Agenda packet — Palo Alto City Council, January 16, 2024 (part 1 of 3)

CITY COUNCIL
Special Meeting
Tuesday, January 16, 2024
Council Chambers & Hybrid
5:30 PM
Palo Alto City Council meetings will be held as “hybrid” meetings with the option to attend by teleconference or in person. To maximize public safety while still maintaining transparency and public access, members of the public can choose to participate from home or attend in person.

Information on how the public may observe and participate in the meeting is located at the end of the agenda. Masks are strongly encouraged if attending in person. The meeting will be broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto ,
and streamed to Midpen Media Center https://midpenmedia.org.

VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900‐6833
PUBLIC COMMENTS
Public comments will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. All requests to speak will be taken until 5 minutes after the staff’s presentation. Written public comments can be submitted in advance to [email protected] and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line.

PowerPoints, videos, or other media to be presented during public comment are accepted only by email to [email protected] at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted.

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

CALL TO ORDER
AGENDA CHANGES, ADDITIONS AND DELETIONS
PUBLIC COMMENT (5:30 ‐ 5:45 PM)
Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (5:45 ‐ 5:50 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (5:50 ‐ 5:55 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

1. Approval of Minutes from December 11, 2023, December 18, 2023, and December 19, 2023 Meetings

2. Adopt an Ordinance to Expand the Public Art Commission (PAC) from Five to Seven Members; CEQA status ‐ not a project

3. Approval of Contract Amendment Number 1 to Contract Number C24189060 with US Bank and its Wholly owned Subsidiary Elavon for General Banking and Merchant Services and Approval of Contract Amendment Number C24189061 with Wells Fargo for Lockbox Services; CEQA Status – Not a Project.

4. Approval of Professional Services Contract with Energy and Environmental Economics, Inc. (E3) for a Not‐to‐Exceed Amount of $945,286 for the Sustainability and Climate Action Plan (S/CAP) Funding Study; Amendment to Professional Services Contract with Sterling Communications, Inc. to Amend the Scope, Extend the Timeline, and Increase Total Not‐to‐Exceed Compensation by $75,000 (from $85,000 to $160,000); and a Budget Amendment in the Electric Fund for Acceptance of $75,000 DEED grant for S/CAP Funding Study; CEQA Status – Not a Project.

5. Accept the City of Palo Alto’s Audited Financial Statements as of June 30, 2023 and the Macias, Gini & O’Connell Management Letter; Approve the FY 2023 Annual Comprehensive Financial Report (ACFR)and Amendments to the FY 2023 Budget in Various Funds; and Adopt a Resolution to Extend and Amend the Development Services Reserve Fund Policy, as Recommended by the Finance Committee; CEQA Status – Not a Project

6. Approval of Amendment No. 2 with Pets in Need Contract (C19174493) to extend the term through March 2024 and increase the compensation by $342,501 for operations of the Palo Alto Animal Shelter, for a Not‐to‐Exceed Amount of $4,431,872; CEQA status – not a project.

7. Adopt a Resolution Approving an Amendment to the City’s 2009 California‐Oregon Transmission Project Long‐Term Layoff Agreement to Extend the City’s Layoff of its Share of the California Oregon Transmission Project (COTP) until 2034 and to Receive Annual Market Payments as Recommended by the Utilities Advisory Commission (UAC); CEQA Status – Not a Project

8. Approval of Recommendations on Process for 2024 Council Priority Setting Retreat as Recommended by Policy & Services Committee (CEQA Status – Not a Project)

9. Approval of the Office of the City Auditor's Investment Management Audit Report as Recommended by the Policy & Services Committee (CEQA Status ‐ Not a Project)

10. SECOND READING: Adoption of an Ordinance Amending Palo Alto Municipal Code (PAMC) Section 18.42.160 (Safe Parking) to Permanently Establish the Congregation‐ Based Safe Parking Program and Establishing Regulations Related to Safe Parking, Including a Maximum Number of Vehicles Per Night on Each Site (FIRST READING:

December 4, 2023 PASSED 6‐1, Tanaka no)

11. SECOND READING: Adoption of an Ordinance Amending Chapters 4.10 (Licenses Obtained by Application to Chief of Police), 4.30 (Soliciting Funds), and Chapter 4.32 (Soliciting Information for Commercial Purposes); and Adding Chapter 4.12 to Title 4 (Business Licenses and Regulations) of the Palo Alto Municipal Code to Comply With Updates to the Law, Including 2018 Senate Bill 946 (Sidewalk Vendors). CEQA status – categorically exempt. (FIRST READING: December 11, 2023 PASSED 5‐1‐1, Kou no, Veenker absent)

12. SECOND READING: Adoption of an Urgency Ordinance and an Interim Ordinance That Allows the Director of Planning and Development Services to Extend Planning Entitlements for Housing Development Projects up to an Additional 18 Months.

Environmental Review: Exempt from CEQA in Accordance with CEQA Guidelines 15061(b)(3). (FIRST READING: December 11, 2023 PASSED 5‐1‐1, Kou no, Veenker absent)
CITY MANAGER COMMENTS (5:55 ‐ 6:10 PM)
BREAK (5‐10 MINUTES)
ACTION ITEMS (Item 13: 6:20 ‐ 7:50 PM, Item 14: 7:50 ‐ 8:35 PM) Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.

13. Tree Protection Ordinance Year One Review and Recommendations; Adoption of an Ordinance Amending Chapter 8.04 (Street Trees, Shrubs, and Plants) and Chapter 8.10 (Tree Preservation and Management Regulations of the Palo Alto Municipal Code to Update the Allowable Reasons for Removal of Protected Trees, Make Clarifying Changes, and to Make Clerical Updates; and Adoption of a Resolution amending the Administrative Penalty Schedule to Increase the Penalties for Violations of Title 8 of the Palo Alto Municipal Code; CEQA Status – Not a Projects

14. Approval of a Substation Improvement Agreement With Tesla Inc. to Install Improvements and Reserve Capacity at Hanover Substation, and Approval of a Fiscal Year 2024 Budget Amendment in the Electric Fund to Establish the Hanover Substation Upgrade Project (EL‐24001); CEQA Status – Exempt under CEQA Guideline Sections 15301 and 15302

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

15. Sales Tax Digest Summary Calendar 2023 Q2 (April 2023 – June 2023) OTHER INFORMATION
Standing Committee Meetings
Public Comment Letters
Schedule of Meetings
PUBLIC COMMENT INSTRUCTIONS
Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone.

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

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

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

You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below.

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

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

When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments.

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

CLICK HERE TO JOIN Meeting ID: 362‐027‐238 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA)
It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing [email protected]. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.
1 Special Meeting January 16, 2024
Materials submitted after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (5:45 ‐ 5:50 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (5:50 ‐ 5:55 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

1. Approval of Minutes from December 11, 2023, December 18, 2023, and December 19, 2023 Meetings

2. Adopt an Ordinance to Expand the Public Art Commission (PAC) from Five to Seven Members; CEQA status ‐ not a project

8. Approval of Recommendations on Process for 2024 Council Priority Setting Retreat as Recommended by Policy & Services Committee (CEQA Status – Not a Project)

9. Approval of the Office of the City Auditor's Investment Management Audit Report as Recommended by the Policy & Services Committee (CEQA Status ‐ Not a Project)

December 4, 2023 PASSED 6‐1, Tanaka no)

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

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

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

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

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

When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments.

CLICK HERE TO JOIN Meeting ID: 362‐027‐238 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA)
It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing [email protected]. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.
2 Special Meeting Janua ry 16, 2024
Materials submitted after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (5:45 ‐ 5:50 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (5:50 ‐ 5:55 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

1. Approval of Minutes from December 11, 2023, December 18, 2023, and December 19, 2023 Meetings

2. Adopt an Ordinance to Expand the Public Art Commission (PAC) from Five to Seven Members; CEQA status ‐ not a project

8. Approval of Recommendations on Process for 2024 Council Priority Setting Retreat as Recommended by Policy & Services Committee (CEQA Status – Not a Project)

9. Approval of the Office of the City Auditor's Investment Management Audit Report as Recommended by the Policy & Services Committee (CEQA Status ‐ Not a Project)

December 4, 2023 PASSED 6‐1, Tanaka no)

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

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

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

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

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

When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments.

CLICK HERE TO JOIN Meeting ID: 362‐027‐238 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA)
It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing [email protected]. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.
3 Special Meeting Janua ry 16, 2024
Materials submitted after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (5:45 ‐ 5:50 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (5:50 ‐ 5:55 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

1. Approval of Minutes from December 11, 2023, December 18, 2023, and December 19, 2023 Meetings

2. Adopt an Ordinance to Expand the Public Art Commission (PAC) from Five to Seven Members; CEQA status ‐ not a project

8. Approval of Recommendations on Process for 2024 Council Priority Setting Retreat as Recommended by Policy & Services Committee (CEQA Status – Not a Project)

9. Approval of the Office of the City Auditor's Investment Management Audit Report as Recommended by the Policy & Services Committee (CEQA Status ‐ Not a Project)

December 4, 2023 PASSED 6‐1, Tanaka no)

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

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

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

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

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

When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments.

CLICK HERE TO JOIN Meeting ID: 362‐027‐238 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA)
It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing [email protected]. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.
4 Special Meeting January 16, 2024
Materials submitted after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (5:45 ‐ 5:50 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (5:50 ‐ 5:55 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

1. Approval of Minutes from December 11, 2023, December 18, 2023, and December 19, 2023 Meetings

2. Adopt an Ordinance to Expand the Public Art Commission (PAC) from Five to Seven Members; CEQA status ‐ not a project

8. Approval of Recommendations on Process for 2024 Council Priority Setting Retreat as Recommended by Policy & Services Committee (CEQA Status – Not a Project)

9. Approval of the Office of the City Auditor's Investment Management Audit Report as Recommended by the Policy & Services Committee (CEQA Status ‐ Not a Project)

December 4, 2023 PASSED 6‐1, Tanaka no)

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

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

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

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

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

When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments.

CLICK HERE TO JOIN Meeting ID: 362‐027‐238 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA)
It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing [email protected]. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.
5 Special Meeting January 16, 2024
Materials submitted after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas.

City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: January 16, 2024
Report #:2312-2461
TITLE
Approval of Minutes from December 11, 2023, December 18, 2023, and December 19, 2023 Meetings

RECOMMENDATION
That the minutes be reviewed and approved.

ATTACHMENTS
Attachment A: December 11, 2023 Draft Action Minutes
Attachment B: December 18, 2023 Draft Action Minutes
Attachment C: December 19, 2023 Draft Action Minutes
APPROVED BY:

Mahealani Ah Yun
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Regular Meeting
December 11, 2023
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M.

Present In Person: Burt, Kou, Lauing, Lythcott-Haims, Stone, Tanaka Present Remotely:

Absent: Veenker

Consent Calendar
Mayor Kou registered a no vote on Agenda Item Number 4, 5, 6.

Council Member Lythcott- Haims, Council Member Tanaka, Vice Mayor Stone , and Council Member Lauing requested to pull Agenda Item Number 6 from Consent.

MOTION: Vice Mayor Stone moved, seconded by Mayor Kou to approve Agenda Item Numbers 1-5.

MOTION SPLIT FOR THE PURPOSE OF VOTING
MOTION PASSED ITEMS 1-3: 6-0-1, Veenker absent
MOTION PASSED ITEMS 4-5: 5-1-1, Kou no, Veenker absent

1. Approval of Minutes from November 27, 2023 Meeting

2. Regional Water Quality Control Plant Joint Intercepting Sewer Rehabilitation Project Phase 1: Approval of Construction Contract, Construction Management Contract Amendment, and Addendum 12 to the Mountain View, Los Altos, and Palo Alto Agreement on Project Funding; CEQA status – Exempt under CEQA Guidelines Section 15301 (Repairs to Existing Facilities)

3. Approval of Contract Amendment Number 1 to Contract C23187506 with Momentum for Health to Extend Term by Eight (8) Months at No Additional Cost to the City, Revise the Not-to-Exceed Amount Down by $68,294 to $1,931,706 and Compensation Language, Provide Quarterly Invoicing, and Revise the Schedule of Rates; CEQA Status – Not a Project.

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4. Adoption of an Ordinance Amending Chapters 4.10 (Licenses Obtained by Application to Chief of Police), 4.30 (Soliciting Funds), and Chapter 4.32 (Soliciting Information for Commercial Purposes); and Adding Chapter 4.12 to Title 4 (Business Licenses and Regulations) of the Palo Alto Municipal Code to Comply With Updates to the Law, Including 2018 Senate Bill 946 (Sidewalk Vendors). CEQA status – categorically exempt.

5. Adoption of an Urgency Ordinance and an Interim Ordinance That Allows the Director of Planning and Development Serv ices to Extend Planning Entitlements for Housing Development Projects up to an Additional 18 Months. Environmental Review: Exempt from CEQA in Accordance with CEQA Guidelines 15061(b)(3).

6. SECOND READING: Adoption of an Ordinance Implementing Program 1.1A and 1.1B of the Housing Element, Including: 1) New Chapter 18.14: Housing Incentives, and 2) Modifications to Base Zoning Districts Throughout Title 18. Adoption of a Resolution Making Corresponding Changes to the Land Use and Design Element of the Comprehensive Plan. (FIRST READING: November 13, 2023 PASSED 5 -1-1, Kou no, Veenker recused and PASSED 6-1, Kou no) Removed from Consent

Action Items

7. LEGISLATIVE: Adopt Ordinances Amending Planned Community Ordinance 2343 for 2901- 2905 Middlefield Road and Establishing a Separate Planned Community Zoning Designation for 702 Ellsworth Place to Enable the Development of a new Single -Story, Single-Family Residence. CEQA Status -- Categorically Exempt Under CEQA Guidelines Sections 15061(b)(3), 15301, and 15303 (Continued from September 18 and November 6, 2023)

MOTION: Council Member Burt moved, seconded by Mayor Kou t o approve the staff recommendation to adopt two ordinances and implement the following:

1. UPS approved delivery spot plan on Ellsworth that does not affect the footprint of the house, that provides a useable delivery spot for 10 -11 foot wide trucks, maintains safe road circulation with Middlefield, does not remove public parking on Sutter, and to relocate the communications pole at a shared expense of the City and the property owner.

2. Require graded fencing that would allow visibility line of sight through 2 angles of the fence that allows adequate transparency of 3-foot fence.

3. Direct Staff to pursue ADA tactile markers on the sidewalk where it intersects the Ellsworth Place easement subject to approval by the Director of Public Works at the City’s expense.

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City Council Meeting
Draft Action Minutes: 12/11/2023

4. Width of Ellsworth Place at entrance to be 26- feet wide for at least 1 00-feet from Middlefield Road.

5. Parking space #16 can be removed at the discretion of the Planning Director.

MOTION PASSED: 6-0-1, Veenker absent

8. Direction to Pursue Development of New Parking and Refined Proposals for Housing in the University Avenue Downtown and Development Goals for Housing Investment. CEQA Status – Not a Project.

MOTION: Council Member Burt moved, seconded by Mayor Kou to direct staff to:

1. Resume work on a new parking structure in the downtown core on a City surface parking lot (previously designed for on Hamilton / Waverley Lot D at 375 Hamilton Avenue) based on the premise that City funds for parking at this site would only be for the purpose of replacing lost surface parking.

MOTION PASSED: 6-0-1, Veenker absent

MOTION SPLIT FOR THE PURPOSE OF VOTING

2. Pursue refined proposals for potential housing development on City surface parking lot on Lytton / Kipling Lot T at 450 Lytton Avenue , or elsewhere, with direction on key development goals:
a. 100% affordable housing up to the 80% AMI that qualifies for relevant tax credits. b. Height allowance and/or density evaluate to two additional stories above current 50-foot height limit with the additional stories being set back from the street face. c. Evaluate p arking on site that would be availab le for the affordable housing residents and potentially shared use for pub lic purposes. Pursue transit pass provisions for residents as well as other best practices in reduc ing single occupancy vehicle use.

MOTION PASSED: 5-1-1, Tanaka no, Veenker absent

9. Adopt a Resolution Establishing the Council Annual Calendar of Meetings, Breaks and Council Events for the Calendar Year 2024.

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Draft Action Minutes: 12/11/2023
MOTION: Council Member Lauing moved, seconded by Council Member Burt to adopt a resolution establishing the Annual Summer (June 21 – August 4, 2024) and Winter (December 20, 2024 – January 5, 2025) Breaks, Council Regular and alternate meeting dates and Council event schedule from January to December 2024 with the following changes:

1. Elimination of Finance Committee meeting on Tuesday, March 5 th, 2024 and to be rescheduled.

2. Add Tuesday, June 18th, 2024 as an optional additional City Council meeting.

3. Eliminate Monday, June 24th, 2024 City Council Meeting.

MOTION PASSED: 6-0-1, Veenker absent

10. Approval of Amendments to the Employment Agreements between the City of Palo Alto and Council Appointed Officers, specifically the City Manager, and City Attorney and Adoption of Amended Resolution Amending Appointment Term for Interim City Clerk through March 31, 2024 and salary adjustment. CEQA Status - Not a Project MOTION: Mayor Kou moved, seconded by Council Member Burt to approve and authorize the Mayor to execute the following contract amendments for Council Approved Officers and Adoption of Amended Resolution Amending Appointment Term for Interim City Clerk:

1. Amendment No. 11 to Employment Agreement between the City of Palo Alto and Molly S. Stump (Attachment A);

2. Amendment to Resolution Amending Appointment Term for Interim City Clerk through March 31, 2024, and salary adjustment in alignment with increase for all unrepresented Management and Professional employees (Attachment C).

MOTION PASSED: 6-0-1, Veenker absent

MOTION SPLIT FOR THE PURPOSE OF VOTING

3. Amendment No. 5 to Employment Agreement between the City of Palo Alto and Ed Shikada (Attachment B); and
MOTION PASSED: 5-1-1, Tanaka no, Veenker absent

Adjournment: The meeting was adjourned at 11:03 P.M.

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Minutes

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Draft Action Minutes: 12/11/2023

ATTEST: APPROVED:
____________________ ____________________
City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC)

2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section

2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423 , the City Council
found action minutes and the video/audio recordings of Council proceedi ngs to be the official records of both Council and committee proceedings. These recordings are available on the City’s website.

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Minutes

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Regular Meeting
December 18, 2023
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M.

Present In Person: Burt, Kou, Lauing, Lythcott-Haims, Stone, Tanaka, Veenker Present Remotely:

Absent:

Special Orders of the Day

1. Resolution Expressing Appreciation to Matt Raschke Upon His Retirement MOTION: Council Member Burt moved, seconded by Mayor Kou to adopt a resolution expressing appreciation to Matt Raschke upon his retirement.

MOTION PASSED: 7-0

2. Proclamation Honoring Bob Moss for his Service to the City of Palo Alto No action taken.

AA1. Proclamation Honoring Herb Borock for his Service to the City of Palo Alto No action taken.

Closed Session

3. CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Authority: Government Code Section 54956.8
Property: 4000 Middlefield Road, Palo Alto (Cubberley Community Center) Negotiating Party: Palo Alto Unified School District
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City Council Meeting
Draft Action Minutes: 12/18/2023
City Negotiators: (Ed Shikada, Kiely Nose, Chantal Cotton Gaines, Kristen O'Kane, Sunny Tong)
Subject of Negotiations: Purchase and Lease, Price and Terms of Payment MOTION: Mayor Kou moved, seconded by Council Member Lauing to go into Closed Session.

MOTION PASSED: 7-0
Council went into Closed Session at 6:03 P.M.

Council returned from Closed Session at 6:40 P.M.

Mayor Kou announced no reportable action.

Study Session

4. Request for Pre -Screening of Application to Amend the Development Agreement and South of Forest Area Phase 1 Coordinated Area Plan for 260 Homer Avenue that Currently Restricts the Amount of Space that One or More Commercial Of fice Tenants can Occupy at the Property. Zoning District: AMF (MUO). CEQA Status: Not a Project.

No action taken.

Consent Calendar
Mayor Kou registered a no vote on Agenda Item Number 13.

Council Member Tanaka registered a no vote on Agenda Item Number 8, 14,19.

Mayor Kou, Council Member Burt , and Council Member Lauing requested to pull Agenda Item Number 11.

MOTION: Mayor Kou moved, seconded by Council Member Veenker to approve Agenda Item Numbers 5-10, 12-20, and pull Agenda Item Number 11 off of Consent.

MOTION SPLIT FOR THE PURPOSE OF VOTING
MOTION PASSED ITEMS 5-7, 9-10, 12, 15-18, 20: 7-0
MOTION PASSED ITEM 13: 6-1, Kou no
MOTION PASSED ITEMS 8, 14, 19: 6-1, Tanaka no
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5. Approval of Minutes from December 4, 2023 Meeting

6. Review and Approve the Williamson Act Contract Renewals Within Palo Alto City Limits (2023)

7. Approval of Construction Contract with GradeTech, Inc. in the Amount of $296,599 and Authorization for the City Manager to Negotiate and Execute Change Orders up to a Not- to-Exceed Amount of $29,659 for Site Work for Rinconada Park Improvements (PE-08001) and Ramos Park Restroom Installation (PG-19000) Projects; CEQA status – exempt under CEQA Guidelines Section 15303

8. Adoption of Updated Salary Schedules for Limited Hourly (HRLY) and Service Employee International Union Hourly (SEIU-H) Employee Groups in Accordance with the City of Palo Alto Minimum Wage Ordinance; Adoption of Revised Salary Schedules for Management and Professional, Fire Chiefs’ Association (FCA), and Service Employees International Union (SEIU); CEQA Status - Not a project.

9. Approval of Professional Services Contract Number C24189293 with Nova Partners, Inc. in an Amount Not to Exceed $652,331 for Cons truction Management Services for the Capital Improvement Program Fire Station No. 4 Replacement Project (PE -18004); CEQA Status – Exempt under CEQA Guidelines Sections 15302 and 15303

10. Approval of Easement at Greer Park, 1098 Amarillo Avenue, for Sewer Line Connecting Building at 2850 W. Bayshore Road; CEQA status – categorically exempt.

11. Adoption of a Resolution and Approving an Easement Relocation Agreement Relocating and Vacating a 25 Foot Public Service Easement at the Castilleja School at 1263 Emerson Street and 220 Embarcadero Road (also commonly known as 1310 Bryant Street), Assessor Parcel Numbers 124-12-033 & 124-12-034; CEQA status – categorically exempt.

12. Adoption of a Resolution Vacating Two Public Service Easements at 1129 San Antonio Road

13. Approval of Professional Services Contract Number C24188179 with Urban Field Studio for a Not -to-Exceed Amount of $249,708 for the Development of the Car -Free Streets Implementation Plan, for a Period of 7-Months; CEQA Status - statutorily Exempt.

14. Approval of Amen dment Number Two to Contract Number S17168145 with WONDERWARE INC., dba CORE BUSINESS TECHNOLOGIES, in the Amount of $205,200 for an Upgrade to the Revenue Collections Cashiering Application and Extend Term for Three Additional Years; and Authorization of a Contract Contingency in an Amount Not -to- Exceed $54,264 for Related, Additional but Unforeseen Work Which May Develop During the Project for a new Not- to-Exceed Contract Amount of $596,913; CEQA Status - Not a Project
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15. Approval of Contract Amendment Number 1 to Contract Number S22185727 with the City of San Jose in the Amount of $30,000 for Minimum Wage Enforcement Services; CEQA Status – Not a Project

16. Approval of Two Lease Agreements for a Five Year Term Between the City of Palo Alto (Landlord) and Palo Alto Community Child Care (Tenant) for Community Child Care Spaces at the College Terrace and Ventura Sites; CEQA Status – Not a Project

17. Recognize Permanent Local Housing Allocation Program (PLHA) Grant Funding from the State of California of $592,367 for Homeless Outreach Services, Approve FY 2024 Budget Amendments in the General Fund, and Establish a Permanent Local Housing Allocation Program (PLHA) Grant Fund; CEQA status – not a project.

18. Approval of a Resolution Authorizing the City Manager to Negotiate and Execute Temporary Construction Easements and Compensation with the Property Owners at 475 Newell Road and 1761 & 1767 Woodland Avenue for the Newell Road/San Francisquito Creek Bridge Replacement Project CIP Program (PE-12011); CEQA - Environmental Impact Report for Newell Road/San Francisquito Creek Bridge (Resolution No. 9889)

19. SECOND READING: 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; CEQA Status - Exempt under CEQA Guidelines Section 15061(b)(3) (FIRST READING: November 27, 2023 PASSED 6-1, Tanaka No).

20. SECOND READING: Adoption of an Ordinance Amending Chapter 2.30 (Contracts and Purchasing Procedures) and Chapter 2.37 (Business Tax) of the Palo Alto Municipal Code to Correct Clerical Errors and Clarify Procedures for Administering the Business Tax. CEQA Status -- Not a project. (FIRST READING: December 4, 2023 PASSED 7-0)

Action Items
AA2. SECOND READING: Adoption of an Ordinance Implementing Program 1.1A and 1.1B of the Housing Element, Including: 1) New Chapter 18.14: Housing Incentives, and 2) Modifications to Base Zoning Districts Throughout Title 18. Adoption of a Resolution Making Corr esponding Changes to the Land Use and Design Element of the Comprehensive Plan. (FIRST READING: November 13, 2023 PASSED 5 -1-1, Kou no, Veenker recused and PASSED 6-1, Kou no)
Council Member Veenker Recusal on Stanford-owned properties & Housing Focus Area MOTION: Council Member Lauing moved, seconded by Council Member Lythcott-Haims to:

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1. Adopt on second reading the attached housing element implementation ordinance that includes a clarifying revision related to a building facade modulation requirement for properties located in the Housing Focus Area.

2. Planning Director to work with the Housing Ad Hoc Committee for other possible suggested changes to this focus area and return to Council.

MOTION PASSED: 5-1-1, Kou no, Veenker recused

MOTION: Council Member Lythcott-Haims moved, seconded by Council Member Lauing to adopt a resolution updating the Land Use and Design Element of the Comprehensive Plan to be consistent with Programs 1.1A and 1.1B of the Housing Element.

MOTION PASSED: 6-1, Kou no

21. Discussion and Confirmation of the Preferred Alternative Concept Plan Line for the University Avenue Streetscape Improvements Project (PE -21004) and Authorization for the City Manager to Develop and Refine the Scope of Work for Future Phases through a Contract Amendment
MOTION: Council Member Lauing moved, seconded by Council Member Burt to:

1. Direct staff to draft additional alternatives that would include one option with the current parklet plan and that sidewalks should be variable or outdoor dining space comparable to the current parklet plan.

2. Consider moving bikes to Hamilton and Lytton and or shrinking the travel lane.

3. Direct staff to present options to the Retail Ad Hoc Committee and come back to Council with interim measures that we can do cheap and quickly that will show progress in that area.

4. Alternatives should cover a range of costs.

MOTION PASSED: 7-0

22. Policy and Services Committee Recommendations for Changes to the City Council Procedures and Protocols Handbook based on Prior City Council Referrals MOTION: Council Member Burt moved, seconded by Mayor Kou to:

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1. Continue the discussion of the changes of the City Council Procedures and Protocols Handbook to a date uncertain soon in the beginning of 2024.

2. Allow for the prior year’s current Ad Hoc, standing committees and council liaison roles, and regional appointment compositions to carry over until the new mayor appoints new members so that those committees can therefore continue to meet in January of the following new year.

MOTION PASSED: 7-0

Adjournment: The meeting was adjourned at 11:14 P.M.

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ATTEST: APPROVED:
____________________ ____________________
City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC)

2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section

2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423 , the City Council
found action minutes and the video /audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website.

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CITY COUNCIL

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Special Meeting
December 19, 2023
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M.

Present In Person: Burt, Kou, Lauing, Lythcott-Haims (5:52 P.M.), Stone, Tanaka (5:50 P.M.), Veenker
Present Remotely:

Absent:

CLOSED SESSION

1. Public Employment
Title: City Clerk
Authority: Government Code Section 54957 (b).

2. Conference with Labor Negotiators
Authority: Cal. Gov. Code section 54957.6;
Agency representative: Maria Hurtado, Peckham & McKenney; Unrepresented Employee: City Clerk

MOTION: Mayor Kou moved, seconded by Council Member Veenker to go into Closed Session.

Motion PASSED: 5-0-2 Lythcott-Haims, Tanaka absent
Council went into Closed Session at 5:33 P.M.

Council returned from Closed Session at 10:42 P.M.

Mayor Kou announced no reportable action.

Adjournment: The meeting was adjourned at 10:43 P.M.

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ATTEST: APPROVED:

____________________ ____________________
City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC)

2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section

2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Community Services
Meeting Date: January 16, 2024
Report #:2312-2326
TITLE
Adopt an Ordinance to Expand the Public Art Commission (PAC) from Five to Seven Members; CEQA status - not a project

RECOMMENDATION
Staff recommends that the City Council adopt the attached ordinance to expand the Public Art Commission from five to seven members.

BACKGROUND AND DISCUSSION
In June 2020, the Public Art Commission was reduced from seven members to five at the direction of Council. 1 On December 4, 2023, Mayor Kou and Vice Mayor Stone presented a Colleagues’ Memo2 to the Council recommending the City Council direct staff to schedule a Consent Calendar item for City Council to restore the PAC to seven members. A motion passed unanimously to proceed with a Consent Calendar item and staff is now returning with the attached ordinance to formally make this change. The ordinance will stagger the two seats so only a portion of the Commission will change each year. The term of the seats will remain three (3) years.

Existing Staggering Schedule:

Seat Current Term Expiration Date Next Term
1 March 31, 2024 April 2024-March 2027
2 March 31, 2024 April 2024-March 2027
3 March 31, 2025 April 2025-March 2028
4 March 31, 2025 April 2025-March 2028
5 March 31, 2025 April 2025-March 2028
1 City Council, June 22, 2020; Item #29; SR#11424,
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020/id-11424.pdf?t=72303.63
2 City Council, December 4, 2023; Item #12; Report # 2311-2244, https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=37038514-797e-4ba8-8d09-b38b24b5aef7 Item 2
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If the ordinance is approved, Council may select four Commissioners in the upcoming recruitment process – two commissioners that have three -year terms and two Commissioners that will have two-year partial terms. Seats 6 and 7 will revert to regular three-year terms in April 2026.

New Staggering Schedule:

Seat Current Term Expiration Date Next Term
1 March 31, 2024 April 2024 – March 2027
2 March 31, 2024 April 2024 – March 2027
3 March 31, 2025 April 2025 – March 2028
4 March 31, 2025 April 2025 – March 2028
5 March 31, 2025 April 2025 – March 2028
6 (new) (new) April 2024 – March 2026
7 (new) (new) April 2024 – March 2026

RESOURCE IMPACT
Increasing the Commission size to seven members will increase demands on staff to support the administration of the PAC, however; overall, staff will be positively impacted by this change as there will be greater opportunities for ad hoc committees to advance work of the Commission. A larger decision-making body will allow for diverse perspectives in the selection of the public art including commissioned artists and locations for temporary and permanent art within Palo Alto.

STAKEHOLDER ENGAGEMENT
This item is brought forward as part of the Council’s motion from December 4, 2023. No additional stakeholder engagement was performed.

The motion also included a referral to Policy & Services Committee to “review with the Public Art Commission the respective role of the Public Art Commission staff, stakeholders, and the Council in public art decision in relation to placement and themes of art.” Staff anticipates placing this on a Policy & Services Committee agenda later this year.

ENVIRONMENTAL REVIEW
Approving this ordinance is not a project within the meaning of CEQA.

ATTACHMENTS
Attachment A: Ordinance Expanding the Public Art Commission from Five to Seven Members APPROVED BY:

Kristen O'Kane, Community Services Director
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*Not Yet Approved*
1 102_20231220_ts24
Ordinance No._____
Ordinance of the Council of the City of Palo Alto Amending PAMC Section

2.18.010 to Expand the Public Art Commission from Five to Seven Members

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

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

A. The City has a Public Art Commission as detailed in Chapter 2.18 of the Palo Alto Municipal Code.

B. The City Council desires to expand the membership of the Public Art Commission from five to seven members.

C. The two new seats created by this ordinance shall initially have two-year terms in order to stagger the introduction of new members as detailed in Section 3 of this ordinance.

SECTION 2. Section 2.18.010 (Membership) of Chapter 2.18 (Public Art Commission) of the Palo Alto Municipal Code (PAMC) is hereby amended and restated as follows (deleted text is in strikethrough, new text is underlined):

2.18.010 Membership.

There is created a public art commission composed of seven members who are not council members, officers, or employees of the city, and who shall be appointed by the city council.

SECTION 3. The two new seats on the Public Art Commission created by this ordinance shall initially have shortened terms to expire on March 31, 2026, subject to extension under the provisions of PAMC 2. 18.040 (Term of office) . After that, successive terms shall be consistent with the term lengths in PAMC section 2. 18.040 and any other applicable section of the PAMC.

This Section 3 shall be uncodified.

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, sentenc es, 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 2
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Expanding the Public Art
Commission from Five to
Seven Members

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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:

____________________________ ____________________________ Assistant City Attorney City Manager

____________________________
Director, Community Services Department
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: January 16, 2024
Report #:2310-2132
TITLE
Approval of Contract Amendment Number 1 to Contract Number C24189060 with US Bank and its Wholly owned Subsidiary Elavon for General Banking and Merchant Services and Approval of Contract Amendment Number C24189061 with Wells Fargo for Lockbox Services; CEQA Status – Not a Project.

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee, to execute:

1. Amendment No. 1 to Contract C24189060 with US Bank and its wholly owned subsidiary, Elavon, for general banking and merchant services (Attachment A), extending the term for one-year, ending June 30, 2024, with an option to negotiate extension for one additional year and;

2. Amendment Number C24189061 with Wells Fargo for lockbox services (Attachment B), extending the term for one-year, ending June 30, 2024, with to negotiate an option to extend for one additional year; and

EXECUTIVE SUMMARY
This report recommends the approval of a one-year extension of current banking services contracts and related services, through completion of an ongoing procurement for new contracts. Administrative Services staff issued a request for proposal (RFP) for these services in October 2023. Proposals are being reviewed by staff and plans to award contracts in 2024. The extensions attached to this staff report are effective July 1, 2023 through June 30, 2024 and maintain pricing from when the contracts were extended on September 21, 2020. Due to the imbedded nature of banking services with day-to-day financial transactions at the City, staff recommends that the City Manager be authorized to negotiate an option to extend the general banking and merchant services agreement with US Bank and Elavon and lockbox services with Wells Fargo to provide overlap for transition if new banking providers are selected.

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BACKGROUND
Staff last conducted a competitive solicitation for banking and related services in 2014. Details for the RFP process are discussed in staff’s report to Council on June 23, 20141. Council awarded contracts to the following financial institutions:
1) U.S. Bank and Elavon for banking and merchant services, 2) Wells Fargo for lockbox service,
3) Commerce Bank for a new and innovative Accounts Payable bill payment service, 4) Union Bank for investment safekeeping (custodial) service, and 5) JP Morgan Chase Banks for purchase card (P-Card) service.

The Commerce Bank’s Accounts Payable bill payment implementation was halted and then discontinued as the service was unable to meet the City’s needs as was originally expected as part of their proposal. Union Bank was acquired by US Bank in August 2021.

On September 21, 20202, the contracts extended for to two- or three-year extension for banking services contracts and related services, extending the contracts to a total term of eight or nine years. At the time, Union Bank was in the process of selling this line of business to US Bank, therefore a two-year extension was done. Upon acquiring this service US Bank honored the full three-year and beyond extension under the original Union Bank’s existing terms (Attachment C).

ANALYSIS
Due to the embedded nature of banking contracts in day-to-day financial transactions of City business, it is not uncommon to see longer term contracts up to 8-10 years to ensure continuity of service and necessary strategic deployment of resources for major projects, such as Automatic Clearing House (ACH) services, auto-draft payments for utility customers, internal control or fraud features (i.e., positive pay), and integrations with the City’s enterprise resource planning system, SAP. An RFP was issued in October 2023 and staff plan to recommend Council’s approval to award contracts to service providers in March 2024. To bridge services and provide overlap in the event service providers are changed through the RFP, staff recommends extending the contracts through June 30, 2024, with an option for the City Manager to negotiate an additional one-year extension if the banks maintain the per unit pricing as in the 2020 extensions. In each contract, the City and the banking services provider each retains the option to terminate the contract upon 30-day notice.

Below is a summary of the recommended agreements:
1) US Bank and its wholly owned subsidiary, Elavon, for general banking and merchant services. U.S. Bank and Elavon have agreed to continue the same transaction prices for 1 City Council, June 23, 2014, Staff Report ID #4905:
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2014/4905.pdf
2 City Council, September 21, 2020, Staff Report ID #11402:
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020-2/id-11402.pdf
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this one-year contract that were agreed to in the original contract in FY 2014. In FY 2023, the annual net spending was $31,700 (gross expense of $41,700, offset by earnings of $10,000) for general banking. (Attachment A) 2) Wells Fargo provides lockbox services. This extension reflects the current pricing. In FY 2023, the annual net spending was $16,500 (gross expense of $24,900 offset by earnings of $8,400). (Attachment B)
These contracts are structured based on service and activity level; the City essentially controls costs via a fixed payment per service during the length of the contracts. Therefore, staff recommends continuation of the previous contract terms that do not include a “not-to-exceed limit”, as cost is dictated by transaction volume which can change over time. Staff has and will continue to closely monitor costs on a regular basis. In total, net annual costs for these contracts have remained at or below $100,000 annually.

FISCAL/RESOURCE IMPACT
The FY 2024 Adopted Budget includes sufficient funding for this extension. Staff will return to the City Council for approval of any future funding needs upon completion of the RFP, as necessary. These one-year contracts are from July 1, 2023 to June 30, 2024 for (1) banking and merchant services; and (2) lockbox services. Fees are netted against interest earnings. therefore, a not-to-exceed limit is not assigned to these contracts and is based on negotiated per unit fixed pricing, based on specific services, with volume controlled by the City.

STAKEHOLDER ENGAGEMENT
For the duration of these contracts, Administrative Services staff coordinates with departments that are involved in daily banking transactions, primarily the Utilities Department, whose feedback on the service level provided by US Bank and Wells Fargo is satisfactory.

ENVIRONMENTAL REVIEW
Council action on this item is not a project under the California Environmental Quality Act (CEQA) because the contract amendments for general banking and merchant services and lockbox services are a continuing administrative or maintenance activity. CEQA Guidelines section 15378(b)(2).

ATTACHMENTS
Attachment A: US Bank and Elavon Amendment Agreement
Attachment B: Wells Fargo Amendment Agreement
Attachment C: US Bank (Formerly Union Bank) Existing (Investment) Custody Agreement APPROVED BY:

Kiely Nose, Assistant City Manager
Lead Staff: Christine Paras, Assistant Director
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Dale Barton
Director, Relationship Manager
Government Banking
MAC A0101-108
420 Montgomery Street, 10
th Fl.

San Francisco, CA 94104
Work: 415-940-1023
Email: [email protected]
September 1, 2023
City of Palo Alto
250 Hamilton Avenue, 4th Floor
Palo Alto, CA 94301
Attn: Tarun A. Narayan, Manager of Treasury, Debts & Investments Re: Contact for Treasury Management Services and Pricing (City of Palo Alto Contract No. C24189061) We are pleased to extend the term of the pricing agreement with the City of Palo Alto at the current pricing for the deposit and treasury management services as described on the Wells Fargo Treasury Management Proposal, Pricing as of May 2023, which is attached hereto as Exhibit 1, for one (1) term of thirteen (13) months, effective as of June 1, 2023, through June 30, 2024.

Additional fees will apply to new deposit and treasury management services not described on Exhibit 1, and we will provide information regarding those fees in connection with the implementation of any such additional services. We reserve the right to modify pricing to reflect the impact of any changes in law, regulations or interpretations thereof. We also reserve the right to change our pricing methodology, including element IDs for a particular service, so long as the change does not increase the total price of such service to you (unless permitted under the immediately preceding sentence).

This letter agreement along with your Master Agreement for Treasury Management Service signed 10/01/2020, attached hereto as Exhibit 2, and other Service Documentation (as that term is defined in the Master Agreement for Treasury Management Services) applicable to your accounts and treasury management services provided as described on Exhibit 1, will constitute the contract governing our deposit and treasury management services relationship. The Service Documentation, including the Service Descriptions for the treasury management services you are enrolled in are posted at our Commercial Electronic Office® (CEO®) portal.

If you agree, please sign, date, and return this agreement below. Thank you for your business and continued partnership with Wells Fargo Bank. Please feel free to call me with any questions.

Sincerely,
Dale Barton
Director, Relationship Manager
415-940-1023
Acknowledged and Agreed:

City of Palo Alto
By:

Name:

Title:

Date:

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Exhibit 1
Wells Fargo Treasury Management Proposal, Pricing as of May 2023 (Attached)

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Treasury Management Proposal

Palo Alto, City of Pricing as of May 2023

Average Positive Collected Balance $ 206,578.87
Reserve Requirement @ 0.00% $0 . 0 0
Investable Balance Available for Services $ 206,578.87

Monthly Analyzed Charges $ 2,361.14
Earnings Allowance @ 4.72% $ 801.41
Net Monthly Analyzed Charges $ 1,559.73
*Monthly Fee Based Charges $0 . 0 0
Total Monthly Analyzed Charges $ 1,559.73
*Charges not offset by balances

Investable balance required to offset $1.00 of analyzed charges $ 257.77 WF Monthly Activity
Code Service Description Charge Basis Price Volume Charges ACH Fraud Filter
34333 ACH CEO FRAUD FILTER REVIEW MO BASE Account 5.00000 2 10.00 Subtotal 10.00
ACH Receive
ES349 ACH RECEIVED ADDENDA Addenda record 0.00000 40 0.00 ES344 ACH RECEIVED ITEM Transaction 0.30000 30 9.00
Subtotal 9.00
Gen Acct Services Recoupment
IAMTH RECOUPMENT MONTHLY Deposit assessment 0.12750 516 65.80 Subtotal 65.80
General Account Services
22051 ACCT MAINTENANCE Account 7.00000 2 14.00
CK021 DEBITS POSTED Debit 0.10000 13 1.31
CK018 ELECTRONIC CREDITS POSTED Credit 0.25000 35 8.75
08025 MISCELLANEOUS CREDITS POSTED Transaction 1.00000 66 66.00 Subtotal 90.06
General Disbursement Services
22225 CHECK CASHING THRESHOLD MO BASE Account 0.00000 2 0.00 22245 CHECKS PAY TO INDIV BLOCK MO BASE Account 0.00000 2 0.00 22235 OTC DEBIT BLOCK MONTHLY BASE Account 0.00000 2 0.00 MD091 PYMT AUTH MAX CHECK MTHLY BASE Account 10.00000 2 20.00 Subtotal 20.00
Image Delivery
27707 CEO SEARCH Inquiry 0.50000 1 0.50
12812 CEO IMAGE VIEW < 90 DAYS - ITEM Image retrieved 3.50000 1 3.50 Subtotal 4.00
Incoming Wire Transfers
ES030 WIRE IN TO USA ACCT-USA DOMESTIC Transfer 15.00000 1 15.00 Subtotal 15.00
Information Reporting
34123 CEO ALERTS SERVICE - EMAIL Email 0.75000 10 7.50
34121 CEO INTRADAY REPORTING ITEMS RPTD Item reported 0.10000 207 20.71 34120 CEO INTRADAY REPORTING SUBSCRIPTION Account 35.00000 2 70.00 34115 CEO PREV DAY REPORTING ITEMS LOADED Item loaded 0.07500 123 9.23 34100 CEO PREV DAY REPORTING SUBSCRIPTION Account 35.00000 2 70.00 Subtotal 177.44

ANALYSIS SUMMARY
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WF Monthly Activity
Code Service Description Charge Basis Price Volume Charges MSC-TM
03303 LBX PKG US MAIL DELIVERY $ pass through 1.00000 10 10.00 Subtotal 10.00
Paper Checks Deposited
311 WHOLESALE LOCKBOX - DEPOSITED CHECK Check deposited 0.05000 2,790 139.50 Subtotal 139.50
Returned Items
CK062 CEO RETURN ITEM RETRIEVAL-IMAGE Transaction 3.50000 1 3.50 CK064 CEO RETURN ITEM SERVICE MTHLY BASE Customer ID 0.00000 2 0.00 CK061 RETURN ITEM - CHARGEBACK Transaction 2.00000 2 4.00 CK069 RETURN ITEM SPECIAL INSTRUCTIONS Transaction 0.25000 2 0.50 CK081 RETURN ITEM SPECIAL INST MTHLY BASE Account 15.00000 2 30.00 CK075 RETURN ITEM REDEPOSITED Transaction 1.00000 1 1.00 Subtotal 39.00
Wells Tax
32068 WELLSTAX CEO SUBSCRIPTION Access code 6.00000 2 12.00 Subtotal 12.00
Wholesale Lockbox
03302 LBX TRANSMISSION BASE Lockbox 65.00000 2 130.00
03711 LBX W EEKEND SERVICE BASE Transmission 0.00000 2 0.00 36709 LBX WHOLESALE BASE Lockbox 100.00000 2 200.00
03102 LBX REMIT PROC ESSED CASH Remittance 5.00000 1 5.00 03611 LBX REMIT PROC ESSED EXPRESS MAIL Remittance 1.00000 4 4.00 36731 LBX CORR ESPONDENCE OR REJECTS Envelope 0.30000 12 3.60 36755 LBX STANDARD CHECK PROCESSED Remittance 0.30000 453 135.91 03905 LBX DOCUMENT SCANNED Remittance 0.05000 5,959 297.95 36791 LBX 7 YEAR IMAGE ARCHIVE Image archived 0.01000 5,959 59.60 36745 LBX VALUE ADDED KEYING Keystroke 0.01000 15,810 158.10 34222 LBX CEO TIR REPORT PER ITEM Item accessed 0.25000 1 0.25 48200 LBX WHOLETAIL BASE Lockbox 65.00000 2 130.00
48210 LBX WT CHECKS Check 0.00000 2,338 0.00
48220 LBX WT TOTAL PAYMENTS PROC ESSED Coupon 0.13000 2,687 349.32 48307 LBX WT STD ITEM PROC ESSED NON SCAN Check 0.30000 1 0.30 48221 LBX WT MULTI PAYMENT Coupon 0.10000 481 48.11
48222 LBX WT PARTIAL PAYMENT Coupon 0.02000 194 3.88
48257 LBX WT MARK SENSE OR ADDR ESS CHANGE Coupon 0.06000 2,687 161.22 48501 LBX WT TRANSMISSION PER ITEM Remittance 0.01000 2,687 26.88 36739 LBX POST OFFICE RETURNED MAIL Transaction 5.00000 1 5.00 48250 LBX WT OCR SCANLINE REJECTS Coupon 0.30000 1 0.30 Subtotal 1,719.42

Wires Origination and Reporting
ES139 WIRE OUT DOMESTIC CEO/API Transfer 5.00000 10 50.00 Subtotal 50.00
Total Monthly Activity Charges 2,361.22
Total Monthly Balance Based Charges (can be paid with balances) 2,361.22 Earnings Credit Rate 4.72%
Estimated Earnings Credit 801.41

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Disclosures
We created this proposal for you based on our understanding of your requirements and the services in which you expressed interest. This proposal confirms the deposit and treasury management services and the pricing we plan to provide you based on certain assumptions including projected volumes and other relevant information you provided.

This document is confidential. Please do not share it without first obtaining our written permission. The services and pricing contained in this proposal are valid for 90 days. The pricing is subject to change if the actual volume or scope of services differs from the assumptions upon which we based the pricing.

Please let us know if you believe this proposal does not accurately represent the prices or services we discussed with you. If you have questions about the services in this proposal, please contact your Treasury Management Sales Consultant or visit: www.wellsfargo.com/accountanalysis for additional information about the services.

Regarding your services

Alerts Service
Charges are assessed against the volume of Alerts per user, per company, per month basis. Users are only charged for the first 80 events/alerts per month, per delivery mechanism (email or text). There is no per company cap for billing.

Wire Book Transfer
A CEO Wire book transfer is between two accounts initiated via CEO Wires Book Transfer workflow. A Payment Manager Book transfer is charged when the debit and credit accounts are setup in a single CEO Company id and entitled to Book Transfer.

Services with No Volumes
Services listed with zero volume are not included in the estimated monthly analysis fee but are included in the event the service is used in the future.

This message may contain confidential and/or privileged information. If you are not the addressee or authorized to receive this for the addressee, you must not use, copy, disclose, or take any action based on this message or any information herein. If you have received this message in error, please advise the sender immediately by reply email and delete this message.Thank you for your cooperation.

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Exhibit 2
Master Agreement for Treasury Management Services
(Attached)

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Master Agreement for Treasury Management Services
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Master Agreement for Treasury
Management Services
The Service Documentation contains the terms under which Wells Fargo Bank, N.A. and the banks, branches or subsidiaries listed in Appendix X (each, "Bank") provide you treasury management services ("Services"). "You," "your" or "yours" refer to the Bank customer identified on the Acceptance of Services that is signed when you enroll in Services ("Acceptance"). The terms "we," "us," or "our" refer to the Bank. The Bank customer to which the Services will be provided is identified in the Acceptance. Other capitalized terms used in this Master Agreement for Treasury Management Services ("Agreement") are defined in this document.

You and we agree:

1. Service Description. The Service Documentation contains the terms governing each Service and includes:
a. The Service Description (which contains terms and conditions applicable to the specific Service), b. The Acceptance (which indicates your acceptance of the Service Documentation), c. This Agreement (which contains terms and conditions applicable to all Services), d. The account agreement governing the account(s) (each, an “Account”) you use in connection with the Service,
e. The Product Enrollment Form (which contains set-up information for each Service in which you are enrolling), and
f. User Guides (which include Terms of Use, software, software licenses, price schedules, specifications, instructions, and notices).

The documents and individual provisions of the Service Documentation are intended to be read together as one agreement between you and us. This Agreement and the Service Descriptions for Services you enroll in are posted at our Commercial Electronic Office® (CEO®) portal. If there is a conflict among the documents that are part of the Service Documentation, they will govern in the order listed above. Your use of a Service confirms your receipt of, and agreement to be bound by, this Agreement and all Service Documentation.

2. Services. You and we will agree upon the Services to be provided. Each Service is subject to the approval by our applicable branch or subsidiary. You may not begin using a Service until we have received all required and properly executed forms and you have successfully completed any testing or training requirements.

3. Changes to services. We may change (or add to) the terms and fees in the Service Documentation at any time. If an enhancement to a Service or other change requires a change to a Service Description, we will post an updated Service Description on the CEO portal. When required by Applicable Law, we will notify you of the change. If you continue to use a Service after the change takes effect, you will be bound by the change. As used in this Agreement, the term "Applicable Law" means all applicable laws (including common or customary laws), statutes, constitutions, policies, decrees, judgments, treaties, regulations, directives, by-laws, rulings, orders or operating circulars governing our activities and/or any transaction effected under this Agreement, including, but not limited to, the funds transfer system and clearing and settlement house rules.

4. Term and termination. Unless a Service is terminated in accordance with the Service Documentation, this Agreement and each Service will continue in effect until terminated by either party upon 30 days’ prior written notice to the other party.

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We may suspend or terminate any Service:
a. After we notify you of a breach of any provision of the Service Documentation or any other agreement with us, and you fail to cure the breach (if it can be cured) within 15 days of the date of the notice; or
b. Without prior notice to you if:
i. We reasonably suspect that an Account associated with a Service has been compromised or otherwise subject to irregular, unauthorized, fraudulent, or illegal activity,
ii. You become subject to any insolvency or bankruptcy proceeding, or any receivership, liquidation, reorganization, or other similar proceeding, or you enter into any agreement or proceeding for voluntary liquidation, dissolution, composition with or assignment for the benefit of creditors or other winding up, iii. We determine in our sole discretion that continuing to provide a Service may place us at risk of financial loss or result in an unacceptable credit exposure, iv. Any guaranty of your obligations to us ("Guaranty") is terminated, revoked, or its validity contested by the guarantor ("Guarantor"),
v. We determine in our sole discretion that a material adverse change has occurred in your ability to perform your obligations under the Service Documentation, or in the ability of a Guarantor to perform its obligations under a Guaranty, or vi. The Account necessary to provide a Service is closed.

The termination of a Service will not affect your or our respective rights with respect to transactions occurring before the termination. We will not be liable to you for any losses or damages you may incur as a result of any termination of any Service or termination or restriction of any CEO portal access rights under section 9(d) below.

5. Service fees. You will pay us the fees described in the Service Documentation and any taxes applicable to each Service, however designated, but excluding taxes based on our net income. We may debit your Account for any fees not covered by earnings credits and any taxes that are due, or we may send you an invoice for these amounts, which you will promptly pay. Our charges and fees are in the applicable fee schedule for Services used in connection with your Account.

6. Security procedures.
a. Unless otherwise agreed, you agree that "Security Procedure" is the applicable security procedure described in the Service Documentation for your Initiation Method for the Service, which we will use to verify the authenticity of a Transaction. The term "Initiation Method" refers to the method we offer in the product enrollment form ("Set-up Form") or other Service Documentation for delivering your Transaction instructions to us with respect to the applicable Service and includes any applicable transmission protocols. The term "Transaction" means (i) any funds transfer or payment instruction (including any communication cancelling or amending an instruction), and (ii) any instruction, data or other information which we receive in your name with respect to a funds transfer. The purpose of the Security Procedure is to verify the authenticity of the Transaction. We will not use the Security Procedure to detect an erroneous or duplicate transaction. You will be responsible for any erroneous or duplicate transaction we receive in your name. You agree to be bound by each Transaction, whether or not authorized by you, issued in your name and accepted by us in compliance with the Security Procedure for the Service.
b. You agree that each Security Procedure for the Initiation Method in the Set-up Form or other Service Documentation for each of the Services (a) best meets your requirements with regard to the size, type and frequency of your Transactions, and (b) is commercially reasonable. If you have refused to use any standard Security Procedure and elect a non-standard Security Procedure, then you must sign the Non-Standard Security Procedure Elections form.

7. Confidential information. Unless otherwise stated in the Service Documentation, “Confidential Information” means all (a) User Guides and Terms and Use, and (b) Security Procedures, passwords, codes, security devices and related instructions. You will not acquire any ownership interest in or rights to Confidential Information as a result of your use of any Service.

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You will:
a. Maintain the confidentiality of the Confidential Information, b. Not disclose (or permit your employees or agents to disclose), copy, transfer, sublicense, or otherwise make any of it available to any person or entity, other than your employees who have a need to use the Confidential Information in connection with the applicable Service, and c. Not decompile, reverse engineer, disassemble, modify, or create derivative works of any Confidential Information.

You will notify us immediately if you know of or suspect any unauthorized disclosure, possession, use, or knowledge (each, an "Unauthorized Use") of any Confidential Information. If you (or your employees or agents) are responsible for the Unauthorized Use, you will, at your expense, promptly take all actions, including initiating court proceedings to recover possession and prevent further Unauthorized Use of the Confidential Information. You will also compensate us for any injury caused to us as a result of the Unauthorized Use.

8. Currency conversion. When your instructions require us to convert the amount of a payment order from the currency in which the Account is denominated ("Account Currency") to another currency ("Foreign Currency"), we will do so using the Applicable Exchange Rate in effect at the time we execute your payment order. “Applicable Exchange Rate” means the exchange rate we set and use for you when we convert one currency to another currency and includes a markup over our cost of sourcing the relevant currency. The markup factors include costs incurred, market risks and our desired return. The exchange rate we provide to you may be different from the exchange rates you see elsewhere. Foreign exchange rates are dynamic, and rates fluctuate over time based on market conditions, liquidity, and risks.

If a financial institution designated to receive the funds does not pay the beneficiary specified in the payment order, and the funds are returned to us, we will not be liable to you for a sum greater than the amount of the payment order after we have converted it from the Foreign Currency to the Account Currency using the Applicable Exchange Rate in effect at the time the funds are returned to us. You accept the risks of any change in the Applicable Exchange Rate between the time you request a payment order and the time the payment order is either completed or is unwound due to a cancellation, an amendment, a rejection, or a return.

9. CEO portal.
a. Description of the CEO portal. The CEO portal is our electronic banking portal that is accessed via the Internet. Your Authorized Agents (defined below) may use the CEO portal to access (i) Services in which you have separately enrolled (each, an “Accessed Service”) and (ii) third-party sites we may make available through the CEO portal. We offer different channels through which you may access the CEO portal, including personal computers and mobile devices. We may add or eliminate channels at any time. A Service or third party site accessible through one channel may not be accessible through another channel.
b. Access to the CEO portal. When you enroll in the CEO portal, and as we may determine is necessary after enrollment, we will provide Log-On Credentials (defined below) to the persons who are authorized to access the CEO portal on your behalf (each, an "Authorized Agent"). Log- On Credentials mean one or more secure methods we provide to access the Services and may include user IDs, passwords, token IDs, and other methods that we adopt from time to time.

We have no obligation to separately verify or authenticate any communication we receive in your name through the CEO portal, whether or not it was actually from an Authorized Agent.

You assume the entire risk of (i) unauthorized use of your Log-On Credentials and (ii) unencrypted electronic transmissions.
c. Administration of the CEO portal. We offer two options for administering the CEO portal: (i) Administration and (ii) Bank administration.
i. Administration. If you enroll in the Administration option, there are three categories of Authorized Agents: Company Administrator, Administrator, or User. Unless you and we separately agree, we will provide Log-On Credentials only to your initial Company

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Administrator(s) who will (a) assign Log-On Credentials to other individuals and (b) designate those individuals as one of the following:
(1) A Company Administrator, who may perform all functions of your initial Company Administrator,
(2) An Administrator, who may perform all functions of an Administrator including designating other Administrator(s) and User(s), or
(3) A User, who may access the Services designated by a Company Administrator or an Administrator, as well as those Services in which we permit a User to self- enroll.

Each Company Administrator and Administrator has the authority to enroll you in additional Services. In addition to your use of Administration as described in this subsection, you may request that we assign Log-On Credentials to Users that you designate in writing to us. Your designation to us will specify the Services which the User is authorized to access in addition to those Services in which we permit a User to self-enroll.
ii. Bank administration. For the Bank administration option, there is one category of Authorized Agent: Users. We will assign Log-On Credentials to each User you designate.

You will promptly revoke the Log-On Credentials of any Authorized Agent or User when that individual is no longer authorized to access the CEO portal. If you notify us in writing to revoke the Log-On Credentials of an Authorized Agent or User, we will have a reasonable time after receiving your written notification to revoke the individual’s access. d. Terminating access. We may terminate or restrict any Authorized Agent’s access to any Service through the CEO portal if we determine such use:
i. Does not comply with any term applicable to the CEO portal, ii. Is not permitted by Applicable Law,
iii. Is not authorized by you or any third party whose authorization we believe is necessary, or
iv. Should be denied for your or our protection (without us agreeing to or being required to make this determination in any circumstance).
e. Financial information. Financial market data, quotes, news, research, and other financial information developed by third parties and transmitted to us ("Financial Information") may be available to you at the CEO portal. The posting of any Financial Information or any other information or data at the CEO portal is not a recommendation by us of any particular Service or transaction. We do not guarantee the accuracy or completeness of any Financial Information, nor are we responsible for (i) the actions or omissions of the third parties developing or transmitting Financial Information or (ii) any decision you make or action you take by relying on any Financial Information.

10. Alerts.
a. Non-subscribed alerts. When you enroll in the CEO portal or other channels or Services, you consent to receiving by email or other delivery channels, servicing messages that we determine are important or urgent. You do not need to subscribe to receive such alerts and you do not pay additional service fees.
b. Subscribed alerts. You may also enroll in fee-based alerts for applicable Services so that you can receive messages you subscribe to at the intervals and through delivery channels that you choose.

11. Liability and indemnification.
a. We are not obligated to honor, in whole or in part, any payment order or other instruction that:
i. Exceeds the available balance in the Account, unless otherwise provided in the Service Documentation,
ii. Does not comply with the Service Documentation or our applicable policies, procedures, or practices made available to you,

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iii. We have reason to believe may not have been duly authorized, should not be honored for our or your protection, or involves funds subject to a hold, dispute, restriction, or legal process, or
iv. Would possibly result in us not complying with Applicable Law. b. Neither we nor our software vendors make any express or implied representations or warranties with respect to the Services or any software used in connection with the Services, including any warranty as to the merchantability or fitness for a particular purpose, other than those expressly set forth in the Service Documentation. c. Any claim, action, or proceeding against us for losses or damages arising from a Service, must be brought within one year from the date of the act or omission, except as otherwise stated in the account agreement governing the Account.
d. We will have no liability for our failure to perform or delay in performing a Service if the failure or delay is due to circumstances beyond our reasonable control. If we determine that any funds transfer or communications network, Internet service provider, or other system used to provide a Service is unavailable, inaccessible, or otherwise unsuitable for use by you or us, we may, upon notice to you, suspend or discontinue the affected Service. e. We will only be liable to you for actual damages incurred as a direct result of our failure to exercise reasonable care in providing the Services. Reasonable care requires only that we follow standards that do not vary unreasonably from the general standards followed by similarly situated banks. Our policies and procedures are general internal guidelines for our use and do not establish a higher standard of care for us than otherwise established under Applicable Law.

A mere clerical error or an honest mistake will not be considered a failure by us to perform any of our obligations. Our liability to you will be limited to an amount not greater than 10 times our fees incurred in the calendar month immediately before the calendar month in which the loss or damages were incurred (or, if no fees were incurred in that month, our fees incurred in the month in which the losses or damages were incurred). f. Except in the case of our negligence or intentional misconduct, you will indemnify and hold us, our directors, officers, employees and agents (“Representatives”) harmless from all losses or damages that arise out of:
i. The performance of a Service in compliance with the Service Documentation, including any warranty we are required to make to a third party in connection with a Service, ii. An act or omission of any of your agents, couriers, or Authorized Agents, and iii. If the Service includes a license or sublicense of any software, any use or distribution of the software by you or any person gaining access to the software through you that is inconsistent with the license or sublicense.

You will promptly provide us with written proof of loss, and notify us if you become aware of any third party claim related to a Service. You will cooperate fully (and at your own expense) with us in recovering a loss. If we reimburse you, we or our designee will be subrogated to all of your rights (i.e., we will be entitled to assert any legal rights you had relating to the claim). g. Except as expressly provided otherwise in the Service Documentation, neither party nor its Representatives will be liable to the other party for:
i. Any special, consequential, incidental (including court costs and attorneys’ fees), indirect, or punitive losses or damages, or
ii. Business interruption, loss of profits, loss of business, loss of revenue, loss of goodwill, loss of opportunity, loss or injury to reputation, or loss of anticipated savings, whether any claim is based on contract or tort, or whether the likelihood of these losses or damages was known to the other party and regardless of the form of the claim or action.
h. When you send payments on behalf of your third party customers, you agree you are solely liable to your customers for any and all losses those customers may suffer. We exclude all and any liability of whatever nature (including those losses detailed in subsection g above) arising out of your relationship with your customer.

12. Governing law. The Service Documentation will be governed by: (a) U.S. federal law and (b) the law of

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(i) the U.S. state in which the office of Bank that maintains the Account is located or, if there is no such state or no account associated with such Service, (ii) the State of New York, without reference to its principles of conflicts of laws ("Governing Law").

13. Arbitration agreement. Upon demand by you or us, any dispute or claim arising out of or relating to this Agreement, or the breach thereof, must be submitted to arbitration administered by the American Arbitration Association ("AAA") under its Commercial Arbitration Rules, and must be heard before three arbitrators if the amount in dispute is US $5,000,000 or more or its equivalent in any other currency, and before one arbitrator for amounts in dispute of less than US $5,000,000 or its equivalent in any other currency. Arbitration will proceed in a location selected by AAA in the state of the applicable Governing Law, and if there is no such state, the place of arbitration must be New York, NY. The language of the arbitration must be English. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. This arbitration requirement does not limit the right of you or us to: (a) exercise self-help remedies including setoff or (b) obtain provisional or ancillary remedies such as injunctive relief or attachment, before, during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of you or us to submit any dispute to arbitration hereunder, including those arising from the exercise of the actions detailed in (a) and (b) of this section.

14. Jurisdiction. For any proceedings regarding this Agreement (not subject to arbitration as provided in this Agreement), you hereby irrevocably submit to the jurisdiction of the courts of the Borough of Manhattan, New York City, in the State of New York or the federal courts located there and irrevocably agree that all claims in relating to the proceeding may be heard or determined in those courts.

15. Miscellaneous
a. Severability. Any portion of the Service Documentation which is inconsistent with Applicable Law or Governing Law will be deemed modified and applied in a manner consistent therewith, and we will incur no liability to you as a result of the inconsistency or modification and application to any dispute regarding the Service Documentation. If any portion or provision of the Service Documentation is deemed unenforceable, it will not affect the enforceability or validity of the remaining Service Documentation nor the enforceability or validity of that portion or provision under the law of any other jurisdiction. b. Entire agreement. The Service Documentation (and any documents referred to therein):
i. Constitutes the entire agreement between you and us regarding the Services we provide for all Accounts opened with us, and
ii. Supersedes and extinguishes all prior agreements, understandings, representations and warranties of any nature (including requests for proposals and other sales material), whether oral or written, between you and us relating to any of our Services (including any other Master Agreement for Treasury Management Services, but excluding the current Commercial Account Agreement or Global Commercial Account Agreement, as applicable).
c. Electronic agreement. To facilitate execution, the Service Documentation may be executed by a party in the form of an "Electronic Record" (as defined in the Electronic Signatures in Global and National Commerce Act at 15 U.S.C. §7001 et seq. ["ESIGN Act"]). The Service Documentation may be executed in as many counterparts as may be required to reflect all parties' approval, and all counterparts will collectively constitute a single agreement. An "Electronic Signature" (as defined in the ESIGN Act) that can be authenticated will constitute an original and binding signature of a party. The fact that a document is in the form of an Electronic Record or is signed using an Electronic Signature will not, in and of itself, be grounds for invalidating such document.
d. No waiver. Neither our failure nor any delay by us in exercising any right or remedy will be deemed to be a waiver of the right or remedy. No course of dealing or waiver of any right on one occasion will constitute a modification of the Service Documentation or be a waiver of that right on a subsequent occasion.
e. Third party beneficiaries. Except as otherwise provided in the Service Documentation, no person or entity other than the parties to this Agreement will be deemed to be a third party beneficiary under the Service Documentation.

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f. Financial condition. You will provide us promptly upon our request any existing financial statements or other information pertaining to your financial condition or any previously unprepared financial statements which we may require you to prepare and/or to be audited or reviewed by independent certified public accountants acceptable to us. g. Your representations and warranties. You represent and warrant that: (i) you will not use any Service in a manner that would violate any Applicable Law by you or us; (ii) if you employ an agent in connection with its use of any Service, you represent and warrant to us that: (1) your governing body has duly authorized the agent; (2) you will exercise appropriate controls to ensure each authorized agent does not exceed the authority granted to it; and (3) you will preserve the confidentiality of the Log-On Credentials and immediately notify us if you become aware or suspect that any Log-On Credential may have been compromised. h. Use of names. You and we will not use each other’s name or refer to our relationship in any solicitation, marketing material, advertisement, news release, or other written, online or oral communication without specific prior written consent for each such use or release, except that we may use your name as a reference in service proposals if we obtain your prior written approval for such use.
i. Notices and communications. Either party may provide notice to the other party by mail, personal delivery, or electronic transmission.
i. You will notify us promptly in writing of any change in your name, Address, legal status, or any other changes relevant to the conduct of the Account or affecting your business relationship with us.
ii. The term "Address" as used in this Agreement refers to a mailing or electronic address. iii. You will use the Address where your relationship manager or other manager is located and will address any notice to the attention of the manager. iv. Each party will have a reasonable time after receipt of any notice to act on it. v. Any communication or notice to us from your agent about your use of a Service will be deemed to be a communication from you, and you authorize us to communicate with your agent about any such communication or Service.
vi. We are entitled to rely on any communication or notice from you that we believe in good faith was authorized by your authorized representative or Authorized Agent and, we will have no obligation to verify or authenticate an identity of a sender or signature on any notice or communication, except as expressly provided in the Service Documentation.

16. Survival. Sections 7, 11 - 15 will survive termination of the Services and this Agreement.

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Appendix X
Applicable Branches or Subsidiaries of Bank

1. Wells Fargo Bank, N.A. – London Branch

2. Wells Fargo Bank, N.A. – Cayman Islands Branch
Customer Name:

Signature
CITY ATTORNEY’S OFFICE

APPROVED AS TO FORM
SIGNATURE __________
DATE________________

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: January 16, 2024
Staff Report:2308-1939
TITLE
Approval of Professional Services Contract with Energy and Environmental Economics, Inc. (E3) for a Not-to-Exceed Amount of $945,286 for the Sustainability and Climate Action Plan (S/CAP) Funding Study; Amendment to Professional Services Contract with Sterling Communications, Inc. to Amend the Scope, Extend the Timeline, and Increase Total Not-to-Exceed Compensation by $75,000 (from $85,000 to $160,000); and a Budget Amendment in the Electric Fund for Acceptance of $75,000 DEED grant for S/CAP Funding Study; CEQA Status – Not a Project.

RECOMMENDATION
Staff recommends that Council:

1. Approve of Professional Services Contract Number C24188769 with E3 in an Amount Not- to-Exceed $945,286 for the S/CAP Funding Study for a Period of One (1) Year;

2. Approve an amendment to Professional Services Contract Number S23187670 with Sterling Communications, Inc. to increase the Not-to-Exceed compensation in the amount of $75,000 for a total of $160,000, to expand the scope to include other electrification initiatives, and to extend the timeline for Advanced Heat Pump Water Heater Pilot Program outreach;

3. Approve the acceptance of the American Public Power Association’s Demonstration of Energy & Efficiency Developments (DEED) grant of $75,000;

4. Amend the Fiscal Year 2024 Budget Appropriation for the Electric Fund (requires a 2/3 vote) by the following:
a. Increasing the Contract Services expense appropriation by $75,000; and b. Increasing Other Revenue by $75,000.

BACKGROUND
The City of Palo Alto (Palo Alto or City) adopted its 2022 Sustainability and Climate Action Plan in 2022 outlining the strategies needed to meet our sustainability goals, including the goal of reducing GHG emissions 80 percent below 1990 levels by 2030. The S/CAP Funding Study will assess the funding needs and explore funding sources to meet Palo Alto’s building and Item 4
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transportation electrification goals and will center around the development of an analytical model to estimate the “community cost to electrify” and to structure the financing of future electrification programs. As part of this study scope, there will be multiple sub-studies to collect inputs to the model such as gas appliance saturation, EV charging needs, and funding and financing sources/methodologies. Key outputs from the model include: the total cost, net of any benefits, of the necessary equipment and infrastructure upgrades, utility rate impacts, and bill impact to different customer groups. Results from the study will inform the development of electrification programs to meet the City’s Sustainability/Climate Action Plan (S/CAP) goals.

City staff applied for and were awarded the American Public Power Association’s Demonstration of Energy & Efficiency Developments (DEED) grant, which can provide $75,000 in funding towards completing this Funding Study.

One major electrification program is already operating, the Advanced Heat Pump Water Heater Pilot Program. This program has required significant outreach to drive program participation. The program has not yet reached its budgeted program capacity and is continuing into 2024.

ANALYSIS
This report requests approval of two S/CAP items:

1. Approval of a consulting contract to complete the City’s S/CAP Funding Study, and

2. Amendment of a contract for the Advanced Heat Pump Water Heater Pilot Program outreach to continue the program through June 2024 and include additional electrification programs.

S/CAP Funding Study Contract Approval
The City published the Request for Proposals (RFP) for the Funding Study on the City’s eProcurement platform, on August 14, 2023. The City received five responsive Proposals from Buro Happold Consulting Engineers, Arup US, Black and Veatch, Quanta Technology, and Energy and Environmental Economics (E3).

Table 1. Summary of RFP Process
RFP Name/Number Consulting Services Funding Study for Electrification Goals RFP No. 188769
Request for Proposals Issued August 14, 2023
Proposals Due September 25, 2023
Number of Firms Notified 2,848
Total Days to Respond to RFP 42
Number of Proposals Received 5
Non-responsive bidders/ Responsive
bidders 0 / 5
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RFP Name/Number Consulting Services Funding Study for Electrification Goals RFP No. 188769
Public Link to Solicitation https://procurement.opengov.com/portal/palo-alto- ca/projects/56912
Proposals Price Range $396,541 to $645,000
An evaluation committee comprised of Resource Management Division staff carefully reviewed each firm’s qualifications and submittals in response to the criteria identified in the RFP:

1. Quality and completeness of proposal

2. Quality, performance and effectiveness of the solution, goods and/or services to be provided by the Proposer

3. Proposer’s experience, including the experience of staff to be assigned to the project, the engagements of similar scope and complexity

4. Cost to the city

5. Proposer’s financial condition and stability

6. Proposer’s ability to perform the work within the time specified

7. Proposer’s prior record of performance with the City or other local, county, or state agencies

8. Proposer’s compliance with applicable laws, regulations, policies (including City policies), guidelines and orders governing prior or existing contracts performed by the proposer The City received five responses. The evaluation committee identified a preferred service provider based on the best overall score from the proposal and an interview. Based on this approach, staff recommends contracting with E3, who provided a comprehensive approach to the scope of work, demonstrated a clear understanding of Palo Alto and its needs, has extensive experience working with California utilities and governments on projects involving building and transportation electrification and financing solutions, proposed an aggressive timeline for completion with a reasonable budget and a competitive average hourly rate, and demonstrated exceptional project management experience.

The scope of work E3 proposed includes the following tasks, to be completed within a 7-month process, beginning shortly after the contract is executed, anticipated for January 2024 ($614,286):

1.Funding Source Survey - An extensive summary of all potential financing mechanisms that Palo Alto could use for funding citywide electrification, including a review of those used by other agencies to identify new potential mechanisms. The timing, structure and method of raising capital for the City’s proposed transactions are key elements to the financial plan.

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2.Building Sector Studies - A study of the single-family, multi-family, and non-residential sectors with the objective of characterizing the equipment used in the buildings, estimating the cost of electrifying that equipment, identifying cost-effective efficiency opportunities, and using this to identify least cost electrification opportunities and as an input into the calculation of the total cost of the building electrification efforts needed to achieve the City’s 80x30 goals. These studies will be used as an input to the funding model.

3.EV Charger Strategic Plan – A plan developed to provide a blueprint on alternatives for future City actions to build the necessary infrastructure to support large scale EV growth in the most cost-efficient and user-friendly way possible, and to project the community cost and funding needs related to these actions. This study will be used as an input to the funding model.

4.Funding Study - An Excel model that estimates the community cost to electrify using building and transportation electrification outputs from the Building Sector Studies and EV Charger Strategic Plan, paired with results from other parallel studies completed by the Utilities Department to analyze Palo Alto’s potential electrification needs and costs, available funding, and financing options. This model will be used by E3 in collaboration with City staff to produce a report with options for funding the S/CAP for Council consideration.

In addition, the RFP requested proposals for optional tasks that could be added to the contract at the City’s discretion. These were tasks that required skill sets and data closely tied to the S/CAP Funding Study. Staff is proposing to include the following three optional tasks in the S/CAP Funding Study contract ($250,000):

A.Electrification Grid Impacts – This additional service will enable the City, at its discretion, to have the consultant model the impacts on the City’s electric distribution system from the electrification measures analyzed in the S/CAP Funding Study. This could be useful if the City needs to validate assumptions in its grid modernization study and can help with evaluating the distribution benefit of flexible energy technologies.

B.Affordable Housing Study – This additional service enables the City to direct consulting resources used to complete the Building Sector Study for the multi-family sector to include a more in-depth study of electrifying the affordable housing complexes in Palo Alto.

C.Low Carbon Commute Strategies – This additional service enables the City direct the consultant to explore regulatory and other transportation management tools focused on employers that could drive employee adoption of low-carbon transportation generally.

There is also $81,000 included in the contract for additional services if needed to complete the base contract work or optional tasks due to factors unanticipated in the original scope.

Sterling Contract Amendment
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The City has an existing $85,000 contract in place with Sterling Communications (S23187670) that was put in place following an informal request for proposals (RFP). Staff is seeking to amend it to expand the scope, extend the timeline, and increase the maximum compensation by $75,000 to $160,000. This contract is to provide communications consulting services for program outreach related to the Advanced Heat Pump Water Heater (HPWH) Pilot Program and electrification more generally. This contract has resulted in innovations in how to the City does its program outreach by developing engaging campaign themes, improving design of the City’s program outreach materials, implementing new outreach strategies (such as audience-targeted Google advertisements with specialized landing pages), and advising on how the City can help participants through the program. Staff wishes to retain this consulting assistance through June 2024 while in parallel doing a broader RFP for S/CAP communications and outreach to begin in July 2024.

Staff had anticipated the original $85,000 to be adequate but has found during the first few months of the program that it requires more outreach than expected. Typically, professional services contracts with estimated expenditures exceeding $85,000 are solicited by formal RFP, per Palo Alto Municipal Code (PAMC) section 2.30.330 (Professional services Contracts), instead of an informal RFP, as this one was. To meet that code requirement would have required ending this contract and doing a formal RFP for a new one. However, staff determined that performing a formal RFP and allowing this contract to lapse would require stopping outreach, which would seriously impact program participation, leaving program installers unable to retain staff, leading to problems meeting demand later on when the City expands its outreach again. For those reasons staff has approved a competitive solicitation exemption, pursuant to PAMC section

2.30.360 (b)(2) and recommends amending this contract to allow work to continue through June 2024. For future work in July 2024 and beyond, staff is starting a formal RFP for marketing services for the S/CAP more broadly, including all electrification programs, not just the Advanced HPWH Pilot program.

POLICY IMPLICATIONS
The S/CAP Funding Study will contain specific policy, project, and program recommendations.

The study will aim to create a plan for staff and Council review for further actions, identifying funding and financing opportunities to enable the City to successfully implement policies and programs to encourage building and transportation electrification and achieve our sustainability goals.

FISCAL/RESOURCE IMPACT
Funding for the core elements of the S/CAP Funding Study was approved by Council as part of the FY 2024 budget. However, staff received a $75,000 grant from the American Public Power Association’s (APPA) Demonstration of Energy & Efficiency Developments (DEED) Program for Item 4
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this study. Staff recommends an increase in Contract Services appropriation of $75,000 in the FY 2024 Electric Fund operating budget, offset by an increase in Other Revenue.

The S/CAP Funding Study contract totals $945,286 and is funded as follows:
•For the base contract tasks totaling $614,286:
o$475,101 from the General Fund Office of Sustainability budget (previously approved in FY 2024 budget)
o$64,185 from the LCFS Reserve for the EV Strategic Plan o$75,000 funded by new revenue from the APPA DEED grant, which will be for the S/CAP Funding Study generally (aligns with budget appropriation action recommendation 4 in this report)
•For the optional tasks totaling $250,000:
oUp to $200,000 from existing Utilities consulting budgets for electrification grid impact studies
o$50,000 from the Electric Cap and Trade Reserve for the low carbon commute strategies study
•For the additional services of $81,000, the budget to be used is to be determined based on whether it is needed for the base contract tasks or the optional tasks.

The amendment of the Sterling Communications contract requires an additional $75,000. This will be funded by the Gas Cap and Trade Reserve. It should be noted that an additional cost of $37,000 is expected for outreach materials and online advertising associated with the program outreach strategies designed by Sterling, and these supply and material costs will be paid as incurred, also funded by the Gas Cap and Trade Reserve.

STAKEHOLDER ENGAGEMENT
The scope of this study was reviewed with the Council Ad Hoc S/CAP Committee and the S/CAP Working Group in August of this year.

The City provided the public procurement process through its eProcurement platform and notified 2,848 firms to encourage participation. In addition, nine firms were contacted directly by Procurement staff to announce availability of the Request for Proposals. Of those notified, 593 firms viewed the project and 47 firms downloaded the proposal documents.

Specific to the project, E3 will be engaging with multi-family and nonresidential building managers in order to complete on-site surveys of equipment and will be coordinating with local contractors to determine equipment and labor availability pricing, etc. in Palo Alto’s electric appliance markets. E3 will be engaging with City of Palo Alto Utilities staff regularly to ensure continued project alignment. The E3 team will also attend up to six public hearings, four meetings with the Council Ad Hoc S/CAP Committee, and two public stakeholder meetings.

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ENVIRONMENTAL REVIEW
Approval of the attached agreements described in this staff report does not meet the definition of a project under the California Environmental Quality Act (CEQA), pursuant to the California Public Resources Code Section 21065, because it is not an activity that will cause a direct physical change in the environment.

ATTACHMENTS
Attachment A: C24188769 E3 S/CAP Funding Study
Attachment B: S23187670 Sterling Communications Amendment 1 APPROVED BY:

Dean Batchelor, Director of Utilities
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CITY OF PALO ALTO CONTRACT NO. C24188769

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND ENERGY AND ENVIRONMENTAL ECONOMICS, INC.

This Agreement for Professional Services (this “Agreement”) is entered into as of the 18th day of December, 2023 (the “Effective Date”), by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and ENERGY AND ENVIRONMENTAL ECONOMICS, INC., a California corporation, located at 44 Montgomery Street, Suite 1500, San Francisco, CA 94104 (“CONSULTANT”).

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

RECITALS

A. CITY intends to award a contract (the “Project”) and desires to engage a consultant to provide a Sustainability Climate Action Plan (S/CAP) Funding Study (the “Services”, as detailed more fully in Exhibit A).

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

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

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

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

Optional On-Call Provision (This provision only applies if checked and only applies to on-call agreements.)

CITY may elect to, but is not required to, authorize on- call Services up to the maximum compensation amount set forth in Section 4 (Not to Exceed Compensation).

CONSULTANT shall provide on- call Services only by advanced, written authorization from CITY as detailed in this Section. On -call Services, if any, s hall be authorized by CITY, as needed, with a Task Order assigned and approved by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A -1 entitled “PROFESSIONAL SERVICES TASK ORDER”.

Each Task Order shall contain a specific scope of s ervices, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement.

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Compensation for on-call Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum.

To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation due to CONSULTANT for all Task Orde rs issued under this Agreement shall not exceed the amount of compensation set forth in Section 4. CONSULTANT shall only be compensated for on -call Services performed under an authorized Task Order and only up to the maximum compensation amount set forth in Section 4. Performance of and payment for any on-call Services are subject to all requirements and restrictions in this Agreement.

SECTION 2. TERM.

The term of this Agreement shall be from the date of its full execution through December 31, 2025 unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.

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

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

SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Six Hundred Fourteen Thousand Two Hundred and Eighty-Six Dollars ($614,286.00). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY.

Optional Additional Services Provision (This provision applies only if checked and a not-to-exceed compensation amount for Additional Services is allocated below under this Section 4.)

In addition to the not-to-exceed compensation specified above, CITY has set aside the not- to-exceed compensation amount of Three Hundred Thirty -One Thousand Dollars ($331,000) for the performance of Additional Services ( as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C , shall not exceed Nine Hundred and Forty -Five Thousand Two Hundred Eighty-Six Dollars ($945,286.00), as detailed in Exhibit C.

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“Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A. CITY may elect to, but is not required to, authorize Additional Services up to the maximum amount of compensation set forth for Additional S ervices in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this S ection. Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum.

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

SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the S ervices performed and the applicable charges (including, if applicable, an identification of personnel who performed the Services, hours worked, hourly rates, and reimbursable expenses), based upon Exhibit C or, as applicable, CONSULTANT’s schedule of rates set forth in Exhibit C-1. If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT’s invoices shall be subject to verification by CITY. CONSULTANT shall send all invoices to CITY’s Project Manager at the address specified in Section 13 (Project Management) below. CITY will generally process and pay invoices within thirty (30) days of receipt of an acceptable invoice.

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

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

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

SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds the CITY’s stated construction budget by ten percent (10%) or more , CONSULTANT shall make recommendations to CITY for aligning the P roject design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY.

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

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

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

SECTION 12. SUBCONTRACTING.

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

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

Willdan Energy Services
Willdan Financial Services
Rincon
Ann Cheng

CONSULTANT shall be responsible for directing the work of any subc ontractors and for any compensation due to subcontractors . CITY assumes no responsibility whatsoever concerning compensation of subcontractors. CONSULTANT shall be fully responsible to CITY for all acts and omissions of subcontractors . CONSULTANT shall ch ange or add subcontractors only with the prior written approval of the City Manager or designee.

SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Amber Mahone as the CONSULTANT’s Project Manager , Telephone: (857) 472-4212, Email: [email protected] to have supervisory responsibility for the performance, progress, and execution of the Services and represent CONSULTANT during the day- to-day performance of the Services. If circumstances cause the substitution of the CONSULTANT’s Project Manager or any other of CONSULTANT’s key personnel for any reason, the appointment of a substitute Project Manager and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s Project Manager. CONSULTANT, at CITY’ s request, shall promptly remove CONSULTANT personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Services or a threat to the safety of persons or property.

CITY’s Project Manager is Jonathan Abendschein, Utilities Department, Resource Management Division, 250 Hamilton Ave (3rd Floor), Palo Alto, CA, 94301, Telephone: 650-329-2309, Email:
[email protected]. CITY’s Project Manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate Project Manager from time to time.

SECTION 1 4. OWNERSHIP OF MATERIALS . A ll work product, including without limitation, all writings, drawings, studies, sketches, photographs, plans, reports, specifications, computations, models, recordings, data, documents, and other materials and copyright interests developed under this Agreement, in any form or media, shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work product pursuant to this Agreement are vested in CITY, and CONSULTANT hereby waives and relinquishes all claims to copyright or other intellectual property rights in favor of CITY. Neither CONSULTANT nor its subcontractors, if any, shall make any of such work product available to any individual or organization without the prior written DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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approval of the C ity Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the Scope of Services.

SECTION 15. AUDITS . CONSULTANT agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for four (4) years from the date of final payment, CONSULTANT’s records pertaining to matters covered by this Agreement, including without limitation records demonstrating compliance with the requirements of Section 10 (Independent Contractor). CONSULTANT further agrees to maintain and retain accurate books and records in accordance with generally accepted accounting principles for at least four (4) years after the expiration or earlier termination of this Agreement or the completion of any audit hereunder, whichever is later.

SECTION 16. INDEMNITY.

16.1. To the fullest extent permitted by law, CONSULTANT shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorney’s fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party.

16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Par ty from a Claim arising from the active negligence or willful misconduct of an Indemnified Party that is not contributed to by any act of, or by any omission to perform a duty imposed by law or agreement by, CONSULTANT, its officers, employees, agents or contractors under this Agreement.

16.3. The acceptance of CONSULTANT’s Services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement.

SECTION 17. WAIVERS. No waiver of a condition or nonperformance of an obligation under this Agreement is effective unless it is in writing in accordance with Section 2 9.4 of this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance. Any waiver granted shall apply solely to the specific instance expressly stated. No single or partial exercise of any right or remedy will preclude any other or further exercise of any right or remedy.

SECTION 18. INSURANCE.

18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit D, entitled “INSURANCE REQUIREMENTS”. CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies.

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

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

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

SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.

19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTA NT. If CONSULTANT fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided under this Agreement or at law, the City Manager may terminate this Agreement sooner upon written notice of termination. Upon receipt of any notice of suspension or termination , CONSULTANT will discontinue its performance of the Services on the effective date in the notice of suspension or termination.

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

19.3. In event of suspension or termination, CONSULTANT will be paid for the Services rendered and work products delivered to CITY in accordance with the Scope of Services up to the effective date in the notice of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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obligated to compensate CONSULTANT only for that portion of CONSULTANT’s S ervices provided in material conformity with this Agreement as such determination is made by the Ci ty Manager acting in the reasonable exercise of his/her discretion . The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 17, 19.2, 19.3, 19.4, 20, 25, 27, 28, 29 and 30.

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

SECTION 20. NOTICES.

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

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

With a copy to the Purchasing Manager

To CONSULTANT: Attention of the P roject Manager at the address of CONSULTANT recited on the first page of this Agreement.

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

SECTION 21. CONFLICT OF INTEREST.

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

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

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

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

SECTION 22. NONDISCRIMINATION; COMPLIANCE WITH ADA.

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

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

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

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

SECTION 24. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE .

CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) h ours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code Section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code Section 4.62.060.

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

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

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

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

This Project is not a 9204 Public Works Project.

SECTION 28. CONFIDENTIAL INFORMATION.

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

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

Notwithstanding the foregoing, CONSULTANT may disclose Confidential Information to its employees, agents and subcontractors, if any, to the extent they have a need to know in order to perform CONSULTANT’s obligations to CITY under this Agreement and for no other purpose, provided that the CONSULTANT informs them of, and requires them to follow, the confidentiality and security obligations of this Agreement.

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

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

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

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

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

SECTION 29. MISCELLANEOUS PROVISIONS.

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

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

29.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys’ fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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parties.

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

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

29.6. In the event of a conflict between the terms of this Agreement and the exhibits hereto (per Section 30) or CONSULTANT’s proposal (if any), the Agreement shall control. In the event of a conflict between the exhibits hereto and CONSULTANT’s proposal (if any), the exhibits shall control.

29.7. The provisions of all checked boxes in this Agreement shall apply to this Agreement; the provisions of any unchecked boxes shall not apply to this Agreement.

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

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

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

EXHIBIT A: SCOPE OF SERVICES
EXHIBIT A-1 PROFESSIONAL SERVICES TASK ORDER
EXHIBIT B: SCHEDULE OF PERFORMANCE
EXHIBIT C: COMPENSATION
EXHIBIT C-1: SCHEDULE OF RATES
EXHIBIT D: INSURANCE REQUIREMENTS

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

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CONTRACT NO. C24188769 SIGNATURE PAGE

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

CITY OF PALO ALTO

____________________________
City Manager

APPROVED AS TO FORM:

__________________________
City Attorney or designee

ENERGY AND ENVIRONMENTAL
ECONOMICS, INC.

Officer 1

By:_____________________________

Name:__________________________

Title:___________________________

Officer 2

By:____________________________

Name:_________________________

Title:__________________________

DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Amber Mahone
Partner
Kate Nguyen
Secretary
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EXHIBIT A

SCOPE OF SERVICES

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

CONSULTANT will provide the CITY with a robust S/CAP Funding Model that accurately assesses community-wide electrification costs and identifies optimal strategies for implementation. CONSULTANT will conduct single-family, multi-family, and nonresidential building sector studies, and will develop an EV Charger Strategic Plan to determine the CITY’S current and future potential for building and transportation electrification to be utilized as inputs to the model. This methodology ensures that the electrification initiatives align with the CITY’S 80x30 goals while minimizing financial burden on residents.

Task 1: Project Kick-Off & Project Management

Upon contract execution, the project manager will schedule a project kick-off with the CITY and CONSULTANT teams to discuss the project objective and goals, review the proposed scope of work, and to finalize the proposed project timeline. To ensure full alignment with the CITY’S objectives, CONSULTANT will also hold an internal workshop, either through a digital platform like MIRO, or in-person, as determined by the CITY. This session will identify major inputs, outputs, constraints, and specific needs for the electrification funding model. As an outcome of this workshop, CONSULTANT will provide a detailed work plan outlining the steps, timelines, and approach for the development and implementation of the funding model.

CONSULTANT project manager will meet regularly (at the CITY’S discretion, as frequently as weekly) with the CITY project manager to ensure close coordination and communication regarding the project timeline and progress. CONSULTANT will produce monthly invoices with a summary of work completed to date and Quarterly reports that include a summary of work completed to date, progress relative to the project timeline, key upcoming deadlines and areas where the project is at risk of delay. Other CONSULTANT team members will join meetings with the CITY, on an as-needed basis, to discuss the workplan and approach in detail. The CONSULTANT team will also attend up to six (6) public hearings, four (4) meetings with the Council Ad Hoc S/CAP Committee, and two (2) public stakeholder meetings, as well as a presentation and recorded webinar, as required by the DEED grant.

Deliverables:
• A final workplan will be delivered within two weeks or less of the stakeholder workshop; • The project manager will provide monthly updates on the project progress with monthly invoices.
• CONSULTANT will also produce Quarterly reports, a presentation and a recorded webinar in compliance with the DEED grant requirements

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Task 2: Funding Source Survey

CONSULTANT will conduct a survey of all potential financing mechanisms that The CITY has at their disposal for funding citywide electrification. The timing, structure and method of raising capital for the CITY’S proposed transactions are key elements to the financial plan. The team will begin this process by identifying all existing incentive, rebate, subsidy, and grant programs that are currently available at the federal, state, and regional levels, including, but not limited to, programs offered by organizations such as the U.S. EPA under the Inflation Reduction Act, including the National Clean Investment Act, BayRen, AQMD, and CA-TECH.

The list of potential financing mechanisms that will be researched includes, but is not limited to:
• Federal and U.S. EPA supported financing through the National Clean Investment Fund and other programs supported by the Inflation Reduction Act • Municipal & utility bonds
• On-bill financing
• Ratepayer incentives
• Utility ownership of assets
• Targeted gas decommissioning
• Customer loans with utility-backed guarantees
• Green bank financing
• Public-private partnerships (PPP)
• Leases
• Carbon tax and other taxes

In addition to the funding sources listed above, CONSULTANT will also investigate some schemes specifically tailored for EV charging infrastructure, such as:
• Public-private partnership for make-ready equipment
• Public-private partnership for EV charging electricity rates • Charging-as-a-Service
CONSULTANT will provide up to 2 rounds of review from the CITY and incorporate CITY feedback, to ensure the final funding source survey meets all CITY legal requirements.

Deliverables: Report summarizing all available funding sources and their requirements (Microsoft Word); Presentation summarizing all available funding sources and their requirements (Microsoft PowerPoint).

Task 3: Single-Family Sector Study

CONSULTANT will perform a study of the single-family building sector in The CITY with the following objectives:
• Characterize gas usage in single-family buildings by end use (e.g. space heating, water heating, cooking, clothes drying)
• Estimate the cost of electrification for various gas end uses and behind-the-meter electrical upgrades
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• Identify cost-effective efficiency opportunities in single-family homes • Estimate the cost of electrifying all single-family homes in the CITY net of benefits (such as the avoided cost of like for like gas end use replacement or ongoing operational savings)

Task 3.1: Scoping

CONSULTANT will meet with CITY staff and other stakeholders selected by the CITY to identify existing and potential data sources and approaches to characterize gas use and building stock structure. CONSULTANT will develop an initial workplan for the CITY staff and stakeholders, including a proposed high-level cost/benefit analysis for each approach.

CONSULTANT will incorporate stakeholder feedback and provide a final memorandum detailing the proposed study scope to gather final feedback from the CITY Council Ad Hoc S/CAP Subcommittee.

Deliverables:
• 2 one-hour meetings with CITY staff, the S/CAP modeling team, and other stakeholders selected by the CITY for Initial Strategy Scoping, Scenario Planning and approach prioritization.
• Draft and final workplan Memo.
• Presentation of work plan to the CITY Council Ad Hoc S/CAP Subcommittee.

Task 3.2: Data Collection

CONSULTANT will use any data and reports provided by the CITY and publicly available data from sources such as the Residential Appliance Saturation Survey (RASS), CEC data, and the Cost Effectiveness Explorer developed by Statewide Investor-Owned Utilities Codes and Standards Team to gain a general understanding of the various building types and ages present in the CITY. This information will be used to develop 3-4 building type categories for single family buildings. CONSULTANT will then analyze the CITY’s existing building technologies including prevalent panel capacities, drop line condition, need for additional wiring for 240V appliances, and both up-front and marginal costs associated with installation of electric alternatives for each major appliance type (HVAC, hot water, stoves, and dryers).

CONSULTANT will estimate costs for both natural gas and electric appliances for various equipment types including, but not limited to: induction and electric resistance cooktops, electric resistance and heat pump dryers, heat pump hot water heaters, heat pump HVAC units, and different EV chargers (level 1,2, and 3). CONSULTANT will estimate these costs using a variety of data sources, including, but not limited to: existing data sources from the region, its own data sets from previous work and research as necessary, and cost data collected by regional groups such as Peninsula Clean Energy and the Bay Area Air Quality Management District. In addition, CONSULTANT will conduct up to 5 contractor interviews to help inform the cost study as well as assess the workforce status in the CITY.

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CONSULTANT will develop a comprehensive cost analysis worksheet and technical appendix that will calculate and summarize the electrification costs, including panel upgrade costs, and changes in energy consumption due to electrification of single-family homes.

Deliverables:
• An electronic copy of the Draft Building Inventory and Electrification Cost Summary (in Word and PDF)
o Existing building inventory based on age of single-family building stock o Detailed residential electrification incentives
o Develop 3-4 building type categories for single family buildings in The CITY o Detailed electrification costs for residential buildings o Electrification cost estimates Technical Results Appendix, which will include detailed documentation of all data sources sufficient for CITY staff to verify all input data.
• An electronic copy of the Draft Comprehensive Cost Analysis Worksheet (in Excel)

Task 3.3: Deliver Study Report

Based on feedback from CITY staff, CONSULTANT will develop a final single-family buildings electrification cost analysis Report and comprehensive cost analysis worksheet that will summarize the analysis conducted and the costs to electrify all single-family homes in The CITY for the S/CAP Funding model.

Specifically, the report will:
• Summarize the data evaluated and information utilized in the analysis; • Characterize gas usage in single-family buildings by end use (e.g., space heating, water heating, cooking, clothes drying);
• Estimate the cost of electrification for various gas end uses and behind-the-meter electrical upgrades;
• Estimate electrification cost scenarios for 3-4 single-family home prototypes; • Identify incentives and cost-effective efficiency opportunities in single-family homes; and,
• Estimate the cost of electrifying all single-family homes in The CITY.

Additionally, the report will include the final technical appendix that includes all the supporting documents and calculations utilized to calculate the costs. As part of this task, CONSULTANT anticipates hosting two meetings with the CITY to present the analysis, provide information on the cost and benefits of compliance to the impacted building owners, and to address questions and concerns.

Deliverables:
• Electronic copies of the final cost summary workbook (in Excel) and technical appendix (word & PDF)
• Electronic copy of the final single-family buildings electrification cost analysis report (in Word and PDF)
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Task 4: Multi-Family Sector Study

CONSULTANT will perform a study of the multi-family building sector in the CITY that will:

Characterize gas usage in multi-family buildings by end use (e.g. space heating, water heating, cooking, clothes drying);
Estimate the cost of electrification for various gas end uses and behind-the-meter electrical upgrades;
Identify cost-effective efficiency opportunities in multi-family buildings; and Estimate the cost of electrifying all multi-family homes in The CITY.

Conduct additional focused outreach and study at affordable multi-family buildings in the CITY (beyond the broad multi-family sector evaluation)

Task 4.1: Scoping

CONSULTANT will work with the CITY to develop the study methodology. CONSULTANT will provide one round of review from the CITY to incorporate S/CAP committee feedback on the proposed methodology for the subsector study.

CONSULTANT will evaluate the cost to electrify a range of multi-family building types in the CITY including owner-occupied condominiums, rental apartments, mixed-use buildings, and buildings with mixed-ownership types. For purposes of evaluation, the multi-family building population will be segmented by age. Building age segments shall be established to align with years when the building energy code (Title 24) underwent significant changes in order to predict efficiency ratings of equipment installed during those periods.

CONSULTANT will characterize building systems by type, fuel source (electricity, natural gas, other fossil fuel), quantity, and capacity. The primary equipment categories will be:
• Water heating
• Heating, ventilating, air-conditioning (HVAC)
• Kitchen
• Laundry
• Swimming pool
• Plug loads
• Other systems of significance

In addition to characterization of primary system equipment, CONSULTANT will evaluate buildings for potential building efficiency improvements that can reduce overall loads such as low flow hot water fixtures, building envelope improvements, or upgrades to controls. Systems will be evaluated as to whether they are within individual residents’ units (i.e., fed by individual residents’ utility meters) or whether they serve common areas (e.g., lobbies, pools, gyms, assembly areas) and are metered at the facility level.

CONSULTANT will establish typical load profiles for each identified system type. Load profiles will be created using a combination of monthly billing data, NREL ResStock databases of end- use load profiles, CONSULTANT’s internal BE-Toolkit, and EnergyPlus/DOE-2 modeling DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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where required. Additional information will be gathered during the detailed site assessments to validate the load profiles.

Once the existing building systems are fully characterized, CONSULTANT will develop approaches for electrification by system types. These approaches will consider the feasibility and cost effectiveness of technologies that are currently available, as well as emerging technologies that are on the horizon. For each electrification approach, the anticipated additional electricity demand and gas demand reduction will be calculated on a per unit basis.

CONSULTANT will evaluate the electrical infrastructure capabilities to electrify building systems on the customer side of electric meters, as well as the capabilities for, and cost associated with upgrading the electrical service. Electrification approaches will be evaluated according to their feasibility and cost effectiveness. Systems that will be difficult to retrofit and less cost effective may include locations with restricted electrical capacity, and systems with high temperature requirements (e.g., steam heating systems).

CONSULTANT will estimate costs to convert natural gas or other fossil fuel consuming systems to all-electric equivalents. These cost estimates will include costs associated with enhancements and upgrades to electric infrastructure required to support electrification of the systems. Both total first costs, and incremental costs (above business-as-usual system replacements) will be evaluated. Costs associated with material, labor, and contractor overhead & profit will be evaluated specifically for the CITY local market. Costs will be “turn-key” and include all hard and soft costs associated with delivery of functioning decarbonized systems, including permitting and disposal of old equipment. Any tax benefits (e.g., depreciation) will not be accounted for within this sub-study. Electrification costs will be evaluated on the customer side of the meter and will be evaluated for households/landlords on a CITY-wide basis, and on an individual sample customer basis.

Task 4.2: Public Data Review

CONSULTANT will first identify available data sources for multi-family housing building stock characterization in the CITY. This citywide evaluation will be followed up with 40-45 site assessments including on-premise inspections and interviews with owners and occupants to align the characterizations based on the data review with facts from the field (see Task 4.3).

CONSULTANT will develop initial characterizations of multi-family building gas and electric equipment saturation in the CITY based on:
• Electricity and gas usage data from CITY
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• CONSULTANT’s internal BE-Toolkit
• NREL’s ResStock Tool. This tool combines large public and private data sources to model different housing stock and the energy impact of building technologies. ResStock analysis results are found in the US Building Stock Characterization Study and the End Use Load Profile dataset.

CONSULTANT will use any data and reports provided by the CITY and publicly available data from sources such as CEC data and the Cost Effectiveness Explorer developed by Statewide Investor-Owned Utilities Codes and Standards Team to gain a general understanding of the various building types and ages present in the CITY. This information will be used to develop multiple building type categories for multi-family buildings.

Deliverables:
• An electronic copy of the Draft Multi-family Building Inventory and Equipment Saturation analysis (Public Data-Based) (in PDF)
o Analysis of multi-family buildings by age
o Analysis of multi-family buildings by type (e.g., condominiums, rental apartments)
o Analysis of multi-family buildings by affordability level (e.g., market based, affordable)
o Analysis of penetration of gas and electric equipment based on public data review.

Task 4.3: Identify Multi-Family Properties for Detailed Site Assessment

CONSULTANT will use a stratified sampling method to determine the appropriate number of sites where detailed on-site surveys will be conducted. Surveys will be conducted by CONSULTANT teams, and involve onsite equipment inspections and face-to-face interviews with site staff and residents. Sites will be stratified based on building vintage, type of dwelling unit (e.g., apartments, condominiums, townhomes), and affordability level. Specific sites to undergo detailed surveys will be randomly selected. The group of sites targeted for detailed surveys will need to be larger than the number determined to be statistically significant, because it is expected that some site owners/managers will be unable or unwilling to coordinate with the survey team, or otherwise non-responsive.

CONSULTANT will work with the CITY to finalize a list of targeted multi-family properties that is appropriate, and fits within the project budget. CONSULTANT and CITY to establish an approximate number of sites to target as part of Task 4.1 under the work plan.

Task 4.3.1: Affordable Multi-Family Property Focused Detailed Site Assessment

In addition to the randomly selected sites, CONSULTANT will perform additional site surveys at specific affordable housing sites as directed and agreed upon with the CITY. Focus on these sites will ensure that affordable sites are properly characterized, and that funding approaches specific to the affordable site market are developed.

Deliverables:

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• List of multi-family properties to target for detailed site assessments. • List of affordable multi-family properties to target for focused, detailed site assessments.

Task 4.4: Develop Survey Tool

CONSULTANT will develop a Geographic Information System (GIS)-based survey tool specific to this Study. The survey tool will include the following data collection capabilities:
• Building level information: address, type and vintage, square footage, annual gas and electricity consumption (EUI calculated), building representative contact information, leasing structure(s) including who pays for utilities, master electric service voltage, capacity, and location. Potential for efficiency retrofits such as improved insulation, windows, and/or low-flow water fixtures.
• Building system level information: location within building, type and vintage, capacity and efficiency, estimated average load factor, hours of operation, nearest electrical panel or subpanel and its capacity (both in total Amperage and spare breaker spaces), Voltage, and ability to be expanded if required. For potential heat pump retrofits, ability to install condensate drain line at installation location and added ventilation for small interior spaces. Indicate new location for replacement equipment if applicable. • EV charging information: location, type, and capacity of existing EV chargers. Modes of operation (payment options, charge time management systems). Indicate any plans or desires to increase EV charging capabilities at site and potential locations. Indicate suitable electrical infrastructure to feed new chargers or ability to expand electrical infrastructure for this purpose.

Deliverables:
• Draft Survey Tool schematic summary
o Showing data fields to be collected, and general organization of data. • Presentation of Survey Tool v1.0 functionality and capabilities.

Task 4.5: Conduct Survey

CONSULTANT will perform initial outreach to the selected multifamily sites to coordinate on- site evaluations. Contact information will be initially obtained from customer-of-record data from CITY’s utility billing systems, and any additional customer contact information the CITY may have based on past program participation.

Where the CITY’s customer-of-record and past program participation data is lacking, CONSULTANT will pursue other methods of finding appropriate outreach contacts. These methods may include the use of multi-family-specific data services (e.g., ALN Apartment Data), use of basic online search tools, and/or door-to-door, in person outreach.

Surveys will be conducted by CONSULTANT teams, and involve on-site equipment inspections and face-to-face interviews with site staff and residents. Equipment inspections will be visual in nature and supported by photos and video to support data collection, in conjunction with utilization of the Survey Tool.

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CONSULTANT teams will spend one to multiple hours at each site collecting data, depending on the size of the building and complexity of the systems. Detailed site visits to multi-family buildings will consist of surveys of both common areas and systems and in-unit areas and systems. In-unit areas will be surveyed using a sampling approach such that the range of unit types are characterized.

At the end of each detailed site survey, CONSULTANT will download and organize the Survey Tool files and site photos and video to CONSULTANT servers for long-term storage and later analysis.

Deliverables:
• Bi-weekly or monthly summary reporting of outreach communications and detailed site surveys completed.
• Completed site surveys, including photos, videos, and building data.

Task 4.5.1: Conduct Affordable Multi-Family Focused Survey

In addition to surveys of the broad multi-family building sector, CONSULTANT will conduct additional surveys specifically targeting affordable multi-family housing. Other than specific targeting, the approach will be the same as used for the broad multi-family sector. Outreach is anticipated to be more direct since operators of affordable housing sites in the CITY are publicly known as is their contact information.

Deliverables:
• Bi-weekly or monthly summary reporting of outreach communications and detailed site surveys completed.
• Completed site surveys, including photos, videos, and building data.

Task 4.6: Research Electric Alternatives to Gas Equipment

For each type of gas or other fossil-fuel consuming system evaluated CONSULTANT will develop suitable electrification and EV charging measures. The cost and the scope of the replacement for individual site types will vary based on the presence or lack of adequate electric infrastructure to support the added electrified load, and the ease or complexity of increasing that capacity if required. Detailed costs for the electrification and EV charging measures will be obtained from two sources. One source is the cloud-based construction cost estimating tool “ProEst”. The second source of cost data will be from licensed contractors (mechanical, electrical, and plumbing) that work with CONSULTANT locally in the area.

Deliverables:
• An electronic copy of the Draft Comprehensive Multi-family Approach and Cost Analysis Worksheet (in Excel)

Task 4.7: Deliver Study Report

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site surveys and electrification cost research, and estimated costs of electrification for all multifamily buildings in the city.

Specifically, the report will:
• Summarize the data evaluated and information utilized in the analysis; • Characterize gas usage in multi-family buildings by end-use; • Estimate the cost of electrification for various gas end uses and behind-the-meter electrical upgrades;
• Estimate electrification cost scenarios for multiple multi-family building prototypes; • Estimate the cost of electrifying all multi-family buildings in The CITY.

Additionally, the report will include the final technical appendix that includes the supporting documents and calculations utilized to perform the analysis, which will include detailed documentation of all data sources sufficient for CITY staff to verify all input data. As part of this task, CONSULTANT anticipates hosting two meetings with the CITY to present the analysis, provide information on the cost and benefits of compliance to the impacted building owners, and to address questions and concerns.

Deliverables:
• Draft Report for review in PDF or Word format
• Final Report incorporating reviewers’ comments in PDF format.

Task 5: Nonresidential Sector Study

CONSULTANT will characterize the non-residential building sector in the city including:
• Gas usage in nonresidential buildings with different occupancy types (e.g. office, retail, K-12 schools, assembly, etc.)
• Estimated cost of electrification for gas end uses and behind-the-meter electrical upgrades in both small/medium and large nonresidential buildings • Cost-effective efficiency opportunities
• Estimated total cost of electrification in nonresidential buildings in Palo Alto

Task 5.1: Scoping

CONSULTANT will work with the CITY to develop the study methodology to evaluate owner- occupied and leased nonresidential buildings. CONSULTANT will provide one round of review from the CITY to incorporate S/CAP committee feedback on the proposed methodology for the subsector study.

CONSULTANT will evaluate the cost to electrify a range of nonresidential building types in Palo Alto. The building population will be segmented by age. Building age segments shall be established to align with years when building energy code (Title 24) underwent significant changes, as that will predict efficiency ratings of equipment installed during those periods.

Building systems will be characterized by type, fuel source (electricity, natural gas, other fossil fuel), quantity, and capacity. The primary equipment categories will be:
• water heating
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• heating, ventilating, air-conditioning (HVAC)
• kitchen
• laundry
• swimming pool (hotels, gyms, etc.)
• plug loads
• other systems of significance
In addition to characterization of primary system equipment, buildings will be evaluated for potential building efficiency improvements that can reduce overall loads such as low flow hot water fixtures, building envelope improvements, or upgrades to controls. Systems will be evaluated as to whether they are metered at the site level or fed by individual tenant meters for leased spaces. CONSULTANT will establish typical load profiles for each identified system type. Load profiles will be created using a combination of monthly billing data, NREL ComStock databases of end-use load profiles, CONSULTANT’s proprietary BE-Toolkit, and EnergyPlus/DOE-2 modeling where required. Additional information will be gathered during the detailed site assessments to validate the load profiles.

The electrical infrastructure capabilities to electrify building systems will be evaluated on the customer side of electric meters, as well as the capabilities for, and cost associated with increasing this infrastructure capacity.

Electrification approaches will be evaluated according to their feasibility and cost effectiveness.

Systems that will be difficult to retrofit and less cost effective may include locations with restricted electrical capacity, and systems with high temperature requirements (e.g., steam heating systems).

CONSULTANT will estimate costs to convert natural gas or other fossil fuel consuming systems to all-electric equivalents. These cost estimates will include costs associated with enhancements and upgrades to electric infrastructure required to support electrification of the systems. Both total first costs, and incremental costs (above business-as-usual system replacements) will be evaluated. Costs associated with material, labor, and contractor overhead & profit will be evaluated specifically for the CITY’s local market. Costs will be “turn-key” and include all hard and soft costs associated with delivery of functioning decarbonized systems, including permitting and disposal of old equipment. Any tax benefits will not be accounted for (e.g., depreciation) within this sub-study.

Electrification costs will be evaluated on the customer side of the meter and will be evaluated on a citywide basis, and on an individual sample customer basis.

Deliverables:

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• 2 one-hour meetings with CITY staff, the S/CAP modeling team, and other stakeholders selected by the CITY for Initial Strategy Scoping, Scenario Planning and approach prioritization.
• Draft and final workplan Memo.
• Presentation of work plan to the CITY Council Ad Hoc S/CAP Subcommittee.

Task 5.2: Public Data Review

CONSULTANT will evaluate non-residential buildings at the CITY-wide level using all available data sources. This CITY-wide evaluation will be followed up with no more than 40-45 detailed site assessments including on-premise inspections and interviews with owners and occupants. Information gathered during the detailed site assessments will be used to confirm and refine the results of CITY-wide analysis and assumptions used therein.

CONSULTANT will use the following resources to provide initial estimates of non-residential building gas and electric equipment saturation:
• Electricity and gas usage data from CITY
• CONSULTANT’s internal BE-Toolkit
• NREL’s ComStock Tool. This tool combines large public and private data sources to model different building stock and the energy impact of building technologies. ComStock analysis results are found in the US Building Stock Characterization Study and the End Use Load Profile dataset
CONSULTANT will use any data and reports provided by the CITY and publicly available data from sources such as CEC data and the Cost Effectiveness Explorer developed by Statewide Investor-Owned Utilities Codes and Standards Team to gain a general understanding of the various building types and ages present in the CITY. This information will be used to develop multiple building type categories for nonresidential buildings.

Deliverables:
• An electronic copy of the Draft Nonresidential Building Inventory and Equipment Saturation analysis (Public Data-Based) (in PDF)
o Analysis of nonresidential buildings by age
o Analysis of nonresidential buildings by type (optimal typologies to be determined)
o Analysis of penetration of gas and electric equipment based on public data review.

Task 5.3: Identify Nonresidential Properties for Detailed Site Assessment

The Non-Residential Sector Study will include detailed site assessments for a sample of buildings. CONSULTANT will use a stratified sampling method to determine the appropriate number of sites where detailed on-site surveys will be conducted. Surveys will be conducted by CONSULTANT teams, and involve onsite equipment inspections and face-to-face interviews with site staff and tenants where applicable. Sites will be stratified based on building vintage, and type of non-residential building. Specific sites to undergo detailed surveys will be randomly selected.

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The group of sites targeted for detailed surveys will need to be larger than the number determined to be statistically significant, because it is expected that some site owners/managers will be unable or unwilling to coordinate with the survey team, or otherwise non-responsive.

CONSULTANT will work with the CITY to finalize a list of targeted nonresidential properties that is appropriate, and fits within the project budget. CONSULTANT and CITY to establish an approximate number of sites to target as part of Task 5.1 under the work plan.

Deliverables:
• List of nonresidential properties to target for detailed site assessments.

Task 5.4: Develop Survey Tool

CONSULTANT will develop a Geographic Information System (GIS)-based survey tool adapted for this Study. The survey tool will include the following data collection capabilities:
• Building level information: address, type and vintage, square footage, annual gas and electricity consumption (EUI calculated), building representative contact information, leasing structure(s) including who pays for utilities, master electric service voltage, capacity, and location. Potential for efficiency retrofits such as improved insulation, windows, and/or low-flow water fixtures.
• Building system level information: location within building, type and vintage, capacity and efficiency, estimated average load factor, hours of operation, nearest electrical panel or subpanel and its capacity (both in total Amperage and spare breaker spaces), Voltage, and ability to be expanded if required. For potential heat pump retrofits, ability to install condensate drain line at installation location and added ventilation for small interior spaces. Indicate new location for replacement equipment if applicable. • EV charging information: location, type, and capacity of existing EV chargers. Modes of operation (payment options, charge time management systems). Indicate any plans or desires to increase EV charging capabilities at site and potential locations. Indicate suitable electrical infrastructure to feed new chargers or ability to expand electrical infrastructure for this purpose.

Deliverables:
• Draft Survey Tool schematic summary
o Showing data fields to be collected, and general organization of data. • Presentation of Survey Tool v1.0 functionality and capabilities.

Task 5.5: Conduct Survey
CONSULTANT will perform initial outreach to the selected non-residential sites to coordinate on-site evaluations. Contact information will be primarily obtained from customer-of-record data from CITY’s utility billing systems, and any additional customer contact information the CITY may have based on past program participation.

Where the CITY’s customer-of-record and past program participation data is lacking, CONSULTANT will pursue other methods of finding appropriate outreach contacts. These methods may include the use of nonresidential-specific data services (e.g., RocketReach, DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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ZoomInfo, Seamless.AI), use of basic online search tools, and/or door-to-door, in person outreach.

Surveys will be conducted by CONSULTANT teams, and involve on-site equipment inspections and face-to-face interviews with site staff and tenants where applicable. Equipment inspections will be visual in nature and supported by photos and video to support data collection, in conjunction with utilization of the Survey Tool.

CONSULTANT teams will spend one to multiple hours at each site collecting data, depending on the size of the building and complexity of the systems.

At the end of each detailed site survey, CONSULTANT will download and organize the Survey Tool files and site photos and video to CONSULTANT servers for long-term storage and later analysis.

Deliverables:
• Bi-weekly or monthly summary reporting of outreach communications and detailed site surveys completed.
• Completed site surveys, including photos, videos, and building data.

Task 5.6: Research Electric Alternatives to Gas Equipment

Deliverables:
• An electronic copy of the Draft Comprehensive Multi-family Approach and Cost Analysis Worksheet (in Excel)
Task 5.7: Deliver Study Report
After the non-residential building sector study activities are complete, a Report will be delivered.

The Report will include the results from the nonresidential site surveys and electrification cost research, and estimate costs of electrification for all nonresidential buildings in the CITY.

Specifically, the report will:
• Summarize the data evaluated and information utilized in the analysis; • Characterize gas usage in nonresidential buildings by end-use; • Estimate the cost of electrification for various gas end uses and behind-the-meter electrical upgrades;
• Estimate electrification cost scenarios for multiple nonresidential building prototypes; • Estimate the cost of electrifying all nonresidential buildings in the CITY.Palo Alto DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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Additionally, the report will include the final technical appendix that includes the supporting documents and calculations utilized to perform the analysis. As part of this task, CONSULTANT anticipates hosting two meetings with the CITY to present the analysis, provide information on the cost and benefits of compliance to the impacted building owners, and to address questions and concerns.

Deliverables:
• Draft Report for review in Word format
• Final Report incorporating reviewers’ comments in PDF format.

Task 6: EV Charger Strategic Plan

CONSULTANT will develop an EV Charger Strategic Plan that can serve as a roadmap to guide CITY actions on building the necessary infrastructure to support large-scale EV growth and estimate its associated costs and funding needs. This plan will include outputs to inform various aspects of the S/CAP Funding Study, including:
• The number and power level of chargers needed by location type and use case • The cost of the EV chargers and the distribution grid upgrades needed to power them • The grants, rebates, and incentives available to defray those costs • The balance of the funding needed to build and maintain this infrastructure, under different business models.

This plan will account for such variables as:
• The amount of private vs public charging (and possible public-private partnerships, such as publicly-facilitated charging in shopping centers for employees and visitors that can also be used overnight by nearby residents)
• The mix of L1 charging, L2 charging, and DCFC
• The location of the chargers (e.g., on-street light pole chargers vs. on-site post-mounted vs. on-site wall-mounted)
• Rate structures available
• Consumer end costs of EV charging if different than rates Informed by the analyses conducted for this plan, CONSULTANT will recommend strategies to facilitate the installation and financing of EV chargers and their supporting infrastructure that is consistent with The CITY’s environmental and equity goals.

Task 6.1: Scoping

CONSULTANT will work with CITY staff to refine the approach to the EV Charger Strategic Plan as proposed in the sections below. CONSULTANT will provide one round of review from the CITY to incorporate S/CAP committee feedback on the proposed methodology for the subsector study.

In the memo that CONSULTANT will provide on this approach, CONSULTANT will identify the publicly-available data and the CITY studies that CONSULTANT will review, and describe its methodology to forecast EV adoption under three different scenarios using an Excel-based DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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model. CONSULTANT will then describe its methodology for estimating the number of charging stations needed to support these three different levels of EV adoption in the model, and how CONSULTANT assesses EV charging loads through incorporation of EV load shapes into the model. Lastly, CONSULTANT will propose the business models by vehicle segment that CONSULTANT will analyze, and describe how they will be incorporated into the model. For each element of the model, CONSULTANT will identify the key inputs, outputs, and assumptions used.

Deliverables: Memo of the scope of work for the EV Charger Strategic Plan.

Task 6.2: Public Data Review

CONSULTANT will work with CITY staff to finalize the list of existing public data sources and the CITY studies to be reviewed. To identify current registered light-, medium- and heavy-duty vehicles by fuel type and other characteristics such as transportation segment, CONSULTANT will review DMV and CEC data on zero emission vehicles and infrastructure. CONSULTANT will also use utility and industry data sources including, but not limited to Calstart’s MHD EV Dataset to identify fleet vehicles fueled within the CITY and that operate within the CITY but may be fueled elsewhere, and will follow up with individual fleets including, but not limited to DHL and GreenWaste to confirm fleet portfolio and location. CONSULTANT will use, at a minimum, CEC, ChargePoint, PlugShare, and Atlas EV Hub to identify current EV charger installations by customer/transportation segments.

Regarding prior CITY studies, CONSULTANT’s review will include the 2022 Sustainability/Climate Action Plan and associated documents, the 2020 Electric Vehicle Charger Needs Assessment, the 2020 Electrification Impact Study, the EV updates in the Utilities Quarterly Reports, The CITY EV Charger Program documents, The CITY EV Scale Project, as well as relevant information available through the Affordability Study and Grid Modernization Study.

Deliverables: List of public and CITY data sources, summary of vehicles currently registered in the CITY, by vehicle type and location type to determine EV charger installation base in the CITY, and documentation of the data sources for the summary to a level sufficient for CITY staff to verify or replicate.

Task 6.3: Develop EV Penetration Model

CONSULTANT will develop an Excel spreadsheet model, which will start with the EV penetration scenarios in this task and be expanded upon in the later tasks to create a comprehensive model supporting the EV Charger Strategic Plan. For the EV penetration analysis, CONSULTANT will use the EV adoption scenarios developed as part of the economy- wide PATHWAYS decarbonization scenarios used for the California Air Resources Board (CARB)’s 2022 Scoping Plan. These EV adoption scenarios will be downscaled to represent the CITY and benchmarked against historic EV adoption trends in the CITY. CONSULTANT will also take into account e-bike adoption as incented through CITY programs and their impact on ICE and EV VMT and by extension GHG emissions. CONSULTANT will include a baseline growth scenario that reflects current policy, as well as a more aggressive adoption scenario that represents the CITY’S 80x30 goals. Finally, CONSULTANT will also create a mid-scenario between these two levels.

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Deliverables: Spreadsheet model showing EV penetration scenarios and associated assumption.

Task 6.4: Project EV Charger Needs and Associated Costs

CONSULTANT will build on the spreadsheet model in the above task by adding in EV charger needs for each adoption scenario and associated costs. CONSULTANT will include detailed assumptions from industry resources, such as NREL’s EVi Pro Lite model or the California Energy Commission’s AB 2127 report, as model inputs to calculate the number of charging stations needed to support different levels of EV adoption. CONSULTANT will research costs for EV chargers, including costs for the electric vehicle supply equipment (“EVSE” or charger) and the make-ready infrastructure from the customer’s meter to the EVSE. Data sources will include data published by the investor-owned utilities through their EV charging infrastructure program reports or other public sources.

The model will be built so that each user can select the relevant scenario parameters and inputs and easily view the associated outputs. For example, CONSULTANT will make the EV adoption scenario from the prior task a user-selection in the model so that the spreadsheet model will show associated charger needs and costs for each scenario.

Deliverables: EV charger needs incorporated into EV penetration spreadsheet model.

Task 6.5: Develop Business Models by Vehicle Segment

CONSULTANT will add business model selection for EV charging services as an additional user-selection input in the spreadsheet model. CONSULTANT will research potential business models, which may include:
• Private investment only: Here, the CITY would not provide any incentives or pay for any portion of the costs of providing EV charging
• Public investment only: The CITY would pay for all EV charging costs, through the CITY or its contractors
• Public-private partnership for make-ready equipment: Similar to some of the make-ready programs implemented by California’s investor-owned utilities, the CITY would pay for the make-ready equipment at different types of EV charging sites, such as multi-family housing, public locations, or fleet charging sites
• Public-private partnership for electricity rates: The CITY would offer discounted electricity rates or demand charge modifiers to EV charging sites • Charging-as-a-Service: The CITY would pay for the upfront costs of the EV chargers and their installation, and bill customers monthly for it until paid off • Others: CONSULTANT will discuss other business models for consideration with the CITY
CONSULTANT will add these business models into the spreadsheet model. CONSULTANT plans to make the spreadsheet model as flexible as possible so that the CITY can consider different business models for different sectors (such as one approach for public charging and a different approach for multi-family charging), since different uses cases will need different levels of support and investment from the CITY.

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The model will use the business model selections to conduct a cash flow analysis and show the upfront and ongoing costs to the CITY, users, and the private sector. The analysis can be incorporated into the S/CAP Funding Model.

Deliverables: Recommend business model options and preliminary financing cashflow analysis/model that will be incorporated into the S/CAP Funding Model.

Task 6.6: Assess the EV Charging Loads

Because the business model cash flow analysis may rely on hourly EV charging load shapes to inform ongoing EV charging costs and recovery via utility rates, CONSULTANT expects to complete this task concurrently with Funding Model development. CONSULTANT will leverage EV charging load shapes that CONSULTANT has produced for similar projects in California for residential, workplace, public level 2, and public DCFC. CONSULTANT will input these load shapes into the spreadsheet model to calculate EV charging costs and the impact of special/discounted electricity rates as part of the business model assessment. CONSULTANT will also model both managed and unmanaged EV load shapes to show how managed charging would impact EV fueling costs (e.g., to show if costs are lower when vehicles charge off-peak when rates are lower vs on-peak when rates are higher). These load shapes and total capacity and energy will be used to inform the S/CAP Funding model.

Deliverables: Completed spreadsheet model. Results of Tasks 4-6 would be provided in an integrated fashion and will serve as input to the S/CAP Funding Model.

Task 6.6: Deliver Study Report

CONSULTANT will create a comprehensive report for the EV Charger Strategic Plan that covers the plan’s framework, details the model’s key inputs, assumptions, and outputs, and frames the model’s results and key findings regarding EV charging in the CITY in the context of the scenarios and business models studied. Additionally, CONSULTANT will create an abridged version of the report for presentation to the public. CONSULTANT will prepare draft versions of these reports and provide two weeks for CITY staff review, after which CONSULTANT will prepare final versions of the comprehensive and abridged reports.

Deliverables: Draft and final study reports, and presentation of study results to internal and external stakeholders.

Task 7: S/CAP Funding Model Development

CONSULTANT will develop an S/CAP electrification Funding Model in Excel. The tool will use as inputs results from the Building Sector Studies, EV Charger Strategic Plan, Funding Sources Survey, and Affordability and Grid Modernization & Gas Transition Studies, creating a cohesive modeling framework that estimates the community cost to electrify for the CITY under a range of funding and policy scenarios.

Task 7.1: Develop Detailed Model Framework and Formulate Data Request

CONSULTANT will prepare a detailed model outline for CITY and stakeholder approval.

CONSULTANT will present its proposed approach to the CITY and stakeholders and incorporate comments and feedback prior to beginning development on the S/CAP Funding Model.

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CONSULTANT will prepare a data request to solicit supplementary datasets or information from the CITY that is not an output of previous tasks or input study components. These may include rate forecasts, customer electric and gas consumption data and bills, etc.

Deliverables: Model design and outline memo (Microsoft Word) and presentation (Microsoft PowerPoint); Data request template (Microsoft Excel).

Task 7.2: Develop S/CAP Funding Spreadsheet Model

CONSULTANT will develop a spreadsheet model to estimate the Total Community Cost to Electrify for the CITY. The model will be used to test a range of alternative funding scenarios and quantify the relationships between utility revenues, funding and incentive programs, and customer bills in order to guide the CITY in the achievement of its electrification goals. The model will support future updates to inputs and assumptions.

The S/CAP funding model will be structured around representative customer types as the basis for understanding how levels of building and transportation electrification translate to upfront costs and lifetime bill impacts for electric and gas customers in the CITY. A key component of this analysis will be quantifying the amount of “missing money”, defined as the net of lifetime benefits and levelized lifetime costs, required for electrification to pencil out across representative customer types and income groups. To estimate the Total Community Cost to Electrify, costs for each representative customer typology must be scaled up across the CITY’S customer base. To complete this aggregation, a representative customer typology will be mapped to each household and building across the CITY, using data from the building characterization completed in the sub-sector studies. Potential representative customer typologies may include, but not be limited to:
• Single family homeowners
o Pre-1980 and post-1980 building vintage
o Customers with and without AC
o Low, moderate, and high income customers
• Multifamily property owners & tenants
o Pre-1980 and post-1980 building vintage
o Customers with and without AC
o Low, moderate, and high income customers
• Commercial building owners
o 2-3 commercial building sub-sector typologies
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The model, as illustrated in the figure above, will enable the user to select different combinations and levels of funding streams and observe the impacts on customer economics and utility cash flows, which will serve as the basis for proposed business models and program design. This flexibility will allow scenarios to be developed that target available funding sources to different customer groups and evaluate the relative impact of alternative funding strategies on the utility.

Overall scenario results will be evaluated for customers using a Participant Cost Test (PCT) framework and for the utility using a Ratepayer Impact Measure (RIM) framework.

Key quantitative metrics, modeled on an annual basis, may include:
• Total Community Cost to Electrify, broken out by sector and for disadvantaged communities where applicable:
o Total funding required
o Available funding from local, state, and federal programs o Remaining funding gap that must be addressed ("missing money") o Distribution of funding needs across customer types by income status • Utility rate impacts for the gas and electric systems • Customer count and sales, for example number of customers electrified by end use and number of heat pump units sold
• Customer usage and bill impacts for representative electric and gas customer types • Greenhouse Gas Emissions, including emissions reduction progress toward “80x30” S/CAP target
Additional qualitative metrics may include:
• Equity impacts of each proposed funding approach, including low- and moderate-income customers
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• Customer practicality considerations, such as up-front costs of electrification and demand-side measures
• Reliability and resilience implications of proposed S/CAP strategies Deliverables: Electrification funding spreadsheet model (Microsoft Excel).

Task 7.3: Funding Scenarios Analysis

CONSULTANT will work with the CITY to develop scenarios to achieve the CITY’S "80 x 30" greenhouse gas reduction target. CONSULTANT will provide up to 2 rounds of review from the CITY and incorporating CITY feedback, to ensure the final scenarios meet all CITY legal requirements and present the desired range of policy options.

CONSULTANT will work with the CITY to ensure alignment around strategies that may target electrification in specific sectors or customer classes, and to consider different combinations of available funding streams. CONSULTANT will develop a counterfactual scenario that accurately captures the anticipated pipeline of upcoming electrification mandates and zero- emissions standards that will impact this analysis.

Each core scenario will be evaluated using the quantitative and qualitative metrics above. Key levers to be pulled for the scenario analysis may include, but not be limited to:
• Appliance saturation. Ability to select from various appliance electrification rates by sector and end use, drawn from the relevant multi-sector studies • Rate forecasts. Ability to select from a menu of plausible electric and gas rate forecasts • Available funding streams. Ability to include or exclude available local, state, or federal funding sources
• Utility incentives. Ability to define varying levels of utility support for electrification or efficiency programs

CONSULTANT will use the results of the analysis, together with feedback from the CITY and stakeholders, to develop a recommended portfolio of alternative strategies to develop and fund electrification programs that achieve the CITY’S S/CAP goals and maximizes benefits from a community cost perspective.

CONSULTANT will use results from the scenario analysis and cash flow modeling to develop a list of proposed business models for representative customer types in the CITY.

Deliverables: Scenario results excel workbook (Microsoft Excel); Scenario results presentation (PowerPoint); Recommended funding and financing approaches.

Task 7.4: Model Documentation and Handoff

CONSULTANT will develop a comprehensive model user guide that describes model features, lays out procedures for updating model inputs and developing new scenarios, and provides documentation for core inputs and assumptions used to develop scenarios for analysis.

Deliverables: Documentation and user guide (Microsoft Word).

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Task 8: Draft and Final Report

CONSULTANT will summarize the results of the analysis and study in a draft report for review by the CITY. This report will include a summary of the methodology and approach, along with all findings from the funding source survey, building and EV sub-sector studies, and funding model scenario analysis. Study results and conclusions in the report will include optimal pathways to help close the funding gap for CITY-wide electrification, and concrete recommendations on electrification programs, incentives, and rebates for different customer segments. CONSULTANT will prepare a final report, incorporating up to two (2) rounds of feedback from the CITY on the draft report. The final report will include an appendix with all supporting data and survey results. CONSULTANT will also attend a meeting with key CITY stakeholders to present a summary of key findings and recommendations from the study.

Deliverables: Draft report and final report summarizing study conclusions and recommendations that is in compliance with the DEED grant requirements
2 (Microsoft Word); Presentation
summarizing study conclusions and recommendations (Microsoft PowerPoint).

Task 9: EV & Building Electrification Grid Impact Modeling

CONSULTANT shall provide Task-Order-based consulting to the CITY's Electric Utility on the electric distribution system impacts of vehicle and building electrification using projections and analysis developed as part of the S/CAP Funding Study, including the benefits and impacts of managed load on the distribution system and utility and customer costs. The City is currently upgrading and modernizing its electric distribution system to accommodate the increased electric loads associated with vehicle and building electrification and may require assistance from CONSULTANT in providing advisory services and analysis related to its grid modernization plans, such as use of CONSULTANT's Forecasting Anywhere tool to estimate the geographic location of new electrification loads in such a way that can be mapped onto the CITY’s assets for grid impacts assessment. Additional adoption trajectories for building electrification would need to be developed to support this analysis and could further support a more detailed analysis in Task 7.3. Adoption trajectories could be combined with E3’s load shaping tools to provide annual 8760 hourly load forecasts for a range of EV types and building end-uses. These adoption trajectories and load forecasts could then be geospatially allocated and overlayed with relevant geospatial layers to assess the impacts of adoption and load within the CITY’s territory.

Deliverables: Deliverables may include items such as: building electrification adoption trajectories; 8760 load forecasts by agent type for each year; results of geospatial downscaling including summary reports, maps, visualizations, and data tables; grid impacts assessment, and headroom and upgrade assessment, as specified on the applicable Task Order (in form of Exhibit A-1 of the Professional Services Agreement) All reports and written material must be provided to and approved by CITY staff.

Task 10: Survey of Potential Transportation Demand Management Strategies

CONSULTANT shall provide as-needed Task-Order based consulting to the CITY on transportation demand management strategies. The CITY has existing transportation demand management regulations in place and a transportation management association to help employers reduce commute trips. The CITY is exploring ways to increase its impact on employee commute

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trips and to expand its efforts to help electrify those employee commute trips that remain. The CITY may require assistance from CONSULTANT in providing advisory services, research, and analysis on these topics.

Deliverables: Consultant’s deliverables will be determined on a task -by -task basis.

Deliverables may include analysis and results, one-time written reports, periodic written reports and updates, oral presentations, recommendations and analysis, as specified more clearly on the applicable Task Order (in form of Exhibit A-1 of the Professional Services Agreement). All reports and written material must be provided to and approved by CITY staff.

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EXHIBIT A-1

PROFESSIONAL SERVICES TASK ORDER

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

CONTRACT NO.

OR PURCHASE ORDER REQUISITION NO. ( AS APPLICABLE)

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

2. CONSULTANT NAME:

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

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

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

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:

SERVICES AND DELIVERABLES TO BE PROVIDED

SCHEDULE OF PERFORMANCE
MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): _____________________________

I hereby authorize the performance of the
work described in this Task Order.

APPROVED:

CITY OF PALO ALTO

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

I hereby acknowledge receipt and acceptance of this
Task Order and warrant that I have authority to
sign on behalf of Consultant.

APPROVED:

COMPANY NAME: ______________________

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

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EXHIBIT B

SCHEDULE OF PERFORMANCE

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

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

1. Project Kickoff 1 week

2. Funding Source Survey 10 weeks

3. Single Family Sector Study 11 weeks

4. Multi Family Sector Study 17 weeks

5. Nonresidential Sector Study 17 weeks

6. EV Charger Strategic Plan 19 weeks

7. Funding Model 22 weeks

8. Final Report 26 weeks

9. EV and Building Electrification Grid
Impact Modeling
Per Task Order

10. Survey of Potential Transportation
Demand Management Strategies
Per Task Order

Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on- call agreements per Section 1 or agreements with Additional Services per Section 4.)

The schedule of performance shall be as provided in the approved Task Order, as detailed in Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case of Additional Services, provided in all cases that the schedule of performance shall fall within the term as provided in Section 2 (Term) of this Agreement.

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EXHIBIT C

COMPENSATION

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

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

CONSULTANT agrees to complete all S ervices, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this /these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY.

BUDGET SCHEDULE

TASK NOT TO EXCEED
AMOUNT
Task 1 (Project Kick-Off and Project Management) $35,170 Task 2 (Funding Source Survey) $30,280
Task 3 (Single-family Sector Study) $34,936
Task 4 (Multi-family Sector Study) $101,995
Task 5 (Nonresidential Sector Study) $80,095
Task 6 (EV Charger Strategic Plan) $128,370
Task 7 (S/CAP Funding Model Development) $123,620
Task 8 (Draft and Final Report) $79,820
Sub-total for Services $614,286
Reimbursable Expenses (if any) $0
Total for Services and Reimbursable Expenses $614,286
Optional Tasks (by Task Order):

Task 9 (Electrification Grid Impact Modeling) $200,000 Task 10 (Survey of Potential Transportation Demand
Management Strategies)
$50,000
Additional Services per section 4 $81,000
Maximum Total Compensation $945,286

REIMBURSABLE EXPENSES

CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time /overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in -house printing, insurance and DocuSign Envelope ID: B8858AAD-2C33-4F86-BA45-EB5E30077FBF Item 4
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other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder.

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

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

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

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

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EXHIBIT C-1

SCHEDULE OF RATES

CONSULTANT’s schedule of rates is as follows:

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EXHIBIT D

INSURANCE REQUIREMENTS

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

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

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

REQUIRED TYPE OF COVERAGE REQUIREMENT

MINIMUM LIMITS
EACH

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

STATUTORY

STATUTORY STATUTORY STATUTORY
YES

GENERAL LIABILITY, INCLUDING

PERSONAL INJURY, BROAD FORM

PROPERTY DAMAGE BLANKET

CONTRACTUAL, AND FIRE LEGAL

LIABILITY

BODILY INJURY

PROPERTY DAMAGE

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

$1,000,000

YES

AUTOMOBILE LIABILITY,

INCLUDING ALL OWNED, HIRED,

NON-OWNED

BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE

PROPERTY DAMAGE

BODILY INJURY AND PROPERTY

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

$1,000,000

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

$1,000,000

YES

PROFESSIONAL LIABILITY,

INCLUDING, ERRORS AND

OMISSIONS, MALPRACTICE (WHEN

APPLICABLE), AND NEGLIGENT

PERFORMANCE
ALL DAMAGES $1,000,000
YES

THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONSULTANT, AT ITS SOLE COST

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

OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY

CONSULTANT AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’
COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.

I. INSURANCE COVERAGE MUST INCLUDE:

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

II. THE CONSULTANT MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE TO THE FOLLOWING: [email protected]

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

A. PRIMARY COVERAGE

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

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

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

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B. CROSS LIABILITY

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

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

INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE

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

C. NOTICE OF CANCELLATION

1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON

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

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

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

[email protected]

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AMENDMENT NO. 1 TO CONTRACT NO.

S23187670 BETWEEN THE CITY OF PALO ALTO
AND STERLING COMMUNICATIONS, INC.

This Amendment No. 1 (this “Amendment”) to Contract No. S23187670 (the “Contract” as defined below) is entered into as of December 18, 2023 (the “Effective Date”), by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and STERLING COMMUNICATIONS, INC., a California Corporation, located at 3130 Tisch Way 110 Plaza West, San Jose, CA 95128 (“CONSULTANT”).

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 providing development and implementation of a marketing plan in connection with the CITY’s program promoting building electrification with a focus on the residential heat pump water heaters (the “Services”, as detailed more fully in Exhibit A), as detailed therein.

B. T he Parties now wish to amend the Contract in order to extend the timeline for provision of the Services for outreach and marketing on electrification, to broaden the scope to encompass more outreach topics, and to increase the total compensation by Seventy-Five Thousand Dollars ($75,000), from Eighty-Five Thousand Dollars ($85,000) to One Hundred and Sixty Thousand Dollars ($160,000), as detailed herein.

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

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

a. Contract. The term “Contract” shall mean Contract No. S23187670 between CONSULTANT and CITY, dated May 18, 2023.

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 “NOT TO EXCEED COMPENSATION” of the Contract is hereby amended to read as follows:

“The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed One Hundred and Sixty Thousand Dollars ($160,000). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY.

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SECTION 3. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference:

a. Exhibit “A” entitled “SCOPE OF SERVICES”, AMENDED, REPLACES PREVIOUS.

b. Exhibit “B” entitled “SCHEDULE OF PERFORMANCE”, AMENDED, REPLACES PREVIOUS.

c. Exhibit “C” entitled “COMPENSATION”, AMENDED, REPLACES PREVIOUS.

SECTION 4. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 5. Incorporation of Recitals . The recita ls 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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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

STERLING COMMUNICATIONS, INC.

By:______________________________

Name:___________________________

Title:____________________________

By:______________________________

Name:___________________________

Title:____________________________

Attachments:

EXHIBIT A: SCOPE OF SERVICES (amended, replaces previous) EXHIBIT B: SCHEDULE OF PERFORMANCE (amended, replaces previous) EXHIBIT C: COMPENSATION (amended, replaces previous)

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Director
Michael Foody
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EXHIBIT A

SCOPE OF SERVICES
(Amended, Replaces Previous)

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

Based on direction and information provided by CITY staff, CONSULTANT shall provide the Services detailed in Exhibit A. CONSULTANT will develop and execute a marketing campaign to build awareness of the CITY’s building electrification programs with a particular focus on generating qualified leads for the residential heat pump water heater (HPWH) program by 12/31/2023. This first part of the campaign focused on the residential heat pump water heater (HPWH) program includes two phases: development (Phase 1, below) and implementation (Phase 2, below). The second part of the campaign continues a focus on generating qualified leads for the HPWH program, but also expands the focus of the electrification campaign to include whole home electrification, the CITY’s work to enhance the reliability and resiliency of its electric system and, with mutual agreement, other programs or related topics.

Phase One: Develop the strategic marketing plan with a focus on early marketing efforts

CONSULTANT will:
● Conduct initial brainstorming session with key CITY staff; ● Compile and analyze research on target audiences, including motivators and demotivators;
● Incorporate results from focus groups conducted by the CITY into marketing plan, described below;
● Lead one (1) strategy and planning workshop with key CITY stakeholders, if requested; ● Develop recommendations on streamlining the customer’s online journey to understand the CITY’s mission, vision, and resources;
● Produce a draft marketing plan that includes:
o A strategic narrative for the CITY’S building electrification programs, o Audience segmentation relevant to CITY residential electrification initiatives,
o A specific communication campaign and related tactics for the CITY and affiliated partners regarding the residential heat pump water heater program,
o Required timelines for material distribution in prescribed channel, o Recommendations for streamlining website content and landing pages related to the Project, and
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o The specific tools, timeline, and costs of the Services necessary for Task Orders in Phase Two;
● Incorporate final feedback on the draft marketing plan — provided to CONSULTANT in a single document — from CITY staff and program stakeholders; and ● Produce a finalized marketing plan shared with City for review and sign-off. (“Marketing Plan”)

In parallel, CONSULTANT will work with the CITY’s Communications staff to conduct Early and Foundational Marketing Efforts. Upon CITY request via Task Order, CONSULTANT will conduct:

• Research and data gathering to support future marketing efforts • Early outreach and marketing with a focus on “quick wins” that will generate high awareness and participation for low effort

CITY will have the complete right to use the Work Product during the term of the Contract for any and all purposes outlined in this Scope of Services, upon written acceptance by CITY of the Work Product as in conformance with CITY direction. Notwithstanding Section 14 (Ownership of Materials), full ownership of Work Product generated in Phase One requested by Task Order and associated with Early and Foundational Marketing Efforts will transfer to CITY upon 1) written acceptance by CITY of the Work Product as complete and in conformance with CITY direction, and 2) payment of costs mutually agreed upon in the Task Order.

Phase Two: Implement campaign, including creating adaptable communication toolkits

CONSULTANT will develop specific tools for relevant CITY departments, program stakeholders, and affiliated community partners based on the Marketing Plan and direction provided by CITY in Task Orders.

CITY will have the complete right to use the Work Product during the term of the Contract for any and all purposes outlined in this Scope of Services, upon written acceptance by CITY of the Work Product as in conformance with CITY direction. Notwithstanding Section 14 (Ownership of Materials), during the course of the Contract, full ownership of that Work Product will transfer to CITY upon 1) written acceptance by CITY of the Work Product as complete and in conformance with CITY direction, and 2) payment of costs mutually agreed upon in the Marketing Plan and Task Order.

Requested tools may include:
• EMAIL — Producing content for the CITY to use in email marketing campaigns ; • ADVERTISING — Writing copy for digital ads targeted at residential customers; • WEB — Editing HPWH copy for the CITY’s website;
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• PRINT — Providing content and creative direction to the CITY’s graphic designer(s) for mailing inserts, flyers, and other campaign collateral
• MULTIMEDIA — Curating existing CITY assets for sharing on social media accounts of CITY and engaged community members in service of promoting CITY programs supporting home electrification, with a focus on the HPWH conversion program.

CONSULTANT will work with the CITY’s Communications staff to conduct campaign operations, which will include:
• Monitoring campaign results and community feedback, adjusting creative and content as needed, and
• Providing ongoing feedback on program and marketing design to improve effectiveness.

Phase Three: Expand campaign

CONSULTANT will work with CITY to expand the existing marketing plan to encompass whole home electrification, the CITY’s work to enhance the reliability and resiliency of its electric system and, with mutual agreement, other programs or related topics, while continuing to also focus on generating leads for the CITY’s HPWH Program. CONSULTANT will develop specific tools for relevant CITY departments, program stakeholders, and affiliated community partners based on the Marketing Plan and direction provided by CITY in Task Orders.

CITY will have the complete right to use the Work Product during the term of the Contract for any and all purposes outlined in this Scope of Services, upon written acceptance by CITY of the Work Product as in conformance with CITY direction. Notwithstanding Section 14 (Ownership of Materials), during the course of the Contract, full ownership of that Work Product will transfer to CITY upon 1) written acceptance by CITY of the Work Product as complete and in conformance with CITY direction, and 2) payment of costs mutually agreed upon in the Marketing Plan and Task Order.

Requested tools may include:
• EMAIL — Producing content for the CITY to use in email marketing campaigns ; • ADVERTISING — Writing copy for digital ads targeted at residential customers; • WEB — Editing HPWH copy for the CITY’s website;
• PRINT — Providing content and creative direction to the CITY’s graphic designer(s) for mailing inserts, flyers, and other campaign collateral
• MULTIMEDIA — Curating existing CITY assets for sharing on social media accounts of CITY and engaged community members in service of promoting CITY programs supporting home electrification, with a focus on the HPWH conversion program.

CONSULTANT will work with the CITY’s Communications staff to conduct campaign operations, which will include:

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• Monitoring campaign results and community feedback, adjusting creative and content as needed, and
• Providing ongoing feedback on program and marketing design to improve effectiveness.

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EXHIBIT B

SCHEDULE OF PERFORMANCE
(Amended, Replaces Previous)

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

Milestones
Completion
Number of Days/Weeks (as specified below)
from NTP
Phase 1

45 days

Phase 2

December 31, 2023 unless extended by mutual
agreement

Phase 3

July 31, 2024 unless extended by mutual
agreement

☐ Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on-call agreements per Section 1 or agreements with Additional Services per Section 4.)

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EXHIBIT C

COMPENSATION
(Amended, Replaces Previous)

CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below.

Compensation shall be calculated based on the rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below.

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

CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY.

BUDGET SCHEDULE NOT TO EXCEED AMOUNT

Phase 1 (Program Planning, Strategy, Workshopping, Early Marketing) $20,500 Phase 2 (Toolkits, Implementation) by Task Order $64,000 Phase 3 (Campaign Expansion) by Task Order $75,000
Sub-total for Services $159,500
Reimbursable Expenses (if any) $500
Total for Services and Reimbursable Expense $160,000
Additional Services (if any, per Section 4) $0
Maximum Total Compensation $160,000

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

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Certificate Of Completion
Envelope Id: 590E62B0E6F04E58B74EC255CA1046FD
Status: Completed
Subject: Complete with DocuSign: S23187670 Amendment 1 final .pdf Source Envelope:

Document Pages: 9
Signatures: 2
Envelope Originator:

Certificate Pages: 2
Initials: 0
Annmarie Romero
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
[email protected]
IP Address: 199.33.32.254
Record Tracking
Status: Original
11/30/2023 3:45:02 PM
Holder: Annmarie Romero
[email protected]
Location: DocuSign
Security Appliance Status: Connected
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Location: DocuSign
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Signature
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Marianne O'Connor
[email protected]
CEO
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Signature Adoption: Pre-selected Style
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Sent: 11/30/2023 3:47:36 PM
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Signed: 12/7/2023 7:06:52 AM
Electronic Record and Signature Disclosure:

Not Offered via DocuSign
Michael Foody
[email protected]
Director
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(None)

Signature Adoption: Pre-selected Style
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Signed using mobile
Sent: 12/7/2023 7:06:53 AM
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Tabatha Boatwright
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Utilities Management Analyst
City of Palo Alto
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Electronic Record and Signature Disclosure:

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Jonathan Abendschein
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: January 16, 2024
Report #:2311-2230
TITLE
Accept the City of Palo Alto’s Audited Financial Statements as of June 30, 2023 and the Macias, Gini & O’Connell Management Letter; Approve the FY 2023 Annual Comprehensive Financial Report (ACFR)and Amendments to the FY 2023 Budget in Various Funds; and Adopt a Resolution to Extend and Amend the Development Services Reserve Fund Policy, as Recommended by the Finance Committee; CEQA Status – Not a Project

RECOMMENDATION
Finance Committee and Staff recommend that the City Council:

1. Accept the City of Palo Alto’s audited financial statements for the fiscal year ended June 30, 2023, and the accompanying reports prepared by Macias Gini & O’Connell LLP (“MGO”)1.

Reports include:
a. Report to the City Council (the “Management Letter”), b. Cable TV Franchise, Independent Auditor’s Report and Statements of Franchise Revenues and Expenses for the years ended December 31, 2022, and 2021, c. Palo Alto Public Improvement Corporation (a component unit of the City of Palo Alto) Annual Financial Report for the year ended June 30, 2023, d. Regional Water Quality Control Plant, Independent Auditor’s Report and Financial Statements for the year ended June 30, 2023, and
e. Independent Accountant’s Report on Applying Agreed-Upon Procedures related to the Article XIII-B Appropriations (GANN) Limit for the year ended June 30, 2023. 1 11/28/2023 CMR# 2309-2041 Finance Committee Staff Report, Discussion and Recommendation to the City Council to Accept the Macias Gini & O’Connell’s Audit of the City of Palo Alto’s Financial Statements as of June 30, 2023
https://portal.laserfiche.com/Portal/DocView.aspx?id=69139&repo=r-704298fc&searchid=098e186d-ecf7-43c8- af8d-c98790422d83
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2. Approve the Fiscal Year (FY) 2023 Annual Comprehensive Financial Report (ACFR) and reports collectively referred to as the Single Audit in CMR #2308-18572. An electronic copy is available on the City’s website3;

3. Amend the Fiscal Year 2023 Budget Appropriation Ordinance for various funds as identified Recommended Amendments to the City Manager’s FY 2023 Budget; referenced as “Attachment B – Exhibit 1 and various capital projects as identified in Attachment B – Exhibit 2” (Attachment I) in CMR #2308-18572 PDF pp. 26-39 (Effective on first reading; five votes required);

4. Adopt a Resolution to Extend and Amend the Development Services Reserve Fund (DSRF) Policy Resolution of the Council of the City Palo Alto to Extend and Amend the Development Services Reserve Fund Policy (Attachment II), previously adopted by Ordinance No. 5420 (Attachment III) ; and

5. Refer to staff review of the approval process for excess Budget Stabilization Reserve (BSR) allocations in both long-term retiree benefit funding policy and capital infrastructure reserve policy with the Finance Committee.

Hard copies of these reports were provided in 2023, though additional are available upon request.

BACKGROUND
Every year, the fiscal year is closed out and the City Council publishes the City’s financial report (Palo Alto Municipal Code 2.28.200). At the November 28, 2023 Finance Committee meeting, the Committee reviewed two staff reports: one transmitted by the City Auditor’s Office and one by the City Manager’s Office via the Administrative Services Department, and unanimously approved both reports for City Council consideration4:
•Office of the City Auditor: Discussion and Recommendation to the City Council to Accept the MGO Audit of the City of Palo Alto’s Financial Statements as of June 30, 20231. 2 11/28/2023 CMR# 2308-1857 Finance Committee Staff Report, Approval of the FY 2023 ACFR YE Budget Amendments, and Resolution to Extend and Amend the Development and Services Reserve Fund Policy https://portal.laserfiche.com/Portal/DocView.aspx?id=69140&repo=r-704298fc&searchid=222c8b61-ff08-4b38- ba4c-22c2a2d87b96
3 City of Palo Alto FY 2023 Annual Comprehensive Financial Report https://www.cityofpaloalto.org/files/assets/public/v/1/administrative-services/city-budgets/fy-2023-city- budget/fy-2023-annual-comprehensive-financial-report.pdf 4 November 28, 2023, Finance Committee Action Minutes:
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•Administrative Services Department: Recommendation to Approve the Fiscal Year (FY) 2023 ACFR, Approve FY 2023 Budget Amendments in Various Funds and Amend the Development Services Reserve Fund Policy (DSRF) 2.

In addition to these reports, the Finance Committee recommended that the Council refer to staff review of the approval process for the allocation of excess Budget Stabilization Reserve (BSR) balance, above the Council approved target range discussed in both the long-term retiree benefit funding policy and capital infrastructure reserve policy. The Committee discussed this in the context of potentially memorializing recent practice in these policies which includes Committee review.

MGO issued a clean opinion on each audit report. A finding was noted for the Appropriations Limit (or “Gann Limit”) Agreed-Upon Procedures Report where the incorrect adjustment factor was used in the calculation. Staff corrected the calculation and did not exceed the FY 2023 GANN Limit after the calculation was corrected.

The City also received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA) for its FY 2022 ACFR.

The Finance Committee discussed the status of the General Fund and the Budget Stabilization Reserve (BSR) balance. The General Fund Budget Stabilization Reserve (BSR) ended FY 2023 at $61.5 million; after adjusting the BSR for FY 2024 uses approved by Council through November 2023, the net BSR balance is $57.3million, $3.4 million above Council’s 20% BSR target level for FY 2024. By policy, the City maintains a BSR balance of 15-20% of the annual operating expense, with a typical target level of 18.5%. In alignment with Council policy, the Committee and staff recommends that the excess is split between the Capital Fund Infrastructure Reserve (IR) and the Section 114 Pension Trust fund ($1.7 million each); necessary budget actions to allocate the BSR funds in excess of the 20% target will be included in the FY 2024 Mid-Year Review (February 2024).

ANALYSIS
Government-wide
As outlined in the staff report to the Finance Committee, at the close of FY 2023, the City’s total Net Position is $1.354 billion, an increase of $83.3 million or 6.6% over the prior fiscal year. The total increase of $83.3 million consists of $42.4 million from governmental activities and $40.9 million from business-type activities. Approximately two-thirds of this increase are the City’s net investment in capital assets (land, buildings, infrastructure, vehicles, and intangible assets) and restricted funds. Approximately 90% of the City’s $1.354 billion Net Position, approximately 90% is net investment in capital assets.

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General Fund
The General Fund ended with a net Budget Stabilization Reserve (BSR) surplus of $3.4 million, after adjusting for estimates used in the development of the FY 2024 Adopted Budget and Council approved uses of the BSR in FY 2024 through November 2023. Overall, at the end of the current fiscal year, the General Fund’s fund balance was $105.8 million, of which $46.3 million is unassigned fund balance. The main difference between the BSR balance ($57.2 million) and unassigned fund balance is the investment unrealized loss adjustment, as required by Governmental Accounting Standards Board (GASB) Statement No. 31. Discussion can be found in staff’s November 28, 2023 report to the Finance Committee.

Enterprise Funds
As of June 30, 2023, the City’s Enterprise Funds reported a total net position of $827.7 million, an increase of $36.6 million or 4.6% from the prior year. The increase is primarily from Electric and Gas Funds. Compared to FY 2022, the Change in Net Position for Enterprise funds increased $49.2 million driven primarily by the Electric Fund, and Gas Funds, partially offset by the decrease in Airport Fund. Electric Fund received $23.9 million related to the litigation of the Central Valley Project Improvement Act (CVPIA) operated by the U.S. Bureau of Reclamation.

The payment comes after years of litigation by Northern California Power Agency (NCPA) members that the United States government overcharged power contractors in a manner contrary to the CVPIA legislation. The refund represents the City’ s share of the judgment issued by the US Court of Federal Claims.

FISCAL/RESOURCE IMPACT
The actions recommended in CMR 2308-1857 pages 26-392 Attachment B, both Exhibits 1 and 2, recommend adjustments to the FY 2023 appropriated level of funds to align budgeted levels with year-end activities. Overall, these transactions ensure all funds remain in a positive financial picture.

STAKEHOLDER ENGAGEMENT
This report has been prepared by the Administrative Service Department Accounting division and coordinated with the Office of the City Auditor and the Office of Management and Budget.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the acceptance of the audited financial reports for the fiscal year ending June 30, 2023 , approval of the ACFR for Fiscal Year 2023, the amendment to the Fiscal Year 2023 Budget Appropriation Ordinance, and extending a resolution of the DSRF Policy are fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).

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ATTACHMENT
Attachment A – FY 2023 Budget Amendments, Schedule B, Exhibit 1 and 2 Attachment B – Resolution to Extend and Amend the Development Services Reserve Fund (DSRF)Policy Previously Adopted by Ord 5420
Attachment C – Ordinance No. 5420
APPROVED BY:

Kiely Nose, Assistant City Manager
Lead Staff; Christine Paras, Assistant Director
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Department Adjustment Adjustment

CAPITAL IMPROVEMENT FUNDS
GENERAL FUND CAPITAL IMPROVEMENT FUND 471)
Capital Transfer from General Fund
This action increases the transfer from the General Fund related to TOT revenue Council earmarked to use for city wide infrastructure improvements due to actual revenue collected being higher than budgeted in FY 2023.
2, 288, 000$
Capital Transfer from Gas Tax Fund/ Streets Maintenance PE 86070) This action increases the transfer from the Gas Tax Fund as a result of SB1 Gas Tax revenue from the State of California that came in higher than budgeted levels. SB1 funding is designated for street improvment projects, so it will be added to the Streets Maintenance capital project PE 86070).
43, 200$ 43, 200$
Capital Transfer to Library Projects Fund
This action transfers the remaining bond funds that were issued in 2013 to reconstruct the Mitchell Park Library and Community Center facility from the Capital Improvement Fund to the Library Projects Fund. The remaining funds had previously been held in the Capital Improvement Fund to complete roof damage repair that persisted from the reconstruction project. The repairs were completed in FY 2023, so the remaining funds are being transferred to be used towards payment of the debt service costs of the bond. 73, 800$
Various Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
4, 170)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 2, 218, 370$
GENERAL FUND CAPITAL IMPROVEMENT FUND 471) SUBTOTAL 2, 331, 200$ 2, 331, 200$ CUBBERLEY PROPERTY INFRASTRUCTURE FUND 472)
Various Salaries and Benefits
This action increases the allocation for salaries and benefits in this fund due increased labor costs that were negotiatied and approved across the City in FY 2023. Additional funding for these cost increases was not appropriated in FY 2023, so this aligns budget levels with actual expenditures.
126, 200$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 126, 200)$
CUBBERLEY PROPERTY INFRASTRUCTURE FUND 472) SUBTOTAL $

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
6 Packet Pg. 136 of 553

Department Adjustment Adjustment

ENTERPRISE FUNDS
AIRPORT ENTERPRISE FUND 530)
Public Works Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
663)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 663$
AIRPORT ENTERPRISE FUND 530) SUBTOTAL $
ELECTRIC FUND 513 523)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment B, Exhibit 2.
14, 336$
Utilities Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
21, 995)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 7, 659$
ELECTRIC FUND 513 523) SUBTOTAL $
GAS FUND 514 524)
Utilities Residential Customer Revenue/ Gas Commodity Purchase This action recognizes additional residential customer revenue that was collected in FY 2023 and appropriates funding for increased costs to purchase gas commodities and align the budget with actual expenditures in FY 2023.
380, 000$ 380, 000$
Utilities Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
9, 665)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 9, 665$
GAS FUND 514 524) SUBTOTAL 380, 000$ 380, 000$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
7 Packet Pg. 137 of 553

Department Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
REFUSE FUND 525)
Public Works Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
3, 079)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 3, 079$
REFUSE FUND 525) SUBTOTAL $
STORMWATER MANGEMENT FUND 528)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment B, Exhibit 2.
27, 148$
Public Works Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
1, 823)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 25, 325)$
STORMWATER MANGEMENT FUND 528) SUBTOTAL $
WASTEWATER COLLECTION FUND 527)
Utilities Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
3, 825)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 3, 825$
WASTEWATER COLLECTION FUND 527) SUBTOTAL $
WASTEWATER TREATMENT FUND 526)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 2.
500, 000)$
Public Works Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
9, 900)$
Public Works Revenue from Other Agencies
This action is a technical correction to reallocate 0. 5 million in revenue from the Advanced Water Purification Facility capital project WQ 19003) to fund operating costs related to water purification services. These funds were incorrectly appropriated to WQ 19003 in CMR 2302 1026 and this action allows the revenue to offset other needs in the Wastewater Treatment Fund.
500, 000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 9, 900$
WASTEWATER TREATMENT FUND 526) SUBTOTAL $
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
8 Packet Pg. 138 of 553

Department Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
WATER FUND 522)
Utilities Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
7, 014)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 7, 014$
WATER FUND 522) SUBTOTAL $
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
9 Packet Pg. 139 of 553

Department Adjustment Adjustment

INTERNAL SERVICE FUNDS
INFORMATION TECHNOLOGY FUND 682)
Information
Technology
Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
5, 081)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 5, 081$
INFORMATION TECHNOLOGY FUND 682) SUBTOTAL $
PRINT AND MAILING FUND 683)
Administrative
Services
Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
41)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 41$
PRINT AND MAILING FUND 683) SUBTOTAL $
VEHICLE REPLACEMENT MAINTENANCE FUND 681)
Capital Capital Improvement Project Adjustments
This action reflects the combined impact from adjustments to projects as outlined in Attachment B, Exhibit 2.
130, 797$
Public Works Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
2, 278)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 128, 519)$
VEHICLE REPLACEMENT MAINTENANCE FUND 681) SUBTOTAL $

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
10 Packet Pg. 140 of 553

Department Adjustment Adjustment

SPECIAL REVENUE FUNDS
PUBLIC ART FUND 207)
Community
Services
Salary and Benefits
This action increases the allocation for salaries and benefits in this fund due increased labor costs that were negotiatied and approved across the City in FY 2023. Additional funding for these cost increases was not appropriated in FY 2023, so this aligns budget levels with actual expenditures.
12, 900$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 12, 900)$
PUBLIC ART FUND 207) SUBTOTAL $
GAS TAX FUND 231)
Administrative
Services
Revenue from the State of California/ Transfer to Capital Improvement Fund This action recognizes SB1 Gas Tax revenue from the State of California that came in higher than budgeted levels and appropriates funding to increase the transfer to the Capital Improvement Fund. SB1 funding is designated for street improvment projects, so it will be added to the Streets Maintenance capital project PE 86070). 43, 200$ 43, 200$
GAS TAX FUND 231) SUBTOTAL 43, 200$ 43, 200$
HAMILTON AVENUE PUBLIC BENFIT FUND 235)
Planning and
Development
Services
Investment Income/ Grants Subsidies
This action recognizes higher investment returns and increases the appropriation for Grants and Subsidies to Avenidas within the fund to align budget levels with actual expenditures in FY 2023
14, 700$ 14, 700$
HAMILTON AVENUE PUBLIC BENFIT FUND 235) SUBTOTAL 14, 700$ 14, 700$ UNIVERSITY AVENUE PARKING PERMIT FUND 236)
Various Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
208)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 208$
UNIVERSITY AVENUE PARKING PERMIT FUND 236) SUBTOTAL $
CALIFORNIA AVENUE PARKING PERMIT FUND 237)
Various Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
119)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 119$
CALIFORNIA AVENUE PARKING PERMIT FUND 237) SUBTOTAL $

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
11 Packet Pg. 141 of 553

Department Adjustment Adjustment

SPECIAL REVENUE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
RESIDENTIAL PARKING PERMIT PROGRAMS FUND 239)
Various Retiree Healthcare Department Charges
This action reflects the adjustment for retiree healthcare costs as outlined in Attachment B, Exhibit 3.
501)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 501$
RESIDENTIAL PARKING PERMIT PROGRAMS FUND 239) SUBTOTAL $ SUPPLEMENTAL LAW ENFORCEMENT SERVICES FUND 248)
Police Investment Income/ Instruction and Training
This action recognizes higher investment returns and increases the appropriation for Facilities and Equipment within the fund to align budget levels with actual expenditures in FY 2023. The cost to upgrade the Department' s Conductive Energy Weapon platform commonly known as Tasers) was slightly higher than the approved funding allocated for this purchase in the SLES Fund.
1, 700$ 1, 700$
SUPPLEMENTAL LAW ENFORCEMENT SERVICES FUND 248) SUBTOTAL 1, 700$ 1, 700$ Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
12 Packet Pg. 142 of 553

Department Adjustment Adjustment

DEBT SERVICE AGENCY TRUST FUNDS
2021 PUBLIC SAFETY BUILDING COP FUND 363)
Administrative
Services
Debt Service Payment
This action is a technical correction to appropriate funding to cover the capitalized interest payment for the Certificates of Participation to fund the New Public Safety Building capital project PE 15001). These funds were set aside as part of bond sale in this Fund in order to make this payment; however, they were not fully appropriated as part of the FY 2023 Budget. 1, 464, 000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 1, 464, 000)$
2021 PUBLIC SAFETY BUILDING COP FUND 363) SUBTOTAL $
LIBRARY PROJECTS FUND 370)
Administrative
Services
Transfer from Capital Improvement Fund
This action recognizes a transfer from the Capital Improvement Fund of the remaining bond funds that were issued in 2013 to reconstruct the Mitchell Park Library and Community Center facility. The remaining funds had previously been held in the Capital Improvement Fund to complete roof damage repair that persisted from the reconstruction project. The repairs were completed in FY 2023, so the remaining funds are being transferred to the Library Projects Fund to be used towards payment of the debt service costs of the bond. 73, 800$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 73, 800$
LIBRARY PROJECTS FUND 370) SUBTOTAL 73, 800$ 73, 800$
EYERLY TRUST FUND 774)
Administrative
Services
Investment Income/ General Expenses
This action recognizes higher investment returns and increases the appropriation for General Expenses within the fund for interest income distribution to designated recipients to align budget levels with actual expenditures in FY 2023.
1, 900$ 1, 900$
EYERLY TRUST FUND 774) SUBTOTAL 1, 900$ 1, 900$
UNIVERSITY AVENUE PARKING ASSESSMENT AGENCY FUND 775)
Administrative
Services
Contract Services
This action increases the appropriation for Contract Services within the fund to align budget levels with actual expenditures in FY 2023.
6, 000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report. 6, 000)$
UNIVERSITY AVENUE PARKING ASSESSMENT AGENCY FUND 775) SUBTOTAL $

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Revenues Expenses
ATTACHMENT B, EXHIBIT 1
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
13 Packet Pg. 143 of 553

Project
Number Title Revenue Expense Comments
AC 86017 Art In Public Spaces 171, 600) Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 14018 Baylands Boardwalk Improvements 6, 258 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PG 06003 Benches, Signage, Walkways, Perimeter
Landscaping, and Site Amenities
64, 765 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PL 04010 Bicycle and Pedestrian Transportation
Plan Implementation
200, 000) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

AS 10000 Capital Improvement Fund Administration 700, 000) Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 13011 Charleston/ Arastradero Corridor Project 564, 252 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PL 20000 Churchill Avenue/ Alma Street Railroad
Crossing Safety Improvements
306, 809) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PE 20001 City Bridge Improvements 123, 555 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 17008 City Hall Floor 4 Remodel 1, 077 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 18016 Civic Center Fire Life Safety Upgrades 71, 019 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 15020 Civic Center Waterproofing Study and
Repairs
113, 241 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PG 18001 Dog Park Installation and Renovation 13, 948 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 18004 Fire Station 4 Replacement 176, 106 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 20000 Foothills Nature Preserve Dam Seepage
Investigation and Repairs
16, 545 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PE 21003 Magical Bridge Playground Rubber and
Synthetic Turf Resurfacing
63, 138 Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PE 18010 Mitchell Park Improvements 957 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PF 16006 Municipal Service Center Lighting,
Mechanical, and Electrical Improvements
579, 179) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PE 15007 New Downtown Parking Garage 300, 000) Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

ATTACHMENT B, EXHIBIT 2

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 CAPITAL IMPROVEMENT PROGRAM

CAPITAL IMPROVEMENT FUND
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
14 Packet Pg. 144 of 553

Project
Number Title Revenue Expense Comments
ATTACHMENT B, EXHIBIT 2

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 CAPITAL IMPROVEMENT PROGRAM PE 15001 New Public Safety Building 464, 797 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 12011 Newell Road/ San Francisquito Creek
Bridge Replacement
947, 154) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

OS 00001 Open Space Trails and Amenities 213, 593 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PG 09002 Park and Open Space Emergency Repairs 80, 985 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PG 19000 Park Restroom Installation 86, 277 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PL 17001 Railroad Grade Separation and Safety
Improvements
344, 600) Adjustment to allocate Salaries and Benefits
across capital projects based on actual
expenditures.

PG 14000 Ramos Park Improvements 291, 512) Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 08001 Rinconada Park Improvements 66, 451 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PF 07011 Roth Building Maintenance 2, 610 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PO 89003 Sidewalk Repairs 158, 238 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PO 05054 Street Lights Improvements 48, 446 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 86070 Street Maintenance 1, 061, 401 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 21004 University Avenue Streetscape Update 95, 758 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

PE 19001 Water, Gas, Wastewater Office Remodel 347, 437 Adjustment to allocate Salaries and Benefits across capital projects based on actual
expenditures.

Total
EL 17007 Facility Relocation for Caltrain
Modernization Project
14, 336 Increase to project due to higher than
anticipated expenditures.

Total 14, 336
SD 22000 E Bayshore Rd E Meadow Dr Storm
Drain System Upgrade
27, 148 Increase to project due to higher than
anticipated expenditures.

Total 27, 148

ELECTRIC FUND

STORMWATER MANAGEMENT FUND
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
15 Packet Pg. 145 of 553

Project
Number Title Revenue Expense Comments
ATTACHMENT B, EXHIBIT 2

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 CAPITAL IMPROVEMENT PROGRAM VR 22000 Scheduled Vehicle Replacement Fiscal
Year 2022
130, 797 Increase to project due to higher than
anticipated expenditures.

Total 130, 797
WQ 19003 Advanced Water Purification Facility 500, 000) Reallocate 0. 5 million in revenue from WQ 19003 to fund operating costs related to water
purification services.

Total 500, 000)
TOTAL CIP ADJUSTMENTS 500, 000) 172, 281

VEHICLE FUND

WASTEWATER TREATMENT FUND
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
16 Packet Pg. 146 of 553

ATTACHMENT B, EXHIBIT 2
Fund
Department/
Fund Title Revenue Expense Comments
General Fund Administrative
Services
Retiree Healthcare Adjustment 8, 162) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund City Attorney Retiree Healthcare Adjustment 2, 106) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund City Clerk Retiree Healthcare Adjustment 637) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund City Council Retiree Healthcare Adjustment 956) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund City Manager Retiree Healthcare Adjustment 2, 356) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Community
Services
Retiree Healthcare Adjustment 13, 789) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Fire Retiree Healthcare Adjustment 35, 753) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Human
Resources
Retiree Healthcare Adjustment 2, 661) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Library Retiree Healthcare Adjustment 7, 109) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Office of
Emergency
Services
Retiree Healthcare Adjustment 650) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Office of
Transportation
Retiree Healthcare Adjustment 1, 107) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Planning and
Development
Services
Retiree Healthcare Adjustment 7, 319) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Police Retiree Healthcare Adjustment 40, 424) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

General Fund Public Works Retiree Healthcare Adjustment 13, 692) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.
136, 721)
Capital
Improvement
Fund
471 Retiree Healthcare Adjustment 4, 170) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.
4, 170)

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET

GENERAL FUND

GENERAL FUND SUBTOTAL

CAPITAL FUNDS

CAPITAL FUNDS SUBTOTAL
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
17 Packet Pg. 147 of 553

ATTACHMENT B, EXHIBIT 2
Fund
Department/
Fund Title Revenue Expense Comments

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER' S FY 2023 BUDGET Airport Fund 530 Retiree Healthcare Adjustment 663) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Electric Fund 513 523 Retiree Healthcare Adjustment 21, 995) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Gas Fund 514 524 Retiree Healthcare Adjustment 9, 665) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Refuse Fund 525 Retiree Healthcare Adjustment 3, 079) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Stormwater
Management
Fund
528 Retiree Healthcare Adjustment 1, 823) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Wastewater
Treatment Fund
526 Retiree Healthcare Adjustment 9, 900) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Wastewater
Collection Fund
527 Retiree Healthcare Adjustment 3, 825) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Water Fund 522 Retiree Healthcare Adjustment 7, 014) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.
57, 964)
Information
Technology Fund
682 Retiree Healthcare Adjustment 5, 081) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Printing
Mailing Fund
683 Retiree Healthcare Adjustment 41) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Vehicle
Maintenance
Replacement
Fund
681 Retiree Healthcare Adjustment 2, 278) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.
7, 401)
California
Avenue Fund
237 Retiree Healthcare Adjustment 119) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

Residential
Parking Permit
RPP) Fund
239 Retiree Healthcare Adjustment 208) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.

University
Avenue Fund
236 Retiree Healthcare Adjustment 501) Adjustment to department charges for retiree healthcare to align with June 30, 2021 valuation.
828)
TOTAL ADJUSTMENT 207, 084)

ENTERPRISE FUNDS

ENTERPRISE FUNDS SUBTOTAL

INTERNAL SERVICE FUNDS

INTERNAL SERVICE FUNDS SUBTOTAL

SPECIAL REVENUE FUNDS

SPECIAL REVENUE FUNDS SUBTOTAL
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
18 Packet Pg. 148 of 553

ATTACHMENTC
NOTYETAPPROVED*
1 0160109_ 20230830_ ay16
Resolution No. _____
Resolution of the Council of the City of Palo Alto to Extend and Amend the Development ServicesReserveFund Policy Previously Adopted by Ordinance No. 5420.

RECI T A L S
A. In 2016, the Development ServicesDepartment completed PhaseI of a fee study to update certain non-valuation-based fees for services, reserving an update of valuation- based fees for PhaseII of the fee study.

B. In 2017, the Development Services Department completed Phase II of the fee study, which recommended adjustments to the Department’s valuation-based fees, the adoption of an operating reserve, and associated changes.

C. On September 19, 2017, the Finance Committee reviewed the fee study and recommended adoption of an ordinance updating Development Services Department fees in accordance with the study’s recommendations, adjusted by the annual salary and benefits adjustment of 5.5 percent.

D. On November 13, 2017, the City Council adopted Ordinance 5420 to adjust Development Services Department fees and approve a FY 2018 Development Services Department ReserveFund Policy.

E. The Development ServicesDepartment ReserveFund Policy was based on a fee study regarding best practices and assumed that the ReserveFund would be fully funded by FY 2022.

F. Reservefunds were expended in FY2020 and FY2021 to cover pandemic-related departmental operating lossesand maintain continuity of service.

G. As a result of this use of reserve funds, the Planning and Development Services Department seeksto extend the funding period for the ReserveFund beyond the planned sunset in FY2022.

H. The Planning and Development ServicesDepartment plans for continued use of the Reserve Fund at existing levels through FY 2025 when a new Cost of Services Study is expected to be implemented.

Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
19 Packet Pg. 149 of 553

ATTACHMENTC
NOTYETAPPROVED*
2 0160109_ 20230830_ ay16
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVESasfollows:

SECTION1. The Council of the City of Palo Alto adopts the Planning and Development ServicesDepartment ReserveFund Policy, as set forth in Exhibit “1” and incorporated herein by reference. This policy replaces the policy adopted by Ordinance 5420.

SECTION2. The Council finds that the adoption of this resolution does not meet the definition of a project under Public Resources Code Section 21065, thus, no environmental assessmentunder the California Environmental Quality Act is required.

INTRODUCEDANDPASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor
APPROVEDASTOFORM: APPROVED:

Assistant City Attorney City Manager
Director of Planning and
Development Services
Item 5
Attachment A - FY 2023
Budget Amendments,
Attachment B, Exhibit 1
and 2

Item 5: Staff Report
Pg.
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Resolution No. _____
Resolution of the Council of the City of Palo Alto to Extend and Amend the Development Services Reserve Fund Policy Previously Adopted by Ordinance No. 5420.

R E C I T A L S

A. In 2016, the Development Services Department completed Phase I of a fee study to update certain non-valuation-based fees for services, reserving an update of valuation- based fees for Phase II of the fee study.

D. On November 13, 2017, the City Council adopted Ordinance 5420 to adjust Development Services Department fees and approve a FY 2018 Development Services Department Reserve Fund Policy.

E. The Development Services Department Reserve Fund Policy was based on a fee study regarding best practices and assumed that the Reserve Fund would be fully funded by FY 2022.

F. Reserve funds were expended in FY 2020 and FY 2021 to cover pandemic-related departmental operating losses and maintain continuity of service.

G. As a result of this use of reserve funds, the Planning and Development Services Department seeks to extend the funding period for the Reserve Fund beyond the planned sunset in FY 2022.

H. The Planning and Development Services Department plans for continued use of the Reserve Fund at existing levels through FY 2025 when a new Cost of Services Study is expected to be implemented.

Item 5
Attachment B -
Resolution to Extend and
Amend the Development
Services Reserve Fund
Policy Previously Adopted
by Ord 5420

Item 5: Staff Report
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NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:

SECTION 1. The Council of the City of Palo Alto adopts the Planning and Development Services Department Reserve Fund Policy, as set forth in Exhibit “1” and incorporated herein by reference. This policy replaces the policy adopted by Ordinance 5420.

SECTION 2. The Council finds that the adoption of this resolution does not meet the definition of a project under Public Resources Code Section 21065, thus, no environmental assessment under the California Environmental Quality Act is required.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

__________________________ _____________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

__________________________ _____________________________ Assistant City Attorney City Manager

_____________________________
Director of Planning and
Development Services

_____________________________
Director of Administrative Services

Item 5
Attachment B -
Resolution to Extend and
Amend the Development
Services Reserve Fund
Policy Previously Adopted
by Ord 5420

Item 5: Staff Report
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EXHIBIT 1
Planning and Development Services Department
Reserve Fund Policy

Section 1. Purpose
The purpose of the Planning and Development Services Department Reserve Fund (PPDSDRF) is to build and maintain an adequate level of unrestricted funds available to cover any unforeseen shortfalls that arise outside of the regular budget planning process, as well as one- time, nonrecurring expenses that will build long-term capacity for Development Services. The fund may not be used to create or hire new full time benefited positions. The department intends for the operating reserve to be used and replenished within a reasonable period of time for Development Services. This policy will be implemented in conjunction with the other financial policies of the City and is intended to support the goals and strategies contained in those related policies and in strategic and operational plans.

Section 2. Definitions and Goals
The PDSDRF is a designated fund set aside by action of the City Council. The target of the PDSDRF is equal to three (3) months of average recurring operating costs; with a range of 23 (minimum) to 27 (maximum) percent with a target of 25 percent of average recurring operating cost.

The PDSDRF is dynamic and will be reviewed and adjusted in response to internal and external changes. In addition to calculating the actual reserve at the fiscal year-end, the reserve fund minimum, target and maximum can be adjusted by the Council as necessary each year during the annual budget development process. These reserves will be reported to the Finance Committee and City Council.

Section 3. Funding of Reserves
The PDSDRF will be funded by a five (5) percent of Development Services fees as listed in the City’s Municipal Fee Schedule beginning in Fiscal Year 2024, upon City Council approval, through Fiscal Year 2025. The City Council may, from time to time, direct that a specific source of revenue be set aside for the PDSDRF.

Section 4. Accounting for Reserves
The PDSDRF will be recorded in the City’s accounting system and financial statements titled as the Development Services Department Reserve Fund. The PDSDRF will be maintained in accordance with the City’s investment policy.

Section 5. Authority to Use the PDSDRF
Authority to use the PDSDRF will remain with the City Council. The City Manager will submit a request to use the PDSDRF to the City Council. The Director of Development Services Department will prepare the report identifying the need for access to the PDSDRF and confirm that the use is consistent with the purpose of the reserves as described in this policy.

Determination of need requires analysis of the sufficiency of the current level of reserve Item 5
Attachment B -
Resolution to Extend and
Amend the Development
Services Reserve Fund
Policy Previously Adopted
by Ord 5420

Item 5: Staff Report
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funds, the availability of any other sources of funds before using reserves, and evaluation of the time
period for which the funds will be required and replenished.

Section 6. Fee or Rate Stabilization
PDSDRF may be added to the Planning and Development Services Department revenue projections by action of the City Council and held to manage the trajectory of future year rate increases.

Section 7. Reappropriation of PDSDRF
At the end of each fiscal year the PDSDRF will be reappropriated to the following fiscal year in accordance with Palo Alto Municipal Code Section 2.28.090.

Section 8. Relationship to Other Policies
The City Manager maintains City Council approved policies, which may contain provisions that affect the creation, sufficiency, and management of the PDSDRF. It will be the responsibility of the City Manager and Director of Administrative Services Officer to notify the Director of Development Services if changes to city -wide policies impact the PDSDRF. These policies may be City Council approved policies such as the Investment Policy or administrative policies within the confines of the Municipal Code.

Section 9. Reporting, Monitoring and Review of Policy
The Director of Planning and Development Services is responsible for ensuring that the PDSDRF is maintained and used only as described in this policy. Upon approval of the use of PDSDRF , the Director of Planning and Development Services and the Director of Administrative Services will maintain records of the use of funds and plan for replenishment. Staff will provide reports to the City Council within the annual budget process, or sooner if warranted by internal or external events.

Item 5
Attachment B -
Resolution to Extend and
Amend the Development
Services Reserve Fund
Policy Previously Adopted
by Ord 5420

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DocuSign Envelope ID: 11C079F5-A091-4431-945D-37A5DB90C8E7 Ordinance No. 5420
Ordinance of the Council of the City of Palo Alto to Update the Fiscal Year 2018 Municipal Fee Schedule to Adjust Development Services Department Fees The City Council of the City of Palo Alto does hereby ORDAIN as follows:

SECTION 1. Findings and declarations.

SECTION 2. The Council of the City of Palo Alto adopts the Development Services Department Reserve Fund Policy, as set forth in Exhibit “1” and incorporated herein by reference.

SECTION 3. The Council of the City of Palo Alto adopts the changes to the Municipal Fee Schedule as set forth in Exhibit "2" and incorporated herein by reference. When effective, such fees shall supersede any prior inconsistent fees charged by the Development Services Department.

SECTION 4. The amount of the new or increased fees and charges is no more than necessary to cover the reasonable costs of the governmental activity, and the manner in which those costs are allocated to a payer bears a fair and reasonable relationship to the payer's burden on, or benefits received from, the governmental activity.

SECTION 5. Fees in the Municipal Fee Schedule are for government services provided directly to the payor that are not provided to those not charged. The amount of this fee does not exceed the reasonable costs to the City of providing the services. Consequently, pursuant to Art. XIII C, Section l(e)(2), such fees are not a tax.

SECTION 6. Effective Date. The fee increases proposed for FY 2017 described in Exhibit A shall become effective no sooner than sixty (60) days from the date of adoption of this ordinance.
1 170905 AY/Dev Services/ORD Amending DSD Municipal Fees (Phase II) Item 5
Attachment C - Ordinance
No. 5420

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DocuSign Envelope ID: 11C079F5-A091-4431-945D-37A5DB90C8E7 SECTION 7. CEQA. The adoption of user fees is exempt from environmental review under the California Environmental Quality Act (CEQA). (See CEQA Guidelines Section 15273.) INTRODUCED: October 2, 2017
PASSED:

AYES:

November 13, 2017

DUBOIS, FILSETH, FINE, HOLMAN, KNISS, KOU, WOLBACH
TANAKANOES:

ABSENT: SCHARFF
ABSTENTIONS:

ATTEST:
____________________________
City Clerk
____________________________
Mayor
APPROVED AS TO FORM: APPROVED:
_______________
Deputy City Attorney
_ _
City Manager
________________
_____________
Director of Development Services
_________________
Director of Administrative Services
2 Item 5
Attachment C - Ordinance
No. 5420

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DocuSign Envelope ID: 11C079F5-A091-4431-945D-37A5DB90C8E7 Exhibit 1
Development Services Department
Reserve Fund Policy
Section 1. Purpose
The purpose of the Development Services Department Reserve Fund (DSDRF) is to build and maintain an adequate level of unrestricted funds available to cover any unforeseen shortfalls that arise outside of the regular budget planning process, as well as one-time, nonrecurring expenses that will build long-term capacity The fund may not be used to create or hire new full time benefited positions. The department intends for the operating reserve to be used and replenished within a reasonable period of time. This policy will be implemented in conjunction with the other financial policies of the City and is intended to support the goals and strategies contained in those related policies and in strategic and operational plans.

Section 2. Definitions and Goals
The DSDRF is a designated fund set aside by action of the City Council. The target of the DSDRF is equal to three (3) months of average recurring operating costs; with a range of 23 (minimum) to 27 (maximum) percent with a target of 25 percent of average recurring operating cost.

The DSDRF is dynamic and will be reviewed and adjusted in response to internal and external changes. In addition to calculating the actual reserve at the fiscal year-end, the reserve fund minimum, target and maximum can be adjusted by the Council as necessary each year during the annual budget development process. These reserves will be reported to the Finance Committee and City Council.

Section 3. Funding of Reserves
The DSDRF will be funded by a five (5) percent increase to all Development Services Department fees as listed in the City’s Municipal Fee Schedule beginning in Fiscal Year 2018, upon City Council approval, through Fiscal Year 2022. The City Council may, from time to time, direct that a specific source of revenue be set aside for the DSDRF.

Section 4. Accounting for Reserves
The DSDRF will be recorded in the City’s accounting system and financial statements titled as the Development Services Department Reserve Fund. The DSDRF will be maintained in accordance with the City’s investment policy.

Section 5. Authority to Use the DSDRF
Authority to use the DSDRF will remain with the City Council. The City Manager will submit a request to use the DSDRF to the City Council. The Director of Development Services Department will prepare the report identifying the need for access to the DSDRF and confirm that the use is consistent with the purpose of the reserves as described in this policy.

Determination of need requires analysis of the sufficiency of the current level of reserve funds, the availability of any other sources of funds before using reserves, and evaluation of the time period for which the funds will be required and replenished.

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Palo Alto City CouncilJanuary 16, 2024

Palo Alto City Council
January 16, 2024