attachment D for Fire Department overtime information with these recommendations included.

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Preliminary FY 2023 2nd
Quarter Financial Status

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Q2
2021
2022 2023

POLICE DEPARTMENT
Overtime Expense
Adopted Budget (A) $944,186 $944,186 $972,512
Modified Budget (B) 944,186 1,244,186 972,512 Net Overtime Cost - see below 366,045 781,344 683,911 Variance to Budget 578,141 462,842 288,601 Overtime Net Cost
Actual Expense $1,431,959 $2,319,043 $1,508,997
Less Reimbursements
California OES/FEMA (Strike Teams) - - -
Stanford Communications 64,906 107,684 67,524 Utilities Communications Reimbursement 33,191 56,004 34,162 Local Agencies (C) 2,412 5,456 2,659
Police Service Fees 467,167 120,411 86,169 Total Reimbursements 567,676 289,556 190,514 Less Department Vacancies (A) 498,238 1,248,143 634,572 Net Overtime Cost $366,045 $781,344 $683,911
Department Vacancies (number of days) 1,494 3,903 2,322 Workers' Compensation Cases 14 11 8
Department Disabilities (number of days) 1,007 1,221 495

FIRE DEPARTMENT
Overtime Expense
Adopted Budget (D) $1,931,121 $1,931,121 $2,124,054
Modified Budget (E) 2,971,460 2,703,621 3,800,642 Net Overtime Cost - see below 1,792,228 4,073,011 1,277,561 Variance to Budget 1,026,424 (1,369,390) 2,523,081 Overtime Net Cost
Actual Expense $2,840,968 $4,684,796 $1,907,675
Less Reimbursements
California OES/FEMA (Strike Teams) 887,531 - - Total Reimbursements 887,531 - -
Less Department Vacancies (D) 161,208 611,784 630,114 Net Overtime Cost $1,792,228 $4,073,011 $1,277,561
Department Vacancies (number of days) 1,942 1,717 2,017 Workers' Compensation Cases 14 35 14
Department Disabilities (number of days) 387 947 367 NOTES:
(A) The FY 2023 Police Department budget was increased by 4.0 Police Officers, 1.0 Business Analyst, and 2.0 Public Safety Dispatcher. (B) Police Department adopted budget has not been adjusted in FY 2023. (C) Includes Animal Control Services contract with Los Altos and Los Altos Hills. (D) The FY 2023 Fire Department budget was increased by 1.0 Deputy Chief, 0.20 40-Hour Captain, 3.0 Fire Fighter Trainee, and 0.05 Fire Marshal
(E) Fire Department adopted budget actions at mid-year: $177,000 County Fire Station 8 overtime reimbursement and $1.5M salary savings transfer to overtime salaries.

Attachment D
Public Safety Departments
Overtime Analysis for Fiscal Years 2021 through 2023
Attachment D - 1
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Attachment D - Public
Safety Overtime Analysis

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Attachment E
Attachment E - 1
Summary of Financial Status Reports in FY 2023
A list of prior staff reports providing various fiscal updates for Council deliberations are below.

However, this does not include informational items that have been distributed for quarterly reporting, such as the Investment Activity Reports.
September 20, 2022, Finance Committee (CMR 14628):

Accept CalPERS Pension Annual Valuation as of June 30, 2021 October 18, 2022, Finance Committee (CMR 14829):

Review Pension and Other Post-Employment (OPEB) (Retiree Healthcare) Trust Funds with Plan Providers
November 29, 2022, Finance Committee (CMR 14632):

Recommendation to the City Council to Approve the Fiscal Year (FY) 2022 Annual Comprehensive Financial Report (ACFR) and FY 2022 Budget Amendments in Various Funds December 6, 2022, Finance Committee (CMR 14748):

Review Revised Actuary Pension Analysis using Alternative Assumptions to CalPERS and Review Potential Modifications to the Pension Funding Policy December 6, 2022, Finance Committee (CMR 14630):

Review Q1 Fiscal Year (FY) 2023 Financial Status Report December 6, 2022, Finance Committee (CMR 14629):

Review and Forward to the City Council the FY 2024 – FY 2033 Long Range Financial Forecast (LRFF) and FY 2024 Budget Development Guidelines
January 23, 2022, City Council (CMR 2301-0715):

Approval of the FY 2022 Annual Comprehensive Financial Report (ACFR) February 6, 2022, City Council (CMR 2212-0513):

Adopt Revised Retiree Benefit Funding Policy (Formerly “Pension Policy”) for the Financial Planning of Employee Pension and Other Post-Employment (OPEB) (Retiree Healthcare) Plans
February 6, 2022, City Council (CMR 2301-0753):

Accept the FY 2024 – FY 2033 Long Range Financial Forecast (LRFF) and FY 2024 Budget Development Guidelines
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of Financial Status
Reports in FY 2023 [for
reference only]

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Item No. 9. Staff Report Page 1 of 2
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CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: ACTION ITEM
Lead Department: City Manager
Meeting Date: February 13, 2023

TITLE
Discussion and Possible Direction on 2023 Standing Committee Topics and Prospective Referrals (Continued item 2C Discussion and Possible Revision to 2023 Standing Committee Topics on January 28, 2023)

RECOMMENDATION
Staff recommends that the City Council discuss and receive the 2023 Standing Committee Topics.

BACKGROUND/ANALYSIS
At the January 23, 2023 City Council Retreat, the Council unanimously made the following motion:

MOTION: Motion by Council Member Burt and Seconded by Vice Mayor Stone to agendize a discussion of prospective referrals to the Policy and Services, Finance Committee and Boards and Commissions.

Note: Staff updated the Policy and Services Tentative Topics to correct an inadvertent omission identified at the retreat.

This item is a continuation of item 2C. Discussion and Possible Revision to 2023 Standing Committee Topics considered at the January 28, 2023 retreat. A separate item may be brought forward for prospective referrals to Boards and Commissions or addressed through the annual review of Boards and Commission workplans by the City Council.

The tentative topics and regularly scheduled work that the City Council Standing Committees of Policy and Services and Finance expect for 2023 are included in attachments A and B. The tentative workplans or calendars were created knowing that there will be referrals and other topics that arise.

Work Plan Calendars for Finance Committee and Policy and Services Committee Standing Committees Per the CPP, Section 2 – Council Meeting & Agenda Guidelines, Subsection 2.4, Letter Y (of the existing CPP Handbook, not the proposed revised Handbook):

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Item No. 9. Staff Report Page 2 of 2
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The purpose and intent of committee meetings is to provide for more thorough and detailed discussion and study of prospective or current Council agenda items with a full and complete airing of all sentiments and expressions of opinion on city problems by both the Council and the public, to the end that Council action will be expedited. Actions of the committee shall be advisory recommendations only.

Referrals for discussion and action at the committee level are referred to Standing Committees by Council action or City Manager (staff) and are made to only one committee (CPP, page 24).

The tentative schedules include regularly scheduled work, such as audit updates and budget related reports, as well as any items that have been previously referred, with the date of the referral.

These schedules were shared with the new Chairs, as appointed by the Mayor for 2023 for information purposes given the timing of publishing.

FISCAL/RESOURCE IMPACT
Depending on the nature and extent of revisions sought, direction to revise standing committee topics could involve substantial staff resources.

STAKEHOLDER ENGAGEMENT
These workplans may be amended as schedules adjust and or new issues arise. The newly appointed Committee Chair’s Chair Burt (Finance Committee) and Chair Tanaka (Policy and Services Committee) will be coordinated with on committee agenda planning moving forward.

ENVIRONMENTAL REVIEW
This is not considered a project and no environmental review is required.

ATTACHMENTS
Attachment A: Policy and Services Tentative Topics Calendar 2023 [revised 2.2.23] Attachment B: Finance Committee Tentative Calendar Topics 2023 APPROVED BY:

Ed Shikada, City Manager
Report #: 2301-0804
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City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA. I www.cityofpaloalto.org – February 2023

POLICY & SERVICES TENTATIVE TOPICS
CALENDAR 2023

As of February 1, 2023

January
• Mayor appoints Committee and designates Chair; no Policy & Services Committee meeting

February
• Auditor Report [tentative]

March
• Update: Summary of Recent Race and Equity Work since late 2022 • Rental Registry Update (linked to Council Referral from Nov. 29, 2021: Renter Protections: Staff to go to P&S with updated language in ordinance for a renter survey and estimates on effort to enforce it for P&S discussion) [tentative]

April
• Auditor Report [tentative]
• Brief Update on the National Community Survey Plans

May
• Auditor Report [tentative]
• Report: Legislative Update

June
• Quarterly Audit Status Report
• Audit Report [tentative]
• Update: Summary of Recent Race and Equity Work since March

July
No meeting; Council break

August
• Quarterly Audit Status Report (April-June) [tentative] • Procedures & Protocols Handbook Discussion (Annual Discussion) • Council Referral from Nov. 29, 2021: Renter Protections: Fair chance ordinance to be reviewed by P&S for analysis on consequences/unintended consequences

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Attachment A- Policy and
Services Tentative 2023
Work Plan

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City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA. I www.cityofpaloalto.org – February 2023 September
• Legislative Recap (what passed/didn’t pass)
• Referral from 2021: Council Referral – Affordable Housing Funding (from August 16, 2021 Council Meeting)

October
• Quarterly Audit Status Report (July-Sept) [tentative] • Audit Report [tentative]
• Quarterly Race and Equity Update: Summary of Recent Race and Equity Work

November
• Legislative Agenda and Guidelines (can also go in December) • 2024 City Council Priorities Discussion (includes discussion on process)

December
• Informational: Report out on Status of Committee Referrals

Completed or Pending Referrals (status and date of referral):

1. Will follow Housing Element timing: Council Referral from Nov. 29, 2021: Renter Protections:

Bring back to P&S [a] proposal and discussion on expanding anti-gouging measure to address loopholes

2. Review City Council Colleagues’ Memo Referring Policy Changes on Short Term Rentals (referral from 2022)

3. COMPLETED: Council Referral from Feb. 5, 2022: Discussion of Council Values, Strategic Priorities, etc.

4. COMPLETED (Committee work; now at City Council): Revise to the City Council Procedures and Protocols Handbook

5. COMPLETED: Review of National Community Survey Questions with Policy and Services Chair

Item Pending Further City Council Direction:
• Continued Item from November 2021: City Council Referral: Policy and Services Committee to Recommend Strategies to Support and Strengthen Neighborhood Programs, Identify Gaps in Existing Neighborhood-based Services, and Evaluate new Strategies as Proposed in the Colleagues' Memo Regarding a Proposed Program for Neighbor Connection Item 9
Attachment A- Policy and
Services Tentative 2023
Work Plan

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City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA. I www.cityofpaloalto.org

ATTACHMENT B

FINANCE COMMITTEE TENTATIVE TOPICS
CALENDAR 2023
Updated on January 13, 2023
January
•Mayor appoints Committee and designates Chair; usually no FC meeting February
March
•Utilities Advisory Commission Rate Forecasts and Financial Plans: Gas, Electric, Water, Wastewater
April
•Utilities Advisory Commission Rate Forecasts and Financial Plans: Gas, Electric, Water, Wastewater
•Rate Schedule Storm Water Management Fee
•Rate Schedule Refuse Fees
May
•Annual Budget Review: Operating + Capital Five Year Plan •daytime meetings, typically 5/9, 5/10, 5/15, 5/23
•Fiscal Year 2023 Municipal Fee Schedule
•Retiree Healthcare Plan and Annual Actuarially Determined Contributions (ADC)- Biannual report, last done May 2022 (FY2022 and 2023 contributions), next scheduled May 2024 •Utilities Advisory Commission Rate Forecasts and Financial Plans: Gas, Electric, Water, Wastewater
June
•Third Quarter Fiscal Year 2023 Financial Report
•Adoption of Fiscal Year 2023 Investment Policy (to be done by June 30 per code) July
No meeting; Council Break
August
Item 9
Attachment B- Finance
Committee Tentative
Calendar Topics 2023

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City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA. I www.cityofpaloalto.org

ATTACHMENT B
•Evaluation of Printing & Mailing Services levels and service delivery. Referred May 2019. [tentative]
September/October
•Accept California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation Reports as of June 30, 2022
•Every 3-4-year review/decision on pension funding policy assumptions next review scheduled for FY 2026.
•JMZ ticket pricing analysis to understand interactions between changes to $18 ticket, attendance, and cost recovery. Referred September 2022; procurement process underway for consultant, review expected calendar year 2023. [tentative] November
•Discussion and Recommendation to the City Council to Accept the Macias Gini & O'Connell's Audit of the City of Palo Alto's Financial Statements as of June 30, 2023 and Management Letter
•Discussion and Recommendation to Approve the Fiscal Year (FY) 2023 Comprehensive Annual Comprehensive Financial Report (ACFR) and Approve Budget Amendments in Various Funds
December
•Review and Forward the FY 2024 - FY 2032 Long Range Financial Forecast •First Quarter Fiscal Year 2024 Financial Report
•Informational: Report out on Status of Committee Referrals Completed Referred Topics:

A full report on the status of Finance Committee referrals and the status can be found here1, Item 1 on the December 5, 2022 agenda.
1) COMPLETED: FY 2021 Budget: A report or item on the Junior Museum and Zoo six months after it opens and what it would look like to eliminate the General Fund Subsidy through a fully cost recoverable program. Referred in June 2021, Reviewed September 2022. 2)PENDING: Planning and Development Services Fee Study. Staff initiated, study is on hold while the Fire Prevention Program organizational study is completed. 3) PENDING: Parking Permits Pricing and Parking Permit Funds Financial Status. Staff initiated, review is on hold while post pandemic trends are collected. 1 Finance Committee, December 6, 2022, Item #1, CMR #14906:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/finance- committee/2022/20221206/20221206pfcsm-late-packet.pdf
Item 9
Attachment B- Finance
Committee Tentative
Calendar Topics 2023

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CITY COUNCIL

STAFF REPORT
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: February 13, 2023

TITLE
Investment Activity Report for the Second Quarter, Fiscal Year 2023

RECOMMENDATION
This is an informational report and no City Council action is required.

EXECUTIVE SUMMARY
The City’s Investment Policy1 (Policy) requires that staff report to Council quarterly on the City’s portfolio composition and performance compared to the Council-adopted Policy; discuss overall compliance with the City’s Investment Policy; and provide recommendations, if any, for Policy changes. In addition, staff provides a detailed list of all securities and reports on the City’s ability to meet expenditure requirements over the next six months. This report is to inform Council of the City’s investment portfolio performance as of the second quarter ending December 31, 2022 and to disclose staff’s cash flow projections for the next six months. The portfolio details, activities, and performance are discussed below, and additional information is provided in the attachments.

During the second quarter staff complied with all aspects of the Investment Policy. Staff expect that the City will have sufficient funds or liquidity to meet expenditure requirements for the next six months.

ANALYSIS
The City’s investment portfolio is summarized in Graph 1 and detailed in the Investments by Fund Report (Attachment B). The Investments by Fund Report groups the portfolio’s securities by investment type and includes details of the investment issuer, date of maturity, current market value, the book and face (par) value, and the weighted average maturity of each type of investment and of the entire portfolio.
1 City of Palo Alto website, Administrative Services Department, Money Management & Treasury:
https://www.cityofpaloalto.org/files/assets/public/administrative-services/investment-policies/adopted- investment-policy-2022-23.pdf
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The par value of the City’s portfolio is $579.3 million; in comparison, last quarter it was $536.3 million. The $43.0 million portfolio growth since the last quarter results from timing of cash flows from the prepayment of the City’s Fiscal Year 2023 Unfunded Accrued Liability (UAL) pension cost for active employees to the Public Employers’ Retirement System (PERS) totaling $43.1 million, additional major revenue receipt due to seasonality timing, and one less pay period costs in the second quarter comparted to the first quarter. By prepaying PERS instead of making payments with each payroll period, the City expects savings of $1.5 million in PERS payments; however, this savings will be partially offset by the loss of approximately $333 thousand in interest income in the City’s portfolio. The net citywide savings of prepaying the UAL cost is $1.2 million. The saving is a consequence of PERS’ ability to earn interest earlier and at a higher rate than the City’s portfolio could realize. Without this prepayment, an additional $10.3 million in UAL payment would have been made in the second quarter; this payment was made in first quarter’s prepayment. As far as additional major revenue receipt due to seasonality timing, property taxes and related receipts don’t begin until the second quarter and major revenues such as sales, transient occupancy and utility user’s taxes are historically lower in the first quarter. For example, second quarter property related (taxes and assessments) receipts was $19.7 million.

The portfolio consists of $30.7 million in liquid accounts and $548.6 million in various investment types as detailed in the following Table 1. The Investment Policy requires that at least $50 million be maintained in securities maturing in less than two years. The portfolio includes $102.6 million in investments maturing in less than two years, comprising 17.7% of the City’s investment portfolio. In addition, the Investment Policy allows up to 30% of the portfolio to be invested in Item 10
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securities with maturities beyond five years; actual at the end of the second quarter is 29.3% of the portfolio.

The current market value of the portfolio is 90.7% of the book value. The market value of securities fluctuates, depending on how interest rates perform. When interest rates decrease, the market value of the securities in the City’s portfolio will likely increase; likewise, when interest rates increase, the market value of the securities will likely decrease. Understanding and showing market values is not only a reporting requirement, but essential to knowing the principal risks in actively buying and selling securities. It is important to note, however, that the City’s practice is to buy and hold investments until they mature so changes in market price do not affect the City’s investment principal. As a result, there is no risk of principal loss due to the declining market value. The market valuation is provided by U.S. Bank, which is the City’s safekeeping agent. The average life to maturity of the investment portfolio is 3.87 years compared to 4.02 years last quarter.

The Investment Policy states “Should the ratio of the market value of the portfolio to the book value of the portfolio fall below 95%, 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.” In the prior two quarters the market value fell below 95% to 93.5% in the fourth quarter of fiscal year 2022 (Staff Report 139982) and 89.7% in the first quarter of fiscal year 2023 (Staff Report 140013). The market rate increased one 2 City Council, August 8, 2022 Item #9, CMR 13998: https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2022/20220808/20220808pccsm-amended-rev- final1.pdf#page=134
3 City Council, November 7, 2022 Item #13, CMR 14001:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2022/20221107/20221107pccsm-amended-linked-q.a-2.pdf#page=188 Item 10
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percentage point this quarter to 90.7% of book value. Interest rates on new investments have begun to decrease so the market value of the portfolio is expected increase in the coming quarters. To minimize risk of loss for investment principal due to lower market values, the City’s investment practice is to buy and hold investments to maturity.

Investments Made During the Second Quarter
During the second quarter, $17.6 million of securities with an average yield of 2.3% matured.

During the same period, per the following Table 2, securities totaling $48.6 million with an average yield of 4.8% were purchased. As expected, as interest rates rose on new investments, the City’s portfolio’s average yield has begun to gradually rise. In the prior two fiscal years or during the height of the COVID-19 economic closures, the portfolio’s interest rate had steadily declined. The City’s short-term money market and pool account increased by $11.9 million compared to the first quarter of Fiscal Year 2022. Staff continually monitors the City’s short-term cash flow needs and adjusts liquid funds to meet them.

Availability of Funds for the Next Six Months
Normally, the flow of revenues from the City’s utility billings and General Fund sources is enough to provide funds for ongoing expenditures in those respective funds. Projections indicate that for the City’s cashflow, an overall growth in the portfolio of $23.0 million is expected over the coming six months due to routine business activities. This reflects expected receipts of $353.4 million and expenditures of $330.4 million over the next six months.

As of December 31, 2022, the City had $30.7 million deposited in the Local Agency Investment Fund (LAIF) and a money market account that could be withdrawn on a daily basis. In addition, investments totaling $36.3 million will mature between January 1, 2023 and June 30, 2023. Based on the above, staff expect that the City will have sufficient funds or liquidity to meet expenditure requirements for the next six months.

Table 2:

Up to 1
Year
1 to 2
Years
2 to 3
Years
3 to 5
Years
Over
5 Years
Portfolio
Total *
% of
Purchase
U.S. Treasury -$ 2.50$ -$ -$ -$ 2.50$ 5.1% U.S. Agency Bonds 3.0 1.5 - - 1.5 6.0 12.3%
U.S. Municipal/ State Bonds - 1.2 0.3 6.1 15.1 22.7 46.7% Negotiable Certificates of Deposits (NCD) 2.3 3.0 1.2 1.7 0.2 8.4 17.3% U.S. Corporate Bonds - - - 2.0 - 2.0 4.1%
Supranational Organizations Bonds - - - 7.0 - 7.0 14.4% Grand Total 5.3$ 8.2$ 1.5$ 16.8$ 16.8$ 48.6$ 100% % of Purchase 10.9% 16.9% 3.1% 34.5% 34.6% 100.0%
* $14.3 million or 29.4% are in investments that support Environmental, Social, and Governace (ESG) Activities (aka "Green", local banks, and Supranational Bonds)
Investment Type
FY 2022 Q4 Security Purchases - Par Value (millions)
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Compliance with City Investment Policy
During the second quarter, staff complied with all aspects of the Investment Policy. Attachment C lists the major restrictions in the City’s Investment Policy compared with the portfolio’s actual performance.

Investment Yields
Interest income on an accrual basis for the second quarter was $2.6 million; $0.4 million higher than the prior quarter due to new higher yielding investments in the portfolio. As of December 31, 2022, the yield to maturity of the City’s portfolio was 1.97%; in the prior quarter it was 1.66%.

In the second quarter, LAIF’s average yield was 1.98% while the average yield on the two-year and five-year Treasury bonds was approximately 4.39% and 4.00%, respectively. In comparison, in the prior quarter LAIF had 1.29% yield and the two-year and five-year Treasury bonds yields were significantly lower at 3.38% and 3.23%.

Historically, the City’s portfolio yield has outperformed the two-year and five-year Treasury bond rates and did so again several years ago; this is an expected occurrence during economic downturns. However, during economic recovery periods, interest rates rise, and the City’s portfolio yield is expected to be lower, which is the current financial environment. As the City’s laddered portfolio investments mature in the next year or two, funds will continue to be reinvested and trends will follow the economic patterns. Graph 2 shows the City’s yields and interest earnings for the past 21 years.

City’s portfolio duration is 3.87 years.
5 . 8 8 %
5 . 0 0 %
4 . 1 7 %
4 . 5 4 %
C i t y o f P a l o A l t o
2 . 7 1 %
1 . 8 0 %
1 . 9 3 %
1 . 6 6 %
1 . 9 7 %
1 . 4 1 %
0 . 8 1 %
0 . 2 5 %
2 Y r . T r e a s u r y
3 . 3 8 %
4 . 3 9 %
4 . 4 3 %
4 . 3 9 %
4 . 9 8 %
1 . 1 0 %
5 - Y r . T r e a s u r y
2 . 8 8 %
2 . 4 7 %
0 . 2 7 %
3 . 2 3 %
4 . 0 0 %
1 . 4 4 %
5 . 2 5 %
0 . 2 3 %

L A I F
1 . 2 9 %
1 . 9 8 %
$ 0 . 0
$ 0 . 5
$ 1 . 0
$ 1 . 5
$ 2 . 0
$ 2 . 5
$ 3 . 0
$ 3 . 5
$ 4 . 0
$ 4 . 5
$ 5 . 0
0 . 0 %
0 . 5 %
1 . 0 %
1 . 5 %
2 . 0 %
2 . 5 %
3 . 0 %
3 . 5 %
4 . 0 %
4 . 5 %
5 . 0 %
5 . 5 %
6 . 0 %
I n t . E a r n i n g s ( M i l l i o n s )
Y i e l d s
F i s c a l Y e a r Q u a r t e r s
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Yield Trends
The Federal Open Market Committee (FOMC), since March 2020, has raised the federal funds rate seven times totaling 4.25% with the first occurring on March 16, 2022. Prior to this the rate was near zero. To mitigate the persistent elevated inflation rate from the peak of 9.1% in June to a low 6.5% in December 2022 with a 2% target. The primary cause to declining inflation rate is declining demand for goods, falling energy and transportation prices, and rapidly improving global supply chains. However, inflation remains elevated for housing, services, apparel, and food and beverages.

The expectation is FOMC will continue to do additional federal funds rate interest rate increases in 2023 with the outlook the FOMC rate could reach low 5%. This is due to the inflation rate failing to come down as quickly as the FOMC had hoped in the past few quarters.

Consistent with the prior three quarters, job growth remains “robust” and unemployment rate remains low, however, FOMC’s high inflation rate concern also continues. In addition, FOMC continue to state “Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are contributing to creating additional upward pressure on inflation and are weighing on global economic activity.” The following tables show the U.S. inflation and unemployment rates and the U.S. Gross Domestic Product (GDP) past and recent trends.

Graph 3: U.S. Inflation Rate
The annual inflation rate in the US slowed for a sixth straight month to 6.5% in December of 2022, the lowest since October of 2021, in line with market forecasts but not in line with FOMC’s goal.

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Graph 4: U.S. Unemployment Rate
The unemployment rate in the US dropped to 3.5% in December 2022, falling below market expectations of 3.7% and matching the rates seen in September and July, which were the lowest since February 2020.

Graph 5: U.S. Gross Domestic Product (GDP)
The Gross Domestic Product (GDP) in the United States expanded 1.90% in the third (calendar) quarter of 2022 over the same quarter of the previous year.

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Funds Held by the City or Managed Under Contract
Attachment A is a consolidated report of all City investment funds, including those not held directly in the investment portfolio. These include cash in the City’s regular bank account with US Bank and Wells Fargo. A description of the City’s banking relationships can be found in Staff Report 78584 and Staff Report 114025. The bond proceeds, reserves, and debt service payments being held by the City’s fiscal agents are subject to the requirements of the underlying debt indenture. The trustees for the bond funds are U.S. Bank and California Asset Management Program (CAMP). Bond funds with U.S. Bank are invested in federal agency and money market mutual funds that consist exclusively of U.S. Treasury securities. Bond funds in CAMP are invested in banker’s acceptance notes, certificates of deposit, commercial paper, federal agency securities, and repurchase agreements. The most recent data on funds held by the fiscal agent is as of December 31, 2022.

In January 2017, the City established a Section 115 Irrevocable Trust (Public Agencies Post- Employment Benefits Trust) administered by Public Agency Retirement Services (PARS). This fund is not governed by the City’s Investment Policy; however, it is discussed in this report to present the full picture of the City’s investments. It is the City’s intent to prefund pension costs and began to address the Net Pension Liabilities (NPL) as calculated by Governmental Accounting Standards Board Pronouncement No. 68 (GASB 68). The Section 115 Trust offered by PARS has five portfolios from which to choose in making investments of City funds. The City has selected the “Moderately Conservative” portfolio which is the second most conservative. Additional information on this trust can be found in City Council Staff Report 75536. Through December 31, 2022, principal investment contributions of $43.3 million made over time since May 2017, has slightly increased to $43.9 million or by $0.6 million and the net return for one and five years has been -12.2% and 2.2% respectively. Calendar year 2022 has realized net earnings loss of $4.8 million which significantly offset the prior calendar years’ earning of $5.8 million for a net gain of $1 million with the portfolio difference increase ($0.4 million) being the total administrative expenses.

FISCAL/RESOURCE IMPACT
This is an information report.

4 City Council, April 11, 2017 Item under “Additional Information”:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2017/7858.pdf
5 City Council, September 21, 2020 Item #2: https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2020-2/id-11402.pdf 6 City Council, January 23, 2017 Item #5: https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2017/7553.pdf Item 10
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STAKEHOLDER ENGAGEMENT
Staff works internally and with external parties (e.g. U.S. Bank’s custodial, U.S. Bank’s bonds, Wells Fargo and U.S. Bank’s banking, California Asset Management Program (CAMP), and Public Agency Retirement Services (PARS)) statements to prepare this report.

ENVIRONMENTAL REVIEW
This Council informational report 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
Attachment A Consolidated Report of Cash Management
Attachment B Investment Portfolio
Attachment C Investment Policy Compliance
APPROVED BY:

Kiely Nose, Assistant City Manager
Report #: 2301-0865
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Book Value Market Value
City Investment Portfolio (see Attachment B) 579,025,051$ 485,206,551 $ Other Funds Held by the City
Cash with Wells Fargo Bank 1,412,380 1,412,380 (includes general and imprest accounts)
Cash with US Bank 3,896,619 3,896,619 (g p ) Total - Other Funds Held By City 5,308,999 5,308,999 Funds Under Management of Third Party Trustees *
Debt Service Proceeds
US Bank Trust Services **
1999 Utility Revenue Bonds
Debt Service Fund 50 50 2009 Water Revenue Bonds (Build America Bonds)
Debt Service and Reserve Funds 2,454,794 2,454,794 2010 & 2013 General Obligation (Library) Bond
Debt Service and Escrow Funds 5,354,216 5,354,216 2011 Utility Revenue Refunding Bonds
Debt Service and Reserve Funds 714,698 714,698 2018 Capital Improvement (Golf Course & 2002B COP Refinance) (Taxable- Green Bond) Certificates of Participation
Debt Service and Cost of Issuance Funds 319 319 2019 California Avenue Parking Garage Certificates of Participation (Tax-Exempt and Taxable Bonds)
Construction and Cost of Issuance Funds 1,338 1,338 2021 Public Safety Building Certificates of Participation Construction Debt Svc, Capitalized Interest, and Cost of Issuan 27,762,038 27,762,038 2022A & B General Obligation (Library) Bond
Cost of Issuance Funds 4,344 4,344 California Asset Management Program (CAMP) ***
2012 University Ave. Parking Refunding Bonds
Reserve Fund 2,753,378 2,753,378
2013 General Obligation (Library) Bond
Reserve Fund 254,866 254,866
Public Agencies Post-Employment Benefits Trust ****
Public Agency Retirement Services (PARS) 43,848,056 43,848,056 Total Under Trustee Management 83,148,097 83,148,097 GRAND TOTAL 667,482,147 $ 573,663,647 $
* These funds are subject to the requirements of the underlying debt indenture. ** U.S. Bank investments are in money market mutual funds that exclusively invest in U.S. Treasury securities. *** CAMP investments are in money market mutual fund which invest in bankers acceptance, certificate of deposit, commercial paper, federal agency securities, and repurchase agreements. **** PARS investments are in moderately conservative index plus funds Attachment A
Second Quarter, Fiscal Year 2022-23
(Unaudited)
Consolidated Report of Cash Management
City of Palo Alto Cash and Investments
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Consolidated Report of
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City of Palo Alto
City of Palo Alto
Administration Svcs. Dept.
250 Hamilton Ave., 4th Floor
Palo Alto, CA 94301
(650)329-2362
December 31, 2022
Fund ALL - Portfolio Listings
Investments by Fund
Par Value
Days To
Maturity
Maturity
Date
Current
RateMarket ValueCUSIP Investment # Issuer
Purchase
Date Book Value
YTM
360
YTM
365
LAIF & Fidelity Cash Accounts
Fidelity Investments158 17,963,406.15SYS158 14.14007/01/2020 17,963,406.15 4.083 4.14017,963,406.15 Local Agency Investment Fund159 12,783,258.42SYS159 12.29007/01/2020 12,537,320.83 2.258 2.29012,783,258.42 Subtotal and Average 30,746,664.57 30,746,664.57 30,500,726.98 3.325 3.371 1 Negotiable Certificates of Deposits
Affinity Plus Fed Credit Union2773 NCD 249,000.0000833AAB6 12/27/2023 3605.10012/27/2022 250,127.97 5.029 5.099249,000.00 Alliant Credit Union2781 NCD 249,000.0001882MAB8 12/30/2027 1,8244.95012/30/2022 252,886.89 4.884 4.952249,000.00 Alpine Bank1525 NCD 245,000.0002082CBG4 08/16/2023 2272.40002/16/2016 241,925.25 2.367 2.400245,000.00 Aneca Federal Credit Union2298 NCD 249,000.00034577AN6 03/20/2025 8091.10003/20/2020 230,628.78 1.085 1.100249,000.00 American State Bank OSCE1805 NCD 245,000.00029733BX9 05/30/2024 5152.30005/30/2017 237,201.65 2.270 2.301245,000.00 Austin Telco Fed. Credit Union2732 NCD 249,000.00052392CC9 11/27/2026 1,4265.05011/28/2022 253,130.91 4.984 5.053249,000.00 American Express Centurion Bk2729 NCD 249,000.0002589AEG3 11/16/2027 1,7805.00011/16/2022 253,312.68 4.931 5.000249,000.00 Banner Capital Bank2453 NCD 249,000.0006654HAA6 11/28/2025 1,0620.45011/27/2020 221,012.40 0.493 0.500248,638.15 Bank of Wisconsin Dells2455 NCD 249,000.00065847EH4 07/28/2025 9391.05011/23/2020 227,613.39 0.542 0.549252,161.31 Baxter Credit Union2730 NCD 249,000.0007181JAU8 11/23/2026 1,4225.00011/22/2022 252,677.73 4.940 5.009249,000.00 Beal Bank - Plano, TX2668 NCD 249,000.0007371AYT4 02/24/2027 1,5152.05003/02/2022 225,307.65 2.053 2.081248,689.09 Texas Exchange Bank2346 NCD 249,000.0088241THJ2 06/13/2025 8941.00006/02/2020 228,290.67 0.986 1.000249,000.00 Century Next Bank2074 NCD 245,000.00156634AY3 08/30/2024 6071.70008/30/2019 233,558.50 1.678 1.701245,000.00 BankUnited NA2474 NCD 249,000.00066519QC6 01/22/2026 1,1170.55001/22/2021 220,496.97 0.592 0.600248,619.20 Blue Foundry Bank2755 NCD 249,000.0009549TAB1 03/19/2024 4434.70012/19/2022 249,211.65 4.633 4.697249,000.00 BMO Harris Bank2480 NCD 249,000.0005600XBX7 10/27/2028 2,1261.00001/27/2021 203,425.53 1.019 1.034248,532.36 BMW Bank of North America2448 NCD 249,000.0005580AXU3 11/20/2025 1,0540.50011/20/2020 221,789.28 0.493 0.500249,000.00 Beal Bank USA - Las Vegas, NV2669 NCD 249,000.0007371CH69 02/24/2027 1,5152.05003/02/2022 225,307.65 2.053 2.081248,689.09 Citigroup1950 NCD 245,000.0017312QJ67 04/22/2023 1113.00004/24/2018 244,095.95245,000.00 California Credit Union2772 NCD 249,000.00130162AN0 12/27/2023 3605.00012/27/2022 249,873.99 4.931 5.000249,000.00 Encore Bank2343 NCD 249,000.0029260MBH7 05/21/2027 1,6011.15005/21/2020 214,951.74 1.134 1.150249,000.00 First Carolina Bank2389 NCD 248,000.0031944MBB0 08/20/2025 9620.45008/20/2020 222,537.84 0.444 0.450248,000.00 Celtic Bank2063 NCD 245,000.0015118RRH2 08/30/2024 6071.85008/30/2019 234,146.50 1.826 1.852245,000.00 Central State Bank IOWA2324 NCD 249,000.0015523RCP9 03/27/2025 8161.00003/27/2020 229,949.01 1.189 1.206247,887.27 Cinfed Fed Credtit Union Bank2504 NCD 249,000.0017248MAC1 03/04/2027 1,5230.65003/04/2021 211,752.09 0.691 0.701248,480.75 Portfolio CPA
AP
Run Date: 01/23/2023 - 03:12 FI (PRF_FI) 7.3.11
Report Ver. 7.3.11
Attachment B
Item 10
Attachment B - Investment Portfolio

Item 10: Staff Report
Pg.
11 Packet Pg. 238 of 269

December 31, 2022
Par Value
Days To
Maturity
Maturity
Date
Current
RateMarket Value
Fund ALL - Portfolio Listings
Investments by Fund Page 2
CUSIP Investment # Issuer
Purchase
Date Book Value
YTM
360
YTM
365
Negotiable Certificates of Deposits
Citadel Federal Credit Union2267 NCD 245,000.0017286TAG0 02/27/2025 7881.65002/27/2020 230,177.50 1.668 1.691244,788.66 Citizens State Bank1541 NCD 250,000.0017670BAQ1 02/17/2023 471.75002/19/2016 249,225.00 1.727 1.751250,000.00 Enerbank USA2215 NCD 245,000.0029278TMR8 01/29/2025 7591.80001/29/2020 231,407.40 1.779 1.803245,000.00 Connexus Credit Union2643 NCD 249,000.0020825WAR1 12/23/2026 1,4521.25012/23/2021 218,803.77 1.273 1.291248,604.00 Capital One Bank USA NA2089 NCD 245,000.0014042TCP0 09/05/2024 6131.90009/05/2019 234,369.45 1.873 1.900245,000.00 Capital One Bank USA NA2609 NCD 249,000.0014042RQB0 11/17/2026 1,4161.10011/17/2021 218,442.72 1.084 1.100249,000.00 Communitywide Fed. Cr. Union2756 NCD 249,000.0020416TAW2 06/21/2024 5375.00012/21/2022 250,352.07 4.935 5.004249,000.00 County Schools FCU2695 NCD 249,000.0022258JAB7 09/27/2027 1,7304.40009/30/2022 246,910.89 4.341 4.402249,000.00 Crescent Bank & Trust2296 NCD 248,000.00225645DN7 03/20/2025 8091.10003/20/2020 229,702.56 1.085 1.100248,000.00 Country Club Bank2477 NCD 249,000.00222327AD0 01/29/2030 2,5851.10001/29/2021 196,403.73 1.154 1.170247,825.07 Decorah Bank Trust Company2690 NCD 249,000.00243594AR9 09/23/2027 1,7263.70009/23/2022 239,769.57 3.651 3.701249,000.00 Delta Natl Bank & TR2670 NCD 249,000.0024773RCR4 02/25/2027 1,5162.00003/09/2022 224,824.59 1.975 2.003249,000.00 Discover Bank / Delaware1956 NCD 245,000.00254673VJ2 10/24/2023 2963.35010/24/2018 242,601.45 3.304 3.350245,000.00 The District Fed Cr Union2778 NCD 249,000.0088340AAA9 12/23/2024 7225.15012/22/2022 250,053.27 5.079 5.150249,000.00 Eagle Cmty Credit Union2770 NCD 249,000.0026948GAF1 12/26/2023 3595.00012/23/2022 249,886.44 4.932 5.000249,000.00 Eaglemark Savings Bank2545 NCD 249,000.0027004PBV4 07/07/2026 1,2830.85007/07/2021 219,092.61 0.919 0.932248,300.18 Eagle Bank2040 NCD 245,000.0027002YEL6 04/28/2023 1172.65004/30/2019 243,782.35 2.615 2.651245,000.00 Farmers & Merchant State Bank2486 NCD 249,000.00308682BM4 02/12/2029 2,2341.00002/12/2021 201,294.09 1.037 1.052248,238.51 Flagstar Bank FSB2414 NCD 249,000.0033847E4E4 09/30/2024 6380.40009/30/2020 231,570.00 0.394 0.400249,000.00 Poppy Bank2285 NCD 249,000.0073319FAF6 03/18/2025 8071.10003/18/2020 230,673.60 1.085 1.100249,000.00 First Federal S&L Bank1626 NCD 245,000.0032018YAW8 06/22/2023 1721.80006/22/2016 242,256.00 1.776 1.800245,000.00 1st Financial Bank2390 NCD 248,000.0032022RNT0 08/19/2025 9610.45008/19/2020 222,562.64 0.444 0.450248,000.00 First Farmers Bank & Trust2076 NCD 245,000.00320165JK0 09/04/2024 6121.75009/04/2019 233,683.45 1.727 1.751245,000.00 Farmers Insurance Group CU2479 NCD 249,000.0030960QAK3 01/27/2026 1,1220.50001/27/2021 219,914.31 0.543 0.550248,617.50 First Class Community CU2759 NCD 249,000.0031976UAA6 12/16/2024 7155.05012/16/2022 249,878.97 4.985 5.054249,000.00 First Oklahoma Bank2451 NCD 249,000.00335857CK2 11/30/2026 1,4290.65011/30/2020 213,900.96 0.691 0.701248,512.80 Farmers &Merchants Bank2644 NCD 249,000.00307811DM8 01/22/2030 2,5781.60001/14/2022 204,075.42 1.630 1.653248,123.66 First National Bank of America2465 NCD 249,000.0032110YRQ0 12/31/2026 1,4600.60012/31/2020 212,755.56 0.625 0.633248,668.15 FNB Bank Inc.1863 NCD 245,000.00330459CB2 10/13/2023 2852.25010/13/2017 240,612.05 2.220 2.251245,000.00 First Community Credit Union2554 NCD 249,000.0031986JAD3 02/26/2027 1,5170.85007/28/2021 213,793.89 0.892 0.905248,444.24 Firstier Bank2061 NCD 245,000.0033766LAJ7 08/23/2024 6001.95008/23/2019 234,653.65 1.925 1.952245,000.00 Portfolio CPA
AP
Run Date: 01/23/2023 - 03:12 FI (PRF_FI) 7.3.11
Report Ver. 7.3.11
Item 10
Attachment B - Investment Portfolio

Item 10: Staff Report
Pg.
12 Packet Pg. 239 of 269

December 31, 2022
Par Value
Days To
Maturity
Maturity
Date
Current
RateMarket Value
Fund ALL - Portfolio Listings
Investments by Fund Page 3
CUSIP Investment # Issuer
Purchase
Date Book Value
YTM
360
YTM
365
Negotiable Certificates of Deposits
Gesa Credit Union2456 NCD 249,000.0037424PAC8 11/30/2027 1,7940.80011/30/2020 207,424.47 0.825 0.836248,563.08 Grant County Bank West V.2042 NCD 245,000.00387625AA4 05/08/2024 4932.55005/08/2019 238,326.20 2.513 2.548245,000.00 Greenwood Credit Union2725 NCD 249,000.00397129AJ6 05/28/2024 5134.95011/28/2022 250,118.01 4.877 4.945249,000.00 Goldman Sachs Bank USA / NY1951 NCD 245,000.0038148PJ81 05/09/2023 1283.15005/09/2018 244,091.05 3.106 3.150245,000.00 Haddon Savings Bank2447 NCD 207,000.00404730DA8 10/20/2025 1,0230.35011/16/2020 184,169.97 0.491 0.498205,940.61 Bank Hapoalim BM2457 NCD 249,000.0006251A2Q2 12/15/2025 1,0790.50012/14/2020 221,164.29 0.543 0.550248,632.36 Harborstone Credit Union2776 NCD 249,000.0041166MAF2 03/27/2024 4515.10012/27/2022 250,419.30 5.027 5.097249,000.00 IC Federal Credit Union2743 NCD 249,000.0044931EAD3 06/10/2024 5265.00012/09/2022 250,322.19 4.931 5.000249,000.00 INS Bank2757 NCD 249,000.0045776NFE1 12/14/2027 1,8084.90012/14/2022 249,744.51 4.835 4.902249,000.00 Interstate Credit Union2771 NCD 249,000.00460807AB6 12/26/2023 3595.00012/23/2022 249,886.44 4.932 5.000249,000.00 Inst. for Sav in Newburyport2556 NCD 249,000.0045780PAQ8 07/29/2026 1,3050.90007/29/2021 218,756.46 0.888 0.900249,000.00 Jonesboro State Bank2452 NCD 249,000.0048040PJL0 11/26/2027 1,7900.75011/27/2020 206,956.35 0.790 0.801248,389.44 Kansas State Bank Manhattan1798 NCD 245,000.0050116CAX7 05/31/2024 5162.50005/31/2017 237,860.70 2.465 2.500245,000.00 Kembra Financial Credit Union2731 NCD 249,000.0048836LAV4 11/25/2024 6945.15011/23/2022 249,931.26 5.083 5.154249,000.00 Knox TVA Empl Credit Union2140 NCD 248,000.00499724AF9 10/31/2023 3033.35010/24/2019 245,490.24 2.210 2.241250,180.61 Kern Schools Fed. Credit Unio2748 NCD 249,000.00920133AJ4 12/13/2024 7125.10012/14/2022 249,998.49 5.038 5.108249,000.00 Lakeside Bank1686 NCD 245,000.0051210SLR6 09/18/2023 2601.80009/16/2016 240,300.90 1.775 1.800245,000.00 Legacy Bank & Trust Company2469 NCD 249,000.0052470QAN4 12/21/2028 2,1810.85012/30/2020 200,300.58 0.889 0.901248,254.28 Liberty Federal Credit Union2741 NCD 249,000.0053052LAD1 12/05/2023 3385.00012/05/2022 249,878.97 4.931 5.000249,000.00 Live Oak Banking Company2599 NCD 249,000.00538036SS4 10/18/2027 1,7511.10010/18/2021 211,535.46 1.135 1.151248,403.01 Loyola Univ Demployee FCU2777 NCD 249,000.0054912KAD1 06/23/2023 1735.00012/23/2022 249,878.97 4.931 5.000249,000.00 Bank Leumi USA NY2335 NCD 249,000.00063248KR8 03/31/2023 891.45003/31/2020 247,339.17249,000.00 Malaga Bank FSB2402 NCD 249,000.0056102AAQ9 06/30/2025 9110.40008/31/2020 224,391.33 0.394 0.400249,000.00 Meritrust Federal Credit Union2672 NCD 249,000.0059001PAP4 03/10/2026 1,1640.55003/07/2022 221,746.95 1.904 1.930238,457.81 Medallion Bank - Salt Lake2010 NCD 245,000.0058404DDB4 01/03/2024 3673.30001/10/2019 241,773.35 3.254 3.299245,000.00 Merchants State Bank2059 NCD 245,000.00589227AG2 08/30/2024 6071.80008/30/2019 234,050.95 1.775 1.800245,000.00 Merrick Bank2610 NCD 249,000.0059013KPS9 05/19/2026 1,2341.10011/19/2021 221,851.53 1.152 1.168248,438.61 Minwest Bank MV2478 NCD 249,000.0060425SJQ3 01/29/2029 2,2201.00001/28/2021 201,513.21 1.024 1.039248,432.66 Maine Savings Credit Union2144 NCD 245,000.00560507AN5 11/08/2024 6771.90011/08/2019 233,217.95 1.875 1.902245,000.00 Mainstreet Bank2038 NCD 245,000.0056065GAG3 04/26/2024 4812.60004/26/2019 238,637.35 2.567 2.602245,000.00 Mountain America FD Credit Uni2719 NCD 249,000.0062384RAR7 05/09/2025 8594.85011/09/2022 250,439.22 4.825 4.892248,765.47 Portfolio CPA
AP
Run Date: 01/23/2023 - 03:12 FI (PRF_FI) 7.3.11
Report Ver. 7.3.11
Item 10
Attachment B - Investment Portfolio