Agenda packet — Palo Alto City Council, June 16, 2025 (part 4 of 6)

CITY OF PALO ALTO CONTRACT NO. C25193536

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND 4LEAF, INC.

This Agreement for Professional Services (this “Agreement”) is entered into as of the 9th day of June, 2025 (the “Effective Date”) , by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and 4LEAF, INC., a California corporation, located at 2126 Rheem Drive, Pleasanton, CA 94588 (“CONSULTANT”).

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

RECITALS

A. CITY intends to construct a new Fire Station No. 4 located at 3600 Middlefield Road, Palo Alto, CA 94303 (the “Project”) and desires to engage a consultant to provide Inspector-of-Record (IOR) services in connection with the Project (the “Services”, as detailed more fully in Exhibit A).

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

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

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

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

SECTION 2. TERM.

The term of this Agreement shall be from the effective date of this agreement through April 30, 2027 unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.

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

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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 Two Hundred Sixty - Four Thousand Seven Hundred Seventy -Five Dollars ($264,775.00). 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 Twenty-Six Thousand Four Hundred Seventy - Seven Dollars and Fifty Cents ($26,477.50) 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 Two Hundred Ninety -One Thousand Two Hundred Fifty -Two Dollars and Fifty Cents ($291,252.50), as detailed in Exhibit C.

“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 Section . 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.

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 exec uted Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Section 4 .

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 Docusign Envelope ID: 57DA58B3-9690-4A3B-81AC-8915F464D26D Item 16
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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.

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 Docusign Envelope ID: 57DA58B3-9690-4A3B-81AC-8915F464D26D Item 16
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pertaining to or in connection with any retirement, health or other benefits that CITY may offer its employees. CONSULTANT wi ll be responsible for all obligations and payments, whether imposed by federal, state or local law, including, but not limited to, FICA, income tax withholdings, workers’ compensation, unemployment compensation, insurance, and other similar responsibilities re lated to CONSULTANT’s performance of the S ervices, or any agent or employee of CONSULTANT providing same. Nothing in this Agreement shall be construed as creating an employment or agency relationship between CITY and CONSULTANT or any agent or employee of CONSULTANT. Any terms in this Agreement referring to direction from CITY shall be construed as providing for direction as to policy and the result of CONSULTANT ’s provision of the Services only, and not as to the means by which such a result is obtained.

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

SECTION 12. SUBCONTRACTING.

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

Option B: Subcontracts Authorized: Notwithstanding Section 11 (Assignment) above, CITY agrees that subcontractors may be used to complete the Services. The subcon tractors authorized by CITY to perform work on this Project are: None

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

SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Traci Caton as the CONSULTANT’s Project Manager 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 P roject 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.

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CITY’s Project Manager is Gloria Yu, Public Works Department, Engineering Division, 250 Hamilton Avenue, Palo Alto, CA 94301, Telephone: 650-329-2484. CITY’s Project Manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate Project Manager from time to time.

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

SECTION 15. AUDITS . CONSULTANT agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for four (4) years from the date of final payment, CONSULTANT’s records pertaining to matters covered by this Agreement, 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.

[Option A applies to the following design professionals pursuant to Civil Code Section 2782.8: architects; landscape architects; registered professional engineers and licensed professional land surveyors.] 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 third party demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorney’ s fees, experts fees, court costs and disbursements (“Claims”) to the extent that such Claims arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. CITY will reimburse CONSULTANT for the proportionate percentage of defense costs exceeding CONSULTANT’s proportionate percentage of fault as determined by the final judgment of a court of competent jurisdiction.

[Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 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, Docusign Envelope ID: 57DA58B3-9690-4A3B-81AC-8915F464D26D Item 16
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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 Party from a Claim arising from the active negligence or willful misconduct of an Indemnified Party that is not contributed to by any act of, or by any omission to perform a duty imposed by law or agreement by, CONSULTANT, its officers, employees, agents or contractors under this Agreement.

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

SECTION 17. WAIVERS. No waiver of a condition or nonperformance of an obligation under this Agreement is effective unless it is in writing in accordance with Section 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.

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

18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is pri mary 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 Docusign Envelope ID: 57DA58B3-9690-4A3B-81AC-8915F464D26D Item 16
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evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement.

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

SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.

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

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

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

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

With a copy to the Purchasing Manager

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

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

SECTION 21. CONFLICT OF INTEREST.

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

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

CONSULTANT certifies that no person who has or will have any 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.

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

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

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 Docusign Envelope ID: 57DA58B3-9690-4A3B-81AC-8915F464D26D Item 16
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rights laws and regulations, as amended from time to time. CONSULTANT will not discriminate against persons with disabilities in the provision of services, benefits or activities provided under this Agreement.

SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with t he CITY’s Environmentally Preferred Purchasing policies which are available at CITY ’s Purchasing Department , hereby incorporated by reference and as amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include, first, minimizing and reducing waste; second, reusing waste ; and, third, recycling or composting waste. In particular, C ONSULTANT shall comply with the following Zero Waste requirements:
(a) All printed materials provided by CONSULTANT to C ITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY ’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post-consumer material and printed with vegetable-based inks. (b) Goods purchased by C ONSULTANT on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Department’s office.
(c) Reusable/returnable pallets shall be taken 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, 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.

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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).

26.1. This Project is subject to prevailing wages and related requirements as a “public works” under California Labor Code Sections 1720 et seq. and related regulations.

CONSULTANT is required to pay general prevailing wages as defined in California Labor Code Section 1773.1 and Subchapter 3, Title 8 of the California Code of Regulations Section 16000 et seq., as amended from time to time. Pursuant to Labor Code Section 1773, the CITY has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the State of California Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the CITY’s Purchasing Department office. The general prevailing wage rates are also available at the DIR, Division of Labor Statistics and Research, web site (see e.g. http://www.dir.ca.gov/DLSR/PWD/index.htm) as amended from time to time. CONSULTANT shall post a copy of the general prevailing wage rates at all Project job sites and shall pay the adopted prevailing wage rates as a minimum. CONSULTANT shall comply with all applicable provisions of Division 2, Part 7, Chapter 1 of the California Labor Code (Labor Code Section 1720 et seq. ), including but not limited to Sections 1725.5, 1771, 1771.1, 1771.4, 1773.2, 1774, 1775, 1776, 1777.5, 1782, 1810, 1813 and 1815, and all applicable implementing regulations, including but not limited to Subchapter 3, Title 8 of the California Code of Regulations Section 16000 et seq. (8 CCR Section 16000 et seq.) , as amended from time to time. CONSULTANT shall comply with the requirements of Exhibit E , entitled “ DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS”, for any contract for public works construction, alteration, demolition, repair or maintenance, including but not limited to the obligations to register with, and furnish certified payroll records directly to, DIR.

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 a 9204 Public Works Project and is required to comply with the claims procedures set forth in Exhibit F, entitled “ Claims for Public Contract Code Section 9204 Public Works Projects”.

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This Project is not a 9204 Public Works Project.

SECTION 28. CONFIDENTIAL INFORMATION.

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

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

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

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

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

SECTION 29. MISCELLANEOUS PROVISIONS.

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

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

29.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys’ fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties.

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

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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
EXHIBIT E: DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS
EXHIBIT F: CLAIMS FOR PUBLIC CONTRACT CODE SECTION 9204

PUBLIC WORKS PROJECTS

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

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CONTRACT No. C25193536

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:

__________________________

4LEAF, INC.

Officer 1

By: ________________________________

Name: ______________________________

Title: _______________________________

Officer 2

By: ________________________________

Name: ______________________________

Title: _______________________________

Docusign Envelope ID: 57DA58B3-9690-4A3B-81AC-8915F464D26D Gene Barry, Vice President
Vice President
President
Kevin Duggan, Secretary
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EXHIBIT A

SCOPE OF SERVICES

CONSULTANT shall provide the Services detailed in this Exhibit A , entitled “ SCOPE OF SERVICES”. Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project.

CONSULTANT’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications.

CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services.

The CONSULTANT will provide Inspector-of-Record (IOR) services for the construction of a new Fire Station No. 4 located at 3600 Middlefield Road in Palo Alto, CA 94303. The IOR will act as an agent of the Owner at the project site and will report to the Chief Building Official or its designee and coordinate with the Construction Manager to ensure that the project is constructed in accordance with the Essential Services Build ings Seismic Safety Act (ESBSSA), the approved building permit plans, specifications, and change orders.

Services include but are not limited to:

1. Review existing Owner’s Project Requirements (OPR) and design documents.

2. Peer review permit set prior to bid of the construction phase of the Project and provide comment log on compliance to applicable codes within two weeks of the Notice to Proceed (NTP). Meet with the City to review comments and comment log. Permitted set of drawings will be provided when IOR is retained.

3. Availability during construction hours, which are allowed from 8 am – 6 pm Monday - Friday and/or 9 am – 6 pm Saturday. IOR may be asked to be onsite during off hours or weekend hours as deemed necessary by the Owner or Construction Manager.

4. Be familiar with the permit plans, specifications, change orders, and the contractor’s operations during all phases of the project.

5. Observe, check and measure items used in the project for compliance with the applicable codes and ordinances, regulations, plans, specifications, change orders, City policies, and technical instructions from the Architect. The services shall include, but not be limited to review of the following as applicable to each project: architectural, structural, electrical, mechanical, and plumbing plans; structural calculations; accessibility compliance; fire and life safety components; geotechnical reports related to structural design; green building and energy code compliance documentation and deferred submittal items.

6. Coordinate assigned inspection and re-inspection requests.

7. Attend project meetings requested by the Owner or Construction Manager such as billing meetings, O wner, Architect, and C ontractor (OAC) meetings, pre-installation meetings, progress meetings, and unique meetings scheduled to resolve specific issues which arise during the course of construction.

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8. Maintain log of deferred submittals schedule and approval.

9. Maintain a daily inspection report/log with photos as needed describing the general work performed by the contractor, noting problems, rejections of materials, or work and unusual events. All reports and records created or maintained by the IOR shall be distributed to the Owner and Construction Manager on a weekly basis and shall be Owner’s sole property. The inspection report will also include equipment, personnel, and site conditions.

10. Create and maintain an extensive photo library, readily identifiable by date and location. Photos shall be easily referenced to the daily inspection report.

11. Supervise on-site testing and ensure that all required tests are performed by a competent testing laboratory, contractor, or engineer as specified in the Contract Documents.

Check and report to the Owner, Construction Manager, Architect, and testing inspector indicating defective materials or other problems. IOR may be requested to review invoices for testing to verify correct billing for testing. Maintain a daily log of inspection by testing lab.

12. Report to the Owner, Construction Manager, and the Architect verbally and in writing:
(1) poor performance by the contractor; (2) acts prejudicial to the Owner’s interest; and, (3) work performed or materials used which are not in conformance with the permit Contract Documents and building code.

13. Accompany Owner, Construction Manager, Architect and/or other consultants when any of them are observing construction work. Ensure any verbal instructions during field inspections are written in the Daily Report/Log for that day.

14. Attempt to foresee methods or materials which will not be acceptable and immediately bring these facts to the Contractor’s attention in order to avoid removal of work already in place.

15. Assist Construction Manager to anticipate the contractor’s problems and review with Owner and Construction Manager anticipated schedules and work involved prior to the commencement of a new trade on the job.

16. Sign Time & Material Request acknowledgements.

17. Review Requests for Information (RFI’s), revisions, and Change Order Requests.

18. Review submittals and deferred submittals.

19. Attempt to foresee the need for all required tests and inspections and provide adequate notification to responsible party for scheduling.

20. Review Progress Billing and As-Builts.

21. Refuse to allow any related work to be installed until shop drawings, samples, and mock-ups have received final approval from the Architect.

22. Collaborate with the Owner, Construction Manager and the Architect in the final inspection and project acceptance phase.

23. Assist in the completion of LEED documentation as required.

24. Assist in project close-out documents as required.

25. IOR will be required to utilize construction program management software.

26. IOR shall keep at the project a copy of all applicable building codes and regulations necessary to perform required inspections and have ready access to City municipal codes, guidelines, and procedures.

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27. Enter inspection records into the Accela permit tracking system. Maintain inspection records for assigned projects as determined by the Owner.

28. If turnover of CONSULTANT staff occurs, provide a two week overlap of IORs for coverage continuity and transfer of project history and knowledge.

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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. Review BOD/OPR and peer review permit
set
2 weeks

2. Provide inspection services 96 weeks

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 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

REIMBURSABLE EXPENSES

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

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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.

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EXHIBIT C-1

SCHEDULE OF RATES

CONSULTANT’s schedule of rates is as follows:

Description Hourly Rate
Inspector-on-Record $147
Administration $175

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EXHIBIT D

INSURANCE REQUIREMENTS

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

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

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

REQUIRED TYPE OF COVERAGE REQUIREMENT

MINIMUM LIMITS
EACH

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

STATUTORY

STATUTORY STATUTORY STATUTORY
YES

GENERAL LIABILITY, INCLUDING

PERSONAL INJURY, BROAD FORM

PROPERTY DAMAGE BLANKET

CONTRACTUAL, AND FIRE LEGAL

LIABILITY

BODILY INJURY

PROPERTY DAMAGE

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

$1,000,000

YES

AUTOMOBILE LIABILITY,

INCLUDING ALL OWNED, HIRED,

NON-OWNED

BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE

PROPERTY DAMAGE

BODILY INJURY AND PROPERTY

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

$1,000,000

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

$1,000,000

YES

PROFESSIONAL LIABILITY,

INCLUDING, ERRORS AND

OMISSIONS, MALPRACTICE (WHEN

APPLICABLE), AND NEGLIGENT

PERFORMANCE
ALL DAMAGES $1,000,000
YES

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

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

OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONSULTANT AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.

I. INSURANCE COVERAGE MUST INCLUDE:

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

II. THE CONSULTANT MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING EMAIL: [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 SENT TO THE FOLLOWING EMAIL:

[email protected]

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EXHIBIT E
DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS (not applicable)

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EXHIBIT F
CLAIMS FOR PUBLIC CONTRACT CODE SECTION 9204 PUBLIC WORKS

PROJECTS

The provisions of this Exhibit are provided in compliance with Public Contract Code Section 9204; they provide the exclusive procedures for any claims pursuant to Public Contract Code Section 9204 related to the Services performed under this Agreement.

1. Claim Definition. “Claim” means a separate demand by the Contractor sent by registered mail or certified mail with return receipt requested, for one or more of the following:

(A) A time extension, including, without limitation, for relief from damages or penalties for delay assessed by the City.
(B) Payment by the City of money or damages arising from the Services performed by, or on behalf of, the Contractor pursuant to the Agreement and payment for which is not otherwise expressly provided or to which the Contractor is not otherwise entitled. (C) Payment of an amount that is disputed by the City.

2. Claim Process.

(A) Timing. Any Claim must be submitted to City in compliance with the requirements of this Exhibit no later than fourteen (14) days following the event or occurrence giving rise to the Claim. This time requirement is mandatory; failure to submit a Claim within fourteen (14) days will result in its being deemed waived.

(B) Submission. The Claim must be submitted to City in writing, clearly identified as a “Claim” submitted pursuant to this Exhibit, and must include reasonable documentation substantiating the Claim. The Claim must clearly identify and describe the dispute, including relevant references to applicable portions of the Agreement, and a chronology of relevant events.

Any Claim for additional payment must include a complete, itemized breakdown of all labor, materials, taxes, insurance, and subcontract, or other costs. Substantiating documentation such as payroll records, receipts, invoices, or the like, must be submitted in support of each claimed cost.

Any Claim for an extension of time or delay costs must be substantiated with schedule analysis and narrative depicting and explaining claimed time impacts.

(C) Review . Upon receipt of a Claim in compliance with this Exhibit, the City shall conduct a reasonable review of the Claim and, within a period not to exceed 45 days from receipt, shall provide the Contractor a written statement identifying what portion of the Cla im is disputed and what portion is undisputed. Upon receipt of a Claim, the City and Contractor may, by mutual agreement, extend the time period provided in this paragraph 2.

(D) If City Council Approval Required. If the City needs approval from the City Council to provide the Contractor a written statement identifying the disputed portion and the undisputed portion of the Claim, and the City Council does not meet within the 45 days or within the mutually agreed to extension of time following receipt of a Claim sent by registered mail or certified mail, return receipt requested, the City shall have up to three days following the next duly publicly noticed meeting of the City C ouncil after the 45-day period, or extension, expires to provide the Contractor a written statement identifying the disputed portion and the undisputed portion.

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(E) Payment. Any payment due on an undisputed portion of the Claim shall be processed and made within 60 days after the City issues its written statement. If the City fails to issue a written statement, paragraph 3, below, shall apply.

3. Disputed Claims

(A) Meet and Confer. If the Contractor disputes the City's written response, or if the City fails to respond to a Claim submitted pursuant to this Exhibit within the time prescribed, the Contractor may demand in writing an informal conference to meet and confer for settlement of the issues in dispute. Upon receipt of a demand in writing sent by registered mail or certified mail, return receipt requested, the City shall schedule a meet and confer conference within 30 days for settlement of the dispute. Within 10 business days following the conclusion of the meet and confer conference, if the Claim or any portion of the Claim remains in dispute, the City shall provide the Contractor a written statement identifying the portion of the Claim that remains in dispute and the portion that is undisputed. Any payment due on an undisputed portion of the Claim shall be processed and made within 60 days after the City issues its written statement.

(B) Mediation . Any remaining disputed portion of the Claim, as identified by the Contractor in writing, shall be submitted to nonbinding mediation, with the City and the Contractor sharing the associated costs equally. The City and Contractor shall mutually agree to a mediator within 10 business days after the disputed portion of the Claim has been identified in writing by the Contractor. If the parties cannot agree upon a mediator, each party shall select a mediator and those mediators shall select a qualified neutral third party to mediate the disputed portion of the Claim. Each party shall bear the fees and costs charged by its respective mediator in connection with the selection of the neutral mediator. If mediation is unsuccessful, the parts of the Cl aim remaining in dispute shall be subject to any other remedies authorized by the Agreement and laws.

(i) For purposes of this paragraph 3.B, mediation includes any nonbinding process, including, but not limited to, neutral evaluation or a dispute review board, in which an independent third party or board assists the parties in dispute resolution through negotiation or by issuance of an evaluation.

Any mediation utilized shall conform to the timeframes in this section.

(ii) Unless otherwise agreed to by the City and the Contractor in writing, the mediation conducted pursuant to this section shall excuse any further obligation, if any, under Public Contract Code Section 20104.4 to mediate after litigation has been commenced.

4. City’s Failure to Respond. Failure by the City to respond to a Claim from the Contractor within the time periods described in this Exhibit or to otherwise meet the time requirements of this Exhibit shall result in the Claim being deemed rejected in its entirety. A Claim that is de nied by reason of the City's failure to have responded to a Claim, or its failure to otherwise meet the time requirements of this Exhibit, shall not constitute an adverse finding with regard to the merits of the Claim or the responsibility or qualifications of the Contractor.

5. Interest. Amounts not paid in a timely manner as required by this section shall bear interest at seven (7) percent per annum.

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6. Approved Subcontractor Claims . If an approved subcontractor or a lower tier subcontractor lacks legal standing to assert a Claim against the City because privity of contract does not exist, the Contractor may present to the City a Claim on behalf of a subcontractor or lower tier subcontractor. A subcontractor may request in writing, either on his or her own behalf or on behalf of a lower tier subcontractor, that the Contractor present a Claim for work which was performed by the subcontractor or by a low er tier subcontractor on behalf of the subcontractor.

The subcontractor requesting that the Claim be presented to the City shall furnish reasonable documentation to support the Claim. Within 45 days of receipt of this written request, the Contractor shall notify the subcontractor in writing as to whether the Contractor presented the claim to the City and, if the Contractor did not present the claim, provide the subcontractor with a statement of the reasons for not having done so.

7. Waiver of Provisions . A waiver of the rights granted by Public Contract Code Section 9204 is void and contrary to public policy, provided, however, that (1) upon receipt of a Claim, the parties may mutually agree to waive, in writing, mediation and proceed directly to the commencement of a civil action or binding arbitration, as applicable; and (2) the City may prescribe reasonable change order, claim, and dispute resolution procedures and requirements in addition to the provisions of Public Contract Code Section 9204, so long as the contractual provisions do not conflict with or otherwise impair the timeframes and procedures set forth in this section.

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CITY OF PALO ALTO CONTRACT NO. C25194267

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND INTERFACE ENGINEERING, INC.

This Agreement for Professional Services (this “Agreement”) is entered into as of the 16th day of June, 2025 (the “Effective Date”) , by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and INTERFACE ENGINEERING, INC., a Delaware corporation, located at 100 SW Main Street, Suite 1600, Portland, OR 97204 (“CONSULTANT”).

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

RECITALS

A. CITY intends to build a new Fire Station No. 4 ( the “Project”) and desires to engage a consultant to provide commissioning services in connection with the Project ( the “Services”, as detailed more fully in Exhibit A).

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

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

SECTION 2. TERM.

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

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.

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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 Ninety -Two Thousand Two Hundred Fifty Dollars ($92,350.00). 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 Nine Thousand Two Hundred Thirty -Five Dollars ($9,235) 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 One Hundred One Thousand Five Hundred Eighty-Five Dollars ($101,585.00), as detailed in Exhibit C.

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 Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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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.

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 Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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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 12. SUBCONTRACTING.

Thornton Tomasetti – Building Envelope

SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Meghan Mello as the CONSULTANT’s Project Manager 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 P roject 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.

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CITY’s Project Manager is Gloria Yu , Public Works Department, Engineering Division, 250 Hamilton Ave., Palo Alto, CA 94301, Telephone: 650-329-2484. 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 16. INDEMNITY.

[Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 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, Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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SECTION 18. INSURANCE.

18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days ’ prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) 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 Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement.

SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.

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
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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.

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

SECTION 22. NONDISCRIMINATION; COMPLIANCE WITH ADA.

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 Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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this Agreement.

SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with t he CITY’s Environmentally Preferred Purchasing policies which are available at CITY ’s Purchasing Department , hereby incorporated by reference and as amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include, first, minimizing and reducing waste; second, reusing waste ; and, third, recycling or composting waste. In particular, C ONSULTANT shall comply with the following Zero Waste requirements:
• 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. • 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.
• Reusable/returnable pallets shall be taken back by CONSULTANT, at no additional cost to CITY , for reuse or recycling. C ONSULTANT 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 .

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

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requirements under the California Labor Code and California Code of Regulations in the performance and implementation of the Project if the contract:

25. is not a public works contract;

26. 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

27. 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).

26.1. This Project is subject to prevailing wages and related requirements as a “public works” under California Labor Code Sections 1720 et seq. and related regulations.

This Project is not a 9204 Public Works Project.

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SECTION 28. CONFIDENTIAL INFORMATION.

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

28.6. If selected in Section 30 (Exhibits), this Agreement is also subject to the Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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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.

29.7. 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.

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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. C25194267

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

INTERFACE ENGINEERING, INC.

Officer 1

By: ________________________________

Name: ______________________________

Title: _______________________________

Officer 2

By: ________________________________

Name: ______________________________

Title: _______________________________

Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Richard Russell
Principal
Shawn MacLean, Secretary/Principal
Principal
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EXHIBIT A

SCOPE OF SERVICES

CONSULTANT’s participation in the planning, discussions, or drawing of proj ect plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications.

Background
The City requires a CONSULTANT to provide complete building commissioning services for this project as noted in the project specifications. The project is seeking LEED Silver certification and will require the associated commissioning services to achieve this level of sustainability, as well as meeting CalGreen Tier II standards. The curren t intent is to achieve full LEED Enhanced Commissioning and Building Envelope Commissioning credits.

The CONSULTANT will be expected to foster collaborative working relationships with all members of the City staff, the architect, engineers, construction managers, other consultants, vendors, specialty contractors, and subcontractors throughout the duration of the project. The CONSULTANT will be integrated into the project team throughout design, construction, and close-out. City will provide construction schedule to CONSULTANT once submitted by the Contractor and approved by the City.

CONSULTANT to provide building commissioning services for the following systems listed below.

A. HVAC Systems

1. Air-handling Units

2. VRF Condensing Unit

3. Fan-coil Units

4. Energy Recovery Ventilator

5. Split System Heat Pump

6. Electric Radiant Heaters

7. Exhaust fans

8. Unit Heaters

9. Vehicle Exhaust System
B. Electrical Systems

1. Utility power distribution system

2. Emergency generator power system and distribution

3. Lighting control system
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4. Photovoltaic panel system

5. EV chargers

6. Photovoltaic systems and integration of the system to present design (may be included as part of the project at a future date, however, infrastructure is included in base bid currently).

C. Plumbing Systems

1. Domestic hot water including Water Heater and Pump

2. Gas Piping for Connection to Mechanical System

3. Air Compressor

4. Plumbing fixtures

5. Irrigation systems
D. Building Management Systems

1. MS Control System
E. Building Envelope

Excluded Systems:

A. Fire alarm, and life safety.

B. Fire sprinklers and pumps, except if pumps are required to function in life safety circumstances
C. Security systems, except as they interface with doors critical to life safety (REX, etc) D. A/V systems
E. IT systems
F. Irrigation systems
G. Battery storage system for PV system (not in scope of project)

The CONSULTANT shall perform the following services:

Design Phase
A. Owner’s Project Requirements (OPR) and Design Document Review

1. The CONSULTANT shall review and provide comments on the most current draft of the Owner’s Project Requirement (OPR) and Design Documents provided by the CITY.

2. The CONSULTANT shall write and complete Specifications and OPR.

3. Deliverables
a. CONSULTANT shall provide comments and feedback in a report of the design and specifications. CONSULTANT to suggest options to existing design for review by the team.
b. CONSULTANT shall provide complete set of specifications for the following sections is a Microsoft Word document format:
a. General Commissioning Requirements
b. Exterior Enclosure Commissioning
c. Commissioning of Plumbing
d. Commissioning of HVAC
e. Commissioning of Electrical Systems
B. Commissioning Plan

1. CONSULTANT shall prepare and distribute a Commissioning Plan, and revise as necessary, that describes the commissioning process and outlines the roles and Docusign Envelope ID: 587C0CE6-9268-47F8-A587-986C917D8614 Item 16
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responsibilities of all commissioning team members; including the Owner’s construction manager, design team, commissioning authority, contractors, subcontractors, and equipment suppliers. These roles and responsibilities shall be summarized in a matrix for clarity.

2. The Commissioning plan shall include a project specific checklist and commissioning process test procedures. Project specific checklist should include party or parties responsible for completing.

3. Deliverables
a. Commissioning Plan
b. Project Specific checklist and commissioning process test procedures

Construction Phase
A. Submittal Review

1. CONSULTANT shall review all submittals of systems to be commissioned concurrently with Engineers -of-Record and act as the Owner’s advocate in reviews related to commissioning, then back- check to ensure that comments have been appropriately addressed. CONSULTANT shall maintain a database of submittals in Facility Grid.

2. Deliverables: CONSULTANT shall provide the following in Facility Grid. a. Mechanical submittals review comments
b. Electrical submittals review comments
c. Plumbing submittals review comments
d. Lighting and lighting control submittals review comments e. BMS Submittals review comments
f. Building Enclosure review comments
B. Commissioning Schedule

1. CONSULTANT shall facilitate scheduling coordination with General Contractor to ensure the following commissioning milestones and activities are included in the project schedule.

2. Equipment submittals and shop drawings
a. Sequence of Operation coordination
b. Equipment start-up and pre-functional checks
c. Factory Representative start-up and inspection of equipment where required d. Test, Adjust, and balance
e. Contractor Functional testing
f. CONSULTANT Witnessed Demonstration tests
g. BMS trend review initiation and data distribution
h. Submission of operations and maintenance manuals and review of information i. Development and review of record drawings
j. Assist in training of Owner personnel
b. Deliverable
a. CONSULTANT shall meet with the General Contractor to provide a schedule to the CITY.

C. Commissioning Matrix

1. CONSULTANT shall prepare a system and equipment commissioning matrix with a line item for each piece of equipment and each subsystem specified to be commissioned. The matrix shall include for each line item, if applicable:
a. Equipment tag or name
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b. Service
c. Location
d. Responsible subcontractor
e. The due date and actual completion date for the following:
i. Submittals
ii. Shop drawings
iii. Factory test
iv. Development and review of Pre-Functional and Startup checks v. Equipment set
vi. Preliminary operations and maintenance manuals indicating start-up procedures
vii. Development and review of functional performance test scripts viii. Pre-start verification
ix. Equipment start-up
x. Pre-functional check out
xi. Test and balance
xii. Contractor Functional performance tests
xiii. Witnessed Functional Demonstration tests
xiv. Operations & Maintenance manuals reviewed
xv. Record drawings reviewed
xvi. Training (possible to assist and record training if not already included in specifications by the GC.)

2. Deliverable

1. CONSULTANT shall complete the commissioning matrix as activities are completed, and distribute to Commissioning Team at least two days prior to each team meeting or when requested by CITY or the CITY’s representative.

D. Functional Performance Test Scripts

1. CONSULTANT shall develop functional performance test documents to be executed by the contractors responsible for each system.
a. Test protocols shall be sufficiently detailed and based on accepted industry standard of care to demonstrate that the system tested is operating in accordance with the OPR and contract documents
E. Commissioning Meetings

1. CONSULTANT shall schedule and lead meetings of Commissioning Team. Commissioning Team shall be notified of all meeting times and locations at least one week prior to the meeting. CONSULTANT shall send agenda to Commissioning Team at least three (3) busine ss days prior to the meeting. Send meeting minutes including action items to Commissioning Team within 2 business days of the meeting.

2. Meeting schedule
a. One scoping meeting shall occur upon time when the Commissioning and General Contractor Contracts are finalized. Meeting shall include a discussion of preliminary commissioning schedule and roles of each Team member. b. Monthly progress meetings; more frequent if required in the judgment of the Commissioning Authority; less frequent if requested by the Commissioning Team and approved by the Owner’s Representative.

F. Functional Testing

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General Contractor’s Members of Commissioning Team.
a. Ensure that check-lists and start up reports are successfully completed by reviewing forms for completeness and positive response, and ensuring forms have been signed by the Team Member who performed the work.
b. Compile pre -functional checklist and start up documentation and submit to the Owner’s Representative for review and approval.
c. Coordinate and ensure resolution of punch lists from Owner, Owner’s Representative, or other entity.
d. The CONSULTANT shall review the draft scripts and forms and prepare final FPT scripts and forms for execution by the Contractors.

2. CONSULTANT shall supervise functional performance testing performed by Contractor’s Members of Commissioning Team.
a. Coordinate tests among Team Members and schedule tests so that required work for each trade is complete prior to tests being performed. b. Ensure that FPTs are successfully completed by reviewing test forms for completeness and positive response, and ensuring forms have been signed by the Team Member who performed the work; the Commissioning Authority is not required to perform or witness any FPTs. The intent is for the Contractor to do all the tests first to ensure they work prior to CONSULTANT involvement. c. Compile test documentation and submit to the Owner’s Representative for review and approval.
d. Coordinate and ensure resolution of punch lists from Owner, Owner’s Representative or other entity.

G. Site Visits

1. CONSULTANT shall conduct periodic site observations sufficient to confirm commissioning activities are being appropriately completed consistent with the progress of the completion of the work.

2. Deliverables
a. CONSULTANT to issue site visit reports to the CITY and the General Contractor within 2 business days of the site visit.

H. Testing and Documentation Prepared by Others

1. Review HVAC ductwork testing and cleaning documentation sufficient to assess that proper procedures were followed and satisfactory results were obtained

2. Review systems startup reports to ensure satisfactory results were achieved and related site observations as may be warranted.

3. Review air and water balancing reports and related site observations as may be warranted, with a written assessment to the City recommending acceptance (or not) of the test and balance report.

4. Review load bank and operational testing documentation of generator, UPS’s and ATS’s to assess that proper procedures were followed and satisfactory results obtained.

5. Review Operations & Maintenance manuals for completeness and accuracy.

6. Deliverables
a. CONSULTANT shall perform formal reviews of and provide comments on each document.

I. Deficiency and Resolution Log

1. CONSULTANT shall prepare and maintain a master deficiency and resolution log developed from punchlists, including status and date of resolution of each deficiency.

CONSULTANT shall use Facility Grid for tracking items.

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2. CONSULTANT to provide the CITY and CITY’s Representative with regular progress reports.

J. Building Envelope Commissioning

1. In addition to the scope above, CONSULTANT shall complete the following commissioning process activities for the building’s thermal envelope in accordance with ASHRAE Guideline 0–2013 and ASTM E2947-16: Standard Guide for Building Enclosure Commissioning, as they relate to energy, air and water tightness, indoor environmental quality, and durability.

2. CONSULTANT shall not exceed 250 hours during the construction phase and warranty/post-occupancy phase.

3. Deliverables
a. In accordance with above for all other commissioning services b. CONSULTANT shall develop an on- going enclosure commissioning plan for maintenance, renewal and revitalization cycles.

Post-Construction
A. CONSULTANT shall coordinate and confirm completion of training of CITY personnel as specified.

1. Assist in schedule training with Contractors and CITY’s Representatives.

2. Review and approve training materials prepared by Contractors. Ensure that training sessions occur as scheduled.

3. CONSULTANT may need to attend training sessions depending upon topic or specific system.

4. Each training session shall have a Training Log created and verified by the CONSULTANT that includes the following:
a. Topics trained Specification sections covered by training b. Electronic word searchable copies of training materials c. Date of training Duration of training
d. Name, title, affiliation and signature of trainer
e. Name, title affiliation and signature of all trainees B. Post Occupancy Site Visit

1. Approximately 8-10 months after substantial completion, the CONSULTANT shall conduct a post-occupancy evaluation to verify the building’s performance during active use. The CONSULTANT will review and address a list of events or concerns provided by the CITY or facility operators and perform seasonal testing as required. Additionally, the CONSULTANT will confirm that all training requirements have been met and that a plan for resolving any outstanding commissioning- related issues has been implemented.

2. Deliverable
a. CONSULTANT shall provide a post-occupancy evaluation report.

Commissioning Documentation
A. Commissioning Report

1. CONSULTANT to provide a summary commissioning report that summarizes commissioning activities and includes copies of the commissioning plan and results.

2. Commissioning Report including:
a. Summary of Commissioning Activities and Status
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b. System/Equipment Matrix
c. Start-up and Factory Test
d. Test and Balance Reports
e. Pre-functional Test Documentation
f. Functional Performance Test Documentation
g. Demonstration Test Documentation
h. Deficiency and Resolution Log

Add Alternate: LEED Monitoring-based Commissioning
Work for LEED Monitoring Based Commissioning credit is an add alternate to the scope.

CONSULTANT shall meet with the CITY to determine if the added scope is needed to achieve the credit, and CONSULTANT shall proceed only upon written authorization from the CITY on scope related to achieving the LEED Monitoring Based Commissioning credit. CONSULTANT shall perform the following services if authorized:

Monitoring-based Commissioning Planning Phase
A. Define high priority systems from performance monitoring B. Create a Monitoring Action Plan that includes meters, monitoring points, and key performance indicators

1. CONSULTANT shall coordinate with the CITY’s facilities management team to develop a guide on what will be tracked to keep building systems optimized over time.

C. Specify or enhance an Energy Management and Information System (EMIS) that identifies issues and opportunities that are displayed visually, allows for root cause analysis and investigation, identifies and implements corrective actions, and provides reports of commissioning efforts
D. Create a Training Plan with the following:

1. Control sequences of operation

2. Sensor calibration

3. Troubleshooting data quality issues

4. EMIS capabilities and navigation

5. Using the Monitoring Action Plan

6. Training on building systems’ improvements

Energy Management and Information System Configuration Phase A. Define data configuration requirements
B. Calibrate critical sensors
C. Perform data quality checks
D. Create a user interface for gathered data that includes the following:

1. Building name and geographical location

2. Simple chart display or summary table indicating key performance indicators

3. Sorting of sites within a portfolio (if applicable)

4. Navigation from main landing page to specific buildings/meters/charts/etc.

5. Summary of outstanding issues or alerts

6. Savings summary data showing progress toward the project savings target

7. Progress toward long-term organizational goals
E. Configure energy savings and anomaly tracking

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Monitoring-based Commissioning Implementation Phase
A. Identify issues and opportunities using EMIS and the Monitoring Action Plan B. Investigate root cause for prioritized issues
C. Identity and implement corrective actions, and update facility documentation D. Verify performance improvement
E. Implement reporting, documentation, and training of CITY personnel

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EXHIBIT A-1

PROFESSIONAL SERVICES TASK ORDER

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:_____________________________________

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

Milestones
Completion
Number of Days/Weeks (as specified below)
from NTP
Review Owner’s Project Requirements Design
Documents
1 week
Commissioning Plan Developments 4 weeks
Commissioning Plan and Submittal Reviews 86 weeks
Commissioning Matrix and Schedule 86 weeks
Commissioning Meetings 86 weeks
Pre-Functional Testing 86 weeks
Demonstration Testing 86 weeks
Site Visits 86 weeks
Review of Tests and Documents 86 weeks
Deficiency and Resolution log 86 weeks
Training 90 weeks
Post Occupancy Site Visit (w/ seasonal
testing)
120 weeks
Commissioning Report 120 weeks
Building Envelope Commissioning 86 weeks
Monitoring-Based Commissioning 90 weeks

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EXHIBIT C

COMPENSATION

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REIMBURSABLE EXPENSES

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EXHIBIT C-1

SCHEDULE OF RATES

CONSULTANT’s schedule of rates is as follows:

Senior Principal $375/Hour
Principal $325/Hour
Associate Principal $275/Hour
Associate / Project Manager $260/Hour
Sr. Engineer / Designer $230/Hour
Engineer / Designer $185/Hour
Project Designer / Drafter $165/Hour
Administrative $135/Hour

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EXHIBIT D

INSURANCE REQUIREMENTS

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

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

REQUIRED TYPE OF COVERAGE REQUIREMENT

MINIMUM LIMITS
EACH

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

STATUTORY

STATUTORY STATUTORY STATUTORY
YES

GENERAL LIABILITY, INCLUDING

PERSONAL INJURY, BROAD FORM

PROPERTY DAMAGE BLANKET

CONTRACTUAL, AND FIRE LEGAL

LIABILITY

BODILY INJURY

PROPERTY DAMAGE

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

$1,000,000

YES

AUTOMOBILE LIABILITY,

INCLUDING ALL OWNED, HIRED,

NON-OWNED

BODILY INJURY
a) EACH PERSON
b) 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

1. INSURANCE COVERAGE MUST INCLUDE:

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

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

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

15 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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16 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.

17 NOTICE OF CANCELLATION

• 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.

• 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 SENT TO THE FOLLOWING EMAIL:

[email protected]

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: June 16, 2025
Report #:2506-4781
TITLE
Approval of Contract Amendment No. 4 to Contract Number C19171363 with Professional Account Management LLC, dba Duncan Solutions, to Extend the Contract for one year to June 30, 2026, and to Adjust Billing Rates, Without an Increase to Compensation, for a Not -to- Exceed Amount of $767,000 for Parking Permitting and Citation Management Services; CEQA Status -- Not a Project.

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or designee to execute Contract Amendment No.4 to Contract No. C19171363 with Professional Account Management LLC, dba Duncan Solutions, to extend the contract term for an additional year through June 30, 2026 and adjust billing rates, without an increase to Compensation.

Not To Exceed (NTE) amount of $767,000.

EXECUTIVE SUMMARY
This action is part of a phased process to potentially transition to a new permit management and citations service provider over the course of the next fiscal year, to streamline the management of the City parking programs. The Office of Transportation (OOT), in coordination with the Administrative Service Department, the City Clerk’s Office, and the Police Department (PAPD), have selected a new parking permit and citation management service provider. That contract approval is currently scheduled to come to Council for approval in August 2025. The new service provider will begin to support the administration of parking permit programs, first in the commercial districts (California Avenue and University Avenue, and then the remaining programs), and to facilitate parking citation processing and collection. The attached amendment with Duncan Solutions extends their term for the current contract to support OOT administration of several Residential Preferential Parking programs while the new service provider takes on program support and administration over the course of the new fiscal year.

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BACKGROUND
The City of Palo Alto has instituted an approach to manage parking that exempts select motorists from short-term parking restrictions in residential neighborhoods and the commercial cores (on- and off-street parking). There are six (6) Residential Preferential Parking (RPP) districts where residents are eligible to obtain parking permits. Businesses and/or employees located within some of these RPP districts as well as the two (2) commercial districts around University Avenue and California Avenue are eligible to obtain a limited number of permits. Across the eight (8) parking programs there are variations on items such as the number of vehicles per permit, fee levels, duration, renewal dates, eligibility, and limits. In addition to permit management, the City issues and processes citations for violations of the parking regulations.

The issuance of parking permits and the issuance and processing of parking citations are handled by a combination of City contractors and City staff and have evolved as permit parking programs have expanded and evolved over time. A new contractor will soon begin to continue the work of previous City contracted service providers to improve efficiencies and customer experience for permit purchasers. The new service provider will build a custom parking permit and citation processing platform and provide support and system maintenance for a period of five years. More details will be provided in the staff report for contract approval in August 2025.

Duncan contract (C19171363) and amendments history:

Original Contract: Effective 3/31/2019 to 3/31/2024 (5 years) NTE of $627,0005 (City Council meeting 6/24/2019 SR 10241)1
Amendment #1: Effective 6/27/2019 - no term change; NTE increased $140,000 for ALPR added to vehicles (City Council meeting 2/22/2021 SR 11492)2
Amendment #2: NTE to remain at $767,000; term extended to 3/31/2024 (City Council meeting 4/1/2024)3
Amendment #3: NTE to remain at $767,000; term extended to 6/30/2025 (See Attachment B) 1 City Council, June 24, 2019, Agenda Items #5, SR #10241 https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=2713&compileOutputType= 1 2 City Council, February 22, 2021, Agenda Item #9, SR#11492 https://www.cityofpaloalto.org/files/assets/public/v/2/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2021/id-11492.pdf
3 City Council, April 1, 2024, Agenda Item #6, SR#2402-2689 https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=29778 79d-109f-458e-b9e5-1164e4c2d184
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The attached Amendment #4 with Duncan Solutions extends their term to support OOT administration of several Residential Preferential Parking programs while the new selected service provider takes on program support and administration over the course of the new fiscal year, streamlining management of services in a phased approach, and maintaining continuity of service for residents. Not approving the extensions would jeopardize the City’s ability to enforce its parking polices and issue parking citations.

This original contract was priced just before the Covid-19 pandemic and the City pays on a per transaction or fulfilment basis. The shift to more remote and hybrid work during the pandemic has been associated with lower than anticipated parking utilization, significantly lower rates of employee permits sold, and fewer than anticipated citations issued, which has allowed the contract amount to stretch over a longer time period.

ANALYSIS
The City has an existing contract. The original agreement was approved by the Council on June 24, 2019. The contract was awarded via an RFP. Amendment No, 1 was approved by the Council to increase compensation, Amendment no. 2 was approved by Council to extend the term for one year and Amendment 3 was issued to extend the term for six months per PAMC 2.30. 290(b1). The attached one-year contract extension, through June 30, 2026, allows City staff to transition parking programs to a newly selected service provider in a phased approach. By extending the contract, staff would have sufficient time to implement updates to the City’s parking programs, including enhanced coordination on services offered to the community, developing new and more efficient parking enforcement strategies, and determining operational needs across programs, and implementing operations in a phased approach to preserve continuity of services for constituents. These customer facing system transitions benefit from a phased approach and redundancy between systems.

FISCAL/RESOURCE IMPACT
Apart from the contract end date being updated to June 30, 2026, other contract terms and conditions remain unchanged. Funding for this contract has been encumbered in prior years, and since the Not to Exceed amount remains at $767,000, sufficient funding is available for this contract; no additional budgetary action is required. Staff will return to the City Council in August 2025 to recommend a contract for a new parking permit and citation management service provider.

STAKEHOLDER ENGAGEMENT
This contract was reviewed and coordinated with internal departments including legal, procurement, and financial functions to ensure alignment with City policies and procedures.

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ENVIRONMENTAL REVIEW
Adoption of this amendment is not a project under CEQA.

ATTACHMENTS
Attachment A: Duncan, Contract C19171363A Amendment No. 4 APPROVED BY:

Ria Hutabarat Lo, Chief Transportation Official
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AMENDMENT NO. 4 TO CONTRACT NO. C19171363A

BETWEEN THE CITY OF PALO ALTO AND

PROFESSIONAL ACCOUNT MANAGEMENT, LLC

This Amendment No. 4 (this “Amendment”) to Contract No. C19171363 (the “Contract” as defined below) is entered into as of April 21, 2025, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ( “CITY”), and PROFESSIONAL ACCOUNT MANAGEMENT, LLC , a Wisconsin limited liability company, located at 663 W. Wisconsin Avenue, Suite 1600, Milwaukee, WI, 53203 (“CONSULTANT”).

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

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of parking citation processing and collection services, as detailed therein.

B. The Parties now wish to amend the Contract in order to extend the term for one year from June 30, 2025, through June 30, 2026, and to adjust billing rates, without an increase to compensation, as detailed in Exhibit C-1.
.

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. C19171363 between CONSULTANT and CITY, dated May 20, 2019, as amended by:

Amendment No.1, dated September 9, 2020
Amendment No.2, dated March 6, 2024
Amendment No.3, dated October 17, 2024

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 2, “TERM” of the Contract is hereby amended to read as follows:

“The term of this Agreement shall be from the date of its full execution through June 30, 2026, unless terminated earlier pursuant to Section 19 of this Agreement.”

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 “C-1” entitled “SCHEDULE OF RATES”, AMENDED, REPLACES PREVIOUS.

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

SECTION 5. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

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SIGNATURES OF THE PARTIES

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

CITY OF PALO ALTO

City Manager

APPROVED AS TO FORM:

City Attorney or designee

PROFESSIONAL ACCOUNT

MANAGEMENT, LLC

By:

Name:

Title:

Attachments:

EXHIBIT C-1 – “SCHEDULE OF RATES, AMENDMENT NO. 4”, AMENDED, REPLACES PREVIOUS.

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James Kennedy
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EXHIBIT C-1
SCHEDULE OF RATES, AMENDMENT NO. 4
(AMENDED, REPLACES PREVIOUS)

CONSULTANT shall be paid per unit for processing services for the comprehensive permit and citation managements system. Table 1 below includes the payment rates per unit for the program including pre- defined pricing for implementation and management of the program. The compensation table shall remain fixed for term of the Agreement.

Table Set 1 Compensation Terms

Permit Management System Pricing

Item

Per Unit
Estimated Annual
Expense*
Per-permit fee $1.00 $10,500.00
Per-renewal letter fee (sent by mail) $0.65 $3,412.50
Per-renewal letter fee (sent by email) $0.00 $0.00
Per-software license fee $0.00 $0.00

Per-permit convenience fee (for web/IVR purchases)

$1.00
charged to customer
Permits Solution subtotal $2.65 $13,912.50
Estimated cost per month $1,159.38
Optional service

Item

Per Unit
Estimated Annual
Expense*
Per-permit fulfillment fee** $4.00 $42,000.00
Permit Solutions subtotal + Optional service subtotal $55,912.50 Estimated cost per month $4,659.38

*Estimate based on assumption of 10,500 permits issued and 50% of renewal letters are sent by mail. Actual expense may be more or less than this estimate, depending on the actual number of permits issued.

**If requested by City, Consultant shall provide this service which includes Consultant: (1) scanning and indexing all paper applications, (2) reviewing and approving scanned applications based on City rules, and (3) reviewing and approving online applications based on City rules.

Citation Management System Pricing Seven (7) handheld enforcement devices

Item

Per Unit
Est. Annual Expense
Per-citation fee (electronic or manual) $1.99 $21,492.00* Per-citation notice fee *Assume 75% $0.65 $5,265.00
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Convenience fee for citation payment

$1.00
charged to customer
Per plate fee for out-of-state lookups (per plate) $0.98 $558.60

% of collections for secondary collection (non-FTB) efforts 25% of
amount
collected

$24,825.00

FTB collections *Assumes 4% or approx. $54K
15% of
amount
collected

$8,100.00
Per-software license fee $0.00 $0.00
Handheld citation stock (per citation) $0.09615 $1,017.65 Manual citation stock (per citation) $0.20 $43.20
Per handheld device (lease per month) $65.00 $5,460.00
Handhelds data plan *Assume $60.00 per month per

$60.00 $5,040.00
Citation Solution subtotal $71,801.45
Estimated cost per month $5,983.45

* Estimate based on assumption of 10,800 citations issued. Other estimates in this column are based on other assumptions, some of which may be noted.

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Compensation Schedule (Estimated)

Table 2 below includes the estimated annual payment compensation schedule for the program, based on assumed numbers of permits and citations issued, equipment utilized, and other services provided. These are estimates only.

Table 2 Compensation Schedule

Est. Monthly
(round ed to
nearest t
1000)
2019 2020 2021 2022 2023
Months Annu al
Cost
Mont hs Annual
Cost
Months Annual
Cost
Months Annual
Cost
Months Annual Cost
Permit $5,000 9 $45,000 12 $60,000 12 $60,000 12 $60,000 12 $60,000 Management

Citation $6,0000 9 $54,000 12 $72,000 12 $72,000 12 $72,000 12 $72,000 Management

Annual $11,000 9 $99,000 12 $132,000 12 $132,000 12 $132,000 12 $132,000 Cost
Estimates
Total Cost Estimates $99,0 00 $231,000 $363,000 $495,000 $627,000

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Table Set 1: Compensation Terms: July 1, 2025 – June 30, 2026 Permit Management System Pricing
Item Per Unit Estimated Annual
Expense*
Per-permit fee $1.03 (was $1.00) $10,815.00 (was
$10,500.00)
Per-renewal letter fee (sent
by mail)
$0.67 (was $0.65) $3,514.88 (was $3,412.50)
Per-renewal letter fee (sent
by email)
$0.00 $0.00
Per-software license fee $0.00 $0.00
Per-permit convenience
fee (for web/IVR
purchases)
$1.03 (was $1.00) charged to customer
Permits Solution subtotal $2.73 (was $2.65) $14,329.88 (was $13,912.50)
Estimated cost per month $1,194.16 (was $1,159.38)
Optional Service
Item Per Unit Estimated Annual
Expense*
Per-permit fulfillment
fee**
$4.12 (was $4.00) $43,260.00 (was
$42,000.00)
Permit Solutions subtotal +
Optional
$57,589.88 (was
$55,912.50)
Estimated cost per month $4,799.16 (was $4,659.38)
Citation Management System Pricing – Seven (7) handheld enforcement devices Item Per Unit Estimated Annual Expense
Per-citation fee (electronic
or manual)
$2.05 (was $1.99) $22,136.76 (was
$21,492.00)
Per-citation notice fee
(75% assumed)
$0.67 (was $0.65) $5,422.95 (was $5,265.00)
Convenience fee for
citation payment
$1.03 (was $1.00) charged to customer
Per plate fee for out-of-
state lookups
$1.01 (was $0.98) $575.36 (was $558.60)
% of collections for
secondary (non-FTB)
25% $25,569.75 (was
$24,825.00)
FTB collections (4% of
approx. $54K)
15% $8,343.00 (was $8,100.00)
Per-software license fee $0.00 $0.00
Handheld citation stock $0.09903 (was $0.09615) $1,048.18 (was $1,017.65) Manual citation stock $0.206 (was $0.20) $44.50 (was $43.20) Docusign Envelope ID: DEA12295-583B-4B60-AAD8-20F6593CAC82 Item 17
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Handheld lease (per
month)
$66.95 (was $65.00) $5,623.80 (was $5,460.00)
Data plan ($60/month) $61.80 (was $60.00) $5,191.20 (was $5,040.00) Citation Solution subtotal $73,955.70 (was
$71,801.45)
Estimated cost per month $6,162.98 (was $5,983.45)
Table 2: Compensation Schedule (Estimated)
Est.

Monthly
2019 2020 2021 2022 2023
Permit
Management
$5,150
(was
$5,000)
9 mo –
$46,350
(was
$45,000)
12 mo –
$61,800
(was
$60,000)
12 mo –
$61,800
12 mo –
$61,800
12 mo –
$61,800
Citation
Management
$6,180
(was
$6,000)
9 mo –
$55,620
(was
$54,000)
12 mo –
$74,160
(was
$72,000)
12 mo –
$74,160
12 mo –
$74,160
12 mo –
$74,160
Annual Cost
Estimates
$11,330
(was
$11,000)
9 mo –
$101,970
(was
$99,000)
12 mo –
$135,960
(was
$132,000)
12 mo –
$135,960
12 mo –
$135,960
12 mo –
$135,960
Total Cost
Estimates
$101,970
(was
$99,000)
$238,000
(was
$231,000)
$374,000
(was
$363,000)
$510,000
(was
$495,000)
$646,000
(was
$627,000)

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: June 16, 2025
Report #:2506-4761
TITLE
Approval of Amendment No. 3 to Contract Number C23184827 with Nomad Transit, LLC (Via) in the Amount of $1,100,000 for a total not to exceed $4,901,550 over a Four-Year Term to Continue the City of Palo Alto On-Demand Transit Service through June 30, 2026; CEQA status - not a project.

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 3 to Contract C23184827 with Nomad Transit, LLC (Via) (Attachment A) to provide Palo Alto Link Services, extending the contract term to June 30, 2026, in an amount not to exceed of $1,100,000. This amendment results in revised not-to- exceed amount of $4,901,550.

BACKGROUND
Palo Alto Link provides on-demand transit service Monday-Friday for a 12-hour service span 7:00 am-7:00 pm. The service operates within most of the City, with exceptions only to the east and west ends that primarily house large open spaces and conservation lands. PAL is utilizing a ten (10) vehicle fleet to provide virtually positioned pick-up and drop-off locations within an acceptable walking distance with the help of a web application. Door-to-door service is available for riders who may require extra assistance. The service addresses first-/last-mile challenges in Palo Alto and provides a convenient and affordable transportation option for residents, employees, and vulnerable/transit-dependent populations.

Finding and securing funding partners such as Stanford Research Park (SRP) is an integral strategy to establish a long-term path forward for funding PAL transit services. The City Council approved the contract for this service December 12, 20221 and further discussed service levels 1 City Council meeting 12/12/2022, Item#8:
https://cityofpaloalto.primegov.com/portal/item/?meetingItemId=20f80994-de00-4d1a-aa0b-9e37365ba583 Item 18
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and funding in April 2023 and as part of the FY 2025 budget process in May 2024. For the FY 2026 Budget process in May 2025, a reduction in service and contract funding to $1.1 million was recommended to mitigate the potential nonrenewal of grant sources. Staff will bring forward subsequent budget adjustments as needed if grant renewals are awarded. Notification is expected in the next several weeks.

The contract with Nomad Transit LLC (Via) provided on-demand transit services in the amount of $2,043,000 for up two years, which the City conducted a formal solicitation for and was primarily funded through the 2016 Measure B Innovative Transit Grant ($2,000,000). On April 10, 2023, the Council approved contract Amendment No. 12, adding a cost sharing agreement with Stanford Research Park. On November 4, 2024, the Council approved contract Amendment No. 2, making some service and fee adjustments, and updating the revenue sharing approach with SRP3. The City continues to work in conjunction with SRP to increase the service area of PAL to also serve SRP, with SRP contributing per month to the City to cover the increased cost of providing the expanded service area.

ANALYSIS
A study session was held with the City Council in FY 20244 to discuss the service levels of this program in light of the sunset of the Innovative Transit Grant. This discussion reviewed the funding necessary to support different levels of services in preparation for the FY 2025 budget process. During the FY 2025 budget process, the Finance Committee and City Council adopted a revised level of service and funding plan including changes to ride fares, partnerships with other agencies, and grant funding to lower the net financial impact on the City’s General Fund. The FY 2025 Adopted Budget reflected gross program expenses of $1.2. million, reflecting a reduction in service level from FY 2024.

The service level included in the second amendment and recommended in this third amendment maintains Palo Alto Link on-demand transit service Monday—Friday for a 12-hour service span 7:00 am-7:00 pm, with increased wait times compared to the previous fiscal year.

FY 2025 was the first of $4 standard fares and $2 fares for the discounted categories—senior, disabled, low-income, and youth. While the first six months of service saw wait times in the 13- to 15-minute ranges, wait times in FY 2025, and particularly in the last six months, have approached 20 minutes (Figure 1).
2 City Council meeting 4/10/2023, Item#7 SR#2303-1128:
https://cityofpaloalto.primegov.com/meeting/document/1875.pdf?name=Item%207%20Staff%20Report 3 City Council meeting 11/4/2023, Item#AA1 SR#2410-3699:
https://cityofpaloalto.primegov.com/viewer/preview?id=13626&type=3#%5B%7B%22num%22%3A1097%2C%22g en%22%3A0%7D%2C%7B%22name%22%3A%22Fit%22%7D%5D
4 City Council meeting 4/1/2024, Item#3 SR#:
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Figure 1: Average Pickup ETA for On Demand Rides
Ridership began with steady growth throughout the first year of the service, but the increased wait times and a slightly increased walking distance to aggregated ride routes have likely helped to modulate growth over the last six months.

Figure 2: Average Pickup Walking Distance
Figure 3: Met Demand (Ride Requests Fulfilled)
Prior to the fare increase, fare recovery ranged from $0.60 to $0.75 per fare. Since the fare increase, fare recovery has ranged from $0.75 to $1.00 per fare. Similarly, total operations cost per trip decreased from a $27 to $35 range per month to a $23 to $30 per month average cost.

In the first four months of 2025, the main factor in services cost, driver hours, has been kept below 1000 hours, increasing ride pooling efficiency and helping to keep per trip costs down.

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Figure 4. Driver Hours.

The recommended service level for FY 2026 will be responsive to funding available for the program: $1.1 million, currently provided, will be a baseline level provided by the City and SRP, with an expanded service level should grant funding be awarded.

FISCAL/RESOURCE IMPACT
In line with the plan outlined in Amendment 2, staff will closely monitor PAL activity and bring forward budgetary adjustments to Council as needed with the expectation that the City’s General Fund funding for the program of $500,000 will not be increased in FY 2026. The remaining $600,000 is funded mostly by Stanford University to offset the cost of PAL services to the University and Research Park ($520,000). Fare revenues from riders using PAL are estimated to provide an additional $80,000 to offset the cost of the program.

STAKEHOLDER ENGAGEMENT
Public engagement is ongoing since the program launched on March 7, 2023. Community engagement and marketing activities include tabling at community events and destinations and social media campaigns.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA under CEQA regulation 15061 (b)(3).

ATTACHMENTS
Attachment A: Nomad Transit LLC (Via) Contract, C23184827 Amendment #3 APPROVED BY:

Ria Hutabarat Lo, Chief Transportation Official
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AMENDMENT NO. 3 TO CONTRACT NO. C23184827

BETWEEN THE CITY OF PALO ALTO AND NOMAD TRANSIT, LLC
This Amendment No. 3 (this “Amendment”) to Contract No. C23184827 (the “Contract”) is entered into as of June 30, 2025, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and NOMAD TRANSIT, LLC, a Delaware limited liability corporation, located at 10 Crosby Street, 2nd Floor, New York, NY 10013 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

RECITALS
A. The Contract was entered into by and between the Parties for the provision of transit and shuttle services, including equipment, transportation planning, customer engagement, marketing services, labor, vendor services, and the technology to support services, as detailed therein.

B. The Parties now wish to amend the Contract to extend the term by six months from December 31, 2025, to June 30, 2026, to increase billing rates, and to increase the compensation by One Million One Hundred Thousand Dollars ($1,100,000.00) from Three Million, Eight Hundred One Thousand Five Hundred Fifty Dollars ($3,801,550.00) to a new total not-to-exceed compensation amount of Four Million, Nine Hundred One Thousand, Five Hundred Fifty Dollars ($4,901,550.00), as detailed herein.

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

SECTION 1. Definitions.

The following definitions shall apply to this Amendment:
a. Contract. The term “Contract” refers to Contract No. C23184827 between CONSULTANT and CITY, dated December 12, 2022, as amended by:

Amendment No. 1, dated April 10, 2023, and
Amendment No. 2, dated September 23, 2024.
b. Other Terms. Capitalized terms used but not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 2, "TERM", of the Contract is hereby amended to read as follows:
"The term of this Agreement shall be from the date of its full execution through June 30, 2026, unless terminated earlier pursuant to Section 19 (Termination) of this Agreement." Docusign Envelope ID: F2E682D7-C646-49E6-9401-0A3E35243C92 Item 18
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SECTION 3. Section 4, "NOT TO EXCEED COMPENSATION", of the Contract is 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, including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Four Million, Nine Hundred One Thousand, Five Hundred Fifty Dollars ($4,901,550.00). The hourly schedule of rates, if applicable, is set out in Exhibit C-1. Any work performed or expenses incurred beyond this maximum compensation shall be at no cost to the CITY." SECTION 4. 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 "C" entitled "COMPENSATION, AMENDMENT NO. 3", AMENDED, REPLACES PREVIOUS.
b. Exhibit “C-1” entitled “SCHEDULE OF RATES, AMENDMENT NO. 3” AMENDED, REPLACES PREVIOUS.

SECTION 5. 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 6. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.
(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

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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 NOMAD TRANSIT, LLC
City Manager: Officer 1

APPROVED AS TO FORM: By:

Name:

City Attorney or designee Title:

Officer 2

By:

Name:

Title:

Attachments
EXHIBIT “C”: “COMPENSATION, AMENDMENT NO. 3”, AMENDED, REPLACES PREVIOUS.

EXHIBIT “C-1”: “SCHEDULE OF RATES, AMENDMENT NO. 3, AMENDED, REPLACES PREVIOUS

Docusign Envelope ID: F2E682D7-C646-49E6-9401-0A3E35243C92 Manager
Alex Laoie
Chief Legal Officer
Erin Abrams
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EXHIBIT C
COMPENSATION, AMENDMENT NO. 3
(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

TASK NOT TO EXCEED AMOUNT
Task 1 (Upfront Costs) $92,500.00 + $13,500.00*
Task 2
(Vehicle Hours compensated at the rate specified in Exhibit C-1)
$2,503,050.00 + $1,186,500.00** +
$1,100,000.00***
Task 3
(Estimated Electricity Cost (To be Treated as a Pass-
Through))
$6,000.00
Sub-total for Services $3,801,550
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Reimbursable Expenses (if any) $0.00
Total for Services and Reimbursable Expenses $4,901,550 Additional Services (if any, per Section 4) $0.00
Maximum Total Compensation $4,901,550

Should Customer require additional WAV retroﬁts or vehicle wraps, CONSULTANT will bill CITY as incurred as a pass-through, so long as the amount stays within the not-to-exceed amount.

* The $13,500 is added by Amendment 2 for the cost of moving from hybrid vans to fully electric vans per TFCA requirements.
** The $1,186,500 is added by Amendment 2.
***The $1,100,000 is added by Amendment 3.

Note: Pricing assumes that the Services provided hereunder are tax exempt and assumes service hours of 8am-6pm M-F. Pricing assumes launch within 4 months of contract signing. Estimated Electricity Cost assumes 2 active EVs with 171 Wh/km efficiency and electricity cost at $0.23 / kWh. Electricity costs will be treated as a pass-through. In the event that the Services cease to be tax exempt, such taxes will be treated as pass-through and charged to the City.

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

Reimbursable expenses, if any are specified as 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.

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, AMENDMENT NO. 3
(AMENDED, REPLACES PREVIOUS)

CONSULTANT’s schedule of rates is as follows:

Cost per Driver Hour, Months 1-12: $88.65
Cost per Driver Hour, Months 18 and onward: $89.00
Note: Annual rate increase for Months 13-18 will be the greater of 5% (as shown) or the last 12 months U.S. all-items CPI. A Driver Hour is defined as each hour during which a driver is paid on the Via platform.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 16, 2025
Report #:2505-4613
TITLE
QUASI-JUDICIAL. 1033 Amarillo Avenue [25PLN-00015]: Request for a Parcel Map with Conditional Exceptions to Subdivide a 20,774-Square-Foot R-1 Property into Two Lots (10,661 and 10,113 Square Feet). Exceptions include Minimum Lot Width, Maximum Lot Size, and Residential Density. Zoning District: R-1 Single Family Residential. CEQA: Exempt pursuant to CEQA Guidelines Section 15301 (Existing Facilities).

RECOMMENDATION
Staff recommends the City Council take the following actions:

1. Approve the Parcel Map with Conditional Exceptions (Attachment A) finding it in substantial compliance with the approved Preliminary Parcel Map (Attachments A and B), consistent with Palo Alto Municipal Code Chapter

21.16 and the Subdivision Map Act.

BACKGROUND
The applicant requests recordation of a Parcel Map with Conditional Exceptions to subdivide the existing 20,774-square-foot lot at 1033 Amarillo Avenue into two lots. Each will retain two of the four existing “cottage cluster” housing units; no structural changes are proposed.

On October 25, 2021,1 the Council provided favorable feedback on a two-lot alternative to a four-lot subdivision that would have required a zoning amendment. Council approved the Preliminary Parcel Map with Exceptions on August 1, 2022.2

1 October 25, 2021 Council Meeting: https://www.cityofpaloalto.org/files/assets/public/v/5/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2021/10-october/20211025/20211025pccsm-linked-w- times.pdf
2 August 1, 2022 Council Meeting:
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ANALYSIS
The purpose of this report is for Council to affirm that the proposed parcel map is in substantial conformance with the previously approved preliminary parcel map for final recordation with Santa Clara County.

Staff reviewed the final Parcel Map and determined it is in substantial conformance with the approved preliminary map (22PLN-00016). The proposed lot sizes (10,661 and 10,113 square feet) are minor deviations from the previously approved sizes (10,668.50 and 10,118.77 square feet). Existing units will remain and no accessory dwelling units are on-site. Redevelopment will be subject to future review, and no net loss of units is permitted. The project is not eligible for an SB 9 lot split due to existing rental housing.

FISCAL/RESOURCE IMPACT
There is no fiscal impact. Application processing costs are covered by applicant fees.

STAKEHOLDER ENGAGEMENT
Public notice was published in the Daily Post, consistent with legal requirements. No new public comments were received related to the subject application.

ENVIRONMENTAL REVIEW
The subject project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Specifically, the project is a minor subdivision with no change to existing structures. This is exempt under CEQA Guideline 15301 Existing Facilities.

ATTACHMENTS
Attachment A: Link to Parcel Map and Approved Preliminary Parcel Map (August 1, 2022) Attachment B: Record of Land Use Action for Approved Preliminary Parcel Map (August 1, 2022) APPROVED BY:

Jonathan Lait, Planning and Development Services Director Item 19
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Attachment A
Project Plans
Project plans are only available online.

Directions to review Project plans online:

1. Go to: bit.ly/PApendingprojects

2. Scroll down to find “1033 Amarillo” and click the address link

3. On this project specific webpage you will find a link to the project plans and other important information
Direct Link to Project Webpage:
https://www.paloalto.gov/Departments/Planning-Development-Services/Current- Planning/Projects/1033-Amarillo-Ave
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Attachment A - Link to
Parcel Map and Approved
Preliminary Parcel Map
(August 1, 2022)

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1 ACTION NO. 2022-02

RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 1033 AMARILLO AVE: PRELIMINARY PARCEL MAP 22PLN-000016
(TED O’HANLON, APPLICANT)

At its meeting on August 8, 2022, the City Council of the City of Palo Alto approved the Preliminary Parcel Map for the development of a two-lot subdivision project with exceptions, making the following findings, determinations and declarations:

SECTION 1. Background.

The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows:

A. On January 18, 2022, Ted O’Hanlon applied for a Preliminary Parcel Map with exceptions for the development of a Two-lot subdivision project (“The Project”).

B. The project site is comprised of one lot (APN No. 127-02-006) of approximately 20,788 square feet. The site contains four residential structures. Single-family residential land uses are located adjacent to the lot to the north, east and west.

C. Planning Staff referred the application to the Planning and Transportation Commission (Commission) for a recommendation to the City Council.

D. The Commission reviewed and recommended denial of the Project on April 27, 2022. The Commission’s recommendations are contained in CMR #14371 and the associated attachments.

E. On August 1, 2022, the City Council held a duly noticed public hearing on the subdivision application, at which evidence was presented and all persons were afforded an opportunity to be heard in accordance with the Palo Alto Municipal Code and the Council’s Policies and Procedures. Council voted to continue the item to August 8, 2022.

F. On August 8, 2022, the City Council held a duly noticed public hearing on the subdivision application and voted to approve the project.

SECTION 2. Environmental Review.

The City as the lead agency for the Project has determined that the project is exempt to environmental review under provisions of the California Environmental Quality Act (CEQA) under Guideline section 15301, Existing Facilities.

DocuSign Envelope ID: 41D1718C-C8B7-45AD-B9E0-BD88CAC65CF4 Item 19
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Land Use Action for
Approved Preliminary
Parcel Map (August 1,
2022)

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2 SECTION 3. Preliminary Parcel Map Findings.

A legislative body of a city shall deny approval of a Parcel Map, if it makes any of the following findings (California Government Code Section 66474):

1. That the proposed map is not consistent with applicable general and specific plans as specified in Section 65451:

The site does not lie within a specific plan area and is consistent with the provisions of the Comprehensive Plan as noted below.

2. That the design or improvement of the proposed subdivision is not consistent with applicable general and specific plans:

The map is consistent with the following Comprehensive Plan policies:
a. Policy L -1.3: Infill development in the urban service area should be compatible with its surroundings and the overall scale and character of the city to ensure a compact, efficient development pattern.
b. Policy L-3.1: Ensure that new or remodeled structures are compatible with the neighborhood and adjacent structures.
c. Policy L-3.3 Recognize the contribution of cottage cluster housing to the character of Palo Alto and retain and encourage this type of development.

3. That the site is not physically suitable for the type of development:

The site currently contains four single-family houses on a single lot. This property is more than twice the allowed maximum size for a single-family zoned property. Most residential lots in Palo Alto are between 5,000 and 7,000 sf, and the existing lot size is 20,787 sf. With four units, this is 5,197 sf per unit. The site is physically suitable for four units and is required by SB 330 to maintain the existing number of homes, which is currently four units.

4. That the site is not physically suitable for the proposed density of development:

The proposal for the site will not change the existing residential density. The site is physically suitable for four units and is required by SB 330 to maintain at least four units. It is possible SB 9 and/or ADU regulations could allow for additional units to be added to this site.

5. That the design of the subdivision or the proposed improvements are likely to cause substanti al environmental damage or substantially and avoidably injure fish or wildlife or their habitat:

The minor subdivision will not cause environmental damage or injure fish, wildlife, or their habitat.

The project site has been fully urbanized and developed and is centrally located within the Midtown neighborhood. There is no recognized sensitive wildlife or habitat in the project vicinity.

DocuSign Envelope ID: 41D1718C-C8B7-45AD-B9E0-BD88CAC65CF4 Item 19
Attachment B - Record of
Land Use Action for
Approved Preliminary
Parcel Map (August 1,
2022)

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3 6. That the design of the subdivision or type of improvements is likely to cause serious public health problems:

The creation of two individual parcels will not cause serious public health problems, as it does not substantially affect the existing conditions and overall function of the property as a site for single - family residences.

7. That the design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. In this connection, the governing body may approve a map if it finds that alternate easements, for access or for use, will be provided, and that these will be substantially equivalent to ones previously acquired by the public. This subsection shall apply only to easements of record or to easements established by judgment of a court of competent jurisdiction and no authority is hereby granted to a legislative body to determine that the public at large has acquired easements for access through or use of property within the proposed subdivision.

The existing site has no easements. The parcel map will be conditioned to have covenant s of easement for existing utility lines, and/or the shared driveway as necessary for the approved design.

SECTION 5. Exception Findings.

The Preliminary Parcel Map with Exceptions also meets the following Findings for the Exceptions (PAMC 21.32.020):

1. There are special circumstances or conditions affecting the property.

The existing property is larger than the 10,000 sf maximum allowed by the Zoning Code. The subdivision will bring the property into better conformance with the Zoning Code, although the resulting parcels will continue to exceed 10,000 sf.

2. The exception is necessary for the preservation and enjoyment of a substantial property right of the petitioner.

A property of this size is better equipped to provide more than one residential unit. One unit is what is allowed by the R-1 zoning. The maximum FAR for a property of the original size is 7,671 sf, however, the maximum house size allowed in Palo Alto is 6,000 sf. Four units currently exist, at density comparable to most of Palo Alto’s neighborhoods (approximately 1 unit per 6,000 sf). A substantial property right is the ability to rebuild unit(s) on the site. As the existing use/number of units is existing non-conforming, the petitioner is not currently able to rebuild the site in a manner that is consistent with both local zoning regulations and SB 330.

DocuSign Envelope ID: 41D1718C-C8B7-45AD-B9E0-BD88CAC65CF4 Item 19
Attachment B - Record of
Land Use Action for
Approved Preliminary
Parcel Map (August 1,
2022)

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4 3. The granting of the exception will not be detrimental to the public welfare or injurious to other property in the territory in which the property is situated.

The use of the property will not be detrimental to the public welfare or injurious to other properties in the area, as the proposed use and density is more in conformance with the Code, and similar to other R-1 neighborhoods.

4. The granting of the exception will not violate the requirements, goals, policies, or spirit of the law.

Granting this exception is found to be consistent with the Subdivision Map Act, Zoning Code, Comprehensive Plan. It will facilitate rebuilding of existing units, and provides an opportunity for new units to be created.

SECTION 5. Preliminary Parcel Map Approval Granted.

Preliminary Parcel Map approval is granted by the City Council under PAMC Sections 21.12 and 21.20 and the California Government Code Section 66474, subject to the conditions of approval in Section 7 of this Record.

SECTION 6. Parcel Map Approval.

The Parcel Map submitted for review and approval by the City Council shall be in substantial conformance with the Preliminary Parcel Map prepared by BKF titled “Preliminary Parcel Map for Single-Family Purposes”, consisting of three (3) pages, dated April 7, 2022 except as modified to incorporate the conditions of approval in Section 7. A copy of this plan is on file in the Department of Planning and Development Services, Current Planning Division. Within two years of the approval date of the Preliminary Parcel Map, the subdivider shall cause the subdivision or any part thereof to be surveyed, and a Parcel Map, as specified in Chapter 21.08, to be prepared in conformance with the Preliminary Parcel Map as conditionally approved, and in compliance with the provisions of the Subdivision Map Act and PAMC Section 21.16 and submitted to the City Engineer (PAMC Section

21.16.010[a]).

SECTION 7. Conditions of Approval.

Planning Division

1. PROJECT PLANS. The Parcel Map submitted for review and approval by the Director shall be in substantial conformance with the Preliminary Parcel Map prepared by BKF “Preliminary Parcel Map”, consisting of 3 pages, uploaded to the Online Permit Services Portal on February 23, 2022, except as modified to incorporate the conditions of this approval.

2. PARCEL MAP COVER PAGE. At such time as the Parcel Map is filed, the cover page shall include the name and title of the Director of Planning and Development Services.

DocuSign Envelope ID: 41D1718C-C8B7-45AD-B9E0-BD88CAC65CF4 Item 19
Attachment B - Record of
Land Use Action for
Approved Preliminary
Parcel Map (August 1,
2022)

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5 3. PARCEL MAP EXPIRATION. A Parcel Map, in conformance with the approved Preliminary Parcel Map, all requirements of the Subdivision Ordinance (PAMC Section 21.16), and to the satisfaction of the City Engineer, shall be filed with the Planning Division and the Public Works Engineering Division within two (2) years of the Preliminary Parcel Map approval date. The time period for a project may be extended once for an additional year by the Director of Planning if submitted prior to the expiration date. The resultant parcel map must be recorded prior to any building permit issuance.

4. INDEMNITY. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice.

5. COVENANT OF EASEMENT. Prior to approval of the Parcel Map, the Applicant shall provide the City with a covenant of easement in a form acceptable to the City Attorney for the purpose of securing a shared driveway and any shared utilities necessary for the two parcels to be created. Such covenant shall be recorded simultaneously with the Parcel Map.

Public Works Engineering

6. PARCEL MAP: This project is subject to, and contingent upon the approval of a preliminary parcel map/final map and recordation of a Parcel/Final Map. The submittal, approval and recordation of the Map shall be in accordance with the provisions of the California Subdivision Map Act and Palo Alto Municipal Code Title 21 Subdivision requirements. All existing and proposed property lines, easements, dedications shown on the preliminary parcel map are subject to City’s technical review and staff approval during the map process prior to issuance of any construction permits.

7. MAP THIRD-PARTY REVIEW: The City contracts with a third-party surveyor that will review and provide approval of the map’s technical correctness as the City Surveyor, as permitted by the Subdivision Map Act. The Public Works Department will forward a Scope & Fee Letter from the third-party surveyor and the applicant will be responsible for payment of the fee’s indicated therein, which is based on the complexity of the map.

SECTION 8. Term of Approval.

1. Preliminary Parcel Map. All conditions of approval of the Preliminary Parcel Map shall be fulfilled prior to approval of a Parcel Map (PAMC Section 21.16.010[c]). Unless a Parcel Map is filed, and all conditions of approval are fulfilled within a two-year period from the date of Preliminary Parcel Map approval, or such extension as may be granted, the Preliminary Parcel Map shall expire and all proceedings shall terminate.

DocuSign Envelope ID: 41D1718C-C8B7-45AD-B9E0-BD88CAC65CF4 Item 19
Attachment B - Record of
Land Use Action for
Approved Preliminary
Parcel Map (August 1,
2022)

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6 PASSED: 5-2
AYES: Burt, Cormack, Dubois, Filseth, Tanaka
NOES: Kou, Stone
ABSENT:

ABSTENTIONS:

ATTEST: APPROVED:
_________________________ ____________________________ City Clerk Director of Planning and
Development Services

APPROVED AS TO FORM:

___________________________
Senior Asst. City Attorney

PLANS AND DRAWINGS REFERENCED:

Those plans prepared by BKF Engineers titled “Preliminary Parcel Map for Single Family Purposes”, consisting of three pages, dated April 8, 2022.

DocuSign Envelope ID: 41D1718C-C8B7-45AD-B9E0-BD88CAC65CF4 Item 19
Attachment B - Record of
Land Use Action for
Approved Preliminary
Parcel Map (August 1,
2022)

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City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: June 16, 2025
Report #:2505-4740
TITLE
SECOND READING: Ordinance of the Council of the City of Palo Alto Amending: Chapter 18.14 (Housing Incentives) of the Palo Alto Municipal Code to Implement Program 3.4E of the 2023- 2031 Housing Element to Expand and Revise Regulations for the El Camino Real Focus Area; Making Conforming Amendments to Chapter 16.58 (Development Impact Fees) (FIRST READING: May 27, 2025; PASSED: 5-0-2, Lu, Veenker recused)

BACKGROUND
The City Council heard this item on May 27, 2025 for a first reading and approved it on a 5-0-2, Lu, Veenker recused vote. The ordinance was updated to reflect the City Council’s motion and is now before the City Council for a second reading. City staff will return to the City Council to effectuate the remaining items in the motion at a future date:
•Modification of the Hansen Way special setback to 20-feet; and •Rezoning the property behind 2999 El Camino Real from NV-R1 to an appropriate transition for housing.

ATTACHMENTS
Attachment A - Amending Chapter 18.14 (Housing Incentives) of the Palo Alto Municipal Code to Implement Program 3.4E of the 2023-2031 Housing Element to Expand and Revise Regulations for the El Camino Real Focus Area; Making Conforming Amendments to Chapter

16.58 (Development Impact Fees)
APPROVED BY:

Mahealani Ah Yun, City Clerk
Item 20
Item 20 Staff Report

Item 20: Staff Report
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1 Ordinance No.

Ordinance of the Council of the City of Palo Alto Amending: Chapter 18.14 (Housing Incentives) of the Palo Alto Municipal Code to Implement Program 3.4E of the 2023-2031 Housing Element to Expand and Revise Regulations for the El Camino Real Focus Area; Making Conforming Amendments to Chapter 16.58 (Development Impact Fees)
SECTION 1. Findings and Declarations. The City Council finds and declares as follows:

A. On May 8, 2023, the City Council adopted Resolution No. 10107, approving an Addendum to the Comprehensive Plan Environmental Impact Report (EIR), making various findings, and adopting the 2023-2031 Housing Element for the City of Palo Alto.

B. On November 13, 2023, the City Council approved a Revised Addendum to the Comprehensive Plan EIR and introduced Ordinance No. 5608, rezoning sites in the 2023- 2031 Housing Element Sites Inventory to accommodate the City’s Regional Housing Needs Allocation.

C. On April 15, 2024, the City Council adopted Resolution No. 10155, making various findings, adopting a Revised 2023-2031 Housing Element, and authorizing the Director of Planning and Development Services to take further actions necessary to achieve certification of the Housing Element by the California Department of Housing and Community Development (HCD).

D. On August 19, 2024, HCD found that the Revised 2023-2031 Housing Element, as further modified on July 17, 2024, was substantially compliant with state law.

E. Program 3.4E of the City’s Revised 2023-2031 Housing Element directs the City to expand the geographic boundaries of the El Camino Focus Area to incentivize housing production in appropriate locations.

F. On March 26, 2025, the Planning and Transportation Commission considered and recommended that the City Council adopt this ordinance to implement the 2023-2031 Housing Element.

SECTION 2. Section 18.14.020 (Housing Element Opportunity Sites) of Chapter 18.14 (Housing Incentives) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to read as follows (additions underlined; deletions struck through; and unchanged text omitted with bracketed ellipses):

18.14.020 Housing Element Opportunity Sites and Focus Areas This subsection implements the rezoning required to meet the RHNA in the 2023-2031 Housing Element, pursuant to Appendix D. Regulations identified in Table 1 and Table 2 modify and replace development standards provided in base zoning district and applicable combining district Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
Pg.
2 Packet Pg. 652 of 1138

2 regulations. This section additionally provides regulations for Housing Focus Areas in portions of El Camino Real and in the GM/ROLM districts that further the goals of the Housing Element. (a) Applicability: This subsection applies to Housing Development Projects, as defined in Cal. Gov’t Code § 65589.5, on Housing Element opportunity sites listed in Appendix D and on sites within the GM/ROLM and El Camino Real Focus Areas depicted in Figure 1 and Figure 3. [. . .]
(c) Development Standards: Refer to base zoning district and applicable combining districts for development standards except:
(i) Residential uses on R-1 zoned sites (faith-based institutions) shall be subject to the development standards for the RM-30 zoning district, pursuant to Chapter 18.13.040, except that Maximum FAR shall be 1.25 and minimum density shall be 20 units per acre. (ii) RM-20, RM-30, RM-40, CN, CS, CC, CC(2), CD-C, and CD-N zoned sites as modified by Table

1. (iii) GM, ROLM, and RP zoned sites as modified by Table 2. (iv) PF zoned sites shall meet the following development standards:
(A) Downtown sites: CD-C standards, pursuant to Table 1 below. (B) California Avenue sites: CC(2) standards, pursuant to Table 1 below. (v) Specific Stanford University-owned sites and El Camino Real Focus Area sites may, as an alternative to State Density Bonus Law, meet base district regulations as modified by Table

3. Housing Development Projects that utilize State Density Bonus Law shall be subject to base district standards or standards provided in Tables 1 and 2, as applicable. Additionally, El Camino Real Focus Area sites shall:
(A) Complete Major Architectural Review pursuant to Section 18.77.020 or Streamlined Housing Development Project Review pursuant to Section 18.77.073, as applicable. (B) Except as provided in paragraph (C) below, Pprovide at least 20% of total units as on- site below-market rate housing affordable to households earning up to 80% of AMI.

This requirement shall apply in place of the basic requirements set forth in Sections

16.65.030 and 16.65.040. The below-market rate units affordable to lower income households and/or their square footage shall be exempt from payment of development impact fees.
(C) Projects proposed on a site for which the Director determines a valid, pending application meets the definition of a “builder’s remedy project” may provide on-site below-market rate housing consistent with “housing for very low, low-, or moderate- income households,” as those terms are defined in Government Code Section 65589.5.

This requirement shall apply in place of the enhanced requirements set forth in subdivision (c)(v)(B) above and shall be credited toward fulfillment of the basic requirements set forth in Sections 16.65.030 and 16.65.040. The below-market rate Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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3 Packet Pg. 653 of 1138

3 units provided pursuant to this paragraph (C) shall be subject to payment of development impact fees as set forth in Title 16 of this code. (vi) Combining district design and development standards shall not apply to exclusively residential projects on housing opportunity sites designated in Appendix D of the Housing Element to accommodate lower income households.
[. . .]
Table 3
Site- Specific Development Standards (Stanford-Owned Sites & El Camino Real Focus Area) Location Pasteur Dr. & 1100
Welch Rd. (1)(3)
(Figure 2)
El Camino Real Focus Area(1)
(Figure 3)
Minimum Setbacks (feet)
Setback lines imposed by a special setback map pursuant to Chapter

20.08 of this code may apply.

Minimum Front (7)
Setback
15 feet 0' - 10' to create a 12' effective sidewalk
width See base district regulations
Abutting low density residential (RE, R2,
NV-R2, RMD), R1, or NV-R1 zone district:
20’
Abutting other residential zone district:
10’
Rear and Interior
Side (8)
Abutting non-residential zone district: 10’
for residential use; none for non-
residential use
Street Side(7)
See base district
regulations: 18.13.040
5’
Maximum FAR (Total) 3.5 (Total) Lot size => 10,000 sq. ft.: 4.0 (Total) Lot size < 10,000 sq. ft.: 3.0 (Total)
Maximum FAR (Non-
Residential)
See base district
regulations: 18.13.040
See base district regulations, except:

1. An additional 5,000 square feet of
retail and retail-like uses may be
permitted, subject to Total FAR limits.

2. Hotel uses may exceed the base
district non-residential FAR provided
the project is a Housing Development
Project and subject to Total FAR limits.

Maximum Site/
Minimum
Landscape/Open
Space Coverage
See base district
regulations (2)
See base district regulations (2)
Maximum Lot
Coverage
60% Lot size => 10,000 sq. ft.: 80%
Lot size < 10,000 sq. ft.: 70%
Maximum Density None None
Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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4 Packet Pg. 654 of 1138

4 (du/ac)
Maximum Height(6)
(feet) for residential
portion
85 Lot size => 10,000 sq. ft.: 85
Lot size < 10,000 sq. ft.: 65
Maximum Height(6)
(feet) for non-
residential portion
50 50, except Hotel uses may reach 85 feet
Daylight Plane Sand Hill Rd. frontage
only: initial height 60
feet above grade at
the Sand Hill Rd.
setback line and a 45-
degree angle
For lot lines abutting an R1 or NV-R1
zoning district:

Initial height: 16 feet, measured at the
property line
Slope: 45 degrees
Other locations: See base district
regulations for standards for daylight
planes
Height Transitions n/a Within 100 ft. of low density residential (RE, R2, or RMD) or R1 single family zone
district property line: 35 ft.

Between 100 and 150 ft. of low density or
R1 zone district property line: 45 ft.

Upper Story Step Back None El Camino Real frontage above 55 feet in height: minimum 10 6 foot step-back from
lower facade, for a minimum 70% of the
facade length.; and average setback from
the property line for the entire facade
shall be 20 feet(7).

See Figure 4.

Minimum Usable
Open Space
100 sq. ft./unit (any
combination of
common and/or
private)
100 sq. ft./unit (any combination of
common and/or private) (2)
Minimum Residential
Parking(5)

0.5 spaces/unit 1 space/unit
(Per AB2097: 1 0 space/unit within ½ mile
of Caltrain)
Other Development
Standards
See base district
regulations: 18.13.040
See base district regulations
Design
Criteria/Standards
Compliance with
Objective Design
Standards pursuant to

18.24(4)
Architectural Review Streamlined Housing
Development Project Review and
compliance with either Objective Deign
Standards pursuant to Chapter 18.24 or
Architectural Review and compliance with
Context-Based Design Criteria pursuant to
base district regulations(4).

Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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5 Notes:
[. . .]
(2) Permitted Landscape/open space may be provided above the ground-floor. For sites containing a naturalized creek, up to 50% of the landscape/open space and minimum usable open space requirements may be satisfied by open space within the creek area (as defined by the top of bank). If standard is not specified, refer to base district regulations. [. . .]
(4) Except, the following objective design standards shall be modified to meet the realistic capacity identified in the Housing Element:
(a) 18.24.050(b)(5): Diversity of Housing Types shall not apply. (b) 18.24.060(b)(7): Parking/Loading/Utilities, shall be replaced with the following standard:

Above grade structured parking levels facing a public right-of-way or publicly accessible open space/path with the exception of vehicular alleys, shall compose no more than 50% of any public frontage. Garage facades fronting on public right-of-way shall be screened with decorative architectural screening (e.g. perforated metal panels, murals), lined with habitable uses, or screened with landscaping (e.g., green wall, climbing vines). (c) 18.24.050(b)(1): Upper Floor Step Backs & Daylight Planes shall not apply. [. . .]
(7) Average setback from the property line may be calculated by taking the area between the property line and the upper facade. This area, in square feet, shall be greater than or equal to the facade length multiplied by 20. Example: 200-foot facade length x 20-foot average setback + minimum 4,000 sq. ft. area of setback per floor. For purposes of this calculation, portions of the upper facade with a setback greater than 40 feet shall be treated as if the facade is located at 40 feet from the property line. For purposes of this calculation, roof projections and eaves up to four feet in depth shall be excluded.

For the purposes of this development standards table, the following definitions apply:
“Abutting” refers to parcels that share a property line, exclusive of parcels with intersecting corners, parcels separated by a street, or parcels under common ownership. “Lot Size” refers to the total lot area of a proposed project, which may be composed of one or more parcels, generally under common ownership, which may include parcels developed in phases over time.
“Front Setback” for properties on El Camino Real means the setback from El Camino Real. “Street Side Setback” for properties on El Camino Real means the setback from a street that intersects El Camino Real.
(8) Below-grade encroachment into rear and interior side setbacks is permitted for the site at 3300 El Camino Real.
[. . .]
Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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6 Packet Pg. 656 of 1138

6 Figure 3: El Camino Focus Area
Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
Pg.
7 Packet Pg. 657 of 1138

7 Figure 4: Upper Story Step Back (El Camino Real Focus Area) portions of buildings more than 49 feet from the property line shall be counted as 40 feet Figure 4b
Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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8 Packet Pg. 658 of 1138

8 SECTION 3. Section 16.58.030 (Exemptions) of Chapter 16.58 (Development Impact Fees) of Title 16 (Building Regulations) of the Palo Alto Municipal Code is hereby amended to read as follows (additions underlined):

16.58.030 Exemptions.

The provisions of this chapter shall not apply to the following:
(a) City buildings or structures;
(b) Public school buildings or structures;
(c) Residential housing, either for sale or rental, which, by recordable means, is permanently obligated to be 100% affordable, as defined in Section 18.14.040(c); (d) Retail service, eating and drinking service, personal service, or automotive service when the total additional square footage is 1,500 square feet or less. This exemption shall apply only when the additional square footage of new development does not exceed 1,500 square feet. New development that is larger than 1,500 square feet shall pay a fee for all square footage, including the first 1,500 square feet;
(e) Day care centers used for child care, nursery school or preschool education; (f) Below market rate housing units above and beyond the minimum number required for projects subject to the City's Below Market Rate (BMR) Housing program or other housing incentive programs. The additional units must be offered and constructed in a manner consistent with all requirements of the BMR program;
(g) Accessory dwelling units (ADU) less than 750 square feet in size. Any impact fees to be charged for an accessory dwelling unit of 750 square feet or more shall be proportional to the square footage of the primary dwelling unit;
(h) Junior accessory dwelling units (JADU);
(i) Any residential subdivision for which land dedication or fees in lieu thereof are required pursuant to Chapter 21.50 of the Palo Alto Municipal Code. This exemption shall only apply to the park development fee described in Section 16.58.020(a). (j) Below market rate housing units affordable to lower income households constructed pursuant to the El Camino Focus Area standards pursuant to Section 18.14.020, subdivision (c)(v)(B), of the Palo Alto Municipal Code.

16.58 (Development
Impact Fees)

Item 20: Staff Report
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9 SECTION 4. Section 18.14.030 (Housing Incentive Program) of Chapter 18.14 (Housing Incentives) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to read as follows (additions underlined; text unchanged and omitted indicated by bracketed ellipses):

18.14.030 Housing Incentive Program
(a) Purpose
The housing incentive program modifies base zoning district standards and streamlines review to encourage higher-density multi-family housing production. The program is a local alternative to State Density Bonus Law.
(b) Applicability
The housing incentive program shall apply to the following zoning districts or locations:
(1) Chapter 18.13: RM-20, RM-30, RM-40
(2) Section 18.14.020: GM/ROLM Focus Area (see Figure 1) (3) Chapter 18.16: CC(2), except the sites at 156-164 California Avenue; CN or CS-zoned sites on El Camino Real, except sites in the Automobile Dealership (AD) Combining District; CS sites on San Antonio Road between Middlefield Road and East Charleston Road
(4) Chapter 18.18: CD(C)
(5) Chapter 18.29: NV-R3, NV-R4, NV-MXL, NV-MXM, NV-MXH, NV-PF [. . .]
(e) Development Standards
[. . .]
Table 6
FAR and Building Height Standards, by Eligible Zone District [. . .]
Notes:
(1) Nothing in this section increases the non-residential floor area permitted in any district.

Maximum Floor Area Ratio shall be increased by 0.5:1 for projects in which at least 10% of all units contain three or more bedrooms.
[. . .]
[. . .]
SECTION 5. 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 Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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10 Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid.

SECTION 6. In accordance with the California Environmental Quality Act (CEQA), the City prepared an Addendum to the 2017 Comprehensive Plan Environmental Impact Report (EIR), analyzing the potential environmental impacts of the 2023-2031 Housing Element. On May 8, 2023, the City Council adopted Resolution No. 10107, and on November 17, 2023, the City Council approved a Revised Addendum, finding that the Addendum, as revised, and the 2017 EIR adequately analyzed the environmental impacts of the Housing Element, including the Programs implemented by this ordinance.

SECTION 7. 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 AS TO CONTENT:

Assistant City Attorney City Manager
Director of Planning and
Development Services
Item 20
Attachment A - Amending
Chapter 18.14 (Housing
Incentives) of the Palo
Alto Municipal Code to
Implement Program 3.4E
of the 2023-2031 Housing
Element to Expand and
Revise Regulations for the
El Camino Real Focus
Area; Making Conforming
Amendments to Chapter

16.58 (Development
Impact Fees)

Item 20: Staff Report
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City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: June 16, 2025
Report #:2506-4772
TITLE
SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Title 16 (Building Regulations) and Title 18 (Zoning) of the Palo Alto Municipal Code to Amend Requirements Relating to Accessory Dwelling Units and Junior Accessory Dwelling Units (FIRST READING: May 12, 2025; PASSED 7-0)

BACKGROUND
The City Council heard this item on May 12, 2025 for a first reading and approved it on a 7-0 vote. The ordinance was updated to incorporate Council’s motion, and it is now before the City Council for a second reading.

ATTACHMENTS
Attachment A - Ordinance of the Council of the City of Palo Alto Amending Title 16 (Building Regulations) and Title 18 (Zoning) of the Palo Alto Municipal Code to Amend Requirements Relating to Accessory Dwelling Units and Junior Accessory Dwelling Units APPROVED BY:

Mahealani Ah Yun, City Clerk
Item 21
Item 21 Staff Report

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Ordinance No. _____
Ordinance of the Council of the City of Palo Alto Amending Title 16 (Building Regulations) and Title 18 (Zoning) of the Palo Alto Municipal Code to Amend Requirements Relating to Accessory Dwelling Units and Junior Accessory Dwelling Units

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

SECTION 1. Findings and Declarations.

A. In 2023, the City of Palo Alto adopted Ordinance 5585, amending the City’s requirements for ADUs and JADUs to reflect changes in State law and guidance from the California Department of Housing and Community Development (HCD).

B. On October 29, 2024, the City received a letter from HCD commenting on aspects of the City’s J/ADU ordinance that HCD found inconsistent with State law.

C. California Government Code section 66326(b)(2) requires that the City either amend its ordinance as indicated in the letter or adopt the ordinance without the changes and include findings that explain the reasons the City believes the ordinance complies with State J/ADU law.

D. Upon recommendation of City Staff and the Planning and Transportation Commission, the Council of the City of Palo Alto now intends to amend its J/ADU ordinance in response to each of HCD’s comments.

E. Additionally, the City now adopts explanatory findings to accompany the amendments in response to several of HCD’s comments.

F. HCD Comment 9 states, “The Ordinance makes several references to Chapter 8.10, the City’s Tree and Landscape Preservation and Management regulations, and requires that elements of ADU development conform to Chapter 8.10…The City should amend the Ordinance to ensure that compliance with this ordinance section will not delay or cause the denial of an ADU or JADU building permit or use permit.” The City now intends to amend its ADU ordinance to eliminate references to Chapter 8.10. Additionally, the City now amends its Chapter 18.09.040 to include objective landscape requirements for those ADUs that are subject to local standards, pursuant to Government Code section 66314(b). These landscape requirements include adherence to applicable objective landscape standards in the Tree and Landscape Technical Manual for the protection of trees during construction. The City Council finds that the standards in the Tree and Landscape Technical Manual for the protection of trees during construction are industry standard best practices for construction and are typically imposed as conditions of approval. Consistent with HCD’s comment, the Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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ordinance will clarify that the Tree and Landscape Technical Manual’s standards for tree protection during construction are not a cause of delay or denial of an ADU or JADU permit.

G. HCD Comment 10 states, “The Ordinance describes JADUs in the section ‘Units Subject to Local Standards’ and creates governance of JADUs that ‘do not qualify for approval under section 18.090.030.’ However, all JADUs are created pursuant to Government Code section 66323, subdivision (a)(1), and would therefore be approved under section 18.090.030. The City must remove references to JADUs in this section.” The City Council finds that this comment is incorrect; although some JADUs are created pursuant to Government Code section 66323, JADUs may also be created pursuant to Government Code sections 66333- 66339 (also known as “Article 3”), which begins with the statement “Notwithstanding Article 2 (commencing with Section 66314 [and including section 66323]), a local agency may, by ordinance, provide for the creation of junior accessory dwelling units in single- family residential zones” (emphasis added). Nonetheless, through this Ordinance, the City intends to remove all references to JADUs in Section 18.09.040, “Units Subject to Local Standards.” All JADUs that meet the requirements of Government Code section 66323(a) will be subject to the ministerial approval provisions in Chapter 18.09.030. Additionally, in order to further incentivize the construction of JADUs, the Ordinance allows a 500 square foot bonus for the primary dwelling unit where a JADU that meets the conditions in

18.09.050(f) is constructed on site. The City Council finds that this additional incentive provided in 18.09.050 does not conflict with Government Code sections 66310-66342 because it liberalizes the City’s regulations for primary residences and does not regulate the construction of JADUs.

H. HCD Comment 14 states, “Section 18.09.040 (l) – Parking Exceptions – The Ordinance does not provide for exemptions to parking requirements pursuant to Government Code section 66322, subdivisions (a)(1) through (a)(6)…Therefore, the City must amend the Ordinance to add the required exemptions.” Table 1 and 2 of PAMC 18.09.030 and 18.09.040, as well as Table 1 of PAMC 18.52.040, indicate that parking is not required for newly constructed ADUs or JADUs. Additionally, this Ordinance amends PAMC 18.09.040(l) so that the City no longer requires replacement parking for ADUs or JADUs under any circumstance. Because the Ordinance as amended imposes no parking requirements for J/ADUs, it does not enumerate the exemptions to parking requirements described in Government Code section 66322(a)(1)-(6).

I. On September 19, 2024, the Governor signed Senate Bill (SB) 1211, effective January 1, 2025. SB 1211 allows up to 8 detached accessory dwelling units (ADUs) on parcels with existing multifamily development and provides that cities can no longer require replacement parking for uncovered parking spaces that are removed for an ADU.

J. Upon recommendation of City Staff and the Planning and Transportation Commission, the Council of the City of Palo Alto desires to amend its J/ADU ordinance to implementing SB 1211 and to make additional clerical amendments and minor amendments to conform with State law.

Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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K. Section 9 of this Ordinance amends Chapter 16.04 (California Building Code, California Code of Regulations, Title 24, Part 2, Volumes 1 &2) of Title 16 (Building Regulations) of the Palo Alto Municipal Code. This is an administrative amendment to clarify and establish civil and administrative procedures, regulations, or rules to administer the enforcement of Title 16.

In particular, it clarifies that while the California Building Code definitions of “gross floor area” and “net floor area” apply for the purposes of enforcing Title 16, for the purposes of enforcing the zoning code (Title 18 of the Palo Alto Municipal Code), the definitions in Title 18 apply. This amendment is not a building standard as defined in Health and Safety Code section 18909.

SECTION 2. Chapter 18.09 (Accessory Dwelling Units and Junior Accessory Dwelling Units) of Title 18 (Zoning) of the Palo Alto Municipal Code (“PAMC”) is amended to read as follows (additions underlined and deletions struck-through):

18.09.010 Purpose

The intent of this Chapter is to provide regulations to accommodate accessory and junior accessory dwelling units (ADU/JADU), in order to provide for variety to the city's housing stock and additional affordable housing opportunities. These units shall be separate, self-contained living units, with separate entrances from the main residence, whether attached or detached. The standards below are provided to minimize the impacts of units on nearby residents and throughout the city, and to assure that the size and location of such dwellings is compatible with the existing or proposed residence(s) on the site and with other structures in the area.

18.09.020 Applicable Zoning Districts

The establishment of an accessory dwelling unit is permitted in zoning districts when single-family or multi-family residential is a permitted land use. The development of a single-family home, ADU, and/or a JADU on a lot that allows for single-family development shall not be considered a multifamily development pursuant to PAMC Section 18.04.030, nor shall they require Architectural Review pursuant to other sections of Chapter 18.

18.09.030 Units Exempt from Generally Applicable Local Regulations

(a) Government Code sections 6632365852.2, subdivision (e) provides that certain units shall be approved notwithstanding State or local regulations that may otherwise apply. The following types of units shall be governed by the standards in this section.

In the event of a conflict between this section and Government Code section 6632365852.2, subdivision (e), the Government Code shall prevail.

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i. An ADU and JADU within the existing space of a single-family dwelling or an ADU within the existing space of an accessory structure (i.e. conversion without substantial addition).

ii. An ADU and JADU within the proposed space of a single-family dwelling.

iii. A detached, new construction ADU on a lot with a proposed or existing single-family dwelling, provided the ADU does not exceed 800 square feet, sixteen feet in height, or four-foot side and rear (i.e. interior) setbacks, or the maximum height described in subparagraph (A), (B), or (C) of paragraph (4) of subdivision (b) of Government Code Section 66321, as applicable.

iv. ADUs created by conversion of portions of existing multi-family dwellings not used as livable space.

v. Up to two eight detached ADUs on a lot with an existing multi-family dwelling, provided that the number of ADUs does not exceed the number of existing units on the lot.

vi. Up to two detached ADUs on a lot with a proposed multi-family dwelling.

(b) The Development Standards for units governed by this section are summarized in Table 1. Regulations set forth in section 18.09.040 do not apply to units created under 18.09.030. The minimum and maximum sizes indicated in Table 1 do not prohibit units that are greater than 800 square feet. These sizes simply serve to distinguish when a unit transitions from regulations set forth in Table 1 and section

18.09.030 to regulations set forth in Table 2 and section 18.09.040.

Table 1: Development Standards for Units Described in Government Code Section 65852.2(e) 66323
Single-Family Multi-Family
Conversion of
Space Within
the Existing
Space of a
Single-Family
Home or
Accessory
Structure
Construction of
Attached

ADU/JADU
Within the
Proposed Space
of a Single-
Family Home
New
Construction
of Detached
ADU
Conversion of
Non-Habitable
Space Within
Existing Multi-
family Dwelling
Structure
Conversion or
Construction of
Detached(4)
ADU on a site
with Existing
Multi-family
Structure
Conversion or
Construction of
Detached(4) ADU
on a site with
Proposed Multi-
family Structure
Number
of Units
Allowed
1 ADU and 1 JADU 1 Attached ADU, 1 Detached
ADU, and 1 JADU
25% of the
existing units
(at least one)
Up to 8 (not to
exceed the
number of
existing units
on the lot)
2 Minimum 150 sf
Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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size(1)
Maximum
size(1) N/A2 800 sf N/A
Setbacks
N/A, if
condition is
sufficient for
fire and safety
Underlying
zone standard
for Single
Family Home

(ADU must be
within
allowable space
of Single-Family
Home)
4 feet from
side and rear
lot lines;
underlying
zoning for
front setback
N/A
4 feet from side
and rear lot
lines; underlying
zoning for front
setback
Daylight
Plane N/A N/A
Maximum
Height(3) N/A 16 (5) N/A 16 (5)(6)
Parking None
State Law
Reference
65852.2(e)(1)(A
) 66323(a)(1)
65852.2(e)(1)(A
) 66323(a)(1)
65852.2(e)(1)
(B)
66323(a)(2)
65852.2(e)(1)(C) 66323(a)(3) 65852.2(e)(1)(D)
66323(a)(4)

(1) Lofts where the height from the floor level to the underside of the rafter or finished roof surface is 5' or greater shall count towards the unit’s floor area. (2) New construction must be consistent with allowable space (e.g. FAR, Lot Coverage) of a single family residence, except that up to 150 sf may be added for the purpose of ingress and egress only, without regard to underlying zone standards The maximum size of a JADU is 500 square feet. See PAMC 18.09.030(h) for additional information. (3) Units built in a flood zone are not entitled to any height extensions granted to the primary dwelling.
(4) Units must be detached from existing primary dwellings but may be attached to each other. (5) A height of 18 feet for a detached ADU on a lot with an existing or proposed single family or multifamily dwelling unit that is within one-half of one mile walking distance of a major transit stop or a high-quality transit corridor, as those terms are defined in Section 21155 of the Public Resources Code. An additional two feet in height shall be provided to accommodate a roof pitch on an ADU that is aligned with the roof pitch of the primary dwelling unit. (6) A height of 18 feet for a detached ADU on a lot with an existing or proposed multifamily, multistory dwelling.

(c) Development standards stated elsewhere in this Section or Title 18, including standards related to FAR, lot coverage, and privacy, are not applicable to ADUs or JADUs that qualify for approval under this section. When there is an ADU or JADU attached to an existing or proposed primary dwelling, the shared wall between these units shall contribute to the maximum allowable Floor Area, Lot Coverage, and Maximum House Size of the primary unit. For a single-family home, this measurement shall be taken to the outside stud wall in accordance with Section

18.04.030(a)(65)(D). For a multi-family dwelling, this measurement shall be taken to the outside surface of exterior walls in accordance with Section 18.04.030(a)(65)(B) and (C).

(d) The establishment of accessory dwelling units and junior accessory dwelling units pursuant to this section shall not be conditioned on the correction of non- Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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conforming zoning conditions; provided, however, that nothing in this section shall limit the authority of the Chief Building Official to require correction of building standards relating to health and safety. Upon request of the owner for a delay in enforcement, the Chief Building Official shall delay enforcement of a building standard, subject to compliance with Section 17980.12 of the Health and Safety Code.

(e) The installation of fire sprinklers shall not be required in an accessory dwelling unit if sprinklers are not required for the primary residence. The construction of an accessory dwelling unit shall not trigger a requirement for fire sprinklers to be installed in the existing multifamily dwelling. Nothing in this section shall preclude the Fire Marshal from accepting fire sprinklers as an alternative means of compliance with generally applicable fire protection requirements.

(f) Rental of any unit created pursuant to this section shall be for a term of 30 days or more.

(g) Attached units shall have independent exterior access from a proposed or existing single-family dwelling. Except for JADUs, attached units shall not have an interior access point to the primary dwelling (e.g. hotel door or other similar feature/appurtenance). If a permitted JADU does not include a separate bathroom, the permitted JADU shall include a separate entrance from the main entrance to the structure, with an interior entry to the main living area.

(h) Conversion of an existing accessory structure pursuant to Government Code section 65852.2(e)(1)(A) 66314(d)(7) may include reconstruction in-place of a non- conforming structure, so long as the renovation orf reconstruction does not increase the degree of non-compliance, such as increased height, envelope, or further intrusion into required setbacks. An expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure may be provided to accommodate ingress and egress. Any portion of an ADU addition to the existing accessory structure that is not limited to providing for ingress and egress to the unit, and that exceeds the envelope of the existing accessory structure shall be subject to Section 18.09.040.

(i) Street addresses shall be assigned to all units prior to building permit final to assist in emergency response.

(j) The unit shall not be sold separately from the primary residence, except as allowed under Government Code Section 66341.

(k) Replacement parking is not required when a garage, carport, or covered parking structure an off-street parking space is converted to, or demolished in conjunction with the construction of, an ADU.

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(l) JADUs shall comply with the requirements of Section 18.09.050.

(m) Notwithstanding any contrary provision of Chapter 8.10, to the extent the City’s application checklist requires a tree disclosure statement, it may be completed by the property owner.

18.09.040 Units Subject to Local Standards

(a) This section shall govern applications for ADUs and JADUs that do not qualify for approval under section 18.09.030 and for which the City may impose local standards pursuant to Government Code section 65852.2, subdivisions (a) through (d)66314.

Nothing in this section shall be interpreted to prohibit an ADU of up to 800 square feet, at the heights stated in Table 2, with a four foot side and rear setbacks.

(b) The Development Standards for units governed by this section are provided in Table

2. These regulations do not limit the height of existing structures converted into ADU/JADUs unless the envelope of the building is proposed to be modified beyond any existing legal, non-conforming condition.

Table 2: All other Units
Attached Detached JADU
Number of Units Allowed1 1 1
Minimum size 150 sf
Maximum size 900 sf (1,000 sf
for two or more
bedrooms);
no more than
50% of the size
of the single-
family home
900 sf (1,000 sf
for two or
more
bedrooms)
500 sf
Setbacks 4 feet from side and rear lot lines; Underlying zone standard
for front
setback
Daylight Plane Underlying
zone standard
per footnote (7)
N/A Underlying
zone standard
Maximum Height3 Underlying
zone standard Res. Estate (RE) 30 feet
Open Space (OS) 25 feet
All other eligible zones 16 feet(5)(6)(7)
Parking None
Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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Square Footage Exemption when in
conjunction with a single family
home(4)
Up to 800 sf Up to 500 sf

(1) An attached orand detached ADU may be built in conjunction with a JADU on a lot with an existing or proposed single family home. One attached or detached ADU may be built in conjunction with an existing or proposed multifamily building. (2) Lofts where the height from the floor level to the underside of the rafter or finished roof surface is 5' or greater shall count towards the unit’s floor area. (3) Units built in a flood zone are not entitled to any height extensions granted to the primary dwelling.
(4) Lots with both an attached and detached ADU and a JADU may exempt a maximum combined total of 800 square feet of boththe ADUs and JADU from FAR, Lot Coverage, and Maximum House Size calculations. Any square footage that exceeds this exemption shall contribute to the FAR, Lot Coverage, and (if attached) Maximum House Size calculations for the subject property.

This exemption is not afforded to lots with existing or proposed multifamily dwellings. (5) A height of 18 feet for a detached ADU on a lot with an existing or proposed single family or multifamily dwelling unit that is within one-half of one mile walking distance of a major transit stop or a high-quality transit corridor, as those terms are defined in Section 21155 of the Public Resources Code. An additional two feet in height shall be provided to accommodate a roof pitch on an ADU that is aligned with the roof pitch of the primary dwelling unit. (6) A height of 18 feet for a detached ADU on a lot with an existing or proposed multifamily, multistory dwelling.
(7) A height of 25 feet or the height limitation in the underlying zone district that applies to the primary dwelling, whichever is lower, for an ADU that is attached to a primary dwelling. These ADUs shall not exceed two stories in height.

(c) A single-family or multifamily dwelling shall exist on the lot or shall be constructed on the lot in conjunction with the construction of an ADU/JADU.

(d) ADU and/or JADU square footage shall not be included in FAR, Lot Coverage, and Maximum House Size calculations for a lot with an existing or proposed single family home, up to the amounts stated in Table 2. ADU and/or JADU square footage in excess of the exemptions provided in Table 2 shall be included in FAR, Lot Coverage, and Maximum House Size calculations for the lot.

(e) When there is an ADU or JADU attached to an existing or proposed primary dwelling, the shared wall between these units shall contribute to the maximum allowable Floor Area, Lot Coverage, and Maximum House Size of the primary unit. For a single- family home, this measurement shall be taken to the outside stud wall in accordance with Section 18.04.030(a)(65)(D). For a multi-family dwelling, this measurement shall be taken to the outside surface of exterior walls in accordance with Section

18.04.030(a)(65)(B) and (C).

(f) Attached units shall have independent exterior access from a proposed or existing single-family dwelling. Except for JADUs, Aattached units shall not have an interior Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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access point to the primary dwelling (e.g. hotel door or other similar feature/appurtenance).

(g) Reserved No protected tree shall be removed for the purpose of establishing an accessory dwelling unit except in accordance with Chapter 8.10. Notwithstanding any contrary provision of Chapter 8.10, to the extent the City’s application checklist requires a tree disclosure statement, it may be completed by the property owner.

(h) For properties listed in the Palo Alto Historic Inventory, the California Register of Historical Resources, the National Register of Historic Places, or considered a historic resource after completion of a historic resource evaluation, compliance with the appropriate Secretary of Interior’s Standards for the Treatment of Historic Properties shall be required.

(i) Noise-producing equipment such as air conditioners, water heaters, and similar service equipment that exclusively serves an ADU/JADU may be located anywhere on the site, provided they maintain the underlying front yard setback requirements of the property and, if the property is a corner lot, a 10-foot street-side setback. All such equipment shall be insulated and housed, except that the Director may permit installation without housing and insulation, provided that a combination of technical noise specifications, location of equipment, and/or other screening or buffering will assure compliance with the city’s Noise Ordinance at the nearest property line. All service equipment must meet the city’s Noise Ordinance in Chapter 9.10 of the Municipal Code.

(j) Setbacks

(1) Detached units shall maintain a minimum three-foot distance from the primary unit, measured from the exterior walls of structures.

(2) A basement or other subterranean portion that serves an ADU/JADU may encroach into a setback required for the primary dwelling provided the following conditions are met:

(A) Newly constructed basement walls are no closer than four feet to an adjacent interior side or rear property line.
(B) A new lightwell associated with a basement shall not be placed closer than four feet to an adjacent interior property line. When visible from the right of way, these facilities shall be screened from view with vegetation.
(C) The new basement shall not negatively impact tree roots on the subject property or on adjacent lots such that it would require to be removed or cause the protected tree to die.

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(D) (C) Habitable ADU/JADU basements shall contribute toward the unit’s total allowable floor area. Any floor area in excess of the exemptions provided in this Section shall contribute to the total allowable limits for the site.

(3) Projections, including but not limited to windows, doors, mechanical equipment, venting or exhaust systems, are not permitted to encroach into the required setbacks, with the exception of a roof eave of up to 2 feet.

(4) For corner lots developed as a single-family home only, when an existing or proposed primary dwelling unit is expanded or constructed simultaneously with the construction of a new ADU/JADU, the homeowner may elect to build all structures may be built to a 10-foot street-side setback and a 16-foot front yard setback, regardless of the presence of a more restrictive special setback, unless a fire or life-safety regulation requires a greater setback.

Pursuant Government Code section 66321(b)(3), a street-side setback may not preclude the development of an 800 square foot unit.

(5) When an existing, legal, nonconforming structure is converted or reconstructed to create an ADU/JADU, any portion of the ADU/JADU that is in the same location and falls within the building envelope of the original structure shall not be subject to the development standards stated in this Section. Any portion of the ADU/JADU that is in a different location or exceeds the envelope of the original structure shall comply with the development standards stated in this Section.

(6) Notwithstanding the development standards stated in Table 2 and paragraph (5) above, when an existing, legal, non-conforming structure is converted in- place to an ADU/JADU, the envelope of the structure may be modified to encroach further into a setback or daylight plane as follows:

(A) The height of the existing structure may be increased by no more than one linear foot in height commensurate to the existing roofline of the structure provided the height of the addition does not exceed 12 feet from grade. The roofline shall not be changed to a style other than what currently exists on the structure.
(B) Each non-conforming wall may be expanded by no more than six inches in thickness based on its existing location and configuration, as measured to exterior surface of the material, to provide for greater insulation and energy requirements provided that a minimum of one foot is maintained between the addition and an adjacent interior property line. An existing wall of a structure that does not currently Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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have a separation of one foot from a parallel property line shall not be expanded outward.
(C) All other additions not specified here shall follow the standard setbacks for the ADU/JADU identified in Table 2.

(k) Design

(1) Except on corner lots, where feasible, the unit shall not have an entranceway facing the same lot line (property line) as the entranceway to the main dwelling unit unless the entranceway to the accessory unit is located in the rear half of the lot. Exterior staircases to second floor units shall be located toward the interior side or rear yard of the property.

(2) Privacy
(A) Second story doors and decks shall not face a neighboring property line. Second story decks and balconies shall utilize screening barriers to prevent views towards an adjacent interior property line. These barriers shall be a minimum five-foot, six-inch height from the floor level of the deck or balcony and shall not include perforations of any kind that would allow visibility between properties.
(B) Windows on a second floor, loft, or equivalent elevated space, excluding those required for egress, shall have a five-foot sill height as measured from the second-finished floor level, or utilize opaque glazing on the entirety any window that faces an adjacent interior property line.
(C) Windows on a second finished floor, loft, or equivalent elevated space, shall be offset from neighbor’s windows to maximize privacy. (D) Where feasible, egress windows on the first and second finished floor of an ADU or JADU shall not face towards an adjacent interior property line. If this is not feasible, then these windows shall utilize opaque glazing on the whole window.
(E) If the first finished floor of an ADU or JADU is two feet or more above grade, then first floor windows shall include the following:
i. Non-egress, operable windows facing an adjacent interior property line shall have a windowsill(s) that start five feet above the first finished floor for the unit;
ii. Non-egress, non-operable windows facing an adjacent interior property line shall have the lower half of window(s) (minimum of five feet above the first finished floor) utilize opaque glazing.
(F) Where feasible, the use of skylights (whether operable or not) shall be used in lieu of operable windows that face adjacent interior properties.

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(G) No exterior lighting shall be mounted above seven feet. All lighting mounted on walls shall be directed downwards and shall not direct light towards adjacent interior property lines. Any ground lighting shall not direct light upwards to the building or sky.

(l) Parking

(1) Replacement parking is not required when a garage, carport, or covered parking structure, or uncovered parking space is converted to, or demolished in conjunction with the construction of, an ADU.

(2) Replacement parking is required when an existing attached garage, carport, or covered parking structure is converted to a JADU or when a required, existing, uncovered parking space is expanded into an ADU/JADU. These replacement spaces may be provided as uncovered spaces in any configuration on the lot including within the front or street side yard setback for the property.

(A) The Director shall have the authority to modify required replacement parking spaces by up to one foot in width and length upon finding that the reduction is necessary to accommodate parking in a location otherwise allowed under this code and is not detrimental to public health, safety or the general welfare.

(B) Existing front and street side yard driveways may be enlarged to the minimum extent necessary to comply with the replacement parking requirement above. Existing curb cuts shall not be altered except when necessary to promote public health, safety or the general welfare.

(2) (3) When parking is provided, the unit shall have street access from a driveway in common with the main residence in order to prevent new curb cuts, excessive paving, and elimination of street trees, unless separate driveway access will result in fewer environmental impacts such as paving, grading or tree removal.

(3) (4) When a single-family dwelling unit is permitted simultaneously with the construction of new ADU/JADUs, the primary unit’s covered parking requirements identified in Chapter 18.10 and 18.12 do not need to be provided. Two uncovered parking spaces shall be provided in any configuration on the lot including within the front or street-side setback for the property.

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(4) (5) If covered parking for a unit is provided in any district, the maximum size of the covered parking area for the accessory dwelling unit is 220 square feet.

This space shall count towards the total floor area for the site but does not contribute to the maximum size of the unit. Any attached garage shall not have an interior access point to the ADU/JADU (e.g. hotel door or other similar feature/appurtenance).

(m) Landscape
(1) For the purposes of this subsection (m), “protected tree” means:
(A) Any locally native tree of the species Acer macrophyllum (Bigleaf Maple), Calocedrus decurrens (California Incense Cedar), Quercus agrifolia (Coast Live Oak), Quercus douglasii (Blue Oak), Quercus kelloggii (California Black Oak), or Quercus lobata (Valley Oak) which is eleven and one-half inches in diameter (thirty-six inches in circumference) or more when measured four and one-half feet (fifty- four inches) above natural grade.
(B) Any Coast Redwood tree (species Sequoia sempervirens) that is eighteen inches in diameter (fifty-seven inches in circumference) or more when measured four and one-half feet (fifty-four inches) above natural grade.
(C) Any tree of any species, other than a Coast Redwood Tree, fifteen inches in diameter (forty-seven inches in circumference) or more when measured four and one-half feet (fifty-four inches) above natural grade. A “protected tree” does not include a tree of any species on the Exempt Species List put forth by the Department of Urban Forestry and available on the City’s website.
(D) Any tree designated for protection during review and approval of a current or previously completed development project.
(E) Any tree designated for carbon sequestration and storage and/or environmental mitigation purposes as identified in an agreement between the property owner and a responsible government agency or recorded as a deed restriction.
(F) Any heritage tree previously designated by the city council. (G) Any tree previously planted as a replacement mitigation tree. (2) Except as provided in subsection (3) below, the construction of an ADU shall not impact any protected tree, on the subject property or any adjacent lot by requiring:
(A) Removal of more than twenty-five percent of the functioning leaf, stem, or root area of a tree in any twenty-four-month period; or (B) Removal of more than fifteen percent of the functioning root area of any Quercus (oak) species in any thirty-six-month period; or Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

Item 21: Staff Report
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(C) Trenching, excavating, altering the grade, or paving within the tree protection zone of a tree in a way that foreseeably leads to the death of the tree. For the purposes of this subsection (m), "tree protection zone" means the area defined by a circle with a radius ten times the diameter of the trunk when measured four and one-half feet (fifty- four inches) above natural grade.
(3) If an action prohibited by section 18.09.040(m)(2) is necessary to allow the construction of an ADU that meets the minimum standards set forth in state law, the tree shall be replaced according to the objective requirements identified in the Tree Canopy Replacement Table of the Palo Alto Tree and Landscape Technical Manual.
(4) The construction of an ADU must comply with applicable objective standards and specifications in the Tree and Landscape Technical Manual for the protection of trees during construction. Compliance with this subsection (4) shall not delay or cause the denial of an ADU or JADU building permit or use permit.

(n) Miscellaneous requirements

(1) Street addresses shall be assigned to all units prior to building permit final to assist in emergency response.

(2) The unit shall not be sold separately from the primary residence except as allowed under Government Code Section 66341.

(3) Rental of any unit created pursuant to this section shall be for a term of 30 days or more.

(4) The installation of fire sprinklers shall not be required in an accessory dwelling unit if sprinklers are not required for the primary residence. Nothing in this section shall preclude the Fire Marshal from accepting fire sprinklers as an alternative means of compliance with generally applicable fire protection requirements.

18.09.050 Additional Requirements for JADUs

(a) A JADUjunior accessory dwelling unit may only be created on a lot in a single-family residential zone with an existing or proposed single family residence. A JADUjunior accessory dwelling unit shall be attached to or created within the walls of an existing or proposed primary dwelling, including enclosed uses within the residence, such as an attached garage.

(b) The JADUjunior accessory dwelling unit shall include an efficiency kitchen, requiring the following components: A cooking facility with appliances, and; food preparation Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit.

i. A cooking facility with appliances shall mean, at minimum a one burner installed range, an oven or convection microwave, a 10 cubic foot refrigerator and freezer combination unit, and a sink that facilitates hot and cold water.

ii. A food preparation counter and storage cabinets shall be of reasonable size in relation to a JADU if they provide counter space equal to a minimum 24-inch depth and 36-inch length.

iii. i. JADUs may share sanitation facilities (bathrooms, laundry facilities, etc.) with the primary unit. If a permitted JADU does not include a separate bathroom, the permitted junior accessory dwelling unit shall include a separate entrance from the main entrance to the structure, with an interior entry to the main living area. In this instance, the floor area and lot coverage associated with shared space shall count towards the primary unit’s maximum allowances only. The combined sanitation facilities between the units shall include shower, toilet, and sink fixtures at a minimum and shall conform to the minimum requirements specified in the Building Code.

(c) For the purposes of any fire or life protection ordinance or regulation or for the purposes of providing service for water, sewer, or power, a JADUjunior accessory dwelling unit shall not be considered a separate or new unit.

(d) The owner of a parcel proposed for a JADUjunior accessory dwelling unit shall occupy as a primary residence either the primary dwelling or the JADUjunior accessory dwelling. Owner-occupancy is not required if the owner is a governmental agency, land trust, or housing organization.

(e) Prior to the issuance of a building permit for a JADUjunior accessory dwelling unit, the owner shall record a deed restriction in a form approved by the city that includes a prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single-family residence, requires owner-occupancy consistent with subsection (d) above, does not permit short-term rentals, and restricts the size and attributes of the JADUjunior dwelling unit to those that conform with this section.

(f) JADU incentive. The existing or proposed primary dwelling unit shall be afforded bonus square footage equal to the square footage of a proposed JADU when a JADU is constructed on site, provided the JADU meets the following requirements:
1) The JADU must conform to the underlying zoning district’s development standards for single family homes.

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2) The maximum number of units on site shall not exceed four (two ADUs, one JADU, and one primary home).
3) The maximum size of the JADU shall not exceed 500 square feet. 4) The total maximum bonus/exempt floor area provided for the site under Section 18.09.040 and 18.09.050 may not exceed 800 square feet. 5) The exterior entryway to the JADU shall not face the same direction as the entrance to the primary home.
6) All egress windows which face an adjacent residential property must utilize opaque glazing on the whole window.
7) All non-egress windows which face an adjacent residential property must have a windowsill(s) that start five feet above the first finished floor for the unit. 8) All noise producing equipment associated with the JADU must comply with the noise regulations in PAMC 9.10.

SECTION 3. Subsection (a)(75)(A) of Section 18.04.030 (Definitions) of Chapter 18.04 (Definitions) of Title 18 (Zoning) of the Palo Alto Municipal Code (“PAMC”) is amended to read as follows (additions underlined and deletions struck-through):

(A) For ADUs, a kitchen must have permanent provisions for eating, cooking, and sanitation as required by Government Code Section 66313 and Section 17958.1 of the Health and Safety Code. major appliances shall mean a minimum two burner installed range, and an oven or convection microwave, as well as a minimum 11 cubic foot freezer and refrigerator combination unit. Kitchens shall also include counter space for food preparation equal to a minimum 24-inch depth and 36-inch length, and a sink that facilitates hot and cold water.

SECTION 4. Subsection (a) of Section 16.49.050 (Exterior Alteration of Historic Structures) of Title 16 (Building Regulations) of the Palo Alto Municipal Code (“PAMC”) is amended to read as follows (additions underlined and deletions struck-through):

(a) Review Process. Except for Accessory Dwelling Units and Junior Accessory Dwelling Units proposed on properties listed in the Palo Alto local historic inventory, aAll applications for a building permit for exterior alteration to any historic structure/site in the downtown area or a significant building elsewhere in the city, new construction on a parcel where there is currently a historic structure in the downtown area or a significant building elsewhere in the city, or such application for construction within a historic district shall be reviewed as follows:

SECTION 5. Footnote (5) of Table 2 in Section 18.10.040 (Development Standards) of Chapter

18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) is amended to read as follows (deletions struck-through):

(5) Maximum House Size: The gross floor area of attached garages and attached accessory dwelling units and junior accessory dwelling units are included in the calculation of Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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maximum house size. If there is no garage attached to the house, then the square footage of one detached covered parking space shall be included in the calculation. This provision applies only to single-family residences, not to duplexes allowed in the R-2 and RMD districts.

SECTION 6. Section 18.10.150 (Grandfathered Uses) of Chapter 18.10 (Low-Density Residential) of Title 18 (Zoning) of the Palo Alto Municipal Code (“PAMC”) is amended to read as follows (additions underlined, deletions struck-through, unchanged text omitted by bracketed ellipses):

18.10.150 Grandfathered Uses

[…]

(d) (Reserved) Existing Accessory Dwellings and Guest Cottages In the RE district, accessory dwellings and guest cottages existing on April 28, 1986, and which prior to that date were lawful, conforming permitted uses may remain as legal nonconforming uses. Such uses shall be permitted to remodel, improve or replace site improvements on the same site, without necessity to comply with site development regulations for continual use and occupancy by the same use; provided that any such remodeling, improvement or replacement shall not add a kitchen nor result in increased floor area, number of dwelling units, height, length or any other increase in the size of the improvement without complying with the standards set forth in this subsection and applying for and receiving a conditional use permit pursuant to Chapter 18.76.

[…]

SECTION 7. Footnote (8) of Table 2 in Section 18.12.040 (Development Standards) of Chapter

18.12 (R-1 Single Family Residential District) of Title 18 (Zoning) of the Palo Alto Municipal Code is amended to read as follows (deletions struck-through):

(8) Maximum House Size: The gross floor area of attached garages and attached accessory dwelling units and junior accessory dwelling units are included in the calculation of maximum house size. If there is no garage attached to the house, then the square footage of one detached covered parking space shall be included in the calculation.

SECTION 8. Chapter 18.28 (Special Purpose (PF, OS, and AC) Districts) of Title 18 (Zoning) of the Palo Alto Municipal Code is amended to read as follows (additions underlined, deletions struck-through, unchanged text omitted by bracketed ellipses):

[. . .]

18.28.040 Land Uses

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Table 1 shows the permitted (P) and conditionally permitted (CUP) land uses for the Special Purpose Districts.

Table 1
Land Uses

PF OS AC Subject to
Regulations in
Chapter:

ACCESSORY AND SUPPORT USES
[…] […] […] […] […]
Accessory Dwelling Units,
subject to regulations in
Section 18.42.040
P(2) P(2) P(2) 18.0942.040
Junior Accessory Dwelling
Units
P(2) P(2) P(2) 18.0942.040
[…] […] […] […] […]

[. . .]

(2) An Aaccessory dDwelling uUnit or a Junior Accessory Dwelling Unit associated with a single-family or multi-family residence on a lot in the OS District is permitted, subject to the provisions of Section Chapter 18.0942.040, and such that no more than two total units result on the lot.

[…]

18.28.070 Additional OS District Regulations

The following additional regulations shall apply in the OS district:

(a) Accessory Dwelling Units and Junior Accessory Dwelling Units Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in SectionChapter 18.0942.040.

[. . .]

18.28.100 Grandfathered Uses
In the OS district, accessory dwellings and guest cottages existing on April 28, 1986, and which prior to that date were lawful, conforming permitted uses may remain as legal nonconforming uses. Such uses shall be permitted to remodel, improve or replace site improvements on the same site, without necessity to comply with site development regulations for continual use and occupancy by the same use; provided that any such remodeling, improvement or replacement shall not add a kitchen nor result in increased floor area, number of dwelling units, height, Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

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length or any other increase in the size of the improvement without complying with the standards set forth in Section 18.28.070(a) and without applying for and receiving a conditional use permit.

SECTION 9. Section 16.04.235 (Section 202 Definitions) is added to Chapter 16.04 (California Building Code, California Code of Regulations, Title 24, Part 2, Volumes 1 &2) of Title 16 (Building Regulations) of the Palo Alto Municipal Code to read as follows (additions underlined, bracketed ellipses indicate text of the California Building Code, 2022 Edition, that has been adopted without amendment but is omitted for brevity):

Section 202 Definitions

[...]

FLOOR AREA, GROSS. The floor area within the inside perimeter of the exterior walls of the building under consideration, exclusive of vent shafts and courts, without deduction for corridors, stairways, ramps, closets, the thickness of interior walls, columns or other features.

The floor area of a building, or portion thereof, not provided with surrounding exterior walls shall be the usable area under the horizontal projection of the roof or floor above. The gross floor area shall not include shafts with no openings or interior courts. For the purposes of Title 18 (Zoning), the definition of “gross floor area” in Section 18.04.030 shall apply.

FLOOR AREA, NET. The actual occupied area not including unoccupied accessory areas such as corridors, stairways, ramps, toilet rooms, mechanical rooms and closets. For the purposes of Title 18 (Zoning), the definition of “net floor area” in Section 18.04.030 shall apply.

[...]

SECTION 10. Any provision of the Palo Alto Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance.

SECTION 11. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.

SECTION 12. The Council finds that the adoption of this Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines sections 15061(b)(3), because it constitutes amendments to the City’s zoning ordinance to conform with preemptive State law, including Item 21
Attachment A - Amending
Title 16 (Building
Regulations) and Title 18
(Zoning) of the Palo Alto
Municipal Code to Amend
Requirements Relating to
Accessory Dwelling Units
and Junior Accessory
Dwelling Units

Item 21: Staff Report
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Article 2 (commencing with Section 66314) and Article 3 (commencing with Section 66333) of Chapter 13 of Division 1 of Title 7 of, the Government Code, as well as other minor and non- substantive amendments. As such, it can be seen with certainty that the proposed action will not have the potential for causing a significant effect on the environment.

SECTION 13. This ordinance shall be effective on the thirty-first date after the date of its adoption.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

____________________________ ____________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

____________________________ ____________________________ City Attorney or Designee City Manager

____________________________
Director of Planning and
Development Services

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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Utilities
Meeting Date: June 16, 2025
Report #:2411-3776
TITLE
PUBLIC HEARING & PROPOSITION 218 HEARING: Finance Committee Recommends Adoption of Six Resolutions: 1) Approving the Fiscal Year 2026 Wastewater Collection Utility Financial Forecast and Reserve Management Practices, Amending Wastewater Collection Rate Schedules S-1, S-2, S-6 and S-7, and Repealing Wastewater Collection Rate Schedules S-3 and S-4; 2) Approving the Fiscal Year 2026 Water Utility Financial Forecast, Reserve Management Practices and Reserve Transfers, and Amending Water Rate Schedules W-1, W-2, W-3, W-4, and W-7; 3) Approving the Fiscal Year 2026 Gas Utility Financial Forecast and Reserve Management Practices, Reserve Transfer, and General Fund Transfer, Approving the Distribution of a Climate Credit to Small and Medium Capacity G-2 Customers in December 2025, and Amending Gas Rate Schedules G-1, G-2, G-3 and G-10; 4) Approving the Fiscal Year 2026 Electric Utility Financial Forecast, Reserve Management Practices and Reserve Transfers, and Amending Electric Rate Schedules E- 1, E-2, E-2-G, E-4, E-4-G, E-4 TOU, E-7, E-7-G, E-7 TOU, E-14, E-16, E-EEC-1, and E-NSE-1; 5) Amending Utility Rate Schedules EDF-1 and EDF-2, and Approving the Palo Alto Fiber Broadband Internet Services Rate Schedule F-1; and 6) Amending Storm Water Utility Rate Schedule D-1; CEQA Status: Not a project under CEQA Guidelines Sections 15378(b)(4) and (5) and Exempt Under Section 15273(a)

RECOMMENDATION
Note: Resolutions are included in the packet as Attachments A – F, Attachment G reflects the Table of URLs for the Exhibits to Attachments A – F.

The Finance Committee recommends that the City Council adopt the following:

1. For the Wastewater Collection Utility, a Resolution (Attachment A):
a. Approving the Fiscal Year (FY) 2026 Wastewater Collection Utility Financial Forecast and Reserves Management Practices; and
b. Amending the Wastewater Collection Utility Rate Schedules effective July 1, 2025 (FY 2026):
i. S-1 (Residential Wastewater Collection and Disposal), ii. S-2 (Commercial Wastewater Collection and Disposal), Item 22
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iii. S-6 (Restaurant Wastewater Collection and Disposal), and iv. S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger); and
c. Repealing the Wastewater Collection Utility Rate Schedules effective July 1, 2025:
i. S-3 (Industrial Waste Laboratory and Analysis Charges), and ii. S-4 (Hauled Liquid Waste Charges);

2. For the Water Utility, a Resolution (Attachment B):
a. Approving the FY 2026 Water Utility Financial Forecast and Reserves Management Practices; and
b. Approving the transfer of up to $3 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2025; and
c. Amending the Water Utility Rate Schedules effective July 1, 2025 (FY 2026):
i. W-1 (General Residential Water service),
ii. W-2 (Water Service from Fire Hydrants),
iii. W-3 (Fire Service Connections),
iv. W-4 (Residential Master-Metered and General Non- Residential Water Service), and
v. W-7 (Non-Residential Irrigation Water Service);

3. For the Gas Utility, a Resolution (Attachment C):
a. Approving the FY 2026 Gas Utility Financial Forecast and Reserves Management Practices; and
b. Approving the transfer of up to $1.5 million from the Gas Utility Operations Reserve to the Distribution Rate Stabilization Reserve in FY 2025; and c. Transferring up to 18% of gas utility gross revenues received during FY 2024 to the General Fund in FY 2026; and
d. Approving the utilization of all available FY 2025 gas utility interest income and up to $1.1 million from the Cap and Trade Reserve to provide a one-time Climate Credit of $820.17 and $201.92 to Small and Medium Capacity G-2 customers, respectively, in December 2025; and
e. Amending the Gas Utility Rate Schedules effective July 1, 2025 (FY 2026):
i. G-1 Residential Gas Service,
ii. G-2 Residential Master-Metered and Commercial Gas Service, iii. G-3 Large Commercial Gas Service, and
iv. G-10 Compressed Natural Gas Service);

4. For the Electric Utility, a Resolution (Attachment D):
a. Approving the FY 2026 Electric Utility Financial Forecast and Reserves Management Practices; and
b. Approving the transfer of up to $5 million from the Electric Utility Supply Operations Reserve to the Distribution Operations Reserve in FY 2025; and c. Amending the Electric Utility Rate Schedules effective July 1, 2025 (FY 2026):
i. E-1 (Residential Electric Service),
ii. E-2 (Small Non-Residential Electric Service),
iii. E-2-G (Residential Master-Metered and Small Non-Residential Green Power Electric Service,
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iv. E-4 (Medium Non-Residential Electric Service),
v. E-4-G (Medium Non-Residential Green Power Electric Service), vi. E-4 TOU (Medium Non-Residential Time of Use Electric Service), vii. E-7 (Large Non-Residential Electric Service),
viii. E-7-G (Large Non-Residential Green Power Electric Service), ix. E-7 TOU (Large Non-Residential Time of Use Electric Service), x. E-14 (Street Lights),
xi. E-16 (Unmetered Electric Service) to recover capital and maintenance costs for utility pole attachments and telecom conduit, xii. E-EEC-1 (Export Electricity Compensation) to reflect 2024 avoided cost, and
xiii. E-NSE-1 (Net Surplus Electricity Compensation) to reflect current projections of FY 2026 avoided cost;

5. For the Fiber Optics Utility, a Resolution (Attachment E):
a. Amending the Dark Fiber Optic Utility Rate Schedules, consistent with the applicable Consumer Price Index, effective July 1, 2025 (FY 2026):
i. EDF-1 (Dark Fiber Licensing Services),
ii.EDF-2 (Dark Fiber Service Connection Fees);
b.Approving the new Palo Alto Fiber Broadband Internet Services Rate Schedule F- 1, for broadband internet services;

6. For Storm Water Management, a Resolution (Attachment F):
a. Amending the Storm Water Management Fee Rate Schedule, consistent with the applicable Consumer Price Index, D-1 effective July 1, 2025 (FY 2026):
i.D-1 (General Storm and Surface Water Drainage)

EXECUTIVE SUMMARY
The City of Palo Alto Utilities (CPAU) provides electricity, water, wastewater, natural gas, and fiber optic services to the Palo Alto community. The Public Works Department also provides refuse collection and processing for recycling, compost and garbage, wastewater treatment and storm water management. The recommended resolutions will set the final rate schedules for these services in FY 2026, beginning July 1, 2025, approve the financial forecasts, reserve management practices, and additional financial adjustments to support the recommended rates.

The City’s primary goals are to manage these services in a way that ensures continued safe, reliable, environmentally sustainable, and cost-effective operations. The City is proposing rate increases this year for electric, natural gas, wastewater and water services. Storm water management fees and two Dark Fiber rates will increase per the Consumer Price Index (CPI). The City is also proposing new broadband internet rates for Palo Alto Fiber as part of the phased buildout of fiber-to-the-premises (FTTP). These rate adjustments are necessary to:
•Cover operating costs: As a municipal utility, CPAU's rates are designed to recover the costs of providing services.

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•Invest in infrastructure: Funds are needed for critical projects like modernizing the electric grid, rebuilding the wastewater treatment plant (Regional Water Quality Control Plant), and maintaining the water distribution system.
•Replenish reserves: Utility reserves are currently low due to minimal rate increases during the pandemic and rising commodity prices/droughts, and need to be restored for financial stability and unexpected events.

The city aims to provide safe, reliable, environmentally sustainable, and cost-effective services, and is committed to transparency in communicating these rate changes to customers. Estimates for retail revenue impacts are included in the FY 2026 budget assumptions. The Finance Committee also recommends to the Council for staff to continue it’s review and work with both the UAC and Committee regarding the 2025 Gas cost of service study.

From December 2024 through June 2025, the Utilities Advisory Commission (UAC) and Finance Committee reviewed preliminary and proposed rate changes recommended by staff for Fiscal Year 2026. This report summarizes the meetings and incorporates UAC and Finance Committee recommendations into the recommendations for Council adoption.

The expected residential median utility bill changes are below, with the expected overall median utility bill for residential service to increase 8% in FY 2026. •20% increase for Wastewater Collection,
•10% increase for Water,
•5% increase for Gas,
•6% increase for Electric,
•2.4% increase for Storm Water Management Fee, and
•2.4% increase for Dark Fiber for pre-2006 commercial customers only

ANALYSIS
The seven rate schedules and recommended changes are summarized below, further details for each can be found in the referenced reports as reviewed by the Utilities Advisory Commission and the Finance Committee.

Wastewater Collection Utility Proposal
The Wastewater Collection Utility financial forecast proposes a 20% rate increase for FY 2026, which is equivalent to approximately $11 per residential customer per month. With this increase, Palo Alto’s rate will remain approximately 5% below neighboring cities, conservatively assuming that neighboring cities’ rates remain at current levels. This forecast also projects annual rate increases of 16% in FY 2027, 14% in FY 2028 and 5% in FY 2029 and FY 2030. Table 1 shows the projected Wastewater Collection rate trajectory from FY 2026 through FY 2030. The additional funding generated by this rate increase is required to pay for ongoing wastewater treatment costs, wastewater utility operations, and capital improvement projects. This forecast reflects deferral of some capital costs to manage the magnitude of the rate increase.

Staff updated the utility’s cost projections for the FY 2025 to FY 2030 forecast period based on Item 22
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the most recent recorded costs and rates of cost increases. Relative to last year’s financial forecast, total expenses are expected to be about 13% higher over the forecast period, due to higher treatment costs and salary and benefits and inflation assumptions. To address these challenges, similar to last year’s forecast, this projection assumes deferral of the next sewer main replacement project to FY 2028. This assumption defers the more accelerated replacement cycle adopted in the FY 2024 financial plan, intended to increase replacement from 1 mile to 2.5 miles of pipe annually starting in FY 2026. In last year’s Financial Plan, staff planned for a smaller main replacement in FY 2026 to replace 1 mile of sewer mains. In this Financial Forecast, both the accelerated main replacement project and the 1 mile sewer main replacement in FY 2026 is deferred to start in FY 2028, and this forecast defers approximately $0.45 million of sewer lateral/manhole rehabilitation and replacement work in FY 2025 to future years. This forecast reflects the minimal number of high priority capital projects to allow the Wastewater Collection Operations Reserve to return to within guideline range and avoid an even higher rate increase.

Utility rates for FY 2026 are developed concurrently with the FY 2026 budget. Due to updated cost estimates since the April 1, 2025 Finance Committee meeting, Staff reduced the rate trajectory by 1% each year in FY 2027 and FY 2028. Updates to the Wastewater Collection utility Financial Forecast are described below, and in the tables in Exhibit 1 to Attachment A, which amend the Financial Forecast presented to the Finance Committee on April 1, 2025:
1) Updated the following treatment budget assumptions:
a. The remaining unencumbered and authorized amount for future pay-as-you-go capital has been revised downward. This lowered the funding needed for treatment reserve replenishment in FY 2026 by approximately $1.1 million, and by $1.4 to $2.3 million each future year.
b. The treatment budget forecast has been revised to reflect the Regional Water Quality Control Plant’s April 2025 forecast. This revision increased Treatment O&M by approximately $0.1 million in FY 2026 and decreased Treatment Pay-as- you-go CIP expenses approximately $0.1 million, with minimal net impact on the total treatment budget forecast in FY 2026.
c. Grant reimbursement amounts have been revised to assume 30% of funds experience a one year delay in reimbursement. This decreases the grant funding assumed in FY 2025 by $0.8 million and increases the grant funding assumed in FY 2026 by $0.5 million.1
2) Added $0.33 million each year from FY 2026 – FY 2028 to transfers out to enterprise funds to reflect an estimated rent expense associated with the use of the Utilities warehouse/laydown yard. This is projected to be an expense of the Electric Utility with reimbursement from the wastewater utility for rent.2
3) Increased CIP Reserve contribution by a total of $5 million from FY 2028 through FY 2030, 1 All of the treatment budget changes described in (a) – (c) of section 1 are shown in Row 7 of Table 1, “Wastewater Collection Utility Financial Forecast”, in Exhibit 1 to Attachment A. 2 See Row 14 of Table 1, “Wastewater Collection Utility Financial Forecast”, in Exhibit 1 to Attachment A.

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allowing that reserve to remain within the guideline range from FY 2027 through FY 2030 instead of dropping to near $0 in FY 2028.3
4) Added an annual inflation factor of 5.4% to CIP budgeted amounts for unallocated salaries and benefits which added about $34K in FY 2026.4
5) As a result of changes 1 through 4 above, an additional $1.1 million is forecasted to increase the Wastewater Collection Operations Reserve replenishment in FY 2026, bringing the total projected year end FY 2026 Collections Operations Reserve balance from $1.5 million to $2.7 million 5. This Operations Reserve level is still below the target of $7.2 million and the minimum guideline of $4.1 million6. However, this change reduces the utility’s risk associated with repayment of the $3 million loan from the Fiber Utility (plus interest), which will occur during FY 2026.

Table 1: Projected Wastewater Collection Rate Trajectory from FY 2026 to FY 2030 With these changes, the Wastewater Collection Operations Reserve is projected to remain below the reserve minimum at the end of FY 2026 but is projected to be restored to within the guideline range by the end of FY 2027, and to the reserve target level by the end of the forecast period.

Figure 1 illustrates the Operations Reserve year-end levels. 3 See Row 15 of Table 1, “Wastewater Collection Utility Financial Forecast” and Row 26 of Table 3, “Wastewater Collection Utility CIP Details”, in Exhibit 1 to Attachment A. 4 See Row 15 of Table 1, “Wastewater Collection Utility Financial Forecast” and Row 17 of Table 3, “Wastewater Collection Utility CIP Details”, in Exhibit 1 to Attachment A. 5 See Row 18 of Table 1, “Wastewater Collection Utility Financial Forecast”, in Exhibit 1 to Attachment A. 6 See Row 25 and 26 of Table 1, “Wastewater Collection Utility Financial Forecast”, in Exhibit 1 to Attachment A.

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Figure 1: Operations Reserve Adequacy
Additionally, staff recommend Council repeal rate schedules S-3 (Industrial Waste Laboratory and Analysis Charges) and S-4 (Hauled Liquid Waste Charges) as an administrative clean-up item.

These rates moved to the citywide municipal fee schedule effective in 2023.

Proposed Rates
The current rates were effective July 1, 2024, when the City increased sewer rates by 15%. To align revenues with costs, CPAU proposes to increase overall rates by 20% in FY 2026, followed by 16% in FY 2027, 14% in FY 2028, and 5% in both FY 2029 and FY 2030.

CPAU has three sewer rate schedules applicable to current customers: one for residential customers (S-1), one for non-residential customers (other than restaurants) (S-2), and one for restaurants (S-6). Table 2 below summarizes the current and proposed rates for all customer classes.

Table 2 shows the current and proposed Sewer rates.

Table 2: Current and Proposed Sewer Rates
ChangeCurrent Rates
(as of 7/1/2024)
Proposed Rates
(effective 7/1/2025) $ %
Monthly Service Charges ($/Month)
S-1 (Residential) Service Charge $ 55.93 $67.11 $ 11.18 20% Water Quantity Rates ($/CCF)
S-2 (Commercial) Quantity Rates 10.44 12.52 2.08 20%
S-6 (Restaurant) Quantity Rates 15.58 18.69 3.11 20%
The proposed rates for the S-7 (Industrial Discharger) rate schedule are:
1) Collection System Operation, Maintenance, and Infiltration Inflow: $6.21 per 100 cubic feet of metered water use
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2) Advanced Waste Treatment Operations and Maintenance Charge: $2.48 per 100 cubic feet of metered water use
3) $304.18 per 1000 pounds (lbs) of COD (Chemical Oxygen Demand) 4) $733.40 per 1000 lbs of SS (Suspended Solids)
5) $5,067.70 per 1000 lbs of NH3 (Ammonia)
6) $22,233.94 per 1000 lbs of toxics (chromium, copper, cyanide, lead, nickel, silver, and zinc) Water Utility Proposal
The Water Utility needs to plan for large capital projects in the five-year budget forecast, including two reservoir replacements or rehabilitations and a large main replacement every other year, which requires rate increases. Staff plans to hold the proposed rate increase at 10% by deferring capital work. Under the proposed rate, the reservoir work will be deferred by two years from FY 2027 and FY 2028 to FY 2029 and FY 2030, and $4.6 million of main replacement work planned in FY 2026 and $2.8 million of main replacement work planned in FY 2028 will be deferred to beyond the 5-year forecast horizon. This approach is consistent with the Finance Committee and UAC’s preference for a water rate increase of no more than 10%. Deferring capital work will increase the cost to complete the same capital work because of construction inflation; additionally, deferring the work may increase maintenance costs and emergency repairs because of older water mains. The Water Utility has utilized or plans to use all available reserve funds to help offset higher costs and keep rates below the utility’s actual expenses during both the pandemic and the drought, up through the current drought recovery period. However, the reserves have now reached a point where rate increases are needed to pay for distribution system costs.

At the end of FY 2024, the operations reserve was approximately $2 million below projected levels with a balance of $7.1 million, which is below the minimum guideline level of $8.4 million.

Revenues were $2.3 million higher than forecasted last year in the FY 2025 Financial Plan (sales revenue, capacity and connection fees). This is because water purchases were higher than forecasted in the FY 2025 Financial Plan while purchases were still lower than in each of the pre- drought years (FY 2018 through FY 2022). Additionally, operating and capital expenses were $4.4 million higher than forecasted. Many of the cost increases are ongoing annual expenses. The rate stabilization reserve at the end of FY 2024 had a $4 million balance, and this financial forecast proposes to use all of that remaining funding to cover the unexpected additional costs for FY 2025 and FY 2026.

This forecast assumes the wholesale water rate in July 2025 will increase from its current level of $5.67/CCF to $5.80/CCF, an increase of 2.3%, as approved by the San Francisco Public Utilities Commission (SFPUC)’s rate hearing on May 13, 2025. SFPUC also projects a rate increase of 1% in FY 2027, 1% in FY 2028, 5% in FY 2029, and 8% in FY 2030, although the projection is highly uncertain and subject to change.

Utility rates for FY 2026 are developed concurrently with the FY 2026 budget. Due to updated cost estimates since the April 1, 2025 Finance Committee meeting, Staff updated the Water Utility Financial Forecast as described below, and in the tables in Exhibit 1 to Attachment B, which Item 22
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amend the Financial Forecast presented to the Finance Committee on April 1, 2025:
1) Updated FY 2026 water purchase costs from $5.79 per ccf to $5.80 per ccf, as approved by the SFPUC on May 13, 2025. This increased FY 2026 Water Purchase costs by $40K.7 2) Updated water purchase costs in FY 2027 through FY 2030 in accordance with the May 13, 2025 SFPUC forecast,8 as shown in Table 3.9
3)Maintained a 10% per year rate increase by deferring $0.3 of additional CIP costs in FY 2028, resulting in an increase from $2.5 million to $2.8 million of deferred costs due to increased water purchase costs.10
Table 3 shows the projected overall average system water rate increase is 10% per year from FY 2026 through FY 2030. As shown in Table 3, the Water Utility requires distribution rate increases between 11% and 17% per year through FY 2030 to provide sufficient revenues to fund annual expenses for the distribution system and capital improvements, even as deferred.

Table 3: Projected Water Rate Trajectory from FY 2026 to FY 2030 Proposed Rates
The current rates and surcharges became effective on July 1, 2024. CPAU has five water rate schedules: separately metered residential customers (W-1), commercial and master-metered multi-family residential customers (W-4), irrigation-only services (W-7), services to fire sprinkler systems in buildings and private hydrants (W-3), and service to fire hydrant rental meters used for construction (W-2). All customers pay a monthly service charge based on the size of their inlet meter. This charge represents metering, billing, and other customer service costs, and also the cost of maintaining the capability to deliver a peak flow for that customer based on their meter size.

Water rates are composed of two general types of costs: commodity and distribution. For July 1, 2025, staff proposes to pass through the wholesale water rate increase approved by SFPUC and 7 See Row 31 of Table 1, “Water Utility Financial Forecast”, in Exhibit 1 to Attachment B. 8 San Francisco Public Utilities Commission Fiscal Year 2025-2026 Wholesale Water Rates, May 13, 2025, https://sfpuc.sharefile.com/share/view/se9a42370c51345bd9d2b495f8b885fc0 9 See Row 31 of Table 1, “Water Utility Financial Forecast”, in Exhibit 1 to Attachment B. 10 See Row 53 of Table 1, “Water Utility Financial Forecast”, in Exhibit 1 to Attachment B, and Row 12 of Table 3, “Water Utility Financial Forecast”, in Exhibit 1 to Attachment B.

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to increase distribution rates by 17%. Council approved the pass-through provision for a five year period, effective July 1, 2024.11
Table 4 shows the current and proposed consumption charges, which are distribution rates.

Table 4: Current and Proposed Water Distribution Charges Current Rates
(as of 7/1/2024)
Proposed Rates
(effective 7/1/2025)
Change
($/CCF)
Change
(%)
W-1 (Residential) Volumetric Rates ($/CCF)
Tier 1 Rate 2.99 3.49 0.50 17%
Tier 2 Rate 6.96 8.14 1.18 17%
W-2 (Construction) Volumetric Rates ($/CCF)
Uniform Rate 4.21 4.92 0.71 17%
W-4 (Commercial) Volumetric Rates ($/CCF)
Uniform Rate 4.21 4.92 0.71 17%
W-7 (Irrigation) Volumetric Rates ($/CCF)
Uniform Rate 6.41 7.49 1.08 17%
Table 5 and Table 6 show the current monthly service charges for rate schedules W-1, W-4 and W-7. These monthly service charges are also considered distribution rates.

Table 5: Current and Proposed Water Monthly Service Charges for W-1 Monthly Service Charge
($/month based on meter size) ChangeMeter
Size Current
(as of 7/1/2024)
Proposed
(effective 7/1/2025) $ %
5/8” 23.62 27.63 4.01 17%
3/4” 23.62 27.63 4.01 17%
1” 23.62 27.63 4.01 17%
1 ½” 76.31 89.28 12.97 17%
2” 118.05 138.11 20.06 17%
3” 250.22 292.75 42.53 17%
4” 445.01 520.66 75.65 17%
6” 911.09 1,065.97 154.88 17%
8” 1,676.31 1,961.28 284.97 17%
10” 2,650.21 3,100.74 450.53 17%
12” 3,485.00 4,077.45 592.45 17%
11 See Resolution 10176 “Resolution of the Council of the City of Palo Alto Approving the FY 2025 Water Utility Financial Plan and Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service),” June 17, 2024.

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Table 6: Current and Proposed Water Monthly Service Charges for W-4 and W-7 Monthly Service Charge
($/month based on meter size) ChangeMeter
Size Current
(as of 7/1/2024)
Proposed
(effective 7/1/2025) $ %
5/8” 20.65 24.16 3.51 17%
3/4” 27.62 32.31 4.69 17%
1” 41.53 48.59 7.06 17%
1 ½” 76.31 89.28 12.97 17%
2” 118.05 138.11 20.06 17%
3” 250.22 292.75 42.53 17%
4” 445.01 520.66 75.65 17%
6” 911.09 1,065.97 154.88 17%
8” 1,676.31 1,961.28 284.97 17%
10” 2,650.21 3,100.74 450.53 17%
12” 3,485.00 4,077.45 592.45 17%
Table 7 shows the current and proposed monthly service charges for fire services rate schedule W-3.

Table 7: Current and Proposed Water Monthly Service Charges for W-3 Monthly Service Charge
($/month based on meter size) ChangeMeter
Size Current
(as of 7/1/2024)
Proposed
(effective 7/1/2025) $ %
2” $4.86 5.68 0.82 17%
4” $30.11 35.22 5.11 17%
6” $87.46 102.32 14.86 17%
8” $186.39 218.07 31.68 17%
10” $335.21 392.19 56.98 17%
12” $541.46 633.50 92.04 17%
Gas Utility Proposal
During the pandemic, the City kept overall Gas Utility rate increases to 2% to 3% annually and utilized reserve funding to cover costs. In the winter of 2022-23, surging gas prices depleted the Gas Utility reserves, which were used to cover the difference between actual gas costs and the revenue generated by charging customers the Council-approved maximum gas commodity charge. Reserves need to be replenished over time to ensure funds are available for safety and reliability needs, while managing ongoing cost inflation.

The FY 2025 financial plan forecasted an overall gas rate increase of 5% for FY 2026. In this financial forecast, staff proposes the same 5% overall rate increase, which is about an 8.7% increase to distribution rates, assuming no change in supply costs, effective July 1, 2025.

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Additionally, this forecast projects overall rate increases of 6% annually from FY 2027 through FY 2030. Table 8 shows the projected gas rate trajectory for FY 2026 through FY 2030.

Table 8: Projected Overall Gas Rate Trajectory from FY 2026 to FY 2030 The City’s Gas Utility rates are based on the 2019 Natural Gas Cost of Service and Rates Study, updated with current and proposed operating costs.

Due to updated cost and revenue estimates since the April 15, 2025 Finance Committee meeting, staff updated the Gas Utility Financial Forecast as described below, and in the tables in Exhibit 1 to Attachment C, which amend the Financial Forecast presented to the Finance Committee on April 15, 2025:

1.Updated Cap and Trade expenses and reserve ending balances to align with the latest budget estimates, which reflect higher levels of spending than shown in the April 15, 2025 Finance Committee Financial Forecast.12

2.In the May 7, 2025 Finance Committee meeting, 13 Committee members recommended utilizing up to $1.1 million from the Cap and Trade Reserve to provide a Climate Credit to Small and Medium G-2 customers. 14 This is reflected as a remaining balance in the Cap and Trade Reserve in FY 2026 that is $1.1 million lower than it would have been after the estimated climate credit spending. Once the amount of available recorded interest income is known for FY 2025, staff will update the estimated Cap and Trade Reserve balance estimate in next year’s financial forecast.

3. In the May 7, 2025 Finance Committee meeting 15, Committee members also recommended to retain the current FY 2025 gas rate structure, with rate increases to meet the revenue requirement for FY 2026 in the gas utility. This change led to minor fluctuations in the sales revenue estimated in FY 2027 through FY 2030.16 General Fund Transfer
The Gas Utility's transfer to the City’s General Fund is a component of the City’s gas rates. This transfer was first authorized by voters in 1950 and reaffirmed in November 2022 with the passage of Measure L, which authorizes a transfer amount up to 18% of the gross revenues of the Gas Utility. This financial forecast proposes a transfer of $9.735 million in FY 2026, 18% of FY 12 See Row 34 of Table 1, “Gas Utility Financial Forecast”, in Exhibit 1 to Attachment C. 13 Finance Committee Meeting Agenda May 7, 2025, Item 2:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16085 14 See Row 34 of Table 1, “Gas Utility Financial Forecast”, in Exhibit 1 to Attachment C. 15 Finance Committee Meeting Agenda May 7, 2025, Item 2:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16085 16 See Row 6 of Table 1, “Gas Utility Financial Forecast”, in Exhibit 1 to Attachment C.

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2024 gross revenues. This transfer of 18% is in alignment with the assumptions in the FY 2025 Adopted Budget process.

Proposed Rates
Table 9 shows the current and proposed monthly service charges, while Table 10 shows the volumetric charges related to distribution for all rate schedules. Supply-related charges are pass-through charges that update periodically. The latest charges are shown in the City’s Rates website17, 18.

Table 9: Current and Proposed Gas Monthly Service Charges Rate Schedule Current Rates
(as of 7/1/2024)
Proposed Rates
(effective 7/1/2025)
Change
($)
Change
(%)
G-1 (Residential) $ 16.93 $ 18.40 $ 1.47 8.7%
G-2 (Small Commercial) 156.90 170.55 13.65 8.7%
G-3 (Large Commercial) 717.89 780.34 62.45 8.7%
G-10 (CNG) 106.11 115.34 9.23 8.7%
Table 10: Current and Proposed Gas Distribution Charges Rate Schedule Current Rates
(as of 7/1/2024)
Proposed Rates
(effective 7/1/2025)
Change
($)
Change
(%)
G-1 (Residential)
Tier 1 Rates $ 0.8229 $ 0.8944 $ 0.0715 8.7%
Tier 2 Rates 2.1043 2.2873 0.1830 8.7%
G-2 (Residential Master-Metered and Small Commercial)
Uniform Rate $ 1.0809 $ 1.1749 $ 0.0940 8.7%
G-3 (Large Commercial)
Uniform Rate $ 1.0702 $ 1.1633 $ 0.0931 8.7%
G-10 (Compressed Natural Gas)
Uniform Rate $ 0.0175 $ 0.0190 $ 0.0015 8.6%

17 Finance Committee Meeting Agenda May 7, 2025, Item 2:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16085 18 City’s Rates Website https://www.cityofpaloalto.org/files/assets/public/v/25/utilities/rates-schedules-for- utilities/residential-utility-rates/monthly-gas-volumetric-and-service-charges-residential-3.pdf Item 22
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Electric Utility Proposal
The Electric Utility rate forecast proposes a 5.1% system wide rate increase for FY 2026. Last year’s forecast projected 5% annual rate increases from FY 2027 to FY 2029. The updated forecast now projects a 6% increase in FY 2027, 8% increases in FY 2028 and FY 2029, and a 6% increase in FY 2030. Table 1 shows the proposed rate increases for FY 2026 through FY 2030. The drivers for this increase relative to last year’s forecast include a new warehouse and laydown yard for grid modernization, replacement of emergency generators, and an update to the General Fund Transfer forecast from $15.6 million to $17.4 million beginning in FY 2026. The General Fund Transfer increase is a result of the estimated grid modernization asset value increase (capital assets are an input to the Council-adopted General Fund Transfer methodology and when capital assets increase, General Fund Transfer also increases). Although the General Fund Transfer is funded by non-rate revenue, a larger General Fund Transfer results in less non-rate revenue projected to be available to pay for other costs, and so a larger rate increase is necessary. The rate increases in the outer years of the forecast could change as the Council finalizes plans for debt financing grid modernization costs. Utility rates for FY 2026 are developed concurrently with the FY 2026 budget. Due to updated cost estimates since the April 15, 2025 Finance Committee meeting, staff updated relevant expenses and revenues that are reflected as updates to the Electric Utility Financial Forecast. The changes are described below, and in the tables in Exhibit 1 to Attachment D, which amend the Financial Forecast presented to the Finance Committee on April 15, 2025:
1) Removed $2.9 million in FY 2027 for the MSC remodel. 19 This project is no longer planned during this forecast period.
2)Updated Low Carbon Fuel Standard reserve, Cap & Trade, and Public Benefits reserves, to reflect the latest budget estimates.20
In the current year, FY 2025, power supply costs are expected to be slightly lower than forecasted a year ago; the main driver for this shift is extremely high market prices for resource adequacy capacity and renewable energy credits, which have yielded higher wholesale revenues for the City. The City’s load (consumption) for the current year is projected to be about 10% higher than previously forecasted, but is then expected to be relatively flat over the next several years.

Meanwhile, output from the City’s hydroelectric resources is projected to be roughly equal to long-term average levels over the next few years. Hydroelectric revenue continues to be a large source of uncertainty in the City’s supply cost projections. In the next five years, staff expects increasing transmission access charges, rising renewable portfolio standard requirements, and tightening resource adequacy requirements to steadily increase electric supply costs. Capital spending and distribution system maintenance spending is rising due to grid modernization, fiber-related investments and an upgrade to the Hanover Substation which will benefit all electric rate payers. Staff expects grid modernization and related capital costs to be offset with a series 19 See Row 31 of Table 1 “Electric Utility Financial Forecast”, in Exhibit 1 to Attachment D. 20 See Row 34 of Table 1 “Electric Utility Financial Forecast”, in Exhibit 1 to Attachment D for the expense changes combined and Rows 51, 52, and 54 for the ending reserves for Low Carbon Fuel Standard, Cap & Trade, and Public Benefits reserves, respectively.

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of debt financing with the first bond issuance in FY 2026. The Hydroelectric Rate Stabilization Reserve has a balance of $17.4 million, approaching the reserve’s target level of $19 million. This level will allow the City to avoid activating the hydroelectric rate adjuster if an upcoming winter is drier than average. In FY 2025, this forecast anticipates the Electric Special Projects Reserve will also be repaid $7.5 million from the Electric Supply Operations Reserve, bringing the balance in the Electric Special Projects Reserve from $22.6 million to $30.1 million. This will fully repay the monies borrowed from the Electric Special Projects Reserve to the Electric Supply Operations Reserve to cover higher costs during the pandemic, the drought, and high winter energy prices during 2022-2023. Table 11 shows the projected electric utility rate trajectory from FY 2026 to FY 2030.

Table 11: Projected Overall Electric Rate Trajectory from FY 2026 to FY 2030 Proposed Rates
The City adopted its current electric rates effective July 1, 2024. At that time, the City did not increase the overall revenue but did implement a series of rate adjustments by customer class in accordance with the City of Palo Alto Electric Cost of Service and Rate Study, completed by EES Consulting in April 2024.21 The current and proposed FY 2026 rates are reflected in Table 12 below:
21 Palo Alto Electric Cost of Service and Rate Study
https://www.cityofpaloalto.org/files/assets/public/v/3/agendas-minutes-reports/reports/city-manager-reports- cmrs/attachments/2024-rates/electric-cosa.pdf
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Table 12: Current and Proposed Electric Rates
Rate Schedule Current Rates
(as of 7/1/2024)
Proposed Rates
(effective 7/1/2025)
Change
($)
Change
(%)
E-1 (Residential)
Tier 1 Energy ($/kWh) 0.19461 0.20570 0.01109 5.7%
Tier 2 Energy ($/kWh) 0.21868 0.22944 0.01076 4.9%
Customer Charge ($/month) 4.64 5.15 0.51 11.0%
E-2 & E-2-G (Small Non-Residential)
Summer Energy ($/kWh) 0.25210 0.26485 0.01275 5.1%
Winter Energy ($/kWh) 0.16414 0.17290 0.00876 5.3%
Customer Charge ($/month) 5.60 6.22 0.62 11.1%
E-4 & E-4-G (Medium Non-Residential)
Summer Energy ($/kWh) 0.15387 0.16171 0.00784 5.1%
Winter Energy ($/kWh) 0.11018 0.11579 0.00561 5.1%
Summer Demand ($/kW) 45.29 47.59 2.30 5.1%
Winter Demand ($/kW) 23.73 24.94 1.21 5.1%
Customer Charge ($/month) 113.73 119.53 5.80 5.1%
E-7 & E-7-G (Large Non-Residential)
Summer Energy ($/kWh) 0.13570 0.14262 0.00692 5.1%
Winter Energy ($/kWh) 0.08797 0.09245 0.00448 5.1%
Summer Demand ($/kW) 40.36 42.41 2.05 5.1%
Winter Demand ($/kW) 27.79 29.20 1.41 5.1%
Customer Charge ($/month) 520.80 547.36 26.56 5.1%
Table 13 shows the current and proposed NEM Buyback rates effective July 1, 2025.

Table 13: Current and Proposed Electric NEM Buyback Rates Rate Schedule Current Rates
$/kWh
Proposed Rates
$/kWh
Net Surplus Electricity (E-NSE-1) $0.1427 $0.1012
Export Electricity (E-EEC-1) $0.1420 $0.1206
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Figure 2 Administration Costs FY 2018 – 2024
During the Finance Committee meeting on April 15, 2025, a Council member asked how much electric utility administration costs were increasing and what the drivers of those increases were.

Staff reviewed the administration costs provided in the April 15, 2025 staff report, Figure 6, and noted that there is an error in the administration costs in that figure and the costs are not comparable from year to year. Figure 2 shows updated and corrected administration costs.

Administration costs over the past 5 years have grown on average 8% per year. The primary driver of the increase are city centralized support (i.e., Administrative Services, Attorney, HR, Facilities, IT services for security, infrastructure replacement, and software applications (i.e. AMI, FTTP, GIS, OMS, SAP), rent for substations, Municipal Services Center and City Hall, electrification of fleet vehicles when feasible, higher salaries due to new FTEs, filled vacancies and market adjustments, benefits including proactive funding of pension, and general liability and insurance premiums.

Fiber Utility Proposal
Since 2007, the EDF-1 and EDF-2 rates for Dark Fiber customers have increased annually by the annual December change in the Consumer Price Index for All Urban Consumers (CPI-U) in the San Francisco area, as stated in their dark fiber license agreements. Based on prior Utilities Advisory Commission and City Council direction, these rate changes are routinely included as part of the Budget adoption process rather than in a separate staff report. This year’s change in CPI-U was

2.4%, as reported by the Bureau of Labor Statistics. The City has four customers remaining on the pre-2006 EDF-1 rate schedule. All other dark fiber customers are on the EDF-3 rate schedule.

Additionally this year, the City is launching its Palo Alto Fiber broadband internet service in a pilot area. A new rate schedule F-1 includes proposed broadband internet services and rates, based on extensive market research, evaluation of customer demand, and competitive benchmarks. A well-defined yet adaptable rate structure is essential for the success of the FTTP project in today’s rapid evolving and competitive landscape. To support a timely and responsive rollout, staff recommends an initial offering focused on simple service packages that are easy to understand $ M
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and to fulfill. Staff also recommends approving a range of rates and packages, which can be easily adapted, compared with fixed-rate offerings. This strategic approach offers several key advantages. First, limiting the number of core packages simplifies the initial deployment and provisioning processes, allowing staff to grow in-house expertise while relying on contracted services to concentrate on efficient installations and customer onboarding. Second, it reduces complexity in customer support efforts and marketing and outreach, enabling the Fiber utility to clearly communicate the value proposition of each plan and focus on providing services. In a market where customers are often overwhelmed by numerous offerings, simplicity and transparency can be a significant differentiator. With a well-defined range for the rates and packages, staff can adapt offerings to target different customer segments.

Proposed Rates (Schedule F-1)
Table 14 shows the proposed maximum monthly service charges for Palo Alto Fiber broadband internet services. The rate range and service package list the maximum price and allow flexibility in setting standard and promotional rates as needed to be competitive in offering internet services to phase 1 customers. The maximum prices are competitive with non-promotional standard internet rates from AT&T and Xfinity.

Table 14: Proposed Palo Alto Fiber Broadband Internet Rates Residential Service Plan Pricing
500 Mbps - Rate Assistance Up to $30
500 Mbps Up to $75
1 Gbps Up to $95
2 Gbps Up to $175
5 Gbps Up to $265
Commercial Internet Service Plan Pricing
500 Mbps Up to $125
1 Gbps Up to $185
2 Gbps Up to $195
5 Gbps Up to $295
Additional Equipment Pricing
Calix GigaSpire Up to $5
Calix Blast Mesh Extender Up to $5
Calix Gig Wan Port Up to $600
Other Service Offerings Pricing
Fixed Wireless - 100 Mbps Up to $75/Month
Protect IQ Up to $10/Month
Experience IQ Up to $10/Month
Smart Home - Calix Up to $10/Month
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Smart Biz - Calix Up to $30/Month
Smart MDU - Calix Up to $10/Month per subscriber
Commercial Dedicated 1 Gbps Internet Access (DIA) Up to $1,500/Month Commercial Dedicated 10 Gbps Internet Access
(DIA) Up to $7,500/Month
Other Contract Terms
Data Allowance - Unlimited
Month to month contract term
Storm Water and Surface Water Drainage Proposal
On April 11, 2017, a majority of Palo Alto property owners approved a ballot measure approving a monthly Storm Water Management Fee. This fee funds thirteen storm drainage capital improvement projects listed in the ballot measure, enhanced maintenance of the storm drainage system, and a variety of storm water quality protection programs. The approved ballot measure allows for an annual adjustment based on the Consumer Price Index (CPI) or 6%, whichever is less. The Storm Water and Surface Drainage Rate will increase 2.4%, increasing the monthly charge per Equivalent Residential Unit by $0.41, $17.20 to $17.61 for Fiscal Year 2026, effective July 1, 2025, to reflect the annual CPI change. See Staff Report 2501-408222 for more information.

Timeline
Water and Wastewater Collection Rates
After the June 16th Public Hearing is opened and testimony from members of the public accepted, City Council may choose to:

1. Close the hearing and take action; or

2. Close the hearing and defer action until the close of the Budget Adoption Hearing on June 16th; or

3. Continue the hearing until the end of the Budget Adoption Hearing (should the Budget Adoption Hearing be continued to another Council meeting), and then reconvene the hearing, take any additional water and wastewater collection rate testimony, close the hearing, and take action.

The latter option has been used in prior years when the Budget Adoption process has spanned multiple City Council meetings. It is customary in such circumstances to continue to accept written protests up until the hearing is closed. Unless written protests are filed by a majority of affected water and wastewater customers, Council may vote on the proposed rate actions. If approved, the water and wastewater rates will become effective July 1, 2025. The City Council 22 Staff Report 2501-4082;
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will also consider changes to the Financial Forecasts for the wastewater collection and water utilities, and should they take action to approve these forecasts, they will also become effective July 1, 2025.

Electric, Gas, Fiber and Storm Water Management rates, as well as Utility Financial Forecasts The electric, gas, fiber and storm water management rates will be considered at the June 16, 2025 public hearing. Should the City Council take action to approve any or all of these rates, they will become effective July 1, 2025.

FISCAL/RESOURCE IMPACT
The resource impact of the recommendations and rate increases summarized in this report is the continued financial solvency of the various utilities through the revenue increases described below. Table 15 shows the estimated FY 2026 revenue impacts of the recommendations in this report, relative to projected revenue for FY 2026 without changing utility rates. Streetlight expenses (which are paid from the General Fund) are projected to increase by 11% or $0.22 million.

Table 15: Median Residential Bill Increase and Revenue Impact Utility
Median Residential
Bill Increase
FY 2026 Estimated
Overall
Revenue Impact
Wastewater Collection 20% $4.9 million
Water 10% $5.6 million
Gas 5% $3.3 million23
Electric 6% $9.2 million
Storm Water Management 2.4% $0.2 million
Utility rate increases impact the general fund because the City is a non-residential utilities customer, and impact revenues (due to the General Fund Transfers). The impact to the general fund of these rate increases from the adopted 2025 budget to the proposed 2026 budget is:
•Wastewater Collection: The impact to the general fund from the proposed wastewater collection rate increase is an expense decrease of $0.01 million relative to what was anticipated for FY 2026 last year.
•Water: The impact to the general fund of the water rate increase is a $0.1 million expense increase in FY 2026.
•Gas: The impact to the general fund from the proposed gas rate increase is a $0.07 million expense increase in FY 2026. The General Fund transfer would decrease from $10.917 million in FY 2025 to $9.735 million in FY 2026, a decrease of about $1.183 million. FY 2025 transfer was elevated due the higher than normal commodity revenue received 23 Not including fluctuations in commodity revenue/cost.

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from the high gas commodity prices in the winter 2022-23. •Electric: Street light expenses (which are paid from the General Fund) are projected to increase by 11% or $0.22 million. The impact to the general fund from the proposed rate increases is $0.3 million. The General Fund revenues from the General Fund Transfer would increase from an estimate of $15.985 million in FY 2025 to an estimated $17.407 million in FY 2026, an increase of $1.422 million.

Resource impacts to City departments and funds of the recommended rate adjustments are programmed in the FY 2026 Proposed Operating Budget. If the final rates adopted by Council in June differ from those proposed in this report, further adjustments may be brought forward as part of the annual budget process.

Staff estimates the Dark Fiber Optics rate increase will increase revenue $12,565 from the four remaining customers on the EDF-1 rate schedule. For Fiber broadband internet services, the revenue increase will depend on the number of customers that sign up.

Policy Implications
Policy implications related to the proposed electric, gas, water, wastewater collection, fiber and storm water management fee rate actions are detailed fully in the attached Resolutions and associated exhibits.

STAKEHOLDER ENGAGEMENT
On December 3, 2024, staff discussed the preliminary rate proposals at the Finance Committee meeting. The Finance Committee did not take any action on this item.24 On December 4, 2024, staff discussed the preliminary rate proposals at the UAC meeting. The UAC took no action.25
The UAC reviewed staff’s proposals for the Wastewater Collection and Water at its March 5, 2025 UAC meeting 26, which both passed unanimously. The UAC reviewed staff’s proposals for the Electric and Gas utilities at its April 2, 2025 meeting. The UAC approved the electric proposal unanimously. Regarding staff’s Gas Utility proposal, the UAC recommended approval of this proposal with a 5-1 vote with one abstention. The Commissioner who voted against the staff proposal expressed concern about the cost of service study results and in particular the increase in rates for the residential (G-1) customer class. The UAC also recommended through a 6-1 vote 24 December 3, 2024 Finance Committee Meeting, Staff Report https://portal.laserfiche.com/Portal/DocView.aspx?id=111748&repo=r-704298fc, Minutes https://portal.laserfiche.com/Portal/DocView.aspx?id=117363&repo=r-704298fc, Video https://www.youtube.com/watch?v=-tshOdaDA3A%3Ffeature%3Dshare 25 December 4, 2024 Utilities Advisory Commission, Staff Report https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=d7cd6030-1d05-412e-a96b-cabd33557bc1, Minutes
https://portal.laserfiche.com/Portal/DocView.aspx?id=123724&repo=r-704298fc, Video https://www.youtube.com/watch?v=tfznidSYXiU%3Ffeature%3Dshare 26 March 5, 2025 UAC meeting; https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13458 Item 22
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to recommend to the Finance Committee and Council to approve the use of approximately $1.6 million of Cap-and-Trade allowance auction proceeds to provide a one-time flat climate credit of $73.20 to each residential (G-1) customer only in FY 2026.27 The Commissioner who voted against the climate credit option said that green funds should not be used to subsidize the use of fossil fuels. The video of the meeting is available on the City’s website at the following link:
https://www.youtube.com/watch?v=021zJQHLADI
The Finance Committee reviewed staff’s proposals for the Wastewater Collection and Water Utilities at its April 1, 2025 meeting and the Finance Committee unanimously approved both proposals.

The Finance Committee reviewed staff’s proposals for the Electric and Gas Utilities at its April 15, 2025 meeting. The Finance Committee unanimously approved the Electric Utility proposal and did not take any action on the Gas Utility proposal and continued the discussion of that proposal to May 7, 2025. During the discussion of the Gas Utility proposal on April 15, Finance Committee members expressed concern about the bill impact to median and low usage residential (G-1) gas customers resulting from the 2025 Natural Gas Cost of Service and Rate Study. 28 Finance Committee members requested additional information on whether the Gas Utility could continue to rely upon the 2020 Natural Gas Cost of Service and Rate Study for another year, what would a higher one-time climate credit look like for G-1 customer bills and whether it is possible to spread the one-time climate credit across customer bills for a year. Committee members requested additional examples and cost drivers.

On May 7, 2025 staff presented additional information to the Finance Committee, including an interim alternative recommendation to continue the current FY 2025 rate structure based on the 2020 Cost Study, with rate increases to meet FY 2026 revenue requirements, and provide a climate credit to some of the G-2 small commercial customers (small and medium meter capacities), using approximately $1.1 million in funding from the City’s Cap and Trade program revenue.29
If the 2025 COSA had been implemented July 1, 2025, G-2 small and medium customers would have received a reduction in their monthly service charges, as well as an increase in the distribution charge per therm. The climate credit amount is calculated to make the G-2 small and medium customer groups pay the same net amount (after taking into account the climate credit) as a result of retaining the current FY 2025 rate structure from July through December 2025, 27 The Gas Utility is a covered entity under California’s Cap-and-Trade program. California Air Resources Board’s Cap-and-Trade regulations authorize utilities to distribute Cap-and-Trade auction proceeds to some or all ratepayers in a non-volumetric manner. (See CA. Code of Regs. Tit. 17 Sec. 95893(d)(3)(C)). 28 The Gas Utility’s rates are evaluated and implemented in compliance with cost-of-service requirements set forth in the California Constitution and applicable statutory law. Staff engaged the services of EES Consulting (EES) to review and revise the Gas Utility’s Cost of Service (COS) for FY 2026. Staff presented the City of Palo Alto Natural Gas Cost of Service and Rate Study, February 2025 to the UAC and Finance Committee. 29 May 7, 2025 Finance Committee Meeting
https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=530a4f 25-5455-4cec-a95c-5190d95d9a4f; Video: https://youtube.com/watch?v=kW97GWkgaY0?feature=share; Item

2.a., 3.b. Supplemental Report
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relative to what G-2 small and medium customers would have paid under the 2025 COSA rates.

The total cost of this climate credit is $1.1 million. After discussion, the Committee voted unanimously to recommend the City Council:
1) Revise the proposed FY 2026 rates to retain the current FY 2025 rate structure, with rate increases to meet the revenue requirement for FY 2026 in the gas utility; 2) In FY 2026 only, apply a combination of climate credit (using Cap and Trade auction revenues) and FY 2025 gas utility interest income to G-2 customers (small and medium meter capacities) in the total amount of $1.1 million and 3) Refer staff to return to the Utilities Advisory Commission (UAC) to further review the FY 2025 Cost of Service Study (COSA) assumptions and principles.

On May 12, 2025 staff briefed the Council on this topic and Council members asked questions and discussed the item but did not take any action.

Upon Council approval, the one-time climate credit will be distributed to small and medium G-2 customers in December 2025, such that each “small” G-2 customer with a CPAU-approved maximum meter capacity up to 220 standard cubic feet per hour will receive a one-time credit of $820.17, and each “medium” G-2 customer with a CPAU approved maximum meter capacity above 220 but below 4,000 will receive a one-time credit of $201.92.30 The credit will be provided to G-2 small and medium customers that are active customers as of December 1, 2025.

During the discussion on May 7th, Finance Committee members expressed a preference for using any available gas utility interest income for the climate credit, before using Cap and Trade auction revenues. At the end of FY 2025, staff will use the actual FY 2025 gas utility interest income less any funds reserved for other purposes (e.g., interest earned on Cap and Trade auction revenue that must be transferred to the Cap and Trade Reserve) to pay for the climate credit, with Cap and Trade auction revenues for the remainder, up to $1.1 million.

The UAC reviewed staff’s proposals for Palo Alto Fiber broadband internet rates at its May 7, 2025 UAC meeting. The UAC approved the proposed maximum fiber rate structure and product offerings (6-1), which enables staff to structure rates for special promotions, service packages, and other means to be competitive in offering fiber services to our pilot customers. This also helps the City maintain its competitive edge over the incumbent providers. One commissioner did not recommend the proposed range of rates, preferring the exact pricing of the various service offerings.31
30 CPAU approved maximum meter capacities are all at an assumed pressure of 7 inches of water column (equivalent to 0.25 pounds per square inch).
31 May 7, 2025, Utilities Advisory Commission, Staff Report https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=45348753-32c1-464e-9861-d8905d16f318 Item 22
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The Finance Committee reviewed staff’s proposals for Palo Alto Fiber broadband internet rates at its June 3, 2025 meeting. The Finance Committee recommended offering promotional rates to attain more customers in the pilot.

Note that there were no specific stakeholder engagement meetings on Dark Fiber rates because there are only a few impacted customers and the rate is increasing by CPI based on contractual EDF-1 terms and consistent with past practice.

Exhibit 4 to Attachments A - D contains examples of CPAU’s communication and outreach methods including the use of the utilities website, utility bill inserts, messaging on utility bills and MyCPAU online account management platform, email newsletters, print and digital ads in local publications, social media, community messaging platforms, and through direct mailings of the Home Water Reports and online WaterSmart portal.

ENVIRONMENTAL REVIEW
Adoption of the attached Financial Forecasts and budgeted transfers does not meet the California Environmental Quality Act’s definition of a project, pursuant to Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(4) and (5), because it is a governmental fiscal and administrative activity which will not cause a direct or indirect physical change in the environment. Adoption of the proposed wastewater collection, water, gas, electric, storm water management fee, and fiber rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

ATTACHMENTS
Attachment A: Resolution for the FY 2026 Wastewater Collection Utility Attachment B: Resolution for the FY 2026 Water Utility
Attachment C: Resolution for the FY 2026 Gas Utility
Attachment D: Resolution for the FY 2026 Electric Utility Attachment E: Resolution for the FY 2026 Fiber Optic Utility Attachment F: Resolution for the FY 2026 Storm Water Management Fee Rates Attachment G: Table of URLs for Exhibits to Attachments A - F APPROVED BY:

Alan Kurotori, Director of Utilities
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Resolution No.

Resolution of the Council of the City of Palo Alto Approving the FY 2026 Wastewater Collection Utility Financial Forecast and Reserve Management Practices, Amending Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger), and Repealing Rate Schedules S-3 (Industrial Waste Laboratory and Analysis Charges) and S-4 (Hauled Liquid Waste Charges)

R E C I T A L S

A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The City does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Forecasts or Plans to summarize these projections.

B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices and Financial Forecast (Exhibit 4 and Exhibit 1) attached to this resolution and made a part of the staff report presented to the City Council.

C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges.

D. On June 16, 2025, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals.

E. As required by Article XIII D, Section 6 of the California Constitution and applicable law, notice of the June 16, 2025 public hearing was mailed to all City of Palo Alto Utilities wastewater customers by May 2, 2025.

F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed wastewater rate amendments, therefore a majority protest does not exist against the proposal.

The Council of the City of Palo Alto does hereby RESOLVE as follows:

SECTION 1. The Council hereby approves the Reserves Management Practices (Exhibit Item 22
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41) and FY 2026 Financial Forecast presented to the Finance Committee on April 1, 20252 and updated by the June 16, 2025 Council report, (Exhibit 13), which is attached to this resolution and made a part of the staff report presented to the City Council.

SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule S-1, as amended, shall become effective July 1, 2025.

SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-2 (Commercial Wastewater Collection and Disposal) is hereby amended to read as shown in Exhibit 24. Utility Rate Schedule S-2, as amended, shall become effective July 1, 2025.

SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule S-6, as amended, shall become effective July 1, 2025.

SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S -7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) is hereby amended to read as shown in Exhibit 2 . Utility Rate Schedule S-7, as amended, shall become effective July 1, 2025.

SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-3 (Industrial Waste Laboratory and Analysis Charges) is hereby repealed, effective July 1, 2025 (Exhibit 35).

SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-4 (Hauled Liquid Waste Charges) is hereby repealed, effective July 1, 2025 (Exhibit 3).

SECTION 8. The Council finds that the revenue derived from the wastewater rates approved by this resolution do not exceed the funds required to provide wastewater service, and the revenue derived from the adoption of this resolution shall be used only for the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.

1 Exhibit 4 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-a-exhibit-4-fy26-wastewater-reserve-management- practices.pdf
2 Meeting Agenda Item 2: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16017) 3 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/3/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/finalized-attachment-a-exhibit-1-fy26-wastewater-collection-utility- financial-forecast-and-cip-detail.pdf
4 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-a-exhibit-2-fy26-wastewater-rate-schedules.pdf 5 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/2/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-a-exhibit-3-wastewater-rate-schedules-repealed.pdf Item 22
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SECTION 9. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product.

SECTION 10. The Council finds that the adoption of this resolution approving the FY 2026 Wastewater Collection Utility Financial Forecast and Reserve Management Practices does not meet the California Environmental Quality Act’s definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing Wastewater collection rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS
ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager
Director of Utilities

Director of Administrative Services
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Resolution No.

Resolution of the Council of the City of Palo Alto Approving the FY 2026 Water Utility Financial Forecast, Reserve Management Practices, and Reserve Transfers, and Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non- Residential Water Service), and W-7 (Non-Residential Irrigation Water Service)

R E C I T A L S

B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserve Management Practices (Exhibit 3 1) and
Financial Forecast (Exhibit 12) attached to and made a part of the staff report presented to the City Council.

C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges.

D. On June 16, 2025, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals.

F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%)

1 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city- council-agendas-minutes/2025/june-16/rates-attachments/attachment-b-exhibit-3-fy26-water-reserve- management-practices.pdf
2 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/2/agendas -minutes-reports/agendas-minutes/city- council-agendas-minutes/2025/june-16/rates-attachments/finalized-attachment-b-exhibit-1-fy26-water-utility- financial-forecast-and-cip-detail.pdf
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of the total number of customers and property owners subject to the proposed water rate amendments, therefore a majority protest does not exist against the proposal.

The Council of the City of Palo Alto does hereby RESOLVE as follows:

SECTION 1. The Council hereby adopts the FY 2026 Water Utility Reserve Management Practices (Exhibit 3) and Financial Forecast (Exhibit 1) presented to the Finance Committee on April 1, 2025 (Meeting Agenda Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16017) and as updated by the June 16, 2025 Council report, which are attached to and made a part of the staff report presented to the City Council.

SECTION 2. The Council hereby approves a transfer from the Rate Stabilization Reserve to the Operations Reserve of up to $3,000,000 in FY 2025 as described in the FY 2026 Water Utility Financial Forecast (Exhibit 1).

SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-1 (General Residential Water Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule W-1, as amended, shall become effective July 1, 2025.

SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-2 (Water Service from Fire Hydrants) is hereby amended to read as shown in Exhibit 23. Utility Rate Schedule W-2, as amended, shall become effective July 1, 2025.

SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-3 (Fire Service Connections) is hereby amended to read as shown in Exhibit 2.

Utility Rate Schedule W-3, as amended, shall become effective July 1, 2025.

SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-4 (Residential Master-Metered and General Non-Residential Water Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule W- 4, as amended, shall become effective July 1, 2025.

SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-7 (Non-Residential Irrigation Water Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule W-7, as amended, shall become effective July 1, 2025.

3 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city- council-agendas-minutes/2025/june-16/rates-attachments/attachment-b-exhibit-2-fy26-water-utility-rate- schedules.pdf
Item 22
Attachment B -
Resolution for the FY
2026 Water Utility

Item 22: Staff Report
Pg.
29 Packet Pg. 711 of 1138

*NOT YET APPROVED*
Attachment B
3 027060325

SECTION 8. The City Council finds that the revenues derived from the water rates approved by this resolution do not exceed the funds required to provide water service, do not exceed the proportional cost of the water service attributable to the parcel, and shall not be used for any purpose other than providing water service and the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.

SECTION 9. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product.

Item 22
Attachment B -
Resolution for the FY
2026 Water Utility

Item 22: Staff Report
Pg.
30 Packet Pg. 712 of 1138

*NOT YET APPROVED*
Attachment B
4 027060325

SECTION 10. The Council finds that the adoption of this resolution approving the FY 2026 Water Financial Forecast, Reserve Management Practices, and Reserve transfers does not meet the California Environmental Quality Act’s (CEQA) definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing Water rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to CEQA, pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager

Director of Utilities

Director of Administrative Services
Item 22
Attachment B -
Resolution for the FY
2026 Water Utility

Item 22: Staff Report
Pg.
31 Packet Pg. 713 of 1138

Attachment C

* NOT YET APPROVED *
6056922
1 Resolution No.

Resolution of the Council of the City of Palo Alto Approving the Fiscal Year 2026 Gas Utility Financial Forecast, Reserve Management Practices, Reserve Transfer, and General Fund Transfer, Approving the Distribution of a Climate Credit to Small and Medium Capacity G-2 Customers in December 2025, and Amending Rate Schedules G-1 (Residential Gas Service), G-2 (Residential Master-Metered and Commercial Gas Service), G-3 (Large Commercial Gas Service), and G-10 (Compressed Natural Gas Service)

R E C I T A L S

A. Each year the City of Palo Alto (“City”) regularly assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations, including reserves.

This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. It does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Forecasts or Plans to summarize these projections.

B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices and Financial Forecast (Exhibit 3 and Exhibit 1) attached to and made part of this resolution and the staff report presented to the City Council.

C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges.

D. On June 16, 2025, the City Council heard and approved the proposed rate increase at a noticed public hearing.

The Council of the City of Palo Alto does hereby RESOLVE as follows:

SECTION 1. The Council hereby approves the Reserves Management Practices (Exhibit 31) and FY 2026 Financial Forecast presented to the Finance Committee on April 15, 20252 and continued to May 7, 20253 and updated by the June 16, 2025 Council report, (Exhibit 14), which is attached to this resolution and made a part of the staff report presented to the City Council.

1 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/3/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-c-exhibit-3-fy26-gas-reserve-management- practices.pdf
2 Meeting Agenda Item 2: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16042 3Meeting Agenda Item 2.a.: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16085 4 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/2/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-c-exhibit-1-fy26-gas-utility-financial-forecast-and- cip-detail.pdf
Item 22
Attachment C - Resolution
for the FY 2026 Gas Utility

Item 22: Staff Report
Pg.
32 Packet Pg. 714 of 1138

Attachment C

* NOT YET APPROVED *
6056922
2 SECTION 2. The Council hereby approves a transfer of up to $1.5 million from the Gas Utility Operations Reserve to the Distribution Rates Stabilization Reserve by the end of FY 2025.

SECTION 3. The Council hereby approves the transfer of up to 18% of gas utility gross revenues received during FY 2024 to the general fund in FY 2026.

SECTION 4. The Council hereby approves the use of all available FY 2025 gas utility interest income and up to $1.1 million from the Cap and Trade Reserve to provide a one-time Climate Credit of $820.17 and $201.92 to Small and Medium Capacity G-2 customers, respectively, in December 2025, as authorized by California’s Cap-and-Trade program regulations (CA. Code of Regs. Tit. 17 Sec. 95893(d)(3)(C)).

SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-1 (Residential Gas Service) is hereby amended to read as shown in Exhibit

25. Utility Rate Schedule G-1, as amended, shall become effective July 1, 2025.

SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-2 (Residential Master-Metered and Commercial Gas Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule G-2, as amended, shall become effective July 1, 2025.

SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-3 (Large Commercial Gas Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule G-3, as amended, shall become effective July 1, 2025.

SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-10 (Compressed Natural Gas Service Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule G-10, as amended, shall become effective July 1, 2025.

SECTION 9. The City Council finds that the revenues derived from the gas rates approved by this resolution do not exceed the funds required to provide gas service and the revenues derived from the gas rates approved by this resolution shall not be used for any purpose other than providing gas service, and the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.

SECTION 10. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product.

5 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-c-exhibit-2-fy26-gas-rate-schedules.pdf Item 22
Attachment C - Resolution
for the FY 2026 Gas Utility

Item 22: Staff Report
Pg.
33 Packet Pg. 715 of 1138

Attachment C

* NOT YET APPROVED *
6056922
3 SECTION 11. The Council finds that the adoption of this resolution approving the FY 2026 Gas Utility Financial Forecast Reserves Management Practices, and transfers, does not meet the California Environmental Quality Act’s (CEQA) definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental assessment is required. The Council finds that changing gas rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager

Director of Utilities

Director of Administrative Services
Item 22
Attachment C - Resolution
for the FY 2026 Gas Utility

Item 22: Staff Report
Pg.
34 Packet Pg. 716 of 1138

Attachment D * NOT YET APPROVED *

027060325 1
Resolution No.

Resolution of the Council of the City of Palo Alto Approving the Fiscal Year 2026 Electric Utility Financial Forecast and Reserve Management Practices, and Amending Utility Rate Schedules E-1 (Residential Electric Service), E-2 (Residential Master-Metered and Small Non-Residential Electric Service), E-2-G (Residential Master- Metered and Small Non-Residential Green Power Electric Service), E-4 (Medium Non-Residential Electric Service), E-4-G (Medium Non- Residential Green Power Electric Service), E-4 TOU (Medium Non-Residential Electric Time of Use Service), E-7 (Large Non-Residential Electric Service), E-7-G (Large Non- Residential Green Power Electric Service), E-7 TOU (Large Non- Residential Electric Time of Use Service), E-14 (Street Lights), E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation), and E-NSE-1 (Net Metering Surplus Electricity Compensation)

R E C I T A L S
A. Each year the City of Palo Alto (“City”) regularly assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequat e to recover these costs. It does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates.

The City adopts Financial Forecasts or Plans to summarize these projections.

B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices (Exhibit 3) and Financial Forecast (Exhibit 1) attached to and made part of the staff report presented to the City Council.

C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges.

D. On June 16, 2025, the City Council heard and approved the proposed rate increase at a noticed public hearing.

The Council of the City of Palo Alto does hereby RESOLVE as follows:

SECTION 1. The Council hereby approves the fiscal year (“FY”) 2026 Electric Utility Reserve Management Practices (Exhibit 31) and Financial Forecast (Exhibit 12) presented to the

1 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-d-exhibit-3-fy26-electric-reserves-management- practices.pdf
2 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/2/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/finalized-attachment-d-exhibit-1-fy26-electric-utility-financial-forecast- and-cip-detail.pdf
Item 22
Attachment D -
Resolution for the FY
2026 Electric Utility

Item 22: Staff Report
Pg.
35 Packet Pg. 717 of 1138

Attachment D * NOT YET APPROVED *

027060325 2
Finance Committee on April 15, 2025 (Meeting Agenda Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16042) as updated by the June 16, 2025 Council report, which are attached to and made a part of the staff report presented to the City Council;

SECTION 2. The Council hereby approves a transfer of up to $5 million from the Electric Utility Supply Operations Reserve to the Distribution Operations Reserve by the end of FY 2025, as described in the FY 2026 Electric Utility Financial Forecast presented to the Finance Committee on April 15, 2025 (Meeting Agenda Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16042), Attachment C Table 12, lines 21 and 24;

SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-1 (Residential Electric Service) is hereby amended to read as shown in Exhibit 23.

Utility Rate Schedule E-1, as amended, shall become effective July 1, 2025;

SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-2 (Residential Master-Metered and Small Non-Residential Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-2, as amended, shall become effective July 1, 2025;

SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-2-G (Residential Master-Metered and Small Non-Residential Green Power Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-2-G, as amended, shall become effective July 1, 2025;

SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E -4 (Medium Non- Residential Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-4, as amended, shall become effective July 1, 2025;

SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-4-G (Medium Non-Residential Green Power Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-4-G, as amended, shall become effective July 1, 2025;

SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-4 TOU (Medium Non-Residential Time of Use Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-4 TOU, as amended, shall become effective July 1, 2025;

SECTION 9. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-7 (Large Non-Residential Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-7, as amended, shall become effective July 1, 2025;

3 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-d-exhibit-2-fy26-electric-rate-schedules.pdf Item 22
Attachment D -
Resolution for the FY
2026 Electric Utility

Item 22: Staff Report
Pg.
36 Packet Pg. 718 of 1138

Attachment D * NOT YET APPROVED *

027060325 3
SECTION 10. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-7-G (Large Non-Residential Green Power Electric Service) is hereby amended to readas shown in Exhibit 2. Utility Rate Schedule E-7-G, as amended, shall become effective July 1, 2025;

SECTION 11. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-7 TOU (Large Non-Residential Time of Use Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-7 TOU, as amended, shall become effective July 1, 2025;

SECTION 12. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-14 (Street Lights) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-14, as amended, shall become effective July 1, 2025;

SECTION 13. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-16 (Unmetered Electric Service) is hereby amended to read as shown in Exhibit 2.

Utility Rate Schedule E-16, as amended, shall become effective July 1, 2025;

SECTION 14. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E -EEC-1 (Export Electricity Compensation) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-EEC-1, as amended, shall become effective July 1, 2025;

SECTION 15. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E -NSE-1 (Net Surplus Electricity Compensation Rate) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-NSE-1, as amended, shall become effective July 1, 2025;

SECTION 16. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.

SECTION 17. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product.

Item 22
Attachment D -
Resolution for the FY
2026 Electric Utility

Item 22: Staff Report
Pg.
37 Packet Pg. 719 of 1138

Attachment D * NOT YET APPROVED *

027060325 4
SECTION 18. The Council finds that approving the Electric Reserve Management Practices, Financial Forecast, and Reserve transfers does not meet the California Environmental Quality Act’s (CEQA) definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental assessment is required. The Council finds that changing electric rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and CEQA Guidelines Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that suffi cient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor
APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager

Director of Utilities

Director of Administrative Services
Item 22
Attachment D -
Resolution for the FY
2026 Electric Utility

Item 22: Staff Report
Pg.
38 Packet Pg. 720 of 1138

*NOT YET APPROVED* Attachment E
027060225 1
R
esolution No. _________
Resolution of the Council of the City of Palo Alto Amending Rate Schedules EDF-1 (Dark Fiber Licensing Services), and EDF-2 (Dark Fiber Connection Fees) and Adopting New Rate Schedule F-1 for Broadband Internet Services
Th
e Council of the City of Palo Alto does hereby RESOLVE as follows:

S
ECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule EDF-1 (Dark Fiber Licensing Services) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-1 (Exhibit 11), as amended, shall become effective July 1, 2025.

S
ECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule EDF-2 (Dark Fiber Connection Fees) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-2 (Exhibit 1), as amended, shall become effective July 1, 2025.

SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule F-1 (Broadband Internet Services) is hereby adopted to read as attached and incorporated. Utility Rate Schedule F-1 (Exhibit 1) shall become effective July 1, 2025.

SECTION 4. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.
//
//
//
//
//
//
//
//
1 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council-agendas- minutes/2025/june-16/rates-attachments/attachment-e-exhibit-1-fy26-fiber-rate-schedules.pdf Item 22
Attachment E - Resolution
for the FY 2026 Fiber
Optic Utility

Item 22: Staff Report
Pg.
39 Packet Pg. 721 of 1138

*NOT YET APPROVED* Attachment E
027060225 2

SECTION 5. The Council finds that the adoption of this resolution amending Dark Fiber utility rates by the Consumer Price Index, and adopting rates for Broadband Internet Services to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager
Director of Utilities

Director of Administrative Services

Item 22
Attachment E - Resolution
for the FY 2026 Fiber
Optic Utility

Item 22: Staff Report
Pg.
40 Packet Pg. 722 of 1138

*NOT YET APPROVED* Attachment F

0280007_20250220_028ca
1 Resolution No.

Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Water Management Fee Rates by 2.4% Per Month Per Equivalent Residential Unit for Fiscal Year 2026

R E C I T A L S

A. In April 2017, a majority of property owners approved a ballot measure adopting a monthly Storm Water Management Fee to fund storm drain capital improvements projects, enhanced maintenance of the storm drain system, storm water quality protection programs, and related activities.

B. The ballot measure allowed for annual increases to the fee based on lesser of the local rate of inflation (based on changes to the Consumer Price Index for the San Francisco-Oakland- San Jose region as published by the Bureau of Labor Statistics) or 6%.

C. According to the Bureau of Labor Statistics, the Consumer Price Index for the San Francisco- Oakland-San Jose region increased by 2.4% between December 2023 and December 2024.

The Council of the City of Palo Alto does hereby RESOLVE as follows:

SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule D-1 (Storm and Surface Water Drainage) is hereby amended to read in accordance with sheet D-1-1, attached as shown in Exhibit 1 1. The foregoing Utility Rate Schedule, as amended, shall become effective July 1, 2025.

SECTION 2. The Council finds that this rate increase is being imposed to offset the effects of inflation on labor and material costs pursuant to the annual inflationary fee escalator provision of the Storm Water Management Fee ballot measure, which was approved by a majority of Palo Alto property owners on April 11, 2017.

SECTION 3 . The Council finds that the revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.
//

1 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council-agendas- minutes/2025/june-16/rates-attachments/attachment-f-exhibit1.pdf Item 22
Attachment F - Resolution
for the FY 2026 Storm
Water Management Fee
Rates

Item 22: Staff Report
Pg.
41 Packet Pg. 723 of 1138

*NOT YET APPROVED* Attachment F

0280007_20250220_028ca
2 SECTION 4. The Council finds that the adoption of this resolution changing the Storm Water Management Fee to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15378(b)(4). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager

Director of Public Works

Director of Administrative Services

Item 22
Attachment F - Resolution
for the FY 2026 Storm
Water Management Fee
Rates

Item 22: Staff Report
Pg.
42 Packet Pg. 724 of 1138

Attachment G: Table of URLs for Exhibits to Attachments A - F

Attachment Exhibit Title URL
A 1 FY26 Wastewater
Collection Utility
Financial Forecast and
CIP Detail
https://www.paloalto.gov/ﬁles/assets/public/v/3/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/ﬁnalized-attachment-a-exhibit-1-fy26- wastewater-collection-utility-ﬁnancial-forecast-and-cip-detail.pdf A 2 FY26 Wastewater
Collection Utility Rate
Schedules
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-a-exhibit-2-fy26-wastewater- rate-schedules.pdf
A 3 Wastewater Collection
Utility Rate Schedules
(Repealed)
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-a-exhibit-3-wastewater-rate- schedules-repealed.pdf
A 4 FY26 Wastewater
Collection Utility
Reserves Management
Practices
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-a-exhibit-4-fy26-wastewater- reserve-management-practices.pdf
A 5 FY26 Wastewater
Collection Utility
Communications Plan
and Samples
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-a-exhibit-5-fy26-wastewater- collection-utility-communications-plan-and-sample.pdf
B 1 FY26 Water Utility
Financial Forecast and
CIP Detail
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-b-exhibit-1-fy26-water-utility- ﬁnancial-forecast-and-cip-detail.pdf
B 2 FY26 Water Utility Rate
Schedules
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-b-exhibit-2-fy26-water-utility- rate-schedules.pdf
B 3 FY26 Water Utility
Reserves Management
Practices
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-b-exhibit-3-fy26-water-reserve- management-practices.pdf
B 4 FY26 Water Utility
Communications Plan
and Samples
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-b-exhibit-4-fy26-water-utility- communications-plan-and-samples.pdf
C 1 FY26 Gas Utility Financial
Forecast and CIP Detail
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-c-exhibit-1-fy26-gas-utility- ﬁnancial-forecast-and-cip-detail.pdf
C 2 FY26 Gas Utility Rate
Schedules
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-c-exhibit-2-fy26-gas-rate- schedules.pdf

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Attachment G - Table of
URLs for Exhibits to
Attachments A - F

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Attachment G: Table of URLs for Exhibits to Attachments A - F

Attachment Exhibit Title URL
C 3 FY26 Gas Utility Reserves
Management Practices
https://www.paloalto.gov/ﬁles/assets/public/v/3/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-c-exhibit-3-fy26-gas-reserve- management-practices.pdf
C 4 FY26 Gas Utility
Communications Plan
and Samples
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-c-exhibit-4-fy26-gas-utility- communications-plan-and-samples.pdf
D 1 FY26 Electric Utility
Financial Forecast and
CIP Detail
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-d-exhibit-1-fy26-electric-utility- ﬁnancial-forecast-and-cip-detail.pdf
D 2 FY26 Electric Utility Rate
Schedules
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-d-exhibit-2-fy26-electric-rate- schedules.pdf
D 3 FY26 Electric Utility
Reserves Management
Practices
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-d-exhibit-3-fy26-electric- reserves-management-practices.pdf
D 4 FY26 Electric Utility
Communications Plan
and Samples
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-d-exhibit-4-fy26-electric-utility- communications-plan-and-samples.pdf
D 5 FY26 COSA Supplement
E-16 Rate
https://www.paloalto.gov/ﬁles/assets/public/v/2/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-d-exhibit-5-fy26-cosa-
supplement-e-16-rate.pdf
E 1 FY26 Fiber Optics Utility
Rate Schedules
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june- 16/rates-attachments/attachment-e-exhibit-1-fy26-ﬁber-rate- schedules.pdf

F 1 FY26 Storm Water
Management Fee Rate
Schedule
https://www.paloalto.gov/ﬁles/assets/public/v/1/agendas- minutes-reports/agendas-minutes/city-council-agendas-
minutes/2025/june-16/rates-attachments/attachment-f-exhibit- 1-fy26-stormwater-rate-schedule.pdf

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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: June 16, 2025
Report #:2503-4250
TITLE
PUBLIC HEARING: Presentation on Status of Vacancies and Recruitment and Retention Efforts and Adoption of Budget Ordinance for Fiscal Year 2026, Including the Operating and Capital Budgets and Municipal Fee Schedule; Adoption of a Resolution determining the Appropriations Limit for Fiscal Year 2026; Vacancies and Recruitment Update (AB2561 Compliance); and Approval of FY 2026 Non-Profit Workplan Phase I Awards as Recommended by the Policy & Services Committee; CEQA Status – Not a Project

RECOMMENDATION
The Finance Committee and Staff recommend that the City Council hold a public hearing to:

1. Adopt the Fiscal Year 2026 Budget Ordinance (Attachment A), which includes:
a. City Manager’s Fiscal Year 2026 Proposed Operating and Capital Budgets, previously distributed at the May 5 City Council Meeting (Attachment A, Exhibit 1) b. Amendments to the City Manager’s Fiscal Year 2026 Proposed Operating Budget (Attachment A, Exhibit 2)
c. Amendments to the City Manager’s Fiscal Year 2026 Proposed Capital Budget (Attachment A, Exhibit 3)
d. Fiscal Year 2026 City Table of Organization (Attachment A, Exhibit 4) e. Fiscal Year 2026 Municipal Fee Changes (Attachment A, Exhibit 5) f. Planning and Development Services Cost of Service Study and Municipal Fee Adjustments (Attachment A, Exhibit 6)
g. Citywide Cost of Services Study and Municipal Fee Adjustments (Attachment A, Exhibit 7)

2. Accept the Fiscal Year 2026 – 2030 Capital Improvement Plan

3. Adopt a Resolution determining the Appropriations Limit for Fiscal Year 2026 (Attachment B)

4. Comply with Assembly Bill 2561 / Government Code § 3502.3 regarding vacancies and recruitment efforts (Attachment D).

5. Approval of FY 2026 Non-Profit Workplan Phase I Awards (To be released as a supplemental memorandum after the June 4, 2025 Policy & Services Committee.) Item 23
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EXECUTIVE SUMMARY
The FY 2026 Adopted Budget will be $1.0 billion including the General Fund Budget of $313.4 million and capital budget across all funds of $312.9 million. The five-year 2026-2030 Capital Improvement Plan (CIP) is $1.1 billion. Compared to the proposed budget, General Fund expenses overall increased by $0.9 million, offset by the recognition of estimated new revenues of equal value. This small net adjustment reflects the combined actions including restoration of $6 million to the Uncertainty Reserve and a reduction of General Fund expenses of $5.1 million to $307.4 million. The capital budget across all funds had a net decrease of $3.3 million compared to the proposed budget.

This budget recommends citywide staffing levels of 1,110.35 FTE in FY 2026. This is a net increase of 6.00 full-time FTE and five 0.20 FTE part-time positions from the proposed budget to implement a new non-sworn, Single Role Division in the Fire Department.

This memorandum provides all necessary documents and transactions for the City Council adoption of the Fiscal Year (FY) 2026 Operating Budget, Capital Budget, and Municipal Fee schedule effective July 1, 2025, unless otherwise regulated. This action reflects two months of public dialogue by the Council and Finance Committee and provides a summary of all changes to the City Manager’s FY 2026 Proposed Budget received by the Council on May 5, 2025. The necessary supporting documents for formal adoption by the City Council include the FY 2026 Budget Ordinance and the Table of Organization, and Resolution for Appropriations Limit for FY 2026.

On May 20 the Finance Committee “Committee” (CMR 2505-46451) unanimously recommended the City Council adopt the FY 2026 budget inclusive of the Final Recommended Changes section of this memorandum. All changes to the Proposed Budget recommended by the Finance Committee are detailed for the FY 2026 Operating Budget, by fund and by department, in Attachment A, Exhibits 2 through 7.

Through the recommended budget actions, the community can expect continued high quality of services in Fiscal Year 2026, with a focus on maintaining services throughout the City. However, this budget also recognizes the need to proactively plan for economic uncertainty and recommends savings of $6.0 million in FY2026 to retain Uncertainty Reserve for future budget planning. To address longer term deficits, of the $6.0 million savings, at least $2.0 million will be ongoing. As part of the budget adoption, staff recommends a placeholder of $2.7 million in operating savings, with $1.0 million ongoing, and will return in August 2025 with specific 1 May 20, 2025, Finance Committee, Discussion on the Fiscal Year (FY) 2026 Budget Wrap-Up and Recommended FY 2026 Budget including the FY 2026 Municipal Fee Schedule for City Council Adoption; https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city-budgets/fy-2026-city- budget/proposed/may-20/fy2026-budget-wrap-up-and-recommended-fy-2026-budget-including-fy-2026- municipal.pdf
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reduction actions across the General Fund for Finance Committee review and ultimately City Council approval.

The City continues to make infrastructure a priority through capital project investments in FY 2026 and through the 2026-2030 Capital Improvement Plan (CIP). The FY 2026 budget includes projects to maintain current infrastructure such as streets, sidewalks, and facilities as well as enterprise funded capital needs such as electric, gas, and water distribution networks and substantial improvements at the Wastewater Quality Control Plant. The 2026-2030 CIP also includes projects to upgrade the City’s infrastructure such as electric vehicle charging, electric grid modernization, and upgrading the fiber network to allow for Fiber to the Premises (FTTP).

Similar to the Operating budget, as part of the budget adoption, staff recommends a placeholder of $3.2 million to reduce the transfer from the General Fund to the Capital Improvement Fund, with $1.0 million ongoing, and will return in August 2025 with specific reduction/deferral actions across projects in the Capital Improvement Fund for Finance Committee review and ultimately City Council approval.

In addition, during the Budget Hearings, certain items did not require additional funding at the time of budget adoption but were recommended as part of staff’s workplan for FY 2026. These Referrals are listed later in the report and if the City Council agrees, these will be included in the FY 2026 workplan.

FY 2026 Appropriation Limit
Also included in this staff report is the approval of the FY 2026 Appropriations (GANN) Limit that is required under Article XIIIB to the California State Constitution, as amended by proposition 98 in 1988 and Proposition 111 in 1990 (Attachment B). The appropriations limit for Fiscal Year 2026 is $234.62 million for funds subject to the appropriation limits. The City's Fiscal Year 2026 budgeted appropriations are estimated to be $56.61 million under the limit (Attachment B, Exhibit 1).

Vacancies and Recruitment Update (AB2561 Compliance)
Assembly Bill 2561 (Government Code § 3502.3) that passed in 2024 requires public agencies to present the status of vacancies and recruitment and retention efforts during a public hearing before the governing body at least once per fiscal year. This requirement is intended to improve transparency around staffing levels and workforce challenges in the public sector. The law also allows recognized labor groups to make a presentation on this topic during the same hearing.

Additional information is discussed later in this report and displayed in Attachment D.

Links to the meetings with the Finance Committee and the City Council, as well as the memoranda, presentations, and additional information provided for discussion can be found on the City’s website, www.paloalto.gov/budget, under the FY 2026 Budget Process section.

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BACKGROUND
Per the Municipal Code, the City Manager is charged with proposing a budget that provides a clear and complete financial plan for all City activities proposed for the coming budget cycle, or fiscal year. The FY 2026 Proposed Operating and Capital Budgets were released April 25, 2025 and transmitted to the City Council at their meeting on May 5, 2025. These documents represent the planned expenditures and revenues for FY 2026 for the various fund types that constitute the City’s Budget: General Funds, Capital Funds, Enterprise Funds, Internal Service Funds, Special Revenue Funds, and Debt Service Funds. The budget documents contain an overview section with descriptions of each of these fund types and detailed information of the revenues and expenses for each fund as well as for each individual department.

The FY 2026 Proposed Operating and Capital Budgets May 5, 2025 Council Study Session presentation provided an overview of the budget for review and discussion, including Citywide budget strategies, assumptions used in budget development, and a summary of service investments. As part of this discussion, the City Council provided guidance to the Finance Committee for their review of the budget documents during hearings on May 6, 7, and 20. The Finance Committee review of operating and capital budgets is structured around public hearings conducted prior to the City Council adoption to complete a detailed review of the budget documents and to incorporate opportunities for community input into the decision- making process. These meeting proceedings are organized by service area and include department presentations to highlight areas of emphasis for their respective department and fund(s). Department by department, the Finance Committee reviews individual budget sections for tentative approval of the budget, potential amendments, and requests for additional information to aid in their review. At the conclusion of these hearings (Budget Wrap-up), the Finance Committee is ultimately tasked to provide recommendations to amend the Proposed Operating and Capital Budgets and Municipal Fee Schedule for City Council consideration. These amendments, and additional information recommended for City Council review, are included in this adoption memorandum. In addition, staff held an additional study session on May 12 to check-in with the City Council for their feedback before the final budget wrap meeting on May

20. The City Council adoption of the City Manager’s FY 2026 Proposed Operating and Capital Budgets and FY 2026 Municipal Fee Schedule, including the amendments summarized in the Budget Wrap-up Memorandum on May 20, 2025 (CMR 2505-4645), will represent the ratification of the amendments that were approved by vote through the budget hearings. These amendments include all changes to the Municipal Fee Schedule and the Table of Organization. A comprehensive list of meeting materials issued during Finance Committee budget hearings is available on the City website, www.paloalto.gov/budget.

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ANALYSIS
The report is organized by the following sections:
•Background and Discussion: Summary of FY 2026 budget process and overall balancing strategies organized by fund type, including funding of Council Priorities and Objectives. •FY 2026 Final Recommended Changes: A summary of final direction given by the Finance Committee on May 20 and additional recommended technical and staff adjustments organized by fund type.
•Table of Organization: A summary of additional changes to the Table of Organization because of adjustments made to the proposed budget that was released on May 5, 2025. •Municipal Fee Schedule: A summary of the changes in the review and recommendations to Council for the FY 2026 Municipal Fee Schedule for incorporation in the FY 2026 Proposed Budget (CMR 2504-45912).
•FY 2026 Utility Rate Changes: A brief overview of the rate changes reviewed by the Utilities Advisory Commission and Finance Committee and the final decision the City Council will make on June 16, 2025 (CMR 2411-3776); each of these rate changes are included in the FY 2026 budget assumptions.
•FY 2026 Appropriation Limit Resolution: Review and approval of a resolution based on California Article XIIIB to the State Constitution, as amended by Proposition 98 in 1988 and Proposition 111 in 1990. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. •Vacancies, Recruitment, and Retention update (AB2561 Compliance): Public hearing and review of the status of vacancies and recruitment and retention efforts during a public hearing to comply with Assembly Bill 2561 (Government Code § 3502.3) that passed in 2024.
•Attachments: Attached to this report are several documents as outlined and referenced throughout the recommendation language and the report. In addition, links to all the materials presented throughout the budget process to the City Council such as staff reports, At Places Memorandums, presentations made during the budget hearings, and transcripts from City Council Budget Hearings are included. 2 May 7, 2025, Finance Committee, FY 2026 Proposed Municipal Fee Schedule; https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city- budgets/fy-2026-city-budget/proposed/may-7/finance-committee-5.25-supp-report- fy-2026-proposed-municipal-fee-schedule.pdf
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Although Council only adopts the budget for the upcoming Fiscal Year, the FY 2026 Proposed Budget continues the practice to outline a two-year budget balancing strategy, bringing financial planning through June 30, 2027 and recommends using one-time surpluses to bridge near-term shortfalls in FY 2026 and partially offset shortfalls in FY 2027 while investing in priority services, infrastructure, and saving for long-term liabilities. In addition, the strategy also recommends limiting ongoing costs and looking for ongoing expense savings to mitigate the potential for greater future deficits.

Overall, the enhancements reflected in this FY 2026 Budget will maintain services throughout the City, support continued workforce recruitment and retention efforts, and advance City Council priority initiatives. While there are continued unknowns and uncertainties ahead, the FY 2026 Budget offers the Council, community, and staff the ability to address community priorities while beginning a process of expense reductions to develop an ongoing balanced financial strategy.

FY 2026 FINAL RECOMMENDED CHANGES
This section reviews amendments to the FY 2026 Proposed Operating and Capital Budgets presented to the City Council on May 5, including final adjustments recommended by the Finance Committee and technical adjustments recommended by staff. A comprehensive list of these adjustments by Fund Type, Fund, and Department is included in Attachment A, Exhibit 2 for changes to the FY 2026 Operating Budget, and Attachment A, Exhibit 3 for funding recommended to be reappropriated from FY 2025 to FY 2026 to continue work on capital projects. Changes to the Table of Organization are discussed later in this memorandum, and an updated Table of Organization is included in Attachment A, Exhibit 4.

Overall, this reflects a $12.3 million, or 1.2%, increase compared to the FY 2026 Proposed Budget across all funds. This includes an increase from the FY 2026 Proposed Budget of 6.00 FTE full-time staff and an increase of five 0.20 FTE part-time staff, all within the Fire Department for the new single role peak medic unit in the General Fund, resulting in an overall workforce of 1,110.35 full-time positions (613.97 FTE in the General Fund).

OPERATING BUDGET
OPERATING BUDGET – General Fund
Overall, the City’s General Fund is recommended to have $301.5 million in revenues and $313.4 million in expenses. To balance the budget for FY 2026, one-time funding of $6.0 million from the Council appropriated Uncertainty Reserve will be used to fund service priorities. In addition, to balance the General Fund, staff recommends placeholders of $2.7 million in operating savings and a $3.2 million reduction in the transfer to the Capital Improvement Fund, with at least $2.0 million of ongoing savings. Staff will return in August 2025 with reduction actions to allow time to constructively develop more specific recommendations. A total of $0.9 million in expenditures has been added to FY 2026 proposed funding levels to support several Council Item 23
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priority programs that are listed below in Table 1; however, excluding the Uncertainty Reserve that was restored to $6.0 million, the General Fund expenditures will decrease by $5.1 million to $307.4 million once the placeholders noted above are replace with specific actions in August and approve by the City Council.

Uncertainty Reserve
As part of the FY 2026 Proposed Budget, Staff recommended using the remaining $12.0 million of the Uncertainty Reserve to balance FY 2026. As a result of actions taken by the Finance Committee, only $6.0 million of the Uncertainty Reserve will be used to balance FY 2026, leaving $6.0 million for future budget planning needs.

Budget Stabilization Reserve
The FY 2026 Proposed Budget recommended leaving the BSR at $54.0 million or 17.3% of General Fund Expenditures for FY 2026. As part of the budget actions recommended for adoption by the Finance Committee, the BSR will remain at $54.0 million; however, due to the decreased expenditure budget of $307.4 million, excluding the $6.0 million in the Uncertainty Reserve, the BSR is at 17.6%. This is still below the 18.5% target level, but within the Council’s recommended range of 15-20% of General Fund Expenditures. The BSR calculation excludes reserves such as the Uncertainty Reserve and the Utility Transfer Legal Cost Reserve to avoid unintentional inflation of BSR needs.

As part of the Finance Committee discussion, recommendations were made to increase the BSR in FY 2027 and combine the Uncertainty Reserve with the BSR. Moving $4.0 million of the Uncertainty Reserve into the BSR in FY 2027 would bring the BSR up to $58.0 million or 18.2% of the estimated FY 2027 expenses. This would leave $2.0 million in the Uncertainty Reserve to partially offset the projected $8.0 million deficit in FY 2027.

Finance Committee Recommended Adjustments
Throughout budget hearings in May, the Finance Committee engaged in several meetings to review proposed budget documents and recommend tentative adjustments. Table 1 provides an overview of these adjustments at various touchpoints in the budget process.

TABLE 1: FY 2026 General Fund Recommended Adjustments
Dept
FY 2026 General Fund
Recommended Adjustments
FY 2026
Revenue or
Savings/
(Cost)
FY 2027
Revenue or
Savings/
(Cost)
General Fund Beginning Balance – Surplus/(Deficit) $- ($9,600,000) NON Use of Uncertainty Reserve (from FY 2026) - 4,000,000 FIR Paramedic transport fee revenue update 700,000 700,000 Item 23
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FIR First responder fee new revenue 100,000 200,000
CSD Rental and reservation fee revenue 100,000 100,000
Subtotal Sources or Revenues $900,000 $5,000,000
NON Restore Uncertainty Reserve (6,000,000) -
FIR Single role ambulance model (600,000) (1,200,000)
NON Nonprofit Workplan Phase I (From $235k to $346k) (111,000) (111,000) CSD Grants community events program (50,000) (50,000)
CSD Youth Community Services YCI funding (50,000) (50,000) NON Defer capital projects and reduce General Fund
transfer to Capital Fund (Placeholder)
3,200,000 1,000,000
NON General Fund expense savings (Placeholder) 2,711,000 1,011,000 Subtotal Uses or Expenses ($900,000) $600,000
General Fund Ending Balance – Surplus/(Deficit) $- ($4,000,000) Uncertainty Reserve Balance $6.0M $2.0M
Budget Stabilization Reserve (BSR) Balance
BSR % of General Fund Expenses
$54.0M

17.6%
$54.0M

17.0%
While the City adopts an annual budget, Finance Committee made recommendations for FY 2027 in consideration of our multi-year budget balancing strategy:
1) Combine Uncertainty Reserve with Budget Stabilization Reserve 2) Achieve 18.5% BSR level and reach $60.0 million (combined balance) 3) Reduce ongoing budget deficit
Nonprofit Partnership Workplan Phase I
Funding for the Nonprofit Partnership Workplan Phase I is recommended to increase by $111,000 plus $50,000 for Youth Connectedness Initiative (YCI) from the FY 2026 Proposed Budget amount of $235,000 to $396,000. While Finance Committee recommended direct allocations to previously funded nonprofits including: UNAFF, YCI, Environmental Volunteers, Magical Bridge, and 3rd Thursday (via the Palo Alto Chamber of Commerce), during the May 12, 2025 Study Session on the FY 2026 Budget, the City Council discussed including the recommended direct allocations, move through the Policy & Services Committee review and award process for all. On Item 23
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June 4, 2025, the Policy & Services Committee reviewed the 22 proposals received from registered 501c(3) nonprofit organizations totaling $819,089 in funding requests (Staff Report #2504-44653). Recommendations from this meeting will be summarized in a supplemental memo to the City Council for this agenda item, with recommendations for award as part of the adopted budget.

Mental Health Direct Funding - Highlights
Direct funding for mental health is included within the FY 2026 budget, as summarized below.

Programming and special events in CSD and Library Departments and other HSRAP grantees and City efforts also support community mental health.
* Contract funded in FY25 and will extend into FY26. Staff will evaluate the contract along with other mental health initiatives to determine a path forward.
** Funding for YCS and other nonprofits will be discussed at the June P&S Committee meeting.

OPERATING BUDGET – Enterprise Funds
Gas Fund – Cost of Services Study (COSA), Rate Adjustments, and Climate Credits The Finance Committee voted for the Utilities Advisory Commission to further review the 2025 Gas Cost of Service and Rate Study assumptions (COSA) and principles while retaining the current FY 2025 rate structure with rate increases of 5% to meet the revenue requirement of the gas utility in FY 2026. The impact on individual customers and customer classes will differ 3 June 4, 2025 Policy and Services Committee Meeting, Staff Report #2504-4465, Item #1:
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depending on whether the 2025 Gas Cost of Service and Rate Study is implemented.

In addition, the Committee recommended a climate credit of $1.1 million using Gas Cap and Trade and/or interest income to G-2 customers (small and medium meter capacities). The $1.1 million will be sufficient if review and adoption of alternative rates are completed by January 2026; however, a total of $2.2 million would be needed if review of the COSA goes beyond January 2026.

OPERATING BUDGET – Other Funds
Community Development Block Grant (CDBG) Fund – Transfer Adjustment A $62,646 increase in the transfer to the Capital Improvement Fund is recommended to align with the award of funds to the Fire Station 4 Replacement capital project (PE-18004) for work on ADA ramp improvement.

Gas Tax Fund – Gas Tax Revenue Adjustment
This action is a technical update to increase Gas Tax revenue estimates for Palo Alto based on the California Department of Finance’s May 2025 updates for estimated Highway Users Tax Account (HUTA) and Road Maintenance and Rehabilitation Account (RMRA) taxes for FY 2026. This also increases the transfer to the Street Maintenance capital project (PE-86070), which is discussed below in the Capital Budget section of this report.

Parkland Dedication Fee Fund – Transfer Adjustment
A $371,165 increase in the transfer to the Capital Improvement Fund is recommended to align with recommended adjustments to capital project reappropriations from FY 2025 to FY 2026 to continue work on the Rinconada Pool Family Changing Room capital project (PE-24004).

University Avenue In-Lieu Parking Fund – Transfer Adjustment A $13,106,958 increase in the transfer to the Capital Improvement Fund is recommended to align with recommended adjustments to capital project reappropriations from FY 2025 to FY 2026 continue work on the New Downtown Parking Garage capital project (PE-15007).

CAPITAL BUDGET
The City’s Capital Improvement Plan reflects a $312.9 million FY 2026 budget, and a $1.1 billion plan over the 2026-2030 five-year Capital Improvement Plan (CIP). Of this, the Capital Improvement Fund FY 2026 budget reflects expected expense of $92.2 million and $331.4 million over the five-year CIP.

Capital Reappropriations
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FY 2026 Proposed Capital Budget included approximately $140.6 million in reappropriated funds for project expenditures across all funds. In the time since the FY 2026 Proposed Budget figures, Staff refined the FY 2025 estimated project activity levels and provided further updates to increase the reappropriations by $0.3 million, to $140.9 million across all funds. The additional reappropriation adjustments are summarized in Attachment A, Exhibit 3.

Other Capital Project Adjustments
In addition to the reappropriations from FY 2025 to FY 2026, several capital projects need to be adjusted based on updated information that became available after the release of the FY 2026 Proposed Capital Budget or as a result of actions recommended in this memorandum. These adjustments are discussed below and summarized in Attachment A, Exhibit 2.

Capital Improvement Fund
-Capital Improvement Fund Administration (AS-10000) – Staff will return in August 2025 with specific recommendations to defer capital projects in order to define the target totals needed to balance the budget. Until then, a placeholder reduction of $3.2 million is recommended to be reflected in the Capital Improvement Fund Administration capital project.
-Fire Station 4 Replacement (PE-18004) – The project’s budget is recommended to be increased by $62,646 in both expense and revenue to align with the awarding of Community Development Block Grant (CDBG) funds for work on ADA ramp improvement.
-Street Maintenance (PE-86070) – The budget is recommended to be increased by $94,910 annually to align with the California Department of Finance’s May 2025 estimates for FY 2025-26 Gas Tax revenue.

Water Fund
-Water Main Replacement – Project 30 (WS-16001) – The FY 2026 Proposed Budget for this project included a reduction of $4.0 million but it should have been a reduction $4.6 million. The recommended action will correct the clerical error by reducing the budget by an additional $0.6 million.

Vehicle Replacement Fund
-Scheduled Vehicle and Equipment Replacement – Fiscal Year 2024 (VR-24000) – The FY 2026 Proposed Budget for this project included $85,000 for replacement of a police patrol vehicle. The recommended action will increase the cost by $10,000 due to a higher-than- anticipated quote received after the development of the 2026 Proposed Budget.

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TABLE OF ORGANIZATION
During budget hearings, the Finance Committee recommended staffing adjustments of 7.00 FTE, 6.00 FTE full-time positions and five 0.20 FTE part-time positions. Additionally, Staff Report 2505-4737, transmitted to the City Council June 16, 2025, further adjusts the Table of Organization. A more detailed description of these actions is included in Attachment A, Exhibit 2, and an updated Table of Organization is included in Attachment A, Exhibit 4:
•Add 1.00 Administrative Associate III, 1.00 Manager, EMS, 2.00 Single Role EMT (Non- sworn), 2.00 Single Role Paramedic (Non-sworn) and five 0.20 FTE Hourly Paramedic positions to the Fire Department
•Add 1.00 Principal Transportation Engineer to the Office of Transportation •Eliminate 1.00 Senior Engineer in the Office of Transportation

MUNICIPAL FEE SCHEDULE
On May 7, 2025, the Finance Committee reviewed the FY 2026 Proposed Municipal Fee Schedule and recommended approval as outlined in CMR 2504-4591,4 included in Attachment A, Exhibit

5., provides a revised listing of fees from the Planning and Development Services fee study.

In addition, on April 29, 2025, the Finance Committee reviewed the Citywide Cost of Services Study as presented in CMR 2503-4351.5 The full results of that study are included in Attachment A, Exhibit 7, which informed several of the updates reflected in the FY 2026 fee schedule.

Rental Registry Program Registration Fee
Starting in FY 2026, the City will begin collecting the Rental Registry Program Registration Fee to recover costs associated with administering the Palo Alto Rental Registry, which was implemented in FY 2025.

In coordination with Planning and Development Services, it was determined that two categories of units will be required to register but exempt from paying the fee. Specifically, owner- occupied units in multi-family buildings will be exempt in recognition of the City’s desire to encourage property owners to live within the community and to avoid burdening small 4 May 7, 2025, Finance Committee, Staff Report # 2504-4591 FY 2026 Proposed Municipal Fee Schedule:
https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city-budgets/fy-2026-city- budget/proposed/may-7/finance-committee-5.25-supp-report-fy-2026-proposed-municipal-fee-schedule.pdf 5 April 29, 2025, Finance Committee, Staff Report # 2503-4351 City Council Adopt Citywide Cost of Services Study and Proposed FY 2026 Municipal Fee Adjustments:
https://portal.laserfiche.com/Portal/DocView.aspx?id=167215&repo=r-704298fc&searchid=318171dd-69f2-4f86- 833e-ddef14c4101d
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property owners with a fee for units from which they do not generate income. Additionally, units located within 100% affordable housing properties will be exempt, reflecting the City’s commitment to supporting not-for-profit organizations providing essential housing services to community members. The fiscal impact of this exemption will be fully offset through the use of Measure K funds dedicated for affordable housing and homeless services.

Technical Update:

Due to a technical error during the translation of fees from the Planning and Development Fee Study consultant report to the proposed fee listing, an updated version in Attachment A, Exhibit 6 has been included to accurately reflect all fees as outlined in the final consultant report. Previously, 136 fees were inadvertently omitted from the ordinance but were included in the full report presented to Finance Committee on March 4th, 20256. As noted in the consultant report, the fee tables intentionally excluded the Technology and Reserve fees to allow for a clearer comparison between fee and City costs. These two components have now been added back to the fees and are recommended to be approved and as part of the FY 2026 Municipal Fee Schedule.

FISCAL YEAR 2026 RATE CHANGES
An overview of the rate changes was reviewed and approved by the Utilities Advisory Commission (UAC) and Finance Committee in April 2025. These rate changes are included in the FY 2026 budget assumptions. This section references those changes for informational purposes only; a separate report recommending final rate changes will be considered by the City Council on June 16, 2025 (CMR 2411-3776).
•6.0% rate change for Electric
•2.4% CPI increase for pre-2006 Dark Fiber customers (New Broadband Fiber rates are addressed in CMR 2411-3776 recommending final rate changes on June 16, 2025 and discussed with the Finance Committee on June 3, 20257)
•5.0% rate increase for Gas
•0.0% rate change for Refuse
•2.4% CPI increase for Stormwater
•20.0% rate change for Wastewater
•10.0% rate change for Water
6 March 4, 2025, Finance Committee, Staff Report # 2501-4019 Recommend City Council Adopt Planning and Development Services Cost of Services Study and Proposed Municipal Fee Adjustments:
https://portal.laserfiche.com/Portal/DocView.aspx?id=146000&repo=r-704298fc&searchid=5be6710f- cd35-47bf-ba99-b88c5eb1b6ce
7 June 3, 2025 Finance Committee Meeting, Staff Report #2502-4159, Item #2:
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The proposed rate changes will allow Palo Alto to invest in utility infrastructure, gradually increase reserves to guideline levels, and to support community goals. As utility infrastructure ages, investment is needed to maintain the reliability of the electric, gas, stormwater, wastewater, and water utilities. These rate increases will support the maintenance and replacement of infrastructure including rebuilding Palo Alto’s wastewater treatment plant (Regional Water Quality Control Plant). Investment in modernizing the electric grid will allow the City to achieve the Council’s Sustainability and Climate Action goals.

STAFF REFERRALS
During the Budget Hearings, certain items did not require additional funding at the time of budget adoption but were recommended to Council for consideration as Referrals and Finance Committee FY 2026 workplan:
- Cost Recovery Policy
Update the City Cost Recovery Policy to include a new 100% cost recovery category. - Update Fee Cost Recovery Category
Summarize the current fee cost recovery category by fee type and update to reflect current policy direction on cost recovery and revenue enhancement objectives.

APPROPRIATIONS LIMIT FOR FISCAL YEAR 2026
California voters approved an initiative on November 6, 1979 that added Article XIIIB to the State Constitution, as amended by Proposition 98 in 1988 and Proposition 111 in 1990. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. The appropriation limit is adjusted annually on the basis of population and per capita income changes provided annually by the California Department of Finance. Based on Article XIIIB, the City of Palo Alto can use the larger of two measurements of population growth, (county or city population growth) in the appropriations limit calculation. For Fiscal Year 2026, the City is using the 2024-2025 percent change in population growth of the City of Palo Alto in the calculation. The City typically uses the highest factor in order to provide maximum appropriation flexibility.

The appropriations limit for Fiscal Year 2026 is $234.62 million for funds subject to the appropriation limits. The City's Fiscal Year 2026 budgeted appropriations are estimated to be $56.61 million under the limit (Attachment B, Exhibit 1). As required by State law, documentation used to compute the appropriations limit has been made available to the public at least fifteen days prior to the Council meeting at which the appropriations limit is being adopted, and notice was published of the availability of these materials.

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VACANCIES AND RECRUITMENT UPDATE (AB 2561 COMPLIANCE)
Assembly Bill 2561 (Government Code § 3502.3) that passed in 2024 requires public agencies to present the status of vacancies and recruitment and retention efforts during a public hearing before the governing body at least once per fiscal year. This requirement is intended to improve transparency around staffing levels and workforce challenges in the public sector. The law also allows recognized labor groups to make a presentation on this topic during the same hearing.

This data was initially presented to the City Council during the FY 2025 Mid-Year Budget Review in February 20258; however, it is being provided during the budget adoption process to ensure the City’s labor groups have the ability to address this topic. As a part of AB2561 any of the City’s recognized bargaining groups are welcome to request to present to Council at the same time as this data is received, staff recommends that any labor groups present be allowed a certain amount of time for presentations per the Mayor’s discretion and time for questions from Council as needed.

For the past three years, the City has invested in strengthening its compensation and benefits structure in order to attract top talent and retain staffing necessary to achieve Council goals and community needs. These targeted improvements, in alignment with the City’s continued commitment to positive work environment initiatives and strategic staffing goals, have positively resulted in decreasing vacancies and employee turnover. The Human Resources Department has included updated data on citywide vacancy and recruitment efforts (Attachment D). The information reflects positions budgeted and vacant by labor group.

Under AB2561, Local agencies are required to provide further details regarding recruitment processes if there is a vacancy rate of greater than 20% within a single bargaining unit. The new law further requires the identification of policies, procedures and recruitment activities that lead to obstacles to the hiring process. The City proactively and aggressively initiated recruitment process reviews and improvements throughout the pandemic and in 2023 through partnership with Municipal Resource Group “MRG” developed a Recruitment Strategic Plan,9 which has led to substantial reductions in vacancies and no bargaining unit being near the 20% threshold mentioned above. The comprehensive recruitment strategic plan developed an overall strategy for elevating the City’s recruitment model to reduce the citywide vacancy rate.

This was then followed by a City Auditor’s review of recruitment practices and succession planning Audit,10 focused on determining the efficiency and effectiveness of the recruitment 8 February 24, 2025 City Council Meeting, Staff Report #2412-3865:
https://portal.laserfiche.com/Portal/DocView.aspx?id=143359&repo=r-704298fc&searchid=5674f11a-a033-46b6-bdff- 3c312e8762d2
9 May 6, 2024 City Council Meeting, Staff Report 2404-2890:
https://portal.laserfiche.com/Portal/DocView.aspx?id=72031&repo=r-704298fc&searchid=ae20a5b0-a735-4764-9e79- 5d269287eac3
10 December 10, 2024 Policy & Services Committee, Report #2410-3633:
https://portal.laserfiche.com/Portal/DocView.aspx?id=115905&repo=r-704298fc&searchid=43aef858-a059-42d4-b70d- Item 23
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and hiring process. All of these steps have aided in positioning the City exceptionally well as it is related to recruiting practices streamlining processes, improving data reporting and is considered ahead of comparator agencies within this realm. This advantage stems from the City’s use of advanced cloud based and on demand interview platforms, a modern government focused applicant tracking system (NEOGOV), and extensive job boards providing access to millions of job seekers every month. While the competition for top talent remains heightened, the City through endeavors like these is well positioned to compete.

Key Highlights:
•Current vacancy rate (Citywide): 11%
•Average time-to-fill (Posting to Hire Date): 81 days
•Currently, there are no employee groups with a vacancy rate higher than 20% •Strategic recruitment initiatives: Recruitment strategic plan phase I implementation complete, Phase II currently under way, FY 2026 focus includes developing additional talent pipelines
Next Steps:
•Continuing annual public reporting of vacancies and recruitment trends alongside the Mid-Year Budget Review as well as to the Finance Committee during the annual budget process
•Continue to provide labor partners with ongoing vacancy data •Monitor and evaluate with the City Manager and Department Directors, adjusting recruitment strategies to meet organizational needs

FISCAL/RESOURCE IMPACT
This report summarizes and seeks the City Council approval of the FY 2026 Operating and Capital Budgets, the supporting fee schedules, and table of organization to support the projections and appropriations included.

The approval of the City Manager’s FY 2026 Capital and Operating Budget, as recommended to be amended in this report, would result in a projected General Fund Budget Stabilization Reserve of $54.0 million. At the recommended expense levels of $307.4 million, after adjusting for the $6.0 million remaining in the Uncertainty Reserve, the BSR is at 17.6%, slightly below the Council’s target of 18.5% and within the recommended range of 15-20% of General Fund Expenditures. Exclusion of reserve funding has been done to avoid unintentional inflation of the BSR funding needs.
22977e9c5fe0
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As part multi-year budget balancing strategy, Finance Committee recommended in FY 2027 to combine the Uncertainty Reserve with the BSR and increase the overall reserve. Moving $4.0 million of the Uncertainty Reserve into the BSR in FY 2027 would bring the BSR up to $58.0 million or 18.2% of the estimated FY 2027 expenses. This would leave $2.0 million in the Uncertainty Reserve to partially offset the projected $8.0 million deficit in FY 2027.

The projected changes to the fund balance for all other funds including Capital Funds, Enterprise Funds, Internal Services Funds, and Special Revenue Funds are outlined in Attachment A Exhibits 2 and 3 and impacts to fund balance summarized in Table 2 below.

TABLE 2: Resource Impact (Non-General Funds with Fund Balance Change) Fund Type Fund Name Fund Balance Change
Capital Capital Improvement Fund +$16.4M
Airport Fund +$3k
Electric Fund -$1.2M
Gas Fund -$2.1M
Stormwater Management Fund $1.2M
Enterprise
Water Fund -$0.4M
Internal Service Vehicle Fund -$10k
Community Development Block Grant Fund -$63k
Parkland Dedication Fee Fund -$0.4M
Special Revenue
University Avenue In-Lieu Parking Fund -$13.1M

STAKEHOLDER ENGAGEMENT
The budget process is structured around public hearings conducted before City Council adoption to complete a detailed review of the budget documents and incorporate opportunities for community input in the decision-making process. The community was encouraged to engage with the budget process through scheduled public meetings with the Finance Committee and City Council, a community informational session with City staff, and direct emails to the City Manager and City Council. Additionally, the City maintains a dedicated webpage for meeting materials and other budget information11

ENVIRONMENTAL REVIEW
Adoption of the City budget and associated actions is not a project under California Environmental Quality Act (CEQA) Guidelines because it is a government fiscal activity which does 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).
11 City’s Budget Website: www.cityofpaloalto.org/budget Item 23
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ATTACHMENTS
Attachment A - FY 2026 Budget Adoption Ordinance
Attachment A, Exhibit 1 - City Manager's Fiscal Year 2026 Proposed Operating & Capital Budgets & Municipal Fee
Attachment A, Exhibits 2 and 3 - Amendments to the City Manager's Fiscal Year 2026 Proposed Operating and Capital Budgets
Attachment A, Exhibit 4 - Table of Organization
Attachment A, Exhibit 5 - Fiscal Year 2026 Municipal Fee Changes Attachment A, Exhibit 6 - Planning and Development Services Cost of Service Study and Municipal Fee Adjustments
Attachment A, Exhibit 7 - Citywide Cost of Services Study and Municipal Fee Adjustments Attachment B - FY 2026 City Appropriations Limit Resolution Attachment B, Exhibit 1 - Appropriations Limit Calculation Attachment C - FY 2026 Summary of Stanford Investments
Attachment D - AB2561 Reporting - Vacancy Data by Bargaining Unit APPROVED BY:

Lauren Lai, Administrative Services Director
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1 ATTACHMENT A
ORDINANCE NO. XXXX

ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO ADOPTING THE BUDGET FOR FISCAL YEAR 2026
SECTION 1. The Council of the City of Palo Alto finds and determines as follows:

A. Pursuant to the provisions of Section 6(g) of Article IV of the Charter of the City of Palo Alto and Chapter 2.28 of the Palo Alto Municipal Code, the City Manager has prepared and submitted to the City Council, by letter of transmittal, a budget proposal for Fiscal Year 2026; and B. Pursuant to the provisions of Section 12 of Article III of the Charter, the Council did, on June 16, 2025, hold public hearings on the budget after publication of notice in accordance with Section 2.28.070 of the Palo Alto Municipal Code; and
C. In accordance with the provisions of Chapter 8 of Division 1, of Title 7, commencing with Section 66016 of the Government Code, as applicable, the Council did on June 16, 2025, hold a public hearing on the proposed amendments to the Municipal Fee Schedule, after publication of notice and after availability of the data supporting the amendments was made available to the public at least 10 days prior to the hearing.

SECTION 2. Pursuant to Chapter 2.28 of the Palo Alto Municipal Code, the following documents, collectively referred to as “the budget” are hereby approved and adopted for Fiscal Year 2026:
(a) The budget document (Exhibit “1”) containing the proposed operating and capital budgets submitted on May 5, 2025, by the City Manager for Fiscal Year 2026, entitled “City of Palo Alto - City Manager’s Fiscal Year 2026 Proposed Budget” covering General Government Funds, Enterprise Funds, Special Revenue Funds, and Internal Service Funds, a copy of which is on file in the Department of Administrative Services, to which copy reference is hereby made concerning the full particulars thereof, and by such reference is made a part hereof; and (b) The Amendments to the City Manager’s Fiscal Year 2026 Proposed Budget, attached hereto as Exhibit “2” and Exhibit “3” and made a part hereof; and (c) Changes and revised pages in the Table of Organization, as displayed on pages 515 Item 23
Attachment A - FY 2026
Budget Adoption
Ordinance

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2 through 536 in “Exhibit 1,” and amended in Exhibit “4” made a part hereof; and (d) Fee changes of the Municipal Fee Schedule attached hereto as Exhibit “5” including changes recommended in the Planning and Municipal Cost of Services Study attached hereto as Exhibit “6” and the Citywide Cost of Services Study attached hereto as Exhibit “7
SECTION 3. The sums set forth in the budget for the various departments of the City, as herein amended, are hereby appropriated to the uses and purposes set forth therein.

SECTION 4. All expenditures made on behalf of the City, directly or through any agency, except those required by state law, shall be made in accordance with the authorization contained in this ordinance and the budget as herein amended.

SECTION 5. Appropriations for the Fiscal Year 2025 that are encumbered by approved purchase orders and contracts for which goods or services have not been received or contract completed, and/or for which all payments have not been made, by the last day of the Fiscal Year 2025 shall be carried forward and added to the fund or department appropriations for Fiscal Year 2026.

SECTION 6. The City Manager is authorized and directed to make changes in the department and fund totals and summary pages of the budget necessary to reflect the amendments enumerated and aggregated in the budget as shown in Exhibit “2” and Exhibit “3” and the Fiscal Year 2025 appropriations carried forward as provided in Section 5.

SECTION 7. As specified in Section 2.04.320 of the Palo Alto Municipal Code, a majority vote of the City Council is required to adopt this ordinance.

SECTION 8. As specified in Section 2.28.140(b) of the Palo Alto Municipal Code, the Council of the City of Palo Alto hereby delegates the authority to invest the City’s funds to the Director of Administrative Services, as Treasurer, in accordance with the City’s Investment Policy for Fiscal Year 2026.

SECTION 9. The Council of the City of Palo Alto adopts the changes to the Municipal Fee Schedule as set forth in Exhibit “5” including changes to Impact and In-Lieu Fees in Exhibit “6”.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. All new and increased fees shall go into effect immediately; provided that pursuant to Government Code Section 66017, all Planning & Community Environment Department fees relating to a “development project” as defined in Government Code Section 66000 shall become effective sixty (60) days from the date of Item 23
Attachment A - FY 2026
Budget Adoption
Ordinance

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3 adoption.

SECTION 10. 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 1(e)(2), such fees are not a tax.

SECTION 11. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption.

SECTION 12. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary.

INTRODUCED AND PASSED: Enter Date Here
AYES:

NOES:

ABSENT:

ABSTENTIONS:

NOT PARTICIPATING:

ATTEST:

City Clerk Mayor
APPROVED AS TO FORM:

APPROVED:

City Attorney
City Manager
Director of Administrative Services
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Attachment A - FY 2026
Budget Adoption
Ordinance

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ATTACHMENT A, EXHIBIT 1
Fiscal Year 2026 City Manager’s
Proposed Operating & Capital Budgets and Municipal Fees These documents were originally distributed on May 5, 2025. Printed copies of the Proposed Budgets are available upon request for $52 per book (FY 2026 fee).

Printed copies of the Municipal Fees are available upon request for $10 per book.

These documents may be viewed at any City of Palo Alto Library or the City’s website: www.paloalto.gov/budget
Changes to the Municipal Fee Schedule were distributed in the Finance Committee Packet on May 7, 2025. The City Manager’s Staff Report (#2504-4591) can be viewed on the City’s website: CoPA Laserfiche Portal - CMR 2504-4591 In addition, various at places memorandum and presentations were presented throughout the Finance Committee Hearings in May 2025 to provide additional information. These documents can be found on the City’s budget website under “FY 2026 Budget Process”: www.paloalto.gov/budget
Item 23
Attachment A, Exhibit 1 -
City Manager's Fiscal Year
2026 Proposed Operating
& Capital Budgets &
Municipal Fee

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ATTACHMENT A, EXHIBIT 2
FTE Revenues Expenses
Department Adjustment Adjustment Adjustment
GENERAL FUND (102 & 103)
Community Services Community Grant Program
Consistent with Finance Committee's direction, this action allocates funding for a new Community Grant Program. This program will allow community members and organizations to apply for grants in an amount up to $5,000 for events that encourage community connections and support diverse cultures, yet don’t qualify for other city-run grant programs like Know Your Neighbors.

Community members and non-profit organizations can apply on a first come, first served basis during the fiscal year, through a form on the City's website. Grant allocations are $2,500 for events with less than 500 participants and $5,000 for events anticipating 500 plus participants. (Ongoing cost: $50,000)
-$ 50,000$
Community Services Youth Community Services (YCS) Youth Connectedness Initiative (YCI)
Consistent with Finance Committee's direction, this action allocates funding to the Youth Community Services Youth Connectedness Initiative. YCI uses service learning and social-emotional learning to improve youth connectedness. This funding will supplement the funding from the County of Santa Clara. (Ongoing cost: $50,000) -$ 50,000$
Community Services Rental and Reservation Fee Revenue Adjustment Consistent with Finance Committee's direction, this action recognizes an additional $100,000 of revenue for Community Services programs, rentals, reservations, and other revenue- generating activities based on FY 2026 Proposed Municipal Fee adjustments. (Ongoing savings: $100,000)
100,000$ -$
Fire Single Role Ambulance Model
Consistent with Finance Committee's direction, this action allocates $633,000 for the addition of 7.0 FTE positions to create the initial Single Role Emergency Medical Services Division of the Fire Department. This action will enhance the current level of services by adding a 12-hour peak ambulance to the City's fire and emergency medical services.
(Ongoing costs: $1,200,000)

7.00 -$ 633,000$
Fire Paramedic Transport and First Responder Fee Revenue Consistent with Finance Committee's direction, this action recognizes $800,000 for the revenue generated from ambulance transport fee increases ($700,000) and the new first responder fee ($100,000). On April 29, 2025, Matrix consulting firm presented a citywide municipal fee study to the Finance Committee and recommended the increase to the base ambulance transport fees and the addition of the first responder fee. (Ongoing savings:
$900,000)
800,000$ -$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 PROPOSED BUDGET Item 23
Attachment A, Exhibits 2
and 3 - Amendments to
the City Manager's Fiscal
Year 2026 Proposed
Operating and Capital
Budgets

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ATTACHMENT A, EXHIBIT 2
FTE Revenues Expenses
Department Adjustment Adjustment Adjustment
GENERAL FUND (102 & 103)

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 PROPOSED BUDGET Non-Departmental Transfer to the Capital Improvement Fund Reduction (Placeholder)
This action in addition to the General Fund savings action will preserve a minimum of $6.0 million of General Fund Uncertainty Reserve. Staff will return in August 2026 with specific recommendations to defer capital projects in order to define the target totals needed to balance the budget, and also allow time to constructively develop more specific recommendations of one-time and ongoing savings. (Ongoing savings: $1,000,000)
-$ (3,200,000)$
Non-Departmental General Fund Savings (Placeholder)
This action in addition to the Capital Improvement Fund reduction action will preserve a minimum of $6.0 million of General Fund Uncertainty Reserve. Staff will return in August 2026 with specific recommendations to reduce expenses in the General Fund in order to define the target totals needed to balance the budget, and also allow time to constructively develop more specific
recommendations of one-time and ongoing savings. (Ongoing savings: $1,011,000)
-$ (2,744,000)$
Non-Departmental Nonprofit Workplan Phase 1 Funding
Consistent with Finance Committee Direction, this action augments funding available to be awarded to applicants through the Nonprofit Partnership Workplan. The City of Palo Alto is committed to strengthening its partnerships with nonprofit organizations to enhance community services and align with Council priorities. The Nonprofit Partnership Workplan is a structured approach to nonprofit engagement, funding, and evaluation to ensure consistency, fairness, and impact across all agreements. (Ongoing cost: $111,000)
-$ 111,000$
Non-Departmental Uncertainty Reserve
As a result of actions taken by the Finance Committee, funding of approximately $6.0 million is available to increase the Uncertainty Reserve for use during future budget planning. This action will increase the remaining funds in the Uncertainty Reserve to $6.0 million. (Ongoing Costs: $0, $6.0 million one-time reserve) -$ 6,000,000$
Office of
Transportation
Engineering Staffing Adjustment
This action adds 1.00 Principal Transportation Engineer, a new classification, offset by the elimination of 1.00 Senior Engineer, in the Office of Transportation. This action is documented as part of the FY 2026 budget as reflected in Staff Report 2505-4737. (Ongoing cost: $0)
-$ -$
GENERAL FUND (102 & 103) SUBTOTAL 7.00 900,000$ 900,000$ Item 23
Attachment A, Exhibits 2
and 3 - Amendments to
the City Manager's Fiscal
Year 2026 Proposed
Operating and Capital
Budgets

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ATTACHMENT A, EXHIBIT 2
FTE Revenues Expenses
Department Adjustment Adjustment Adjustment

CAPITAL IMPROVEMENT FUNDS
CAPITAL IMPROVEMENT FUND (471)
Capital Capital Improvement Project Amendments to Proposed Reappropriations
This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2025 to FY 2026, as outlined in Attachment A, Exhibit 3.

Projects with other recommended adjustments are detailed below.
13,478,123$ (2,874,114)$
Capital Transfer to the Capital Improvement Fund Reduction (Placeholder)
This action in addition to the General Fund savings action will preserve a minimum of $6.0 million of General Fund Uncertainty Reserve. Staff will return in August 2026 with specific recommendations to defer capital projects in order to define the target totals needed to balance the budget, and also allow time to constructively develop more specific recommendations of one- time and ongoing savings. (Ongoing savings: $1,000,000) (3,200,000)$ (3,200,000)$
Capital Transfer from Community Development Block Grant (CDBG) Fund/Fire Station 4 Replacement (PE-18004)
This action increases the transfer from the CDBG Fund and the Fire Station 4 Replacement project's budget by $62,645 in FY 2026 to reflect the award of funds for ADA ramp improvement. 62,646$ 62,646$
Capital Transfer from Gas Tax Fund/Street Maintenance (PE-86070) This action increases the transfer from the Gas Tax Fund and the Street Maintenance project's budget by $94,910 annually to align with the California Department of Finance’s May 2025 updates for estimated 2025-26 Gas Tax Revenue.
94,910$ 94,910$
Office of
Transportation
Engineering Staffing Adjustment
This action adds 1.00 Principal Transportation Engineer, a new classification, offset by the elimination of 1.00 Senior Engineer, in the Office of Transportation. This action is documented as part of the FY 2026 budget as reflected in Staff Report 2505-4737. (Ongoing cost: $0)
-$ -$
Fund Balance Adjustment to Fund Balance (Infrastructure Reserve) This action adjusts the fund balance to offset adjustments recommended in this report.
-$ 16,352,237$
CAPITAL IMPROVEMENT FUND (471) SUBTOTAL 0.00 10,435,679$ 10,435,679$

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ATTACHMENT A, EXHIBIT 2
FTE Revenues Expenses
Department Adjustment Adjustment Adjustment

ENTERPRISE FUNDS
AIRPORT FUND (530)
Capital Capital Improvement Project Amendments to Proposed Reappropriations
This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2025 to FY 2026, as outlined in Attachment A, Exhibit 3.

Projects with other recommended adjustments are detailed below.
(22,500)$ (25,000)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
-$ 2,500$
AIRPORT FUND (530) SUBTOTAL 0.00 (22,500)$ (22,500)$ ELECTRIC FUND (513 & 523)
Capital Capital Improvement Project Amendments to Proposed Reappropriations
This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2025 to FY 2026, as outlined in Attachment A, Exhibit 3.

Projects with other recommended adjustments are detailed below.
-$ 1,203,855$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
-$ (1,203,855)$
ELECTRIC FUND (513 & 523) SUBTOTAL 0.00 -$ -$ GAS FUND (514 & 524)
Capital Capital Improvement Project Amendments to Proposed Reappropriations
This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2025 to FY 2026, as outlined in Attachment A, Exhibit 3.

Projects with other recommended adjustments are detailed below.
-$ 999,558$
Utilities Gas Climate Credits
This one-time action increases the Gas Operating budget by $1,100,000 to fund the Climate Credit which will be applied to the G2 class of small and medium customers. Funding will be offset from the Gas Cap & Trade reserves. (Ongoing costs: $0)
-$ 1,100,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
-$ (2,099,558)$
GAS FUND (514 & 524) SUBTOTAL 0.00 -$ -$

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ATTACHMENT A, EXHIBIT 2
FTE Revenues Expenses
Department Adjustment Adjustment Adjustment

ENTERPRISE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 PROPOSED BUDGET STORMWATER MANAGEMENT FUND (528)
Capital Capital Improvement Project Amendments to Proposed Reappropriations
This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2025 to FY 2026, as outlined in Attachment A, Exhibit 3.

Projects with other recommended adjustments are detailed below.
1,215,562$ -$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
-$ 1,215,562$
STORMWATER MANAGEMENT FUND (528) SUBTOTAL 0.00 1,215,562$ 1,215,562$ WATER FUND (522)
Capital Capital Improvement Project Amendments to Proposed Reappropriations
This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2025 to FY 2026, as outlined in Attachment A, Exhibit 3.

Projects with other recommended adjustments are detailed below.
-$ 1,000,000$
Capital Technical Correction of Water Main Replacement Project 30 (WS- 16001)
This action corrects a clerical error made during the FY 2026 Proposed Budget. A reduction of $4.0 million was made to the project when it should have been $4.6 million.
(600,000)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
-$ (400,000)$
WATER FUND (522) SUBTOTAL 0.00 -$ -$
Item 23
Attachment A, Exhibits 2
and 3 - Amendments to
the City Manager's Fiscal
Year 2026 Proposed
Operating and Capital
Budgets

Item 23: Staff Report
Pg.
27 Packet Pg. 753 of 1138

ATTACHMENT A, EXHIBIT 2
Revenues Expenses
Department Adjustment Adjustment

SPECIAL REVENUE FUNDS
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUND (232)
Capital Transfer to Capital Improvement Fund
This action increases transfers to the Fire Station 4 Replacement capital project (PE-18004) to reflect the award of funds of ADA ramp improvement.
-$ 62,646$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset the actions recommended in this report.
-$ (62,646)$
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUND (232) SUBTOTAL -$ -$ GAS TAX FUND (231)
Non-
Departmental
Gas Tax Revenue Increase/ Transfer to Capital Improvement Fund for Street Maintenance (PE-86070)
This action increases Gas Tax revenue estimates and increases transfers to the CIP for the Street Maintenance Project (PE-86070) based on the California Department of Finance's May 2025 updates for estimated 2025-26 HUTA and RMRA-SB1 taxes.
94,910$ 94,910$
GAS TAX FUND (231) SUBTOTAL 94,910$ 94,910$
Parkland Dedication Fee Fund (209)
Capital Transfer to Capital Improvement Fund
This action reappropriates funding for a transfer to the Rinconada Pool Family Changing Room capital project (PE-24004) to ensure funding is available to continue work on the project in FY 2026. -$ 371,165$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset the actions recommended in this report.
-$ (371,165)$
Parkland Dedication Fee Fund (209) SUBTOTAL -$ -$ University Avenue In-Lieu Parking Fund (247)
Capital Transfer to Capital Improvement Fund
This action reappropriates funding for a transfer to the New Downtown Parking Garage capital project (PE-15007) to ensure funding is available to continue work on the project in FY 2026. -$ 13,106,958$

Item 23: Staff Report
Pg.
28 Packet Pg. 754 of 1138

ATTACHMENT A, EXHIBIT 2
Revenues Expenses
Department Adjustment Adjustment

SPECIAL REVENUE FUNDS

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 PROPOSED BUDGET Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset the actions recommended in this report.
-$ (13,106,958)$
UNIVERSITY AVENUE IN-LIEU PARKING FUND (247) SUBTOTAL -$ -$ Item 23
Attachment A, Exhibits 2
and 3 - Amendments to
the City Manager's Fiscal
Year 2026 Proposed
Operating and Capital
Budgets

Item 23: Staff Report
Pg.
29 Packet Pg. 755 of 1138

ATTACHMENT A, EXHIBIT 2
Revenues Expenses
Department Adjustment Adjustment

INTERNAL SERVICE FUNDS
VEHICLE REPLACEMENT & MAINTENANCE FUND (681)
Capital Replacement of Police Patrol Vehicle/Scheduled Vehicle and Equipment Replacement - Fiscal Year 2024 (VR-24000)
This action increases the project's budget by $10,000 due to a higher-than-anticipated quote for replacement of a police patrol vehicle.
-$ 10,000$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance to offset adjustments recommended in this report.
-$ (10,000)$
-$ -$

CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 PROPOSED BUDGET VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL
Item 23
Attachment A, Exhibits 2
and 3 - Amendments to
the City Manager's Fiscal
Year 2026 Proposed
Operating and Capital
Budgets

Item 23: Staff Report
Pg.
30 Packet Pg. 756 of 1138

ATTACHMENT A, EXHIBIT 3
Capital Improvement Plan FY 2025 Reappropriations to FY 2026 Fund Number and Name Project Title
Project
Number
Expense
Reappropriatio
n Adjustment
(Proposed)
Expense
Reappropriatio
n Adjustment
(A2P)
Expense
Reappropriatio
n Adjustment
TOTAL
Revenue
Reappropriatio
n Adjustment
(Proposed)
Revenue
Reappropriatio
n Adjustment
(A2P)
Revenue
Reappropriatio
n Adjustment
TOTAL
471 - Capital Improvement Fund Americans With Disabilities Act Compliance PF-93009 200,000 200,000 Animal Shelter Renovation PE-19002 2,420,239 2,420,239 Art In Public Spaces AC-86017 1,657,951 1,657,951 Athletic Courts Resurfacing PG-06001 139,290 139,290 Baylands Boardwalk Piling Repair PE-24000 33,787 33,787 Baylands Comprehensive Conservation Plan PG-17000 43,100 43,100 Baylands Nature Preserve Entrance Gate OS-24000 1,374 1,374 Benches, Signage, Walkways, Perimeter Landscaping, and Site Amenities PG-06003 78,298 78,298
Bicycle and Pedestrian Transportation Plan Implementation PL-04010 1,937,186 1,937,186 Boulware Park Improvements PE-17005 143,174 143,174 Building Systems Improvements PF-01003 65,000 65,000 Byxbee Park Completion PE-18006 450,000 (450,000) - California Avenue District Gateway Signs PE-17004 123,382 123,382 Churchill Avenue Enhanced Bikeway PL-14000 200,000 200,000 City Bridge Improvements PE-20001 1,508,071 1,508,071 City Hall Space Planning PE-19000 486,400 486,400 Civic Center Electrical Upgrade & EV Charger Installation PE-17010 1,265,872 1,265,872 Civic Center Fire Life Safety Upgrades PE-18016 131,741 131,741 Civic Center Waterproofing Study and Repairs PE-15020 427,537 427,537 El Camino Park Turf Replacement PG-24000 639,550 639,550 Facility Interior Finishes Replacement PF-02022 457,517 457,517 Fire Training Facility Replacement FD-24000 49,988 49,988 Foothills Nature Preserve Boronda Lake Dock Replacement OS-18000 102,000 102,000 Foothills Nature Preserve Dam Seepage Investigation and Repairs PE-20000 18,463 18,463
Foothills Nature Preserve Improvements PE-21000 692,744 692,744 Golf Course Net and Artificial Turf Replacement PG-18000 770,000 770,000 Golf Reconfiguration & Baylands Athletic Center Improvements PG-13003 97,906 97,906 Heritage Park Site Amenities Replacement PG-21000 40,000 40,000 JMZ Renovation AC-18001 398,024 398,024
Library Automated Material Handling LB-21000 324,586 324,586 Lucie Stern Community Theater Mechanical Equipment
Replacement
PE-24002 2,199,713 2,199,713
Lucie Stern Community Theatre Fire Curtain AC-24001 200,000 200,000 Municipal Service Center Lighting, Mechanical, and Electrical Improvements
PF-16006 6,365,504 6,365,504
New California Avenue Area Parking Garage PE-18000 743,876 743,876 New Downtown Parking Garage PE-15007 13,106,958 13,106,958 13,106,958 13,106,958 Open Space Lakes And Pond Maintenance OS-00002 74,430 74,430 Open Space Trails and Amenities OS-00001 91,773 91,773 Park and Open Space Emergency Repairs PG-09002 95,161 95,161 Park Restroom Installation PG-19000 173,898 173,898 Parking District Implementation PL-15003 163,900 163,900 Performing Arts Venues Seat Replacement AC-18000 53,289 53,289 Ramos Park Improvements PG-14000 1,010 1,010 Rinconada Pool Family Changing Room PE-24004 1,181,202 1,181,202 371,165 371,165 Robles Park Improvements PE-18015 641,308 641,308 Safe Routes To School PL-00026 888,000 888,000 388,000 388,000 San Francisquito Creek Joint Powers Authority Ongoing Creek Projects
PE-22000 150,652 150,652
Sidewalk Repairs PO-89003 100,000 100,000
Stanford Palo Alto Community Playing Fields Turf Replacement PG-26000 2,424,114 (2,424,114) - Street Lights Condition Assessment PE-13014 220,000 220,000 Street Lights Improvements PO-05054 108,422 108,422 Street Maintenance PE-86070 218,549 218,549 Thermoplastic Lane Marking and Striping PO-11001 125,000 125,000 Transportation and Parking Improvements PL-12000 250,000 250,000 250,000 250,000 University Avenue Streetscape Update PE-21004 151,443 151,443 Mitchell Park Library Repair PE-24006 151,192 151,192 Baylands Interpretive Signage Program OS-24001 47,343 47,343 47,343 47,343 Traffic Intersection Accessibility Improvement Project PL-25001 250,000 250,000 250,000 250,000 Children's Theatre Facility Upgrade/Repair AC-28002 125,000 125,000 471 - Capital Improvement Fund Total 45,204,917 (2,874,114) 42,330,803 935,343 13,478,123 14,413,466 472 - Cubberley Property Infrastructure FunCubberley Field Restroom CB-17002 27,697 27,697 Cubberley Roof Replacements CB-16002 100,000 100,000 472 - Cubberley Property Infrastructure Fund Total 127,697 127,697 530 - Airport Enterprise Fund Airport Parking Lot Electric Vehicle Charger Installation AP-24001 25,000 (25,000) - 22,500 (22,500) - Automated Weather Observation System (AWOS) AP-19000 1,340,237 1,340,237 1,291,050 1,291,050 530 - Airport Enterprise Fund Total 1,365,237 (25,000) 1,340,237 1,313,550 (22,500) 1,291,050 523 - Electric Fund Colorado Distribution Feeder Outlet Replacement EL-22002 379,109 379,109 Colorado Power Station Equipment Upgrades EL-19001 2,725,339 2,725,339 Colorado Substation Site Improvements EL-19002 1,041,142 1,041,142 Foothills Rebuild (Fire Mitigation) EL-21001 1,599,239 1,599,239 Inter-substation Line Protection Relay EL-17005 437,505 179,140 616,645 Smart Grid Technology Installation EL-11014 876,335 876,335 Substation Breaker Replacement EL-17002 2,748,481 2,748,481 Substation Facility Improvements EL-89044 645,606 645,606 Substation Physical Security EL-16003 2,476,728 2,476,728 Wood Pole Replacement EL-19004 328,950 328,950 Hanover Substation Upgrade Project EL-24001 14,779,014 14,779,014 523 - Electric Fund Total 27,012,733 1,203,855 28,216,588 533 - Fiber Optics Fund Fiber Optics Customer Connections FO-10000 153,100 153,100 Fiber Optics Network - System Improvements FO-10001 540,325 540,325 Fiber-to-the-Premises (FTTP) FO-24000 10,946,450 10,946,450

Item 23: Staff Report
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CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 PROPOSED BUDGET 533 - Fiber Optics Fund Total 11,639,875 11,639,875 524 - Gas Fund Gas Main Replacement - Project 25 GS-15000 8,728,324 8,728,324 Gas Meters and Regulators GS-80019 516,000 516,000 Gas Line Repair at Arastradero Creek GS-25001 999,558 999,558 524 - Gas Fund Total 9,244,324 999,558 10,243,882 528 - Stormwater Management Fund Green Stormwater Infrastructure SD-22001 1,239,330 1,239,330 1,215,562 1,215,562 Storm Drainage System Replacement And Rehabilitation SD-06101 1,183,015 1,183,015 528 - Stormwater Management Fund Total 2,422,345 2,422,345 1,215,562 1,215,562 527 - Wastewater Collection Fund
Wastewater Collection System Rehabilitation/Augmentation Project 32 WC-20000 1,000,000 1,000,000
527 - Wastewater Collection Fund Total 1,000,000 1,000,000 526 - Wastewater Treatment Fund Headworks Facility Replacement WQ-16002 1,638,974 1,638,974 New Laboratory And Environmental Services Building WQ-14002 16,472,600 16,472,600 Outfall Line Construction WQ-19000 10,605,800 10,605,800 Secondary Treatment Upgrades WQ-19001 811,320 811,320 526 - Wastewater Treatment Fund Total 29,528,694 29,528,694 522 - Water Fund Water System Supply Improvements WS-11004 2,307,792 1,000,000 3,307,792 522 - Water Fund Total 2,307,792 1,000,000 3,307,792 682 - Technology Fund City Council Chambers Upgrade TE-19001 1,483,737 1,483,737 Computer Aided Dispatch (CAD) Upgrade TE-23000 320,000 320,000 Enterprise Resource Planning Upgrade TE-19000 230,000 230,000 Infrastructure Management System TE-13004 285,906 285,906 IT Data Center Upgrade TE-25000 850,000 850,000 682 - Technology Fund Total 3,169,643 3,169,643 681 - Vehicle Replacement & Maintenance Emergency Repair and Replacement VR-15001 158,194 158,194 Scheduled Vehicle and Equipment Replacement - Fiscal Year 2020 VR-20000 30,000 30,000
Scheduled Vehicle and Equipment Replacement - Fiscal Year 2021 VR-21000 16,981 16,981
Scheduled Vehicle and Equipment Replacement - Fiscal Year 2023 VR-23000 712,277 712,277
Scheduled Vehicle and Equipment Replacement - Fiscal Year 2024 VR-24000 3,296,275 3,296,275
Scheduled Vehicle and Equipment Replacement - Fiscal Year 2025 VR-25000 3,398,584 3,398,584
681 - Vehicle Replacement & Maintenance Fund Total 7,612,311 7,612,311 All Funds Total 140,635,568 304,299 140,939,867 2,248,893 14,671,185 16,920,078 Item 23
Attachment A, Exhibits 2
and 3 - Amendments to
the City Manager's Fiscal
Year 2026 Proposed
Operating and Capital
Budgets

Item 23: Staff Report
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TABLE OF ORGANIZATION
EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 15 T able of Organization
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
General Fund
Administrative Services
Account Specialist 4.13 4.13 4.13 4.13 — —%
Account Specialist-Lead 3.45 3.45 3.45 3.45 — —%
Accountant 2.00 2.00 2.00 2.00 — —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 0.50 1.00 1.00 1.00 — —%
Administrative Associate III 1.00 1.00 1.00 1.00 — —%
Assistant Director Administrative Services 1.65 1.65 1.65 1.65 — —% Buyer 2.00 2.00 2.00 2.00 — —%
Chief Procurement Officer 1.00 1.00 1.00 1.00 — —%
Contracts Administrator* 2.70 3.70 3.70 2.70 (1.00) (27.0)% Director Administrative Services/CFO 0.80 0.80 0.80 0.80 — —% Director Office of Management and Budget 1.00 1.00 1.00 1.00 — —% Management Analyst 2.00 2.00 3.00 2.00 (1.00) (33.3)%
Manager Budget 2.00 2.00 2.00 2.00 — —%
Manager Real Property 1.00 1.00 1.00 1.00 — —%
Manager Revenue Collections 0.62 0.62 0.62 0.62 — —%
Manager Treasury, Debt & Investments 0.60 0.60 0.60 0.60 — —% Manager, Finance 1.00 1.00 1.00 1.00 — —%
Payroll Analyst 2.00 2.00 2.00 2.00 — —%
Senior Accountant 3.00 3.00 3.00 3.00 — —%
Senior Buyer 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 2.30 2.30 2.30 3.40 1.10 47.8% Storekeeper 2.00 2.00 2.00 2.00 — —%
Storekeeper-Lead 0.20 0.20 0.20 0.20 — —%
Item 23
Attachment A, Exhibit 4 -
Table of Organization

Item 23: Staff Report
Pg.
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TABLE OF ORGANIZATION
16 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Warehouse Supervisor 0.20 0.20 0.20 0.20 — —%
Total Administrative Services 39.15 40.65 41.65 40.75 (0.90) (2.2)% City Attorney
Assistant City Attorney 4.00 4.00 4.00 4.00 — —%
Chief Assistant City Attorney 1.00 1.00 1.00 1.00 — —%
City Attorney 1.00 1.00 1.00 1.00 — —%
Claims Investigator 1.00 1.00 1.00 1.00 — —%
Deputy City Attorney — 0.50 0.50 0.50 — —%
Legal Fellow 1.00 1.00 1.00 1.00 — —%
Secretary to City Attorney 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Total City Attorney 10.00 10.50 10.50 10.50 — —%
City Clerk
Administrative Associate III 2.00 2.00 2.00 2.00 — —%
Assistant City Clerk 1.00 2.00 2.00 2.00 — —%
City Clerk 1.00 1.00 1.00 1.00 — —%
Deputy City Clerk 1.00 — — — — —%
Total City Clerk 5.00 5.00 5.00 5.00 — —%
City Manager
Administrative Assistant 2.00 3.00 3.00 3.00 — —%
Assistant City Manager 1.00 1.00 1.00 1.00 — —%
Assistant to the City Manager 3.00 3.00 3.00 3.00 — —%
Chief Communications Officer 1.00 1.00 1.00 1.00 — —%
City Manager 1.00 1.00 1.00 1.00 — —%
Deputy City Manager 1.00 1.00 1.00 1.00 — —%
Executive Assistant to the City Manager 1.00 1.00 1.00 1.00 — —% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
Attachment A, Exhibit 4 -
Table of Organization

Item 23: Staff Report
Pg.
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TABLE OF ORGANIZATION
EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 17 Management Fellow — — — 0.20 0.20 —%
Management Specialist — — 1.00 — (1.00) (100.0)%
Manager Communications 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Total City Manager 12.00 13.00 14.00 13.20 (0.80) (5.7)% Community Services
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Animal Caretaker — — 4.00 4.00 — —%
Assistant Director Community Services 1.00 2.00 2.00 2.00 — —% Building Serviceperson 1.00 2.00 2.00 2.00 — —%
Building Serviceperson-Lead 0.60 2.00 2.00 2.00 — —%
Coordinator Recreation Programs 4.00 5.75 5.75 6.00 0.25 4.3% Director Community Services 1.00 1.00 1.00 1.00 — —%
Division Manager Open Space, Parks & Golf — 1.00 1.00 1.00 — —% Inspector, Field Services 2.00 2.00 2.00 2.00 — —%
Junior Museum & Zoo Educator 4.10 4.85 4.85 5.85 1.00 20.6% Management Analyst 1.00 1.00 1.00 1.00 — —%
Management Assistant 1.00 1.00 1.00 1.00 — —%
Manager Community Services 5.00 5.00 5.00 5.00 — —%
Manager Community Services Senior Program 4.00 4.00 4.00 4.00 — —% Manager Human Services 1.00 1.00 1.00 1.00 — —%
Park Maintenance Person 6.00 6.00 6.00 6.00 — —%
Park Maintenance-Lead 1.00 1.00 1.00 1.00 — —%
Park Ranger 6.00 6.00 6.00 6.00 — —%
Parks/Golf Crew-Lead 2.00 2.00 2.00 2.00 — —%
Producer Arts/Science Program 12.25 9.50 9.50 9.50 — —% Program Assistant I* 3.00 3.75 4.75 5.75 1.00 21.1%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
Attachment A, Exhibit 4 -
Table of Organization

Item 23: Staff Report
Pg.
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TABLE OF ORGANIZATION
18 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Program Assistant II 4.00 4.00 4.00 4.00 — —%
Project Manager 0.10 0.10 0.10 0.10 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Sprinkler System Representative 4.00 4.00 4.00 4.00 — —% Superintendent Community Services 2.00 2.00 2.00 2.00 — —% Theater Specialist 2.00 5.00 5.00 5.00 — —%
WGW Heavy Equipment Operator 0.07 0.07 0.07 0.07 — —%
Total Community Services 70.12 78.02 83.02 85.27 2.25 2.7% Fire
40-Hour Captain 0.20 0.20 — — — —%
40-Hour Training Battalion Chief 1.00 1.00 1.00 1.00 — —% 40-Hour Training Captain 1.00 1.00 1.00 1.00 — —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 2.20 2.20 3.00 3.00 — —%
Administrative Associate III** 0.20 0.20 1.00 2.00 1.00 50.0% Assistant Fire Marshal — — 1.00 1.00 — —%
Battalion Chief 3.00 3.00 3.00 3.00 — —%
Business Analyst 0.80 0.80 0.80 0.80 — —%
Deputy Director Technical Services Division 0.20 0.20 0.20 0.20 — —% Deputy Fire Chief 2.00 2.00 2.00 2.00 — —%
Emergency Medical Service Director 1.00 1.00 1.00 1.00 — —% Emergency Medical Services Data Specialist 1.00 1.00 1.00 1.00 — —% Fire Apparatus Operator 26.00 26.00 26.00 26.00 — —%
Fire Captain 20.00 20.00 20.00 23.00 3.00 15.0%
Fire Chief 1.00 1.00 1.00 1.00 — —%
Fire Fighter 34.00 34.00 37.00 37.00 — —%
Fire Fighter Trainee 3.00 3.00 3.00 3.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
Attachment A, Exhibit 4 -
Table of Organization

Item 23: Staff Report
Pg.
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TABLE OF ORGANIZATION
EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 19 Fire Inspector 0.40 2.40 3.20 3.20 — —%
Fire Marshal 0.05 0.05 0.75 0.75 — —%
Geographic Information System Specialist 0.50 0.50 0.50 0.50 — —% Hazardous Materials Inspector 0.70 0.70 3.93 3.93 — —%
Manager, EMS** — — — 1.00 1.00 —%
Plans Check Engineer — — 0.50 0.50 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Single Role EMT (Non-sworn)** — — — 2.00 2.00 —%
Single Role Paramedic (Non-sworn)** — — — 2.00 2.00 —%
Total Fire 100.25 102.25 112.88 121.88 9.00 7.4%
Human Resources
Administrative Assistant — 0.75 0.75 0.75 — —%
Assistant Director Human Resources 1.00 1.00 1.00 1.00 — —% Director Human Resources/CPO 1.00 1.00 1.00 1.00 — —%
Human Resources Representative 2.00 4.00 4.00 4.00 — —% Human Resources Technician 4.00 2.00 2.00 2.00 — —%
Management Fellow — — — 0.30 0.30 —%
Manager Employee Benefits 1.00 1.00 1.00 1.00 — —%
Manager Employee Relations 1.00 1.00 1.00 1.00 — —%
Recruitment Division Manager — — 1.00 1.00 — —%
Senior Human Resources Administrator 3.00 4.00 4.00 4.00 — —% Senior Management Analyst 2.00 2.00 2.00 2.00 — —%
Total Human Resources 15.00 16.75 17.75 18.05 0.30 1.7% Library
Administrative Assistant — 1.00 1.00 1.00 — —%
Administrative Associate III 1.00 — — — — —%
Assistant Director Library Services 1.00 — — — — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
Attachment A, Exhibit 4 -
Table of Organization

Item 23: Staff Report
Pg.
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TABLE OF ORGANIZATION
20 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Business Analyst 1.00 — — — — —%
Coordinator Library Programs 2.00 5.00 5.00 5.00 — —%
Director Libraries 1.00 1.00 1.00 1.00 — —%
Division Head Library Services 1.00 2.00 2.00 2.00 — —% Librarian 7.00 4.00 4.00 4.00 — —%
Library Associate 6.00 10.00 10.00 10.00 — —%
Library Specialist 12.50 8.00 8.00 8.00 — —%
Management Analyst 1.00 1.00 1.00 1.00 — —%
Manager Library Services 3.00 3.00 3.00 3.00 — —%
Senior Business Analyst — 1.00 1.00 1.00 — —%
Senior Librarian 6.00 8.00 8.00 8.00 — —%
Supervising Librarian 4.00 5.00 5.00 5.00 — —%
Total Library 46.50 49.00 49.00 49.00 — —%
Office of Emergency Services
Director Office of Emergency Services 1.00 1.00 1.00 1.00 — —% Office of Emergency Services Coordinator 1.00 2.00 2.00 2.00 — —% Total Office of Emergency Services 2.00 3.00 3.00 3.00 — —% Office of Transportation
Administrative Assistant 0.60 0.60 0.60 0.60 — —%
Associate Engineer 0.35 0.35 0.35 0.35 — —%
Associate Planner 0.40 0.40 1.40 1.40 — —%
Chief Transportation Official 0.70 0.70 0.70 0.70 — —%
Coordinator Transportation Systems
Management

0.65 0.65 — — — —%
Management Analyst 0.50 — — — — —%
Parking Operations-Lead 0.05 0.05 0.05 0.05 — —%
Planner — — 0.40 0.40 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
Attachment A, Exhibit 4 -
Table of Organization

Item 23: Staff Report
Pg.
38 Packet Pg. 764 of 1138

TABLE OF ORGANIZATION
EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 21 Project Engineer 0.25 0.25 0.25 0.35 0.10 40.0%
Principal Transportation Engineer** — — — 0.20 0.20 —%
Senior Engineer** 0.55 0.55 0.55 0.35 (0.20) (57.1)%
Senior Management Analyst — 0.50 0.50 0.50 — —%
Senior Planner 0.15 1.40 1.65 1.65 — —%
Transportation Planning Manager 1.00 1.00 1.00 1.00 — —% Total Office of Transportation 5.20 6.45 7.45 7.55 0.10 1.3% Planning and Development Services
40-Hour Captain 0.80 0.80 — — — —%
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate I 1.00 — — — — —%
Administrative Associate II 2.80 0.80 — — — —%
Administrative Associate III 4.80 7.80 6.00 6.00 — —%
Assistant Chief Building Official 2.00 2.00 1.00 1.00 — —% Assistant Director PCE 1.00 1.00 1.00 1.00 — —%
Associate Engineer — 0.50 0.50 0.50 — —%
Associate Planner 1.25 1.25 1.25 1.25 — —%
Building Inspector Specialist 8.00 — — — — —%
Building/Planning Technician 2.50 2.50 2.50 2.50 — —%
Chief Building Official 1.00 1.00 1.00 1.00 — —%
Chief Planning Official 1.00 1.00 — — — —%
Code Enforcement Officer 1.00 1.00 1.00 1.00 — —%
Code Enforcement-Lead 1.00 1.00 1.00 1.00 — —%
Development Project Coordinator II 2.00 2.00 2.00 2.00 — —% Development Project Coordinator III 3.00 3.00 3.00 3.00 — —% Director Planning/Community Environment 1.00 1.00 1.00 1.00 — —% Division Manager Planning — — 1.00 1.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
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TABLE OF ORGANIZATION
22 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Engineer 0.52 0.52 0.52 0.52 — —%
Engineering Technician III 1.50 1.00 1.00 1.00 — —%
Fire Inspector 1.60 1.60 0.80 0.80 — —%
Fire Marshal 0.80 0.80 0.25 0.25 — —%
Hazardous Materials Inspector 3.20 3.20 0.07 0.07 — —%
Industrial Waste Investigator 0.35 0.35 0.35 0.35 — —%
Inspector, Field Services 0.68 0.68 0.68 0.68 — —%
Landscape Architect Park Planner 0.50 0.50 0.50 0.50 — —% Manager Planning 4.00 4.00 4.00 5.00 1.00 25.0%
Plan Review Manager — — 1.00 — (1.00) (100.0)%
Planner 5.00 5.00 5.00 5.00 — —%
Plans Check Engineer 1.00 1.00 0.50 0.50 — —%
Principal Planner 2.00 2.00 3.00 4.00 1.00 33.3%
Project Manager 0.50 0.50 0.50 0.50 — —%
Senior Building Inspector — 8.00 8.00 8.00 — —%
Senior Business Analyst 1.00 1.00 — — — —%
Senior Engineer 0.45 0.45 0.45 0.45 — —%
Senior Management Analyst 2.00 2.00 2.00 2.00 — —%
Senior Plan Check Engineer — 2.00 3.00 3.00 — —%
Senior Planner 4.65 7.65 8.75 8.75 — —%
Senior Program Manager — — 1.00 1.00 — —%
Senior Technologist — — 1.00 1.00 — —%
Supervisor Inspection and Surveying 0.25 0.25 0.25 0.25 — —% Supervisor of Code Enforcement — 1.00 1.00 1.00 — —%
Technologist — — 1.00 1.00 — —%
Transportation Planning Manager 0.05 0.05 0.05 0.05 — —% Total Planning and Development Services 65.20 71.20 67.92 68.92 1.00 1.5% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 23 Police
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 2.00 3.00 3.00 3.00 — —%
Animal Control Officer 2.00 2.00 2.00 2.00 — —%
Animal Control Officer-Lead 1.00 1.00 1.00 1.00 — —%
Assistant Police Chief 1.00 1.00 1.00 1.00 — —%
Business Analyst 2.20 2.20 2.20 2.20 — —%
Code Enforcement Officer 1.00 1.00 1.00 1.00 — —%
Community Service Officer 5.63 5.63 4.69 4.69 — —%
Court Liaison Officer 1.00 2.00 2.00 2.00 — —%
Crime Analyst 1.00 1.00 1.00 1.00 — —%
Deputy Director Technical Services Division 0.80 0.80 0.80 0.80 — —% Forensic Coordinator — — 1.00 1.00 — —%
Forensic Specialist — — 1.00 1.00 — —%
Geographic Information System Specialist 0.50 0.50 0.50 0.50 — —% Police Agent 19.00 19.00 19.00 19.00 — —%
Police Captain 2.00 2.00 2.00 2.00 — —%
Police Chief 1.00 1.00 1.00 1.00 — —%
Police Lieutenant 4.00 4.00 5.00 5.00 — —%
Police Officer 43.00 45.00 45.00 45.00 — —%
Police Records Specialist II 6.00 6.00 6.00 6.00 — —%
Police Records Specialist-Lead 1.00 1.00 1.00 1.00 — —% Police Sergeant 14.00 14.00 14.00 14.00 — —%
Program Assistant II 1.00 1.00 1.00 1.00 — —%
Property Evidence Technician 2.00 2.00 — — — —%
Public Safety Communications Manager 1.00 1.00 1.00 1.00 — —% Public Safety Dispatcher 14.00 16.00 16.00 16.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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24 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Public Safety Dispatcher-Lead 4.00 4.00 4.00 4.00 — —%
Public Safety Program Manager 1.00 1.00 1.00 1.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Total Police 133.13 139.13 139.19 139.19 — —%
Public Works
Administrative Assistant 0.50 0.50 0.50 0.75 0.25 50.0% Administrative Associate II 2.65 2.65 2.65 2.65 — —%
Assistant Director Public Works 0.73 0.73 0.73 0.73 — —% Associate Engineer — 0.45 0.45 0.45 — —%
Building Serviceperson-Lead 1.00 1.00 1.00 1.00 — —%
Building/Planning Technician 0.50 0.50 0.50 0.50 — —%
Cement Finisher 2.00 2.00 2.00 2.00 — —%
Cement Finisher-Lead 0.26 0.26 0.26 0.26 — —%
Coordinator Public Works Projects 1.50 1.50 1.50 0.70 (0.80) (53.3)% Director Public Works/City Engineer 1.00 1.00 1.00 1.00 — —% Electrician 0.80 0.80 0.80 0.80 — —%
Engineer 0.48 0.48 0.48 0.48 — —%
Engineering Technician III 1.75 1.80 1.80 1.80 — —%
Environmental Specialist 0.33 0.33 0.33 0.33 — —%
Equipment Operator 2.46 2.46 2.46 2.46 — —%
Facilities Carpenter 1.00 1.00 1.00 1.00 — —%
Facilities Maintenance-Lead 1.85 1.85 1.85 1.85 — —%
Facilities Painter 1.75 1.75 1.75 1.75 — —%
Facilities Technician 4.05 5.05 5.05 5.05 — —%
Heavy Equipment Operator 2.10 2.10 2.10 2.10 — —%
Heavy Equipment Operator-Lead 0.85 0.85 0.85 0.85 — —%
Inspector, Field Services 0.11 0.11 0.11 0.11 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 25 Landscape Architect Park Planner 0.60 0.60 0.60 0.60 — —% Management Analyst 0.70 0.70 0.80 0.80 — —%
Manager Environmental Control Program 0.33 0.33 0.33 0.33 — —% Manager Facilities 0.90 0.90 0.90 0.90 — —%
Manager Maintenance Operations 1.20 1.20 1.20 1.20 — —% Manager Urban Forestry 1.00 1.00 1.00 1.00 — —%
Manager Watershed Protection 0.05 0.05 0.05 0.05 — —%
Project Manager 2.50 2.85 2.85 2.85 — —%
Senior Engineer 0.60 0.60 0.60 0.60 — —%
Senior Management Analyst 1.11 1.11 1.11 1.11 — —%
Supervisor Inspection and Surveying 0.10 0.10 0.10 0.10 — —% Surveyor, Public Works 0.33 0.33 0.33 0.33 — —%
Traffic Controller Maintainer I 1.94 1.94 1.94 1.94 — —% Traffic Controller Maintainer II 1.00 1.00 1.00 2.00 1.00 100.0% Tree Maintenance Person 1.00 1.00 1.00 1.00 — —%
Tree Trim/Line Clear 7.00 7.00 7.00 7.00 — —%
Tree Trim/Line Clear-Lead 1.00 1.00 1.00 1.00 — —%
WGW Heavy Equipment Operator 0.23 0.23 0.23 0.23 — —%
Total Public Works 49.26 51.11 51.21 51.66 0.45 0.9%
Total General Fund 552.81 586.06 602.57 613.97 11.40 1.9% Enterprise Fund
Public Works
Accountant 0.70 0.70 0.70 0.70 — —%
Administrative Associate I 1.00 1.00 1.00 1.00 — —%
Administrative Associate II 2.15 2.15 2.15 2.15 — —%
Administrative Associate III 0.20 0.20 0.20 0.20 — —%
Airport Specialist II — 2.50 2.50 2.50 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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26 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Assistant Director Public Works 1.30 1.30 1.30 1.30 — —% Assistant Manager WQCP 2.00 2.00 2.00 2.00 — —%
Associate Engineer 3.00 3.05 3.05 3.05 — —%
Chemist 2.00 3.00 3.00 3.00 — —%
Electrician 3.00 3.00 3.00 3.00 — —%
Electrician-Lead 2.00 2.00 2.00 2.00 — —%
Engineer 0.90 1.90 1.90 1.90 — —%
Engineering Technician III 0.25 0.20 0.20 0.20 — —%
Environmental Specialist 2.33 2.33 2.33 3.33 1.00 42.9% Equipment Operator 0.54 0.54 0.54 0.54 — —%
Facilities Maintenance Lead 1.00 1.00 1.00 1.00 — —%
Facilities Technician 2.50 — — — — —%
Fire Marshal 0.07 0.07 — — — —%
Hazardous Materials Inspector 0.04 0.04 — — — —%
Heavy Equipment Operator 0.90 0.90 0.90 0.90 — —%
Heavy Equipment Operator-Lead 1.15 1.15 1.15 1.15 — —%
Industrial Waste Inspector 3.00 3.00 3.00 3.00 — —%
Industrial Waste Investigator 1.15 1.15 1.15 1.15 — —%
Instrumentation Electrician — — — 1.00 1.00 —%
Laboratory Technician WQC 3.00 3.00 3.00 3.00 — —%
Landfill Technician 1.00 2.00 2.00 2.00 — —%
Management Analyst 2.30 2.30 2.90 2.90 — —%
Manager Airport 1.00 1.00 1.00 1.00 — —%
Manager Environmental Control Program 5.33 5.33 5.33 5.33 — —% Manager Laboratory Services 1.00 1.00 1.00 1.00 — —%
Manager Maintenance Operations 1.96 1.96 1.96 1.96 — —% Manager Solid Waste 1.00 1.00 1.00 1.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 27 Manager Water Quality Control Plant 1.00 1.00 1.00 1.00 — —% Manager Watershed Protection 0.95 0.95 0.95 0.95 — —%
Plant Mechanic 7.00 7.00 7.00 7.00 — —%
Program Assistant I 1.00 1.00 1.00 1.00 — —%
Program Assistant II 2.00 2.00 2.00 2.00 — —%
Project Engineer 1.83 2.83 2.83 2.83 — —%
Project Manager 1.35 1.35 1.35 1.35 — —%
Senior Accountant 0.30 0.30 0.30 0.30 — —%
Senior Buyer 1.00 1.00 1.00 1.00 — —%
Senior Chemist 2.00 2.00 2.00 2.00 — —%
Senior Engineer 3.76 3.76 3.76 3.76 — —%
Senior Industrial Waste Investigator 1.00 1.00 1.00 1.00 — —% Senior Management Analyst 0.21 0.21 0.21 0.61 0.40 190.5% Senior Mechanic 1.00 1.00 1.00 1.00 — —%
Senior Operator WQC 6.00 6.00 6.00 7.00 1.00 16.7%
Senior Technologist 1.00 1.00 1.00 1.00 — —%
Storekeeper 1.00 1.00 1.00 1.00 — —%
Street Maintenance Assistant 1.00 — — — — —%
Street Sweeper Operator 1.63 1.63 1.63 1.63 — —%
Supervisor WQCP Operations 3.00 3.00 3.00 3.00 — —%
Surveyor, Public Works 0.12 0.12 0.12 0.12 — —%
Technologist 1.00 1.00 1.00 1.00 — —%
Traffic Controller Maintainer I 0.06 0.06 0.06 0.06 — —% WQC Plant Operator II 16.00 16.00 16.00 16.00 — —%
Zero Waste Coordinator 1.00 1.00 1.00 1.00 — —%
Total Public Works 103.98 106.98 107.47 110.87 3.40 3.2% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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28 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Utilities
Account Specialist 1.00 1.00 1.00 1.00 — —%
Accountant 1.30 1.30 1.30 1.30 — —%
Administrative Assistant 1.00 1.00 1.00 1.75 0.75 75.0% Administrative Associate II 6.00 6.00 6.00 6.00 — —%
Assistant City Attorney 1.00 2.00 2.00 2.00 — —%
Assistant Director Administrative Services 0.25 0.25 0.25 0.25 — —% Assistant Director Sustainability and Climate
Action
— 1.00 1.00 1.00 — —%
Assistant Director Utilities Customer Support
Services

1.00 2.00 2.00 2.00 — —%
Assistant Director Utilities Engineering 1.00 1.00 1.00 1.00 — —% Assistant Director Utilities Operations 1.00 1.00 1.00 1.00 — —% Assistant Director Utilities/Resource
Management

1.00 1.00 1.00 1.00 — —%
Associate Sustainability Program Administrator 1.00 1.00 2.00 2.00 — —% Business Analyst 6.00 6.00 6.00 6.00 — —%
Cathodic Protection Technician Assistant 1.00 1.00 1.00 — (1.00) (100.0)% Cathodic Technician 1.00 1.00 1.00 2.00 1.00 100.0%
Cement Finisher 2.00 2.00 3.00 3.00 — —%
Contracts Administrator 0.70 0.70 0.70 0.70 — —%
Coordinator Utilities Projects 8.00 8.00 10.00 10.00 — —% Customer Service Representative 7.00 7.00 7.00 7.00 — —% Customer Service Specialist 2.00 2.00 2.00 2.00 — —%
Customer Service Specialist-Lead 2.00 2.00 2.00 2.00 — —% Deputy City Attorney — 0.50 0.50 0.50 — —%
Director Administrative Services/CFO 0.20 0.20 0.20 0.20 — —% Electric Heavy Equipment Operator 1.00 1.00 1.00 1.00 — —% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 29 Electric Project Engineer 8.00 8.00 10.00 10.00 — —%
Electric Underground Inspector 2.00 2.00 2.00 2.00 — —% Electric Underground Inspector-Lead 1.00 1.00 1.00 1.00 — —% Electrical Equipment Technician 1.00 1.00 1.00 1.00 — —% Electrician Assistant I 3.00 3.00 3.00 3.00 — —%
Electrician-Lead — — 1.00 1.00 — —%
Engineer 4.00 5.00 5.00 5.00 — —%
Engineering Manager - Electric 1.00 1.00 1.00 1.00 — —% Engineering Manager - WGW 1.00 1.00 1.00 1.00 — —%
Engineering Technician III 3.00 3.00 3.00 3.00 — —%
Environmental Specialist 0.34 0.34 0.34 0.34 — —%
Equipment Operator 1.00 1.00 1.00 2.00 1.00 100.0%
Fire Marshal 0.08 0.08 — — — —%
Gas and Water Meter Measurement and
Control Technician

4.00 4.00 5.00 5.00 — —%
Gas and Water Meter Measurement and
Control Technician - Lead

1.00 1.00 1.00 1.00 — —%
Hazardous Materials Inspector 0.06 0.06 — — — —%
Heavy Equipment Operator - Install/Repair 4.00 4.00 5.00 5.00 — —% Human Resources Representative 1.00 1.00 1.00 1.00 — —% Industrial Waste Investigator 0.50 0.50 0.50 0.50 — —%
Inspector, WGW Utilities Field Svc 5.00 5.00 5.00 6.00 1.00 20.0% Lineperson/Cable Specialist 10.00 10.00 10.00 10.00 — —% Lineperson/Cable Specialist-Lead 4.00 4.00 4.00 4.00 — —% Maintenance Mechanic-Welding 2.00 2.00 2.00 2.00 — —%
Management Analyst 1.00 1.00 1.00 1.00 — —%
Management Fellow — — — 0.50 0.50 —%
Manager Communications 1.00 1.00 1.00 1.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
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TABLE OF ORGANIZATION
30 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Manager Customer Service 1.00 1.00 1.00 1.00 — —%
Manager Electric Operations 1.00 1.00 1.00 1.00 — —%
Manager Environmental Control Program 0.34 0.34 0.34 0.34 — —% Manager Information Technology — 1.00 1.00 1.00 — —%
Manager Treasury, Debt & Investments 0.40 0.40 0.40 0.40 — —% Manager Utilities Compliance 1.00 1.00 1.00 1.00 — —%
Manager Utilities Credit & Collection 1.00 1.00 1.00 1.00 — —% Manager Utilities Operations WGW 1.00 1.00 1.00 1.00 — —% Manager Utilities Program Services 2.00 2.00 2.00 2.00 — —% Manager Utilities Strategic Business 1.00 1.00 1.00 1.00 — —% Manager Utilities Telecommunications 1.00 3.00 3.00 3.00 — —% Meter Reader 6.00 5.00 5.00 5.00 — —%
Meter Reader-Lead 1.00 1.00 1.00 1.00 — —%
Metering Technician 2.00 2.00 2.00 2.00 — —%
Metering Technician-Lead 1.00 1.00 1.00 1.00 — —%
Offset Equipment Operator 0.48 0.48 0.98 0.48 (0.50) (51.0)% Overhead Underground Troubleman 2.00 2.00 2.00 2.00 — —% Principal Business Analyst 1.00 1.00 1.00 1.00 — —%
Principal Utilities Program Manager 1.00 — — — — —%
Program Assistant I 1.50 2.00 2.00 2.00 — —%
Project Engineer 5.00 5.00 5.00 5.00 — —%
Project Manager 0.75 0.75 0.75 0.75 — —%
Resource Planner 5.00 5.00 5.00 5.00 — —%
Restoration Lead 1.00 1.00 1.00 1.00 — —%
Senior Accountant 0.70 0.70 0.70 0.70 — —%
Senior Business Analyst 3.00 3.00 3.00 3.00 — —%
Senior Buyer* — — — 1.00 1.00 —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
Item 23
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 31 Senior Electrical Engineer 5.00 5.00 5.00 5.00 — —%
Senior Engineer 6.00 5.00 5.00 5.00 — —%
Senior Management Analyst 0.70 0.70 0.70 1.00 0.30 42.9% Senior Marketing Analyst — 1.00 1.00 1.00 — —%
Senior Mechanic 1.00 1.00 1.00 1.00 — —%
Senior Resource Planner 7.00 7.00 7.00 7.00 — —%
Senior Utilities Field Service Representative 1.00 1.00 1.00 1.00 — —% Senior Utilities System Operator — 1.00 1.00 1.00 — —%
Senior Water Systems Operator 2.00 2.00 2.00 2.00 — —%
Storekeeper 1.00 1.00 1.00 1.00 — —%
Storekeeper-Lead 0.80 0.80 0.80 0.80 — —%
Street Light, Traffic Signal & Fiber Technician 4.00 4.00 4.00 4.00 — —% Street Light, Traffic Signal & Fiber-Lead 2.00 2.00 2.00 2.00 — —% Substation Electrician 6.00 6.00 6.00 6.00 — —%
Substation Electrician-Lead 2.00 2.00 2.00 2.00 — —%
Sustainability Programs Administrator 5.00 5.00 5.00 5.00 — —% Tree Maintenance Person 1.00 1.00 1.00 1.00 — —%
Utilities Chief Operating Officer 1.00 1.00 1.00 1.00 — —% Utilities Compliance Technician 3.00 3.00 3.00 3.00 — —% Utilities Compliance Technician-Lead 1.00 1.00 1.00 1.00 — —% Utilities Credit/Collection Specialist 2.00 2.00 2.00 2.00 — —% Utilities Director 1.00 1.00 1.00 1.00 — —%
Utilities Engineer Estimator 5.00 5.00 5.00 5.00 — —%
Utilities Field Services Representative 5.00 5.00 5.00 5.00 — —% Utilities Install Repair-Lead-Welding Certified 3.00 3.00 3.00 3.00 — —% Utilities Install Repair-Welding Certified 3.00 3.00 3.00 3.00 — —% Utilities Install/Repair 10.00 10.00 11.00 11.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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TABLE OF ORGANIZATION
32 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Utilities Install/Repair Assistant 1.00 1.00 1.00 — (1.00) (100.0)% Utilities Install/Repair-Lead 4.00 4.00 4.00 3.00 (1.00) (25.0)% Utilities Key Account Representative 3.00 3.00 3.00 3.00 — —% Utilities Locator 3.00 3.00 3.00 3.00 — —%
Utilities Safety Officer 1.00 1.00 1.00 1.00 — —%
Utilities Supervisor 12.00 12.00 12.00 12.00 — —%
Utilities System Analyst 2.00 2.00 2.00 2.00 — —%
Utilities System Operator 6.00 5.00 5.00 5.00 — —%
Utility Engineering Estimator - Lead 1.00 1.00 1.00 1.00 — —% Warehouse Supervisor 0.80 0.80 0.80 0.80 — —%
Water System Operator II 4.00 4.00 4.00 4.00 — —%
WGW Heavy Equipment Operator 4.70 4.70 4.70 4.70 — —%
Total Utilities 267.60 273.60 283.96 286.01 2.05 0.7%
Total Enterprise Fund 371.58 380.58 391.43 396.88 5.45 1.4% Other Funds
Capital Project Fund
Administrative Assistant 0.65 0.65 0.65 0.65 — —%
Administrative Associate III 0.80 0.80 0.80 0.80 — —%
Assistant Director Public Works 0.72 0.72 0.72 0.72 — —% Associate Engineer 1.65 1.65 1.65 1.65 — —%
Associate Planner 0.35 0.35 0.35 0.35 — —%
Building Serviceperson 1.00 — — — — —%
Building Serviceperson-Lead 1.40 — — — — —%
Cement Finisher-Lead 0.74 0.74 0.74 0.74 — —%
Chief Transportation Official 0.30 0.30 0.30 0.30 — —%
Contracts Administrator 0.60 0.60 0.60 0.60 — —%
Coordinator Public Works Projects 1.30 1.30 1.30 1.30 — —% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 33 Coordinator Transportation Systems
Management

1.35 1.35 — — — —%
Engineer 3.10 3.10 3.10 3.10 — —%
Engineering Technician III 0.50 0.50 0.50 0.50 — —%
Facilities Technician 1.50 1.50 1.50 1.50 — —%
Inspector, Field Services 1.21 1.21 1.21 1.21 — —%
Landscape Architect Park Planner 0.90 0.90 0.90 0.90 — —% Management Analyst 0.95 0.80 0.90 0.90 — —%
Manager Facilities 0.10 0.10 0.10 0.10 — —%
Manager Maintenance Operations 0.65 0.65 0.65 0.65 — —% Parking Operations-Lead 0.30 0.30 0.30 0.30 — —%
Planner — — 0.60 0.60 — —%
Principal Transportation Engineer** — — — 0.80 0.80 —%
Project Engineer 7.92 7.92 7.92 8.82 0.90 11.4%
Project Manager 0.80 1.45 1.45 1.45 — —%
Senior Engineer** 4.64 4.64 4.64 3.84 (0.80) (20.8)%
Senior Management Analyst 0.60 0.75 0.75 0.75 — —%
Senior Planner 0.80 1.55 2.30 2.30 — —%
Supervisor Inspection and Surveying 0.65 0.65 0.65 0.65 — —% Surveyor, Public Works 0.55 0.55 0.55 0.55 — —%
Transportation Planning Manager 0.45 0.45 0.45 0.45 — —% Total Capital Project Fund 36.48 35.48 35.58 36.48 0.90 2.5% General Benefits Fund
Human Resources Technician — — — 0.50 0.50 —%
Total General Benefits Fund — — — 0.50 0.50 —%
General Liabilities Insurance Program Fund
Senior Management Analyst — 1.00 1.00 1.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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34 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET Total General Liabilities Insurance Program
Fund
— 1.00 1.00 1.00 — —%
Printing and Mailing Services
Manager Revenue Collections 0.10 0.10 0.10 0.10 — —%
Offset Equipment Operator 1.52 1.52 2.02 1.52 (0.50) (24.8)% Total Printing and Mailing Services 1.62 1.62 2.12 1.62 (0.50) (23.6)% Special Revenue Funds
Account Specialist 1.37 1.37 1.37 1.37 — —%
Account Specialist-Lead 0.55 0.55 0.55 0.55 — —%
Administrative Assistant 0.25 0.25 0.25 0.25 — —%
Administrative Associate II 0.20 0.20 0.20 0.20 — —%
Community Service Officer 0.37 0.37 0.31 0.31 — —%
Coordinator Public Works Projects 0.20 0.20 0.20 — (0.20) (100.0)% Electrician 0.20 0.20 0.20 0.20 — —%
Facilities Maintenance-Lead 0.15 0.15 0.15 0.15 — —%
Facilities Painter 0.25 0.25 0.25 0.25 — —%
Facilities Technician 0.45 0.45 0.45 0.45 — —%
Management Analyst 0.35 — — — — —%
Manager Community Services Senior Program 1.00 1.00 1.00 1.00 — —% Manager Maintenance Operations 0.19 0.19 0.19 0.19 — —% Manager Revenue Collections 0.28 0.28 0.28 0.28 — —%
Parking Operations-Lead 0.65 0.65 0.65 0.65 — —%
Senior Management Analyst — 0.35 0.35 0.35 — —%
Senior Planner 0.40 0.40 0.30 0.30 — —%
Street Maintenance Assistant 2.00 2.00 2.00 2.00 — —%
Street Sweeper Operator 0.37 0.37 0.37 0.37 — —%
Transportation Planning Manager 0.50 0.50 0.50 0.50 — —% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET 35 Total Special Revenue Funds 9.73 9.73 9.57 9.37 (0.20) (2.1)% Technology Fund
Administrative Assistant 1.00 1.00 1.00 1.00 — —%
Assistant Director Administrative Services 0.10 0.10 0.10 0.10 — —% Assistant Director Information Technology — — 1.00 1.00 — —% Business Analyst 1.00 1.00 1.00 1.00 — —%
Desktop Technician 6.00 6.00 4.00 4.00 — —%
Director Information Technology/CIO 1.00 1.00 1.00 1.00 — —% Management Analyst — 1.00 1.00 1.00 — —%
Manager Information Technology 3.00 3.00 3.00 4.00 1.00 33.3% Senior Business Analyst 2.00 2.00 2.00 2.00 — —%
Senior Management Analyst 1.00 1.00 1.00 1.00 — —%
Senior Technologist 16.00 17.00 17.00 16.00 (1.00) (5.9)% Technologist — — 2.00 2.00 — —%
Total Technology Fund 31.10 33.10 34.10 34.10 — —%
Vehicle Replacement and Maintenance Fund
Assistant Director Public Works 0.25 0.25 0.25 0.25 — —% Assistant Fleet Manager 1.00 1.00 1.00 1.00 — —%
Equipment Maintenance Service Person 1.00 2.00 2.00 2.00 — —% Fleet Services Coordinator 1.00 2.00 2.00 2.00 — —%
Management Analyst 0.20 0.20 0.40 0.40 — —%
Management Assistant 1.00 1.00 1.00 1.00 — —%
Manager Fleet 1.00 1.00 1.00 1.00 — —%
Motor Equipment Mechanic II 5.00 5.00 5.00 5.00 — —%
Motor Equipment Mechanic-Lead 2.00 1.00 1.00 1.00 — —%
Project Manager 1.00 1.00 1.00 1.00 — —%
FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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36 EMPLOYEE INFORMATION • CITY OF PALO ALTO FISCAL YEAR 2026 PROPOSED OPERATING BUDGET *The FY 2025 Adopted Budget does not include City Council actions to amend staffing levels approved in the FY 2025 Mid-Year Budget Review (Report # 2412-3865). These positions appear as a base adjustment in the FY 2026 Proposed Budget. **Positions approved by Finance Committee and/or City Council subsequent to the presentation of the FY 2026 Proposed Budget.

These include new classifications that require completion of appropriate review and potential discussions with bargaining groups.

Proposals in this budget include estimated funding levels for financial planning purposes only and do not reflect the final terms of the proposed classifications.

Senior Management Analyst 0.08 0.08 0.08 0.28 0.20 250.0% Total Vehicle Replacement and
Maintenance Fund

13.53 14.53 14.73 14.93 0.20 1.4%
Workers' Compensation Program Fund
Human Resources Technician — — — 0.50 0.50 —%
Senior Human Resources Administrator 1.00 1.00 1.00 1.00 — —% Total Workers' Compensation Program
Fund

1.00 1.00 1.00 1.50 0.50 50.0%
Total Other Funds 93.46 96.46 98.10 99.50 1.40 1.4%
Total Citywide Positions 1,017.85 1,063.10 1,092.10 1,110.35 18.25 1.6% FY 2023
Actuals
FY 2024
Actuals
FY 2025
Adopted
Budget
FY 2026
Proposed
Budget
FY 2026
Change
FTE
FY 2026
Change %
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Finance Committee
Supplemental Report
From: Lauren Lai, Administrative Services Director
Meeting Date: May 7, 2025
Item Number: 4
Report #:2504-4591
TITLE
FY 2026 Proposed Municipal Fee Schedule

RECOMMENDATION
Staff recommends that the Finance Committee review amendments to the Municipal Fee Schedule for FY 2026 and make recommendations to Council for incorporation into the FY 2026 budget.

EXECUTIVE SUMMARY
This report represents the City’s annual update to over 350 fees as part of the budget process. It highlights proposed changes to the FY 2026 Municipal Fee Schedule. These changes encompass 6 new fees in the Community Services Department, and adjustments to 306 existing fees. It is based on the general premise of exception reporting, which is reflected in the practice of applying a General Rate Increase (GRI) to fees to keep up with the cost of service, new service delivery, and changes in cost recovery levels, and reporting out any fees that are proposed to stay the same or change by an amount other than the GRI of 6.8%. The fees included in this report were not part of prior fee adjustment actions presented earlier in the fiscal year – specifically those brought forward through the Citywide Cost of Services Study1 and the Planning and Development Cost of Services Study.2 Upon Council approval, the recommended changes will be incorporated in the FY 2026 Adopted Budget and take effect July 1, 2025.

BACKGROUND
The City charges fees for a variety of services provided, such as fees for parking permits, building inspection services, recreation classes, and facility rentals. As part of the annual budget 1 Finance Committee, April 29, 2025: Agenda Item #2, 2503-4351 https://portal.laserfiche.com/Portal/DocView.aspx?id=167215&repo=r-704298fc 2 Finance Committee, March 4, 2025: Agenda Item #2, 2501-4019 https://portal.laserfiche.com/Portal/DocView.aspx?id=146000&repo=r-704298fc&searchid=15f371b7-7bbd-41ac- 9e82-1f0f1bd1045d
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process, staff submit changes to the Municipal Fee Schedule for review, followed by finalization and approval during City Council’s budget adoption.

To ensure fees reflect the cost of service, the city periodically conducts cost of services studies in addition to making annual adjustments. In FY 2025, two such studies were completed. Those efforts brought forward targeted fee changes based on a detailed cost analysis that estimated staff time per unit of service and incorporated all applicable City costs to determine the full cost of providing each fee-based service. These costs reflect staff time, direct expenses, and overhead costs associated with each fee-generating activity.

Since it was last updated by Council in FY 2019, the User Fee Cost Recovery Level Policy has served as a guide for departments to update fees by ensuring proper alignment with user cost recovery levels.

Table 1: Summary of Municipal Fee Cost Recovery Policy
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This annual report brings forward amendments to the Municipal Fee Schedule organized into three categories
(1) New fees,
(2) Deletion of existing fees, and
(3) Changed fees to attain a cost recovery level consistent with other fees or based on a market study for similar services.

ANALYSIS
The development of the Municipal Fee Schedule for FY 2026 reflects a best practice of updating fees to maintain cost recovery levels. The general rate of increase (GRI) of 6.8% was based upon factors of salaries and benefits from FY 2025 to FY 2026, and is applied to most fees to maintain current cost recovery levels, as directed by the policy. Fees that were updated by a factor greater or less than GRI to realize an alternative cost recovery level, or were adjusted based on a fee study, market study, or staff recommendation are further detailed in Attachment A.

New Fees
As identified in Table 1 below, six (6) new fees are recommended to be added to the FY 2026 Municipal Fee Schedule. All are within the Community Services Department and pertain to rental spaces at the Roth and Bryant Street facilities.

These fees are being added to reflect anticipated availability of newly designated rooms for public use and to improve clarity in the schedule. Establishing individual fees for each space allows staff to better manage bookings, provide consistent pricing, and enhance transparency for users.

Table 2. New Fees for FY 2026
Department Fee Title FY 2025 Proposed Fee Cost
Recovery
Level
Community Services Downstairs Community Room -
Roth
$143.00 per hour
$205.00 per hour
High
Community Services Downstairs Education Resource
Room - Roth
$143.00 per hour |
$205.00 per hour
High
Community Services Upstairs Meeting Room - Roth $212.00 per hour $328.00 per hour
High
Community Services Downstairs Large Space - Bryant $143.00 per hour $205.00 per hour
High
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Community Services Upstairs, Classroom 1 - Bryant $188.00 per hour $263.00 per hour
High
Community Services Upstairs, Classroom 2 - Bryant $143.00 per hour $205.00 per hour
High
Deleted Fees
2 fees in the Office of Transportation – One-Way Fare and Discounted Fare -- are deleted following Council action in FY 2025 to standardize fares for all users of the Palo Alto Link on- demand transit service.

Changed Fees
304 fees are recommended to be adjusted by a factor other than the 6.8% GRI to adjust for the general change in salary and benefits adjustments between FY 2025 and FY 2026. While specific reasons for fee adjustments vary year to year, such changes often reflect one or more of the following considerations: Changes to these fees as detailed in Attachment A generally reflect changes to:
(1)Attaining a cost recovery level consistent with other fees; (2)Aligning with rates charged by comparable jurisdictions (3)Modifying the fee structure to align with current service delivery; or (4)Holding a fee flat to preserve accessibility or encourage participation; or (5)Reflecting fees or rates consistent with prior Council action.

Attachment A lists each changed fee alongside the Adopted FY 2025 rate, the Proposed FY 2026 rate, the percentage change, and the fee change justification.

Also to note, the golf fees reflect the East Palo Alto residential discounts per FY 2025 City Council referral.

Parking In-Lieu fees
Palo Alto Municipal Code (PAMC) Chapter 16.57.030 requires that the Parking In-Lieu Fee be adjusted annually for inflation. The FY 2025 fee amount was $135,514. The Construction Cost Index (CCI) decreased by 0.7% for FY 2026, which brings the fee to $134,623.

Development Impact and In-Lieu Fees
In the Planning and Development Services Department, impact fees (i.e., community center, park, library, and citywide transportation impact fees) and in-lieu fees were decreased by 0.7% to reflect the most recently published Construction Cost Index (CCI) for the San Francisco Bay Item 4
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Area, as calculated by the Engineering News Record. This is in accordance with Municipal Code

16.64.110, as amended on November 28, 2016 ( CMR 7518), to standardize when these fees are paid, bring uniformity to the calculation in effect, bring uniformity to the annual adjustment rate, and other updates. Since these fees are governed by the applicable Municipal Code section, they are not discussed in Attachment A.

FISCAL/RESOURCE IMPACT
This action aligns fees with expense increases associated with these services. It works to ensure the City can maintain cost recovery levels, and is part of the FY 2026 Proposed Operating Budget.

POLICY IMPLICATIONS
These recommendations are consistent with existing City policies. Where a fee or charge is subject to Proposition 26, the amount of the new or increased fee or charge is no more than necessary to cover the reasonable cost of the City service, 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 City service funded by the fee. Certain types of fees, such as fines, penalties and/or late charges, or charges imposed for entrance to or use of, as well as the purchase, rental, or lease of local government property, are generally not limited to the actual costs of providing service. Instead, these types of fees are more typically governed by local market rates, reasonableness, and potentially other policy factors. These types of fees may have rates that are higher than the full cost recovery level.

STAKEHOLDER ENGAGEMENT
Staff has coordinated internally with budget and management staff in each department citywide to develop the recommendations in this report. Conversations with the City Council throughout May and June prior to the adoption of the FY 2026 Operating and Capital Budgets and Municipal Fee Schedule allow for public participation in this annual process.

ENVIRONMENTAL REVIEW
Adjustment to the Municipal Fee Schedule is a governmental fiscal activity that does not involve any commitment to any specific project, and therefore does not constitute a “project” pursuant to CEQA regulation 15378(b)(4).

ATTACHMENTS
Attachment A: Municipal Fee Schedule Amendments for FY 2026 Changed Fees APPROVED BY:

Lauren Lai, Chief Financial Officer/Director Administrative Services Item 4
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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Administrative Services
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Mailing (Certified) $4.15 each $5.30 each 27.7% Fee set by outside agency Tobacco Retail Permit One‐time application fee $347. Annual permit fee $434. One‐time application fee $347. Annual permit fee $434. 0.0%

0.0%
Fee set by outside agency
Fee set by Council policyBusiness Registry Free $50.00 per business $50.00 per business Community Services
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Adoptions ‐ Adoption Hold Fee
Adoptions ‐ Cats (5+ Years)
$26.00 per pet $100.00 per pet 285.0% Fee set by vendor Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
$50.00 per cat | $50.00 per cat
$130.00 per cat | $130.00 per cat
$185.00 per cat | $185.00 per cat
$175.00 per cat | $205.00 per cat
$10.00 per pet
$50.00 per cat | $50.00 per cat
$130.00 per cat | $130.00 per cat
$240.00 per cat | $240.00 per cat
$175.00 per cat | $205.00 per cat
$10.00 per pet

0.0%

29.7%

0.0%

0.0%
0‐17%
Adoptions ‐ Cats (6 months ‐ 5 years)
Adoptions ‐ Cats (Two adopted at once)
Adoptions ‐ Cats (Under 6 Months)
Adoptions ‐ Cockatiels, Parakeets, Chickens, Pigeons, & Doves
Adoptions ‐ Dogs (5+ Years)
Adoptions ‐ Dogs (6 months ‐ 5 years)
Adoptions ‐ Dogs (Under 6 Months)
Adoptions ‐ Exotic Animals
Adoptions ‐ Rabbits
$75.00 per dog $75.00 per dog
$175.00 per dog $205.00 per dog
$300.00 per dog $350.00 per dog
$10.00 per pet
$75.00 per dog | $75.00 per dog
$175.00 per dog | $205.00 per dog
$300.00 per dog | $350.00 per dog
$10.00 per pet
$20.00 per pet $20.00 per pet
Adoptions ‐ Rats, Hamsters, Guinea Pigs, & Mice
Boarding ‐ Cat
$10.00 per pet $10.00 per pet
$21.00 per day $30.00 per day
Boarding ‐ Dog $21.00 per day $30.00 per day
Boarding ‐ Rabbit $21.00 per day $30.00 per day
Boarding ‐ Small Animal (Reptiles, Birds, etc.)
Cremation ‐ A. Animal: 0lbs ‐ 3lbs
$21.00 per day $30.00 per day
$150.00 per pet | $50.00 per pet $175.00 per pet | $50.00 per pet Item 4
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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Cremation ‐ B. Animal: 4lbs ‐ 20lbs
Cremation ‐ C. Animal: 21lbs ‐ 49lbs
Cremation ‐ D. Animal: 50lbs ‐ 79lbs
Cremation ‐ E. Animal: 80lbs ‐ 99lbs
Cremation ‐ F. Animal: 100lbs ‐ 150lbs
$200.00 per pet | $50.00 per pet
$225.00 per pet | $50.00 per pet
$250.00 per pet | $50.00 per pet
$275.00 per pet | $50.00 per pet
$300.00 per pet | $50.00 per pet
$22.00 each
$200.00 per pet | $50.00 per pet
$225.00 per pet | $50.00 per pet
$250.00 per pet | $50.00 per pet
$275.00 per pet | $50.00 per pet
$300.00 per pet | $50.00 per pet
$22.00 each

0.0%

0.0%
Cremation ‐ G. Cremation Services ‐ Custom Engraved
Plaque Fee 0.0%
Euthanasia ‐ A. Domestic Animals (up to 20lbs)
Euthanasia ‐ B. Dogs (21lbs to 75lbs)
Euthanasia ‐ C. Dogs (76lbs and over)
Euthanasia ‐ D. Small Animals and Birds
$85.00 per pet $150.00 per pet 76.5%

20.0%

6.0%
$125.00 per pet $150.00 per pet
$159.00 per pet $150.00 per pet
$45.00 per pet $45.00 per pet 0.0%
Other Animal Shelter Fees ‐ Classes, camps, corporate
events $21.00 ‐ $1,075.00 per event
$200.00 per pet
$21.00 ‐ $1,075.00 per event
$220.00 per pet

0.0%
Spay & Neuter Clinic Fees ‐ A. Neuter (0lbs ‐ 50lbs)
Spay & Neuter Clinic Fees ‐ B. Neuter (51lbs and 99lbs)

10.0%

11.1%

10.0%

0.0%
$225.00 per pet $250.00 per pet
Spay & Neuter Clinic Fees ‐ C. Neuter (100 lbs and
over) $250.00 per pet $275.00 per pet
Spay & Neuter Clinic Fees ‐ Clinic Board Fee $100.00 per pet $100.00 per pet Spay & Neuter Clinic Fees ‐ Community Cat Package
Spay & Neuter Clinic Fees ‐ D. Spay (0lbs ‐ 50lbs)
Spay & Neuter Clinic Fees ‐ E. Spay (51lbs and 99lbs)
Spay & Neuter Clinic Fees ‐ F. Spay (100 lbs and over)
$55.00 per pet $125.00 per pet 127.3%

34.1%

10.0%

14.3%
100.0%
100.0%

40.0%

20.0%

14.3%

36.4%
$250.00 per pet $275.00 per pet
$300.00 per pet $330.00 per pet
$350.00 per pet $400.00 per pet
Spay & Neuter Clinic Fees ‐ Late Fee for Spay/Neuter
Pickup $50.00 per pet $100.00 per pet
Spay & Neuter Clinic Fees ‐ Neuter $75.00 per pet $150.00 per pet Spay & Neuter Clinic Fees ‐ No‐Show Fee (non‐
refundable) $50.00 per pet $70.00 per pet
Spay & Neuter Clinic Fees ‐ Rabbit ‐ Neuter
Spay & Neuter Clinic Fees ‐ Rabbit ‐ Spay
$125.00 per pet | $125.00 per pet
$175.00 per pet $175.00 per pet
$55.00 per pet
$150.00 per pet | $150.00 per pet
$200.00 per pet | $200.00 per pet
$75.00 per petSpay & Neuter Clinic Fees ‐ Rescue Group (Non‐Profit) ‐ Cat Neuter
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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Spay & Neuter Clinic Fees ‐ Rescue Group (Non‐Profit) ‐ Cat Spay $65.00 per pet
$175.00 per pet
$150.00 per pet
$300.00 per pet
$250.00 per pet
$90.00 per pet
$15.00 per pet
$85.00 per pet
$15.00 per pet
$85.00 per pet
$15.00 per pet
$100.00 per pet
$125.00 per pet
$25.00 per pet
$100.00 per pet
$125.00 per pet
$15.00 per pet
$6.00 per pet
$100.00 per pet
$175.00 per pet
$150.00 per pet
$300.00 per pet
$250.00 per pet
$100.00 per pet
$20.00 per pet
$85.00 per pet
$20.00 per pet
$85.00 per pet
$20.00 per pet
$100.00 per pet
$125.00 per pet
$25.00 per pet
$100.00 per pet
$125.00 per pet
$20.00 per pet
$6.00 per pet

53.8%

0.0%
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Spay & Neuter Clinic Fees ‐ Rescue Group (Non‐Profit) ‐ Dog Neuter (over 50 lbs)
Spay & Neuter Clinic Fees ‐ Rescue Group (Non‐Profit) ‐ Dog Neuter (under 50 lbs) 0.0%
Spay & Neuter Clinic Fees ‐ Rescue Group (Non‐Profit) ‐ Dog Spay (over 50 lbs) 0.0%
Spay & Neuter Clinic Fees ‐ Rescue Group (Non‐Profit) ‐ Dog Spay (under 50 lbs) 0.0%
Spay & Neuter Clinic Fees ‐ Spay
Vaccinations ‐ Bordatella & Parainfluenza
Vaccinations ‐ Cat Package

11.1%

33.3%

0.0%
Vaccinations ‐ DA2PP 33.3%

0.0%Vaccinations ‐ Dog Package
Vaccinations ‐ FVRCP 33.3%

0.0%Vaccinations ‐ Kitten Package (over 3 months)
Vaccinations ‐ Kitten Package (under 3 months)
Vaccinations ‐ Microchip

0.0%

0.0%
Vaccinations ‐ Puppy Package (over 3 months)
Vaccinations ‐ Puppy Package (under 3 months)
Vaccinations ‐ Rabies

0.0%

33.3%

0.0%Vaccinations ‐ Rabies (Actual Clinic Cost)
Vaccinations ‐ Routine Deworming (roundworms &
hookworms) $30.00 per pet
$75.00 each
$75.00 per pet
$75.00 each
150.0%

0.0%Vaccinations ‐ Trap Rental ‐ Deposit
Veterinary Services ‐ Bandages $30.00 ‐ $110.00 per pet $75.00 per pet
$19.00 each
$75.00 per pet
$100.00 per pet
$21.00 each
Veterinary Services ‐ Brachycephalic Fee 33.3%

10.5%

9.7%
Veterinary Services ‐ Common Procedures ‐
Fluorescein Eye Stain
Veterinary Services ‐ Common Procedures ‐ Medical
Grooming $93.00 per hour
$100.00 per pet
$102.00 per hour
$110.00 per petVeterinary Services ‐ Cryptorchid Abdominal ‐ Fee 10.0% Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

Item 4: Staff Report
Pg.
8 Packet Pg. 13 of 35
Item 23
Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

Item 23: Staff Report
Pg.
62 Packet Pg. 788 of 1138

Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Veterinary Services ‐ Cryptorchid Subcutaneous ‐ Fee
Veterinary Services ‐ Deciduous Tooth Extraction
Veterinary Services ‐ Dewclaw Removal
$50.00
$30.00 each
$55.00 each
$33.00 each

10.0%

13.9%

10.0%

11.1%

9.1%
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
Fee set by vendor
$75.00 per dewclaw
$30.00 each
$82.00 per dewclaw
$33.00 eachVeterinary Services ‐ Ear Cleaning
Veterinary Services ‐ Ear Mite Treatment (2 doses of
Revolution) $60.00 per pet
$30.00 ‐ $100.00 each
$27.00 per hour
$44.00 each
$66.00 per pet
$33.00 ‐ $110.00 each
$30.00 per hour
$48.00 each
Veterinary Services ‐ Flea +/‐ Preventative (per dose)
Veterinary Services ‐ Fluid Therapy ‐ IV Fluids
Veterinary Services ‐ Fluid Therapy ‐ SQ (Cats)
Veterinary Services ‐ Fluid Therapy ‐ SQ (Dogs)
Veterinary Services ‐ IV Catheter Placement
Veterinary Services ‐ Lab work ‐ Fecal O & P
Veterinary Services ‐ Lab work ‐ FeLV/FIV Test
Veterinary Services ‐ Lab work ‐ In‐House Fungal Culture Veterinary Services ‐ Labwork ‐ Heartworm Test
Veterinary Services ‐ Labwork ‐ Parvo Test
Veterinary Services ‐ Labwork ‐ PCV/TP
$56.00 each $61.00 each 8.9%
$66.00 each $72.00 each 9.1%
$31.00 each $75.00 each 141.9%

40.5%

10.3%

9.1%
$37.00 each $52.00 each
$39.00 each $43.00 each
$44.00 each $48.00 each
$47.00 each $52.00 each 10.6%

10.0%

0.0%
$30.00 each $33.00 each
Veterinary Services ‐ Labwork ‐ Pre‐surgical
Veterinary Services ‐ Labwork ‐ Reference Lab
Veterinary Services ‐ Labwork ‐ Skin Scraping
Veterinary Services ‐ Labwork ‐ Urine Dipstick
Veterinary Services ‐ Labwork ‐ USG
$150.00 per pet $150.00 per pet
Labwork cost plus $28.00 service fee
$30.00 each
Labwork cost plus $30.00 service fee
$33.00 each

7.1%

10.0%

50.0%

10.0%

0.0%
$30.00 each $33.00 each
$30.00 each $33.00 each
Veterinary Services ‐ Leukemia/FIV Combo Testing
Veterinary Services ‐ Local Anesthetic
$40.00 $60
$39.00 each $42.90 each
Veterinary Services ‐ Long‐Acting Topical Ear Medication Veterinary Services ‐ Medication ‐ Injectable
$64.00 each $70.40 each
$15.00 ‐ $250.00 each $15.00 ‐ $250.00 each
Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

Item 4: Staff Report
Pg.
9 Packet Pg. 14 of 35
Item 23
Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

Item 23: Staff Report
Pg.
63 Packet Pg. 789 of 1138

Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Veterinary Services ‐ Medication ‐ Oral
Veterinary Services ‐ Medication ‐ Topical
Veterinary Services ‐ Nail Trim
$15.00 ‐ $250.00 each
$15.00 ‐ $250.00 each
$0.00 with surgery
$30.00 per pet
$15.00 ‐ $250.00 each
$15.00 ‐ $250.00 each
$0.00 with surgery
$33.00 per pet

0.0%

0.0%
Fee set by vendor
Fee set by vendor

0.0% Fee set by vendor
Veterinary Services ‐ Nail Trim 10.0%

10.0%

10.0%
‐3.2%

10.0%

9.7%
Fee set by vendor
Veterinary Services ‐ Obesity Fee plus Spay Fee
Veterinary Services ‐ Rabbit Hemorrhagic Disease Vaccine $50.00 per pet $55.00 per pet Fee set by vendor
$30.00 each $33.00 each Fee set by vendor
Veterinary Services ‐ Routine Deworming (roundworms &
hookworms) $31.00 per pet $30.00 per pet Fee set by vendor Veterinary Services ‐ Sedation/Anesthesia ‐ Gas
Veterinary Services ‐ Sedation/Anesthesia ‐ IM
Veterinary Services ‐ Sedation/Anesthesia ‐ IV
Veterinary Services ‐ Specialized Feeding
$100.00 for first 30 minutes; $1.80 per minute thereafter $62.00 each
$110.00 for first 30 minutes; $1.80 per minute thereafter $68.00 each
Fee set by vendor
Fee set by vendor
$88.00 each $97.00 each 10.2%

10.0%

11.1%

10.0%

6.3%
Fee set by vendor
$30.00 each $33.00 each Fee set by vendor
Veterinary Services ‐ Surgery ‐ Major Surgery, Preparation and Recovery $500.00 ‐ $1,500.00 per hour
$50.00 ‐ $500.00 each
$550.00 ‐ $1,650.00 per hour
$55.00 ‐ $550.00 each
Fee set by vendor
Veterinary Services ‐ Surgery ‐ Minor Surgery, Preparation and Recovery Fee set by vendor
Veterinary Services ‐ Tapeworm Treatment (Praziquantel) Veterinary Services ‐ Umbilical Hernia Repair
Veterinary Services ‐ Veterinarian Exam
$18.00 per pet $20.00 per pet Fee set by vendor
$40.00 ‐ $87.00 per pet $44.00 ‐ $95.00 per pet Fee set by vendor $80.00 per hour $85.00 per hour Fee set by vendor
Veterinary Services ‐ Wound Care $30.00 ‐ $110.00 per pet $14.00 ‐ $31.00 each
$33.00 ‐ $121.00 per pet 10.0%

0.0%
Fee set by vendor
Children's Theatre ‐ Children's Theatre ‐ Adults
Children's Theatre ‐ Children's Theatre ‐ Children
$14.00 ‐ $31.00 each Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
$6.00 ‐ $31.00 each $6.00 ‐ $31.00 each 0.0%
Children's Theatre ‐ Children's Theatre ‐ Per Show
Production Per Participant Fee $66.00 ‐ $430.00 each $66.00 ‐ $430.00 each | Fee plus up to 50% $47.00 ‐ $486.00 each
0‐50%

0.0%Junior Museum & Zoo (JMZ) ‐ Family Membership
Junior Museum & Zoo (JMZ) ‐ Ticketed Admission Fee
Golf ‐ 9 Hole/Twilight Non Resident
$47.00 ‐ $486.00 each
$2.00 ‐ $26.00 per person
$34.00 ‐ $54.00 per player | $40.00 ‐ $65.00 per player $30.00 ‐ $49.00 per player | $36.00 ‐ $61.00 per player $5.00 ‐ $8.00 per bucket
$2.00 ‐ $26.00 per person
$40.00 ‐ $62.00 per player | $50.00 ‐ $75.00 per player $35.00 ‐ $56.00 per player | $45.00 ‐ $70.00 per player $6.00 ‐ $10.00 per bucket |

0.0%
17‐20%
17‐20%
20‐25%
Golf ‐ 9 Hole/Twilight Resident or East Palo Alto Resident Golf ‐ A. Small Bucket
Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

Item 4: Staff Report
Pg.
10 Packet Pg. 15 of 35
Item 23
Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

Item 23: Staff Report
Pg.
64 Packet Pg. 790 of 1138

Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Golf ‐ B. Medium Bucket
Golf ‐ Bay Area Resident
Golf ‐ Baylands Cardholder
Golf ‐ C. Large Bucket
$10.00 ‐ $15.00 per bucket $10.00 ‐ $17.00 per bucket | 0‐13% 10‐25%
10‐25%
7‐22%
13‐22%
6‐14%
6‐13%

10.0%
5‐10%
6‐52%
16‐46%
22‐32%
14‐66%
20‐42%
8‐16%
8‐32%
18‐20%
25‐30%
1‐12%

0.0%
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
$41.00 ‐ $109.00 per player | $52.00 ‐ $158.00 per player $26.00 ‐ $89.00 per player | $41.00 ‐ $117.00 per player $13.00 ‐ $18.00 per bucket
$55.00 ‐ $120.00 per player | $65.00 ‐ $175.00 per player $40.00 ‐ $100.00 per player | $55.00 ‐ $135.00 per player $14.00 ‐ $22.00 per bucket |
Golf ‐ D. Jumbo Bucket
Golf ‐ Golf Cart ‐ 18 Holes
Golf ‐ Golf Cart ‐ 9 Holes
Golf ‐ Juniors
$16.00 ‐ $22.00 per bucket $17.00 ‐ $27.00 per bucket | $16.00 ‐ $36.00 per rental $17.00 ‐ $41.00 per rental | $10.00 ‐ $23.00 per rental $11.00 ‐ $26.00 per rental | $13.00 ‐ $29.00 per player | $22.00 ‐ $46.00 per player $268.00 ‐ $762.00 per team
$15.00 ‐ $32.00 per player | $25.00 ‐ $51.00 per player $282.00 ‐ $840.00 per teamGolf ‐ League Reservation Fee Golf ‐ Membership Card
Golf ‐ Non Resident
$52.00 ‐ $154.00 per card $79.00 ‐ $175.00 per card
$52.00 ‐ $116.00 per player | $62.00 ‐ $170.00 per player $32.00 ‐ $96.00 per player | $41.00 ‐ $129.00 per player $7.00 ‐ $9.00 per rental
$60.00 ‐ $130.00 per player | $70.00 ‐ $190.00 per player $45.00 ‐ $110.00 per player | $55.00 ‐ $145.00 per player $8.00 ‐ $15.00 per rental
Golf ‐ Palo Alto or East Palo Alto Resident
Golf ‐ Pull Cart ‐ 18 Holes
Golf ‐ Pull Cart ‐ 9 Holes
Golf ‐ Rental Clubs ‐ 18 Holes
Golf ‐ Rental Clubs ‐ 9 Holes
Golf ‐ Replay Rate
$4.00 ‐ $7.00 per rental $5.00 ‐ $10.00 per rental
$46.00 ‐ $69.00 per rental $50.00 ‐ $80.00 per rental
$23.00 ‐ $34.00 per rental $25.00 ‐ $45.00 per rental
$21.00 ‐ $40.00 per player | $26.00 ‐ $59.00 per player $16.00 ‐ $27.00 per rental
$25.00 ‐ $50.00 per player | $30.00 ‐ $70.00 per player $20.00 ‐ $35.00 per rentalGolf ‐ Single Rider ‐ 18 Holes Golf ‐ Tournaments $70.00 ‐ $183.00 per player | $84.00 ‐ $242.00 per player $6.00 each
$75.00 ‐ $205.00 per player | $85.00 ‐ $270.00 per player $6.00 eachOpen Space Activities ‐ Vehicle Entry Fees ‐ A. Vehicle Entry ‐ Daily Fee ‐ Vehicle Capacity 9 passengers or less
Open Space Activities ‐ Vehicle Entry Fees ‐ B. Vehicle Entry ‐ Daily Fee ‐ Vehicle Capacity 10‐24 passengers
Open Space Activities ‐ Vehicle Entry Fees ‐ C. Vehicle Entry ‐ Daily Fee ‐ Vehicle Capacity 25 or more passengers with a group permit
$30.00 each $30.00 each 0.0%
$60.00 each $60.00 each 0.0%
Open Space Activities ‐ Vehicle Entry Fees ‐ D. Vehicle Entry ‐ Annual Pass $0.00 ‐ $86.00 each $0.00 ‐ $86.00 each 0.0% Open Space Activities ‐ Vehicle Entry Fees ‐ Special Events Art Center ‐ Auditorium
$2.00 ‐ $142.00 per event $2.00 ‐ $142.00 per event 0.0% $204.00 per hour | $307.00 per hour $217.00 per hour | $337.00 per hour 6‐10% Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

Item 4: Staff Report
Pg.
11 Packet Pg. 16 of 35
Item 23
Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

Item 23: Staff Report
Pg.
65 Packet Pg. 791 of 1138

Municipal Fee Schedule Amendments for FY 2026 Changed Fees $57.00 per hour | $89.00 per hour
Attachment A
Art Center ‐ Children's Clay Studio
Art Center ‐ Children's Outdoor Classroom
Art Center ‐ Historic Courtyard
Art Center ‐ Kitchen/Pre‐school
Art Center ‐ Lobby
$54.00 per hour | $81.00 per hour 6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
0‐10%
0‐10%
0‐10%
0‐10%
0‐10%
6‐10%
5‐9%
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
$123.00 per hour | $186.00 per hour
$123.00 per hour | $186.00 per hour
$131.00 per hour | $204.00 per hour
$131.00 per hour | $204.00 per hour
$57.00 per hour | $89.00 per hour
$131.00 per hour | $204.00 per hour
$137.00 per hour | $213.00 per hour
$57.00 per hour | $89.00 per hour
$173.00 per hour | $268.00 per hour
$57.00 per hour | $89.00 per hour
$57.00 per hour | $89.00 per hour
$67.00 per hour | $125.00 per hour
$90.00 per hour | $210.00 per hour
$8.00 per hour | $11.00 per hour
$54.00 per hour | $81.00 per hour
$123.00 per hour | $186.00 per hour
Art Center ‐ Meeting Room
Art Center ‐ Project LOOK! Studio
Art Center ‐ Sculpture Garden
Art Center ‐ Studio A
$129.00 per hour | $194.00 per hour
$54.00 per hour | $81.00 per hour
$162.00 per hour | $244.00 per hour
$54.00 per hour | $81.00 per hour
Art Center ‐ Studio B $54.00 per hour | $81.00 per hour Athletic Fields ‐ Grass Fields
Athletic Fields ‐ Synthetic Turf Field
$63.00 per hour | $114.00 per hour
$85.00 per hour | $191.00 per hour
Athletic Fields ‐ Tennis Courts (USTA and Palo Alto Tennis Club Only) $8.00 per hour | $10.00 per hour
Children's Theatre ‐ Auditorium and Stage
Children's Theatre ‐ Castle Stage and Secret Garden
Children's Theatre ‐ Dance Studio
$189.00 ‐ $2,533.00 per hour | $286.00 ‐ $3,800.00 per hour $378.00 ‐ $3,167.00 per hour | $569.00 ‐ $4,750.00 per hour $40.00 ‐ $1,363.00 per hour | $62.00 ‐ $2,041.00 per hour $189.00 ‐ $2705.00 per hour | $286.00 ‐ $4180.00 per hour $378.00 ‐ $3,382.00 per hour | $569.00 ‐ $5,225.00 per hour $40.00 ‐ $1455.00 per hour | $62.00 ‐ $2245.00 per hour $1,266.00 ‐ $6,764.00 per hour | $1,901.00 ‐ $10,451.00 per hour $309.00 per hour | $478.00 per hour
$61.00 per hour | $95.00 per hour
$450.00 each
Children's Theatre ‐ Package Rental ‐ All Available Space and $1,266.00 ‐ $6,334.00 per hour | $1,901.00 ‐ $9,501.00 per Garden hour
Community Theatre ‐ Auditorium and Stage $290.00 per hour | $435.00 per hour Community Theatre ‐ Rehearsal Hall $58.00 per hour | $87.00 per hour $430.00 eachCubberley Community Center ‐ Additional Performance Cubberley Community Center ‐ Art Studio Short Term
Cubberley Community Center ‐ D. Dark Day Package

4.7%
$107.00 per week | $119.00 per week
$290.00 each
$114.00 per week | $131.00 per week
$300.00 each
6‐10%

3.4%
Cubberley Community Center ‐ Exclusive Monthly Storage
Space (As Available) $2.00 each $2.00 each 0.0%
Cubberley Community Center ‐ Gym A
Cubberley Community Center ‐ Gym A
$142.00 per hours | $95.00 per hour
$116.00 per hour | $77.00 per hour
$151.00 per hours | $101.00 per hours
$123.00 per hour | $82.00 per hour

6.3%

6.3%
Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

Item 4: Staff Report
Pg.
12 Packet Pg. 17 of 35
Item 23
Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

Item 23: Staff Report
Pg.
66 Packet Pg. 792 of 1138

6.3%

6.3%
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Cubberley Community Center ‐ Gym B $129.00 per hour | $86.00 per hour $93.00 per hour | $75.00 per hour
$76.00 per hour | $60.00 per hour
$74.00 per hour | $63.00 per hour
$56.00 per hour | $50.00 per hour
$91.00 per hour | $70.00 per hour
$71.00 per hour | $55.00 per hour
$70.00 per hour | $61.00 per hour
$54.00 per hour | $46.00 per hour
$54.00 per hour | $45.00 per hour
$46.00 per hour | $36.00 per hour
$1.99 per sq. ft. per month | $1.68 per sq. ft. per month $211.00 per hour | $186.00 per hour
$168.00 per hour | $131.00 per hour
$10.00 ‐ $100.00 | $11.00 ‐ $115.00
$32.00 per hour | $49.00 per hour
$34.00 ‐ $138.00 per week | $51.00 ‐ $209.00 per week
$107.00 per hour | $161.00 per hour
$60.00 per use | $90.00 per use
Cubberley Community Center ‐ H‐1 Lecture Room
Cubberley Community Center ‐ H‐1 Lecture Room
Cubberley Community Center ‐ L‐6 Dance Studio
Cubberley Community Center ‐ L‐6 Dance Studio

6.3%

6.3%
5‐6%
5‐6%
5‐6%
5‐6%
5‐6%
5‐6%
5‐6%
6‐7%
6‐7%
6‐7%
0‐10%
6‐10%
0‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
0‐10%
6‐10%
Cubberley Community Center ‐ Meeting Room ‐ Large
(2,000 ‐ 4,000 sq. ft.)
Cubberley Community Center ‐ Meeting Room ‐ Large
(2,000 ‐ 4,000 sq. ft.) $75.00 per hour | $58.00 per hour $74.00 per hour | $65.00 per hour
$57.00 per hour | $49.00 per hour
$57.00 per hour | $48.00 per hour
$49.00 per hour | $38.00 per hour
$2.13 per sq. ft. per month | $1.79 per sq. ft. per month $225.00 per hour | $198.00 per hour
$179.00 per hour | $140.00 per hour
$10.00 ‐ $106.00 | $11.00 ‐ $126.00
$34.00 per hour | $54.00 per hour
$34.00 ‐ $147.00 per week | $51.00 ‐ $230.00 per week
$114.00 per hour | $177.00 per hour
$64.00 per use | $99.00 per use
Cubberley Community Center ‐ Meeting Room ‐ Medium
(1,000 ‐ 2,000 sq. ft.)
Cubberley Community Center ‐ Meeting Room ‐ Medium
(1,000 ‐ 2,000 sq. ft.)
Cubberley Community Center ‐ Meeting Room ‐ Small (Less than 1,000 sq. ft.)
Cubberley Community Center ‐ Meeting Room ‐ Small (Less than 1,000 sq. ft.)
Cubberley Community Center ‐ Office/Program Space (As
Available)
Cubberley Community Center ‐ Pavilion
Cubberley Community Center ‐ Pavilion
Equipment Rentals ‐ Electric Warming Plates
General ‐ Alma Plaza Community Room
General ‐ Banner Space Rental
General ‐ Baylands Nature Interpretive Center Meeting
Room
General ‐ Built‐in Digital Projector System
General ‐ Chairs $1.58 per chair | $2.36 per chair $1.69 per chair | $2.60 per chair General ‐ Grand Piano $120.00 per use | $181.00 per use $60.00 per hour | $90.00 per hour
$9.00 ‐ $105.00 per hour | $19.00 ‐ $209.00 per hour
$209.00 per day | $282.00 per day
$128.00 per use | $199.00 per use
$64.00 per hour | $99.00 per hour
$9.00 ‐ $112.00 per hour | $19.00 ‐ $230.00 per hour
$223.00 per day | $310.00 per day
General ‐ Lawn Bowling Green's Kitchen and Meeting
Facility
General ‐ Mitchell and Rinconada Parks ‐ Bowl Areas
General ‐ Peers Park, Mitchell Park Field House
Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

Item 4: Staff Report
Pg.
13 Packet Pg. 18 of 35
Item 23
Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

Item 23: Staff Report
Pg.
67 Packet Pg. 793 of 1138

Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A General ‐ Picnic Reservations (1 ‐ 15 people)
General ‐ Podium and Microphone
$35.00 per group | $41.00 per group $37.00 per group | $45.00 per group $42.00 per use | $68.00 per use
5‐10%
5‐10%
6‐10%
0‐10%
5‐7%
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
$40.00 per use | $62.00 per use
$83.00 per use | $126.00 per use
$12.00 per use | $19.00 per use
General ‐ Portable Digital Projector $88.00 per use | $138.00 per use $12.00 per use | $21.00 per useGeneral ‐ Portable Movie Projector ‐ 16mm General ‐ Portable Public Address System
General ‐ Tables ‐ 6' Round
$18.00 per use | $28.00 per use $19.00 per use | $30.00 per use $9.00 per table | $11.00 per table
$16.00 per use | $26.00 per use
$9.00 per table | $12.00 per table
$17.00 per use | $28.00 per use
0‐9%
General ‐ Television 6‐9%
Junior Museum & Zoo (JMZ) ‐ Dawn Redwood Courtyard
Junior Museum & Zoo (JMZ) ‐ Exhibit Hall Rental
Junior Museum & Zoo (JMZ) ‐ Indoor Classroom
Junior Museum & Zoo (JMZ) ‐ Multi‐use Room
Junior Museum & Zoo (JMZ) ‐ Outdoor Classroom
$300.00 per hour | $392.00 per hour
$354.00 per hour | $532.00 per hour
$114.00 per hour | $126.00 per hour
$143.00 per hour | $216.00 per hour
$143.00 per hour | $216.00 per hour
$904.00 per hour | $1,357.00 per hour
$354.00 per hour | $532.00 per hour
$236.00 per hour | $340.00 per hour
$176.00 per hour | $239.00 per hour
$134.00 per hour | $187.00 per hour
$50.00 per hour | $69.00 per hour
$178 per use | $231 per use
$320.00 per hour | $431.00 per hour
$378.00 per hour | $585.00 per hour
$121.00 per hour | $138.00 per hour
$152.00 per hour | $237.00 per hour
$152.00 per hour | $237.00 per hour
$965.00 per hour | $1492.00 per hour
$378.00 per hour | $585.00 per hour
$252.00 per hour | $374.00 per hour
$188.00 per hour | $263.00 per hour
$143.00 per hour | $205.00 per hour
$53.00 per hour | $76.00 per hour
$190.00 per use | $254.00 per use
$227.00 per hour | $334.00 per hour
$551.00 per hour | $697.00 per hour
$504.00 per hour | $624.00 per hour
$195.00 per hour | $288.00 per hour
$137.00 per hour | $203.00 per hour
$152.00 per hour | $237.00 per hour
6‐9%
6‐9%
6‐9%
6‐9%
6‐9%
Junior Museum & Zoo (JMZ) ‐ Package Rental ‐ All Available Space 6‐9%
Junior Museum & Zoo (JMZ) ‐ Zoo Rental 6‐9%
Lucie Stern Community Center ‐ Ballroom (Room S) 6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
Lucie Stern Community Center ‐ Community Room (Room
R)
Lucie Stern Community Center ‐ Fireside Room (Room D)
Lucie Stern Community Center ‐ Kitchen
Lucie Stern Community Center ‐ Lighting
Lucie Stern Community Center ‐ Package Rental ‐
Community Room and Patio Package $213.00 per hour | $304.00 per hour $516.00 per hour | $634.00 per hour
$472.00 per hour | $568.00 per hour
$183.00 per hour | $262.00 per hour
$129.00 per hour | $185.00 per hour
$143.00 per hour | $216.00 per hour
Lucie Stern Community Center ‐ Package Rental ‐ Exclusive Use (Friday, Saturday & Sunday)
Lucie Stern Community Center ‐ Package Rental ‐ Exclusive Use Package (Monday‐Thursday)
Lucie Stern Community Center ‐ Package Rental ‐ Fireside Room and Patio Package
Lucie Stern Community Center ‐ Patio
Mitchell Park Community Center ‐ Adobe North Tech Lab
Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

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Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Mitchell Park Community Center ‐ Adobe South or
Matadero Room $114.00 per hour | $172.00 per hour $121.00 per hour | $189.00 per hour $152.00 per hour | $237.00 per hour
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
6‐10%
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Other, Department Recommendation
Mitchell Park Community Center ‐ El Palo Alto East or West Only $143.00 per hour | $216.00 per hour
$291.00 per hour | $436.00 per hourMitchell Park Community Center ‐ El Palo Alto Room (Ballroom) $310.00 per hour | $479.00 per hour
Mitchell Park Community Center ‐ Kitchen $82.00 per hour | $124.00 per hour $87.00 per hour | $136.00 per hour Mitchell Park Community Center ‐ Package Rental ‐ Adobe North Tech Lab and South Meeting Room $250.00 per hour | $375.00 per hour $267.00 per hour | $412.00 per hour Mitchell Park Community Center ‐ Package Rental ‐ Birthday Package $272.00 per hour | $406.00 per hour $290.00 per hour | $446.00 per hour Mitchell Park Community Center ‐ Package Rental ‐ El Palo Alto Room and Kitchen $354.00 per hour | $532.00 per hour $378.00 per hour | $585.00 per hour Mitchell Park Community Center ‐ Package Rental ‐
Exclusive Use Package $659.00 per hour | $988.00 per hour $703.00 per hour | $1,086.00 per hour Rinconada Complex and PAUSD Pools when Operated by
the City ‐ A. 1 ‐ 25 People (2 Hour Minimum) $111.00 ‐ $185.00 per hour | $141.00 ‐ $197.00 per hour $161.00 ‐ $234.00 per hour | $172.00 ‐ $246.00 per hour $211.00 ‐ $285.00 per hour | $222.00 ‐ $296.00 per hour $246.00 ‐ $320.00 per hour | $259.00 ‐ $334.00 per hour $309.00 ‐ $383.00 per hour | $320.00 ‐ $395.00 per hour $111.00 ‐ $197.00 per hour | $141.00 ‐ $216.00 per hour $161.00 ‐ $250.00 per hour | $172.00 ‐ $270.00 per hour $211.00 ‐ $304.00 per hour | $222.00 ‐ $325.00 per hour $246.00 ‐ $341.00 per hour | $259.00 ‐ $367.00 per hour $309.00 ‐ $409.00 per hour | $320.00 ‐ $434.00 per hour Rinconada Complex and PAUSD Pools when Operated by
the City ‐ B. 26 ‐ 50 People (2 Hour Minimum)
Rinconada Complex and PAUSD Pools when Operated by
the City ‐ C. 51 ‐ 75 People (2 Hour Minimum)
Rinconada Complex and PAUSD Pools when Operated by
the City ‐ D. 76 ‐ 100 People (2 Hour Minimum)
Rinconada Complex and PAUSD Pools when Operated by
the City ‐ E. 101 People or More (2 Hour Minimum)
Fire
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Paramedic Internship Fee $1,000.00 each $1,000.00 each 0.0% Maintained for local fee competitiveness Library
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Fees aligned with market rates
Fees aligned with market rates
Fee set by vendor
Fines & Penalties ‐ Billing Fee for Overdue Items
Fines & Penalties ‐ Collection Agency Processing Fee
Fines & Penalties ‐ Damaged and Lost Materials ‐ LINK+
Fines & Penalties ‐ Expired Hold Fee
$5.00 each $5.00 each 0.0%
$12.00 each
$115.00 each
$1.00 each
$12.00 each
$115.00 each
$1.00 each

0.0%

0.0%
Fees aligned with market rates
Fees aligned with market ratesFines & Penalties ‐ Overdue Materials ‐ In House $0.30 each $0.30 eachLaptops Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

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2026 Municipal Fee Changes

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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Fines & Penalties ‐ Replacement Library Card $1.00 each $1.00 each 0.0%

0.0%

0.0%
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Fees aligned with market rates
Rentals & Reservations ‐ Mitchell Park Library
Community Room $66.00 per hour | $99.00 per hour $66.00 per hour | $99.00 per hour Rentals & Reservations ‐ Mitchell Park Library
Community Room ‐ Full Day Rental $330.00 per hour | $494.00 per hour $100.00 ‐ $2,000.00 per session
$96.00 per hour | $143.00 per hour
$478.00 per day | $716.00 per day
$306.00 ‐ $3,060.00 per deposit
$80.00 ‐ $500.00 per event
$0.15 per page
$330.00 per hour | $494.00 per hour
$100.00 ‐ $2,000.00 per session
$96.00 per hour | $143.00 per hour
$478.00 per day | $716.00 per day
$306.00 ‐ $3,060.00 per deposit
$80.00 ‐ $500.00 per event
$0.15 per page
Rentals & Reservations ‐ Photography/Filming ‐Space
Rental Fee
Rentals & Reservations ‐ Rinconada Library Community
Room
Rentals & Reservations ‐ Rinconada Library Community
Room ‐ Full Day Rental
Rentals & Reservations ‐ Room Cleaning & Damage
Deposit
Rentals & Reservations ‐ Room Cleaning Fee ‐ Add on
Services ‐ Laser Prints ‐ Black & White
Services ‐ Laser Prints ‐ Color $0.050 per page $0.050 per page Non‐Departmental
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Online Processing of Traffic Citations $2.00 $2.00 0.0% Fee set by vendor Office of Transportation
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Pricing based on Staff Report #:2408‐3387 changed
October 21, 2024On‐Demand Transit ‐ (Palo Alto Link) $0.00 ‐ $3.50 per passenger trip $0.00 ‐ $4.00 per passenger trip 0‐14% Pricing based on Staff Report #:2408‐3387 changed
October 21, 2024Weekly Pass $20.00 per week
$65.00 per month
$11.00 per occurence
$0 ‐ $25
$40.00 per week
$130.00 per month
$12.10 per occurrence
$0 ‐ $25 per occurrence
$990 per year
100.0%
100.0%

10.0%

0.0%
Pricing based on Staff Report #:2408‐3387 changed
October 21, 2024Monthly Pass
All Downtown and SOFA ‐ Wait List Registration Adjustment of pricing based on market conditions.

Adjustment of pricing based on market conditions.

All Downtown and SOFA Garages and Lots ‐ One Day
Parking Permit
All Downtown and SOFA Lots and Garages Annual Parking
Permit $900.00 per year
$0 ‐ $25 per day
$650 per year

10.0%

0.0%California Avenue Area All Garages and Lots ‐ Daily Parking Permit $0 ‐ $25
California Avenue Area All Garages and Lots Annual Parking Permit $715.00 per year 10.0%
Item 4
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Schedule Amendments for FY 2026
Changed Fees

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2026 Municipal Fee Changes

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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A All Downtown and SOFA Lots and Garages Reduced‐Price
Annual Parking Permit $225.00 per year
$162.50 per year
$117.00 per month
$50.00 per year
$5.00 per day
$375.00 each
$93.75 each
$247.5 per year
$178.75 per year
128.78 per month
$55.00 per year
$5.50 per day
$412.5.0

10.0%

10.0%
Adjustment of pricing based on market conditions.

California Avenue Area All Garages and Lots Reduced‐Price Annual Parking Permit Adjustment of pricing based on market conditions.

Adjustment of pricing based on market conditions.

RPP Construction Parking Permit
Evergreen Park ‐ Mayfield RPP Annual Resident Parking
Permit
Evergreen Park ‐ Mayfield RPP Daily Resident Parking
Permit
Evergreen Park ‐ Mayfield RPP Full Price Employee Parking Permit
Evergreen Park ‐ Mayfield RPP Reduced‐Price Employee
Parking Permit $103.10 each
$55.00 eachOld Palo Alto RPP ‐ Annual Resident Parking Permit Old Palo Alto RPP ‐ Daily Resident Parking Permit
Southgate RPP ‐ Annual Resident Parking Permit
Southgate RPP ‐ Daily Resident Parking Permit
Southgate RPP ‐ Full Price Employee Parking Permit
Southgate RPP ‐ Reduced Price Employee Parking Permit
Standard On‐street Disabled Parking Space
$50.00 each
$5.00 $5.50 each
$50.00 per year
$5.00 per day
$375.00 each
$93.75 each
$55.00 per year
$5.50 per day
$412.50 each
$103.10 each
$1,111.00 each
$55.00 per year
$5.50 per day
$55.00 per year
$5.50 each
$1,010.00 each
$50.00 per year
$5.00 per day
$50.00 per year
$5.00 each
College Terrace RPP ‐ Annual Resident Parking Permit
College Terrace RPP Daily Resident Parking Permit
Crescent Park NOP ‐ Annual Resident Parking Permit
Crescent Park NOP Daily Resident Parking Permit
Downtown RPP ‐ Annual Resident Parking Permit
Downtown RPP ‐ Daily Resident Parking Permit
Downtown RPP ‐ Reduced‐Price Employee Parking Permit
Downtown RPP Full Price Employee Parking Permit
$50.00 per year
$5.00 per day
$131.25 each
$525.00 each
$55.00 per year
$5.50 per day
$144.35 each
$577.50 each
Police
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

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2026 Municipal Fee Changes

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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Planned for Council consideration later this year for update and policy revisionMassage Technician ‐ New $318.00 per year $239.00 each
$318.00 per year
$239.00 each

0.0%

0.0%
Planned for Council consideration later this year for update and policy revisionMassage Technician ‐ Renewal
Planned for Council consideration later this year for update and policy revisionMassage Practitioner ‐ Non‐Certified (New) Massage Practitioner ‐ Non‐Certified (Renewal)
C. Massage Establishment ‐ Sale or Transfer of Interest A. Massage Establishment ‐ New
$160.00 each $160.00 each
Planned for Council consideration later this year for update and policy revision$239.00 per year
$161.00 per year
$161.00 per occurrence
$478.00 per year
241.00 per year
$239.00 per year
$161.00 per year
$161.00 per occurrence
$478.00 per year
241.00 per year
Planned for Council consideration later this year for update and policy revision
Planned for Council consideration later this year for update and policy revision
Planned for Council consideration later this year for update and policy revisionB. Massage Establishment ‐ Renewal
Planned for Council consideration later this year for update and policy revisionMassage Establishment ‐ Sole Proprietor (New) Massage Establishment ‐ Sole Proprietor (Renewal)
Massage Establishment ‐ Non‐Certified (New)
Planned for Council consideration later this year for update and policy revision$318.00 per year
$235.00 per year
$488.00 per year
$1,342.00 each
$318.00 per year
$235.00 per year
$488.00 per year
$1,342.00 each
Planned for Council consideration later this year for update and policy revision
Massage Establishment ‐ Massage Establishment ‐ Non‐
Certified
Planned for Council consideration later this year for update and policy revision
Planned for Council consideration later this year for update and policy revisionBusiness Location Change
Planned for Council consideration later this year for update and policy revisionConcealed Carry Weapon a. New (Application fee) Concealed Carry Weapon b. New (Issuance fee)
Concealed Carry Weapon c. Renewal fee
Concealed Carry Weapon d. Modification/Duplicate fee
130.00 per application
522.00 per application

99.00 per application

15.00 each
130.00 per application
522.00 per application

99.00 per application

15.00 each
Planned for Council consideration later this year for update and policy revision
Planned for Council consideration later this year for update and policy revision
Planned for Council consideration later this year for update and policy revision
Public Works
Fee Title FY 2025 Adopted FY 2026 Proposed % Change Justification Encroachment Permit ‐ Residential $1,038.00 each $1,276 each 22.9% Aligned with PDS fee study Encroachment Permit ‐ Fence
Inspection Fees ‐ Off Hour Inspection
Certificate of Compliance
$2156.00 each
$334.00 per hour
$1998.00 each
$244 per hour
‐7.3%
‐29.1%
‐24.8%

0.0%
Aligned with PDS fee study
Aligned with PDS fee study
Aligned with PDS fee study
Based on bid prices
$6,086.00 per occurrence
$28.00 per square foot
$20.00 per square foot
$4,577.00 per occurrence
$28.00 per square foot
$20.00 per square foot
Street Cut Fees ‐ D. Pavement Condition: Very Good ‐
Excellent
Street Cut Fees ‐ C. Pavement Condition: Good 0.0% Based on bid prices Item 4
Attachment A - Municipal Fee
Schedule Amendments for FY 2026
Changed Fees

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Attachment A, Exhibit 5 - Fiscal Year
2026 Municipal Fee Changes

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Municipal Fee Schedule Amendments for FY 2026 Changed Fees Attachment A Street Cut Fees ‐ B. Pavement Condition: Fair/At‐Risk
Street Cut Fees ‐ A. Pavement Condition: Poor
Street Cut Fees ‐ Service Lateral Connection
$17.00 per square foot
$14.00 per square foot
$1756.00 per square foot
$17.00 per square foot
$14.00 per square foot
$1756.00 per square foot

0.0%

0.0%
Based on bid prices
Based on bid prices
Based on bid prices
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Schedule Amendments for FY 2026
Changed Fees

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2026 Municipal Fee Changes

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Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: March 4, 2025
Report #:2501-4019
TITLE
Recommend City Council Adopt Planning and Development Services Cost of Services Study and Proposed Municipal Fee Adjustments

RECOMMENDATION
Staff recommends that the Finance Committee recommend that the City Council amend the Planning and Development Services municipal fees as outlined in Attachment B as part of the FY26 budget and municipal fee schedule, informed by the findings of the Cost of Services Study (Attachment C).

EXECUTIVE SUMMARY
This report presents the findings of the Planning and Development Services Cost of Services Study, conducted by Matrix Consulting Group, and recommends municipal fee adjustments to achieve cost recovery of City services related to planning entitlements and permitting. The study evaluates the actual costs of providing development-related services, including Building, Planning, Fire Prevention, and Public Works, and identifies areas where fees are misaligned with service demands.

Key recommendations include refining valuation-based fees for commercial and multi-family projects, adjusting discretionary planning fees to reduce General Fund impacts, and updating fire prevention and hazardous materials permitting fees to better reflect staff time and regulatory requirements. Additionally, the Technology Surcharge is recommended for an increase to cover rising costs of digital permitting and cybersecurity, while extending the Development Services Reserve Fund Policy will help stabilize revenue fluctuations and maintain long-term service continuity.

The proposed adjustments align fees with actual service costs while considering policy-driven subsidies for minor residential improvements, sustainability initiatives, and community-benefit projects. The study finds that Building (97% cost recovery) and Public Works (84% cost recovery) fees are near full recovery, while Planning (71% cost recovery) and Fire Prevention (72% cost Item 23
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Planning and
Development Services
Cost of Service Study and
Municipal Fee
Adjustments

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recovery) potentially impacting the General Fund to a greater degree. Where fees are increasing noticeably, the Finance Committee may consider phased implementation strategies to ease financial impacts, particularly for small businesses and housing-related projects. If approved, new fees will take effect 60 days after City Council adoption.

BACKGROUND
A cost of services study determines appropriate user fees for services that provide direct benefits to individuals or businesses, ensuring beneficiaries pay their fair share or services rendered rather than shifting costs to general taxpayers.

This study calculates service costs based on staffing, operational expenses, and service demands.

Costs adjust over time with changes to regulatory and policy direction, staffing levels and inflation. Periodic reviews ensure fees remain aligned with actual costs. By law, these fees cannot exceed the reasonable cost of providing a service; anything above that is considered a special tax requiring voter approval.

The Planning and Development Services (PDS) Department charges fees for a range of development-related services, including:
Building Permits – Ensuring compliance with State and local codes. Planning Applications – Zoning approvals, conditional use permits, and variances. Fire Prevention Inspections – Ensuring compliance to fire codes. Public Works Permits – Encroachments, grading, and street improvements.

Without cost recovery, these services would require General Fund financial support, diverting resources from other programs. Other charges, such as fines and penalties, are not user fees and are governed by separate policy considerations. Impact fees, which fund infrastructure improvements related to new development, are also not included in this study and are evaluated through separate fee studies.

Between comprehensive fee studies, PDS fees are adjusted annually as part of the citywide municipal fee update using the Engineering News-Record (ENR) Construction Cost Index or the General Rate of Increase (GRI). However, these adjustments do not fully capture changes in workload, changes to regulatory complexity, or technology costs, leading to fee misalignments over time.

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Planning and
Development Services
Cost of Service Study and
Municipal Fee
Adjustments

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Cost Recovery Level Policy
The City Council’s 2015 User Fee Cost Recovery Level Policy1 categorizes fees into three recovery levels:

1. Low (0–30%) – Broad public benefits or where fee would discourage compliance with regulatory requirements (e.g., long-range planning, affordable housing, subsidized planning or building permits).

2. Medium (30%–70%) – Mixed public/private benefits (e.g., discretionary reviews).

3. High (70%–100%) – Primarily private benefits (e.g., building permits, inspections).

In addition, the City targets 70–100% recovery for regulatory services, with Council discretion to subsidize fees for policy reasons.
2016 Fee Study Results and Subsequent Efforts
The last comprehensive fee study was in 2016, when PDS operated as two separate departments—Planning and Community Environment 2 and Development Services 3. Those studies led to fee revisions to address misalignments. In 2022, the City engaged Matrix Consulting Group (Matrix) for another study, which identified under-recovery in several areas, particularly Current Planning and Fire Prevention. However, fee adjustments were postponed due to economic uncertainty following the pandemic and the City’s efforts in 2023 focusing on the Fire Prevention program’s organization operations without updating such fees.

Since 2022, costs have continued rising, and permit application volumes have increased alongside State housing mandates and local development trends. Since the last comprehensive fee study nine years ago, the City has expanded staffing levels within PDS to support permit processing and development review, including the addition of positions on the data team, current and long- range planning, and building inspection. Staffing levels in fire prevention and public works have also increased since then. This study updates the City’s fee structure to align with these changes, ensuring financial sustainability while balancing cost recovery, economic development, housing production, and service efficiency.

In 2024, the City re-engaged Matrix to update and conclude this effort and the results are provided in Attachment C. Without the proposed adjustments:
1 City Council, May 18, 2015; Agenda Item #6, SR#5735,
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2015/5735.pdf
2 City Council, March 28, 2016; Agenda Item #7, SR#6638, https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2016/id6638.pdf
3 City Council, December 12, 2016; Agenda Item #22, SR#7525, https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2016/id-7525-ccm-121216.pdf
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Development Services
Cost of Service Study and
Municipal Fee
Adjustments

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Certain fees will remain under-recovered, requiring continued General Fund subsidies. Service levels in other General Fund supported programs may decline if permit revenue shortfalls persist.
Staffing reductions may be needed to balance expenses with costs and may result in permitting and inspection service delays.
Potential risk of overcharging for services that require less staff time due to improved efficiencies or workflow changes.

Implementing the proposed fee adjustments will better align the services provided by the City’s planning and permitting operations to actual costs. The City Council may consider phased increases to minimize larger fee increases while maintaining service quality.

ANALYSIS
Methodology
The study used an activity-based costing approach, a standard methodology that calculates the full cost of service delivery based on:
Staff time, operating expenses, and department overhead. Historical permit volume trends.
Indirect costs such as administration, IT, and facilities. Regional benchmarking to assess cost recovery and competitiveness.

Fee Structures
PDS fees recover the cost of permit processing and inspections, ensuring applicants cover service costs rather than impacting the General Fund. Fees fall into three primary categories:
Flat Fees: Fixed rates for services with predictable service requirements like minor permits.
Valuation-Based Fees: Used for building permits, scaling with project valuation to reflect size and complexity.
Deposit-Based Fees: Applied to complex applications requiring extended staff time, reconciled based on actual work performed.

Flat fees provide cost certainty for applicants and are structured to recover staff time for straightforward plan reviews and inspections. Valuation-based fees ensure larger projects contribute proportionally to staff workload. The study also evaluates cost alignment for commercial and multi-family projects to ensure fees accurately reflect service demands, with proposed refinements discussed later in this report.

While the study calculates full cost recovery in accordance with the Cost Recovery Level Policy, the City Council retains discretion to adjust fees based on policy priorities. In the past, the Council Item 23
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Planning and
Development Services
Cost of Service Study and
Municipal Fee
Adjustments

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has subsidized the planning fees associated with childcare facilities to reduce costs for establishing those uses. The Finance Committee is encouraged to consider other subsidies to achieve regulatory compliance with certain minor trade permits, advance carbon reduction goals, or reduce costs related to housing development.

Policy Considerations and Impact
The Finance Committee must balance cost recovery with broader policy objectives, including housing production, economic development, sustainability, and public engagement. While the study recommends aligning fees with actual service costs, the City Council retains discretion to subsidize select fees where public benefits justify General Fund support.

Implications of Valuation-Based Methodology Changes
Proposed changes primarily impact commercial and multi-family developments by shifting to a base fee plus multiplier model, ensuring larger projects contribute proportionally while preventing over-recovery in high-value developments. The existing valuation-based structure does not always correlate with staff effort, leading to fee disparities. The new tiered approach improves fairness and aligns fees with actual review complexity.

For residential projects, the valuation-based structure remains, but refinements better reflect service complexity. Single-family home permits will continue to be assessed based on construction valuation to maintain cost recovery while avoiding excessive burdens on homeowners making renovations or additions.

Impact on Key Stakeholder Groups
The proposed changes will affect different applicant groups in distinct ways:
Homeowners and Small-Scale Residential Projects – Minor home improvement fees remain stable.
Commercial Developers and Large-Scale Projects – Expanded valuation tiers ensure larger developments contribute proportionally without overpaying, preventing undue financial strain on major projects.
Small Businesses and Tenant Improvements – Minimal fee increases ensure affordability while maintaining full cost recovery.
Affordable and Multi-Family Housing Developers – New valuation tiers create more predictable costs, making project financing and feasibility clearer, benefiting affordable housing initiatives.
Community Service Providers (e.g., childcare centers, affordable housing projects, sustainability projects) – Reduced fees remain for projects that align with accessibility and environmental goals.

Effect on Program Area Fees
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Planning and
Development Services
Cost of Service Study and
Municipal Fee
Adjustments

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Proposed updates improve cost recovery across all program areas while keeping fees fair and service-aligned.
Building (97% cost recovery) – Valuation tier refinements create a more equitable fee structure, ensuring better alignment between revenue and staff workload. Current Planning (71% cost recovery) – Increased fees for discretionary entitlements reduce General Fund subsidies while better reflecting staff effort for review-intensive applications.
Fire Prevention (72% cost recovery) – Adjustments to fire plan check and hazardous materials permitting fees ensure high-risk occupancies contribute proportionally while maintaining public safety.
Public Works (84% cost recovery) – Encroachment and stormwater compliance fees are updated to reflect actual staff review time, particularly for undergrounding and green infrastructure projects.

Encouraging Housing Development
The proposed fee adjustments streamline permitting processes and reduce uncertainty to support housing production while maintaining financial sustainability:
A tiered valuation-based structure for multi-family projects improves cost predictability, allowing developers to budget more accurately.
Lower preliminary project review fees encourage early-stage engagement, reducing costly delays and resubmittals in later permitting phases. Targeted subsidies remain for affordable housing projects, reinforcing local and state housing mandates while ensuring cost recovery stability.

Additionally, deposit-based fees remain unchanged, ensuring applicants only pay for the actual staff time required for their projects. This approach prevents overpayment while maintaining flexibility in cost recovery for complex applications.

Fee Study Summary Findings
The user fee study identifies a $2.6 million shortfall in cost recovery based on the current fee rates for development-related services. With the current fee rates, Planning and Development Services would recover 93% of costs, leaving a $1.2 million gap, while Fire Prevention would recover only 72%, creating a $1.4 million gap. Without the fee adjustments recommended in this report, this shortfall may require General Fund support in the future. The study recommends aligning fees with actual service costs where feasible, while considering appropriate subsidies. It also recommends annual adjustments to keep pace with inflation.

The City recognizes the need to balance cost recovery with the financial feasibility of development, particularly for housing. Staff continues to review the financial impact of fees, including impact fees, to ensure alignment with policy goals. The Finance Committee may also Item 23
Attachment A, Exhibit 6 -
Planning and
Development Services
Cost of Service Study and
Municipal Fee
Adjustments

Item 23: Staff Report
Pg.
79 Packet Pg. 805 of 1138

consider this balance when discussing potential subsidies to support housing and economic development.

Key changes include eliminating outdated fees, introducing new fees, restructuring valuation- based fees, and ensuring better transparency in surcharges. Additionally, the study highlights the need to capture cross-departmental costs for Planning, Fire, Public Works, and Transportation.

These findings provide a path forward to improve financial sustainability, ensure fair cost distribution, and maintain high-quality services for the community.

The study used FY 2024 actual revenues and FY 2025 adopted expenses across PDS program areas. Cost recovery levels vary due to differences in service complexity, staffing costs, and fee structures. Current Planning and Fire Prevention have lower cost recovery because discretionary reviews, inspections, and regulatory requirements involve extensive staff time that is not fully captured in existing fees. In contrast, Building has a higher cost recovery rate as most permit fees are structured to cover plan check and inspection costs. While staffing has increased since the last fee study, cost recovery is also impacted by workload demand, evolving service needs, and fee adjustments over time.

Palo Alto City CouncilJune 16, 2025

Palo Alto City Council
June 16, 2025