CITY COUNCIL
SUMMARY MINUTES
Regular Meeting
May 12, 2025
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 PM
Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: None
Absent: None
Special Orders of the Day
1. Proclamations Honoring Ella Cohen – California Interscholastic Federation State Wrestling Champion, and Angelina Jiang – State Runner Up
NO ACTION
Vice Mayor Veenker read the proclamation aloud.
Angelina Jiang thanked coaches, teammates, the City , and the school , and expressed appreciation for the recognition.
2. Proclamation Recognizing National Police Week as May 11-17, 2025, and National Peace Officers' Memorial Day as May 15, 2025
NO ACTION
Mayor Lauing read the proclamation aloud.
Andrew Binder, Police Chief , thanked the Mayor and Council for their support and expressed appreciation for the Palo Alto Police Department. Chief Binder invited the public to Cogswell Plaza on May 14 for the annual Police Officer Memorial Grove at 9 AM.
3. Review List of Applicants and Select Candidates to Interview for the Architectural Review Board (ARB) Vacancies; CEQA Status: Not a project
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
NO ACTION
Francesca Reyes, Deputy City Clerk , reported three candidates were interviewed for the Architectural Review Board on March 24. On March 27, Staff opened the extended recruitment.
The recruitment closed April 30 and yielded a total of 9 new applications. Voting was conducted via an emailed survey link to all Council members and all final votes were received prior to the current meeting. Deputy City Clerk Reyes provided a slide listing the candidates that were selected to interview on May 27.
Agenda Changes, Additions and Deletions
Ed Shikada, City Manager, reported there were none.
Public Comment
1. Liz G. spoke requested Mayor Lauing look into the structural structure of Mayfield Place, 2500 El Camino Real, due to deteriorating living conditions and progressively increasing rent.
2. Jennifer L. asked for a City response to the announced expansion of San Francisco Airport at the San Francisco Planning Commission on May 20.
3. Carol G. , founder and producer of Third Thursday California Avenue Music Festival, invited everyone to the second anniversary celebration the following Thursday from 6 to 9 PM.
4. Tingrun C. , Vote 16 Palo Alto, hoped to begin a collaborative process with the City Council to move towards a more formal ordinance that would enfranchise 16 and 17 - year-old youth voters in local elections.
5. Sven T. warned about the dangers of CH4 and indicated the utility bills should have an Prop 65 warning insert every month to encourage moving to all electric.
6. Julia Z. , director of 2024 -25 Bay Area Heat Mapping Campaign, provided a slide presentation including the partners of the organization, the campaign, heat maps, analysis of the maps, the Cool Cities Coalition – building resilience against extreme heat and longer-term policies.
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
Council Member Questions, Comments and Announcements
Councilmember Stone described having attended the Messages in Media event the day before along with Vice Mayor Veenker.
Vice Mayor Veenker mentioned having attended a meeting of the Recycling and Waste Reduction Commission for Santa Clara County the prior week. The Commission acted to direct Staff to explore adopting a household hazardous waste extended producer responsibility ordinance for the county. Vice Mayor Veenker requested the agendizing and closed session to address joining in lawsuits regarding cases entitled American Federation of Government Employees versus Trump and City and County of San Francisco versus Trump.
Councilmember Lythcott-Haims conveyed interest in joining the lawsuits. Councilmember Lythcott-Haims discussed attending the employee appreciation picnic in Mitchell Park the prior week. Councilmember Lythcott -Haims would be cosponsoring an event at Third Thursday’s second anniversary celebration. A flyer slide was presented with information.
Mayor Lauing discussed speaking at the Youth Art and Creative Connections event at the Art Center. Mayor Lauing attended the organization of a faith leaders conference driven by the HRC to continue dialog with faith leaders to see how their leadership in their respective belief systems can be leveraged to fight bias. There is now a list of connections of people that can be called to spread the word. Mayor Lauing had an overlap with Third Thursday but hoped to attend after dessert. Mayor Lauing discussed attending two appreciation week events.
Councilmember Stone and Mayor Lauing supported the Vice Mayor's suggestion to go into closed session on the two cases.
City Manager Shikada suggested adding the closed session to the agenda for the following week.
Study Session
4. FY 2026 Proposed Operating and Capital Budget - Finance Committee Update and Council Budget Discussion
NO ACTION
Lauren Lai, Chief Financial Officer, provided a slide presentation of the FY 2026 proposed operating and capital budgets including budget conversations and calendar, FY26 proposed budget overview, “Parking Lot” of general fund budget, “Parking Lot” as of May 7, multi -year general fund balancing, retain minimum of $6 million in Uncertainty Reserve, FY26 -30 capital improvement reductions 5%/10%/15%, fire and ambulance service augmentation, nonprofit partnership workplan phase 1 recommended adjustments, non- general fund: gas utility rates, community encouraged to join the budget conversation and Council discussion.
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
Councilmember Burt remarked that using the uncertainty reserve and then having two follow- on years with projected deficits without an uncertainty reserve compounded by the additional existing uncertainties was a proposition the Finance Committee was uncomfortable with.
Councilmember Reckdahl framed a high -level goal of trying to achieve only utilizing half of that uncertainty reserve this year, $6 million out of the $12 million, and be able to carry over at least $6 million more with the hope of having a surplus at the end of the year. If there is additional surplus, it will be a Council decision on how to allocate that. The Finance Committee wanted to ask Council to consider allocating $246,000 for Project Safety Net, Magical Bridge, Third Thursday and UNAFF in the budget but create a new fund for nonprofit partnership programs that are not covered under the HSRAP funding plus $50,000 for the community events grants and that be what is open to all of the community nonprofits to apply for.
Geo Blackshire, Fire Chief , explained if the Council's interest is to minimize the cross -staffing of Station 4, there would be an option to not cross-staff the ambulance with the engine during the peak hours and have the 12 -hour unit in service. That would not be a change in service. The ultimate goal is to have that peak ambulance reduce the reliability on county ambulance coming into Palo Alto and provide a fourth ambulance during the peak hours. Doing it without cross-staffing at Station 4 would not reduce the reliability on the county ambulance.
Public Comment:
1. Steve L. stated that as a resident, it appeared the Finance Committee had everything under control. As an economist, there is a plausible forecast that has lower revenues, higher inflation and higher interest rates. He hoped the Committee would look at an alternative forecast in the June period.
2. Hamilton (Zoom) remarked a lot of folks in the community do not want to see cap -and- trade funds diverted away from the original purpose of permanently lowering greenhouse gases to subsidize gas use because it undermines city policies. Once the Utility Commission has come to a conclusion then it can be determined how to proceed forward.
3. Utsav G. (Zoom) recommended to direct Staff to develop proposals for investing cap - and-trade funds exclusively in electrification and other greenhouse gas reducing projects and seek the advice of the UAC pertaining to the use of the cap- and-trade funds.
Councilmember Reckdahl was interested in Policy and Services thoughts on the nonprofits.
Chief Financial Officer Lai responded to Councilmember Reckdahl’s questions stating that relating to FY27 the only change is $700,000 related to the fee increases for fire transport fees of $700,000. Sales tax projections have not changed. It was previously $9.6 million, taken down by $2 million because that was assumed to be ongoing savings. On May 20, it will delineate how much remains that is one time that is a placeholder and how much is ongoing. Within the one time, how much may come from capital and otherwise will be targeted. Grace and time will be
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
needed to look more closely and develop something that takes into consideration priorities, service impacts and the current vacancies. City Manager Shikada added it reflects the time it will take to come back to the Council with thoughtful recommendations on that. It is proposed to come back to the Finance Committee in August and full Council following that. It will take time to narrow down where the savings will come from. Two buckets will be given and what can be identified by Thursday’s memo.
Councilmember Lythcott-Haims agreed in the interest of adequately funding the nonprofits to the extent of the means based on the priorities and is interested in learning which organizations go in which category.
Councilmember Lu wanted to know if there is a reason the rebate conversation cannot be had later or referred to UAC. City Manager Shikada stated the recommendation of using the climate credit to provide rate relief was a reflection of having completed the COSA and trying to develop a smooth transition for all users. Remanding the entire packet to the UAC would eliminate the attempt to use the credit accordingly. Consideration could be made to recommend issuing a rebate to the same customer class retrospectively. Councilmember Lu wanted to discuss the rebate more and think about means testing it for fixed income renters and otherwise reducing the subsidy on gas as much as possible. Councilmember Lu preferred to deferring consideration of the rebate until there is a clearer picture of the cost increases. City Manager Shikada replied to Councilmember Lu’s questions about single role staffing by explaining it reflects the bottom line in terms of the cost relative to the proposed budget. It is anticipated there will be a savings relative to the alternative which might be firefighters staffing any additional ambulance and other apparatus. The rationale is that it is dependent on the base. The recommendation for the single role is a prudent step toward the roll out by allowing the department to establish a new division, to put in place the administrative infrastructure necessary to support the single role and then to use the first unit as the proof of concept allowing ability to address the CalPERS issues on how retirement would be defined for that new classification. The future expansion of the single role model is not dependent on Station 4 but on the effectiveness of that model and the financial ability to expand it to which Fire Chief Blackshire agreed stating having the fourth ambulance would bring in additional revenue. Chief Financial Officer Lai replied to Councilmember Lu’s questions about identifying revenue opportunities by stating other revenues would be reviewed to see what areas can be enhanced and as more opportunities present themselves over the course leading up to August 19, they will be put before Finance Committee for consideration.
Vice Mayor Veenker had questions about the budget savings. Chief Financial Officer Lai replied the proposed budget as published included using $12 million of uncertainty reserve. The Finance Committee has recommended using half of it. In order to achieve that, they would need to come back with $6 million of either new revenues and or reduction in costs. Some things would be identified in the next several days as a reduction of the $6 million then the balance of the $6 million will be a placeholder in the adopted budget. Staff will then bring back more details on revenues, capital projects and/or other expenses to be more specific on that
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
level of savings . The adopted budget is a point in time and throughout the year budget adjustments are made. City Manager Shikada added if the $6 million target was found to need to be increased in August, accommodations could be made in that cycle. In response to Vice Mayor Veenker’s query about G2 customers, Councilmember Lythcott -Haims replied G1 is residential, G2 is small multifamily and small to medium -sized businesses. It has a wide range because the smaller to medium businesses become medium to large and the large ones are G3.
Responding to Vice Mayor Veenker’s utility questions, Kiely Nose , Assistant City Manager/Interim Utilities Director, explained the 2025 cost of service analysis that the UAC reviewed reflected 22% overall increase to the residential median bill. That was the core cost.
When the UAC recommended a climate credit to the residential customers, that would have brought the bill down to about 13% year over year impact. The Finance Committee recommended maintaining the current rate structure, increase rates about 9 or 10% for all customers. For the median residential bill, that is probably about a 5% increase but instead of giving the G1 or residential customers a climate credit, it would give the G2 smaller users a climate credit. The larger customers would not be included in the climate credit. There are rate increases throughout that cost of service that would reflect 32% increase but when Staff does the overall bill analysis, it is 22% for G1. City Manager Shikada added there is a fixed and a variable cost associated with usage. The percentage increase reflects one of those factors but when aggregated it is the 22%. Assistant City Manager Nose confirmed the climate credit is non-volumetric meaning it is flat.
Councilmember Stone wanted to ensure the deleted fees related to Palo Alto Link would not remove the free rides for youth seeking mental health services. Nathan Baird, Transportation Planning Manager , remarked it was likely that subsidy of the fare that the youth themselves would pay in these circumstances for these trips would be renewed. Kristen O’Kane, Community Services Director added the intent was to continue the free Link ride program through the Youth Mental Health funding.
Mayor Lauing asked about the percentage of ambulance to fire calls. Fire Chief Blackshire confirmed it is approximately 63% emergency medical services and 1.5% fire. The report reflects about 87 fires a year. The ambulance is in the thousands. Mayor Lauing observed spending money on ambulance coverage would provide more safety than anything else because of the number of calls and life -threatening nature of the folks that take the ambulances. The single role would be the right approach and should replace the county calls.
Fire Chief Blackshire said it was projected there would be approximately 10,100 calls this year and 63% of that would be emergency medical calls so 6,300 calls. Brad Eggleston, Director of Public Works, replied to Mayor Lauing’s thoughts about possible CIPs to delay stating there was no thought about that at the time. A meeting was planned for the next day to dig into that topic. Mayor Lauing asked about categories and the 747 applications. Chief Financial Officer Lai explained of the applications received as of the deadline, there were 719 totaling 747,000 . In addition, there were 3 applications totaling 73,00 slightly shy of that deadline. If the direct allocation proposed in the table for the nonprofits, some of the nonprofits were amongst the 19 applicants. Direct applications include Magical Bridge, Third Thursday, UNAFF. Some of those
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
nonprofits are within the 19 applications, the 246. When that is deducted, what remains excluding those direct allocations, the value of the applications is $451,000. That compares to $100,000 in the table. Based on Finance Committee recommendation, what would remain for P&S going into looking at the applications is $100,000 to award for the net value being asked of $451,000. There is $50,000 for CSD grants. City Manager Shikada stated each one of the organizations put an application in for the Nonprofit Partnership Workplan.
Mayor Lauing wanted to know if the Finance Committee was recommending plug numbers. City Manager Shikada indicated there were no other placeholder numbers other than what is shown on the various slides. Regarding the consultant’s report, City Manager Shikada said a report was given to the Finance Committee as an initial report on the Tuesday meeting the week before.
That included a variety of contracts including services as well as construction services that exceeded a million dollars over the last few years. The second piece that is in progress is the Policy and Services Committee will get a report on the consultant services review later this month.
Councilmember Lu supported framing to reduce the uncertainty reserve contribution by $6 million. That is the best plug number and gives flexibility. On nonprofit funding, Councilmember Lu was hesitant to give direct allocations to the four groups on the third column due to a lack of understanding of what was asked for this year and their previous asks. Councilmember Lu questioned if Neighbors Abroad would belong in that list. City Manager Shikada clarified Neighbors Abroad is an ongoing relationship funded largely through the city manager's office budget. There is also an application from Neighbors Abroad through this work plan for a particular additional request so it fits in both buckets. Councilmember Lu suggested taking it to Policy and Services and then have a holistic view for the full Council when the budget is clarified. On gas rebates, Councilmember Lu agreed on remanding the COSA to the UAC and strongly pitched deferring the decision about the rebate. Time should be taken to think about whether filters, means testing or other measures taken to subsidize gas as little as possible.
Councilmember Lu liked the proposed rubric for CIP prioritization but also wanted to prioritize safety. There are some infrastructure and traffic safety improvements and safety should be a parameter in the blue box. Projects that will actually happen should be prioritized.
Councilmember Burt addressed Councilmember Lu’s comments about organizations stating it is all continuing the programming that has been performed. Reducing those would mean those programs would be reduced. The discussion about the JED Foundation on youth mental health had not been resolved. Council wanted feedback. It is a one -time expense so does not fit in the same category of general human services contracts that are ongoing but would be a one -time human service contract and is something for Council to weigh in on. Councilmember Burt shared thoughts about if things get worse and going to a debt financing on Fire Station 4 and some other capital improvement plans.
Vice Mayor Veenker asked if there is a placeholder for the JED Foundation in the budget. City Manager Shikada answered there is not and explained there is youth mental health funding within the CSD budget. It is not specific to JED but would provide some capacity depending on
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
where the dollars land. Accommodating that is already being anticipated. Vice Mayor Veenker wondered if the 19 applications were reviewed to see if any of them fall in similar categories to the direct allocations shown on the slide, had been previously funded, provide services the City would need to provide if they did not. City Manager Shikada replied that had not been reviewed with that screen. Vice Mayor Veenker was interested in taking the ones in the third column and putting them back into the overall process because it was hard to draw clear lines.
Councilmember Reckdahl observed the thought process is that the more uncertainty a partner has, the less efficient they are in when spending their money. There is implied support for the long-term partners delivering established services. Vice Mayor Veenker thought it might be worth having a review of a contract every three to five years to make sure there is accountability. Mayor Lauing observed at a minimum an overview on all the 19 that came in should have an overview and advised Staff might do a first cut and bring it back to P&S or Finance. City Manager Shikada indicated the plan is to bring it back to P&S on June 10. The question before the Council was who would be coming back. When Staff brought forward the recommended Partnership Workplan, the category of multi- year agreements were not included. From that vantage point, organizations such as Avenidas and Palo Alto Community Child Care are not on this list. Project Safety Net was treated as a multi- year agreement. This was the end of a five -year term and Staff was working on an extension to that and that is the reason it was not included as part of this application process. YCI was a three -year agreement that ended and mistakenly was not assumed to be automatically up for renewal. YCS was notified the week before. The four were notified that the process of the applications would be their mechanisms for gaining funding through this year’s budget.
Councilmember Burt provided an explanation that the additional $100,000 would go toward the new nonprofit partnership fund that would be new funding that other entities would be eligible for. Mayor Lauing thought the basis for a way forward would start with Staff analysis of the 19 new applications. Vice Mayor Veenker did not understand how the four were selected and who the others are. Mayor Lauing advised stopping the item until there is visibility on it.
Vice Mayor Veenker asked for suggestions for alternative processes. City Manager Shikada explained the current timeline stated P&S would review and make recommendations after Staff conducted an initial evaluation based on criteria established by Council direction on June 10. If Council wants to get a report of what was received, that can be made available. It will not have the analysis that is expected to be done before June 10. For June 10, the packet will be out at the end of the month. Mayor Lauing advised the numbers that were decided on could be used without the allocations to buy more time to get beyond June 10. City Manager Shikada agreed that would be possible. P&S could come up with a recommendation for who should receive portions of the 546 with additional below the line scores that if additional funding was available would receive funds.
Mayor Lauing suggested having a total number for all the awards and if that meant P&S or Finance Committee needed to come back on that beyond the 10 th, there would still be an
approved budget at some number. City Manager Shikada suggested P&S should evaluate the organizations that were proposed for direct allocation. Mayor Lauing agreed.
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
Councilmember Reckdahl wanted an explanation about the different buckets. City Manager Shikada replied the intention of the workplan was not intended to create a new funding source but to provide a method of evaluating requests for funding through the City’s budget.
Councilmember Lythcott- Haims observed Councilmember Reckdahl was looking for an explanation about HSRAP to which City Manager Shikada responded HSRAP specifically focuses on Human Services and has defined a set of criteria for funding various programs. This workplan had no such criteria other than being structured that the evaluation would compare the proposals to the City Council's priorities for the year.
Councilmember Burt recalled how the four were selected and funded a year before, how the various buckets were established and how the process was not well thought through.
Councilmember Burt recommended thinking about how to move forward with a process with more time to understand its ramifications and commitment to it. It was not anticipated to be opened up to everybody who had already applied for HSRAP to take another bite at the apple.
Councilmember Burt advised stepping back, have one approach to take this year and figure out a longer-term approach over the course of the year.
Mayor Lauing indicated the new ones need to be evaluated through P&S, get the report back from there and have a discussion when that information is received. Councilmember Lythcott - Haims wanted to be sure whatever chart is created has columns indicating whether they have also applied for HSRAP or get funding from the City through some other allocation process.
5. Discussion of Strategies for the Use of Low Carbon Fuel Standard, Electric and Gas Cap and Trade, and Electric and Gas Public Benefits Revenues; CEQA Status - Not a Project
NO ACTION
Jonathan A bendschein, Assistant Director Public Works – Sustainability Climate Action , provided a slide presentation about Strategies for Use of LCFS, Cap and Trade, and Public Benefits Revenues including an overview, revenue sources, Council policies, uses to -date, opportunities for use of revenues, proposed public benefits policy and next steps.
Mayor Lauing asked when this would come back for action on policy. Assistant Director Abendschein answered the action on policy is part of the FY26 budget adoption.
Public Comment:
1. Hamilton (Zoom) provided responses to questions that had been raised by Council regarding whether a gas rebate is needed.
2. Stephen R. discussed reasons a gas rebate should not be considered at this point in time and should go through the Climate Action Sustainability Committee. If funds are
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
considered to subsidize gas service, they should only go to people stressed financially by having to pay the gas charge.
Mayor Lauing had questions about the paragraph at the top of packet page 100. Assistant Director Abendschein explained the whole section was intended to give an idea of how others in the region are approaching the balance between utility affordability and climate action. This particular paragraph was meant to give perspective on how some of these funding sources could be used to reduce electric rates more than they have already. There are many ways to configure the use of those funds focused on specific demographics that could have a larger effect but it is about a 2% reduction.
Councilmember Lu asked for a clarification of the scope for the study session. Assistant Director Abendschein replied the proposed policy for public benefit revenues does not designate any specific use of funds. It gives guidelines on the types of proposals Council would like to be brought forward but does not lay out a specific budget proposal. As far as specific budget proposals, the discussion is about FY26 and the hope was to be able to talk more specifically about actual dollar allocations on a longer -term basis with the FY27 budget cycle and onward.
Director Eggleston added there are some proposals to potentially use funding for a climate credit and how that ties into these overall different types of ways this funding can be used.
S/CAP programs are at the point of getting scaled up. The assumption has been that these funding sources would be used but no full discussion has been had with the Council about that assumption and other potential things that could be done with them. Guidance on how to think about this looking forward was being sought. Assistant Director Abendschein explained the gas change was to get on paper a policy from the Council which has so far been isolated Council actions that are hard to find in the record related to how much spending and what the focus should be turning that into something a little more robust that puts on record the types of spending Council is looking for with the public benefits funds. In reviewing the policy, the city attorney’s office took a careful look at the different competing state regulations and constitutional provisions that potentially affect these funds and the balance struck for the use of the gas funds is reflected in this list. The use of those gas public benefits funds for building electrification might be more of a novel use they might have to reconsult with them if Council provides guidance to press on the use of gas public benefit funds for building electrification as opposed to electric public benefit funds. The intention with the efficiency dimension for the gas public benefits funds is for things like tightening up building envelopes and things that are valuable in reducing gas use but also can be valuable in reducing electric use if homes electrify.
Councilmember Lu wanted to push the low- income rate assistance to the bottom of the list or just add a note that this is the last resort.
Vice Mayor Veenker expressed a desire to avoid using these funds for climate credit and wanted clarification on what funds were available to use. Assistant Director Abendschein remarked climate credit would come out of the gas cap -and-trade either FY26 revenues or existing reserves and had to be brought to Council for approval. All funds will come from gas cap-and-trade.
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
Karla Daily, Assistant Utilities Director, commented the decision on climate credit would return to the Finance Committee on the 20 th and move on to Council. The UAC recommended to the Finance Committee to use about $1.6 million of gas cap -and-trade money for a residential climate credit to offset the impact of the proposed rates based on the 2025 cost of service analysis. The Finance Committee leaned toward sticking with the current rate structure which would disadvantage the small commercial customers and using $1.1 million of gas cap -and- trade money to provide a climate credit to the small and medium business commercial customers because those would be the ones that would be disadvantaged by not adopting the 2025 cost of service analysis. Approximately $1.5 million of climate credit would either go to the residential customers or to a subset of the small medium business commercial customers.
Assistant Director Abendschein added a preference had been expressed by the Finance Committee for the use of other non -rate revenues like interest income, if possible. Assistant Director Daily confirmed that stating it would be a small amount of money. Cap -and-trade reserve needs to stay with cap- and-trade. Director Eggleston indicated the Finance Committee expressed the preference for using interest income to fund as much of the climate credit as possible and then whatever could not be funded through that mechanism to use the gas cap- and-trade with the expectation from S taff there is not sufficient interest income to fully close that gap. Assistant Director Abendschein stated Staff is still looking into that.
Councilmember Reckdahl opined the money would be better spent on improving the efficiency of the community and pay benefits down the road as opposed to lowering rates.
Councilmember Stone wanted an explanation of the impact this would have on reduced rates.
Assistant Director Abendschein replied the estimate takes into consideration future rate increases. A one -time $1.1 million credit is being proposed in the FY26 budget which has a short-term FY26 impact to transition related to the gas cost service study. Director Eggleston added there is a program of whatever proposed gas rate increases will happen that have been reviewed by UAC and Finance Committee. Whatever those increases are that could happen, there could be an 8% reduction from that level. With the commitment of those large quantities of funds, there will be a savings of $5 to $7 for the gas rate. Because it's targeted in a very specific way, there will be a much larger impact with a much smaller amount of money and because it will only be for one year.
Councilmember Stone asked for updates on the state’s Advanced Clean Cars. Assistant Director Abendschein replied progress on electric vehicles is important to achieving climate goals.
California has done a lot to try to protect its advanced clean cars, its advanced clean cars, its exception and its Advanced Clean Cars exception and regulations. Consideration needs to be given to what can be done to make that regulation successful if it stays in place and also to mitigate the damage if it does not in the coming years. Having a robust EV charging network is one thing that can be done and is in the work in the climate efforts, particularly using low carbon fuel standard funds.
Councilmember Burt inquired if there is another funding source to mitigate gas price increases.
Assistant Director Abendschein remarked the Finance Committee expressed a desire to look at
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
that but it was an open question. Alan Kurotori, Assistant Chief Operating Officer, commented the Finance Subcommittee was looking at the interest income for the gas utility as a whole, not just for the cap-and-trade. The number was $300,000 to $400,000. It was not enough to match the entire fund. There was a large discussion at the UAC in the use of climate credit monies from the gas fund. It would be a one -time event. Assistant Director Abendschein confirmed the reason money was not being invested in the reserve is pilot programs were needed to establish the most effective way to use the funds. Organizational capacity is being built and studies done to demonstrate the most effective way to use those funds.
Consent Calendar
Vice Mayor Veenker recused on Agenda Item Number 7.
MOTION: Councilmember Reckdahl moved, seconded by Council member Lythcott-Haims to approve Agenda Item Numbers 6-9.
MOTION PASSED ITEMS 6, 8-9: 7-0
MOTION PASSED ITEM 7: 6-0-1, Veenker recused
6. Approve the Office of the City Auditor Quarterly Report for the Period of October - December 2024
7. Stanford University Medical Center (SUMC) Annual Report to Council for Fiscal Year 2024 (FY 24)
8. Approval of Professional Services Contract No. C25193532 with Biggs Cardosa Associates Inc. in an Amount Not to Exceed $750,000 for On-Call Structural Engineering Services for City Structures including Bridges, Buildings, and Other Structures over a Period of Three Years; CEQA status – Not a Project
9. Approval of Two Professional Services Contracts, No. C25192359A with the Embarcadero Media Foundation and C25192359B with San Francisco Daily dba The Daily Post, in an Amount Not to Exceed $425,000 in Total for Legal Advertising Services for a Period of 5 Years; CEQA Status - Not a Project
City Manager Comments
City Manager Shikada provided a slide presentation with City Manager comments including Charleston Arastradero Corridor completion and upcoming Bike to Work event, upcoming Police Memorial event, housing updates and notable tentative upcoming Council items.
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
Action Items
10. FIRST READING: Adoption of an Ordinance Amending Various Palo Alto Municipal Code Chapters in Title 16 and 18 in Response to Direction from the California Department of Housing and Community Development (HCD) Regarding State Accessory and Junior Accessory Dwelling Unit Law. CEQA Status - Exempt From the Provisions of the California Environmental Quality Act (CEQA) Pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines Section 15061(b)(3).
Garrett Sauls, Principal Planner provided a slide presentation about the ADU Ordinance update including HCD comments, unit allowance (item #3), tree protection (item #9), JADU provisions (item #10), historic inventory (item #12), kitchen requirements (items #17 & 20), public comment (summary) and recommended motion and next steps.
Public Comment:
1. Sven T. spoke about increasing the square footage allowed for ADUs, condoizing ADUs and problems with impact fees.
2. John K. agreed the size of ADUs should be expanded, condo conversions should be allowed and disincentives for ADUs and impact fees should be done away with.
3. Jessica R. echoed that impact fees are a burden to ADUs. ADUs should be allowed to be sold separately from the main house.
Councilmember Lythcott-Haims described validity in allowing ADUs to be bigger, treating ADUs as real housing, allowing ADUs to be converting into condominiums and sold separately from the main house and treating ADUs fairly regarding the impact fee structure.
Councilmember Burt discussed ramifications of continuing to move the goalposts on ADUs.
Director Lait remarked the ordinance restates the provisions that the City applies to trees with the exception of the state mandated by right ADUs, those tree provisions would not apply. One correction being made with this ordinance was the mandated provisions superseding historic preservation. JADUs can now have a shared bathroom. A provision exists in current code that should be struck with respect to front yard ADUs for state mandated ADUs. Councilmember Burt discussed the notion of abandoning all boundaries and felt it required deep consideration.
Councilmember Lu supported looking at different size changes or condoization in the margins and asked about homes that currently have more than one ADU. Director Lait replied single family homes with a JADU and a detached ADU are common but no homes with a third ADU.
Councilmember Lu asked about a program to investigate expanding floor area limitations for SB9 projects. Director Lait commented that program is slated for next year to increase the maximum size of the SB9 unit from 800 square feet up to 1200 square feet. Councilmember Lu was open to the concept of 1200 square feet but felt a study was needed to go further than
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
that. An opportunity to study it might be within the housing element program suggested directing Staff to also consider ADUs in that 1,200 square foot change.
Mayor Lauing asked about impact fees for ADUs. Mr. Sauls explained impact fees are charged for ADU 750 square feet or larger. Director Lait commented as part of the citywide development impact fee nexus and feasibility study, a subset related to ADUs will also be reviewed. The fees are variable based on the size of the home.
Councilmember Reckdahl asked if the 18 -foot height on packet page 266 would require a daylight plane. Mr. Sauls explained 18 feet is allowed for a detached ADU and allowed with an existing or proposed multi -family, multi -story dwelling. There is a nuance to say if there is a multi-family, single-story dwelling, the height limit would be 16 feet for a detached ADU . If an ADU is proposed within a half mile walking distance of a major transit stop or high -quality transit corridor, a detached ADU can be up to 18 feet in height and potentially up to 20 feet in height if the roof pitch of the ADU is aligned with the roof pitch of the primary dwelling unit.
Those provisions were in place since 2023. Councilmember Reckdahl advised looking at a reasonable way of handling these adjusted setbacks that ADUs provide within state law. Mr.
Sauls added those provisions existed for detached ADUs between 2020 and 2022. State law changed to be more clearly explicit to allow providing some additional protections in that capacity. Even detached ADUs were explicitly prohibited of any height to be able to apply a daylight plane. Clear direction was received from HCD that could not be done for detached ADUs.
Councilmember Lu inquired if Staff saw in any efficiencies in tackling some subset of Councilmember Lythcott-Haims’ motion in the consideration of the SB9 updates or at least the condoization or the 1,200 square feet permissiveness. If it is a relatively manageable addition for the end of next year timeframe might be a way to consider it. Director Lait replied two actions related to SB9 are being worked on: 1. At the beginning of this year, the City Council adopted some changes to respond to state law. It is on the workplan to make that either a permanent ordinance or to extend the existing interim ordinance. The anticipation is coming back with an extension of that ordinance. 2. Increasing the size of the units. Director Lait offered looking at that to see if there are opportunities to engage the PTC in a conversation along the lines of what was discussed with respect to increasing ADU size and having that policy discussion through that process.
MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember XX to:
1. Adopt the draft ordinance in Attachment A amending PAMC Title 16 (Building Regulations) and Title 18 (Zoning) regulations for ADUs and JADUs.
2. Direct staff to engage with local architects, design professionals, and members of the public to analyze potential ADU reforms and return to Council by October 1 with a set of policy alternatives and recommendations including but not limited to:
SUMMARY MINUTES
City Council Meeting
Summary Minutes: 05/12/2025
a. increasing the maximum allowable size of ADUs (with 2+ BR) to between 1200 - 1600sf
b. excluding basements from the floor area of the JADU/ADU unit c. waiving impact fees for all ADUs
d. enabling condominium conversions to make way for separate conveyance of ADUs
MOTION FAILED FOR LACK OF A SECOND
MOTION: Councilmember Burt moved, seconded by Council member Reckdahl to adopt the draft Ordinance (Attachment A) amending Palo Alto Municipal Code (PAMC) Title 16 (Building Regulations) and Title 18 (Zoning) regulations for Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) with the added modification:
• Eliminate the phrase "underlying zoning for front setback" under the Single Family - New Construction of Detached ADU column in PAMC 18.09.030 Table 1 MOTION PASSED: 7-0
MOTION: Vice Mayor Veenker moved, seconded by Council member Lythcott-Haims to direct Staff to explore further policy alternatives relating to ADUs including additional square footage and condo conversions.
MOTION PASSED: 6-1, Burt no
Adjournment: The meeting was adjourned at 11:15 PM