Palo Alto City Council
November 27, 2023

AMENDMENT NO. 2 TO CONTRACT NO. C21177994A

BETWEEN THE CITY OF PALO ALTO AND
4LEAF, INC

This Amendment No. 2 (this “Amendment”) to Contract No. C20177994A (the “Contract” as defined below) is entered into as of October 30, 2023, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and 4LEAF, INC, a California corporation located at 2126 Rheem Drive, Pleasanton, CA 94588 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of On-Call Building Inspection and Plan Review Services, as detailed therein.

B. The Parties entered into Amendment No. 1 to amend the Professional Service Agreement Contract in order to increase the total compensation by $350,000 from $6,000,000 to $6,350,000, as detailed therein.

C. The Parties now wish to amend the Contract in order to increase compensation by Three Million Four Hundred Thousand Dollars ($3,400,000) , changing from Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) over the term of the contract among a total of six (6) consultant agreements (C21177994A, C21177994B, C21177994C, C21177994D, C21177994 E, C21177994F).

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No.C20177994A between CONSULTANT and CITY, dated June 22, 2020 as amended by:

Amendment No.1, dated November 15, 2021

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 4 “NOT TO EXCEED COMPENSATION” of the Contract is hereb y amended to read as follows:

DocuSign Envelope ID: 30E8862A-A79A-40CA-BACB-B61802EADA86 Item 10
Attachment A -
C21177994A Amendment
No. 2 - 4Leaf Inc.

Item 10: Staff Report
Pg.
4 Packet Pg. 105 of 339

Vers.: Aug. 5, 2019

“The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount; provided howe ver CONSULTANT acknowledges that the compensation paid to be likely will be less than $9,750,000.00 as CITY has appropriated that amount to payments to be made under six Agreements, of which this Agreement is one. The six Agreements shall be administered by Planning and Development Services to ensure that the total aggregate of compensation paid for these six Agreements will not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) The applicable rates and schedule of payment are set out at Exhibit “C -1”, entitled “SCHEDULE OF RATES,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Servic es performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”.”

SECTION 3. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 4. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

DocuSign Envelope ID: 30E8862A-A79A-40CA-BACB-B61802EADA86 Item 10
Attachment A -
C21177994A Amendment
No. 2 - 4Leaf Inc.

Item 10: Staff Report
Pg.
5 Packet Pg. 106 of 339

Vers.: Aug. 5, 2019

SIGNATURES OF THE PARTIES

IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or designee

4LEAF, INC

By:

Name: Gene Barry
Title: Vice President
([email protected])

By:

Name: Kevin Duggan
Title: President
([email protected])

DocuSign Envelope ID: 30E8862A-A79A-40CA-BACB-B61802EADA86 Item 10
Attachment A -
C21177994A Amendment
No. 2 - 4Leaf Inc.

Item 10: Staff Report
Pg.
6 Packet Pg. 107 of 339

Vers.: Aug. 5, 2019

AMENDMENT NO. 2 TO CONTRACT NO. C21177994B

BETWEEN THE CITY OF PALO ALTO AND

SAFEBUILT, LLC

This Amendment No. 2 (this “Amendment”) to Contract No. C20177994B (the “Contract” as defined below) is entered into as of November 31 2023, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ( “CITY”), and SAFEBUILT, LLC , a California corporation located at 3755 Precision Drive, Suite 140, Loveland, CO 80538 (“CONSULTANT”).

CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. T he Contract (as defined below) was entered into by and between the Parties hereto for the provision of On-Call Building Inspection and Plan Review Services as detailed therein.

B. The Parties entered into Amendment No. 1 to amend the Professional Service Agreement Contract in order to increase the total compensation by $350,000 from $6,000,000 to $6,350,000, as detailed therein.

C. T he Parties now wish to amend the Contract in order to increase compensation by Three Million Four Hundred Thousand Dollars ($3,400,000), changing from Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) over the term of the contract among a total of six (6) consultant agreements (C21177994A, C21177994B, C21177994C, C21177994D, C21177994E, C21177994F).

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean C ontract No. C20177994B between CONSULTANT and CITY, dated June 22, 2020, as amended by:

Amendment No.1, dated November 15, 2021

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 4, “NOT TO EXCEED COMPENSATION” of the Contract is hereb y amended to read as follows:

DocuSign Envelope ID: CDF7C615-75B4-46F4-9DC3-CC4CE1075D1E Item 10
Attachment B -
C21177994B Amendment
No. 2 - Safebuilt LLC

Item 10: Staff Report
Pg.
7 Packet Pg. 108 of 339

Vers.: Aug. 5, 2019

“The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount; provided however CONSULTANT acknowledges that the compensation paid to be likely will be less than $9,750,000.00 as CITY has appropriated that amount to payments to be made under six Agreements, of which this Agreement is one. The six Agreements shall be administered by Planning and Development Services to ensure that the total aggregate of compensation paid for these six Agreements will not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). The applicable rates and schedule of payment are set out at Exhibit “C -1”, entitled “SCHEDULE OF RATES,” which is attached to and made a part of this Ag reement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”.

SECTION 3. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 4. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

DocuSign Envelope ID: CDF7C615-75B4-46F4-9DC3-CC4CE1075D1E Item 10
Attachment B -
C21177994B Amendment
No. 2 - Safebuilt LLC

Item 10: Staff Report
Pg.
8 Packet Pg. 109 of 339

Vers.: Aug. 5, 2019

SIGNATURES OF THE PARTIES

IN WITNESS WHEREOF, the P arties have by their duly authorized representatives executed this Amendment effective as of the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or designee

SAFEBUILT, LLC

By:

Name: Will Brown
Title: CFO
([email protected])

By:

Name: Chris Giordano
Title: CEO
([email protected])

DocuSign Envelope ID: CDF7C615-75B4-46F4-9DC3-CC4CE1075D1E Item 10
Attachment B -
C21177994B Amendment
No. 2 - Safebuilt LLC

Item 10: Staff Report
Pg.
9 Packet Pg. 110 of 339

Vers.: Aug. 5, 2019

AMENDMENT NO. 2 TO CONTRACT NO. C21177994C

BETWEEN THE CITY OF PALO ALTO AND
BUREAU VERITAS NORTH AMERICA INC.

This Amendment No. 2 (this “Amendment”) to Contract No. C21177994C (the “Contract” as defined below) is entered into as of October 30, 2023, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and BUREAU VERITAS NORTH AMERICA INC., a Delaware corporation located at PO Box 841566, Dallas TX 75284-1566 (“CONSULTANT”).

CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of On-Call Building Inspection and Plan Review Services , as detailed therein.

B. The Parties entered into Amendment No. 1 to amend the Professional Service Agreement Contract in order to increase the total compensation by $350,000 from $6,000,000 to $6,350,000, as detailed therein.

C. The Parties now wish to amend the Contract in order to increase compensation by Three Million Four Hundred Thousand Dollars ($3,400,000), changing from Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) over the term of the contract among a total of six (6) consultant agreements (C21177994A, C21177994B, C21177994C, C21177994D, C2 1177994E, C21177994F).

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No. C21177994C between CONSULTANT and CITY, dated June 22, 2020as amended by:

Amendment No.1, dated November 15, 2021

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 4 “NOT TO EXCEED COMPENSATION” of the Contract is hereb y amended to read as follows:

DocuSign Envelope ID: 250A51E6-03A2-45C7-B785-827570DBB951 Item 10
Attachment C -
C21177994C Amendment
No. 2 - Bureau Veritas
North America Inc.

Item 10: Staff Report
Pg.
10 Packet Pg. 111 of 339

Vers.: Aug. 5, 2019

“The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount; provided however CONSULTANT acknowledges that the compensation paid to be likely will be less than $9,750,000.00 as CITY has appropriated that amount to payments to be made under six Agreements, of which this Agreement is one. The six Agreements shall be administered by Planning and Development Services to ensure that the total aggregate of compensation paid for these six Agreements will not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). The applicable rates and schedule of payment are set out at Exhibit “C -1”, entitled “SCHEDULE OF RATES,” which i s attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work th at is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”.

SECTION 3. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 4. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

DocuSign Envelope ID: 250A51E6-03A2-45C7-B785-827570DBB951 Item 10
Attachment C -
C21177994C Amendment
No. 2 - Bureau Veritas
North America Inc.

Item 10: Staff Report
Pg.
11 Packet Pg. 112 of 339

Vers.: Aug. 5, 2019

SIGNATURES OF THE PARTIES

IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or designee

BUREAU VERITAS NORTH AMERICA
INC.

By:

Name: Heather B. Bush, Esq.

Title: Secretary and Vice President
([email protected])

By:

Name: Gus Guerrero
Title: Sr. Vice President / COO
([email protected])

DocuSign Envelope ID: 250A51E6-03A2-45C7-B785-827570DBB951 Item 10
Attachment C -
C21177994C Amendment
No. 2 - Bureau Veritas
North America Inc.

Item 10: Staff Report
Pg.
12 Packet Pg. 113 of 339

Vers.: Aug. 5, 2019

AMENDMENT NO. 2 TO CONTRACT NO. C21177994D

BETWEEN THE CITY OF PALO ALTO AND
INDEPENDENT CODE CONSULTANTS, INC.

This Amendment No. 2 (this “Amendment”) to Contract No. C21177994D (the “Contract” as defined below ) is entered into as of November 30, 2023, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ( “CITY”), and INDEPENDENT CODE CONSULTANTS, INC ., a California corporation located at 6280 W. Las Positas Blvd., Suite 220, Pleasanton, CA 94588 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of On-Call Building Inspection and Plan Review Services,, as detailed therein.

B. The Parties entered into Amendment No. 1 to amend the Professional Service Agreement Contract in order to increase the total compensation by $350,000 from $6,000,000 to $6,350,000, as detailed therein.

C. The Parties now wish to amend the Contract in order to increase compensation by Three Million Four Hundred Thousand Dollars ($3,400,000) , Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) over the term of the contract among a total of six (6) consultant agreements (C21177994A, C21177994B, C21177994C, C21177994D, C21177994E, C21177994F).

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No. C21177994D between CONSULTANT and CITY, dated June 22, 2020, as amended by:

Amendment No.1, dated November 15, 2021

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 4 “NOT TO EXCEED COMPENSATION” of the Contract is hereb y amended to read as follows:

DocuSign Envelope ID: EEDBF9F7-D976-4078-8B88-1AA322CFBFF1 Item 10
Attachment D -
C21177994D Amendment
No. 2 - Independent Code
Consultants Inc.

Item 10: Staff Report
Pg.
13 Packet Pg. 114 of 339

Vers.: Aug. 5, 2019

“The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount; provided however CONSULTANT acknowledges that the compensation paid to be likely will be less than $9,750,000.00 as CITY has appropriated that amount to payments to be made under six Agreements, of which this Agreement is one. The six Agreements shall be administered by Planning and Development Services to ensure that the total aggregate of compensation paid for these six Agreements will not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). The applicable rates and schedule of payment are set out at Exhibit “C -1”, entitled “SCHEDULE OF RATES,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work th at is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”.

SECTION 3. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 4. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

DocuSign Envelope ID: EEDBF9F7-D976-4078-8B88-1AA322CFBFF1 Item 10
Attachment D -
C21177994D Amendment
No. 2 - Independent Code
Consultants Inc.

Item 10: Staff Report
Pg.
14 Packet Pg. 115 of 339

Vers.: Aug. 5, 2019

SIGNATURES OF THE PARTIES

IN WITNESS WHEREOF, the P arties have by their duly authorized representatives executed this Amendment effective as of the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or designee

INDEPENDENT CODE CONSULTANTS,
INC.

By:

Name: Kelly Park-Li
Title: Secretary
(kpark-
[email protected])

By:

Name: Abigail Obligacion
Title: President
(aobligacion@independentcodeconsult
ants.com)

DocuSign Envelope ID: EEDBF9F7-D976-4078-8B88-1AA322CFBFF1 Item 10
Attachment D -
C21177994D Amendment
No. 2 - Independent Code
Consultants Inc.

Item 10: Staff Report
Pg.
15 Packet Pg. 116 of 339

Vers.: Aug. 5, 2019

AMENDMENT NO. 2 TO CONTRACT NO. C21177994E

BETWEEN THE CITY OF PALO ALTO AND
SHUMS CODA ASSOCIATES, INC.

This Amendment No. 2 (this “Amendment”) to Contract No. C21177994E (the “Contract” as defined below) is entered into as of October 30, 2023, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and SHUMS CODA ASSOCIATES, INC. , a California corporation located at 5776 Stoneridge Mall Road, Suite 150, Pleasanton, CA 94588 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of On-Call Building Inspection and Plan Review Services, as detailed therein.

B. The Parties entered into Amendment No. 1 to amend the Professional Service Agreement Contract in order to increase the total compensation by $350,000 from $6,000,000 to $6,350,000, as detailed therein.

C. The Parties now wish to amend the Contract in order to increase compensation by Three Million Four Hundred Thousand Dollars ($3,400,000), changing from Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) over the term of the contract among a total of six (6) consultant agreements (C21177994A, C21177994B, C21177994C, C21177994D, C21177994E, C21177994F).

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No. C21177994E between CONSULTANT and CITY, dated June 22, 2020, as amended by:

Amendment No.1, dated November 15, 2021

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 4 “NOT TO EXCEED COMPENSATION” of the Contract is hereb y amended to read as follows:

DocuSign Envelope ID: 9FCC9717-A106-4896-AE36-745D1DC44117 Item 10
Attachment E -
C21177994E Amendment
No. 2 - Shums Coda
Associates Inc.

Item 10: Staff Report
Pg.
16 Packet Pg. 117 of 339

Vers.: Aug. 5, 2019

“The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exc eed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount; provided however CONSULTANT acknowledges that the compensation paid to be likely will be less than $9,750,000.00 as CITY has appropriated that amount to payments to be made under six Agreements, of which this Agreement is one. The six Agreements shall be administered by Planning and Developm ent Services to ensure that the total aggregate of compensation paid for these six Agreements will not exceed Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ( $9,750,000). The applicable rates and schedule of payment are set out at Exhibit “C -1”, entitled “SCHEDULE OF RATES,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”.

SECTION 3. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 4. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

DocuSign Envelope ID: 9FCC9717-A106-4896-AE36-745D1DC44117 Item 10
Attachment E -
C21177994E Amendment
No. 2 - Shums Coda
Associates Inc.

Item 10: Staff Report
Pg.
17 Packet Pg. 118 of 339

Vers.: Aug. 5, 2019

SIGNATURES OF THE PARTIES

IN WITNESS WHEREOF, the Parties have by their duly authorized re presentatives executed this Amendment effective as of the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or designee

SHUMS CODA ASSOCIATES, INC.

By:

Name: Christine Godinez
Title: Chief Operating Officer
([email protected])

By:

Name: David Basinger
Title: Principal/CEO
([email protected])

DocuSign Envelope ID: 9FCC9717-A106-4896-AE36-745D1DC44117 Item 10
Attachment E -
C21177994E Amendment
No. 2 - Shums Coda
Associates Inc.

Item 10: Staff Report
Pg.
18 Packet Pg. 119 of 339

Vers.: Aug. 5, 2019

AMENDMENT NO. 2 TO CONTRACT NO. C21177994F

BETWEEN THE CITY OF PALO ALTO AND
TRB AND ASSOCIATES, INC.

This Amendment No. 2 (this “Amendment”) to Contract No. C21177994F (the “Contract” as defined below) is entered into as of October30, 2023, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and TRB AND ASSOCIATES, INC. , a California corporation located at 3180 Crow Canyon Place, Suite 216, San Ramon, CA 94583 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of On-Call Building Inspection and Plan Review Services , as detailed therein.

B. The Parties entered into Amendment No. 1 to amend the Professional Service Agreement Contract in order to increase the total compensation by $350,000 from $6,000,000 to $6,350,000, as detailed therein.

C. The Parties now wish to amend the Contract in order to increase compensation by Three Million Four Hundred Thousand Dollars ($3,400,000), changing from Six Million Dollars Three Hundred Fifty Thousand ($6,350,000) for a new not to exceed total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) over the term of the contract among a total of six (6) consultant agreements (C21177994A, C21177994B, C21177994C, C21177994D, C21177994E, C21177994F).

NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No. C21177994F between CONSULTANT and CITY, dated June 22, 2020, as amended by:

Amendment No.1, dated November 15, 2021

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

DocuSign Envelope ID: B511C54D-9EC2-4649-B206-2E053922A1C5 Item 10
Attachment F -
C21177994F Amendment
No. 2 - TRB and
Associates Inc.

Item 10: Staff Report
Pg.
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Vers.: Aug. 5, 2019

SECTION 2. Section 4, “NOT TO EXCEED COMPENSATION” of the Contract is hereb y amended to read as follows:

“The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount; provided however CONSULTANT acknowledges that the compensation paid to be likely will be less than $9,750,000.00 as CITY has appropriated that amount to payments to be made under six Agreements, of which this Agreement is one. The six Agreements shall be administered by Planning and Development Services to ensure that the total aggregate of compensation paid for these six Agreements will not exceed Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000)The applicable rates and schedule of payment are set out at Exhibit “C-1”, entitled “SCHEDULE OF RATES,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.

Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”.

SECTION 3. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 4. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

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Vers.: Aug. 5, 2019

SIGNATURES OF THE PARTIES

IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written.

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or Designee

TRB AND ASSOCIATES, INC.

Officer 1

By:

Name: Todd Bailey
Title: President and Secretary
([email protected])

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: November 27, 2023
Report #:2311-2204
TITLE
Approval of Two Sublease Agreements with Palo Alto Community Child Care and Kids Choice for an Initial 12-Month Term

RECOMMENDATION
Staff recommends that the City Council authorize the City Manager or their designee to execute two (2) Sublease Agreements with Palo Alto Community Child Care and Kid's Choice for the Extended Day Care Services at Palo Alto Unified School District Elementary School Sites. These agreements establish an initial term of 12 months and may be renewed for four additional one- year terms upon mutual agreement.

BACKGROUND
The City of Palo Alto (City) currently has a leasing arrangement with the Palo Alto Unified School District (PAUSD) for spaces dedicated to delivering afterschool child care services. The City is a tenant of PAUSD. Subsequently, the City has subleased these spaces to Palo Alto Community Child Care (PACCC) and Kids Choice, two childcare providers. On June 19, 2023, the City Council approved the first amendment to the lease for elementary school sites from PAUSD to sublease the sites to providers of afterschool care 1. The current sublease agreements were amended several times before the current standalone sublease agreements for extended day care services were executed in July 2022. The current agreement went into holdover status on June 30, 2023.

Now, the parties desire to enter new sublease agreements to continue City-operated extended day childcare services provided by PACCC and Kid’s Choice.

ANALYSIS
Staff has negotiated the sublease agreements with terms that align with the lease agreement the City has with PAUSD for the Extended Day Care Sites (Attachments A & B). The subleases extend 1 June 19, 2023 Staff Report, Item 37 - https://cityofpaloalto.primegov.com/Portal/viewer?id=2393&type=0 PAUSD Lease Amendment - https://cityofpaloalto.primegov.com/Portal/viewer?id=1933&type=2 Item 11
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the term to June 30, 2024 and provide options for four additional one-year extensions, up to June 30, 2028, exercisable upon ninety (90) day notice from either party and mutual agreement. All other the terms of the lease remain the same. The base rent and utilities will remain unchanged at $10,423 per month for PACCC (at eleven sites) and $961 per month for Kid’s Choice (at one site). The rent and utilities shall not exceed $115,640 per year for PACCC and $11,528 per year for Kid’s Choice.

FISCAL/RESOURCE IMPACT
The base rent and utilities are $10,423 per month for PACCC and $961 per month for Kid’s Choice.

The rent and utilities shall not exceed $115,640 per year for PACCC and $11,528 per year for Kid’s Choice. These amounts did not change from the previous agreement and align with the FY 2024 Adopted Budget estimate for rental income.

STAKEHOLDER ENGAGEMENT
The Administrative Services and Community Services departments collaborated with PACCC and Kids Choice to develop an initial 12-month term sublease that includes options to extend in one (1) year terms through 2028. The subleases were developed in coordination with PAUSD to align with the first amendment to the lease for elementary school sites that was approved by Council on June 19, 2023.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) categorizes this action as "Not a Project" as it does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment.

ATTACHMENTS
Attachment A: Sublease Agreement with Palo Alto Community Child Care Attachment B: Sublease Agreement with Kids Choice
APPROVED BY:

Kiely Nose, Assistant City Manager
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SUBLEASE AGREEMENT FOR EXTENDED CHILD CARE SERVICES

AT PALO ALTO UNIFIED SCHOOL DISTRICT ELEMENTARY SCHOOL SITES

BETWEEN

CITY OF PALO ALTO
AND

PALO ALTO COMMUNITY CHILD CARE

This Sublease agreement (herein "Sublease") is made and entered into on _________________, by and bet ween the City of Palo Alto, a California chartered municipal corporation (herein "City") and Palo Alto Community Child Care, a California non -profit corporation (herein "Sublessee"). City and Sublessee may be referred to individually as a “Party” or collectively as the “Parties” or the “Parties to this Subl ease." T he City Manager serves as Contract Administrator for this Sublease on behalf of the City Council.

RECITALS

A. These recitals are a substantive portion of this Sublease.

B. Effective July 1, 2023, City and the Palo Alto Unified School District (“District”) entered into a Lease Agreement for Extended Day Care Spaces (“Master Lease”). The Master Lease provides in part, that the District furnish space at various elementary school sites to be used for the purpose of providing child care services. The space provided shall meet the State standards for licensing and have all the utility connections in place except telephone.

C. Space has been provided by the District at various Palo Alto Elementary School Sites (“Sites”). City desires to Sublease the space to Sublessee for child care services.

D. Sublessee desires to Sublease said space for the purpose of providing child care services.

Now, therefore, in consideration of these r ecitals and the following covenants, terms, and conditions, Sublessee and City mutually agree as follows:

SUBLEASE PROVISIONS

1. PREMISES.

City hereby subleases to Sublessee, certain real property located in the City of Palo Alto, County of Santa Clara, State of California, at the Sites more particularly described in Exhibit A attached hereto and incorporated herein by reference (herein the " Premises"). Unless specifically provided, Sublessee accepts the Premises “as-is” on the date of execution of this Sublease.

Sublessee acknowledges that the Premises meets the State requirements for State Licensing or as an Exempt Provider according to the general licen sing requirements of Title 22 of the Calif ornia Codes of Regulations as promulgated by the Depart ment of Social Services. Sublessee shall notify City’s Child Care Coordinator immediately if a site no longer qualifies for State Licensing as a child care facility.

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2. TERM.

2.1 Original Term. T he term of this Sublease shall commence on July 1, 2023 and end on June 30, 2024. Sublessee shall, at the expiration of the term of this s ublease, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this sublease. The Parties expect reasonable wear and tear.

2.2 Early Termination by City. If City in its sole discretion determines that it requires the Premises for any public purpose, City may terminate this Sublease upon sixty (60) days written notice.

2.3 Renewed Terms. This Sublease may be renewed for additional one (1) year terms ("Renewed Terms") upon the mutual written agreement of the Parties but in no event shall this Sublease's Term and Renewed Terms, together, exceed a total of five (5) years.

If either party wishes to renew this Sublease, it shall notify the other party in writing at least ninety (90) days before the expiration of the Term.”

3. RENT.

3.1 Base Rent . The rent to be paid by Sublessee shall be in the amount identified on Exhibit A, per site, per month without deduction or offset. Rent s hall be payable on the first day of each and every month commencing on Ju ly 1, 2023, at a place (or places) as may be designated in writing from time to time by City.

3.2 Annual Increase. During the Term of this Sublease, the Base Rent shall be increased 3% effective on each July 1 st. The sum shall be adjusted an nually resulting in a compound rate of increase.

3.3 Late Charge. Sublessee acknowledges late payment of rent will cause City to incur costs not contemplated by this Sublease, the exact amou nt of such costs being extremely difficult an d impractic able to fix. Such costs include, without limitati on, processing, accounting and late charges t hat may be imposed on City. Therefore, if City does not receive any installment of rent due from Sublessee postmarked within ten (10) days after the date such r ent is due, Sublessee shall pay to City an additi onal sum of five percent (5%) of the overdue rent as a late charge. The parties agree this late charge represents a fair and reas onable estimate of the costs City will incur by reason of late paym ent by Sublessee. Acceptance of any late charge shall not constitute a waiver of Sublesse e’s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City.

3.4 Rent Payment Procedures . Su blessee’s obligation to pay rent shall com mence upon the com mencement of this Sublease. R ent payment for any fractional calendar month shall be prorated. Rent payments shall be delivered to City’s Revenue Collections Division, 250 Hamilton Avenue, PO Box 10250, Palo Alto, CA 94303. The designa ted place of payment may be changed at any time by City upon ten (10) days’ written notice to Sublessee. Sublessee specifically agrees that acceptance of any late or incorrect rentals Item 11
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submitted by Sublessee shall not constitute an acquiescence or waiver b y City and shall not prevent City from enforcing Section 3.3 (Late Charge) or any other remedy provided in t his Sublease. Acceptance of ren t shall not constitute approva l of any unauthorized sublease or use, nor constitute a waiver of any non- monetary breach. Payments shall be effective upon receipt. City may apply a ny payment received from Sublessee at any time against any obligation due and owing by Sublessee under this Sublease, regardless of any statement appe aring on or referred to in any remittance from Sublessee or any prior application of such payments.

3.5 Partial Payment. The receipt by City of a pa rtial payment of any amount due to City endorsed as payment in f ull will be deemed to be a partial payment on ly. City may accept and deposit said chec k without prejudice to its right to recover the balance. Any endorsements or statements on the check or any letter accompanying the check shall not be deemed an accord and/or satisfaction. Sublessee's obligation (without prior not ice or demands) to pay r ent and all other amounts due hereunder shall be absolute and unconditional, and not subject to any abate ment, set off, defense, recoupment or reduction.

4. LIMITATION OF THE SUBLEASEHOLD.

Pursuant to the Master Lease, District leased to City the Sites in accordance with the terms of the Master Lease. Sublessee ackn owledges that it has received a copy of the Ma ster Lease.

Capitalized terms used in this Sublease and not otherwise de fined shall have the meaning given them in the Master Lease. This Sublease and the rights and privileges granted Sublessee in and to the P remises are subje ct to all covenants, conditions, restrictions, and physical or lega l encumbrances, including but not limited to those listed out in Exhibit A. Nothing contained in this Sublease or in any document relat ed hereto shall be co nstrued to impl y the conveyance to Sublessee of rights in the Premises which exceed those o wned by City. Except as otherw ise specifically provided herein, where this Sublease requires Subless ee to obtain City’ s consent or approval, Sublessee understands that City may be required to first obtain the consent or approval of District. If District should refuse such consent or approval, through no fault of City, City shall be released of any obligation to grant its consent or approval, whe ther or not such refusa l, in Sublessee’s opinion, is arbitrary or unreasona ble. Sublessee acknowledges that City is not in a position nor obligated to render any of the services or to per form any of the obligations required of District under the Master Lease.

5. USE OF PREMISES.

5.1 Required and Permitted Uses. Throughout the t erm of this Sublease, Sublessee shall provide child care related use s, services and activities as set forth in Exhibit C which is attached and incorporated by reference. Premises may not be used for any other purposes without C ity's prior written consent, which consent may be withheld in t he sole and absolute discretion of the City.

5.2. Use By City. U pon written approval by Sublessee, which approval sha ll not be unreasonably withheld, the City may use any of the P remises, at no cost, during the summer months that they are not used as set forth in Exhibit A.

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5.3 Proh ibited Uses . Sublessee shall not use Premises for any purpose not expressly permitted hereunder. Sublessee shall not create, cause, maintain or perm it any nuisance or waste in, on, or about the Premises, or permit or allow the Premises to be used for any unlawful or immoral purpose . Sublessee shall not do or permit to be done anything in any manner which unreasonably disturbs the users of the Sites. Specifically, and without limiting the above, Sublessee agrees not to cause any unreasonable odor, noise, vibration, power emission, or other item to emanate from the Premises . No materials or articles of any nature shall be permanently stored outside upon any portion of the Premise s, unless approved in writing by the City. Su blessee will not use Sites in a manner that increases the risk of fire or cost of fire insurance. No unauthorized sign or placard shall be painted, inscribed or placed in or on said Sites; and no tree or shrub thereon shall be destroyed or removed or other waste co mmitted of said Si tes. No motorcycles, automobiles or other mechanical means of transportation shall be placed or stored anywhere on the Sites except for the parking lot. No repair, overhaul or modification of any motor vehicle shall take place on the Si tes or the street in f ront of said Sites . Sublessee, at his/her expense, shall k eep the Premises in as good condition as it was at the beginning of the term s hereof, except damage occasioned by ordinary wear and tear, and excep t damage to the roof, sidewalks and underground plumbing, which is not the fault of Sublessee.

5.4 Condition, Use of Premises . City makes no warranty or representation of any kind concerning the condition of the Premises, or the fitness of the Pr emises for the use intended by Sublessee, and here by disclaims any personal knowledge with respect thereto, it being expressly understood by the parties that Sublessee has personally inspected the Prem ises, knows its condition, finds it fit for Subless ee’s intended use, accepts it as is, and has ascertain ed that it can be used exclus ively for the limited purposes specified in Section 5.1.

6. HAZARDOUS MATERIALS.

6.1 Hazardous Materials Defined. Th e term “Hazardous Material(s)” shall mean any toxic or h azardous substance, material or waste or any pollutant or contaminant, or infectious or radioactive m aterial, including but not limited to, those substances, materials, or wastes regulated now or in t he future under any of the following statutes or regulations and any and all of thos e substances included within the definitions of “hazardous substances, ” “hazardous waste, ” “hazardous chemical substance or mixture,” “imminently hazardous c hemical substan ce or mixture,” “toxic substances,” “hazardous air p ollutant,” “toxic pollut ant” or “solid waste” in the ( a) CERCLA or Superfund as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec . 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. S ec. 2601 et seq., (f) The Refuse Act of 1899, 33 U .S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C.

Sec. 1801 et seq., (i) USDOT Tabl e ( 40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 e t seq., (k) Cal. Hazar dous Waste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) Porter -Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et Item 11
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seq., (n) Proposition 65, Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank L aw, Cal. Heal th & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Act , Cal. H ealth & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Resublease Response Plans a nd Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) T CPA, Cal. Health and Saf ety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said la ws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules.

Hazardous Materials shall also me an any a nd all other substance s, materials, and wastes which are, or in the futur e become, regulated under applicable local, state or federal law for the protection of health or th e environment, or which are classified as hazardous or toxic substances, mat erials o r wastes, pollutants or contaminants, as defined, l isted or regulated by any federal, state or local law, reg ulation or order or by common law decision, incl uding without l imitation: (i) trichloroethylene, tetracholoethylene , perchloroethylene and other chlorinated solvents; (ii) any petroleum products or fractions thereof; (iii) asbestos, (iv) polychlorinated biphenyls; (v) flammable explosives; (vi) urea formaldehyde; and, (vii) radioactive materials and waste.

6.2. Compliance with Laws. Sublessee shall not cause or permit any Hazardous Material (as defined above) to be brought upon, kept or used in or about the Premises or Sites by Sublessee, its agents, employees, contractors or invitees.

6.3 Termination of Subleas e. City shall have the rig ht to te rminate the Sublease in City’s sole and absolute discretion i n the event that : (i) any anticipated use of the Premises by Sublessee involves the generation or storage, use, treatment, disposal , or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority, or Hazardous Materials Laws; (ii) Sublessee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Pre mises, if the contamination re sulted from Sublessee’s action or use of the Premises; or (iii) Sublessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal, or storage of a Hazardous Material on the Premises.

6.4 Reserved.

6.5 Hazardous Mate rials Indemnity . Sublessee shall indemnify, defend (by counsel reasonably acceptable to City), protect, and hold City harmless from and against any and all claims, liabilities, penalties, forfeitures , losses , and/or expenses, inc luding without limitation, diminution in value of the Premises, damages for the loss or restricti on on use of the rentable or usable space or of any am enity of the Premis es, damages arising from any adverse impact or marketing of the Premises and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person, or dam age to any prope rty whatsoever (including, without l imitation, groundwater, sewer systems , and atmosphere), arising from, caused, or resulting, either prior to or during the Sublea se Term, in whole or in part, directly or indirectly, by the presence or dis charge i n, on, under , or about the Premises by Suble ssee, Sublessee’s Item 11
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agents, employees, licensees , or invitees or at Sublessee’s direction, of Hazardous Material, o r by Sublessee’ s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. For purposes of the indemnity provided herein, any acts or omissions of Sublessee or its employees, agent s, customers, sub-sublessees, assignees, contractors, or subcontractors of Sublessee (whether or not they are negligent, intentional, wil lful or unlawful) shal l be strictly attributa ble to Sublessee . Sublessee’s indemnification obligations sh all include, with out limitation, and whether forese eable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Premises, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the Sublease Term.

6.6 City’s Right to Perform Tests . A t any time prior to the expiration of the Sublease Term, City shall have t he right to enter upon the Premises in order to condu ct tests of water and soil.

7. UTILITIES AND OPERATING EXPENSES.

Sublessee acknowledges that City is not in a position nor obligated to render any of the services or to perform any of the obligations required of District under Section 5.1.6 of the Master Lease with respect to the furnishing of any services or utilities to the P remises. Sublessee shall pay the cost for utilities and provide and pay for any telephone equipment or services at the Premises .

However, as separate meters are not provided for these services and it would be uneconomical to separately meter these services, Subles see agrees t o pay to City an estimate of Sub lessee’s consumption for these utilities. The monthly utility amount is se t forth in E xhibit A hereto and shall be rem itted by Sublessee to City at the same time as the Rent payment s are du e under Section 3.

If City is required to construct new or addi tional utility installations, in cluding, without limitation, wiring, plumbing, conduits, and mains, resultin g from Sublessee’s special requirements, Sublessee shall on demand pay t o C ity the t otal cos t of such item s or pay and contract for such installations directly.

8. TAXES.

8.1 Re al Property Taxes Defined. The term “real property taxes” as used herein sha ll mean all taxes (including possessory interest taxes) , assessments, l evies and ot her charges, general and special, foreseen and unfor eseen, now or hereafter imposed by any governmental or quasi -governmental authority or special district h aving the direc t or indirect power to tax or levy assessments, which are levied or assessed against or with respect to: ( i) value, occupancy, use or possession of the Premises and/or the improvements; (ii) any improvements , fixtures, equipment and other re al or personal property of Sublessee that are an integral part of the Premises; or, (ii i) use of th e Premises, improvements public utilities or energy within the Premises . The term “real property taxes” shall also mean all charges, levies or fees imposed by reason of environmental regulation or other governmental control of the premises and/or the improvements, new or altered excise, transaction, sales, privilege, assessment, or other Item 11
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taxes or charges now or hereafter impo sed upon City as a result of this Sublease, and a ll costs and fees (including attorneys’ fees) incurred by City in contes ting any real property taxes and in negotiating with public authorities as to any real property taxe s affecting the Premises. If any r eal property taxes are based upon property or rent s unrelated to the Premises and/or the i mprovements, then only that par t of such tax that is fairly allocable to the Premises and/or the i mprovements, as determined by City, on th e basis of the assessor’s w orksheets or other available infor mation, shall b e included within the meaning of the term “real property taxes.”

8.2 Payment of Real Pr operty Taxes. Sublessee shall pay Sublessee’ s share of all real property taxes (as defined in Section 8.1 above) which become due and payable to City on or before the l ater of ten (10) days prior to the delinquency thereof or three (3) days after the date on which Sublessee receives a copy of the tax bill and notice of Cit y’s determination hereunder. Sublessee’s liability to pay real property taxes shall be prorated on the basis of a three hundred sixty- five (365) day year to account for a ny fraction or portion of a tax year included in the Sublease term at the commencement or expiration of the Sublease.

8.3 Revenue and Taxation Code. Sublessee specifically acknowledges it is familiar with section 107.6 of the California Revenue and Taxa tion Code. Sublessee realizes that a possessory interest subject to property taxes may be created, agrees t o pay any such tax, and her eby waives any rights Sublessee may have under sa id California Revenue and Taxation Code section 107.6.

8.4 Personal Pr operty Taxes. S ublessee shall pay before delinquent, or if requested by City, reimburse City for , any and a ll taxes, fees, and assessm ents associated with the Premises, the personal pr operty contained in the premises and other taxes, fees, and assessments regarding any activities which take place at the Sites . Sublessee recognizes and understands in accepti ng this Sublease that its interest therein may be subject to a possible possessory interest tax that City or County may impose on such inte rest and that such tax payment shall not reduce any rent due City hereunder and any such tax shall be the liability of and be paid by Sublessee.

9. MAINTENANCE.

9.1 City and Sublessee Responsibilities. Sublessee acknowledges that City is not in a position nor obligated to perform any of the obligat ions required of District under Sections 5.3.2 of the Master Lease with respect to the maintenance, repair, or restoration of the Premis es. Sublessee shall not be granted relief from rent or b e given other consideration if and when District performs mainten ance and repair obligations as required therein. Sublessee at Sublessee’s expense, shall perform a ll remaining maintenance and repairs that are not th e responsibility of District, including but not limited to: plumbing, painting, light bulb and ballast replacement, window glass replacement, floor treatme nt, drapery and carpet cleaning, door and window hardware replacement, space heater o r any other Subl essee installed heating/air conditioning system, interior pest control a nd any spec ial secu rity d evices. Sublessee shall provide janitorial service to the Premises and shall clean the windows inside and outside as Item 11
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needed. Sublessee shall keep the P remises and all improvements there to in first- class order, repair, and condition, and shall keep the Premises in a safe, clean, wholesome, and sanitary condition to the complete satisfaction of C ity, and in com pliance with all applicable laws, thr oughout the ter m of this Sublease. In addi tion, Sublessee shall maintain, at Sublessee’ s expense, all equipment, furnishings and trade fixtures upon the Premises required for the maintenance and operation of a first -class business of the type to be conducted pursuant to this Sublease. Sublessee further agrees to provide approved containers for trash, garbage and re cycling and to keep the Premises free and clear of rubbish, litter and recyclable materials. City shall h ave the right to enter upon and inspect the Premises at any time for cleanliness and safety. Notwithstanding the above provisions, Sublessee shall be responsible for damage or repair to the Premises or any of its support systems resulting from Sublessee’s use of the Premises and not occasione d by normal wear and tear, including plumbing and glass breakage.

Sublessee shall desi gnate in wr iting to City an on -site representative who shall be responsible for the day -to-day operation and level of maintenance, cl eanliness and general order.

9.2 Waiver of Civil Code. Sublessee expressly waives the benefit of any statute now or hereinafter in e ffect, i ncluding the provisions of S ections 1941 and 1942 of the Civil Code of California, which would otherwise afford Su blessee the right to make repairs a t City’s expense or to terminate this Sublease because of City’s failure to keep Premises in good order, co ndition and re pair. Sublessee further agrees that if and when any repairs, alterations, additions or betterment s shall be made by Sublessee as requi red by this paragraph, Sublessee shall prom ptly pay for all labor done or materi als furnish ed and shall keep the P remises free and clear of any lien or encumbrance of any kind whatsoever. If Sublessee fails to make any repairs or perform any maintenance w ork for which Sublessee is responsible with in a reasonable time (as determined b y the City Manager in the City Manager’s sole discretion) after demand by the C ity, City shall have the right, but not the obligation, to m ake the repairs at Sublessee’s expens e; within ten (10) days of receipt of a bil l, Sublessee shall reimburse City for the cost of such repairs, including a fi fteen percent (15%) administrative overhead fee. The making of such repairs or performance of maintenance by City shall in no event be construed as a waiver of the duty of Suble ssee to make repairs or perform maint enance as p rovided in this section.

9.3 Reserved.

10. CONSTRUCTION BY SUBLESSEE.

10. 1 Construction Standards. All design and construction performed by or on behalf of Sublessee shall conform to the approved plans, specifications, construction and architectural standards approved by the C ity Council if require d by Palo Alto ordinances or procedures or otherwise by the City Manager . Once the work is begun, Sublessee shall with reasonable diligence prosecute all construction to completion. All work shall be performed in a good and workmanl ike manner, shall substantia lly comply with any plans and specifications approved by C ity and shall comply with all applicable Item 11
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governmental permits, la ws, ordinances and regulations, and shall meet all other requirements contained in this Sublease.

10.2 Cost of Improvements . Sublessee shall pay all costs for construction done or caused to be done by Sublessee on the Premises as permitted or required by this Sublease.

Sublessee shall keep the Premises free and cl ear of all claims and liens resulting from construction done by or for Sublessee. Promptly after completion of construction, Sublessee shall provide to the City Manager a state ment of the reas onable and actual costs of construction for the initial improvements, which statement shall be certified as to accuracy and signed by Sublessee under penalty of perjury.

10.3 Ownership of Improvements . All improvements constructed, erected, or installed upon the P remises must be free and clear of all liens, claims, or liability f or la bor or material and shall become the property of C ity, at its election, upon expiration or earlier termination of this sublease and upon City's election, shall remain upon the Premises upon termination of this Sublease. Title to all equip ment, furnit ure, furnishings, and trade f ixtures placed by Subl essee upon the P remises shall remain in Sublessee, and replacements, substitutions and modifications thereof may be made by Suble ssee throughout the term of this Sublease. Sublessee may remove such fixtur es an d furnishings upon termination of this Sublease if Sublessee is not then in default under this Sublease, provided that Sublessee shall repair to the satisfaction of City any damage to the P remises and improvements caused by such removal and provided t hat u sual and customary lighting, plumbing and heat ing fixtures shall remain upon the P remises upon termination of this Sublease.

10.4 Indemnity for Claims Arising Out of Construc tion. Sublessee shall defend and indemnify City against all cla ims, liabilities, and losses of any type a rising out of work performed on the Premises by Sublessee, together with reasonable attorneys' fees and all costs and expenses reasona bly incurred by C ity in negotiating, settling, defending or otherwise protecting against such claims.

10.5 Assurance of Completion. Prior to commencement of any construction or alteration expected to cost more than $5,000.00, Sublessee shall furnish the City Manager evidence that assures City that sufficient monies will be available to complete t he proposed work.

The amount of such assurance sh all be at least the total estimated construction cost.

Evidence of such assurance shall take one of the forms set out below and shall guarantee Sublessee’s full and faithful performance of all of the terms , covenants, and conditions of this Sublease:

A. Completion Bond;
B. Performance, labor and material bonds, supplied by Sublessee’s contractor or contractors, pr ovided the bonds are issued jointly to Sublessee and City;
C. Irrevocable letter of credit from a financial institution; or D. Any combination of the above.

All bonds and letters of credit must be issued by a company qualified to do business in Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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the State of California a nd be acceptable to the City Manager. All bonds and letters of credit shall be in a form acceptable to the City Manager, and shall in sure faithful and full observance and performance by Sublessee of all of the terms, conditions, covenants , and agreements relating to the construction of improvements or alterations in accordance with this Sublease.

10.6 As Built Plans. Sublessee shall provide the City Manager with a complete set of reproducible “as built plans” reflecting actual constructi on within or upo n the Premises upon completion of any: (i) new construction; (ii) structural alterations; or, (iii) n on- structural alterations costing more than $25,000.

11. ALTERATIONS BY SUBLESSEE

Sublessee shall not make any alterations or improvement s to the Premises without obtaining the prior written consent of the City Manage r. Subless ee may, at any time and at its sole expense, install and place business fixtures and equipment within the Premises, provided such fixtures and installation have bee n reviewed and a pproved by the City Manager. Prior to commencement of any work, S ublessee shall pay the amount of an y incr ease in premiums on insurance policies provided for herein because of endorsements to be made covering the risk during the course of the work and shall pay for any and all permits which may be required.

12. HOLD HARMLESS/INDEMNIFICATION.

12.1 Indemnification. To the exte nt permitted by law, Sublessee agrees to protect, defend, hold harmless and indemnify City, its City Council, com missions, officer s, agents, volunteers, and employees from and against any claim, injury, li ability, loss, cost, and/or expense or damage, howe ver same may be caused, including all costs and reasonable attorney's fees in providing a defense to any claim arising therefrom for which City shall become legally liable arising from Sublessee's , its off icers’ ag ents’ subcontractors’ or employees’ negligent, reck less, willful, or wrongful acts, errors, or omissions, or conduct for which applicable law may impose s trict liability on Sublessee, with respect to or in any way connected with this Su blease or in connec tion with Sublessee’s performance of or fa ilure to perform its obligations under this Sublease, including but not limited to Exhibit C . Sublessee shall give City immediate notice of any claim or liability hereby indemnified against. Th is indemnity shall be in addition to the Hazardous Materials i ndemnity contained in this Sublease and shall survive the expiration of or early termination of the Sublease Term.

12.2 Waiver of Claims . Sublessee waives any claims against C ity for injury to Sublessee’s busi ness or any loss of income therefrom , for damage to Sublessee’ s property, or for injury or death of any person in or about the Premises or Sites , from any cause whatsoever, except to the extent caused by Ci ty’s active negligence or willful misconduct.

13. DAMAGE, DESTRUCTION AND TERMINATION.

13.1 Nontermination and Nonabatement . Except as provided herein, no destruction or Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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damage t o the Premises by fi re, w indstorm or othe r casualty, whether insured or uninsured, shall entitle Su blessee to terminate this Sublease. City and S ublessee waive the provisions of any statutes which relate to termination of a sublease when subleased property is destroyed and a gree that such event shall be governed by the terms of this Sublease.

13.2 Fo rce Majeure. Pre vention, delay or stoppage due to strikes, lockout s, labor disputes, Acts of God, inability to obtain labor, inability to obtain materials o r reasonable substitutes, governmental r estrictions, governmental regulati on, governmental controls , judicial orders , enemy or hostile governmenta l actions, civil com motion, fire or other casualty, and other causes beyond the reasonable control of Sublesse e (financial inability excepted), shall e xcuse the performance by Sublessee for a period equal to t he prevention, delay, or stoppage, except the obl igations imposed w ith regard to rent to be paid by Sublessee pursuant to this Sublease. In the event any work performed by Sublessee or Sublessee’s contractors results in a strike, lockout, and/or labor dis pute, the strike, lockout, and/or labor dispute shall not excuse the performance by Sublessee of the provisions of this Sublease.

13.3 Restoration of Premises by Sublessee.

13.3.1 Destruction Due to Risk Covered by Insurance . If, during the term, the Premises are totall y or par tially destroyed from a risk covered by the insurance described in Section 20 (Insurance), rendering the Premises totally or partia lly inaccessible or u nusable, Sublessee shall restore the Premises to subs tantially the same condit ion as it was in i mmediately before destruction, whether or not the insurance proceeds are sufficient to cover the actual cost of restoration. Such destruct ion shall not termina te this Sublease. I f the laws existing at that time do not permit the restoration, either party can terminate this Sublease immediately by giving notice to the other party.

If the cost of the restoration exceeds the amount of proceeds received from the insurance required under Section 20 (Insurance), C ity can elect to terminate this Sublease by giving noti ce to Sublessee within thirty (30) days after determining that the restoration cost will exceed the insurance proceeds. In the ca se of destruction to t he Premises only, if C ity elects to terminate this Subleas e, Sublessee, within thirty (30) days a fter receiving City’s notice to terminate, can ele ct to pay to C ity, at the time Sublessee notifies C ity of its election, the difference between the amount of insurance proceeds an d the cost of restor ation, in which c ase C ity shall restore the Premises. C ity shall give Sublessee satisfactory evidence that all sums contributed by Sublessee as provided in this paragraph have been expended by City in paying the cost of restoration.

If City elects to terminate this Sublease, and Sublessee does not elect to contribute toward the cost of restoration as provi ded in this section, this Sublease shall terminate.

Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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13.3.2 Destruction Due to Risk Not Covered by Insurance . If, during the term, the Premises are t otally or partially destr oyed from a risk not covered by the insurance described in Section 20 (Insurance), rendering the Premises totally or partially inaccessible or unusable, Sublessee shall res tore the Premises to su bstantially the s ame condition as it was in immediately before destruction, whether or not the insura nce proceeds are suffi cient to cover the actual cost of restoration. Such destruction shall not terminate this Sublease. If the la ws existing at that time do not permit t he restoration, either party can terminate this Sublease immediately by giving notice to the other party.

If the cost of res toration exc eeds ten percent (10% ) of the then replacement value of the Premises totally or partially destroyed, Sublessee can elect to terminate th is Sublease by giving no tice to C ity within sixty (60) days after determining the restoration cost and replacement value.

In the case of destruction to the Premises only, if City elects to termina te this Sublease, Sublessee, within thir ty (30) days afte r receiving C ity's notice to terminate, can elect to pay to City at the time Sublessee notifies City of its election, the difference between ten percent (10%) of the then replacement value of the Premises and the actual co st of restoration , in which case C ity shall restore the Pr emises. C ity shall give Sublessee satisfactory evidence that all sums contributed by Sublessee as provided in this paragraph have been expended by C ity in paying the cost of restoration.

If City elects to terminate this Sublease and Sublessee cannot or does not elect to contribute toward the cos t of restoration as pr ovided in this section, this Sublease shall terminate.

13.3.3 Extent of City’s Obligation to Restore . If City is required or elects to restore the P remises as prov ided in this section, C ity shall not be required to restore a lterations made by Sublessee, Sublessee's improvements, Sublessee's trade fixtures, and Sublessee's personal property, such excluded items being the sole responsibility of Sublesse e to restore. City shall have no obligat ion to restore, replace or compensa te Sublessee for any loss of S ublessee’s improvem ents, trade fixtures or personal property in the event of partial damage to Premises due t o floor or ceiling water leaks, electrical damage, fire damage or smoke damage.

14. SIGNS.

Sublessee shall not pla ce, cons truct, maintain, or al low any signs upon the Premises without prior written consent of City , which consent shall not be unreasonably withheld. All signs must comply with the City’s Sign Ordinance unless exempt therefrom.

Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

Item 11: Staff Report
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15. ASSIGNMENT AND SUBLETTING.

15.1 Assignment & Suble tting Prohibited. The parties acknowledge that C ity has relied on the unique background, character and capa bilities of Sublessee in entering into thi s Sublease or in establishing the rent pa yable under this Sublease. Consequently, Sublessee shall not, either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Su blease or any interest he rein, or any right or privilege appurtenant hereto, or al low any other person (the employees, agents and invitees of Subles see excepted) to oc cupy or use the Premises, or any portion thereof.

Any purported assignment or subletting shall be void, and shall, at the option of the City, constitute a default under this Sublease.

15.2 Assignment Defined. For purposes of this s ection, each of the following shall also be deemed an assignment subject to the provisions hereof: (i) if Sublessee is a partnership or joint venture, a withdrawal, addition, or change (voluntary, involuntary, by operation of law, or otherwise) of any of t he partners or vent urers thereof; (ii) if Sublessee is a limited liability company, a withdrawal, addition, or change (voluntary, invol untary, by operation of law, or otherwise) of any of the members or managers thereof; (iii) if Sublessee is composed of m ore than one person, a purported assignment or transfer (voluntary or involuntary, by operation of law, or otherwise) from one thereof to the other or others thereof; (iv) if Sublessee is a corporation, a change in the ownership (voluntary or involuntary, by operation of law , or otherwise) of 25% or more of its capital stock or members (or, in the case of a nonprofit corporation without members, of 25% or more or its directors); or (v) a chan ge in Sublessee ’s status as a non -profit, ch aritable organization.

16. DEFAULTS; REMEDIES.

16.1 Defaults . The occurrence of any one or more of the following events shall constitute a material default, or breach of this Sublease, by Sublessee:

16.1.1 Abandonment of the Premises by Subl essee as defined by California Civil Code section 1951.3;

16.1.2 Failure by Sublessee to make any payment of rent or any other payment required to be made by Sublessee hereunder, as provided in this Sublease, where such failure shall continue for a perio d of ten (10) business days af ter written notice thereof from City to Sublessee. In the event City serves Sublessee with a Notice to Pay Rent or Quit pursuant to ap plicable Unlawf ul Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the noti ce required by this subparagraph;

16.1.3 Failure by Sublessee to observe or perform any of the covenants, conditions or provisions of this Sublease in an y material respect where such failure shall continue for a period of thirty (30) days after w ritten notice thereof from Cit y to Sublessee; pro vided, however, that if the nature of Sublessee’ s default is such that more than thirty ( 30) days are reasonably required for its cure, Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

Item 11: Staff Report
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then Sublessee shall not be deemed to be in default if Sublessee commenced such cure within said thir ty (30) day period and thereafter diligently prosecutes such cure to completion;

16.1.4 Making by Sublesse e of any general arrangem ent or assignment for the benefit of creditors; Sublessee’ s becoming a “debtor” as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Sublessee, the same is dismissed within sixty (60) days); the appoi ntment of a bankruptcy truste e or receiver to take poss ession of all or substantially all o f Sublessee’s assets located at or on the Premise s or of Sublessee’s interest in this Sublease where possession is not restored to Subless ee within thirty (30) days; or the attachm ent, execution or other judicial seizure of all or substantially all of Sublessee’s assets located at or o n the Premises or o f Sublessee’s interest in this Sublease, where such seizure is not discharged within thirty (30) days.

16.2 Remedies. In the event of any material default or breach by Sublessee, City may at any time thereafter, following any notice required by statute, and without limiting City in the exercise of any right or remedy which City may have by reason of such default or breach:

16.2.1 Terminate Sublessee’s right to possessi on of the Premises by any lawful means, in w hich case this Subleas e shall terminate a nd Sublessee shall immediately surrender possession of the Premises to C ity. In such event, City shall be entitled to recover from Sublessee all damages incurred by City by reason of Sublessee’s default inc luding but not limited to : the cost of recovering possession of the Premises and Improvements ; expenses of reletting, inc luding necessary renovati on and alteration of the Premis es and Improvements ; reasonable attorneys’ fees; the worth at the time of the a ward of the u npaid rent that had been earned at t he time of termination of this Sublease and the worth at the time of awa rd of the amount by which the unpaid rent for the balanc e of the term after the tim e of such award exceeds the amount of such rental loss for t he same period that Sublessee proves could be reasonably avoided.

16.2.2 Maintain Sublessee’s right to possession, in which case this Sublease shall continue in effect whether or not Sublessee shall have abandoned the Premises.

In such event, Ci ty shall be entitled to enforc e all of Cit y’s rights and remedies under this Sublease, including the right to recover rent and other payments as they become due hereunder.

16.2.3 Pursue any other remedy now or hereafter available to City under the laws or judici al de cisions of the St ate of California. City shall have all remedies provided by law and equity.

16.3 No Relief from Forfeiture After Default. Sublessee waives all rights of redemption or re lief from forfeiture under California Code of Civil P rocedure sections 1174 and 1179, and any other pr esent or future law, in the event Sublessee is evicted or City otherwise lawfully takes possession of the Premises b y reason of any default or breach of Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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this Sublease by Sublessee.

16.4 Disposition of Abandoned Pe rsonal Property. If the Sublessee fails to remove any personal property belonging to Sublessee from the Premises after forty -five (45) days of the expiration or termination of this Sublease, such property shall at the option of C ity be deemed to ha ve been trans ferred to C ity. City shall have the right to remove and to dispose of such property without liability to Sublessee or to any person claiming under Sublessee, and the City shall have no need to account for such property.

17. INTEREST ON PAST-DUE OBLIGATIONS.

Except as ex pressly provided he rein, any amount due City when not paid when due shall bear interest at the lesser of ten percent (10%) per year or the maximum rat e then allowable by law from the date due.

18. HOLDING OVER.

If Sublessee remains in possession of the P remises or any part thereof after the expiration of the term or option term hereof, such oc cupancy shall be a tenancy from month to month with all the obligations of this Su blease applicable to Sublessee and at City's prevaili ng monthly rate of rent for the Premises at the time of expiration. The rent under a month-to-month tenancy is subject to increase on thirty (30) days prior writte n notice from C ity. Nothing c ontained in this Sublease shall give to Sublessee the right to occupy the Premises after the expiration of the term, or upon an earlier termination for breach.

19. CITY’S ACCESS.

19.1 Access for Inspection. City and Ci ty’s agents shall ha ve the right to enter the Premises at reasonable times, upon not less than twenty -four (24) hours prior notice to Sublessee, for the purpose of inspecting same, showing same to prospective purchas ers, lenders or sublessees, and making such alterations, repairs, improvements, or additions to the Premises as City may deem necessary . City may at any time place o n or about the Premises any ordinary “ For Sale” signs and City may at any time during the last one hundred twenty ( 120) days of the term hereof place on or about the Premise s any ordinary “For Sublease” signs, all without rebate of rent or liability to Sublessee.

19.2 Security Measures . City shall have the right to require a reasonable secur ity system, device, operation, or plan be installed and implemented to protect the Premises or the Improvements. Should City, in its s ole discretion, require Sublessee to install such a security system, Sublessee agrees to bear the sole cost and expense o f any security system, de vice, operation or plan and the in stallation and implement ation thereof.

Sublessee shall obtain City’s prior approval before installing, implementing or changing any City approved security system, device, operation or plan.

19.3 New Locks. Sublessee may install new locks on all exterior doors. Sublessee shall advise City of such action and shall provide City with keys to said locks. Sublessee shall also deliver to City the old locks with keys. Upon termination, Sublessee shall leave new Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

Item 11: Staff Report
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locks that shall become the property of City.

20. INSURANCE.

Sublessee's responsibility for the Premises begins immediately upon delivery and Sublessee, at its sole cost and expense, and at no cost to City, shall purchase and maintain in ful l force and effect during the en tire term of this Sublease insurance coverage in am ounts and in a form acceptable to City as set forth in Exhibit C attached hereto an d incorporated herein by reference.

Said policies shall be maintained with respect to Sublessee’s employees, if any, and all vehicles operated on t he Premises. The policie s shall include the required endorsements, certifica tes of insurance and coverage v erifications as described in Exhibit C. Sublessee also agrees to secure renter's liability insurance.

Sublessee shall deposit with the City Manager , on or before the effec tive date of this Sublease, certificates of ins urance necessary to satisfy City that the insurance pr ovisions of this Sublease have been complied with, and to keep such insurance in effect and the c ertificates therefore on deposit with City during the entire term of this Sublease. Should Sublessee not provide evidence of such required coverage at least three (3) days prior to the expiration of any existing insurance coverage, City may purchase such insuran ce, on behal f of and at the expense of Sublessee to provide six months of coverage.

City shall retain the right at any time to review the coverage, form, and amount of the insurance required hereby. If, in the opinion of t he C ity’s Risk Manager (o r comparable offici al), the insurance provisions in this S ublease do not provide adequate protection for C ity and for members of the public u sing the P remises, the City Manager may require Sublessee to obtain insurance sufficient in coverage, form, and amount to provide adequate protectio n as determined by the Ri sk Manager. C ity's requirements shall be reasonable and shall be designed to assur e protection from and against the kind and extent of risk that exists at the time a change in insurance is required.

The City Manager shall notify Sublessee in writing of changes in the insurance requirements. If Sublessee does not deposit copies of acceptable insurance p olicies with C ity incorporating such changes within sixty (60) days of r eceipt of such notice, or in the event Sublessee fails to maintain in effect any required insurance coverage, Sublessee shall be in def ault under th is sublease without further notice t o Sublessee. Such failure shall constitute a material breach and shall be grounds for immediate termination of this Sublease at the option of City.

The p rocuring of such required policy or policies of insurance sh all n ot be construed to limit Sublessee’s liability hereunder nor to fulfill the indemnification provision and re quirements of this Sublease. Notwithstanding the policy or policies of insurance, Sublessee shall be obligated for the full and total amount of any damage, injury, or loss caused by o r connected with this Sublease or with use or occupancy of the Premises.

21. RESERVATION OF AVIGATIONAL EASEMENT.

City hereby reserves for the use and benefits of the public, a right of avigation over the Premises for the passage of air craft landing at, taking off, or operating from the adjacent airport operated Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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by the Count y of Santa Clara. Subles see resubleases the City from all liability for noise, vibration, and any other related nuisance.

22. EMINENT DOMAIN.

22.1 If all or any part of the P remises (or the building in which the Premises are l ocated) is condemned by a public entity in the lawf ul exercise of its power of eminen t domain, this Sublease shall cease as to the part condemned. The date of s uch termination shall be the effective date of p ossession of t he whole or part of the Premises by the condemning public entity.

22.2 If only a part is condemned and the condemnation of that part does not substantially impair the capacity of the remainder to be us ed fo r the purposes required by this Sublease, Sublessee shall continue to be bound by the terms, covenants, and conditions of this Sublease. However, the t hen monthly r ent shall be reduced in pr oportion to the diminution in value of the P remises. If the condemnation of a part of the P remises substantially impairs the capacity of the remainder to be used for the purposes required by this Sublease, Sublessee may:

A. Terminate this Sublease and thereby be absolved of obligations under this Sublease which have not accrued as of t he date of posses sion by the condemning public entity; or

B. Continue to occupy the remai ning P remises and thereby continue to be bound by the ter ms, covenants and conditions of this Sublease. If Sublessee elects to continue in possession of the remainder of the Premises, the monthly rent shall be reduced in proportion to the diminution in value of the Premises.

C. Sublessee shall provide C ity with written notice advising C ity of Sublessee’s choice within thirty (30) days of possession of the part condemned by the condemning public entity.

22.3 City shall be entitled to and shall receive all compensation related to the condemnation, e xcept that Su blessee shall be entitled to: (a) that portion of the compensation which repre sents the value for the remaind er of the Subleas e term of any Sublessee-constructed improvements taken by the condemning public entity, which amount shall not exceed the actual cos t of such improvements r educed in proportion to the relationship of the rema ining Sublease term to the orig inal Sublease term, using a straight line approach; and (b) any amount specifically designated as a moving allowanc e or as compensatio n for Sublessee’s personal property. Su blessee shall have no claim against City for the value of any unexpired term of this Sublease.

23. POST-ACQUISITION TENANCY.

Sublessee hereby acknowledges that Sublessee was not an occupant of the Premises at the time the Premises were acquired by C ity. Sublessee further understands and agrees that as a post - acquisition Sublessee, Sublessee is not eligible and furthermore waives all claims for relocation Item 11
Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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assistance and benefits under federal, state or local law.

24. DISPUTE RESOLUTION.

24.1 Unless otherwise mutually agreed to, any controversies between Sublessee and City regarding the construction or application of this Sublease, and claims arising out of this Sublease or its breach shall be submitted to mediation within thirty ( 30) days of the written request of one Party after the service of that request on the other Party.

24.2 The Parties may agree on one mediator. If they cannot agree on one mediator, the Party de manding mediation shal l r equest the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting shall not exceed one day (eight (8) hours).

The Parties may agree to extend the time allowed for mediation under this Sublease.

24.3 The costs of mediation shall be borne by the Parties equally.

24.4 Mediation under this section is a condition precedent to filing an a ction in any court. In the even t of litigation a rising out of any dispute related to this Sublease, the Parties shall each pay their respective attorney's fees, expe rt wi tness cost s and cost of suit, regardless of the outcome of the litigation.

25. NON-LIABILITY OF OFFICIALS AND EMPLOYEES OF THE CITY.

No official or employee of City shall be personally liable for any default or liability under thi s agreement.

26. NON-DISCRIMINATION

26.1 Non-discrimination in Sublease Activities. Sublessee agrees that in the performance of this Suble ase and in connec tion with all of the activities Sublessee conducts on the Premises, it sh all not discriminate a gainst any employee or person because of the race, skin color, gender, age, religion, disability, national origin, ancest ry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Subless ee acknowledges that is familiar with the provisions set forth in Section 2.30.510 of the Palo Alto Municipal Code relating to nondiscr imination in employment and Sec tion 9.73 of the Palo Alto Municipal Code relating to City policy against arbitrary discrimination.

26.2 Human Rights Policy. In connecti on with all activities that are co nducted upon the Premises, Sublessee agrees to accep t and en force the statements of policy set forth in Section 9.73.010 which provides: “It is the policy of the City of Pal o Alto to affirm, support and protect the human rights of every person within its jurisdiction. These rights include, but are not limi ted to, eq ual economic, politic al, and education al opportunity; equal accommodations in all business establishments in th e city; and equal serv ice and protection by all public agencies of the city.”

27. INDEPENDENT CONTRACTOR.

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Community Child Care

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It is agreed that Sublessee shall a ct and be an independent contractor and not an agent nor employee of City.

28. CONFLICT OF INTEREST.

Sublessee shall at all times avo id conflict of interes t or appearance of conflict of interest in performance of this agreement. Sublessee warrants and c ovenants that no offici al or employee of City nor any business entity in which any official or employee of C ity is interested: (1) has been employed or retai ned t o solicit or aid in the procuring of this agreement; or (2) will be employed in the pe rformance of this agreement without the divulgence of such fact to C ity. In the event that C ity determines that the employment of any such off icial, employee or bus iness entity is not compatible with suc h official's or employee's duties as an official or employee of City, Sublessee upon request of City shall immediately terminate such employment. Violation of this provision constitutes a serious b reach of this Suble ase and City may terminate this Sublease as a result of such violation.

29. MEMORANDUM OF SUBLEASE.

Neither this Subleas e, nor any memora ndum, affi davit, or other writing with respect thereto , shall be recor ded by Sublessee or by anyone acting through, under, or on beha lf of Sublessee.

City shall have the right to record a memorandum of this Sublease, and Sublessee shall execute, acknowledge , and deliver to City for recording any memorandum prepared by City.

30. ESTOPPEL CERTIFICATE.

Sublessee shall, from time to time , upon at least thirt y (30) days prior written notice from City, execute, acknowledge and deliver to City a statement in wr iting: (i) certifying this Sublease is unmodified and in full force and effect, or, if modified, stating the nature o f the modification and certifying that the Su blease, as modified, is in full force and effe ct, and the date to which the rental and other c harges, if any, ha ve been paid; and, (ii) acknowledging that there are not to Sublessee’s knowledge, any defaults, or stating if any defaults are claimed, any statement may be relied upon by any prospective purchaser or encumbrancer of the Premises.

31. LIENS.

Sublessee agrees at its sole cost and expense to keep the Sites free and clear of any and all claims, levies, liens, encumbrances or attachments.

32. VACATING.

Upon termination of the tenancy, Subles see shall completely vacate the Sites, including the removal of any and all of its property. Before departure, Sublessee shall return keys and personal p roperty lis ted on the inve ntory to City in good, clean and sanitary condition, reasonable wear and t ear excepted. Sublessee shall allow City to inspec t the Premises to verify the condition of the Premises and its contents.

33. ABANDONMENT.

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Attachment A - Sublease
Agreement with Palo Alto
Community Child Care

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Sublessee's absence from t he Premises for three (3) cons ecutive days, without prior notice, during which time rent or other charges are delinquent, shall be deemed abandonm ent of the Premises. Such abandonment will be deemed cause for im mediate termination without notice.

City shall thereupon be authorized to enter and take possession and to remove and dispose of the property of Sublessee or its guests without any liability whatsoever to City.

34. NOTICES.

All notices to the Parties shall, unless otherwise requested in writing, be sent to City addressed as follows:

City of Palo Alto
Real Estate Manager
250 Hamilton Avenue
Palo Alto, CA 94301

and

Office of Human Services
Cubberley Community Center
4000 Middlefield Road #T2
Palo Alto, CA 94303

And to Sublessee addressed as follows:

Palo Alto Community Child Care
3990 Ventura Court
Palo Alto, CA 94306
Attn: Lee Pfab
Telephone: (650) 493-2361
Email: [email protected]

Notices may be served upon Sublessee in person, by first class mail, or by certified mail whether or not said mailing is accepted by Sublessee.

35. TIME.

Time shall be of the essence in this Sublease.

36. AMENDMENTS.

It is mutually agreed that no oral S ubleases have been entered into and that no altera tion or variation of the term s of this Sublease shall be valid unless made in writing and signed by the Parties to this Sublease.

37. SIGNING AUTHORITY.

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If this Sublease is not signed by all Sublessee s na med herein, the person actually signing warrants that he/she has the authority to sign for the others.

38. CAPTIONS.

The captions of the various sections, paragraph s and subparagra phs of t his Sublease are for convenience only and shall not be considered or referred to in resolving questions of interpretation.

39. SURRENDER OF SUBLEASE NOT MERGER.

The voluntary or other surr ender of this sublease by Sublessee, or a mutual cancellation ther eof, shall not work a merger, and shall, at the option of City, terminate all or any existing subleases or subtenancies, o r may, at the option of City, operate as an assignment of any and all such subleases or subtenancies.

40. INTEGRATED DOCUMENT.

This Sublease, including any exhibits attached hereto, embodies t he entire agreement between City and Sublessee. N o other understa nding, agreements, conversations or otherwise, with any officer, agent or employee of City prior to execut ion of this Sublease shall affect or modify any of the terms or obligations containe d in any documents comprising this Sublease. Any such verbal agreement shall be considered as unofficial information and in no way binding upon City.

All agreements with City are s ubject to approval of the City Council before City shall be bound thereby.

41. WAIVER.

Waiver by City of one or more conditions of performance or any breach of a condition under this Sublease shall not be construed as a waiver of any other condition of performance or subsequent breaches. The subsequent acceptance by a Party o f the performance of any obligation or duty by another Party shall not be deemed to be a waiver of any term or condition of this Sublease. The exercise of any remedy, right, option or privilege hereunder by City shall not preclude City from exercising the same or any and all other remedies, rights, options and pri vileges hereunder and City's failure to exercise any remedy, right, option or privilege at law or equity, or othe rwise which City may have, shall not be construed as a waiver.

42. INTERPRETATIONS.

In construing or interpreting this Sublease, the word "o r" shall not be construed as exclusive and the word "including" s hall not be li miting. The Parties agree that th is Sublease shall be fai rly interpreted in accordance with its terms without any str ict construction in favor of or against any other Party.

43. SEVERABILITY CLAUSE.

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If any provision of this Sublease is held to be illega l, invalid or unenforceable in ful l or in pa rt, for any reason, then such provision shall be modified to the minimum e xtent necessary to make the provision legal, valid and enforceable, and the other provisions of this Sublease shall not be affected thereby.

44. GOVERNING LAW.

This Sublease shall be governed and construed in accordance with the statutes and laws of the State of California.

45. VENUE.

In the event that suit shall be brought by any Party to this Sublease, the Parties agree th at venue shall be exclusively vested in the state courts of the County of Santa Clara.

46. COMPLIANCE WITH LAWS.

The Parties hereto shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local governments in the performance of their rights, duties and obliga tions under this Sublease.

47. BROKERS.

Each Party represents that is has not had deal ings with any real estate broker, finder, or other person, with respect to th is sublease in any manner. Each Party shal l hold harmles s the other Party from all damages resulting from any claims that may be asserted against the other P arty by any broke r, finder, or other person with whom the i ndemnifying Party has or purportedly has dealt.

49. PREVAILING WAGE.

As required by law, a ll contractors and subcontractors perf orming work on the Premi ses are required by pay general prevailing wages as defined in S ubchapter 3, Title 8 of the California Code of Regulations and section 160000 et seq. and Labor Code Section 1773.1. Before entering into a construction contract to per form work on the Pre mises and at all times w hile performing work on the Premises , all co ntractors and subcontractors must be re gistered with the Calif ornia Department of Industrial Relati ons to perform public work under Labor Code Section 1725.5.

Pursuant to Labor Code Section 1773, the general p revailing 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 perform the work for this Premises may be obt ained at the Purcha sing Office of the City of Palo Alto. All contractors and subcontractors for t he Project must comply with the provisions of Labor Code Sections 1775, 1776, 1777.5, 1810, and 1813.

48. ATTACHMENTS TO SUBLEASE.

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

“A” – Description of Premises and Rents
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“B” – Standard Insurance Requirements
“C” – Scope of Required Childcare Services
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IN WITNESS WHEREOF, the parties have executed this Sublease the day and year first above written.

CITY: TENANT:

CITY OF PALO ALTO (LESSOR) PALO ALTO COMMUNITY CHILD
CARE, a California non-profit corporation

By: __________ By:___________________________ City Manager or Designee
Its: ___________________________
ATTEST:

_________________
City Clerk

APPROVED AS TO FORM:

By: _______________________
City Attorney or Designee

RECOMMENDED FOR APPROVAL:

By: _______________________
Manager, Operating Department

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PAUSD SITE TRAILER # OR ID* SCHEDULE SQ. FT.

BASE
MONTHL
Y RENT

MONTHLY

UTILITIES
($0.24 PER SQ.

FT.)
TOTAL

MONTHLY

RENT AND

UTILITIES
TOTAL

ANNUALIZED

RENT AND

UTILITIES
1 ADDISON AKC1 960 615.01$ 230.40$ 845.41$ 10,144.97$ 2 DUVENEC DCK28 1,920 615.01$ 460.80$ 1,075.81$ 12,909.77$ 3 ELCARMELO 1/2 DAYCARE closed July/August 1,320 615.01$ 316.80$ 931.81$ 9,318.14$ 4 ESCONDIDO KIDS CLUB closed for August 1,440 615.01$ 345.60$ 960.61$ 10,566.76$ 5 HAYS 1/2 KIDS CLUB 1,440 615.01$ 345.60$ 960.61$ 11,527.37$ 6 HOOVER CHILDCARE 1,440 615.01$ 345.60$ 960.61$ 11,527.37$ 7 BARRON PARK Unmarked Space closed July/August 1,440 615.01$ 345.60$ 960.61$ 9,606.14$ 8 OHLONE 24 960 615.01$ 230.40$ 845.41$ 10,144.97$ 9 PALO VERDE Kids Club closed July/August 960 615.01$ 230.40$ 845.41$ 8,454.14$ 10 JUANA BRIONES PACCC closed for August 1,920 615.01$ 460.80$ 1,075.81$ 11,833.96$ 11 FAIRMEADOW BBKC3 closed July/August 1,440 615.01$ 345.60$ 960.61$ 9,606.14$ 15,240 6,765.16$ 3,657.60$ 10,422.76$ 115,639.75$

EXHIBIT A

DESCRIPTION OF PREMISES AND RENTS
* See attached maps for graphic description of Premises. Note that these site locations may change from time to time pursuant to Section 5 of the Lease Agreement between the City of Palo Alto and the Palo Alto Unified School District dated 7/1/2022. The Palo Verde space will be located on the Greendell Temporary Campus for 2022 - 2023.
**PACCC may request a rent abatement for up to two months for any Site that is closed during the Summer. As a condition of such rent abatement PACCC shall offer the Site to the City, at no cost, for Summer programming needs.

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EXHIBIT B

STANDARD INSURANCE REQUIREMENTS

Insurance Requirements for Sublessee:

Sublessee shall purchase and maintain the insurance policies set forth below on all of its operations under this Sublease at its sole cost and expense. Such policies shall be maintained for the full term of this Sublease and the related warranty period (if applicable). For purposes of the insurance policies required under this Sublease, t he term "City" shall include the duly elected or appointed council members, com missioners, officers, agents, employees and volunte ers of the City of Palo Alto, California, individually or collectively.

Coverages (RL 28.1A) S

Minimum Scope of Insurance

Coverage shall be at least as broad as:

1) Insurance Servi ces Office Commer cial General Liability coverage (occurrence form CG 0001).
2) Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any auto).
3) Workers' Compensation insurance as required by the State of Californi a and Employer's Liability Insurance (for sublessees with employees). 4) Property insurance against all risks of loss to any t enant improvements or betterments

The policy or policies of insurance maintained by Sublessee shall provide the following limits and coverages:

POLICY MINIMUM LIMITS OF LIABILITY

(1) Commercial General Liability $2,000,000 per each occurrence for bodily injury, personal injury and property damage

(2) Abuse and Molestation Liability $1,000,000 per person, per occurrence

(3)Automobile Liability $ 1,000,000 Combined Single Limit Including Owned, Hired and
Non-Owned Automobiles
(4) Workers’ Compensation Statutory
Employers Liability $1,000,000 per accident for bodily injury or disease

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(5) Sublessee’s Property Insurance
Sublessee shall procure and maintain property insurance coverage for:
all office furniture, trade fixture, office equipment, merchandise, and all other items of Sublessee’s property in, on, at, or about the premises and the building, include property installed by, for, or at the expense of Sublessee;
(b) all other improvements, betterments, alterations, and additions to the premises.

Sublessee’s property insurance must fulfill the following requirements:
(a) it must be written on the br oadest av ailable “all risk” po licy form or an equivalent form acceptable City of Palo Alto, including earthquake sprinkler leakage.
(b) for no less than ninety percent (90%) of the full
replacement cost (new without deduction for depreciation) of the covered items and property; and
(c) the amounts of coverage must meet any coinsurance
requirements of the policy or policies.

(RL 28.2)

Deductibles and Self-Insured Retentions

Any deductibles or self-insured retentions must be declared to and approved by the C ity. At the option of the City either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees a nd volunteers; or t he Sublessee shall procure a bond guaranteeing payment of loss es and related in vestigations, claim administration and defense expenses.

Insurance shall b e in full forc e and effect comm encing on t he f irst day of the term of this Sublease.

Each insurance policy required by this Sublease shall:

1. Be endorsed to st ate that coverage shall not be suspended, voided, canceled by either party, reduced in cover age or in limi ts except after t hirty (30) days ' prior written notice by certified mail, return receipt requested, has been given to the City.

2. Include a waiver of all ri ghts of subrogation against the City and the members of the City Council and elective or appointive officers or employees, and each party shall indemnify the other against any loss or e xpense including reasonable attorney fees, resulting from the failure to obtain such waiver.

3. Name the City of Palo Alto as a loss payee on the property policy.

4. Provide that the City, its offi cers, officials, employees, agents an d volunteers are to be covered as insureds as respects: liability arising out of activities performed Item 11
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by or on behalf of the Sublessee; products and completed operations of the Sublessee; premises owned, occupied or used by the Sublessee; or automobiles owned, subleased, hir ed or borrowed by the Sublessee. The coverage shall contain no special limitati ons on the sc ope of protection afforded to the City, its officers, officials, employees, agents or volunteers.

5. Provide that for any claims related to this Sublease, the Sublessee's insurance coverage shall be primary insurance as resp ects the C ity, it s officers, official s, employees, agents and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents o r volunteers shall be excess of the Sublessee's insurance and shall not contribute with it.

6. Provide t hat an y failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers.

7. Provide that Sublessee's insurance shall apply separately to each insured against whom claim is made or su it is b rought, except wit h respect t o the limits of the insurer's liability.

8. Sublessee agrees to promptly pay to City as Additional Rent, upon demand, the amount of any incre ase in the rat e of i nsurance on the Premises or on any other part of Buildi ng tha t resul ts b y reason of Su blessee’s act(s) or Sublessee’s permitting certain activities to take place.

Acceptability of Insurers

All insurance policies shal l be issued by California-admitted carriers having current A.M. Best's ratings of no lower than A-:VII.

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EXHIBIT C

SCOPE OF SERVICES FOR PROVIDERS OF EXTENDED CHILD CARE SERVICES

AT PALO ALTO UNIFIED SCHOOL DISTRICT ELEMENTARY SCHOOL SITES

SERVICES: Under this Agreement, Palo Alto Community Child Care (PACCC) shall provide extended child care services to the child(ren) as follows:
• (10) Elementary School(s) listed on Exhibit A located on the Palo Alto Unified School District (PAUSD) property leased by the City of Palo Alto. • (1) Elementary School (Hoover will lease classroom space on the Cubberley Community Center during renovation work at that campus.

Services shall be furnished as specified in this Exhibit C: Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites.

The extended child care program shall be limited to children currently enrolled in Traditional Kindergarten and Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District schools (multiple locations) and children
(age TK-5th Grade) whose parent is on staff
of either PAUSD or the child care provider.

PROGRAM GOALS:

la. To offer affordable child care services to children of families enrolled in PAUSD Elementary schools; and

lb. Children (age TK-5th grade) whose parent is on staff of either PAUSD or the child care provider.

Eligibility for Extended Child Care Services:

The extended child care program shall be limited to:

a. Children currently enrolled in Transitional Kindergarten and Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District (PAUSD) schools.

b. Children (age TK-5th grade) whose parent is on staff of either PAUSD or the child care provider.

Priority for the Extended Child Care Services:

Priority shall always be given to children currently enrolled in Traditional Kindergarten and Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District (PAUSD) schools (see a. above). The number of children allowed in b. (above) shall not exceed 10% of the enrollment, unless first priority children (a. above) cannot fill Item 11
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available spaces. Priority children may not be wait -listed in favor of non-priority children enrolled beyond 10% capacity.

1. To provide working parents with access to licensed child care services year -round including PAUSD school holidays, school vacations, and staff development days.

2. To provide a quality program, which seeks to maintain, standards set forth by the National Association for the Education of Young Children (NAEYC) and/or the Quality Matters, QRIS system of program quality assurance through WestEd.

PROGRAM SPECIFICATIONS:

1. Program Schedule
Services rendered shall include before-and after-school childcare for school age children in grades kindergarten through fifth grade. Before -school care shall be provided if such care is required by eight (8) or more children. The City will consider exceptions to t he provision of before school care if PROVIDER can reasonably demonstrate the inability to find adequate staffing. Program schedule shall be operable daily throughout the year, including school holidays and vacation periods except for legal holidays, which are recognized by the City of Palo Alto as specified in Section 2.08.100 of the Palo Alto Municipal Code. Any exceptions to the provisions below must be approved by the City’s Contract Manager.

a. Regular School Days
The designated hours of operation for extended child care services on regular school days shall commence not earlier than 6:30 a.m. but not later than 7:00 a.m. and shall operate until the scheduled start of school at the site. The provider shall reopen at the earliest scheduled end of the school day and shall remain open until at least 6:00 p.m. but not later than 6:30 p.m.

Regular school days are defined as Monday through Friday except legal holidays recognized by the City of Palo Alto, PAUSD school holidays, PAUSD school vacations, and PAUSD staff development days.

It is understood that the provider shall have exclusive use of the site. When the site is not in use by the provider, the City, PAUSD, its agent or assigns, may use the site for academic curriculum or other City purposes.

b. Legal Holidays
Services shall be offered as outlined in this Exhibit C with the only exception being legal holidays recognized by the City of Palo Alto, as defined and specified in Section 2.08.100 of the Palo Alto Municipal Code.

c. School Holidays
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The designated hours of operation for extended child care services on school holidays that are not recognized by the City of Palo Alto as specified in Section 2.08.100 of the Palo Alto Municipal Code (including winter and spring breaks and summer vacation) shall be 7:30 a.m. to 6:00 p.m. The City will consider exceptions to the operational hours if PROVIDER can reasonably demonstrate that the designated times are not needed by the participants in their programs.

d. Consolidation of Services
The provider may consolidate services with another licensed or legally exempt school age provider during school vacations and summer periods when enrollment is low. Programs may close for the purpose of offering staff development or in-service training. All such closings are subject to approval by the City's Project Manager which for purposes of this Agreement shall be the City Manager or designee.

e. Other Uses
The provider may use the contracted site(s) outside of the normal hours of operation for staff, parent, and/or student meetings.

2. Licensing and Exemptions
The provider shall operate a school age child care program that is licensed by the California Department of Social Services, Community Care Licensing Division, unless the provider qualifies for exemption from licensure as stated in the general licensing requirements of Title 22 of the California Code of Regulations as promulgated by the Department of Social Services/Community Care Licensing Division. All licensed programs shall maintain a current non-ambulatory license.

3. Licensing Reports
The provider shall forward to the City's Project Manager, within ten (10) days of all licensing visits, copies of all licensing reports issued by the California Department of Social Services, Community Care Licensing Division.

4. Staffing Ratios and Requirements
The provider shall meet or exceed the staffing ratios and requirements for school age children as specified in the licensing requirements of Title 22 of the California Code of Regulations: 1 teacher to 14 children
1 teacher and 1 aide to 28 children
For any group over 28 and up to 42, 2 teachers plus 1 aide are required to be present and within eye contact of enrollees. ·
For any group over 42, 2 teachers and 2 aides are mandated.

Job descriptions shall be developed and maintained for all positions including staff employed on a substitute or temporary basis.

5. Health and Safety Standards
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The provider shall enforce health and safety standards that are consistent with state regulations, State and County health orders, and PAUSD policies and regulations in such areas as administration of medications, emergency information forms, and exclusion of sick children. The providers shall ensure that staff members receive ongoing training in the areas of basic first aid and cardiopulmonary resuscitation (CPR).

6. Emergency Preparedness
The provider shall implement and follow emergency procedures and drills that are consistent with state laws and PAUSD elementary school site policies and regulations, and the Emergency Preparedness Plan for School Age Child Care Centers located at PAUSD Elementary School Sites. Compliance and implementation will be the responsibility of the provider and will be documented in the Emergency Preparedness Plan Notebook. The provider shall ensure that staff members receive on going emergency preparedness training. The provider shall also, on an annual basis, inform the parents of enrolled children about the program's policies and procedures regarding the Emergency Preparedness Plan.

7. Sign In/Sign Out Procedures
The provider shall offer appropriate sign-in and sign-out procedures in accordance with state licensing requirements.

8. Staff Development
The provider shall offer appropriate staff development activities on an ongoing basis, including staff training, in order to fully meet the child development needs of children enrolled in the program.

9. Written Schedules
The provider shall at all times maintain a written schedule setting forth the operating hours and operating procedures for each required and optional use provided on or from the elementary school site. A fee schedule for prices charged for all servi ces related to the required and optional uses set forth in this Contract shall be maintained.

10. Children with Special Needs
The provider shall identify children with special needs at the time of enrollment to ensure adequate staffing levels. Children with special needs who require assistance during an emergency evacuation shall be accommodated.

11. Equipment and Supplies
The provider shall assume responsibility for program implementation, and shall provide furniture, equipment, and supplies except as otherwise agreed upon with the City and PAUSD.

12. Collaboration with Local Agencies and Programs
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The provider shall coordinate with local agencies and programs to enable children to participate in extra-curricular activities including sports, scouts, re creational activities, and community service projects. The Provider shall seek to ensure collaboration with other agencies and programs in order to maximize access to existing services and to avoid duplication.

13. Waiting Lists
The provider shall maintain a current waiting list when program is at licensed capacity and shall grant priority enrollment status to working parents and to non -ambulatory children when a non-ambulatory space becomes available.

14. Provider Parent Feedback mechanism
The provider shall establish a regular mechanism to solicit and receive parent feedback related to program operations and quality at each PAUSD elementary site. The feedback mechanism shall be shared with the City’s Project Manager by September 30 th of each year.

15. City Annual Parent Survey
The provider shall distribute an annual parent survey provided by City.

16. Materials to be Kept on File
The following materials will be submitted to the City's Office of Human Services for each contract period and resubmitted within the same period in the event of any changes. The Annual Financial Statement is due upon its completion. The remaining materials are due by September 30.

Annual Financial Statement
Calendar of days open and
closed
Operating Procedures and Policies (Parent Handbook)
Licensing reports issued by the California Department of Social Services (within 10 days of visit)
Summary sheet of annual parent
evaluations Tuition schedule

In addition to the above, the following materials shall be available at each Center for examination by the City's Office of Human Services.

Current operating license
Completed and up to date copy of the Emergency Preparedness Plan for School Age Child Care Centers located at PAUSD Elementary School Sites.

17. Annual Site Evaluation
The provider shall participate in an annual site evaluation conducted by the City's Project Manager to determine that the program continues to satisfactorily meet the City's requirements as stated in this Exhibit C- Scope of Services for Providers of Extended Child Item 11
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Care Services at Palo Alto Unified School District Elementary School Sites.

18. Reports to the City
All correspondence relating to this Exhibit C: Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites shall be sent to the following address:

City of Palo Alto
Office of Human Services
4000 Middlefield Road #T2
Palo Alto, CA 94301

PROVIDER QUALIFICATIONS, STATUS, AND DUTIES

1.1 PROVIDER represents and warrants that it has the expertise and professional qualifications to furnish or cause to be furnished the Services. PROVIDER further represents and warrants that the project director and every individual charged with the performance of the Services under this Contract are duly licensed or certified by the State of California, to the extent such licensing or certification is required by law to perform the Services.

1.2 In reliance on the representation and warranty set forth in Section 1.1, CITY hires PROVIDER to perform, and PROVIDER covenants and agrees that it will furnish or cause to be furnished, the Services.

1.3 PROVIDER will assign a project director to have supervisory responsibility for the performance, progress, and execution of the Services. If circumstances or conditions subsequent to the execution of this Contract cause the substitution of the project director for any reason, the appointment of a substitute project director will be subject to the prior written approval of the project manager.

1.4 PROVIDER represents and warrants that it will:

1.4.1 Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incident to the due and lawful prosecution of the Services;

1.4.2 Keep itself fully informed of all existing and future Federal, State of California, and local laws, ordinances, regulations, orders, and decrees which may affect those engaged or employed under this Contract, any materials used in PROVIDER's performance under this Contract, or the performance of the Services;

1.4.3 At all times observe and comply with, and cause its employees and Item 11
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providers (and consultants), if any, who are assigned to the performance of this Contract to observe and comply with, the laws, ordinances, regulations, orders and decrees mentioned above; and

1.4.4 Report immediately to the project manager, in writing, any discrepancy or inconsistency it discovers in the laws, ordinances, regulations, orders, and decrees mentioned above in relation to any plans, drawings, specifications or provisions of this Contract.

1.5 PROVIDER will be responsible for employing or engaging all persons necessary to perform the Services. All contractors of PROVIDER will be deemed to be directly controlled and supervised by PROVIDER, which will be responsible for their performance.

1.6 PROVIDER shall ensure that all services offered under this CONTRACT shall be secular in nature. PROVIDER shall further ensure that it shall refrain from offering
religious instruction, worship, or other religious activities while providing child care services, in accordance with the provision of the California and United States Constitution.

FINANCIAL CONTROL RESPONSIBILITIES OF PROVIDER

1.1 PROVIDER shall establish and maintain a system of accounts that shall conform with generally accepted principles of accounting. Such system of accounts shall be subject to the review of the Deputy City Manager, Administrative Services and the City Auditor .

1.2 In support of its system of accounts, PROVIDER shall maintain complete and accurate records of all financial transactions, including contracts, invoices, time cards, cash receipts, cancelled checks, and bank statements. Such records shall be preserved and made available upon request until the expiration of three (3) years following the termination of this CONTRACT .

1.3 Financial expense and revenue s ummary sheets for all of PROVIDER's operations under this Contract shall be submitted by PROVIDER on an annual basis to CITY .

1.4 PROVIDER shall provide for an independent audit of its fiscal transactions, records and financial reports relating to its obligations under this Contract. The audit shall be completed every two years and shall be conducted by a certified public accountant according to generally accepted audit procedures.

1.5 Income to the program in the form of fees, direct contributions, fundraising, and any other form of monetary program support must be shown in the records of Item 11
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the fiscal PROVIDER in a manner acceptable to the Project manager and PROVIDER.

1.6 On reasonable notice, PROVIDER shall grant the project manager access to all records, data, statements, and reports, but excluding any confidential records of personnel and client reports which tend to identify specific individuals, for purposes of financial or operational audit or review of PROVIDER by CITY. PROVIDER shall permit CITY to audit, at any reasonable time during the term of this CONTRACT and for three (3) years thereafter, PROVIDER's records pertaining to matters covered by this CONTRACT. PROVIDER further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this CONTRACT.

COST OF SERVICES OFFERED BY PROVIDER

1.1 The PROVIDER shall at all times maintain a written schedule setting forth operating hours and operating procedures for each required and optional use provided on or from the PREMISES. A schedule of prices charged for all services related to the required and optional use of this CONTRACT shall be maintained.

Upon written request, PROVIDER shall furnish the project manager a copy of the schedules and procedures. Should the project manager decide that any part of these schedules or procedures is not justified with regard to fairly satisfying the needs of the public, upon written notice from the project manager, the PROVIDER shall meet and confer to attempt to address the issue. This meeting may focus on the following data:

(1) The degree of public service involved in the sale of services; (2) The market prices charged by other competing and/or comparable businesses; and
(3) The degree to which salaries and benefits are at a commensurate level that ensures a quality program which minimizes staff turnover.

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Agreement with Palo Alto
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SUBLEASE AGREEMENT FOR EXTENDED CHILD CARE SERVICES

AT PALO ALTO UNIFIED SCHOOL DISTRICT ELEMENTARY SCHOOL SITES

BETWEEN

CITY OF PALO ALTO
AND

KIDS CHOICE

This Sublease agreement (herein "Sublease") is made and entered into on _________________, by and bet ween the City of Palo Alto, a California chartered municipal corporation (herein "City") and Kids Choice (herein " Sublessee"). City and Sublessee may be referred to individually as a “ Party” or collectively as the “Parties” or the “Parties to this Suble ase." T he City Manager serves as Contract Administrator for this Sublease on behalf of the City Council.

RECITALS

A. These recitals are a substantive portion of this Sublease.

B. Effective July 1, 2023, City and the Palo Alto Unified School District (“District”) entered into a Lease Agreement for Extended Day Care Spaces (“Master Lease”). The Master Lease provides in part, that the District furnish space at various elementary school sites to be used for the purpose of providing child care services. The space provided shall meet the State standards for licensing and have all the utility connections in place except telephone.

C. Space has been provided by the District at various Palo Alto Elementary School Sites (“Sites”). City desires to Sublease the space to Sublessee for child care services.

D. Sublessee desires to Sublease said space for the purpose of providing child care services.

Now, therefore, in consideration of these recitals and the following covenants, terms, and conditions, Sublessee and City mutually agree as follows:

SUBLEASE PROVISIONS

1. PREMISES.

City hereby subleases to Sublessee, certain real property located in the City of Palo Alto, County of Santa Clara, State of California, at the Sites more particularly described in Exhibit A atta ched hereto and incorporated herein by reference (herein the " Premises"). Unless specifically provided, Sublessee accepts the Premises “as-is” on the date of execution of this Sublease.

Sublessee acknowledges that the Premises meets the State requirements for State Licensing or as an Exempt Provider according to the general licensing requirements of Title 22 of the Calif ornia Codes of Regulations as promulgated by the Department of S ocial Services. Sublessee shall notify City’s Child Care Coordinator immediately if a site no longer qualifies for State Licensing as a child care facility.

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2. TERM.

2.1 Original Term. T he term of this Sublease shall commence on July 1, 2023 and end on June 30, 2024. Sublessee shall, at the expiration of the term of this sublease, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this sublease. The Parties expect reasonable wear and tear.

2.2 Early Termination by City. If City in its sole discretion determines that it requires the Premises for any public purpose, City may terminate this Sublease upon sixty (60) days written notice.

2.3 Renewed Terms. This Sublease may be renewed for additional one (1) year terms ("Renewed Terms") upon the mutual written agreement of the Parties but in no event shall this Sublease's Term and Renewed Terms, together, exceed a total of five (5) years.

If either party wishes to renew this Sublease, it shall notify the other party in writing at least ninety (90) days before the expiration of the Term.”

3. RENT.

3.1 Base Rent . The rent to be paid by Sublessee shall be in the amount identified on Exhibit A, per site, per month without deduction or offset. Rent shall be payable on the first day of each and every month commencing on July 1, 2023, at a place (or places) as may be designated in writing from time to time by City.

3.2 Annual Increase. During the Term of this Sublease, the Base Rent shall be increased 3% effective on each July 1 st. The sum shall be adjust ed an nually resulting in a compound rate of increase.

3.3 Late Charge. Sublessee acknowledges late payment of rent will cause City to incur costs not contemplated by this Sublease, the exact amount of such costs being extremely difficult and impractic able to fix. Such costs include, without limitati on, processing, accounting and late charges that may be imposed on City. Therefore, if City does not receive any installment of rent due from Sublessee postmarked within ten (10) days after the date such r ent is due, Sublessee shall pay to City an additi onal sum of five percent (5%) of the overdue rent as a late charge. The parties agree this late charge represents a fair and reasonable estimate of the costs City will incur by reason of late payment by Sublessee. Acceptance of any late charge shall not constitute a waiver of Sublessee’ s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City.

3.4 Rent Payment Procedures . Su blessee’s obligation to pay rent shall com mence upon the com mencement of this Sublease. Rent payment for any fractional calendar month shall be prorated. Rent payments shall be delivered to City’s Revenue Collections Division, 250 Hamilton Avenue, PO Box 10250, Palo Alto, CA 94303. The designa ted place of payment may be changed at any time by City upon ten (10) days’ written notice to Sublessee. Sublessee specifically agrees that acceptance of any late or incorrect rentals Item 11
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submitted by Sublessee shall not constitute an acquiescence or waiver b y City and shall not prevent City from enforcing Section 3.3 (Late Charge) or any other remedy provided in t his Sublease. A cceptance of rent shall not constitute approval of any unauthorized sublease or use, nor constitute a wa iver of any non-monetary breach. Payments shall be effective upon receipt. City may apply any payment received from Sublessee at any time against any obligation due and owing by Sublessee under this Sublease, regardless of any statement appe aring on or r eferred to in any remittance from Sublessee or any prior application of such payments.

3.5 Partial Payment. The receipt by City of a pa rtial payment of any amount due t o City endorsed as payment in full will be deemed to be a partial payment only. City may accept and deposit said check without prejudice to its right to recover the balance. Any endorsements or statements on the check or any l etter accompanying the check shall not be deemed an accord and/or satisfaction. Sublessee's obligation (without prior not ice or demands) to pay rent and all other amounts due hereunder shall be absolute and unconditional, and not subject to any abate ment, set off, defense, recoupmen t or reduction.

4. LIMITATION OF THE SUBLEASEHOLD.

Pursuant to the Master Lease, District leased to City the Sites in accordance with the terms of the Master Lease. Sublesse e acknowledges that it has received a copy of the Ma ster Lease.

Capitalized terms used in this Sublease and not otherwise defined shall have the meaning given them in the Master Lease. This Sublease and the rights and privileges granted Sublessee in and to the Premises are subje ct to all covenants, conditions, restrictio ns, and physica l or legal encumbrances, including but not limited to those listed out in Exhibit A. Nothing contained in this Sublease or in any document related hereto shall be construed to imply the conveyance to Sublessee of rights in the Premises whic h exceed those owned by City. Except as otherwise specifically provided herein, where this Sublease requi res Sublessee to obtain City’ s consent or approval, Sublessee understands that City may be required to first obtain t he consent or approval of District. If District should refuse such consent or approval, through no fault of City, City shall be released o f any obligation to grant its consent or approval, whe ther or not such refusal, in Sublessee’s opinion, is arbitrary or unreasona ble. Sublessee acknowledges that City is not in a position nor obligated to render any of the services or to perform any of the obligations required of District under the Master Lease.

5. USE OF PREMISES.

5.1 Required and Permitted Uses. Throughout the t erm of this Sublease, Sublessee shall provide child care related uses, services and activities as set forth in Exhibit C which is attached and incorporated by reference. Premises may not be used for any other purposes without C ity's prior written consent, which consent may be withheld in t he s ole and absolute discretion of the City.

5.2. Use By City. U pon written approval by S ublessee, which approval shall not be unreasonably withheld, the City may use any of the Premises, at no cost, during the summer months that they are not used as set forth in Exhibit A.

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5.3 Prohibited Uses . Sublessee shall not use Premises for any pur pose not expressly permitted hereunder. Sublessee shall not create, cause, maintain or permit any nuisance or waste in, on, or about the Premises, or permit or allow the Premises to be used for any unlawful or immoral purpose. Sublessee shall not do or p ermit to be done anything in any manner which unreasonably disturbs the users of the Sites . Specifically, and without limiting the above, Sublessee agrees not to cause any unreasonable odor, noise, vibration, power emission, or other item to emanate from th e Premises. No materials or articles of any nature shall be permanently stored outside upon any portion of the Premise s, unless approved in writing by the City. Sublessee will not use Sites in a manner that increases the risk of fire or cost of fire insurance. No unauthorized sign or placard shall be painted, inscribed or placed in or on said Sites ; and no tree or shrub thereon shall be destroyed or removed or other waste committed of said Si tes. No motorcycles, automobiles or other mechanical means of transportation shall be placed or stored anywhere on the Sites except for the parking lot. No repair, overhaul or modification of any motor vehicle sh all take place on the Sites or the street in front of said Sites . Sublessee, at his/her expense, shall keep the Premises in as good condition as it was at the beginning of the terms hereof, except damage occasioned by ordinary wear and tear, and excep t damage to the roof, sidewalks and underground plumbing, which is not the fault of Sublessee.

5.4 Condition, Use of Premises. City makes no warranty or representation of any kind concerning the condition of the Premises, or the fitness of the Pr emises for the use intended by Sublessee, and hereby disclaims any personal knowledge with respect thereto, i t being expressly understood by the parties that Sublessee has personally inspected the Premises, knows its condition, finds it fit for Subless ee’s int ended use, accepts it as is, and has ascertained that it can be used exclus ively for the limited purposes specified in Section 5.1.

6. HAZARDOUS MATERIALS.

6.1 Hazardous Materials Defined . The term “ Hazardous Material(s)” shall mean any toxic or h azardous substance, material or waste or any pollutant or contaminant, or infectious or radioactive m aterial, including but not limited to, those substances, materials, or wastes regulated now or in the future under any of the following statutes or regulations and any and al l of those substances included within the definitions of “hazardous substances, ” “hazardous waste, ” “hazardous chemical substance or mixture,” “imminently hazardous chem ical substance or mixture,” “toxic substances,” “hazardous air p ollutant,” “toxic pollut ant” or “solid waste” in the (a) CERCLA or Superfund as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. S ec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C.

Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 e t seq., (k) Cal. Hazar dous Wa ste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) Porter -Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et Item 11
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seq., (n) Proposition 65, Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Ac t, Cal. Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Resublease Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) T CPA, Cal. Health and Sa fety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said la ws or a ny replacement thereof, or as similar terms are defined in the federal, state an d local laws, statutes, regulations, orders or rules.

Hazardous Materials shall also me an any and all other substances, materials, and wastes which are, or in the futur e become, regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, ma terials or wastes, pollutants or contaminants, as defined, listed or regulated by any fed eral, state or local law, reg ulation or order or by common law decision, includi ng without limitation: (i) trichloroethylene, tetracholoethylene , perchloroethylene and other chlorinated solvents; (ii) any petroleum products or fractions thereof; (iii) asbestos, (iv) polychlorinated biphenyls; (v) flammable explosives; (vi) urea formaldehyde; and, (vii) radioactive materials and waste.

6.2. Compliance with Laws. Sublessee shall not cause or permit any Hazardous Material (as defined above) to be brought upon, kept or used in or about the Premises or Sites by Sublessee, its agents, employees, contractors or invitees.

6.3 Termination of Subleas e. City sh all have the ri ght to terminate the Sublease in City’s sole and absolute discretion i n the event that : (i ) any anticipated use of the Premises by Sublessee involves the generation or storage, use, treatment, disposal , or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority, or Hazardous Mate rials Laws; (ii) Sublessee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Premises, if the contamination resulted from Sublessee’s action or use of the Premises; or ( iii) Sublessee is subject to an enforcement order issued by any governmental authority in connection with the re lease, use, disposal, or storage of a Hazardous Material on the Premises.

6.4 Reserved.

6.5 Hazardous Mate rials Indemnity . Sublessee shall indemnify, defend (by counsel reasonably acceptable to City), protect, and hold City harmless from and against any and all claims, liabilities, penalties, forfeiture s, losses , and/or expenses, including without limitation, diminution in value of the Prem ises, damages for the loss or restricti on on use of the rentable or usable space or of any amenity of the Premises, damages arising from any adverse impact or marketin g of the Premises and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person, or da mage to any property whatsoever (including, without l imitation, groundwater, sewer system s, and atmosphere), arising from, caused, or resulting, either prior to or during the Sublease Term, in whole or in part, directly or indirectly, by the presence or di scharge in, on, under, or about the Premises by Suble ssee, Sublessee’s Item 11
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agents, employees, licensees, or invitees or at Sublessee’s direction, of Hazardous Material, or by Sublessee’ s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. For purposes of the indemnity provided herein, any acts or omissions of Sublessee or its employees, agents, c ustomers, sub-sublessees, assignees, contractors, or subcontractors of Sublessee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributa ble to Sublessee . Sublessee’s indemnification obligations sh all include, with out limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Ma terials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Pre mises, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the Sublease Term.

6.6 City’s Right to Perform Tests . A t any time prior to the expiration of the Sublease Term, City shall have t he right to enter upon the Premises in order to conduct tests of water and soil.

7. UTILITIES AND OPERATING EXPENSES.

Sublessee acknowledges that City is not in a position nor obligated to render any of the services or to perform any of the obligations required of District under Section 5.1.6 of the Master Lease with respect to the furnishing of any services or ut ilities to the Premises. Sublessee shall pay the cost for utilities and provide and pay for any telephone equipment or services at the Premises .

However, as separate meters are not provided for these services and it would be uneconomical to separately meter these services, Sublessee agrees t o pay to City an estimate of Sub lessee’s consumption for these utilities. The monthly utility amount is se t forth in Exhibit A hereto and shall be rem itted by Sublessee to City at the same time as the Rent paymen ts are due under Section 3.

If C ity is required to construct new or addi tional utility installations, in cluding, without limitation, wiring, plumbing, conduits, and mains, resulting from Sublessee’s special requirements, Sublessee shall on demand pay t o C ity the total cost of such items or pay and contract for such installations directly.

8. TAXES.

8.1 Re al Property Taxes Defined. The term “real property taxes” as used herein shal l mean a ll taxes (including possessory interest taxes) , as sessments, l evies and other charges, general and special, foreseen and unforeseen, now or hereafter impo sed by any governmental or quasi -governmental authority or special district having the direct or indirect power to tax or levy assessments, which are levied or assesse d against or with respect to: (i) value, occupancy, use or possession of the Premises and /or the improvements; (ii) any improvements, fixtures, equipment and other real or personal property of Sublessee that are an integral part of the Premi ses; or, (ii i) use of the Premises, improvements public utilitie s or energy within the Premises. The te rm “real property taxes” shall also mean al l charges, levies or fees imposed by reason of environmental regulation or other governmental control of the premises and /or the improvements, new or altered excise, transaction, sales, privilege, assessment, or o ther Item 11
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taxes or charges now or hereafter impo sed upon City as a result of this Sublease, and a ll costs and fees (including attorneys’ fees) incurred by City in contes ting any real property taxes and in negotiating with public authorities as to any real prope rty taxes affecting the Premises. If any real property taxes are based upon property or rents unrelated to the Premises and/or the improvements , then only that par t of such tax that i s fairly allocable to the Premises and/or the improvements , as determine d by City, on th e basis of the assessor’s w orksheets or other available information, shall be included within the meaning of the term “real property taxes.”

8.2 Payment of Real Pr operty Taxes. Sublessee shall pay Sublessee’ s share of all real property taxes (as defined in Section 8.1 above ) which become due and payable to City on or before the later of ten (10) days prior to the delinquency thereof or t hree (3) day s after the date on which Sublessee receives a copy of the tax bill and notice of Cit y’s determination hereunder. Sublessee’s liability to pay real property taxes shall be prorated on the basis of a three hundred sixty- five (365) day year to account for a ny fraction or portion of a tax year included in the Sublease term at the commencement or expiration of the Sublease.

8.3 Revenue and Taxation Code. Sublessee specifically acknowledges it is familiar with section 107.6 of the California Revenue and Taxa tion Code . Sublessee realizes that a possessory interest subject to property taxes may be c reated, agrees to pay any such tax, and hereby waives any rights Sublessee may have under said California Revenue and Taxation Code section 107.6.

8.4 Personal Property Taxes. Suble ssee shall pay before delinquent , or if requested by City, reimburse City for, any and a ll taxes, fees, and assessments associated with the Premises, the personal property contained in the premises and other taxes, fees, and assessments regarding any activities which take place at the Sites . Sublessee recognizes and understands in accepti ng this Sublease that its interest therein may be subject to a possible possessory interest tax that City or County may impose on such inte rest and that such tax payment shall not reduce any rent due City hereunder and any such tax shall be the liability of and be paid by Sublessee.

9. MAINTENANCE.

9.1 City and Sublessee Responsibilities . Sublessee acknowledges that City is not in a position nor obligated to perform any of the obligations required of District under Sections 5.3.2 of the Maste r Lease with respect to the maintenance, repair, or restoration of the Premises. Sublessee shall not be granted relief from rent or b e given other consideration if and when District pe rforms maintenance and repair obligations as required t herein. Sublessee at Sublessee’s expense, shall perform a ll remaining maintenance and repairs that are not the res ponsibility of District, including but not limited to: plumbing, pa inting, light bulb and ba llast replacement, window glass replacement, floor treatme nt, drape ry and carpet cleaning, door and window hardware replacement, space heater or any other Sublessee installed heating/air conditioning system, interior pest control a nd any special secu rity d evices. Sublessee shall provide janitorial service to the Premise s and shall clean the windows inside and outside as Item 11
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needed. Sublessee shall keep the P remises and all improvements thereto in first- class order, repair, and condition, and shall keep the Premises in a safe, clean, wholesome, and sanitary condition to the c omplete satisfaction of C ity, and in com pliance with all applicable laws, throughout the term of this Sublease. In addi tion, Sublessee shall maintain, at Sublessee’s expense, all equi pment, furnishings and trade fixtures upon the Premises required for the maintenance and operation of a first -class business of the type to be conducted pursuant to this Sublease. Sublessee f urther agrees to provide approve d containers for trash, g arbage and recycling and to keep the Premises free and clear of rubbish, litter and recyclable materials. City shall h ave the right to enter upon and inspect the Premises at any time for cleanliness and safety. Notwithstanding the above provisions, Sublessee shall be responsible for damage or repair to the Premises or any of its support systems resulting from Sublessee’s use of the Premises and not occasioned by normal wear and tear, including plumbing and glass breakage.

Sublessee shall desi gnate in wri ting to C ity an on -site representative who shall be responsible for the day -to-day operation and level of maintenance, cl eanliness and general order.

9.2 Waiver of Civil Code . Sublessee expressly waives the benefit of any statute now or hereinafter in effect, i ncluding the provisions of S ections 1941 and 1942 of the Civil Code of California, which would otherwise afford Su blessee the right to make repairs at City’s expense or to terminate this Suble ase because of City’s failure to keep Premises in good order, conditio n and repair. Sublessee further agrees that if and when any repai rs, alterations, additions or betterment s shall be made by Sublessee as required by this paragraph, Sublessee shall promptly pay for all labor done or m aterials furnis hed and shall keep the P remises free and clear of any lien or encumbrance of any kind whatsoever. If Sublessee fails to make any repairs or perform any maintenance work for which Sublessee is responsible with in a reasonable time (as determi ned by the City Manager in the City Manager’s sole discretion) after demand by the C ity, City shall have the right, but not the obligation, to m ake the repairs at Sublessee’s expense; within ten (10) days of receipt of a bil l, Sublessee shall reimburse City for the cost of such repairs, including a fifteen percent (15%) administrative overhead fee. The maki ng of such repairs or performance of maintenance by City shall in no event be construed as a waiver of the duty of Suble ssee to make repairs or perform maintenance as pr ovided in this section.

9.3 Reserved.

10. CONSTRUCTION BY SUBLESSEE.

10. 1 Construction Standards. All design and construction performed by or on behalf of Sublessee shall conform to the approved plans, specifications, construction and architectural standards approved by the C ity Council if require d by Palo Alto ordinances or procedures or otherwise by the City Manager. Once the work is begun, Sublessee shall with reasonable diligence prosecute all construction to completion. All work shall be p erformed in a good and workmanlike manner, shall substantia lly comply with any plans and s pecifications approved by C ity and shall comply with all applicable Item 11
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governmental permits, laws, ordinances and regulations, and shall meet all other requirements contained in this Sublease.

10.2 Cost of Improvements . Sublessee shall pay all costs for c onstruction done or caused to be done by Sublessee on the Premises as permitted or required by this Sublease.

Sublessee shall keep the Premises free and clear of all c laims and liens resulting from construction done by or for Sublessee. Promptly after com pletion of construction, Sublessee shall provide to the City Manager a state ment of the reasonable and actual costs of construction for the initial improvements, which statement shall be certified as to accuracy and signed by Sublessee under penalty of perjury.

10.3 Ownership of Improvements. All improvements constructed, erected, or installed upon the P remises must be free and clear of all liens, claims , or liability for la bor or material and shall become the property of C ity, at its election, upon expira tion or earlier termination of this sublease and upon City's election, shall r emain upon the P remises upon termination of this Sublease. Title to all e quipment, furni ture, furnishings, and trade f ixtures placed by Subl essee upon the P remises shall remain in Sublessee, and replacements, substitutions and modifications thereof may be made by Sublessee throughout the term of this Sublease. Sublessee may remove such fixtur es an d furnishings upon termination of this Sublease if Sublessee is not then in default under this Sublease, provided that Sublessee shall repair to the satisfaction of City any damage to the P remises and improvements caused by such remova l an d provided t hat usual and customary lighting, plumbing and heating fixtures shall remain upon the P remises upon termination of this Sublease.

10.4 Indemnity for Claims Arising O ut of Construction. Sublessee shall defend and indemnify City against all claims, liabilities, and losses of any type arising out of work performed on the Premises by Sublessee, together with reasonable attorneys' fees and all costs and expenses reasona bly incurred by C ity in negotiating, settling, defending or otherwise protecting against such claims.

10.5 Assurance of Completion. Prior to commencement of any construction or al teration expected to cost more than $5,000.00, Sublessee shall furnish the City Manager evidence that assures City that sufficient monies will be availa ble to complete the proposed work.

The amount of such assurance shall be at least the total estimated c onstruction cost.

Evidence of such assurance shall take one of the forms set out below and shall guarantee Sublessee’s full and faithful performance of all of the terms, covenants, and conditions of this Sublease:

A. Completion Bond;
B. Performance, lab or and material bonds, supplied by Sublessee’s contractor or contractors, pr ovided the bonds are issued jointly to Sublessee and City;
C. Irrevocable letter of credit from a financial institution; or D. Any combination of the above.

All bonds and letter s of credit must be issued by a company qualified to do business in Item 11
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the State o f California and be acceptable to the City Manager. All bonds and letter s of credit shall be in a form acceptable to the City Manager, and shall in sure faithful and full observance and performance by Sublessee of all of the terms, conditions, covenants, a nd agreements relating to the construction of improvements or alterations in accordance with this Sublease.

10.6 As Built Plans . Sublessee shall provide the City Manager with a complete set of reproducible “as built plans” reflecting actual constructi on within or upon the Premises upon completion of any: (i) new construction; (ii) structural alterations; or, (iii) n on- structural alterations costing more than $25,000.

11. ALTERATIONS BY SUBLESSEE

Sublessee shall not make any alterations or improvements to the Premises without obtaining the prior written consent of the City M anager. Sublessee may, at any time and a t its sole expense, install and place business fixtures and equipment within the Premises, provided such fixtures and installation have been reviewed and approved by the City Manager. Prior to commencement of any work, Sublessee shall pay the amount of any increase in premiums on insurance policies provided for herein because of endorsements to be made covering the risk during the course of the work and shall pay for any and all permits which may be required.

12. H OLD HARMLESS/INDEMNIFICATION.

12.1 Indemnification. To the exte nt permitted by law, Sublessee agrees to protect, defend, hold harmless and indemnify City, its City Council, com missions, officers, agents, volunteers, and employees from and against any cl aim, injury, liability, loss, cost, and/or expense or damage, howe ver same may be caused, including all c osts and reasonable attorney's fees in providing a defense to any claim arising therefrom for which City shall become legally liable arising from Suble ssee's, its off icers’ agents’ subcontractors’ or employees’ negligent, reck less, willful, or wrongful ac ts, errors, or omissions, or conduct for which applicable law may impose s trict liability on Sublessee, with respect to or in any way connected with this Sublease or in connection with Sublessee’s performance of or fa ilure to perform its obligations under this Sublease, including but not limited to Exhibit C . Sublessee shall give City immediate notice of any claim or liability hereby indemnified against. Th is indemnity shall be in addition to the Hazardous Materials i ndemnity contained in this Sublease and shall survive the expiration of or early termination of the Sublease Term.

12.2 Waiver of Claims . Sublessee waives any claims against C ity for in jury to Sublessee’s business or any loss of income therefrom, for damage to Sublessee’ s property, or for injury or death of any person in or about the Premises or Sites , from any cause whatsoever, except to the extent caused by Ci ty’s active negligence or willful misconduct.

13. DAMAGE, DESTRUCTION AND TERMINATION.

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damage t o the Premises by fire, windstorm or other casualty, whether insured or uninsured, shall entitle Su blessee to terminate this Sublease. City and Sub lessee waive the provisions of any statutes which relate to termination of a sublease when subleased property is destroyed and agree that such event shall be governed by the terms of thi s Sublease.

13.2 Fo rce Majeure. Pr evention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God, inability to obtain labor, inability to obtain materials o r reasonable substitutes, governmental restrictions, governmental regulati on, governmental controls , judicial order s, enemy or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Sublessee (financial inability excepted), shall excuse the performance by Sublessee for a period equal to t he prevention, delay, or stoppage, except the obligations imposed with regard to rent to be paid by Subles see pursuant to this Sublease. In the event any work performed by Sublessee or Sublessee’s contractors results in a strike, lockout, and/or labor dis pute, the strike, lockout, and/or labor dispute shall not excuse the performance by Sublessee of the provisions of this Sublease.

13.3 Restoration of Premis es by Sublessee.

13.3.1 Destruction Due to Risk Covered by Insurance . If, during the term, the Premises are total ly or partially destroyed from a risk covered by the insurance described in Section 20 (Insurance), rendering the Premises totally or partially inaccessible or u nusable, Sublessee shall restore the Premises to subs tantially the same condit ion as it was in i mmediately before destruction, whether or not the insurance proceeds are sufficient to cover the actual cost of restoration. Such destruct ion shall not termina te this Sublease. If the laws existing at that time do not permit the restoration, either party can terminate this Sublease immediately by giving notice to the other party.

If the cost of the restoration exceeds the amount of proceeds received from the insurance required under Section 20 (Insurance), C ity can elect to terminate this Sublease by gi ving notice to Sublessee within thirty (30) days after determining that the restoration c ost will exceed the insurance proceeds. In the case of destruction to the Premises only, if C ity elects to terminate this Subleas e, Sublessee, within th irty (30) days a fter receiving City’s notice to terminate, can ele ct to pay to C ity, at the time Sublessee notifies C ity of its election, the difference between the amount of insurance proceeds and the cost of restoration, in which c ase C ity shall restore the Premises. C ity shall give Sublessee satisfactory evidence that all sums contributed by Sublessee as provided in this paragraph have been expended by City in paying the cost of restoration.

If City elects to terminate this Sublease, and Sublessee do es not elect to contribute toward the cost of restoration as provided in this section, this Sublease shall terminate.

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13.3.2 Destruction D ue to Risk Not Covered by Insurance . If, during the term, the Premises are t otally or partially destr oyed from a risk not covered by the insurance described in Secti on 20 (Insurance), rendering the Premises totally or par tially inaccessible or unusable, Sublessee shall res tore the Premises to su bstantially the same condition as it was in immediately before destruction, whether or not t he insurance proceeds are suffici ent to cover the actual cost of restoration. Such destr uction shall not terminate this Sublease. If the la ws existing at that time do not permit the restoration, either party can terminate this Sublease immediately by giving notice to the other party.

If the cost of res toration exc eeds ten percent (10%) of t he then replacement value of the Premises totally or partially destroyed, Sublessee can elect to terminate th is Sublease by giving no tice to C ity within sixty (60) days after determining the restoration cost and replacement value.

In the case of destruct ion to the Premises only, if City elects to termina te this Sublease, Suble ssee, within thirty (30) days afte r receiving C ity's notice to terminate, can elect to pay t o City at the time Sublessee noti fies City of its election, the difference between ten per cent (10%) of the then replacement value of the Premises and the actual co st of restoration, in which case C ity shall restore the Pr emises. C ity shall give Sublessee satisfactory evidence that all sums contributed by Sublessee as provided in this paragrap h have been expended by C ity in paying the cost of restoration.

If City elects to terminate this Sublease and Sublessee cannot or does not elect to contribute towar d the cost of restoration as provided in this section, this Sublease shall terminate.

13.3.3 Extent of City’s Obligation to Restore . If City is required or elects to restore the Premises as prov ided in this section, C ity shall not be required to restore alterations made by Sublessee, S ublessee's improvements, Sublessee's trade fixtures, and S ublessee's personal property, such excluded items being the sole responsibility of Sublessee to restore. City shall have no obligation to restore, replace or compens ate Sublessee for any loss of Su blessee’s improvements, trade fixtures or personal property in the event of partial damage to Premises due t o floor or ceiling water leaks, electrical damage, fire damage or smoke damage.

14. SIGNS.

Sublessee shall not pl ace, construct, maintain, or al low any signs upon the Premises without prior written consent of City , which consent shall not be unreasonably withheld. All signs must comply with the City’s Sign Ordinance unless exempt therefrom.

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15. ASSIGNMENT AND SUBLETTING.

15.1 Assignment & Suble tting Prohibited. The parties acknowledge that C ity has relied on the unique background, character and capa bilities of Sublessee in entering into this Sublease or in establishing the rent pa yable under this Su blease. Consequently, Sublessee shall not, either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Su blease or any interest herein, or any right or privilege appurtenant hereto, or al low any other person (the employees , agents and invitees of Subles see excepted) to oc cupy or use the Premises, or any portion thereof.

Any purported assignment or subletting shall be void, and shall, at the option of the C ity, constitute a default under this Sublease.

15.2 Assignment Defined. For purposes of this s ection, each of the following shall also be deemed an assignment subject to the provisions hereof: (i) if Sublessee is a partnership or joint venture, a withdrawal, addition, or change (voluntary, involuntary, by operation of law, or otherwise) of any of the partners or vent urers thereof; (ii) if Sublessee is a limited liability company, a withdrawal, addition, or change (voluntary, involuntary, by operation of law, or otherwise) of any of the members or manager s thereof; (iii ) if Sublessee is composed of more than one person, a purported assignment or transfer (voluntary or involuntary, by operation of law, or otherwise) from one thereof to the other or others thereof; (iv) if Sublessee is a corporation, a change in the owners hip (voluntary or involuntary, by operation of law, or otherwise) of 25% or more of its c apital stock or members (or, in the case of a nonprofit corporation without members, of 25% or more or its directors); or (v) a chan ge in Sublessee ’s st atus as a non -profit, charitable organization.

16. DEFAULTS; REMEDIES.

16.1 Defaults . The occurrenc e of any one or more of the following events shall constitute a material default, or breach of this Sublease, by Sublessee:

16.1.1 Abandonment of the Premises by Subl essee as defined by California Civil Code section 1951.3;

16.1.2 Failure by Sublessee t o make any payment of rent or any other payment required to be made by Sublessee hereunder, as provided in this Sublease, where such failure shall continue for a peri od of ten (10) business days af ter written notice thereof from City to Sublessee. In the event City serves Sublessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph;

16.1.3 Failure by Sublessee to observe or pe rform any of the covenants, conditions or provisions of this Sublease in any material respect where such failure shall continue for a period of thirty ( 30) days after w ritten notice thereof from Cit y to Sublessee; pro vided, however, that if the nature of Sublessee’ s default is such that more than thirty ( 30) days are reasonably required for its cure, Item 11
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then Sublessee shall not be deemed to be in default if Sublessee commenced such cure within said thir ty (30) day period and thereafter diligently prosecutes such cure to completion;

16.1.4 Making by Sublessee of any general arrangement or assignment for the benefit of creditors; Sublessee’ s becoming a “debtor” as defined i n 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition file d against Sublessee, the same is dismissed within sixty (60) days); the appointment of a bankruptcy truste e or receiver to take poss ession of all or substantially all of Sublessee’s assets located at or on the Premise s or of Sublessee’s interest in this Sublease where possession is not restored to Sublessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substanti ally all of Sublessee’s assets located at or o n the Premises or o f Sublessee’s interest in this Sublease, where such seizure is not discharged within thirty (30) days.

16.2 Remedies. In the event of any material default or breach by Sublessee , City may at any time thereafter, following any notice required by statute, and without limiting City in the exercise of any right or remedy which City may have by reason of such default or breach:

16.2.1 Terminate Sublessee ’s right to possessi on of the Premises b y any lawful means, in which case this Subleas e shall terminate a nd Sublessee shall immediately surrende r possession of the Premises to City. In such event, City shall be entitled to recover from Sublessee all damages incurred by City by reason of Sublessee’s default in cluding but not limited to : the cost of recovering possession of the Premises and Improve ments; expenses of reletting, inc luding necessary renovati on and alteration of the Premises and Improvements ; reasonable attorneys’ fees; the worth at t he time of the a ward of the u npaid rent that had been earned at t he time of termination of this Sublease and the worth at the time of awa rd of the amount by which the unpaid rent for the balanc e of the term after the tim e of such award exceeds the amount of such rental l oss for the same period that Sublessee proves could be reasonably avoided.

16.2.2 Maintain Sublessee’s right to possession, in which case this Su blease shall continue in effect whether or not Sublessee s hall have abandoned the Premises.

In such event, C ity shall be e ntitled to enforce all of City’ s rights and remedies under this Sublease, including the right to recover rent and other payments as they become due hereunder.

16.2.3 Pursue any other remedy now or hereafter available to City under the laws or judicial decisions of the State of California. City shall have all remedies provided by law and equity.

16.3 No Relief from Forfeiture After Default. Sublessee waives all rights of redemption or re lief from forfeiture under California Code of Civil Procedure sections 1174 and 1179, and any other present or future law, in the event Subles see is evicted or City otherwise lawfully takes possession of the Premises by reason of any default or breach of Item 11
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this Sublease by Sublessee.

16.4 Dis position of Aba ndoned Personal Property. If the Sublessee fails to remove any personal property belonging to Sublessee from the Premises after forty -five (45) days of the expiration or termination of this Sublease, such property shall at the option of C ity be deemed to h ave been transferred to C ity. C ity shall have the right to remove and to dispose of such property without liability to Sublessee or to any person claiming under Sublessee, and the City shall have no need to account for such property.

17. I NTEREST ON PAST-DUE OBLIGATIONS.

Except as expressly provided herein, any amount due City when not paid when due shall bear interest at the lesser of ten percent (10%) per year or the maximum rate then allowable by law from the date due.

18. HOLDING OVER.

If Sublessee remains in possession of the Premises or any part thereof after the expiration of the term or option term hereof, such oc cupancy shall be a tenancy from month to month with all the obligations of this Su blease applicable to Sublessee and at City's prevailing monthly rate of rent for the Premises at the time of expiration. The rent under a m onth-to-month tenancy is subject to increase on thirty (30) days prior written notice from City. Nothing contained in this Sublease shall give to Sublessee the right to occupy the Permises after the expiration of the term, or upon an earlier termination for breach.

19. CITY’S ACCESS.

19.1 Access for Inspection. City and Ci ty’s agents shall have the right to enter the Premises at reasonable times, upo n not less than twenty-four (24) hours prior notice to Sublessee, for the purpose of inspecting same, showing same to prospective purchas ers, lenders or sublessees, and making such alterations, repairs, improvements, or additions to the Premises as City ma y deem necessar y. City may at any time place on or about the Premises any ordinary “ For Sale” signs and City may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary “For Sublease” signs, all without rebate of rent or liability to Sublessee.

19.2 Security Measures. City shall have the ri ght to require a reasonable secur ity system, device, operation, or plan be installed and implemented to protect the Premises or the Improvements. Shoul d City, in its s ole discretion, require Sublessee to install such a security system, Sublessee agrees to bear the sole cost and expense o f any security system, device, operation or plan and the installation and implement ation thereof.

Sublessee shall obtain City’s prior approval before installing, implementing or changing any City approved security system, device, operation or plan.

19.3 New Locks. Sublessee may install new locks on all exterior doors. Sublessee shall advise City of such action and shall provide City with keys to said locks. Sublessee shall also deliver to City the old locks with keys. Upon termination, Sublessee shall leave new Item 11
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locks that shall become the property of City.

20. INSURANCE.

Sublessee's responsibility for the Premises begins immediately upon delivery and Sublessee, at its sole cost and expense, and at no cost to City, s hall purchase and maintain in full force and effect during the en tire term of this Sublease insurance coverage in am ounts and in a form acceptable to City as set forth in Exhibit C attached hereto and incorporated herein by reference.

Said policies shall be maintained with respect to Sublessee’s employees, if any, and all vehicles operated on t he Premises. The policies shall include the required endorse ments, certificates of insurance and coverage verifications as described in Exhibit C. Sublessee also agrees to secure renter's liability insurance.

Sublessee shall deposit with the City Manage r, on or before the effec tive date of this Sublease, certificates of ins urance necessary t o satisfy City that the insurance provisions of this Sublease have been com plied with, and to keep such insurance in effect and the c ertificates therefore on deposit with City during the entire term of this Sublease. Should Sublessee not provide evidence of such required coverage at least t hree (3) days prior to the expiration of any existing insurance coverage, City may purchase such insuran ce, on behalf of and at the expense of Sublessee to provide six months of coverage.

City shall retain the right at any time to review the coverage, for m, and amount of the insurance required hereby. If, in the opinion of t he C ity’s Risk Manager (or comparable official), the insurance provisions in this S ublease do not provide adequate protection for C ity and for members of the public using the P remises, the City Manager may require Sublessee to obtain insurance sufficient in coverage, form, and amount to provide adequate protection as determined by the Risk Manager. C ity's requirements shall be reasonabl e and shall be designed to assure protection from and against the kind and extent of risk that exists at the time a change in insurance is required.

The City Manager shall notify Sublessee in writing of changes in the insurance requirements . If Sublessee does not deposit copies of acceptable insurance p olicies with C ity incorporating such changes within sixty (60) days of receipt of such notice, or in the event Sublessee fails to maintain in effect any required insurance coverage, Sublessee shall be in de fault under this sublease without further notice t o Sublessee. Such failure shall consti tute a material breach and shall be grounds for immediate termination of this Sublease at the option of City.

The p rocuring of such required policy or policies of ins urance shall n ot be construed to limit Sublessee’s liability hereunder nor to fulfill the indemnification provision and requirements of this Sublease. Notwithstanding the policy or policies of insurance, Sublessee shall be obligated for the full and total amount of any damage, injury, or loss caused by or connected with this Sublease or with use or occupancy of the Premises.

21. RESERVATION OF AVIGATIONAL EASEMENT.

City hereby reserves for the use and benefits of the public, a right of avigation over the Premises for the passage of aircraft landing at, taking off, or operating from the adjac ent airport operated Item 11
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by the Count y of Santa Clara. Subles see resubleases the City from all liability for noise, vibration, and any other related nuisance.

22. EMINENT DOMAIN.

22.1 If all or any part of the P remises (or the building in which the Premise s are located) is condemned by a public entity in the lawf ul exercise of its power of emin ent domain, this Sublease shall cease as to the part condemned. The date of s uch termination shall be the effective date of p ossession of the whole or part of the Pr emises by the condemning public entity.

22.2 If only a part is condemned and the condemnation of that part does not substantially impair the capacity o f the remainder to be used for the purposes required by this Sublease, Sublessee shall continue to be bound by the terms, covenants, and conditions of this Sublease. However, the then monthly rent shall be reduced in proportion to the diminution in value of the P remises. If the cond emnation of a part of the P remises substantially impairs the capacity of th e remainder to be used for the purposes required by this Sublease, Sublessee may:

A. Terminate this Sublease and thereby be absolved of obligations under this Sublease which have not accrued as of the date of posses sion by the condemning public entity; or

B. Continue to occupy the remaining P remises and thereby cont inue to be bound by the terms, covenants and conditions of this Sublease. If Sublessee elects to continue in possession of the remainder of the Premises, the monthly rent shall be reduced in proportion to the diminution in value of the Premises.

C. Suble ssee shall provide C ity with written notice advising C ity of Sublessee’s choice within thirty (30) days of possession of the part condemned by the condemning public entity.

22.3 C ity shall be e ntitled to and shall receive all compensation related to the condemnation, except that Su blessee shall be entitled to: (a) that portion of the compensation which repr esents the val ue for the remainder of the Sublease term of any Sublessee-constructed impr ovements taken by the condemning public entity, which amount shall not exceed the actual cost of such improvements reduced in proportion to the relation ship of the rem aining Sublease term to the original Sublease term, using a straight line approach; and (b) any amount specifically designated as a moving allowanc e or as compensation for Sublessee’s personal property. Su blessee shall have no claim against City for the value of any unexpired term of this Sublease.

23. POST-ACQUISITION TENANCY.

Sublessee hereby acknowledges that Sublessee w as not an occupant of the P remises at the time the Premises were acquired by C ity. Sublessee further understands and a grees that as a post- acquisition Sublessee, Sublessee is not eligible and furthermore waives all claims f or relocation Item 11
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assistance and benefits under federal, state or local law.

24. DISPUTE RESOLUTION.

24.1 Unless otherwise mutually agreed to, any controversies between Sublessee and City regarding the construction or application of this Sublease, and clai ms arising out of this Sublease or its breach shall be submitted to mediation with in thirty (30) days of the written request of one Party after the service of that request on the other Party.

24.2 The Parties may agree on one mediator. If they cannot agr ee on one mediator, the Party demanding mediation shal l r equest the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting s hall not exceed one day (eight (8) hours).

The Parties may agree to extend the time allowed for mediation under this Sublease.

24.3 The costs of mediation shall be borne by the Parties equally.

24.4 Mediation under this section is a condition preceden t to filing an a ction in any court. In the event of litigation arising out of any dispute related to thi s Sublease, the Parties shall each pay their respective attorney's fees, expert wi tness costs and cost of suit, regardless of the outcome of the litigation.

25. NON-LIABILITY OF OFFICIALS AND EMPLOYEES OF THE CITY.

No official or employee of City shall be personally liable for any defau lt or liability under thi s agreement.

26. NON-DISCRIMINATION

26.1 Non-discrimination in Sublease Activities. Sublessee agrees that in the performance of this Sublease and in connec tion with all of the activities Sublessee conducts on the Premises, it shall not discriminate a gainst any employee or pers on because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Subless ee acknowledges that is familiar with the provisions set forth in Section 2.30.510 of the Palo Alto Municipal Code relating to nondisc rimination in employment and Section 9.73 of the Palo Alto Municipal Code relating to City policy against arbitrary discrimination.

26.2 Human Rights Policy. In connecti on with all activities that are co nducted upon the Premises, Sublessee agrees to accept and enforce the statements of policy set forth in Section 9.73.010 which provides: “It is the policy of the City of Palo Alto to affirm, support and protect the human rights of every person within its jurisdiction. These rights include, but are not lim ited to, equal economic, political, and educational opportunity; equal accommodations in a ll business establishments in th e city; and equal serv ice and protection by all public agencies of the city.”

27. INDEPENDENT CONTRACTOR.

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It is agreed that Sublessee shall act and be an independent contractor and not an agent nor employee of City.

28. CONFLICT OF INTEREST.

Sublessee shall at all times avo id conflict of interest or appearance of conflict of interest in performance of this agreement. Sublessee warrants and covenants that no official or employee of City nor any business entity in which a ny official or employee of C ity is interested: (1) has been employed or retained to solicit or aid in the procuring of this agreement; or (2) will be employed in the pe rformance of this agreement without the divulgence of such fact to C ity. In the event t hat City determines that the employment of any such off icial, employee or business entity is not compatible with suc h official's or employee's duties as an official or employee of City, Sublessee upon request of City shall immediately terminate such employment. Violation of this provision constitutes a serious b reach of this Sublease a nd City may terminate this Sublease as a result of such violation.

29. MEMORANDUM OF SUBLEASE.

Neither this Sublease, nor any memorandum, affidavit, or other writing with re spect thereto , shall be recor ded by Sublessee or by anyone acting through, under, or on behalf of Sublessee.

City shall have the right to record a memorandum of this Sublease, and Sublessee shall execute, acknowledge , and deliver to City for recording any memorandum prepared by City.

30. ESTOPPEL CERTIFICATE.

Sublessee shall, from time to time, upon at least thirty (30) days prior written notice from City, execute, acknowledge and deliver to City a statement in wr iting: (i) certifying this Sublease is unmodified and in full force and effect, or, if modified, stating the nature of the modifi cation and certifying that the Su blease, as modified, is in ful l force and eff ect, and the date to which the rental and other charges, if any, have been paid; and, (ii ) acknowledging that there are not to Sublessee’s knowledge, any defaults, or stating if any defaults are claimed, any statement may be relied upon by any prospective purchaser or encumbrancer of the Premises.

31. LIENS.

Sublessee agrees at its sole cost and expense to keep the Sites free and clear of any and all claims, levies, liens, encumbrances or attachments.

32. VACATING.

Upon termination of the tenancy, Subless ee shall completely vacate the Sites , including the removal of any and all of its prope rty. Before departure, Sublessee shall return keys and personal p roperty listed on the inventory to City in good, clean and sanitary condition, reasonable wear and t ear excepted. Sublessee shall allow City to inspect the Premises to verify the condition of the Premises and its contents.

33. ABANDONMENT.

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Sublessee's absence from t he Premises for three (3) consecutive days, without prior notice, during w hich time rent or other charges are delinquent, shall be deemed abandonm ent of the Premises. Such abandonment will be deemed cause for im mediate termination without notice.

City shall thereupon be authorized to enter and take possession and to remove and dispose of the property of Sublessee or its guests without any liability whatsoever to City.

34. NOTICES.

All notices to the Parties shall, unless otherwise requested in writing, be sent to City addressed as follows:

City of Palo Alto
Real Estate Manager
250 Hamilton Avenue
Palo Alto, CA 94301

and

Office of Human Services
Cubberley Community Center
4000 Middlefield Road #T2
Palo Alto, CA 94303

And to Sublessee addressed as follows:

Kids Choice
132 Brenton Court
Mountain View, CA 94043
Attn: Lorene Scatena
Telephone: (650) 290-2040
Email: [email protected]

Notices may be served upon Sublessee in person, by first class mail, or by certified mail whether or not said mailing is accepted by Sublessee.

35. TIME.

Time shall be of the essence in this Sublease.

36. AMENDMENTS.

It is mutually agreed that no oral S ubleases have been entered into and that no alteration or variation of the terms of thi s Sublease shall be v alid unless mad e in writing and signed by the Parties to this Sublease.

37. SIGNING AUTHORITY.

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If this Sublease is not signed by all Sublessee s named herein, the person actually signing warrants that he/she has the authority to sign for the others.

38. CAPTIONS.

The captions of the various sections, paragraphs and subparagraphs of this Sublease are for convenience only and shall not be considered or referred to in resolving questions of interpretation.

39. SURRENDER OF SUBLEASE NOT MERGER.

The voluntary or other surr ender of this sublease by Sublessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of City, te rminate all or any existing subsubleases or subtenancies, or may, at the option of City, operate as an assig nment of any and all such subsubleases or subtenancies.

40. INTEGRATED DOCUMENT.

This Sublease, including any exhibits attached hereto, embodies t he entire agreement between City and Sublessee. No other understanding, agreem ents, conversations or otherwise, with any officer, agent or employee of City prior to execution of thi s Sublease shall affect or mod ify any of the terms or obligations contained in any documents comprising this Sublease. Any such verbal agreement shall be considered as unofficial in formation and in no way binding upon City.

All agreements with City are s ubject to approval of the City Council before City shall be bound thereby.

41. WAIVER.

Waiver by City of one or more conditions of performance or any breach of a condition under this Sublease shall not be construed as a waiver of any other condition of performance o r subsequent breaches. The subsequent acceptance by a Party o f the performance of any obligation or duty by another Party shall not be deemed to be a waiver of any term or condition of this Sublease. The exercise of any remedy, right, option or privilege hereunder by City shall not preclude City from exercising the same or any and all other remedies, rights, options and pri vileges hereunder an d City's failure to exercise any remedy, right, option or privilege at law or equity, or otherwise which City may have, shall not be construed as a waiver.

42. INTERPRETATIONS.

In construing or interpreting this Sublease, the word "o r" shall not be construed as exclusive and the word "including" s hall not be li miting. The Parties agree that this Subleas e shall be f airly interpreted in accordance with its terms without any str ict construction in favor of or against any other Party.

43. SEVERABILITY CLAUSE.

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If any provision of this Sublease is held to be illegal, invalid or unenforceable in full or in pa rt, for any reason, then such provision shall be modified to the minimum e xtent necessary to make the provision legal, valid and enforceable, and the other provisions of this Subleas e shall not be affected thereby.

44. GOVERNING LAW.

This Sublease shall be governed and construed in ac cordance with the statutes and laws of the State of California.

45. VENUE.

In the event that suit shall be brought by any Party to this Sublease, the Parties agree t hat venue shall be exclusively vested in the state courts of the County of Santa Clara.

46. COMPLIANCE WITH LAWS.

The Parties hereto shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local g overnments in t he performance of their rights, duties and obligations under this Sublease.

47. B ROKERS.

Each Party represents that is has not had dealings with any real estate broker, finder, or other person, with respect to thi s sublease in any manner. Each Party shal l hold harmless the other Party from all damages resulting from any claims that may be asserted against the other Party by any broker, finder, or other person with whom the indemnifying Party has or purportedly has dealt.

49. PREVAILING WAGE.

As require d by law, a ll contractors and subcontractors performing work on the Pre mises are required by pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and section 160000 et seq. an d Labor Code Section 1773.1. Before entering into a construction contract to perform work on the Pre mises and at all times w hile performing work on the Premises , all contractors and subcontractors must be re gistered with the California Department of Industr ial Relati ons t o perform pu blic work under Labor Code Section 1725.5.

Pursuant to Labor Code Section 1773, 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 perform the work for this Premises may be obtained at the Purcha sing Office of the City of Palo Alto. All contractors and subcontractors for t he Project must comply with the provisions of Labor Code Sections 1775, 1776, 1777.5, 1810, and 1813.

48. ATTACHMENTS TO SUBLEASE.

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

“A” – Description of Premises and Rents
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“B” – Standard Insurance Requirements
“C” – Scope of Required Childcare Services
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IN WITNESS WHEREOF, the parties have executed this Sublease the day and year first above written.

CITY: TENANT:

CITY OF PALO ALTO (LESSOR) KIDS CHOICE

By: __________ By:___________________________ City Manager or Designee
Its: ___________________________
ATTEST:

_________________ By:___________________________
City Clerk
Its: ___________________________

APPROVED AS TO FORM:

By: _______________________
City Attorney or Designee

RECOMMENDED FOR APPROVAL:

By: _______________________
Manager, Operating Department

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PAUSD SITE TRAILER # OR ID*SQ. FT.

BASE
MONTHL
Y RENT

MONTHLY

UTILITIES
($0.24 PER SQ.

FT.)
TOTAL

MONTHLY

RENT AND

UTILITIES
TOTAL

ANNUALIZED

RENT AND

UTILITIES
1 NIXON DAYCARE 1,440 $ 615.01 345.60$ 960.61 $ 11,527.37$

EXHIBIT A

DESCRIPTION OF PREMISES AND RENTS
* See attached maps for graphi c descri pti on of Premi ses. Note that these si te l ocati ons may change from ti me to ti me pursuant to Section 5 of the Lease Agreement between the City of Palo Alto and the Palo Alto Unified School District dated 7/1/2022.

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EXHIBIT B

STANDARD INSURANCE REQUIREMENTS

Insurance Requirements for Sublessee:

Sublessee shall purchase and maintain the insurance policies set forth below on all of its operations under this Sublease at its sole cost and expense. Such policies shall be maintained for the full term of this Sublease and the related warranty period (if applicable). For purposes of the insurance policies required under this Sublease, the term "City" shall include the duly elected or appointed council members, commissi oners, officers, agents, employees and volunte ers of the City of Palo Alto, California, individually or collectively.

Coverages (RL 28.1A) S

Minimum Scope of Insurance

Coverage shall be at least as broad as:

1) Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
2) Insurance Services Office form number CA 00 01 (Ed. 1/87) covering Automobile Liability, code 1 (any auto).
3) Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance (for sublessees with employees). 4) Property insurance against all risks of loss to any tenant improvements or betterments

The policy or policies of insurance maintained by Sublessee sha ll provide the following limits and coverages:

POLICY MINIMUM LIMITS OF LIABILITY

(1) Commercial General Liability $2,000,000 per each occurrence for bodily injury, personal injury and property damage

(2) Abuse and Molestation Liability $1,000,000 per person, per occurrence

(3)Automobile Liability $ 1,000,000 Combined S ingle Limit Including Owned, Hired and
Non-Owned Automobiles
(4) Workers’ Compensation Statutory
Employers Liability $1,000,000 per accident for bodily injury or disease

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(5) Sublessee’s Property Insurance
Sublessee shall procure and maintain property insurance coverage for:
all office furniture, trade fixture, office equipment, merchandise, and all other items of Sublessee’s property in, on, at, or about the premises and the building, include property installed by, for, or at the expense of Sublessee;
(b) all other improvements, better ments, alterations, and additions to the premises.

Sublessee’s property insurance must fulfill the following requirements:
(a) it must be written on the broadest available “all risk” p olicy form or an equivalent form acceptable City of Palo Alto, including earthquake spr inkler leakage.
(b) for no less than ninety percent (90%) of the full
replacement cost (new without deduction for depreciation) of the covered items and property; and
(c) the amounts of coverage must meet any coinsurance
requirements of the policy or policies.

(RL 28.2)

Deductibles and Self-Insured Retentions

Any deductibles or self-insured retentions must be declared to and approved by the C ity. At the option of the C ity either: the insurer s hall reduce or eliminate such deductibles or self-insured retentions as respects the C ity, its officers, officials, employees and volunteers; or the Sublessee shall procure a bond guaranteeing payment of losses and re lated investigations, claim administration and defense expenses.

Insurance shall be in full force and effec t commencing on t he f irst day of the term of this Sublease.

Each insurance policy required by this Sublease shall:

1. Be endorsed to state that coverage shall not be suspe nded, voided, canceled by either party, reduced in cover age or in limits except after t hirty (30) days ' prior written notice by certified mail, return receipt requested, has been given to the City.

2. Include a waiver of all ri ghts of subrogation a gainst the City and the members of the City Council and elective or appointive officers or employees, and each party shall indemnify the other against any loss or expense including reasonable attorney fees, resulting from the failure to obtain such waiver.

3. Name the City of Palo Alto as a loss payee on the property policy.

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by or on behalf of the Subl essee; products and completed operations of the Sublessee; pr emises o wned, occupied or use d by the Sublessee; or automobiles owned, subleased, hired or borrowed by the Sublessee. The coverage shall contain no special limitations on the s cope of protection afforded to the City, its officers, officials, employees, agents or volunteers.

5. Provi de that for any claims related to this Sublease, the Sublessee's insurance coverage shall be primary insurance as respects the C ity, its officers, o fficials, employees, agents and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents o r volunteers shall be excess of the Sublessee's insurance and shall not contribute with it.

6. Provide t hat an y failure t o comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers.

7. Provide that Suble ssee's insurance shall apply separately to each insured against whom claim is made or su it is brought, exce pt with respect t o the limits of the insurer's liability.

8. Sublessee agrees to promptly pay to City as Additional Rent, upon demand, the amount of any increase in the rat e of insurance o n the Premises or on any other part of Building tha t results b y reason of Sublessee’s act(s) or Sublessee’s permitting certain activities to take place.

Acceptability of Insurers

All insurance policies shall be issued by California -admitted carriers having current A.M. Best's ratings of no lower than A-:VII.

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EXHIBIT C

SCOPE OF SERVICES FOR PROVIDERS OF EXTENDED CHILD CARE SERVICES

AT PALO ALTO UNIFIED SCHOOL DISTRICT ELEMENTARY SCHOOL SITES

SERVICES: Under this Agreement, Kid’s Choice shall provide extended child care services to the child(ren) of families enrolled at Nixon Elementary School located on the Palo Alto Unified School District (PAUSD) property lease by the city of Palo Alto.

Services shall be furnished as specified in this Exhibit C: Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites.

The extended child care program shall be limited to children currently enrolled in Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District schools and children
(age K-5th Grade) whose parent is on staff of either PAUSD or the child care provider.

PROGRAM GOALS:

la. To offer affordable child care services to children of families enrolled in PAUSD Elementary schools; and

lb. Children (age K-5th grade) whose parent is on staff of either PAUSD or the child care provider.

Eligibility for Extended Child Care Services:

The extended child care program shall be limited to:

a. Children currently enrolled in Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District (PAUSD) schools.

b. Children (age K-5th grade) whose parent is on staff of either PAUSD or the child care provider.

Priority for the Extended Child Care Services:

Priority shall always be given to children currently enrolled in Grades Kindergarten through Grade Five (5) in the Palo Alto Unified School District (PAUSD) schools (see a. above). The number of children allowed in b. (above) shall not exceed 10% of the enrollment, unless first priority children (a. above) cannot fill available spaces. Priority children may not be wait -listed in favor of non- priority children enrolled beyond 10% capacity.

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including PAUSD school holidays, school vacations, and staff development days.

2. To provide a quality program, which seeks to maintain, standards set forth by the National Association for the Education of Young Children (NAEYC) and/or the Quality Matters, QRIS system of program quality assurance through WestEd.

PROGRAM SPECIFICATIONS:

1. Program Schedule
Services rendered shall include before-and after-school childcare for school age children in grades kindergarten through fifth grade. Before -school care shall be provided if such care is required by eight (8) or more children. The City will consider exceptions to the provision of before school care if PROVIDER can reasonably demonstrate the inability to find adequate staffing. Program schedule shall be operable daily throughout the year, including school holidays and vacation periods except for legal holidays, which are recognized by the City of Palo Alto as specified in Section 2.08.100 of the Palo Alto Municipal Code. Any exceptions to the provisions below must be approved by the City’s Contract Manager.

a. Regular School Days
The designated hours of operation for extended child care services on regular school days shall commence not earlier than 6:30 a.m. but not later than 7:00 a.m. and shall operate until the scheduled start of school at the site. The provider shall reopen at the earliest scheduled end of the school day and shall remain open until at least 6:00 p.m. but not later than 6:30 p.m.

Regular school days are defined as Monday through Friday except legal holidays recognized by the City of Palo Alto, PAUSD school holidays, PAUSD school vacations, and PAUSD staff development days.

It is understood that the provider shall have exclusive use of the site. When the site is not in use by the provider, the City, PAUSD, its agent or assigns, may use the site for academic curriculum or other City purposes.

b. Legal Holidays
Services shall be offered as outlined in this Exhibit C with the only exception being legal holidays recognized by the City of Palo Alto, as defined and specified in Section 2.08.100 of the Palo Alto Municipal Code.

c. School Holidays
The designated hours of operation for extended child care services on school holidays that are not recognized by the City of Palo Alto as specified in Section 2.08.100 of the Palo Alto Municipal Code (including winter and spring breaks and summer vacation) shall be 7:30 a.m. to 6:00 p.m. The City will consider exceptions to the operational hours Item 11
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if PROVIDER can reasonably demonstrate that the designated times are not needed by the participants in their programs.

d. Consolidation of Services
The provider may consolidate services with another licensed or legally exempt school age provider during school vacations and summer periods when enrollment is low. Programs may close for the purpose of offering staff development or in-service training. All such closings are subject to approval by the City's Project Manager which for purposes of this Agreement shall be the City Manager or designee.

e. Other Uses
The provider may use the contracted site(s) outside of the normal hours of operation for staff, parent, and/or student meetings.

2. Licensing and Exemptions
The provider shall operate a school age child care program that is licensed by the California Department of Social Services, Community Care Licensing Division, unless the provider qualifies for exemption from licensure as stated in the general licensing requirements of Title 22 of the California Code of Regulations as promulgated by the Department of Social Services/Community Care Licensing Division. All licensed programs shall maintain a current non-ambulatory license.

3. Licensing Reports
The provider sha ll forward to the City's Project Manager, within ten (10) days of all licensing visits, copies of all licensing reports issued by the California Department of Social Services, Community Care Licensing Division.

4. Staffing Ratios and Requirements
The provider shall meet or exceed the staffing ratios and requirements for school age children as specified in the licensing requirements of Title 22 of the California Code of Regulations: 1 teacher to 14 children
1 teacher and 1 aide to 28 children
For any group over 28 and up to 42, 2 teachers plus 1 aide are required to be present and within eye contact of enrollees. ·
For any group over 42, 2 teachers and 2 aides are mandated.

Job descriptions shall be developed and maintained for all positions including staff employed on a substitute or temporary basis.

5. Health and Safety Standards
The provider shall enforce health and safety standards that are consistent with state regulations, State and County health orders, and PAUSD policies and regulations in such areas as administration of medications, emergency information forms, and exclusion of sick children. The providers shall ensure that staff members receive ongoing training in Item 11
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the areas of basic first aid and cardiopulmonary resuscitation (CPR).

6. Emergency Preparedness
The provider shall implement and follow emergency procedures and drills that are consistent with state laws and PAUSD elementary school site policies and regulations, and the Emergency Preparedness Plan for School Age Child Care Centers located at PAUSD Elementary School Sites. Compliance and implementation will be the responsibility of the provider and will be documented in the Emergency Preparedness Plan Notebook. The provider shall ensure that staff members receive on going emergency preparedness training. The provider shall also, on an annual basis, inform the parents of enrolled children about the program's policies and procedures regarding the Emergency Preparedness Plan.

7. Sign In/Sign Out Procedures
The provider shall offer appropriate sign-in and sign-out procedures in accordance with state licensing requirements.

8. Staff Development
The provider shall offer appropriate staff development activities on an ongoing basis, including staff training, in order to fully meet the child development needs of children enrolled in the program.

9. Written Schedules
The provider shall at all times maintain a written schedule setting forth the operating hours and operating procedures for each required and optional use provided on or from the elementary school site. A fee schedule for prices charged for all services related to the required and optional uses set forth in this Contract shall be maintained.

10. Children with Special Needs
The provider shall identify children with special needs at the time of enrollment to ensure adequate staffing levels. Children with special needs who require assistance during an emergency evacuation shall be accommodated.

11. Equipment and Supplies
The provider shall assume responsibility for program implementation, and shall provide furniture, equipment, and supplies except as otherwise agreed upon with the City and PAUSD.

12. Collaboration with Local Agencies and Programs
The provider shall coordinate wit h local agencies and programs to enable children to participate in extra-curricular activities including sports, scouts, recreational activities, and community service projects. The Provider shall seek to ensure collaboration with other agencies and progra ms in order to maximize access to existing services and to Item 11
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avoid duplication.

13. Waiting Lists
The provider shall maintain a current waiting list when program is at licensed capacity and shall grant priority enrollment status to working parents and to non -ambulatory children when a non-ambulatory space becomes available.

14. Provider Parent Feedback mechanism
The provider shall establish a regular mechanism to solicit and receive parent feedback related to program operations and quality at each PAUSD elementary site. The feedback mechanism shall be shared with the City’s Project Manager by September 30 th of each year.

15. City Annual Parent Survey
The provider shall distribute an annual parent survey provided by City.

16. Materials to be Kept on File
The following materials will be submitted to the City's Office of Human Services for each contract period and resubmitted within the same period in the event of any changes. The Annual Financial Statement is due upon its completion. The remaining materials are due by September 30.

Annual Financial Statement
Calendar of days open and
closed
Operating Procedures and Policies (Parent Handbook)
Licensing reports issued by the California Department of Social Services (within 10 days of visit)
Summary sheet of annual parent
evaluations Tuition schedule

In addition to the above, the following materials shall be available at each Center for examination by the City's Office of Human Services.

Current operating license
Completed and up to date copy of the Emergency Preparedness Plan for School Age Child Care Centers located at PAUSD Elementary School Sites.

17. Annual Site Evaluation
The provider shall participate in an annual site evaluation conducted by the City's Project Manager to determine that the program continues to satisfactorily meet the City's requirements as stated in this Exhibit C- Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites.

18. Reports to the City
All correspondence relating to this Exhibit C: Scope of Services for Providers of Extended Child Care Services at Palo Alto Unified School District Elementary School Sites shall be Item 11
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sent to the following address:

City of Palo Alto
Office of Human Services
4000 Middlefield Road #T2
Palo Alto, CA 94301

PROVIDER QUALIFICATIONS, STATUS, AND DUTIES

1.1 PROVIDER represents and warrants that it has the expertise and professional qualifications to furnish or cause to be furnished the Services. PROVIDER further represents and warrants that the project director and every individual charged with the performance of the Services under this Contract are duly licensed or certified by the State of California, to the extent such licensing or certification is required by law to perform the Services.

1.2 In reliance on the representation and warranty set forth in Section 1.1, CITY hires PROVIDER to perform, and PROVIDER covenants and agrees that it will furnish or cause to be furnished, the Services.

1.3 PROVIDER will assign a project director to have supervisory responsibility for the performance, progress, and execution of the Services. If circumstances or conditions subsequent to the execution of this Contract cause the substitution of the project director for any reason, the appointment of a substitute project director will be subject to the prior written approval of the project manager.

1.4 PROVIDER represents and warrants that it will:

1.4.1 Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incident to the due and lawful prosecution of the Services;

1.4.2 Keep itself fully informed of all existing and future Federal, State of California, and local laws, ordinances, regulations, orders, and decrees which may affect those engaged or employed under this Contract, any materials used in PROVIDER's performance under this Contract, or the performance of the Services;

1.4.3 At all times observe and comply with, and cause its employees and providers (and consultants), if any, who are assigned to the performance of this Contract to observe and comply with, the laws, ordinances, regulations, orders and decrees mentioned above; and

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1.4.4 Report immediately to the project manager, in writing, any discrepancy or inconsistency it discovers in the laws, ordinances, regulations, orders, and decrees mentioned above in relation to any plans, drawings, specifications or provisions of this Contract.

1.5 PROVIDER will be responsible for employing or engaging all persons necessary to perform the Services. All contractors of PROVIDER will be deemed to be directly controlled and supervised by PROVIDER, which will be responsible for their performance.

1.6 PROVIDER shall ensure that all services offered under this CONTRACT shall be secular in nature. PROVIDER shall further ensure that it shall refrain from offering
religious instruction, worship, or other religious activities while providing child care services, in accordance with the provision of the California and United States Constitution.

FINANCIAL CONTROL RESPONSIBILITIES OF PROVIDER

1.1 PROVIDER shall establish and maintain a system of accounts that shall conform with generally accepted principles of accounting. Such system of accounts shall be subject to the review of the Deputy City Manager, Administrative Services and the City Auditor .

1.2 In support of its system of accounts, PROVIDER shall maintain complete and accurate records of all financial transactions, including contracts, invoices, time cards, cash receipts, cancelled checks, and bank statements. Such records shall be preserved and made available upon request until the expiration of three (3) years following the termination of this CONTRACT .

1.3 Financial expense and revenue s ummary sheets for all of PROVIDER's operations under this Contract shall be submitted by PROVIDER on an annual basis to CITY .

1.4 PROVIDER shall provide for an independent audit of its fiscal transactions, records and financial reports relating to its obligat ions under this Contract. The audit shall be completed every two years and shall be conducted by a certified public accountant according to generally accepted audit procedures.

1.5 Income to the program in the form of fees, direct contributions, fundraising, and any other form of monetary program support must be shown in the records of the fiscal PROVIDER in a manner acceptable to the Project manager and PROVIDER.

1.6 On reasonable notice, PROVIDER shall grant the project manager access to all records, data, statements, and reports, but excluding any confidential records of personnel and client reports which tend to identify specific individuals, for purposes of financial or Item 11
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operational audit or review of PROVIDER by CITY. PROVIDER shall permit CITY to audit, at any reasonable time during the term of this CONTRACT and for three (3) years thereafter, PROVIDER's records pertaining to matters covered by this CONTRACT. PROVIDER further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this CONTRACT.

COST OF SERVICES OFFERED BY PROVIDER

1.1 The PROVIDER shall at all times maintain a written schedule setting forth operating hours and operating procedures for each required and optional use provided on or from the PREMISES. A schedule of prices charged for all services related to the required and optional use of this CONTRACT shall be maintained.

Upon written request, PROVIDER shall furnish the project manager a copy of the schedules and procedures. Should the project manager decide that any part of these schedules or procedures is not justified with regard to fairly satisfying the needs of the public, upon written notice from the project manager, the PROVIDER shall meet and confer to attempt to address the issue. This meeting may focus on the following data:

(1) The degree of public service involved in the sale of services; (2) The market prices charged by other competing and/or comparable businesses; and
(3) The degree to which salaries and benefits are at a commensurate level that ensures a quality program which minimizes staff turnover.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: November 27, 2023
Report #:2311-2259
TITLE
Approval of Purchase Orders with WESCO (Representative of EATON/COOPER) and Anixter (Representative of S&C) to Purchase Dielectric Switches for Electric Grid Modernization in an Annual amount of $2,000,000 for Five Years for a Total-Not-to-Exceed Amount of $10,000,000

RECOMMENDATION
Staff recommends the City Council approve and authorize the City Manager or designee to execute blanket purchase orders for buying solid dielectric pad-mounted and submersible switches with and without “Supervisory Control and Data Acquisition” (SCADA) options from WESCO (representative of EATON/COOPER) and Anixter (representative of S&C) for a Total Not- to-Exceed Aggregate Amount of $2,000,000 annually for five years.

EXECUTIVE SUMMARY
City of Palo Alto Utilities plans to upgrade outdated electric switches (both underground and above ground types) in the electric distribution system. If authorized, this will allow staff to procuring “Solid Dielectric Switches” to replace outdated switches. By awarding the blanket order to two vendors, the city will have the flexibility to purchase the switches based on the lowest price quoted for each switch configuration. The new switches will have reduced impact on the environment as well improving system safety and reliability.

BACKGROUND
The City has been using oil insulated and Sulfur Hexafluoride (SF6) switches in the electric distribution system for 40 years or more. Some current switches were manufactured based on the technologies available during 1970-1980s. Many of these switches have reached or exceeded their normal life of operation which is typically 30 years by industry standards. These switches are therefore more likely to fail during inclement weather conditions and could cause extended outages if not replaced by latest technology switches available in the market.

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flammable. In addition, oil can leak, which requires additional resources to monitor and to clean up, an environmental problem, and a risk of equipment failure. Like oil, Sulfur Hexafluoride (SF6) gas has some disadvantages. For one, the gas can leak, so equipment must be checked periodically. The primary drawback of Sulfur Hexafluoride (SF6) gas is its classification as a potent greenhouse gas which results in increasing restrictions.

The California Air Resources Board (CARB) has made regulatory amendments to phase out use of SF6 in gas insulated equipment (GIE) starting in 2025. The phase out schedule limits the gas insulated equipment owners’ ability to acquire new SF6 gas insulated equipment without an approved SF6 phaseout exemption. Staff prepared material specifications for new solid dielectric pad-mounted and submersible switches to support new businesses and the City’s upcoming “Electrification Project” as well as for replenishing the minimum inventories. In accordance with the specifications, vendors and manufacturers were asked to provide bids for various types of 15 kilovolt (kV) pad-mounted and submersible switches with different switching configurations.

ANALYSIS
Staff is seeking authorization for purchasing solid dielectric switches for five years to ensure continued progress on the electrification and grid modernization project in a timely fashion. This will allow the city to select the switch configuration that is required from either of the authorized vendors based upon the lowest quoted price, potentially saving a significant amount of money.

Based on the City’s consultant’s assessment, the city would need around 10-15 solid dielectric switches per year for next 5 years for modernizing City’s electric grid. The new solid dielectric pad-mounted and submersible switches have been widely accepted by majority of the utilities in the United States.

Procurement Process
The Request for Quotation was posted on February 1, 2023, on City of Palo Alto’s website, which provides a direct link to City’s e-procurement system (Planet Bids). The Planet Bids e- procurement system notified 369 number of vendors with bid opening date on March 8, 2023.

On March 8, 2023, a total of two (2) bids were received and the results were made public in the City’s e-procurement system. The feedback received from non-participating vendors are that the effects of the pandemic and supply-chain issues are the cause for a shortage of skilled workforce and raw materials that have resulted in their inability to meet the market demand. The unit prices for different switch configurations are presented in the attached bid summary. The City will purchase the switches for its electrification projects as required.

Below is the bid summary table that provides pricing for each switch configuration from Eaton/Cooper and S&C. Solid Dielectric Switch cost ranges from $150,000 to $178,000 with “Supervisory Control And Data Acquisition” (SCADA) options. SCADA options are required for switches to communicate with Utility Control Center.

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Based on conformance to the technical specification, current industry standards, cost, delivery, and supplier/manufacturer qualifications, staff carefully evaluated the quotations submitted by Wesco (manufacturer’s representative for Eaton/Coper), and Anixter (manufacturer’s representative for S&C). Both bidders submitted proposals for each type of required switch configuration. Eaton/Cooper prices are lower for switches without SCADA options and S&C switches prices are lower for with SCADA options. City staff will purchase switches from the vendors based on the lowest quoted prices for the City’s needs at the time of purchase.

Attached are the blanket orders for venders, Anixter PO 4624000098 and WESCO PO 4624000099, both shall be valid for 12 months from the date of award, with a possibility of renewing it for next four consecutive years with mutually agreed price escalation. However, if the existing market conditions improve and the City can get better prices then the City will rebid after the initial 12-month term. At present, costs are driven by the market conditions. No vendor is willing to make any commitments for escalation for multiple years. Considering the current cost of each switch unit, the total amount that the City would require is around $2.0 million per year and would be subject to the annual appropriation of funds.

FISCAL/RESOURCE IMPACT
Funding for the first-year purchase of switches is available in the FY 2024 Electric Capital Improvement Program (CIP) budget under EL-98003 (Electric System Improvements) and other Electric CIP projects. Funding for contract years two through five are contingent upon Council appropriation and approval of funds through the annual budget process. The breakdown for funding requirements from first year to the next five years is provided in the Attachment B. The total value of this procurement over five (5) years will not exceed $10.0 Million without further Council approval.

STAKEHOLDER ENGAGEMENT
Procurement of switches for electric distribution projects does not involve or impact any stake holders. Solid Dielectric Switches are basically maintenance free, and it will not impose any additional costs on the ratepayers.

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ENVIRONMENTAL REVIEW
This project is categorically exempt from the California Environmental Quality Act (CEQA) under Section 15301 (repair or maintenance of existing facilities), and 15302 (replacement or reconstruction of existing structures and facilities) of the California Code of Regulations.

ATTACHEMENTS
Attachment A: PO 4624000098 Anixter
Attachment B: PO 4624000099 WESCO
APPROVED BY:

Dean Batchelor, Director of Utilities
Staff: Jim Pachikara, Principal Electric Engineer; and
Gopal Jagannath, Electric Management Specialist
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Award in accordance with RFQ 186673 dated March 8, 2023 0010 Solid Dielectric Switches 1,000,000 USD 1.00 1,000,000.00 For the purchase of Solid Dielectric Switches (Submersible and Pad Mounted) With and Without SCADA Options
This is the 1st pattial year of a 5 year agreement. 6-1/2 months Term: November 27, 2023 thru June 30, 2023.

PM: Gopal Jagannath x3138 [email protected] NTE: 1,000,000.00 for the period listed above.

This Blanket purchase agreement is for an amount not-to-exceed $1,000,000.00 for the period listed. The City makes no guarantee of actual or minimum purchases during the term of this order. -------------------------
Sub-Total 1,000,000.00
*** ORDERING VIA EMAIL ***
**** PRICE HAS BEEN QUOTED ****
Vendor Address

ANIXTER INC
P O BOX 842584
DALLAS TX 75284
Tel: 8003502285
Bill To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Ship To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Item Material/Description Quantity UM Unit Price Target $ Value ______________________________________
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
Blanket Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4624000098
Date 11/09/2023
Vendor No. 105666
Payment Terms Payment Due 30 days
FOB Point F.O.B. Palo Alto
Ship via Vendor to ship bestway
Term 11/27/2023 - 06/30/2024
Buyer/Phone Renee Howard / 650-496-5900
Email [email protected]
DELIVERIES ACCEPTED ONLY BETWEEN 7:00 AM & 3:00 PM UNLESS OTHER

ARRANGEMENTS ARE INDICATED HEREIN

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4624000098 ANIXTER

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Vendor Address

ANIXTER INC
P O BOX 842584
DALLAS TX 75284
Tel: 8003502285
Bill To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Ship To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Item Material/Description Quantity UM Unit Price Target $ Value ______________________________________
Interim Chief Procurement Officer
Total 1,000,000.00
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
Blanket Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4624000098
Date 11/09/2023
Vendor No. 105666
Payment Terms Payment Due 30 days
FOB Point F.O.B. Palo Alto
Ship via Vendor to ship bestway
Term 11/27/2023 - 06/30/2024
Buyer/Phone Renee Howard / 650-496-5900
Email [email protected]
DELIVERIES ACCEPTED ONLY BETWEEN 7:00 AM & 3:00 PM UNLESS OTHER

ARRANGEMENTS ARE INDICATED HEREIN

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Attachment A - PO
4624000098 ANIXTER

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Award in accordance with RFQ 186673 dated March 8, 2023 0010 Solid Dielectric Switches 1,000,000 USD 1.00 1,000,000.00 For the purchase of Solid Dielectric Switches (Submersible and Pad Mounted) With and Without SCADA Options.

This is the 1st pattial year of a 5 year agreement. 6-1/2 months Term: November 27, 2023 thru June 30, 2023.

PM: Gopal Jagannath x3138 [email protected] NTE: 1,000,000.00 for the period listed above.

This Blanket purchase agreement is for an amount not-to-exceed $1,000,000.00 for the period listed. The City makes no guarantee of actual or minimum purchases during the term of this order. -------------------------
Sub-Total 1,000,000.00
*** ORDERING VIA EMAIL ***
**** PRICE HAS BEEN QUOTED ****
Vendor Address

WESCO DISTRIBUTION INC
PO BOX 910465
PASADENA CA 91110
Tel: 562-356-2942 Fax: 562-463-5105
Bill To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Ship To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Item Material/Description Quantity UM Unit Price Target $ Value ______________________________________
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
Blanket Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4624000099
Date 11/14/2023
Vendor No. 100047
Payment Terms Payment Due 30 days
FOB Point F.O.B. Palo Alto
Ship via Vendor to ship best way
Term 11/27/2023 - 06/30/2024
Buyer/Phone Renee Howard / 650-496-5900
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 - PO
4624000099 WESCO

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Vendor Address

WESCO DISTRIBUTION INC
PO BOX 910465
PASADENA CA 91110
Tel: 562-356-2942 Fax: 562-463-5105
Bill To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Ship To:

Utilities Engineering
City of Palo Alto
1007 Elwell Court
Palo Alto CA 94303
Item Material/Description Quantity UM Unit Price Target $ Value ______________________________________
Interim Chief Procurement Officer
Total 1,000,000.00
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
Blanket Order
P.O. NUMBER MUST APPEAR ON ALL INVOICES, PACKAGES, SHIPPING

PAPERS AND CORRESPONDENCE PERTAINING TO THIS ORDER
PO Number 4624000099
Date 11/14/2023
Vendor No. 100047
Payment Terms Payment Due 30 days
FOB Point F.O.B. Palo Alto
Ship via Vendor to ship best way
Term 11/27/2023 - 06/30/2024
Buyer/Phone Renee Howard / 650-496-5900
Email [email protected]
DELIVERIES ACCEPTED ONLY BETWEEN 7:00 AM & 3:00 PM UNLESS OTHER

ARRANGEMENTS ARE INDICATED HEREIN

Item 12
Attachment B - PO
4624000099 WESCO

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: November 27, 2023
Report #: 2310-2166
TITLE
SECOND READING: Adoption of an Ordinance Amending the Stanford University Medical Center (SUMC) Development Agreement Adjusting the Timeline for Achieving the SUMC Alternative Mode Share Targets. Zoning District: HD (Hospital District). Environmental Review: Project is Consistent with the 2011 Certified Environmental Impact Report (EIR) for the SUMC Facilities Renewal and Replacement Project. (FIRST READING: October 23, 2023 PASSED 4-2-1, Lythcott- Haims and Tanaka No, Veenker Recused)

RECOMMENDATION
Approve on second reading the attached ordinance amending the SUMC development agreement in accordance with the City Council’s prior action.

BACKGROUND
On October 23, 2023, City Council heard SUMC Development Agreement Amendment Number 1 for a first reading of a draft ordinance and adoption of an associated draft resolution. 1 In a vote 4-2-1 (Lythcott-Haims and Tanaka No, Veenker Recused), City Council took the following actions:

1. Found the proposed amendment to the SUMC Development Agreement consistent with the Certified EIR for the SUMC Facilities Renewal and Replacement Project;

2. Adopted an Ordinance approving Amendment No. 1 to the SUMC Development Agreement; and modify language as follows: to extend the second interim target year to 2024 and the final target year to 2026;

3. Adopted a Resolution updating Mitigation Measure TR-2.3 to be Consistent with the Development Agreement Amendment Number 1; and

4. Prioritized use of any payments to the City for trip reduction in the Northwest commercial areas of the City, meaning the hospital area and the shopping center areas.2 1 City Council City Manager Report # 2306-1690, October 23, 2023:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13044. 2 City Council Draft Action Minutes, October 23, 2023: https://www.cityofpaloalto.org/Departments/City- Clerk/Citys-Meeting-Agendas/Meeting-Agendas-and-Minutes.

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In summary, City Council approved an adjustment to the timeline for which SUMC would need to meet the alternative transportation mode share targets in the original SUMC Development Agreement Section 5(ix) Monitoring of TDM Programs as follows:
•SUMC proposed adjusting the 2021 target (33% of SUMC employees using alternative transportation modes) to be achieved in 2024. This would be reported in the SUMC Alternative Mode Share Report FY 2023-2024 that would be submitted to the City in June 2024. This was accepted by City Council.
•SUMC proposed adjusting the 2025 target (35.1% of SUMC employees using alternative transportation modes) to be achieved in 2028. This would be reported in the SUMC Alternative Mode Share Report FY 2027-2028 that would be submitted to the City in June 2028. However, City Council did not accept this adjustment. Instead, City Council proposed adjusting the 2025 target to be achieved in 2026, which would be reported in the SUMC Alternative Mode Share Report FY 2025-2026 that would be submitted to the City in June 2026.

City Council also approved the proposed spending flexibility for any potential future $175,000 Annual Payment and the inclusion of a cost escalator using the Consumer Price Index for any potential future $175,000 Annual Payment or $4,000,000 Mode Split Penalty Payment.

Given that amendments to any Development Agreement requires City Council approval by ordinance, a second reading action on the associated draft ordinance (Attachment A) is required.

ANALYSIS
Staff updated the draft Ordinance (Attachment A) to reflect City Council action on October 23, 2023. The updates pertain to the removal of new terms “Second Interim Target Year” and “Final Target Year” that SUMC proposed as additions to the existing SUMC Development Agreement Section 1 Definitions. The updates also reflect City Council’s proposed adjustments to the 2021 and 2025 alternative transportation mode target dates to now be 2025 and 2026, respectively.

City Council action on this second reading completes review of the SUMC Development Agreement Amendment application filed on September 7, 2022. If the second reading is approved by City Council, City staff will make SUMC Development Agreement Amendment Number 1 available for execution by the City and SUMC and final recordation with Santa Clara County.

If SUMC Development Agreement Amendment Number 1 is not executed by any party, then the original SUMC Development Agreement will remain in effect and the SUMC Development Agreement Amendment Number 1 documents will become moot. At the time this report was prepared, SUMC had indicated its acceptance for Council’s directed action.

FISCAL/RESOURCE IMPACT
This action has no fiscal impact. As previously discussed on October 23, 2023, due to the claim by SUMC of a “Permitted Delay” under SUMC Development Agreement Section 18(c) Force Majeure, Item 13
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the City deferred seeking the $175,000 Annual Payments that are otherwise due for Fiscal Year 2021-2022 and Fiscal Year 2022-2023. Therefore, it could appear that the resource impact of approving the SUMC Development Agreement Amendment Number 1 would be $350,000 not being available for City expenditure on alternative transportation programs in accordance with SUMC Development Agreement Section 5(c)(ix). However, SUMC Development Agreement Amendment Number 1 adjusts the timeframe for achievement of the alternative mode share targets. The two $175,000 Annual Payments would not be due and there would be no resource impact to the City as a result; the $175,000 Annual Payments and the $4,000,000 Lump Payment, both with the CPI cost escalator, would only be due if SUMC missed applicable target years in the future.

STAKEHOLDER ENGAGEMENT
City staff coordinated with SUMC prior to and subsequent to the October 23, 2023 City Council meeting. Noticing for this item has been conducted in a manner consistent with the municipal code regulations.

ENVIRONMENTAL REVIEW
Staff analyzed if the SUMC Development Agreement Amendment Number 1 would substantially change the SUMC Project, as well as if the amendment would result in any new potentially significant environmental impacts or a substantial increase in any previously identified potential environmental impacts. The adjustments to the alternative transportation mode share target timeline did not substantially change the SUMC Project; all original project components and mitigation measures would remain in effect. The SUMC Development Agreement, SUMC Facilities Renewal and Replacement Project Environmental Impact Report, and MMRP analyzed and anticipated that some circumstances might be beyond the control of SUMC or the City. The proposed adjustments to the alternative transportation mode share target timeline do not relieve SUMC of their requirements to implement their TDM Program activities on an ongoing basis, nor increase previously identified transportation impacts or greenhouse gas emissions.

ATTACHMENTS
Attachment A: Draft Ordinance – SUMC Development Agreement Amendment Number 1 APPROVED BY:

Jonathan Lait, Planning and Development Services Director Item 13
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Ordinance No.

Ordinance of the Council of the City of Palo Alto Approving The First Amendment to the Stanford University Medical Center Development Agreement Dated June 6, 2011

The Council of the City of Palo Alto does ORDAIN as follows:

SECTION 1. Findings and Determinations
A. The City of Palo Alto (City) and Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, and the Board of Trustees of the Leland Stanford Junior University (“SUMC Parties”) are parties to a certain Development Agreement dated June 6, 2011 (the "SUMC Development Agreement" or "Agreement"), concerning the replacement, retrofit, and enhancement of Stanford University Medical Center facilities in Palo Alto,

B. Section 65868 of the California Govern ment Code and section 8(b) of Palo Alto Resolution No. 7104 (June 8, 1992) provide that a development agreement may be amended by mutual consent of the parties to the agreement.

C. Pursuant to these provisions, Section 15 of the Agreement provides that the City and SUMC Parties may amend the Agreement from time to time by mutual consent.

D. Section 5, subdivision (c)(ix) of the Agreement, Monitoring of TDM Programs, sets forth a series of transportation demand management (TDM) program targets for the share of employees using alternative modes of travel (“Alternative Mode Share Targets”). These provisions include penalties for failure to meet the Alternative Mode Share Targets.

E. Section 18, subdivision (c), of the Agreement, Force Majeure, provides that performance of an obligation under the Agreement may be excused during any period of “permitted delay” caused by events beyond the reasonable control of a party.

F. On June 10, 2022, SUMC Parties provided a notice of intent to claim a permitted delay in compliance with the Alternative Mode Share Targets as a result of the COVID-19 pandemic.

G. The City and SUMC Parties wish to adopt the First Amendment to the Agreement (“Amendment”) in light of the SUMC Parties’ claim of permitted delay.

H. The City Council, as the planning agency pursuant to Government Code Section 65867, has given notice of intention to consider the Amendment and has conducted a public hearing on the Amendment.

I. The City Council that the provisions of the Agreement and the Amendment are consistent with City’s Comprehensive Plan.

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Attachment A - Draft
Ordinance - SUMC
Development Agreement
Amendment Number 1

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SECTION 2 . The City Council hereby approves the First Amendment to the Development Agreement between the City of Palo Alto and Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, and the Board of Trustees of the Leland Stanford Junior University, a copy of which is attached hereto as Exhibit "A", and authorizes the Mayor to execute the Agreement on behalf of the City.

SECTION 3. The City Clerk is directed to cause a copy of the development agreement to be recorded with the County Recorder not later than ten (10) days after it becomes effective.

SECTION 4. Because the amendment implements a permitted delay contemplated by the Agr eement, and because the permitted delay will not result in any new, significant environmental impacts, the City Council finds that the potential environmental impacts of the Amendment were adequately studied and addressed in the Final Environmental Impact Report for the Stanford University Medical Center Facilities Renewal and Replacement Project, which was certified by Resolution No. 9168.

SECTION 5 . This ordinance shall be effective upon the thirty -first (31st) day after its adoption.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager

Director of Planning and Development Services
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Attachment A - Draft
Ordinance - SUMC
Development Agreement
Amendment Number 1

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This document is recorded for the
benefit of the City of Palo Alto
and is entitled to be recorded
free of charge in accordance with
Section 6103 of the Government Code.

After Recordation, mail to:

Office of the City Attorney
City of Palo Alto
250 Hamilton Ave
Palo Alto, CA 94301

AMENDMENT TO DEVELOPMENT AGREEMENT

This AMENDMENT TO THE DEVELOPMENT AGREEMENT (“Amendment”) is entered into as of this day of , 2023, by and between the CITY OF PALO ALTO, a chartered city and municipal corporation of the State of California (“City”); STANFORD HEALTH CARE, formerly known as Stanford Hospital and Clinics, a California nonprofit public benefit corporation (“SHC”); LUCILE SALTER PACKARD CHILDREN’S HOSPITAL AT STANFORD, a California nonprofit public benefit corporation (“LPCH”); and THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under the laws of the State of California (“University,” and together with SHC and LPCH, collectively, the “SUMC Parties”).

RECITALS

THIS AMENDMENT is entered into on the basis of the following facts, understandings, and intentions of the parties:

A. City and the SUMC Parties entered into that certain Development Agreement, dated June 6, 2011, and recorded in the Official Records of Santa Clara County on as Document Number (“Development Agreement”).

B. On June 13, 2022, the SUMC Parties provided City, under Section 18(c) of the Development Agreement, with notice of an intent to claim a Permitted Delay (“Notice”) toward achievement of (1) all applicable interim alternative mode share targets and (2) the 2025 alternative mode share target of 35.1 percent, both of which are identified in Section 5(c)(ix) of the Development Agreement. The SUMC Parties’ Notice explained why the ongoing COVID -19 pandemic has caused the Hospitals to be unable to achieve, on schedule, the interim and 2025 alternative mode share targets.

C. City and the SUMC Parties wish to amend the Development Agreement as set forth in this Amendment to adjust the timing of the SUMC Parties’ obligations under Section 5(c)(ix) of the Development Agreement, to align with the anticipated period of Permitted De lay resulting from the COVID-19 pandemic.

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Ordinance - SUMC
Development Agreement
Amendment Number 1

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D. All proceedings necessary for the valid adoption and execution of this Second Amendment have taken place in accordance with California Government Code sections 65864 through 65869.5, the California Environmental Quality Act, and City Resolution No. 7104 (June 8, 1992).

E. The City Council has given notice of intention to consider this Amendment and conducted a public hearing on this Amendment, and the City Council has found that the Development Agreement, as amended by this Amendment, is consistent with the City’s Comprehensive Plan.

AGREEMENT

NOW, THEREFORE, City and the SUMC Parties agree as follows:

1. Updated Requirement for Monitoring of TDM Programs. Section 5(c)(ix) of the Development Agreement is amended and restated in its entirety to read as follows:

(ix) Monitoring of TDM programs.

The City and the SUMC Parties acknowledge that because use of transit by employees of the Hospitals is voluntary and may be influenced by a number of factors outside of the reasonable control of the Hospitals, such as gasoline prices, costs and availabilit y of alternative transit, housing costs and availability, and personal preferences of employees, the Hospitals cannot guarantee the results of their TDM programs. However, the Hospitals shall monitor the success of their TDM programs from the date of the Initial Project Approvals through the Life of the Project. The following interim targets shall be used to measure the progress toward meeting the desired mode split by 2026. These interim targets assume that in the early phases of implementation, there may be larger shifts to alternative modes than the shifts that may occur in later phases of the TDM program enhancement. For purposes of calculating alternative mode share, any mode that does not constitute driving in a single -occupant vehicle to and from the work site shall be considered an “Alternative Mode,” including working remotely from home.

Target Year Alternative Mode Share Percent Change
EIR Baseline
(2006) 22.9% NA
2018 30 % 7.1 %
2024 33 % +3 %
2026 35.l % +2.1 %

Excluding the period from 2022 through 2023, during which time this provision shall not apply, if the applicable interim target is not met for any two consecutive years prior to 2026, the Hospitals shall provide alternative transportation funding to the City in Annual Payments in the amount of One Hundred Seventy- Five Thousand Dollars ($175,000) per year. For payments made after January 1,2025, the amount of the payment shall be adjusted to reflect the change in the San Francisco Area Consumer Price Index between January 1, 2025 and the date on which Item 13
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Ordinance - SUMC
Development Agreement
Amendment Number 1

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the Annual Payment is due. The alternative transportation funding must be used by the City for local projects and programs that encourage use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to citywide and regional transportation systems and solutions. The City of Palo Alto should consider transportation syst ems and solutions that also help to reduce traffic in the City of Menlo Park.

(A) Submission of Reports.

The Hospitals shall submit annual reports showing the current number of employees employed over 20 hours per week; the number of employees using an alternative mode share as documented by a study or survey to be completed by the Hospitals using a method mutually agreeable to the City and Hospitals; and the efforts used by the Hospitals to attempt to achieve the Alternative Mode targets.

(B) 2026 Mode Split Penalty.

If the annual report for 2026 does not demonstrate that the Hospitals have substantially achieved the Thirty Five and One -Tenth Percent (35.1%) target modal split for alternative transportation modes, the Hospitals shall make a lump sum payment of Four Million Dollars ($4.0 million), as adjusted to reflect the change in the San Francisco Area Consum er Price Index from January 1, 2025 to January 1, 2026, to the City for local projects and programs that encourage and improve use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to regional transportation systems or solutions. The City shall identify capital projects and program enhancements for which the funds may be applied. Sample projects may include contributions towards regional transportation projects of interest to the City and that are identified within the Valley Transportation Authority -Valley Transportation Plan or other local planning documents. The City of Palo Alto should consider transportation systems and solutions that also help to reduce traffic in the City of Menlo Park. If required, said Four Million Dollar ($4,000,000) payment, as adjusted for inflation, shall constitute funds to be used by the City to offset trips by Hospital employees through citywide trip reduction. The Four Million Dollar ($4,000,000) payment, as adjusted for inflation, shall not relieve the SUMC Parties of any of their other obligations under this Agreement, including but not limited to their obligations to continue to attemp t to achieve the 35.1% target modal split through implementation of the GO Pass or substantially similar program, or a substitute program mutually agreed upon by the SUMC Parties and the City’s Director of Planning and Community Environment, which shall continue pursuant to the terms of this Agreement for fifty-one (51) years from commencement of the GO Pass program. Further, the Hospitals shall continue to implement an enhanced TDM program, monitor modal splits by Hospital employees, and strive to maximize use of alternative commute modes by Hospital employees. In additi on, the Hospitals shall continue to meet with the City on a regular basis to identify potential improvements to the enhanced TDM program.

The City shall keep all payments received from the Hospitals pursuant to this Section 5(c)(ix) in a separate account (the “TDM Fund”), to be used only for the purposes described in this Section 5(c)(ix). The City shall deliver an annual report of disbursements from the TDM Fund in accordance with Section 12 below.

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Ordinance - SUMC
Development Agreement
Amendment Number 1

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---

4. Full Force and Effect. As amended by this Amendment, the Development Agreement shall remain in full force and effect.

5. Counterparts. This Amendment may be executed in any number of identical counterparts, and each counterpart shall be deemed to be an original document. All executed counterparts together shall constitute one and the same document, and any counterpart signature pages may be detached and assembled to form a single original document.

[Signatures on following page]
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Attachment A - Draft
Ordinance - SUMC
Development Agreement
Amendment Number 1

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IN WITNESS WHEREOF, this Amendment has been duly executed by the parties as of the day and year first above written.

CITY OF PALO ALTO: Attest:

By:

Hon. Lydia Kou, Mayor City Clerk

Approved:

Ed Shikada, City Manager
Approved as to Content:

Jonathan Lait, Director of Planning and Community Environment Approved as to Form:

Assistant City Attorney

STANFORD HEALTH CARE (formerly STANFORD HOSPITAL AND CLINICS)

By:

David Entwistle, President and Chief Executive Officer

LUCILE SALTER PACKARD CHILDREN’S HOSPITAL AT STANFORD

By:

Paul A. King, President and Chief Executive Officer

THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY

By:

Robert C. Reidy, Vice President of Land, Buildings & Real Estate Item 13
Attachment A - Draft
Ordinance - SUMC
Development Agreement
Amendment Number 1

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City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: November 27, 2023
Report #: 2311-2215
TITLE
SECOND READING: Interim Ordinance Temporarily Continuing Expansion of Outdoor Dining Retail and Other Activities until December 31, 2024 (FIRST READING: November 7, 2023 PASSED 5-2, Kou, Veenker no)

BACKGROUND
This was heard by the City Council on November 7, 2023 for a first reading and was approved 5- 2, Kou, Veenker no. No changes were made to the ordinance; it is now before you for a second reading.

ATTACHMENTS
Attachment A: Interim Ordinance Temporarily Continuing Expansion of Outdoor Dining Retail and Other Activities until December 31, 2024
APPROVED BY:

Mahealani Ah Yun, Interim City Clerk
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Ordinance No. _____
Interim Ordinance of the Council of the City of Palo Alto Temporarily Continuing the Expansion of Outdoor Dining, Retail and Other Activities on Public and Private Property and Relaxing Regulations Regarding Onsite Parking, On-Sale of Alcohol, Design/Architectural Review, Permit Fees, and Alcohol Consumption in Public Places, All to Facilitate Such Outdoor Use

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

SECTION 1. Findings and Declarations. The City Council finds and declares as follows:

A. On June 23, 2020, the City Council adopted Ordinance 5500, an emergency ordinance, in response to COVID -19 and its effects on local businesses. At that time and since then, county and state regulations related to COVID -19 have limited or curtailed many indoor activities, including dining, bars, retail, performances, and other recreational uses.

B. In June 2021, the City Council adopted Ordinance 5526, which amended and restated Ordinance 5500 on a non-emergency basis (among other changes).

C. On November 8, 2022, the City Council adopted Ordinance 5533, which amended and restated Ordinance 5526 with a sunset date of June 30, 2022.

D. In May 2022, t he City Council adopted Ordinance 5551, which amend ed and restate d Ordinance 5533 to extend its provisions through December 31, 2022.

E. In October and November 2022, the City Council adopted Ordinance 5572, which amended and restated Ordinance 5551 to extend its parklet provisions through June 30, 2023 and the remainder of its provisions through December 31, 2023.

F. In May 2023, the City Council adopted Ordinance 5584 to extend the parklet provisions of this ordinance until March 31, 2024. The remainder of the ordinance will sunset on December 31, 2023 as previously adopted.

G. The City Council now desires to amend and restate Ordinance 5584 to extend the on- street dining provisions of this ordinance until December 31, 2024. The remainder of the ordinance will sunset on the dates as previously adopted.

SECTION 2. City Manager Authorization

The City Manager or his or her designee(s) may promulgate guidelines and implementing regulations for the uses and programs described in this Ordinance as long as such regulations do not conflict with this Ordinance.

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Attachment A - Interim
Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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SECTION 3. Fee Waivers for Encroachment Permits and Parking Space Closures

A. The permit fees set forth in the Municipal Fee Schedule are temporarily waived for applications for encroachment permits under Palo Alto Municipal Code Section 12.12.010 and Section 12.12.020, as modified by this Ordinance, to place structures and equipment in the public right-of-way (including closed streets and sidewalks) for purposes of outdoor dining and outdoor retail sales and display of wares.

B. The parking space closure fee in the Municipal Fee Schedule collected by the Department of Planning and Development Services is temporarily waived for the use of a parking space(s) on-street or in a parking lot for purposes of outdoor dining and outdoor retail sales and display of wares as authorized through an encroachment permit, license, or agreement with the City.

SECTION 4. Modified Review Process for Commercial Sidewalk Encroachment Permits

Notwithstanding contrary provisions of PAMC Section 12.12.020, permits may be granted for commercial sidewalk encroachments for outdoor retail sales and display areas and outdoor eating areas. Permits for these purposes shall not be required to undergo and complete design review by the Planning Department described in subsection (d) of Section 12.12.020. Except as expressly modified herein, the provisions of Section 12.12.020 shall apply to commercial sidewalk encroachments.

SECTION 5. Eating and Drinking Establishments

Eating establishments, and drinking establishments may temporarily relocate some or all of their existing indoor seating capacity to outdoor seating capacity, as follows:

A. Location. Outdoor eating areas may be placed in one or more of the following areas:

1. Public streets temporarily closed by the City of Palo Alto, through issuance of an encroachment permit under PAMC Section 12.12.010;

2. Sidewalks through issuance of an encroachment permit under PAMC Section

12.12.020, as modified by Section 4 of this Ordinance;

3. In on -street parking spaces approved for use as temp orary parklets, in accordance with the Pilot Parklet Demonstration Project as first approved by Council Resolution No. 9909 and continued by subsequent resolutions;

4. Surface p arking lots that currently provide required onsite parking for the eating/drinking establishment, through issuance of an approval by the Director of Planning, or his or her designee , as described in subsections C and D of this Section, below;
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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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5. Other outdoor areas on the eating /drinking establishment site not originally permitted for outdoor seating in the establishment’s approved site plan or planning entitlement ( such as landscaped areas ), through issuance of an approval by the Director of Planning, or his or her designee, in accordance with subsections C and D of this Section, below; and

6. In other areas that the Council identifies by resolution or ordinance.

B. Use of Private Parking Lots – Temporary Reduction of Parking Requirements.

1. Notwithstanding the parking requirements applicable to eating /drinking establishments in Title 18 (Zoning) of the PAMC or in individual planning entitlements or approvals for eating /drinking establishments, an eating/drinking establishment may place outdoor eating areas in its parking lot, so long as at least half of the parking spaces on the subject site remain available for use by vehicles. If the establishment’s parking lot has ten or fewer parking spaces, up to 100 percent of the parking lot may be used for outdoor eating, subject to review and approval of the Planning Director or his or her designee.

2. Notwithstanding the parking requirements applicable to shopping centers and their tenant businesses in Title 18 (Zoning) of the PAMC or in individual planning entitlements or approvals for shopping centers or their tenant businesses, a shopping center with an eating /drinking establishment tena nt(s) may place outdoor eating areas for such tenant business(es) in the shopping center parking lot, so long as at least half of the parking spaces on the subject site remain available for use by vehicles.

C. Application. A n application in a form approved by the Director of Planning shall be submitted to the Planning and Development Services Department to relocate some or all of an eating /drinking establishment’s permitted indoor restaurant seating to outdoor seating in privately-owned areas on the eating/drinking establishment site not originally permitted for outdoor eating. The Director of Planning is authorized to establish submittal requirements and procedures. Temporary Use Permit s (TUP) under PAMC Section 18.42.050 may be utilized for this purpose. A TUP issued for this purpose may be valid for a specified period longer than 45 days, notwithstanding subsection (d) of Section

18.42.050. The Planning Director may extend a TUP issued prior to the effective date of this Ordinance to be valid beyond 45 days.

D. Seating Layout Review. A Seating Layout Review is required to relocate some or all of an eating/drinking establishment’s permitted indoor seating to outdoor seating in privately- owned areas on the eating /drinking establishment site not originally permitted for outdoor eating. The Seating Layout Review shall be conducted by a transportation planner, planner, and/or fire inspector who will review and either approve or require modifications to the proposed outdoor seating layout based on the following criteria:

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Attachment A - Interim
Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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1. Seating layout does not create a safety risk and adequate pedestrian and vehicular separation is maintained, including with movable barriers as appropriate where outdoor seating is to be placed in parking lots or on-street parking spaces.

2. Seating layout accommodates appropriate vehicle and pedestrian circulation and maintains adequate paths of travel and complies with accessibility requirements of the Americans with Disabilities Act.

3. Any tents must comply with fire codes and Palo Alto Fire Department issued standards for tents, and safety standards set forth by the National Fire Protection Association for fire-resistant tents and must include an affixed manufacturer’s la bel stating the tent meets NFPA requirements. A State Fire Marshal seal on the tent or a certificate is needed to prove treatment.

4. Any heaters must comply with fire codes.

5. An adequate and visible barrier is placed that clearly separates the retail area from the parking area and provides sufficient protection for patrons. Adequacy shall be defined in standards and guidelines issued by the Director of Planning.

6. Other requirements established in the standards and guidelines issued by the Director of Planning.

E. Fee. No fee will be charged for submittal and review of the Application and for conducting a Seating Layout Review.

F. Occupancy. Total seating occupancy (includi ng all indoor and outdoor seating) shall not exceed the overall occupancy for which the restaurant is permitted.

G. Alcohol Service. Establishments that are allowed by the City to serve alcohol for onsite consumption by issuance of a conditional use permit (“CUP”) as required by PAMC Section

18.42.090 or as a legal nonconforming use, and that both have an on -sale license from the Department of Alcoholic Beverage Control (“ABC”) and are duly authorized by ABC to serve alcohol in outdoor areas, shall be allowed to serve alcohol for onsite consumption in such outdoor areas, notwithstanding any prohibition on outdoor alcohol service or consumption in the PAMC or planning entitlement issued under Title 18 (Zoning) of the PAMC. During the effective period of this Ordinance, establishments that meet the preceding requirements may expand their footprint to outdoor areas without an amendment of the CUP, notwithstanding PAMC Section 18.42.090(c). Outdoor alcohol service shall be in full compliance with ABC regulations, as amended.

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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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H. No Architectural Review . Notwithstanding PAMC Sections 18.77.077 and 18.76.020, architectural review shall not be required for proposed outdoor eating areas or signage related to such areas during the effective period of this Ordinance.

SECTION 6. Retail Establishments

Retail establishments may temporarily relocate some or all of their existing customer-accessible square footage to outdoor spaces as follows:

A. Location. Outdoor retail sales and display areas and outdoor eating areas may be placed in one or more of the following areas:

1. Public streets temporarily closed by the City of Palo Alto, through issuance of an encroachment permit under PAMC Section 12.12.010;

2. Sidewalks through issuance of an encroachment permit under PAMC Section

12.12.020, as modified by Section 4 of this Ordinance;

3. Surface parking lots that currently provide required onsite parking for the retail establishment, through issuance of an approval by the Director of Planning, or his or her designee, as described in subsections C and D of this Section, below;

4. Other outdoor areas on the retail establishment site not originally permitted for retail sales and display or dining in the retail establishment’s approved site plan or planning entitlement (such as landscaped areas), through issuance of an approval by the Director of Planning or his or her designee in accordance with subsections C and D of this Section, below; and

5. In other areas that the Council identifies by resolution or ordinance.

B. Use of Private Parking Lots – Temporary Reduction of Parking Requirements.

1. Notwithstanding the parking requirements applicable to retail establishments in Title 18 (Zoning) of the PAMC or in individual planning entitlements or approvals for retail establishments, a retail establishment may conduct outdoor retail sales and display and may place outdoor eating areas in its parking lot, so lo ng as at least half of the parking spaces on the subject site remain available for use by vehicles. If the establishment’s parking lot has ten or fewer parking spaces, up to 100 percent of the parking lot may be used for outdoor dining/retail , subject to review and approval of the Planning Director or his or her designee.

2. Notwithstanding the parking requirements applicable to shopping centers and their tenant businesses in Title 18 (Zoning) of the PAMC or in individual planning entitlements or approvals for shopping centers or their tenant businesses, a shopping Item 14
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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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center with a retail establishment tenant(s) may place outdoor retail sales and display areas and outdoor eating areas for such tenant business(es) in the shopping center parking lot, so long as at least half of the parking spaces on the subject site remain available for use by vehicles.

C. Application. An application in a form approved by the Director of Planning shall be submitted to the Planning and Development Services Department to relocate some or all of a retail establishment’s customer-accessible square footage to outdoor retail sales and display in privately-owned areas on the retail establishment site not originally permitted for outdoor retail sales and display . The Director of Planning is authorized to establish submittal requirements and procedures. Temporary Use Permits (TUP) under PAMC Section 18.42.050 may be utilized for this purpose. A TUP issued for this purpose may be valid for a specified period longer than 45 days, notwithstanding subsection (d) of Section

18.42.050. The Planning Director may extend a TUP issued prior to the effective date of this Ordinance to be valid beyond 45 days.

D. Merchandise or Seating Layout Review. A Layout Review is required to relocate some or all of an retail establishment’s permitted indoor customer-accessible square footage to privately-owned areas on the retail establishment site not originally permitted for retail.

The Layout Review shall be conducted by a transportation planner, planner, and/or fire inspector who will review and either approve or require modifications to the proposed retail layout based on the following criteria:

1. The placement of the merchandise, displays, or other items does not create a safety risk and adequate pedestrian and vehicular separation is maintained, including with movable barriers as appropriate where outdoor seating is to be placed in parking lots or on-street parking spaces.

2. The layout accommodates appropriate vehicle and pedestrian circulation and maintains adequate paths of travel and complies with accessibility requirements of the Americans with Disabilities Act.

3. Any tents must comply with fire codes and Palo Alto Fire Department issued standards for tents, and safety standards set forth by the National Fire Protection Association for fire-resistant tents and must include an affixed manufacturer’s label stating the tent meets NFPA requirements. A State Fire Marshal seal on the tent or a certificate is needed to prove treatment.

4. Any heaters must comply with fire codes.

5. An adequate and visible barrier is placed that clearly separates the retail area from the parking area and provides sufficient protection for patrons. Adequacy shall be defined in standards and guidelines issued by the Director of Planning.

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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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6. Other requirements established in the standards and guidelines issued by the Director of Planning.

E. Fee. No fee will be charged for submittal and review of the Application and for conducting a Layout Review.

F. No Architectural Review . Notwiths tanding PAMC Sections 18.77.077 and 18.76.020, architectural review shall not be required for proposed outdoor retail areas or signage related to such areas during the effective period of this Ordinance.

SECTION 7. Compliance with Other Regulations, Orders and Approvals

The uses of public and private property allowed in this Ordinance shall be conducted in compliance with any applicable state or county mandate (including executive orders and health orders), this Ordinance, Resolution No. 9909 and its successors, and all other local and state regulations, orders, and approvals, as applicable (collectively, “Applicable Law”). Any approval, allowance or permit to conduct such temporary outdoor use(s) shall be subject to revocation by the issuing City official if the use is conducted in violation of Applicable Law, or poses a threat to public health, safety or welfare.

SECTION 8. No Vested Rights

The outdoor uses of public and private property allowed in this Ordinance are temporary and shall be terminated upon the earlier of the date stated in the applicable permit/approval or the expiration of this interim Ordinance , unless earlier revoked by the City Manager or other authorized official (or their designee) or terminated by action of the City Council . The City may discontinue one or more, or all, of the allowed outdoor uses at any time if the City Manager or designee determines that the public health, safety or welfare warrant such action. Nothing in this Ordinance shall establish a vested right.

SECTION 9. Suspension of Prohibition on Alcohol Consumption in Lytton Plaza and Cogswell Plaza

Notwithstanding PAMC Sections 22.04.330 and 22.04.331, the City Manager is authorized to suspend the prohibition on consumption of alcoholic beverages in the parking lots adjacent to Lytton Plaza and Cogswell Plaza.

SECTION 10. Use of City Parking Lots for Reopening Activities

A. The City Manager, or his or her designee (“City Manager”), is authorized to permit outdoor dining, retail and other activities necessary to facilitate the reopening of businesses, in public parking lots owned by the City , subject to the City Manager’s adoption of rules, regulations, guidelines, and standards for such use (“Regulations”), and publication of such Regulations on the City’s website . Use of parking lots, or portions Item 14
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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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thereof, by a business shall require a license or other agreement, including an agreement to indemnify and hold harmless the City, and provision of insurance.

B. The City Manager is authorized to waive any fee in the Municipal Fee Schedule associated with the temporary use of parking areas for the purposes identified in Section A above.

C. Notwithstanding PAMC Section 9.04.020, the City Manager is authorized to suspend the prohibition on consumption of alcoholic beverages in any City owned parking lot.

SECTION 11. Personal Services, Indoor Recreation and Other Uses

The authorized outdoor uses of public and private spaces authorized in this Ordinance may be applied to personal services, indoor recreation and other uses. Prior to authorizing these additional activities to occur, the City Manager, or his or her designee (“City Manager”), shall adopt rules, regulations, guidelines, and standards for these uses, and publish them on the City’s website.

SECTION 12. Severability

If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or unconstitutional.

SECTION 13. Environmental Review

The Council finds that the Ordinance is categorically exempt from CEQA under CEQA Guidelines Sections 15301 (existing facilities) and 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment).

SECTION 14. Effective Date

This Ordinance shall be effective 31 days after adoption. Subject to future Council action, the provisions of this ordinance allowing eating and drinking establishments , retail establishments, and other uses on temporarily closed streets in Sections 5, 6, and 11 of this Ordinance shall remain in effect until December 31, 2024. The remainder of th e provisions in sections 5, 6, 10, and 11, including those provisions allowing parklets, shall remain in effect until March 31, 2024.

SECTION 15. Uncodified

This Ordinance shall not be codified.

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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
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December 31, 2024

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SECTION 16. Supercedes Ordinance 5584.

As of the effective date of this Ordinance, this Ordinance shall supercede Ordinance 5584, and any conflict shall be resolved in favor of this Ordinance.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

NOT PARTICIPATING:

ATTEST:

____________________________ ____________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

____________________________ ____________________________ Assistant City Attorney City Manager

____________________________
Director of Public Works

____________________________
Director of Planning & Development
Services
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Ordinance Temporarily
Continuing Expansion of
Outdoor Dining Retail and
Other Activities until
December 31, 2024

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City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: November 27, 2023
Report #:2311-2254
TITLE
SECOND READING: Adoption of an Ordinance Renewing the Police Department's Military Equipment Use Policy Under AB 481 (FIRST READING: November 13, 2023 PASSED 7-0)

BACKGROUND
This was heard by the City Council on November 13, 2023 for a first reading and was approved 7-

0. No changes were made to the ordinance; it is now before you for a second reading.

ATTACHMENTS
Attachment A: Ordinance Renewing the City’s Military Equipment Use Policy APPROVED BY:

Mahealani Ah Yun, Interim City Clerk
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Ordinance No. _____
Ordinance of the Council of the City of Palo Alto Renewing the Military Equipment Use Policy in Compliance with Govt. Code Section 7070 et seq.

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

SECTION 1.Findings and declarations. The City Council finds and declares as follows:

1. In 2021, the California Legislature and the Governor approved AB 481, which requires the City Council to approve a “Military Equipment Use Policy” in order to acquire, use, or seek funds for the use of certain equipment used by law enforcement. AB 481 is codified at Gov. Code section 7070 et seq.

2. The City Council adopted Ordinance 5562 in September 2022 to approve the City’s first Military Equipment Use Policy.

3. As required by Govt. Code section 7072, the Palo Alto Police Department submitted an annual military equipment report for each type of military equipment approved by the City Council in 2022. This report was posted publicly on the Department’s website. The Department also held a community engagement meeting on October 11, 2023.

4. As required by Govt. Code section 7071, the City Council now intends to renew and restate Ordinance 5562 to implement the Military Equipment Use Policy for another year.

SECTION 2.The City Council makes the following required findings in compliance with Gov. Code section 7071(d)(1) and (e) as to the attached Military Equipment Use Policy:
(A) The military equipment is necessary because there is no reasonable alternative that can achieve the same objective of officer and civilian safety. (B) The proposed military equipment use policy will safeguard the public’s welfare, safety, civil rights, and civil liberties.
(C) The equipment is reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety. (D) Prior military equipment use complied with the military equipment use policy that was in effect at the time.

SECTION 3.The City Council hereby approves the attached Military Equipment Use Policy incorporated as Exhibit A to this ordinance.

SECTION 4. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance.

The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or unconstitutional.

SECTION 5. The Council finds that adoption of this Ordinance is not a “project” within the meaning of CEQA.

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Renewing the City’s
Military Equipment Use
Policy

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SECTION 6.This Ordinance shall be effective on the thirty-first date after the date of its adoption. This Ordinance shall then supersede Ordinance 5562, and any conflict shall be resolved in favor of this Ordinance.

SECTION 7. This Ordinance shall be uncodified.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

NOT PARTICIPATING:

ATTEST:
____________________________ ____________________________ City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
____________________________ ____________________________ Assistant City Attorney City Manager
____________________________
Chief of Police
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Renewing the City’s
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Exhibit A
Palo Alto Police Department Military Equipment Use Policy (Updated November 2023)

PURPOSE
This policy is provided to fulfill the obligations set forth in Assembly Bill No. 481 as codified at Govt. Code section 7070 et seq., and establishes guidelines for the acquisition, funding, use and reporting of “military equipment”, as the term is defined in Government Code section 7070.

These obligations include but are not limited to seeking approval on specific items deemed, by statute, to be military equipment and requirements related to compliance, annual reporting, cataloging, and complaints regarding these items.

PROCEDURE
A. DEFINITIONS

1. Governing Body – The City Council of the City of Palo Alto.

2. Military Equipment – Shall have the same meaning as defined by California Government Code § 7070(c).

B. GOVERNING BODY APPROVAL

1. The Department shall obtain approval of the governing body prior to engaging in any of the following activities:
a. Requesting military equipment made available pursuant to Section 2576a of Title 10 of the United States Code.
b. Seeking funds for military equipment including, but not limited to, applying for a grant, soliciting or accepting private, local, state, or federal funds, in-kind donations, or other donations or transfers.
c. Acquiring military equipment either permanently or temporarily, including by borrowing or leasing.
d. Collaborating with another law enforcement agency in the deployment or other use of military equipment within the territorial jurisdiction of the governing body. e. Using any new or existing military equipment for a purpose, in a manner, or by a person not previously approved by the governing body pursuant to general order f. Soliciting or responding to a proposal for, or entering into an agreement with, any other person or entity to seek funds for, apply to receive, acquire, use, or collaborate in the use of, military equipment.
g. Acquiring military equipment through any means not provided in a. through f.

2. In seeking the approval of the governing body, the Department shall comply with Gov. Code § 7071, which requires that the Department submit a proposed military equipment use policy, or subsequent amendments, to the City Council and the public via the law enforcement agency’s internet website at least 30 days prior to any public hearing concerning the military equipment at issue.

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3. The governing body must be able to make the following findings in approving the Military Equipment Use Policy as required by Gov. Code § 7071(d)(1) in order to use military equipment:
a. The military equipment is necessary because there is no reasonable alternative that can achieve the same objective of officer and civilian safety. b. The proposed military equipment use policy will safeguard the public’s welfare, safety, civil rights, and civil liberties.
c. If purchasing the equipment, the equipment is reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety. d. Prior military equipment use complied with the military equipment use policy that was in effect at the time, or if prior uses did not comply with the accompanying military equipment use policy, corrective action has been taken to remedy nonconforming uses and ensure future compliance.

C. MILITARY EQUIPMENT ANNUAL REPORT
The Department shall submit an annual military equipment report to the governing body that addresses each type of military equipment possessed by the Department in compliance with Gov. Code § 7072.

1. The Department shall also make each annual military equipment report publicly available on its internet website for as long as the military equipment is available for use.

2. The annual military equipment report shall, at a minimum, include the following information for the immediately preceding calendar year for each type of military equipment:
a. A summary of how the military equipment was used and the purpose of its use. b. A summary of any complaints or concerns received concerning the military equipment.
c. The results of any internal audits, any information about violations of the military equipment use policy, and any actions taken in response. d. The total annual cost for each type of military equipment, including acquisition, personnel, training, transportation, maintenance, storage, upgrade, and other ongoing costs, and from what source funds will be provided for the military equipment in the calendar year following submission of the annual military equipment report. e. The quantity possessed for each type of military equipment. f. If the Department intends to acquire additional military equipment in the next year, the quantity sought for each type of military equipment.

The Department will document each use of military equipment and, via administrative review, ensure compliance with this policy. Any instances of non-compliance will be reported to the City Council via the annual military equipment report, and to the Independent Police Auditor where appropriate.

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Renewing the City’s
Military Equipment Use
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D. MILITARY EQUIPMENT USE POLICY COMPLAINTS AND CONCERNS Pursuant to Gov. Code § 7070(d)(7), members of the public may register complaints or concerns or submit questions by any of the following means:

1.Via email to: [email protected]

2.Via phone call to: (650) 329-2406

3.Via mail sent to: Palo Alto Police Department
Attn: Personnel and Training
275 Forest Avenue
Palo Alto, CA 94301
The Department is committed to responding to complaints, concerns and/or questions received through any of the above methods in a timely manner.

E. MILITARY EQUIPMENT TRAINING
Military equipment shall only be used after applicable training, including any course required by the Commission on Peace Officer Standards and Training (P.O.S.T.), has been completed, unless exigent circumstances arise.

F. MILITARY USE EQUIPMENT POLICY CONTENTS
All military use equipment kept and maintained by the Department shall be cataloged in a way which addresses each of the following requirements in compliance with Gov. Code § 7070(d):

1. A description of each type of military equipment, the quantity sought, its capabilities, expected lifespan, and product descriptions from the manufacturer of the military equipment.

2. The purposes and authorized uses for which the law enforcement agency or the state agency proposes to use each type of military equipment.

3. The fiscal impact of each type of military equipment, including the initial costs of obtaining the equipment and estimated annual costs of maintaining the equipment.

4. The legal and procedural rules that govern each authorized use.

5. The training, including any course required by the Commission on Peace Officer Standards and Training, that must be completed before any officer, agent, or employee of the law enforcement agency or the state agency is allowed to use each specific type of military equipment to ensure the full protection of the public’s welfare, safety, civil rights, and civil liberties and full adherence to the military equipment use policy.

6. The mechanisms to ensure compliance with the military equipment use policy, including which independent persons or entities have oversight authority, and, if applicable, what legally enforceable sanctions are put in place for violations of the policy.

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G. USE POLICY FOR SPECIFIC EQUIPMENT
Qualifying Equipment Owned/Utilized by the Department
Equipment Type: 37mm Less Lethal Launchers and Kinetic Energy Munitions - CA Gov’t Code §7070(c)(14)
Quantity Owned/Sought: 30 owned Lifespan: Approximately 15 years Equipment Capabilities: The 37MM Less Lethal Launcher is capable of firing 37MM Kinetic Energy and Chemical Agent Munitions. Palo Alto PD only possesses “KO1” impact baton rounds in its inventory.

Manufacturer Product Description: Sage Control Ordinance 37MM launchers are rugged, reliable, and simple to operate less lethal launchers. These launchers are light weight, versatile and used worldwide by police officers. The 37MM launcher family of products is available in single-shot (“Ace”), double-shot (“Deuce”), or magazine fed configurations. Palo Alto PD possesses the “Ace” and “Deuce” models.

Purpose/Authorized Uses: The 37MM Less Lethal Launchers and Kinetic Energy Munitions are intended for use as a less lethal use of force option. Kinetic energy projectiles, when used properly, are less likely to result in death or serious physical injury and can be used in an attempt to de-escalate a potentially deadly situation.

Circumstances appropriate for deployment include, but are not limited to, situations in which:
(a) The suspect is armed with a weapon and the tactical circumstances allow for the safe application of approved munitions.
(b) The suspect has made credible threats to harm him/herself or others. (c) The suspect is engaged in riotous behavior or is throwing rocks, bottles or other dangerous projectiles at people and/or officers.
(d) There is probable cause to believe that the suspect has already committed a crime of violence and is refusing to comply with lawful orders.

Fiscal Impacts: The initial cost of this equipment was approximately $27,000. The ongoing costs for munitions will vary and maintenance is conducted by departmental staff.

Legal/Procedural Rules Governing Use: Use governed by applicable State, Federal and Local law, and PAPD policy, including but not limited to PAPD policy §§ 300 (Use of Force) and 308 (Control Devices and Techniques). Use will continue to be subject to an administrative Use of Force review.

Training Required: Officers must complete a department certified 37mm course as well as regular training and qualifications as required by law and policy.

Other Notes: None.

Equipment Type: Long Range Acoustic Device (LRAD) - CA Gov’t Code §7070(c)(13) Quantity Owned/Sought: 1 Lifespan: Unknown.

Equipment Capabilities: LRAD systems are a type of Acoustic Hailing Device (AHD) used to send messages over long distances. LRAD systems produce much higher sound levels (volume) than normal loudspeakers or megaphones, and can be more narrowly directed.

Manufacturer Product Description: LRAD systems are a type of Acoustic Hailing Device (AHD) used to send messages over long distances. LRAD systems produce much higher sound levels Item 15
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(volume) than normal loudspeakers or megaphones. Over shorter distances, LRAD signals are loud enough to cause pain in the ears of people in their path.

Purpose/Authorized Uses: Primarily used to communicate, from a safe distance, with armed and/or barricaded subjects, for the purpose of negotiation. Can also be used in furtherance of search and rescue operations, and to communicate lawful dispersal orders.

Fiscal Impacts:

Legal/Procedural Rules Governing Use: Use governed by applicable State, Federal and Local law, and PAPD policy, including but not limited to PAPD policy § 414 (Hostage and Barricade Incidents). Use will be subject to an administrative review.

Training Required: The Palo Alto Police Department provides internal training for staff members prior to allowing them to use this equipment.

Other Notes: This equipment is maintained and operated by members of the Department’s Crisis Negotiation Team (CNT).

Equipment Type: Diversionary Devices and Chemical Agents (tear gas) and pepper balls - CA Gov’t Code §7070(c)(12)
Quantity Owned/Sought: 108 Lifespan: 5 years
Equipment Capabilities: Capable of creating auditory/visual distractions, and/or deploying tear gas or pepper chemical to distract potentially dangerous individuals.

Manufacturer Product Description:

The Palo Alto Police Department uses Diversionary Devices and Chemical Agents produced by Defense Technology (DT) and Combined Tactical Systems (CTS). All Chemical Agents utilized by PAPD contain CS (Orthochlorobenzalmalononitrile) or OC (Oleoresin Capsicum).

Diversionary Devices:

1. Mini-Bang (CTS-7290M)
a. The Model 7290M Flash-Bang exhibits all of the same attributes of its larger counterpart but in a smaller and lighter package. Weighing in at just 15 ounces the new 7290M is approximately 30% lighter than the 7290 but still has the same 180db output of the 7290 and produces 6-8 million candela of light.

Chemical Agents:

1. CS 37mm Liquid Ferret Barricade Round (CTS-3330)
a. 3330 – Liquid CS filled projectile penetrates intermediate barriers and delivers irritant agents into an adjacent room.

2. CS 37mm Liquid Ferret Barricade Round (DT-1162)
a. The Ferret® 37 mm CS Round is a frangible projectile filled with chemical agent. Upon impacting the barrier, the nose cone ruptures and instantaneously delivers the .16 oz. agent payload inside a structure.

3. CTS 5230b Baffled CS
a. The design of the Baffled CS allows the contents to burn within an internal can and external baffling, and disperse the agent safely with reduced risk of fire.

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and/or dislodge a barricaded subject. This grenade can be hand thrown or launched from a fired delivery system.

4. CTS 5230 Riot CS
a. The CTS Riot CS is specifically designed for outdoor use. It discharges a high volume of smoke and chemical agent through multiple emission ports. This grenade can be hand thrown or launched from a fired delivery system.

5. CS Riot Control (DT-1082)
a. The Riot Control CS Grenade is designed specifically for outdoor use in crowd control situations with a high volume continuous burn. . This grenade can be used to conceal tactical movement or to route a crowd. The volume of smoke and agent is vast and obtrusive. .

Smoke:

1. CTS 5210 White Smoke
a. The CTS 5210 White Smoke Grenade is designed specifically to conceal tactical movement or to route a crowd. The volume of non-irritant smoke and agent is vast and obtrusive.

PepperBall:

Less lethal launchers are designed for minimum time between launches and quick reload speed, so whether in a crowd control scenario, tactical or even Mobile Field Force situation, the PepperBall system offers flexibility, safety and security, all within one platform. Each launcher is air powered, with either carbon dioxide (CO2), nitrogen, or compressed air powering the launch of projectiles.

Purpose/Authorized Uses: creating explosive distractions, and/or deploying chemical agents.

Fiscal Impacts: The initial cost of the Pepperball equipment was approximately $7,920. The ongoing costs for munitions will vary and maintenance is conducted by departmental staff.

The initial cost of the distraction devices and chemical agents was approximately $2,400. The ongoing costs for munitions will vary and (minimal, if any) maintenance is conducted by departmental staff.

Legal/Procedural Rules Governing Use Use governed by applicable State, Federal and Local law, and PAPD policy, including but not limited to PAPD policy §§ 300 (Use of Force), 308 (Control Devices and Techniques), and 408 (Crisis Response Unit).Use of tear gas or pepper balls will continue to be subject to an administrative Use of Force review. Use of distraction devices will be subject to an administrative review to ensure policy compliance.

Training Required: A P.O.S.T. certified Control Devices and Techniques Department chemical agent and distraction device instructor provides internal training for all members of the SWAT team prior to allowing them to use flashbang grenades or tear gas. The Department provides internal training for all members prior to allowing them to use pepper balls.

Other Notes: Distraction devices and chemical agents are exclusively maintained and operated by members of the Department’s Special Weapons and Tactics Team (SWAT).

Equipment Type: Bolt Action Rifle and Ammunition - CA Gov’t Code §7070(c)(10) Quantity Owned/Sought: 1 owned Lifespan: Approximately 15 years Equipment Capabilities: Accuracy International rifle is capable of firing a 7.62mm/.308 cal projectile bullet.

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Manufacturer Product Description: Accuracy International (AI) Accuracy Tactical bolt action rifle .308 Winchester/7.62mm NATO.

1.20" barrel threaded 5/8x24

2.Nightforce:C622 Scope .250 MOA

3.AI Adjustable cheek piece

4.AI Two-stage trigger

5.AI 10-round .380 caliber magazine

6.AI Three-position safety
Purpose/Authorized Uses: This rifle is authorized for use by a specially-trained, SWAT marksman only and may be deployed in any circumstance where the officer can articulate a reasonable expectation that the rifle may be needed. Examples of some general guidelines for deploying the rifle may include but are not limited to:

1. Situations where the officer reasonably anticipates an armed encounter.

2. When the officer is faced with a situation that may require accurate and effective fire at long range.

3. Situations where an officer reasonably expects the need to meet or exceed a suspect's firepower.

4. When an officer reasonably believes that there may be a need to fire on a barricaded person or a person with a hostage.

5. When an officer reasonably believes that a suspect may be wearing body armor.

6. When authorized or requested by a supervisor.

Fiscal Impacts: This equipment was purchased by the Palo Alto Police Department at an initial cost of $6500.00. The ongoing costs for ammunition will vary and maintenance is conducted by departmental staff.

Legal/Procedural Rules Governing Use: Use governed by applicable State, Federal and Local law, and PAPD policy, including but not limited to PAPD policy §§ 300 (Use of Force), 312 (Firearms), and 408 (Crisis Response Unit).Each use will continue to be subject to an administrative Use of Force review.

Training Required: In addition to CA P.O.S.T. certified patrol rifle and CA P.O.S.T. certified standard SWAT Operator training, SWAT marksmen must successfully complete a CA P.O.S.T. certified course as well as regular SWAT marksmanship training and qualifications as required by law and policy.

Other Notes: None.

Qualifying Equipment Owned/Utilized by Palo Alto OES
Equipment Type: Command and control vehicle – CA Gov’t Code §7070(c)(5) Quantity Owned/Sought: 1 Lifespan: Approximately 20 years Equipment Capabilities: The City of Palo Alto Office of Emergency Services (OES) has a Mobile Emergency Operations Center (MEOC) vehicle.

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Manufacturer Product Description: The MEOC is built on a 40’ Freightliner chassis, 2010 Model Year.

Purpose/Authorized Uses: The MEOC serves as a resource for public safety and coordinates with other such vehicles operated by other agencies. It is deployed to “all hazards” ranging from natural disasters, wildfires, crime, special events, and planned and unplanned disruptions to 9-1-1 and Emergency Operations Center systems and facilities.

Fiscal Impacts: The MEOC was acquired in approximately 2010 with grant funding of $300,000 and City funding of $375,000. The ongoing costs for maintenance and operation will vary and most maintenance is conducted by City staff.

Legal/Procedural Rules Governing Use: It is the policy of OES to use the MEOC in accordance with California State law regarding the operation of motor vehicles. Furthermore, since the MEOC is grant-funded and since the MEOC is a rare resource, the City may support mutual aid with the MEOC (for example wildfire response). Use will be subject to an administrative review to ensure policy compliance.

Training Required: The MEOC is a highly complex system. City staff are provided with requisite training and licensing, depending on their role in supporting the MEOC.

Other Notes: The MEOC is not a “military vehicle” but could support coordination with the National Guard, FEMA, and other cooperating agencies after a major earthquake or other disaster.

Qualifying Equipment known to be owned and/or utilized by law enforcement units with which the Palo Alto Police Department collaborates and/or participates for law enforcement purposes
Equipment Type: Unmanned Aircraft Systems (UAS/Drones) – CA Gov’t Code §7070(c)(1) Quantity Owned/Sought: None (outside owned) Lifespan: Various Equipment Capabilities: Remotely piloted aerial vehicles capable of providing live and recorded video images captured from aerial positions, including images enhanced by Forward Looking Infrared (FLIR) and optical zoom lenses.

Manufacturer Product Description: Various. Dependent upon the availability of mutual aid equipment and personnel at the time of need.

Purpose/Authorized Uses: UAS/Drones may be utilized to enhance the Department’s mission of protecting lives and property when other means and resources are not available or are less effective. Uses may include but are not limited to: search and rescue; suspect apprehension; crime scene documentation; tactical operations; scene security; hazard monitoring, identification and mitigation; response to emergency calls; crisis communications; legally authorized surveillance.

Fiscal Impacts: None. Equipment owned, maintained, and operated by another agency.

Legal/Procedural Rules Governing Use: Use governed by applicable State, Federal and Local law, Federal Aviation Administration (FAA) regulations, and PAPD policy, including but not limited to PAPD policy §§ 322 (Search and Seizure) and 352 (Outside Agency Assistance).Federal Aviation Administration (FAA) regulations . Absent a warrant or exigent circumstances, operators and observers shall adhere to FAA altitude regulations and shall not intentionally record or transmit images of any location where a person would have a reasonable expectation of privacy (e.g., residence, yard, enclosure). Operators and observers shall take reasonable precautions to avoid inadvertently recording or transmitting images of Item 15
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areas where there is a reasonable expectation of privacy. Upon mutual aid or other request from PAPD, UAS/Drone will be operated by the deploying agency’s staff pursuant to their own policies and review.

Training Required: Prior to piloting any UAS/Drone staff members must secure an FAA Remote Pilot License and complete all training required by our FAA COA.

Other Notes: None.

Equipment Type: Unmanned, remotely piloted, powered ground vehicles - CA Gov’t Code §7070(c)(1)
Quantity Owned/Sought: None (outside owned) Lifespan: Various Equipment Capabilities: Robots are capable of being remotely navigated to provide scene information and intelligence in the form of video and still images transmitted to first responders.

Manufacturer Product Description: Various. Dependent upon the availability of mutual aid equipment and personnel at the time of need.

Purpose/Authorized Uses: To enhance the safety of potentially dangerous situations by providing first responders with the ability to capture video and still images of hazardous areas prior to, or in lieu of, sending in personnel.

Fiscal Impacts: None. Equipment owned, maintained, and operated by another agency.

Legal/Procedural Rules Governing Use: Absent a warrant or exigent circumstances, operators and observers shall adhere to all applicable privacy laws and shall not intentionally record or transmit images of any location where a person would have a reasonable expectation of privacy (e.g., residence, yard, enclosure). Use governed by applicable State, Federal and Local law, Federal Aviation Administration (FAA) regulations, and PAPD policy, including but not limited to PAPD policy §§ 322 (Search and Seizure) and 352 (Outside Agency Assistance). Upon mutual aid or other request from PAPD, vehicle will be operated by deploying agency’s staff pursuant to their own policies and review.

Training Required: Subject to the policies of the deploying agency.

Other Notes: While the Palo Alto Police Department does not own or operate this equipment, it could be deployed to an incident within city limits.

Equipment Type: Wheeled vehicles that have a breaching apparatus attached - CA Gov’t Code §7070(c)(3)
Quantity Owned/Sought: None (outside owned) Lifespan: Various Equipment Capabilities: Capable of breaching doors, gates, and other points of entry; facilitating the safe transport of officers or civilians facing an armed suspect.

Manufacturer Product Description: Various. Dependent upon the availability of mutual aid equipment and personnel at the time of need.

Purpose/Authorized Uses: Breaching doors, gates, and other points of entry. Safely transporting police personnel or evacuating civilians, when facing with an armed suspect.

Fiscal Impacts: None. Equipment owned, maintained, and operated by another agency.

Legal/Procedural Rules Governing Use: Use governed by applicable State, Federal and Local law, and PAPD policy, including but not limited to PAPD policy §§ 322 (Search and Seizure) and 352 (Outside Agency Assistance). Upon mutual aid or other request from PAPD, vehicle will be operated by deploying agency’s staff pursuant to their own policies and review.

Training Required: Subject to the policies of the deploying agency.

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Other Notes: While the Palo Alto Police Department does not own or operate this equipment, it could be deployed to an incident within city limits.

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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: November 27, 2023
Report #:2308-1904
TITLE
PUBLIC HEARING: Adoption of an Ordinance Amending the Palo Alto Municipal Code to Add Chapter 9.65 and Amend Chapter 9.72 to Establish a Mandatory Registry Program of Residential Rental Units in the City of Palo Alto; Provide Direction to Staff on the Rental Registry Program Implementation. CEQA Status – Exempt under CEQA Guidelines Section 15061(b)(3).

RECOMMENDATION
Staff recommends that the City Council take the following action:

1. Adopt an Ordinance (Attachment A) amending the Palo Alto Municipal Code (PAMC) to add Chapter 9.65 (Rental Registry Program) and amend PAMC Chapter 9.72 (Mandatory Response to Request for Discussion of Disputes Between Landlords and Tenants) to establish a mandatory rental registry program of residential rental units in the City of Palo Alto; and

2. Direct staff to implement the City’s Rental Registry Program as detailed in this report or as modified by Council.

EXECUTIVE SUMMARY
Two years ago, the City Council directed staff to advance a number of renter protection policy initiatives, including expansion of tenant relocation assistance and eviction protections, security deposit limits, a fair chance ordinance, the subject rental registry program and other efforts.1 Staff engaged renters, property owners/managers, landlords, the City’s Human Relations Commission (HRC), the Planning and Transportation Commission (PTC), the Policy and Services Committee, and the Housing Ad Hoc to inform the recommendations in this report.

The attached ordinance amends the City’s existing rental data collection efforts and broadens it into a new rental registry program. The ordinance sets forth the overall framework and basic requirements; however, many of the program implementation components are delegated to the City Manager. The City’s implementation decisions significantly impact the amount of staff resources needed to support the program. Staff from planning and development services, the 1 See Attachment B for a description of all initiatives with status updates.

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city attorney’s office, information technology, and the city manager’s office, as well as administrative support staff will be needed to initiate and maintain this program at a basic level. A professional services contract to administer and support the online registry portal is also required. The need for additional regulations and resources expands significantly if the City Council were to direct an active role for the City in enforcing violations to the City’s existing renter protection laws, beyond efforts to achieve compliance with the program’s rental unit registration requirements.

At a basic level of implementation, most support departments and programs would be expected to absorb additional work within existing resources, which will likely require reprioritizing or delays in some other efforts. For planning and development services, which would oversee the program, at least two full time positions are needed for implementation.

Since the rental program is new, staff recommends a phased implementation approach that is expected to reduce, initially, to one, the number of new staff needed to support the program.

This will provide an opportunity to work through anticipated but unknown technology and implementation challenges that inevitably arise when starting a new program. This approach is also expected to minimize potential user frustration while still providing the City with significant data collection to help inform future renter protection policy decisions. As the program scales, more resources will be expected, but efficiencies learned through initial implementation may mitigate the extent.

Based on the recommendations in this report, staff anticipates returning to Council with a contract for professional services in early 2024 to provide technical and online support for the program. At that time or during mid-year budget review, staff will seek Council authorization for one new full-time position. Rental registration, based on initial program cost estimates and the aforementioned recommendations, is anticipated to cost landlords approximately $40 per unit, per year.

BACKGROUND
This report transmits an ordinance to establish a residential rental registry program for Palo Alto.

The City Council on November 29, 2021, directed staff to work with the Policy and Services Committee to propose design and implementation strategies, including overall structure, fees, resources and timeline for implementation.

Staff also engaged renters and landlords in outreach events that are detailed in Attachment C.

The HRC, PTC, Policy and Services and the Housing Ad Hoc have all reviewed a draft ordinance and provided feedback on program implementation, which has influenced the staff recommendations described below. A summary of this feedback is provided in Attachment D.

DISCUSSION / ANALYSIS
The attached ordinance codifies the City’s authority to establish a rental registry program. The ordinance details why the ordinance is warranted, its purpose, defines certain terms, describes privacy expectations, when penalties may be assessed and basic registry requirements, including:

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•Initial and annual registration for each residential rental unit in the City, including attached and detached single family homes, junior/accessory dwelling units (J/ADUs), duplexes and all multifamily units;
•Submittal information identifying the address of each rental unit; the name and contact information of the property owner, manager, or landlord; and additional information determined by the City Manager (see Attachment E and F for a complete list of additional information intended to be collected and reason for collection); •Event-based registration that applies anytime during the year when applicable for notices to quit and for eviction notices sent to a renter (see discussion below); •An affidavit attesting under penalty of perjury the accuracy of the information provided; and,
•Provisions to collect fees to offset the costs associated with the rental registry program.

In addition, the ordinance modifies existing code requirements in Palo Alto Municipal Code Chapter 9.72 that previously established a reporting requirement for rental property and directs responsible parties to the new rental registry requirements described above.

The ordinance establishes the overall framework and intent for requiring the rental registry program. However, the detailed administrative implementation requirements are deferred to the City Manager or their designee. This is to provide flexibility and the ability to make timely program adjustments in response to information learned from program implementation without having to update the ordinance.

Rental Registry Program Implementation
The administrative regulations will be prepared following the Council’s action on the subject ordinance and posted on the City’s website. Staff seeks the Council’s endorsement on the recommended approach toward implementing some components of the rental registry program that are highlighted below. These recommendations are informed by feedback received from staff’s research on the topic, including conversations with other jurisdictions and from the outreach efforts summarized above.

These recommendations are also guided by the stated intent for a registry program, which is to collect data that may help inform future rental protection policies, and is balanced to resource considerations, including new staff positions to support the program. Enforcement of existing renter protection policies is currently addressed through private rights of action in civil court.

Data collected through this registry may reveal a violation of local renter protection regulations.

As described further below, the City does not currently have a regulatory structure for enforcement and staff is not currently resourced to follow up on these potential violations.

Council direction to proactively enforce violations would have significant budgetary implications.

Rental Registry Program Phasing
The registry is intended to capture all rental units in the City and staff recommends a phased approach for its initial implementation.

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There are approximately 11,400 rental units in Palo Alto as detailed in Table 1. Nearly 300 rental property owners represent about 70% of the rental housing stock. The other 30% includes nearly 3,400 single family residential units, J/ADUs and duplexes.

Staff recommends for the first two years of the program that landlords or property managers be required to register all sites that have three or more rental units, excluding J/ADUs, and regardless of current occupancy or availability on the market. Staff supports this approach for the following reasons:
•Implementing a new online database and working with a new vendor to manage that system is bound to have glitches that will disrupt the experience and ease of use in the early phase of the program, despite efforts to mitigate such instances. •Realtime beta testing with a limited number of registrants that represents a high percentage of overall rental units will enable the City to launch the program more quickly while keeping the inevitable implementation challenges and frustrations to a limited subset of individuals.
•Experience gained from the early implementation phase will allow staff and the vendor to make system adjustments, improve online instructions and provide meaningful outreach before extending the program to nearly 3,000 additional registrants, homeowners.

This approach also reflects the business nature of multi-family rental housing where landlords and property managers are more familiar with a rental regulatory environment and are likely better equipped to navigate the online registry program. Homeowners on the other hand may have only one or two units that they rent but it may not be a primary source of income and additional local regulatory procedures may be perceived as burdensome. Ironing out any technical challenges with this new system before opening it up to a large number of homeowners may help avoid future frustration, reduce the need for administrative support for the program and better position the City for more successful data collection.

Accordingly, the staffing recommendation below is impacted by this approach requiring fewer additional resources while also largely relying on existing staff levels.

Starting in year three, all property owners/managers and landlords would be required to register their rental units.

This recommendation was not specifically addressed with any of the stakeholders, rather it evolved subsequently based on earlier, related conversations about exempting homeowners or J/ADUs from the program or first program year and addressing concerns about fee collection or waivers.

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Table 1: Distribution of Rental Households by Rental Unit Property Type in Palo Alto Mobile
Home
Boat,
RV,
Van,
etc.

Single
Family
Detached
Single
Family
Attached
Duplex
Triplex
and
Fourplex
Small
Sized
Rental
Property
(5 to 9
Units)
Medium
Sized
Rental
Property
(10 to 19
Units)
Medium
Sized
Rental
Property
(20 to 49
Units)
Large
Sized
Rental
Property
(50 or
More
Units)
Total
# of
Units 38 0 2,890 558 135 941 1,557 1,289 1,636 2,379 11,423 % of
Total
Units

0.3% 0.0% 25.3% 4.9% 1.2% 8.2% 13.6% 11.3% 14.3% 20.8% 100% Source: U.S. Census Bureau, 2016-2020 American Community Survey 5-Year Estimates, B25032 Tenure by Units in Structure:
https://data.census.gov/cedsci/table?q=units%20in%20structure&t=Housing%3AIncome%20%28Households,%20Families,%20Individuals%29%3AOwner%2FRenter%20%28Householder%29%20Chara cteristics&g=1600000US0655282&tid=ACSDT5Y2020.B25032
Rental Program Fees and Fee Waivers
Staff recommends the rental registry ultimately be a fully cost recoverable program. Program costs include professional services from a vendor to develop and maintain the software and database and related customer support services. There are also staffing costs that will be needed to support registrants, engage with the vendor and follow up on program participation, as well as indirect costs.

The cost of the program upon full implementation is proposed to be distributed among the total number of rental units in the City resulting in a program fee of about $40 per year, per unit.2 This fee would increase annually based on the consumer price index or similar metric used by the City.

However, for similar reasons noted above supporting a phased implementation, staff recommends the City Council consider waiving the program’s first year fee and begin assessing the fee in the second year for multi-family property owners/managers and landlords. Staff recommends a fee waiver for single family homeowners and registration of J/ADUs for program year three; resulting in full payment from all registrants in program year four and cost recovery.

There are several iterations the Council could consider and this does not need to be resolved immediately as staff will need to return with a fee resolution to establish the fee. The HRC, PTC and Housing Ad Hoc either made recommendations to exempt homeowners or J/ADUs if the owner also lived on the property or suggested limited term waivers. To the extent the program is not cost recovered through fees, the City Council would need to allocate General Fund resources to support any delayed or waived fee collection.

Notwithstanding any deferred or waived fees, the City would still seek to enforce compliance with the registration requirements and would assess penalties as described later in this report. 2 Based on current fiscal year estimates.

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The ordinance has a provision that precludes property owners/managers or landlords from passing the fee onto renters. However, unless the fee is clearly identified on the lease to be paid by the renter, it would be very difficult to document a violation and enforce this provision.

Rental Program Registration Form – Data Collection & Privacy A draft registration form is included with this report as Attachment E. The form identifies the type of information the City would collect, which is intended to be minimal while still being meaningful for future analysis. This registration form will be used by the City’s consultant to prepare the program software and website interface. Both the PTC and Housing Ad Hoc requested to see registration form before being launched publicly.

The HRC requested outlining program privacy mandates and how they will be facilitated. Staff and the consultant would address software privacy and security through authentication procedures and software design. The draft ordinance focuses on outlining the circumstances under which information collected by the program would be shared or distributed. The registry would have a landlord portal, a public portal, and a staff portal. Landlords would be able to access all rental unit information for their units only. Members of the public would be able to use their portal see if the City has or has not received mandated information (not the content), the type of reporting, and the date of that reporting. Renters may request information reported for their rental unit during their tenancy. City staff would be able to access all rental unit information but would report information in aggregate. The data collected through this program would be subject to the California Public Records Act. The City would be obligated to release existing data pursuant to a request.

Event-Based Reporting
Registrants would be required to renew their rental units annually. The draft ordinance also requires between renewals that the registry be updated when a notice to quit is sent to a renter and for evictions. This update must be made within 10 days and there is no proposed fee associated with this update.

There may be other events that the City has an interest in receiving timelier updates than annually. This may include rent increases or when a new tenancy is established, for instance. Any data point that the City collects that changes in a year could potentially be an event triggering an update.

Staff recommends initiating the rental registry program with the fewest number of event- triggering updates as necessary to advance the City’s interests. Property owners/managers or landlords with several units will undoubtably find frequent updates burdensome and time consuming. Also, the data collected is intended to inform future rental protection policies. It is anticipated it would take several years of data collection to begin to see trends or identify concerns in the rental market to inform future policy decisions. Moreover, unless the City is going to invest in substantial resources for proactive enforcement, there is little the City would do with event-based input received. The ordinance captures what staff anticipates are the most important events to identify disconcerting trends related to evictions. While the City is not Item 16
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resourced to broadly enforce renter protection policies – if an irregular eviction event occurred and appeared inconsistent with local or state laws, staff would investigate and support enforcement of its rules if an eviction-related violation were documented.

This approach was generally supported by the HRC, PTC, and Housing Ad Hoc though there was some discussion about different reporting schedules such as quarterly or within 30 days for certain events. For simplicity staff recommends only annual reporting except as noted. As the City’s interests or improved understanding of the rental market deepens, the event-based reporting requirements could change. In this regard, those that might favor more frequent updates could look at this approach as part of the early implementation efforts that could be expanded as needed.

Rental Program Costs & Resource Needs
The City issued a Notice of Intent to Award the contract to the firm 3Di in August 2023. Contract negotiations are still in progress and the final cost for consultant services and software are not yet fully fleshed out. Based on 3Di’s initial proposal submitted to the City, there is an initial program buildout cost of approximately $70,000, and approximately $150,000 for 3 years of maintenance and software subscription. Therefore, to get the program software up and operating for three years, the cost is approximately $220,000. Staff anticipates that this figure would adjust with the finalization of the contract scope, but it is not expected to change substantially. After receiving 3Di’s proposal, staff learned from 3Di of their recent launch of a new online chat and call service that Palo Alto landlords could use if they had any basic data entry questions when registering their rental units. Staff intends to incorporate this service and cost when the contract is presented to Council early next year.

In general, the consultant software and professional services contract is anticipated to include the basic software tools necessary to administer the program. This includes an online portal, user interface design, user authentication, software maintenance, database storage, user guides, data analysis and visualization tools, reporting functionality, customer relationship management functionality, participation fee invoicing and collection, and penalty fee invoicing and collection.

The software can translate the registration forms and other materials into many different languages. Other than offering the online chat and call service, the consultant would not be performing any community outreach, trainings, sending notices, quality control, data analysis, or reporting. The bulk of program administration and implementation would still need to be provided by City staff.

Staff conducted interviews with other local jurisdictions to understand how their rental unit registry programs operated, including staffing needs. The review of other cities found that staff was needed for a range of program administration roles. These included contract management, policy development, oversight, and day-to-day outreach/customer service for landlords, renters, and other stakeholders. Additionally, staff review of rental unit registrations for quality assurance and control, program implementation requirements, coordination with other City departments engaged in housing, and preparation of reports for policymakers.

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A significant amount of staff resources is also anticipated for outreach to thousands of individuals, particularly homeowners, to provide program awareness and support not offered by the consultant.

Based on this information, staff anticipates it would require two full-time equivalent employees to implement the rental registry program upon full implementation. Notably, staff from other cities found it challenging to implement their equivalent registry program with only two dedicated employees and this includes cities that utilize software tools identified above.

Staffing costs over a three-year period, including salaries and benefits, is estimated to be in the range of $340,000 to $400,000 per year for two employees. This does not include overhead costs (supervision) or costs from the City Attorney’s Office or other support departments or programs, such as code enforcement (related to registration requirements) that will likely be needed to support this program. Staff will evaluate these related costs during program implementation and may need to seek additional funding authorization to support the program.

Table 2: RRP Implementation 3-Year Cost Estimate
Cost Type Cost Description 3-Year Cost Estimate
RRP Software and
Professional Services
Contract
Initial RRP software build -
approximately $70,000;
3-years of maintenance and
software subscription –
approximately $150,000
$220,000
RRP City Staffing 2 FTEs (fully loaded costs,
including salaries and
benefits):
$340,000/year - $400,000/year
$1,020,000 - $1,200,000
3-Year Cost Estimate Total $1,240,000 - $1,420,000
Initially, staff requests that the City Council authorize the creation of one new position in the planning and development services department to support the staff recommended rental registry program described in this report. The department will utilize existing staff resources to provide supplemental support until the program expands toward full implementation. This approach has the benefit of phasing new resources and gives staff a chance to fully understand the workload impacts of this new program. The downside to this approach is that it may divert staff resources from other work the department performs.3 Based on the Council’s direction with the program, staff would return with the staffing request either as part of the mid-year budget review or when the professional services contract is provided to Council early next year.
3 Specifically, staff responsiveness on the city’s community development block grant program, limitations on staff’s ability to apply for and secure land use related planning grants, and could forgo the monitoring and commenting on development projects in adjacent jurisdictions that may impact Palo Alto.

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Enforcement and Penalties
As noted above, the City’s approach to renter protection enforcement largely relies on private party action through civil court. Data received from the registry program may reveal potential violations that impinge on a renter’s rights, or information collected (under penalty of perjury) may be inaccurate. The City’s code enforcement program and city attorney’s office are not sufficiently staffed to take on proactive renter protection enforcement or follow up on most alleged renter protection violations. If this is the City Council’s interest or intent, staff would need to return to Council with an appropriate regulatory framework and estimate of the additional resource and staff costs associated with that direction. It is anticipated that in addition to line staff support, management positions may also be needed.

Staff does anticipate working with the vendor and following up with property owners who are believed to have rental units and who have not registered those units. In this regard, the City’s code enforcement efforts would be limited to trying to achieve compliance with the registration requirements and not the policy implications from the data collected. The workload impact from this action depends in part on program awareness and lawful compliance from responsible parties.

Initially, staff anticipates it can accommodate the increased code enforcement workload based on the phased approach recommended in this report. Achieving compliance with the registration requirements is expected to be substantially more challenging when staff needs to engage individual property owners renting one, two or three units. The staff resource demand is expected to be greatest for this subset of landlords principally because renting units at this small scale is likely an ancillary endeavor that may not receive the same focus or attention as it would for a professional property manager responsible for several units.

The administrative penalty structure and amount is set by the City Council through resolution on a regular basis. City Council last updated the City’s Administrative Penalty Schedule and Civil Penalty Schedule in September 2023.4 The applicable penalty fee for not registering a rental unit would be $50 dollars per violation (per unit not registered or registered in error), which is similar to the anticipated amount of the annual registration fee. A second and third violation within 36 months would be $75 and $100 dollars, respectively in addition to any unpaid balances. Other cities have set their administrative penalty schedule at a higher amount, such as $100 for the first violation. If the City Council felt a higher penalty were warranted, it could direct staff accordingly.

The ordinance includes a penalty fee waiver if the City found there was good cause for failing to properly register a unit.
4 City Council Resolution No. 10122: https://portal.laserfiche.com/Portal/DocView.aspx?id=67917&repo=r- 704298fc&searchid=b18813c0-7ea0-4e75-8e9e-c3293c51a431.

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TIMELINE
The next steps for the rental registry program if the Council approves the attached ordinance and endorses the staff recommended implementation strategy, includes the following:
•December 2023: Adopt ordinance on second reading;
•January/February 2024: Council to consider professional services contract and authorize new full time equivalent employee (or at mid-year budget review); •Spring 2024: Staff publishes the rental registry administrative implementation requirements – City Council action on administrative fee schedule identifying the registration costs and any changes to the penalty fee schedule, as appropriate; •Spring through Summer 2024: staff and consultant work on various components to implement the registry program, including continuing community awareness efforts; •September 2024: Anticipated launch of rental registry program and start of two month enrollment period.

Staff anticipates providing the Council with annual update reports, or more frequently if needed, during the first several years of implementation and ongoing to report on data collected through the registry program.

FISCAL/RESOURCE IMPACT
The recommendation in this report will have a fiscal impact requiring both consultant and staff resources. The rental registry program is anticipated to achieve full cost recovery upon the fourth year of implementation.

In the first year of the program, consultant expenses are required for the initial set up and ongoing operational support, estimated to be $70,000 and $68,0000, respectively. Operational support will include both online and telephone support for registrants. Additionally, staff resources will require 1.0 full-time equivalent employee, and salary and benefits is anticipated to cost approximately $200,000 per year, adjusted annually in accordance with Council approved wage and benefit increases. First year implementation costs will be offset by Council’s appropriation in the FY2024 operating budget of $100,000 to support program implementation.

Resource impacts are also anticipated for internal service departments, including the city attorney’s office, planning, code enforcement, information technology and the city manager’s office, as well as administrative services. Additional general expense costs may be required for outreach and engagement are also expected. It is anticipated these costs will be absorbed within the Planning and Development Services appropriated budget but may impact progress on other department or Council Priorities
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Starting in the second year of implementation, program revenue will be generated when landlords pay an approximated fee of $40 to register each unit annually. Based on the staff recommendation, approximately 6,800 units will be required to register, generating an estimated $270,000. In the third year, revenue is expected to remain at the same level of the prior year. Although the program would be expanded to include more units, the new units would also benefit from a fee waiver. By the fourth year, the City expects all units to register and will generate program revenue to be approximately $513,000 annually thereafter, as adjusted by cost indices.

In summary, based on the foregoing assumptions, the impact to the general fund is estimated to be as follows based on current dollars and costs:
* Year 0 is prorated to ¼ of the total costs due to hiring lead time.

As staff finalizes the professional services contract and develops a better understanding of staff workload implications, these estimates will be adjusted to achieve cost neutrality.

Resources to support the rental registry program will be brought forward in the FY2024 Mid- Year Budget Review and FY2025 Proposed Operating Budget process.

POLICY IMPLICATIONS
Pursuing renter protection policy work is consistent with the goals in the City’s 2030 Comprehensive Plan to provide adequate housing for all. Additionally, the renter protection policy work is consistent with the list of policies and programs in the 2023-2031 Housing Element.

The registry provides one means to affirmatively further fair housing within Palo Alto, as well as promote certainty, stability, and fairness in the rental market. The rental registry program provides an opportunity to collect information to inform future rental protection policy initiatives.

STAKEHOLDER ENGAGEMENT
Staff conducted community outreach and stakeholder engagement as summarized in this section and outlined in Attachment C. Additional community feedback is anticipated at future City Council meetings. Ahead of the November 27, 2023 City Council meeting, staff sent notice of this meeting via emails to rental policy email contact lists, posted information on the City’s webpage,5 5 Rental Registry Program webpage: https://www.cityofpaloalto.org/Departments/Planning-Development- Services/Housing-Policies-Projects/Rental-Registry-Program.

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and published a newspaper ad on November 17, 2023. Notice of this meeting was also distributed through social media channels, including the City’s digital newsletter, Uplift Local.

ENVIRONMENTAL REVIEW
This project is exempt from the provisions of the CEQA, pursuant to Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment.

ATTACHMENTS

Attachment A: Draft Rental Registry Program Ordinance
Attachment B: Renter Protection Work Status Update
Attachment C: Rental Registry Program Community Outreach Stakeholder Engagement Attachment D: PS HRC PTC and HAH Feedback Summary
Attachment E: Draft Example of an Initial Rental Unit Registration Form - November 2023 Attachment F: Draft Rental Market Policy Questions
APPROVED BY:

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Not Yet Approved
Ordinance No. _____
Ordinance of the Council of the City of Palo Alto Adopting Chapter 9.65 (Residential Rental Registry Program) and Amending Chapter 9.72 (Mandatory Response to Request for Discussion of Disputes Between Landlords and Tenants) to Establish a Mandatory Registry Program of Residential Rental Units

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

SECTION 1. Findings and Declarations. The City Council finds and declares as follows:

A. Renters represent a significant percentage of Palo Alto’s population; B. Landlords provide a significant community service by providing rental housing in the City of Palo Alto;
C. Palo Alto has great diversity in residential rental property and rental unit types, ranging from single-family homes and accessory and junior accessory dwelling units to properties with multi-family apartment buildings containing a variety of unit types; D. There is a need to ensure that housing is provided for people of a ll income levels and to affirmatively further fair housing;
E. The Palo Alto rental market is one of the most expensive in the country, which is one factor that can lead to renters being at risk of displacement; F. The City desires to implement policies for certainty, stability, and fairness in the rental market for renters and landlords;
G. The City finds value in having an updated registry of rental units and landlord contact information, for purposes such as informing City housing policy updates and assisting with renter/landlord mediation services;
H. The City and State have instituted existing renter protections, and the City has an interest in understanding the extent of awareness of these protections in the community and the status of implementation;
I. A significant number of renters in Palo Alto are low-income and cost-burdened; J. The City mak es a significant investment on an ongoing basis regarding rental unit protection, preservation, and production and will also soon implement the 6 th Cycle
Housing Element policies and programs;
K. The City hosted public hearings to gain feedback on the Rental Registry Program, including before the Human Relations Commission on September 23, 2021 and May 24, 2023, the Planning & Transportation Commission on April 28, 2021 and May 31, 2023, City Council Item 16
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on November 8, 2021, November 15, 2021, and November 29, 2021, the Policy & Services Committee on September 13, 2022, and the Housing Ad Hoc on August 31, 2023; and L. The City Council finds and determines that the Residential Rental Registry Program ordinance codified in Palo Alto Municipal Code Chapter 9 .65 (Residential Rental Registry Program) is adopted pursuant to the authority to protect the public health, safety, and welfare.

SECTION 2. Chapter 9.65 (Residential Rental Registry Program) of Title 9 (Public Peace, Morals and Safety) is hereby adopted as follows:

9.65.010. Purpose.

The purpose of this chapter is to adopt a residential rental registry program for the city of Palo Alto, which will allow the city to:

(a) Learn about the Palo Alto residential rental landscape as it is experienced by renters and landlords;
(b) Make data -informed policy decisions that protect public health, safety, and welfare for the residents of Palo Alto and that support certainty, stability, and fairness in the residential rental market for renters and landlords; (c) Support community awareness of existing renter protections; (d) Support the implementation of the c ity’s Housing Element goals, policies, and programs, including providing information available to inform the c ity’s significant investments in rental unit protection, preservation, and production.

9.65.020. Definitions.

For purposes of this chapter, the following terms are defined as follows:

(a) “Landlord” means the owner or property manager exercising effective control over the terms and conditions of the tenancy of a residential rental unit, including a person with such control delegated through a durable power of attorney.
(b) “Rent” means the cons ideration, including any bonus, benefit, or gratuity demanded or received by a landlord , for or in connection with the use or occupancy of a residential rental unit.
(c) “Rental registry information” means the information required to be submitted to the city of Palo Alto by a landlord pursuant to this chapter. (d) “Residential rental unit” means any housing structure occupied as a dwelling or offered for rent or lease as a dwelling, whether attached, detached, single or multiple-family. The term “residential rental unit” shall not include an attached Item 16
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bedroom of a landlord-occupied dwelling where the landlord and renter(s) share living facilities.
(e) “Renter” means a person or entity entitled by written or oral agreement to occupy a residential rental unit to the exclusion of others.

9.65.030. Registration of residential rental units.

(a) Initial Registration of Residential Rental Units . The landlord of each residential rental unit within the city of Palo Alto shall register the unit within the annual open registration period established by the City Manager or their designee .

Registration must be completed using forms provided by the city, which may take the form of a secure website , and which may be amended from time to time .

Registration is complete only when all rental registry information has been provided to the city and all outstanding fees and penalties, if applicable, have been paid.
(b) Renewal Registration. The landlord of each residential rental unit within the city of Palo Alto shall renew the registration of each unit annually within the annual open registration period established by the City Manager or their designee. (c) Rental Registry Information Submission.
(1) At minimum, the following information shall be provided as part of the initial and renewal registration of a residential rental unit:
i. The address of each residential rental unit,
ii. The name and contact information of the property owner and property manager or landlord, as applicable.
(2) In addition to requiring the minimum information described in paragraph

9.65.030 (c)(1), the City Manager or their designee shall have the authority to require or request additional information at initial or renewal registration which may help to achieve the intended purpose of this chapter.
(3) The City Manager or their designee shall have the authority to require rental registry information to be submitted in a particular manner or on a particular platform, su ch as on a secure website or through paper -based forms, which may be amended from time to time.
(d) Event-based Registration Amendments.
(1) At minimum, landlords shall amend the registration of their residential rental unit within 3010 calendar days whenever one of the following events occurs in relation to that residential rental unit:
i. An y increase in rent,
ii. Any new tenancy is established,
iii.i. A new vacancy in the residential rental unitA notice to quit is sent to a renter, or
iv.ii. An eviction.
(2) The City Manager or their designee shall have authority to designate additional events which will require landlords to amend the registration of Item 16
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their residential rental units and which may help to achieve the intended purpose of this chapter.
(e) Affidavit. Each initial and renewal registration and event -based registration amendment shall be accompanied by an affidavit signed by the landlord declaring under penalt y of perjury that the information provided is true and correct.
(f) Fees.
(1) For the sole purpose of reimbursing the city of Palo Alto for the reasonable costs of maintaining residential rental unit registration records and related administrative systems, and program administration, the landlord of each residential rental unit to which this chapter applies shall pay a fee upon initial and renewal registration in an amount to be set by the Palo Alto city council.
(2) Notwithstanding paragraph (1) of this subsection, the city council may, in its discretion, waive or reduce the fees for initial or renewal registration to help achieve the intended purpose of this chapter.
(3) A landlord may not seek recovery of this fee from the renter(s) in occupancy of their residential rental unit(s).

9.65.040. Rental registry information privacy.

The City will only affirmatively publish or disseminate rental registry information in the aggregate, except that rental registry information describing individualized residential rental units may be shared or distributed in the following circumstances:

Individualized rental registry information containing trade secrets and proprietary information will not be shared or distributed, except in the following circumstances:

(a) Individualized rental registry information regarding a renter’s tenancy at a specific residential rental unit may be shared with that renter; (b) The status of whether the City has or has not received rental registry information regarding a residential rental unit will be considered public informationmay be shared with the public; and
(c) As required by the California Public Records Act, individualized rental registry information may be disclosed pursuant to a request.

9.65.050. Penalties.

(a) Penalties for Delinquency. Any landlord operating in the city that fails to register or amend their residential rental units in accordance with this Chapter shall pay, in addition to the amount of the registration fee, a penalty in an amount to be determined by ordinance or resolution.
(b) Penalty Waiver. The City Manager or their designee shall have discretion to waive this penalty fee for good cause and if the City Manager or their designee Item 16
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determines that waiving the penalty fee would promote the purpose of this chapter.
(c) Action to Collect. If a landlord fails to comply with the fee requirements of this Chapter, the city may refer the matter to a collection agency and/or the city attorney may file a civil action against any landlord. Penalties may be added to the residential rental unit registration fee. Penalties will become due and payable along with the registration fee.
(d) Remedies Cumulative. All remedies prescribed under this Chapter shall be cumulative and the use of one or more remedies by the city shall not bar the use of any other remedy for the purpose of enforcing the provisions of this Chapter.

SECTION 3. Chapter 9.72 (Mandatory Response to Request for Discussion of Disputes Between Landlords and Tenants) of Title 9 (Public Peace, Morals and Safety) is hereby amended as follows:

9.72.050. Property registration.

(a) The landlord of each residential rental property within the city shall register the unit or units with the city according to the requirements of Chapter 9.65 (Residential Rental Registry Program), regardless of whether the residential rental property is listed in Section 9.72.030. The registration shall include the name and mailing address of the owner or owners of the property, as well as the name, mailing address and contact telephone number of the person having the legal authority to effectively resolve disputes arising under this chapter.

For the sole purpose of reimbursing the city of Palo Alto for the reasonable costs of maintaining property registration records and related administrative systems, the owner or manager of each residential rental unit to which this chapter applies shall pay a fee in an amount to be set by the Palo Alto city council.

SECTION 4. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid.

SECTION 5. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Item 16
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Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment.

SECTION 6. This ordinance shall be effective on the thirty-first day after the date of its adoption.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

____________________________ ____________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

____________________________ ____________________________ Deputy City Attorney City Manager

____________________________
Director of Planning and Development
Services

____________________________
Director of Administrative Services
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November 2023 Page 1 of 5
Renter Protection Policy Work Status Update –
November 2023
On November 29, 2021, the City Council adopted a package of rental protection policies. 1 The policies are summarized below. Since that Council meeting, staff have focused primarily on the three policies identified by Council as priorities. Some policies are also identified for incorporation into Housing Element programs.

Policy Brief Description Work Status
1 Rental Registry
Program (RRP)
(CC Motion #E)

HIGH PRIORITY
Establish a program that
gathers information on
rental units in City for
purposes identified by
Council.

In progress.

Council referred the design and
implementation to the Policy & Services
Committee, including proposed fees,
resources, and timeline. P&S
Committee provided feedback in
September 2022.2
RRP Program Development Phase I -
RFP released March 2023. Proposals
received April 2023. Currently in
contract negotiations in Fall/Winter
2023.

Community meeting in March 2023.

Draft Rental Registry Program
ordinance prepared. Public meetings
before the Human Relations
Commission and Planning &
1 City Council Meeting Minutes, 11/29/21: https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2021/11-november/20211129/20211129amccs.pdf City Council City Manager Report ID # 13786, 11/29/21:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2021/11-november/20211129/20211129pccs.pdf City Renter Protection Policy Development Webpage: https://www.cityofpaloalto.org/Departments/Planning- Development-Services/Long-Range-Planning/Renter-Protection-Policy-Development 2 Policy & Services Committee Meeting City Manager Report ID # 14139, 09/13/22:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/policy-and- services-committee/2022/20220913/20220913ppsr.pdf
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Protection Work Status
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November 2023 Page 2 of 5
Policy Brief Description Work Status
Transportation Commission May 2023.3
Housing Ad Hoc meeting August 2023.4
RRP Program Development Phase II –
This future phase will include
community outreach, City budgeting
and staffing, and RRP software
development.

RRP Program Implementation Phase I –
This future phase will include
community outreach, RRP launch, and
rental unit initial registrations.

RRP Program Implementation Phase II –
This future phase will include
community outreach and RRP
reporting.

HRC also discussed the RRP at their
February 2023 meeting as part of their
Motion I Council referral, see Item 8
below.
2 Expand Tenant
Relocation
Assistance
(CC Motion #B)

HIGH PRIORITY
Update existing local
ordinance to extend
tenant relocation
assistance requirements
to properties with ten
units or more
Completed.

Council acted upon an ordinance that
expanded Tenant Relocation Assistance
codified in the Palo Alto Municipal Code
Section 9.68.035.5
HRC also discussed Tenant Relocation
Assistance at their February 2023
3 Human Relations Commission Staff Report, May 24, 2023:
https://www.cityofpaloalto.org/files/assets/public/v/1/community-services/human-relations- commission/agendas/5-24-23/05-24-23-hrc-retreat-agenda.pdf.

Planning & Transportation Commission Staff Report, May 31, 2023:
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/planning-and- transportation-commission/2023/ptc-5.31-public-agenda.pdf. 4 Housing Ad Hoc Staff Report, August 31, 2023: https://www.cityofpaloalto.org/files/assets/public/v/3/planning- amp-development-services/long-range-planning/rrp-housing-ad-hoc-committee-staff-report-08.16.23-for-jl.pdf 5 Palo Alto Municipal Code Section 9.68.035 Relocation assistance for no-fault eviction:
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-66806.

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November 2023 Page 3 of 5
Policy Brief Description Work Status
meeting as part of their Motion I
Council referral, see Item 8 below.
3 Eviction Reduction
(CC Motion #C)

PRIORITY
Create local ordinance to
expand eviction
protections in AB 1482
to include rental units
receiving occupancy
within the last 15 years.

Completed.

City Council acted upon two ordinances
which updated Palo Alto Municipal
Code Chapter 9.68 Rental Housing
Stabilization to include local just cause
eviction protections, including covering
more rental units than in state law.

HRC discussed Eviction Reduction at
their February 2023 meeting as part of
their Motion I Council referral, see Item
8 below.
4 Anti-Rent-gouging
(CC Motion #D)
Consider preparation of
a local ordinance to
expand the number of
units covered by AB
1482 rent increase
limitations.

Not started.

Council referred the anti-rent gouging
topic to the Policy & Services
Committee, including the review and
discussion of measures to address
loopholes. This work is incorporated
into the Housing Element workplan.

Staff anticipates work on this topic
starting Winter 2023.

HRC discussed Rent Increases at their
February 2023 meeting as part of their
Motion I Council referral, see Item 8
below.
5 Security Deposit
Limit
(CC Motion #F)
Create a local ordinance
that limits the locally
allowable amount of
security deposit charged
for unfurnished rental
units to 1.5 times the
monthly rent.

Completed.

City Council acted upon an ordinance in
which updated Palo Alto Municipal
Code Chapter 9.68 Rental Housing
Stabilization to establish a new security
deposit limit for unfurnished rental
units that is lower than the limit
allowed by state law.

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November 2023 Page 4 of 5
Policy Brief Description Work Status
6 Fair Chance
Ordinance
(CC Motion #H)
Consider preparation of
a local ordinance that
supports fair chance
policies.

In process.

Council referred the fair chance policy
topic to the Policy & Services
Committee, including a staff analysis of
consequences and unintended
consequences. This work is
incorporated into the Housing Element
workplan. Staff anticipates continued
work on this topic in Winter
2023/Spring 2024.

HRC discussed Fair Chance at their
February 2023 meeting as part of their
Motion I Council referral, see Item 8
below.
7 Right to Counsel
(CC Motion #G)
Provide tenants with
legal assistance in
housing-related cases.

Ongoing.

Ongoing to identify ways to support
County efforts on right to counsel.

Santa Clara County won a grant in
Spring 2023 to investigate the Right to
Counsel topic. City staff is coordinating
with the County regarding investigation
findings.

City staff met with the Bay Area
Housing Finance Authority in Spring
2023, which is preparing a Bay Area
Eviction Study, the results of which will
likely explore the Right to Counsel
topic. City staff will coordinate with
BAFHA regarding the study findings.

City staff joined the Santa Clara County
Eviction, Tenant/Landlord Disputes, &
Rent Relief Collaborative that meets
monthly and discusses the Right to
Counsel topic.

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November 2023 Page 5 of 5
Policy Brief Description Work Status
8 Improving
Implementation of
Existing Renter
Protection Policies
(CC Motion #I)
City review and
assessment of the
implementation of
existing renter
protection policies.

In progress.

Council referred this implementation
review and assessment to the Human
Relations Commission.

HRC discussed many existing and new
Renter Policies at their February 2023
meeting as part of their Motion I
Council referral. 6 HRC
recommendations will be brought to
City Council for direction in Winter
2023/Spring 2024.
6 For more specifics, refer to the Human Relations Commission February 9, 2023 meeting minutes and the April 27, 2023 meeting minutes whereby one February 9, 2023 HRC motion was clarified:
https://www.cityofpaloalto.org/Departments/Community-Services/Other-Services/Commissions/Human- Relations-Commission/HRC-Current-Year-Agendas-and-Minutes.

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1 Rental Registry Program Community Outreach and Stakeholder Engagement Summary – November 2023
Staff conducted community outreach and stakeholder engagement on the Rental Registry Program. The City also hosted public hearings to gain feedback on the Rental Registry Program, including before the Human Relations Commission on September 23, 2021 and May 24, 2023, the Planning & Transportation Commission on April 28, 2021 and May 31, 2023, City Council on November 8, 2021, November 15, 2021, and November 29, 2021, the Policy & Services Committee on September 13, 2022, and the Housing Ad Hoc on August 31, 2023. Additional community feedback is anticipated at forthcoming City Council meetings. Staff prepared a summary of the public comment themes received on the City’s RRP webpage.1 Initial Stakeholder Interviews
Staff conducted a series of initial stakeholder interviews in Fall 2022 with rental unit property owners (California Apartment Association representatives), renter advocacy groups (Palo Alto Renters Association and SV@Home), and renter service providers (LifeMoves and Project Sentinel/Palo Alto Mediation Program). The detailed feedback themes were reported to the P&S Committee in their September 13, 2022 staff report. Themes included requests for specific types of outreach for the RRP to address cost and privacy concerns, as well as for the RRP to collect information on rents, rent increases, and evictions. Among other items, the detailed feedback themes helped inform:
•the preparation of the draft Rental Registry Program ordinance, including:
othe draft findings and the draft broad purpose statements that discuss the need for the rental registry,
othe inclusion of privacy in the ordinance, and
othe inclusion of the administrative penalty process to try to reduce RRP registration costs,
•the preparation of the City’s rental registry RFP and the organization of the draft illustrative example of an initial rental unit registration form, which both reflect the desire to minimize the time and effort it would take for landlords to register rental units, and
•staff efforts to reach all landlords in the City, including through mailing of Community Meeting postcard notices to all properties listed as a rental unit in the City’s geographic information system.

Renter and Landlord Survey – Fall 2022/Winter 2023
Staff initiated a Renter and Landlord Survey – Fall 2022/Winter 2023. This short survey was oriented toward learning more about renters and landlords in Palo Alto, publicizing overall rental unit policy development work, and asking a few questions that will help with future community outreach efforts for the RRP.
1 Rental Registry Program webpage: https://www.cityofpaloalto.org/Departments/Planning-Development- Services/Housing-Policies-Projects/Renter-Protection-Policy-Development/Rental-Registry-Program.

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Community Outreach
Stakeholder Engagement

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2 Staff received 204 surveys from renters (1/3) and property owners/managers (2/3).

Approximately half of survey respondents were interested in receiving regular rental policy- related updates.

In the survey, staff placed information about the City’s tenant/landlord mediation services program and the local Tenant Relocation Assistance (TRA) requirements. The mediation services program is long-standing for many years and the local TRA requirements has been in effect since 2018. Staff found that almost half of the respondents were not aware of the City’s mediation services program and almost three-quarters of respondents were not aware of the City’s local TRA requirements. These initial survey results have helped to inform staff on the increased degree of community engagement efforts needed to ensure awareness of existing City rental policies for both renters and property owners/property managers, as well as the anticipated significant community outreach effort necessary to inform community members of any new rental policies, such as the implementation of the RRP.

Community Meeting
Staff conducted a virtual community meeting on March 30, 2023 that included at least 50 participants throughout the meeting. The meeting was targeted toward rental unit landlords and rental unit property managers. In summary, a significant amount of the feedback received at the meeting pertained to concerns about registry implementation, including its cost, privacy, and administration of the program. Other community members expressed support for the RRP, indicating its value in providing information to support policy development. Specific questions and feedback received can be found by watching the meeting video recording.2 Staff utilized the feedback discussion to prepare responses to Frequently Asked Questions (FAQs) asked by community members, including the question “What types of community feedback has staff received on the RRP thus far?” Refer to the FAQs on the City RRP webpage for more information.3
Additional Engagement Efforts
In addition to providing information on the City’s website, staff included a brief promotion of the City’s overall rental policy development work, including the RRP, in the November 2022 and May 2023 Utility & Community Announcements.4 The City’s Communications Team has also included the RRP and other renter policy work in community newsletters.

Prior to the March 30 Community Meeting and public hearings, staff sent email notifications to 2 Rental Registry Program Community Meeting – March 30, 2023:
https://www.youtube.com/watch?v=QCnH03Eb9Tg.
3 Rental Registry Program webpage: https://www.cityofpaloalto.org/Departments/Planning-Development- Services/Housing-Policies-Projects/Renter-Protection-Policy-Development/Rental-Registry-Program. 4 Utilities Department Utility & Community Announcements (UCAs) are short promotional blurbs included in monthly residential bills. The November 2022 and May 2023 Utility & Community Announcements are online:
https://www.cityofpaloalto.org/files/assets/public/utilities/bill-inserts/nov-2022-uca.pdf and https://www.cityofpaloalto.org/files/assets/public/utilities/bill-inserts/may-2023-uca.pdf.

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Community Outreach
Stakeholder Engagement

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3 stakeholders and those community members requesting rental policy-related updates to encourage participation. In addition to the many questions and comments received at the Community Meeting and public hearings, staff received over 70 emails from community members specifically regarding the RRP. While some emails did not support creation of an RRP, most emails were in favor of creating a rental registry. The feedback themes from these emails were also incorporated into the FAQs on the City RRP webpage.

Future stakeholder engagement will include additional individual stakeholder meetings with the California Apartment Association and the Palo Alto Renters’ Association and others, as well as additional community meetings where various stakeholders and community members may attend.

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Community Outreach
Stakeholder Engagement

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0 2
1 Rental Registry Program Policy & Services Committee, Human Relations Commission, Planning & Transportation Commission, and Housing Ad Hoc Feedback Policy & Services Committee Feedback
At the September 13, 2022 P&S Committee meeting, staff presented Palo Alto’s rental profile, examples of Rent Registries and Rental Survey Programs in other cities, and key design and implementation considerations.1
The P&S Committee provided direction on the types of information to collect, which types of units should participate, frequency of reporting, and asked for additional information on how the data collected would be used. The following details were given in their motion on the registry:

A. Information to Collect:

1. The reason for vacancy,

2. Identification if the rental unit is deed restricted,

3. Rental unit contact information, including:
a. Property owner contact information,
b. Landlord/property manager contact information,

4. Rental unit characteristics, including:
a. Rental unit size (square feet),
b. Rental unit number of bedrooms,
c. Property type/number of units at the property,

5. Rent information, including:
a. Rent amount,
b. Services included in rent,

6. Tenancy information, including:
a. Tenancy status (occupied/vacant),
b. Tenancy or vacancy commencement date,

7. Affidavit, including:
a. Attestation to information accuracy,
b. Registration date of submittal,

8. Information relevant to the implementation of existing State and City renter protections, and

9. Information relevant to the development of City rental policy.

B. Program Participation
Use existing property registration participation requirements outlined in the PAMC Chapter 9.72, which requires registration of any housing structure occupied as a 1 For additional background information on the RRP, review the September 13, 2022 staff report, available here:

Policy & Services Committee Meeting City Manager Report ID # 14139, 09/13/22:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/policy-andservices- committee/2022/20220913/20220913ppsr.pdf.

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1 dwelling or offered for rent or lease as a dwelling, whether attached, detached, or a single- or multiple-family residence.2
C. Frequency of Reporting
Use initial rental unit registration and thereafter qualifying event-based reporting frequency or an annual affidavit if no qualifying events occur. Qualifying events include:
• Rent increases,
• New tenancy,
• New vacancy or eviction,
• Offer of a one-year lease at renewal, and
• Other events.

D. Use of Information Collected
Provide additional information and suggestions for how the City could use information and data collected.3
Human Relations Commission Feedback Summary
On May 24, 2023, after detailed discussion and community feedback, the HRC unanimously supported the basic framework of the RRP as presented in the staff report and staff presentation.

The HRC also unanimously recommended further consideration of the following issues:

1. Potential burden to property owners regarding fees and cost of participation; a. Penalty fee structure and costs;
b. Possible RRP participation fee exemptions for duplexes where one unit is owner- occupied and for ADUs;

2. Outlining RRP privacy mandates and how they will be facilitated; and

3. Exemption of ADUs from the RRP. 4
Planning and Transportation Commission Feedback Summary On May 31, 2023, the PTC unanimously recommended the draft RRP ordinance to City Council with some minor text clarifications, as well as consideration of the following topics:

1. Clarify the ordinance to be clear that all landlords would provide the same information for the registry;
2 Palo Alto Municipal Code (PAMC) Section 9.72.050 Property registration:
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-66901. Palo Alto Municipal Code (PAMC) Section 9.72.080(g) Residential rental property:
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-66915. 3 Policy & Services Committee Meeting Action Minutes, 09/13/22:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/policy-andservices- committee/2022/20220913/20220913ampsr.pdf.
4 Human Relations Commission Staff Report # 2303-1139, May 24, 2023:
https://www.cityofpaloalto.org/files/assets/public/community-services/human-relations-commission/agendas/5- 24-23/item-3-staff-report.pdf.

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1 2. Identify opportunities to reduce frequency of reporting, such as waiving annual registration if other events were reported within a recent timeframe; and

3. Add a provision that waives the first penalty fee if property owner claims no notification of the RRP program was received.

The PTC also included in their motion that staff return with the mock-up of the rental unit registration form developed in the future selected RRP software.5 Housing Ad Hoc Feedback Summary
On August 31, 2023, the HAH recommended:

1. adoption of the draft RRP ordinance to City Council and

2. waiving participation fees for ADUs and rental units on properties with less than five (5) rental units for the first year of RRP implementation.

To follow-up on the HRC’s recommendations regarding RRP participation exemptions, the HAH discussed whether all rental units in the City should participate in the RRP program. They concluded that submittal of rental unit information on all rental units, including rented single- family residences and ADUs, helped the City have a complete picture of the rental market in Palo Alto and that RRP participation exemptions are not recommended. Therefore, the HAH did not recommend any changes to the RRP participation requirements in the draft RRP ordinance.

To follow-up on the PTC’s recommendations regarding reducing frequency of reporting, the HAH discussed establishment of event-based reporting timeframes, suggesting timely reporting on potential evictions and other events of most importance to the City. They suggested City consideration if other events could be reported within a different timeframe, such as a quarterly or within a 30-day lookback period.

To follow-up on the HRC’s recommendations regarding RRP participation fees and cost recovery, the HAH discussed a desire for the RRP participation fees to be on the lower end of the initially estimated $50 - $200/per rental unit range. The HAH was aware that permanent exemption of some rental units from RRP participation fees would make RRP implementation costs spread amongst fewer overall rental units in the City, making the fee higher for those not exempted. Therefore, the discussion reflected that City Council should consider the initial and possibly ongoing degree of cost recovery for RRP implementation as part of establishing RRP participation fees.

The HAH discussed the initial rental unit registration form and concluded that it was focused and not onerous to complete. Therefore, the HAH did not recommend any changes to the form (Attachment C). The HAH supported identifying opportunities for the software to make rental 5 Planning & Transportation Commission Staff Report #2303-1135, May 31, 2023:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/planning-and- transportation-commission/2023/ptc-5.31-rental-registry.pdf.

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1 unit registration easier for landlords, such as with the ability to do bulk upload of information and having dropdown menus.

The HAH discussed staffing levels in brief, noting a desire to learn more about code enforcement strategies and any associated staffing.6
6 Housing Ad Hoc Staff Report, August 31, 2023: https://www.cityofpaloalto.org/files/assets/public/v/3/planning- amp-development-services/long-range-planning/rrp-housing-ad-hoc-committee-staff-report-08.16.23-for-jl.pdf.

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PTC and HAH Feedback
Summary

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