Agenda packet — Palo Alto City Council, June 17, 2025 (part 1 of 2)

CITY COUNCIL
Special Meeting
Tuesday, June 17, 2025
Council Chambers & Hybrid
5:30 PM
Amended Agenda
Amended agenda items appear below in RED (Time Estimates Updated)

Palo Alto City Council meetings will be held as “hybrid” meetings with the option to attend by teleconference or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda.

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

VIRTUAL PARTICIPATION

CLICK HERE TO JOIN

(
https://cityofpaloalto.zoom.us/j/362027238
)
Meeting ID: 362 027 238 Phone:1(669)900-6833

PUBLIC COMMENTS
General

Public

Comment

for

items

not

the

agenda

will

accepted

person

for

three
minutes

amount

time

determined

the

Chair.

General

public

comment

will

heard
for

30 minutes.

Additional

public

comments,

any,

will

heard

the

end

the

agenda.

Public

comments

for

agendized

items

will

accepted

both

person

and

via

Zoom

for

to
three

minutes

amount

time

determined

the

Chair.

Requests

speak

will

taken
until

5 minutes

after

the

staff’s

presentation

determined

the

Chair.

Written

public
comments

can

submitted

advance

[email protected]

and

will

provided

to
the

Council

and

available

for

inspection

the

City’s

website.

Please

clearly

indicate

which
agenda item you are referencing in your subject line.

PowerPoints,

videos,

other

media

presented

during

public

comment

are

accepted

only
by

[email protected]

least

24 hours

prior

the

meeting.

Once

received,

the

Clerk

will

have

them

shared

public

comment

for

the

specified

item.

uphold

strong
cybersecurity

management

practices,

USB’s

other

physical

electronic

storage

devices

are

not
accepted.

Signs

and

symbolic

materials

less

than

2 feet

3 feet

are

permitted

provided

that:

(1)

sticks,
posts,

poles

similar/other

type

handle

objects

are

strictly

prohibited;

(2)

the

items

not
create

facility,

fire,

safety

hazard;

and

(3)

persons

with

such

items

remain

seated

when
displaying

them

and

must

not

raise

the

items

above

shoulder

level,

obstruct

the

view

passage
of other attendees, or otherwise disturb the business of the meeting.

TIME ESTIMATES
Listed

times

are

estimates

only

and

are

subject

change

any

time,

including

while

the
meeting

progress.

The

Council

reserves

the

right

use

less

time

any

item,

to
change

the

order

items

and/or

continue

items

another

meeting.

Particular

items

may

be
heard

before

after

the

time

estimated

the

agenda.

This

may

occur

order

best
manage the time at a meeting or to adapt to the participation of the public.

1 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at
www.paloalto.gov/agendas
.

CALL TO ORDER

SPECIAL ORDERS OF THE DAY (5:30 - 5:35 PM)

1. Proclamation Honoring Juneteenth
CLOSED SESSION (5:35 - 6:20 PM)

AA1.

CONFERENCE WITH LABOR NEGOTIATORS
City Designated Representatives: City Manager and his Designees Pursuant to Merit System Rules and Regulations(Ed Shikada, Kiely Nose, Sandra Blanch, Nick Raisch, Tori Post, Molly Stump, Lauren Lai, Paul Harper, and Jennifer Fine) Employee Organization: Service Employees International Union, (SEIU) Local 521 Hourly Unit, Utilities Management andProfessional Association of Palo Alto (UMPAPA), Palo Alto Peace Officers’ Association (PAPOA), Palo Alto Police Management Association (PMA), International Association of Fire Fighters (IAFF) local 1319, Palo Alto Fire Chiefs’ Association (FCA);
Authority: Government Code Section 54957.6 (a)
New Item Added

AGENDA CHANGES, ADDITIONS AND DELETIONS

PUBLIC COMMENT (6:20 - 6:50 PM)
Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (6:50 - 7:00 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (7:00 - 7:05 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

2. Approval of the Office of the City Auditor Annual Risk Assessment and FY 2026 Audit Plan and Corresponding Task Orders

3. Climate Action and Sustainability Committee Recommendation to Council to Direct Staff to Develop an Affordable Multi-Family Housing Electrification Grant Program and to Approve a Budget Amendment in the Gas Utility Funds; CEQA Status: Under CEQA Guidelines section 15183, projects consistent with an existing general or comprehensive plan do not require additional CEQA review

2 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at
www.paloalto.gov/agendas
.

4. Adopt a Resolution Declaring Surface Parking Lot T (APN: 120-15-100) Exempt Surplus Land and Approve an Exclusive Negotiation Agreement with Alta Housing for Development of 100% Affordable Housing on City-Owned Property Located at the Corner of Kipling Street and Lytton Avenue in Downtown Palo Alto; CEQA Status – Not a Project.

5. Approval of the 2025 update to the Sewer System Management Plan (SSMP) and Authorization for Staff to Make Future Administrative or Minor Updates to the SSMP as Needed; CEQA Status – Exempt under CEQA Guidelines sections 15301, 15302, 15308.

6. Approval for the City Manager or their Designee to Execute Contract No. C25194016 with SCA of CA, LLC, Utilizing Sourcewell Cooperative Contract No. 062421-SW P, to Procure Services for the Sweeping of Residential and Commercial Streets for a Period of Five Years for a Total Not-to-Exceed Amount of $9,883,850; CEQA Status – Not a Project

7. Approval of General Services Contract No. C25193659 With Community Tree Service LLC for Utility Line Clearance Services in an Amount Not-to-Exceed $16,500,000 for a Period of Five Years; CEQA Status – Exempt Under Section 15301(h)

8. Approval of
and Authorization for the City Manager or Designee to Negotiate and Execute
a Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property Located at 2575 East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million, with
Six-Month
Leaseback to Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month
; CEQA Status – Exempt Under CEQA Guidelines Section 15301 Title
Updated, Late Packet Report Added, Supplemental Report Added

9. Approval of Professional Services Contract Number C26193797 with Chandler Asset Management, Inc. in an Amount Not to Exceed $750,000 for Investment Management Services for a Period of Three Years; CEQA Status - Not A Project

10. Approval of Professional Services Contract Number C25193814 with Alta Housing BMR Services LLC in an Amount Not to Exceed $450,600 for Administration and Consulting Services for the City's Below Market Rate Housing Program for a Period of Two Years and Approve a FY 2026 Budget Amendment in the Residential Housing In-Lieu Fund.

CEQA Status: Exempt under CEQA Guidelines 15262.

3 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at
www.paloalto.gov/agendas
.

C26193271E with UDC, C26193271F with NV5 Geospatial Inc, C26193271G with SSP Innovations, C26193271H with Timmons Group, C26193271I with Infojini Inc, C26193271J with Sybyte Technologies Inc, C26193271K with 360S2G, C26193271L with Enterprise Maps, C26193271M with Farallon Geographics, C26193271N with Arini Geographics in an Amount Not-to-Exceed $2,000,000
for a Term of One Year
in Fiscal
Year 2026
; CEQA Status – Not a Project.

Title Updated, Supplemental Report added

12. Approval of
Authorize the City Manager to Negotiate and Execute
Professional Services
Contracts for SAP Enterprise Resource System On-call Programming Services: Contract C26193272A with 360S2G, C26193272B with Sage Group Technologies Inc, C26193272C with Avertra Corp, C26193272D with Amick Brown LLC, C26193272E with 2iSolutions Inc, C26193272F with the Peloton Group, C26193272G with Phoenix Business Inc, C26193272H with EPI-USE America in an Amount Not-to-Exceed $2,000,000 for a Term
of One Year
in Fiscal Year 202
6 ; CEQA status – Not a project.

Title Updated,
Supplemental Report added

13. Approval of
Authorize the City Manager to Negotiate and Execute
Eight Professional
Services Contracts for On-Call IT Project Support and supplemental staffing: Contract C26193247A with INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc in an Amount Not to Exceed $1,500,000
for a Term of One Year
in Fiscal Year 2026
; CEQA Status – Not a Project
Title
Updated, Supplemental Report added

15. Approval of Seven (7) On-Call Consulting Contracts to Provide Planning Application Processing and Supplemental Staffing for the Planning and Development Services Department over a Five-Year Term, as needed: 1) Arnold Mammarella, Architecture + Consulting, 2) CTC Media Group INC., 3) Good City Company 4) Metropolitan Planning Group, 5) Michael Baker International Inc., 6) Stantec Consulting Services, Inc., 7) Urban Planning Partners Inc. in the Amount not to exceed $2,000,000 ; CEQA Status: Not a Project.

16. Amend the Fiscal Year (FY) 2026 Budget Appropriation for the Community Development Block Grant (CDBG) Fund to Reflect Final Entitlement Grant Allocation. CEQA Status:

Exempt under CEQA Guidelines Section 15378(b)(4).

4 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at
www.paloalto.gov/agendas
.

AA2.

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. (Originally Published on the June 16, 2025 City Council Meeting Agenda Item Number #18 - Deferred to June 17, 2025 City Council Meeting)
New Item Added
BREAK (15 MINUTES)

ACTION ITEMS (7:20 - 8:20 PM)
Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.

17. Approve a Resolution to Allow Dining and Retail Encroachments on Car Free California Avenue under PAMC Ch. 12.11; Direct Staff to Approve the Car Free California Avenue Outdoor Activation Program Regulations Including Reference to the Program fees in the FY 2026 Municipal Fee Schedule; Adopt a Resolution Allowing Open Containers in Conjunction with Third Thursday Performances in 2025; Direct Staff to Review Differences Between the Open Container Resolution and an Entertainment Zone as Recommended by the Retail Committee. CEQA Status – categorically exempt.

ADJOURNMENT

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

Semiannual Update on the Status of Capital Improvement Program Projects; CEQA Status – Not a Project

OTHER INFORMATION
Standing Committee Meetings this week
Finance Committee June 17, 2025 CANCELED
Retail Committee June 18, 2025
Public Comment Letters

Schedule of Meetings

AMENDED AGENDA ITEMS

AA1.

CONFERENCE WITH LABOR NEGOTIATORS

5 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at
www.paloalto.gov/agendas
.

City Designated Representatives: City Manager and his Designees Pursuant to Merit System Rules and Regulations(Ed Shikada, Kiely Nose, Sandra Blanch, Nick Raisch, Tori Post, Molly Stump, Lauren Lai, Paul Harper, and Jennifer Fine)
Employee Organization: Service Employees International Union, (SEIU) Local 521 Hourly Unit, Utilities Management andProfessional Association of Palo Alto (UMPAPA), Palo Alto Peace Officers’ Association (PAPOA), Palo Alto Police Management Association (PMA), International Association of Fire Fighters (IAFF) local 1319, Palo Alto Fire Chiefs’ Association (FCA);
Authority: Government Code Section 54957.6 (a)
New Item Added

8. Approval of and Authorization for the City Manager or Designee to Negotiate and Execute a Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property Located at 2575 East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million, with Six-Month
Leaseback to Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month; CEQA Status – Exempt Under CEQA Guidelines Section 15301 Title Updated, Late Packet Report Added, Supplemental Report Added

11. Approval of Authorize the City Manager to Negotiate and Execute 14 Professional Services Contracts for GIS On-Call Services, supplemental staffing, and programming services: C26193271A with Lynx Technologies Inc, C26193271B with Seven Tablets Inc, C26193271C with iSpatial Techno Solutions Inc, C26193271D with Geodesy, C26193271E with UDC, C26193271F with NV5 Geospatial Inc, C26193271G with SSP Innovations, C26193271H with Timmons Group, C26193271I with Infojini Inc, C26193271J with Sybyte Technologies Inc, C26193271K with 360S2G, C26193271L with Enterprise Maps, C26193271M with Farallon Geographics, C26193271N with Arini Geographics in an Amount Not-to- Exceed $2,000,000 for a Term of One Year in Fiscal Year 2026 ; CEQA Status – Not a Project. Title Updated,
Supplemental Report

12. Approval of Authorize the City Manager to Negotiate and Execute Professional Services Contracts for SAP Enterprise Resource System On-call Programming Services: Contract C26193272A with 360S2G, C26193272B with Sage Group Technologies Inc, C26193272C with Avertra Corp, C26193272D with Amick Brown LLC, C26193272E with 2iSolutions Inc, C26193272F with the Peloton Group, C26193272G with Phoenix Business Inc, C26193272H with EPI-USE America in an Amount Not-to-Exceed $2,000,000 for a Term of One Year in Fiscal Year 2026; CEQA status – Not a project. Title Updated, Supplemental Report added

13. Approval of Authorize the City Manager to Negotiate and Execute Eight Professional Services Contracts for On-Call IT Project Support and supplemental staffing: Contract C26193247A with INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc in an Amount Not to Exceed $1,500,000 for a Term of One Year in Fiscal Year 2026 ; CEQA Status
– Not a Project Title Updated, Supplemental Report added

14. Approval of Professional Services Contract No. C26193874 with Palo Alto Community Child Care in an Amount Not-to- Exceed $3,228,146 to Provide Management of the City’s Childcare Subsidy Program for a Term of Five Years. CEQA Status – Not A Project Supplemental Report added
AA2. 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. (Originally Published on the June 16, 2025 City Council Meeting Agenda Item Number #18 - Deferred to June 17, 2025 City Council Meeting) New Item Added
6 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

PUBLIC COMMENT INSTRUCTIONS
Members

the

Public

may

provide

public

comments

teleconference

meetings

via

email,
teleconference, or by phone.

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

2. For

person

public

comments

please

complete

speaker

request

card

located

the

table

at
the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item.

3. Spoken

public

comments

for

agendized

items

using

computer

smart

phone

will

accepted
through

the

teleconference

meeting.

address

the

Council,

click

the

link

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access

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connect

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Agenda

Item,

click

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Speakers

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CLICK HERE TO JOIN
Meeting ID: 362-027-238 Phone: 1-669-900-6833
Americans

with

Disability

Act

(ADA)

the

policy

the

City

Palo

Alto

offer

its

public

programs,
services

and

meetings

manner

that

readily

accessible

all.

Persons

with

disabilities

who

require
materials

appropriate

alternative

format

who

require

auxiliary

aids

access

City

meetings,
programs,

services

may

contact

the

City’s

ADA

Coordinator

(650)

329-2550

(voice)

emailing
[email protected]
.

Requests

for

assistance

accommodations

must

submitted

least

24 hours

in
advance of the meeting, program, or service.

California

Government

Code

§84308
,

commonly

referred

the

"Levine

Act,"

prohibits

elected
official

local

government

agency

from

participating

proceeding

involving

license,

permit,

or
other

entitlement

for

use

the

official

received

campaign

contribution

exceeding

$500

from

party

or
participant,

including

their

agents,

the

proceeding

within

the

last

12 months.

“license,

permit,

or
other

entitlement

for

use”

includes

most

land

use

and

planning

approvals

and

the

approval

contracts
that

are

not

subject

lowest

responsible

bid

procedures

and

have

value

over

$50,000.

“party”

a
person

who

files

application

for,

the

subject

of,

proceeding

involving

license,

permit,

other
entitlement

for

use.

“participant”

person

who

actively

supports

opposes

particular

decision

in
a

proceeding

involving

license,

permit,

other

entitlement

for

use,

and

has

financial

interest

the
decision.

The

Levine

Act

incorporates

the

definition

“financial

interest”

the

Political

Reform

Act,
which

encompasses

interests

business

entities,

real

property,

sources

income,

sources

gifts,

and
personal

finances

that

may

affected

the

Council’s

actions.

you

qualify

“party”

or
“participant”

proceeding,

and

you

have

made

campaign

contribution

Council

Member
exceeding

$500

made

within

the

last

12 months,

you

must

disclose

the

campaign

contribution

before
making your comments.

7 June 17, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at
www.paloalto.gov/agendas
.

City Council
Staff Report
Report Type: SPECIAL ORDERS OF THE DAY
Lead Department: City Clerk
Meeting Date: June 17, 2025
Report #:2506-4801
TITLE
Proclamation Honoring Juneteenth

ATTACHMENTS
Attachment A: Proclamation Honoring Juneteenth
APPROVED BY:

Mahealani Ah Yun, City Clerk
Item 1
Item 1 Staff Report

Item 1: Staff Report
Pg.
1 Packet Pg. 8 of 413

Proclamation

JUNETEENTH

WHEREAS, June 19 th is observed as Juneteenth, a nationally recognized day that celebrates the culture, heritage and perseverance of Black and African American people;

WHEREAS, Juneteenth commemorates the country’s second independence day. On June 19, 1865, Union Army General Gordon Granger arrived in Galveston, Texas and announced that the state’s 25,000 enslaved people were freed by executive decree, marking the effective end to slavery in the United States; and

WHEREAS, this was two and a half years after President Abraham Lincoln’s issued the Emancipation Proclamation on January 1, 1863; and

WHEREAS, Constitutional amendments passed between 1865 and 1870 profoundly change d the legal status of those once enslaved. The T hirteenth Amendment abolished slavery , the F ourteenth Amendment conferred citizenship upon those once enslaved and guarantees equal protection under the law, and the Fifteenth Amendment enfranchised men once held in bondage; and

WHEREAS, today, Juneteenth celebrates Black and African American people’s freedom and achievement s, and encourages everyone to reflect, learn about , and honor the rich diversity of our nation and the ongoing movement towards equity and belonging; and

WHEREAS, communities across the Bay Area will be hosting cultural events including food and vendor festivals, music and dance performances, and parades.

NOW, THEREFORE, I, Ed Lauing, Mayor of the City of Palo Alto on behalf of the entire City Council, do hereby proclaim and celebrate June 19th as Juneteenth, and call upon our community to reaffirm our commitment to eradicating hate, racism, and inequity and continuing the work of justice and hope.

PRESENTED: June 17, 2025

__________________________
Ed Lauing
Mayor

Item 1
Attachment A -
Proclamation Honoring
Juneteenth

Item 1: Staff Report
Pg.
2 Packet Pg. 9 of 413

7 3
5 7
City Council
Staff Report
From: City Auditor
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: June 17, 2025
Report #:2505-4691
TITLE
Approval of the Office of the City Auditor Annual Risk Assessment and FY 2026 Audit Plan and Corresponding Task Orders

RECOMMENDATION
The City Auditor and the Policy and Services Committee recommend the City Council approve the following reports:

1. Fiscal Year 2025 Risk Assessment Report

2. Fiscal Year 2026 Audit Plan Report

3. Fiscal Year 2026 Audit Plan Task Orders

EXECUTIVE SUMMARY
Baker Tilly, serving as the City Auditor, surveyed City Council, Executive Leadership Team and staff members about citywide and departmental risks. The Auditor received responses from 11 departments across the organization. Baker Tilly analyzed the results of these responses and other data and information gathered from industry associations and publications.

Identified risks were scored and then ranked based on likelihood and impact. The FY2026 Audit Plan was prepared based on the results of the FY2025 risk assessment and other relevant factors such as other planned assessments and studies.

BACKGROUND
The Palo Alto Municipal Code (Section 2.08.1301) requires the City Auditor prepare and submit an annual audit plan to the City Council for review and approval. In its capacity serving as the City Auditor function, and in accordance with Baker Tilly’s agreement with the City, Baker Tilly 1 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-60361 Item 2
Item 2 Staff Report

Item 2: Staff Report
Pg.
1 Packet Pg. 10 of 413

7 3
5 7
performed a citywide risk assessment (Task 1 of the agreement2). The purpose of the assessment was to identify and prioritize risks to develop the annual audit plan (Task 2). During the risk assessment, Baker Tilly assessed a wide range of risk areas, including strategic, financial, technological, human capital, operational, reputational, economic, and including compliance risk categories.

ANALYSIS
Baker Tilly provided presented the results of the risk assessment and proposed annual audit plan to members of the Policy & Services Committee and recommended the Committee recommend Council approval of the attached risk assessment report and proposed FY2026 annual audit plan and associated task orders. The Committee voted unanimously to recommend that Council approve the FY25 risk assessment and FY2026 audit plan.

Proposed FY2026 Audit Plan Projects:

For Baker Tilly to execute the approved audit plan, the Task Orders will need to be signed by the Policy & Services Committee Chair upon approval of the audit plan by City 2 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020-2/id-11624.pdf?t=64761.15
Item 2
Item 2 Staff Report

Item 2: Staff Report
Pg.
2 Packet Pg. 11 of 413

7 3
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Council. Furthermore, one responsibility of the Office of the City Auditor (OCA) is to follow up on management’s corrective actions. The follow-up activities require periodic inquiries with management on outstanding corrective actions and verifying implementation of the corrective actions as well as testing of the effectiveness of the implemented controls.

FISCAL/RESOURCE IMPACT
Projects on the FY2026 Annual Audit Plan will commence in July 2025 with anticipated completion in June 2026. The proposed projects in the plan are within the contract amount for FY2026.

STAKEHOLDER ENGAGEMENT
The OCA designed and disseminated a risk assessment survey to members of City Council, the Executive Leadership Team, and other key management staff. The OCA received responses from eleven departments including City Council.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the audit activities do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4). Council action on this item is not a project as defined by CEQA because the audit activities do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).

ATTACHMENTS
Attachment A: OCA - FY2025 Risk Assessment Report
Attachment B: OCA - FY2026 Annual Audit Plan
APPROVED BY:

Kate Murdock, City Auditor
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1 May 15, 2025
City of Palo Alto
Office of the City Auditor
FY2025 Annual Risk Assessment
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Contents
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.

INTRODUCTION ...............................................................................................................1 RISK ASSESSMENT APPROACH...................................................................................2 RISK ASSESSMENT RESULTS ......................................................................................3 APPENDICES ...................................................................................................................9 Item 2
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1 Introduction
Overview
According to City Ordinance of the City of Palo Alto (the City), the mission of the Office of the City Auditor (OCA) is to promote honest, efficient, effective, economical, and fully accountable and transparent city government. To fulfill this mission, the OCA conducts performance audits and performs financial/operational analyses of city departments, programs, services, or activities as approved by the City Council. (Section 2.08.130). In its capacity serving as the City Auditor function, and in accordance with Baker Tilly’s agreement with the City (Task #1 of the agreement), Baker Tilly Advisory Group, LP (Baker Tilly) conducted the fiscal year (FY) 2025 citywide risk assessment in order to develop the FY2026 annual audit plan (Task #2).

The California Government Code Section 1236 requires all cities that conduct audit activities to conduct their work under the general and specified standards prescribed by the Institute of Internal Auditors (IIA) or the Government Auditing Standards (GAO) issued by the Comptroller General of the United States, as appropriate.

According to the IIA Standard 2010, the head of internal audit function “must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization’s goals” and consider the input of senior management and a governing board.

The purpose of the risk assessment is to develop an internal audit plan that assigns internal audit resources to the activities that add the most value to the City. The risk assessment process involves identifying, measuring, and prioritizing risks associated with the audit universe (list of specific departments, functions, processes, programs, etc. that can be subject to an audit). Risk is defined as “the possibility of an event or condition occurring that will have an impact on the ability of an organization to achieve its objectives.”1 Due to management changes in the OCA at the end of FY2024, the FY2024 Risk Assessment was delayed and presented to City Council for approval in December 2024. As the FY2025 risk assessment is being conducted just 6 months later, the OCA conducted an assessment process to preserve City resources. The OCA surveyed City Council, Executive Leadership Team and other key management staff across the organization. OCA received responses from 11 departments. This report summarizes our risk assessment methodology, analysis, and results. The FY2026 annual audit plan is based on the results of this risk assessment.

Through the risk assessment, we observed certain strengths of the City. Key strengths include:
Commitment to public service by a dedicated and highly professional management team High value placed on efficient and effective government Focus on strategic planning and implementation
Demonstrated investment in innovation and commitment to sustainability Dedication to continuous improvement
Risk Assessment Process Considerations
The starting point of internal auditing is to conduct a risk assessment that is the basis for determining internal audit activities. However, it is not a one-size-fits-all process. The scope and complexity of the risk assessment are affected by various factors such as the maturity level of the internal audit function’s products and services, the organization’s enterprise risk management efforts, coordination with other monitoring and risk management functions, and the stakeholders’ expectations. As every organization is subject to a changing environment, the results of the annual risk assessment represent the information considered at the time of the assessment.

In addition to the annual macro-level risk assessment, the internal audit function is required to perform an engagement-level risk assessment when starting each audit listed in the approved audit plan. The IIA Standard 2200 states, “Internal auditors must develop and document a plan for each engagement, including the engagement’s objectives, scope, timing, and resource allocations. The plan must consider the organization’s strategies, objectives, and risks relevant to the engagement.” 1 Rick A. Wright Jr., CIA, “The Internal Auditor’s Guide to Risk Assessment” The Institute of Internal Auditors Research Foundation (IIARF), 2018
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2 Risk Assessment Approach
Baker Tilly’s risk assessment approach this year focused on gathering information from the following inputs:
•Surveying City Council, Executive Leadership Team members and other key management staff •Analyzing key documents such as City Council Priorities, budget documents, the annual comprehensive financial report, and other relevant documents
•Updating the risk assessment matrix with the gathered information •Scoring the auditable units (listed in Appendix A) in the risk assessment matrix based on the likelihood and impact of potential adverse events
•Identifying potential internal audit topics for the auditable units with high-risk scores •Summarizing the approach and results for presentation

At the start of our contract with the City, Baker Tilly conducted an initial comprehensive risk assessment in FY2021 by interviewing all Council Members and Executive Leadership Team (ELT) members to create a risk assessment matrix. Each year, this matrix is updated to redevelop a comprehensive picture of the risk landscape which is continuously changing. For FY2025, Baker Tilly conducted a survey of City Council, ELT and other management staff, as well as meeting with available City Council members to identify strategic and operational challenges and risks.

While the risk assessment primarily measures inherent risk (the risk without mitigating controls/factors) for each risk factor, it also considers specific risks based on the above information and the City’s processes, controls, and other factors surfaced through internal audit activities. Using the information gathered, OCA identified risks and determined the likelihood and impact of those risks.

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3 Risk Assessment Results
Department Descriptions and Key Risk Areas
When identifying risk areas throughout the City, Baker Tilly considered each department and associated risks.

Based on the concerns described by interviewees, departments’ functions, and their inherent risks, Baker Tilly identified the auditable risk areas for each department. Below is an overview of the City’s departments and their key risk areas.

Administrative Services
The Administrative Services Department provides financial and analytical support to the City. Departmental functions include finance and accounting, purchasing, administration, budget, real estate, and others.

Key Risk Areas
Purchasing Card Program
Procurement Process
Property Management
Contract & Consultant Oversight
City Attorney’s Office
The City Attorney’s Office provides legal services to the City, including providing legal advice and training to City leaders, negotiating on behalf of the City, drafting contracts and other legal documents, investigating claims, and defending the City in litigation
Key Risk Areas
Identification of Legal Risks
Contracts & Legal Documents
Public Records Act
City Clerk’s Office
The City Clerk serves as a liaison between the public and City Council. Office functions include Public Records Act requests, public hearings, local elections, board and commission
recruitments, record management, and others.

Key Risk Areas
Election Administration
Record Retention & Management
Council Meeting Management
City Manager’s Office
The City Manager’s Office provides leadership to the City departments and is responsible for facilitating City Council legislative actions, managing special interdepartmental projects, and more. The Communications Office is housed under the City Manager’s Office and is the primary correspondent between the City and the public.

Key Risk Areas
Citywide Risk Management
Government Efficiency
Economic Development
Strategic Planning
Consultant Management
Office of Transportation
The Office of Transportation works to enhance quality of life and improve the safety of the users of all modes of transportation.

The Office is responsible for sustainable transportation systems, managing parking, and oversees the City’s traffic and
transportation capital improvement projects.

Key Risk Areas
Traffic Safety Improvements
Federal Railroad Administration (FRA)
Quiet Zone
Transit-Related Growth
Community Services Department
The Community Services Departments offers a variety of
services administered through the following three divisions and the Office of Human Services: Arts and Sciences; Open Spaces, Parks, and Golf; and Recreation.

Key Risk Areas
Human Services Resource Allocation
Process (HSRAP)
Junior Museum and Zoo (JMZ)
Operation
Equipment & Materials Management
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4 Fire
The Fire Department oversees emergency response such as ambulance transports and fire response/rescue, emergency protection services such as fire prevention, and hazardous materials planning. The department highlights safeguarding the community and compassionate care.

Key Risk Areas
Emergency Preparedness (Foothills
Fire Master Plan)
Staffing
Fleet Electrification
Human Resources
The Human Resources (HR) Department is responsible for
recruiting, developing, and retaining a well-qualified and professional workforce. The Department ensures compliance with relevant labor laws, adheres to record keeping practices, and serves as a strategic partner for executive decision making.

Key Risk Areas
Recruitment
Succession Planning
HR Strategy & Risk Management
Workplace Safety
Information Technology
The Information Technology Department's provides innovative technology solutions that support City departments. The department oversees IT project management, operations,
enterprise systems, and security services.

Key Risk Areas
- PCI/DSS Compliance
- AMI Implementation
- ERP Upgrade
- Adoption & Integration of New Tech
Library
The Library Department operates five libraries throughout the City, each offering unique resources. The Library provides educational programming, multi-cultural events, and large and diverse book, information and technology resources.

Key Risk Areas
Operations
Events and Programming
Volunteer Engagement
Office of Emergency Services
The Office of Emergency Services is designed to prevent, prepare for, and recover from various hazards. The Office is responsible for overseeing various risk management programs.

Key Risk Areas
Emergency Preparedness (Foothills
Fire Mitigation Program; Evacuation
Plans, COOPs, Interlocal Agreements)
Training Compliance
Planning and Development Services
The Planning Department supports the City in land use
development, planning, transportation, housing and
environmental policies, and plans and programs that “maintain and enhance the City as a safe, vital, and attractive community”.

Key Risk Areas
Building Permit & Inspection Processes
Building Permit & Inspection Fees
Zoning Ordinance
Code Enforcement
Long Range Planning
Below Market Rate Housing
Police
The Police Department oversees technical services such as dispatch and record management, field services such as patrol and emergency response, and animal control. The Police
Department also places a high value on community relations.

Key Risk Areas
Crime Reduction
Psychiatric Emergency Response Team
(PERT) Program
Safety and Wellness
Training
Staffing
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5 Overall Risk Scoring Distribution
Baker Tilly structured the audit universe based on the department/division/program from the budget document and management’s feedback, which resulted in 96 auditable units (Appendix A). We scored them based on the information gathered for each risk factor related to the likelihood, impact, or fraud. Appendix B lists the risk factors, definitions, and scoring method. The maximum score for an auditable unit is 30. The following chart shows the distribution of overall risk scoring.

Baker Tilly rated the auditable units as follows:
•High Risk – Scores 14 and above
•Moderate Risk – Scores more than 9 and less than 14
•Low Risk – Scores below 9
Listed in the following pages are the auditable units with a score over 12 (out of 30) based on our scoring. The list includes 26 functions rated as high risk (with a score between 14 and 30) and 49 functions rated as Public Works
The Public Works Department is broken into four divisions:

Engineering, Airport, Public Services, and Environmental Services. The Divisions are responsible for a variety of tasks including design and implementation of capital projects, maintenance of City-owned and leased structures, and
management of the solid waste programs.

Key Risk Areas
Wastewater Treatment Capital Program
The Americans with Disabilities Act
(ADA) Compliance
Flood Protection Capital Project
Fleet Operations
Airport Operations
Utilities
The Utilities Department owns and operates electric, gas, water, wastewater and fiber optic services to the City. The City purchases all their power from external sources. The mission of the Department is to “provide safe, reliable, environmentally sustainable and cost effective services.”
Key Risk Areas
Power Purchase Agreements
Utility Billing
Fiber Optics Billing & Rates
Rate Setting and Adjustment
Utility Asset Management
Reserves
21 49
26 2 - 8 (LOW) 9 - 13 (MODERATE) 14 - 30 (HIGH)
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6 moderate risk (with a score between 9 and 14). In determining the audit activities to be performed in FY2026, we further evaluated specific risks and functional areas and considered risk-based priorities as well as other factors such as requirements by law or regulation, timing of activities, special projects, and requests from City Council and management. The proposed audit plan will be included in a separate FY2026 Annual Audit Plan Report.

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9 Appendix A: Resumes
Appendices
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10 Appendix A: Audit Universe
City Attorney’s Office
Administration
Consultation and Advisory
Litigation and Dispute Resolution
Official and Administration Duties
City Clerk’s Office
Administration
Administrative Citations
Council Support Services
Election/Conflict of Interest
Legislative Records Management
City Manager’s Office
Administration and City Management
Economic Development
Public Communication
Administrative Services Department
Accounting
Administration
Office of Management and Budget
Printing and Mailing
Purchasing
Real Estate
Treasury/Revenue Collection/Warehouse
Community Services Department
Administration and Human Services
Animal Shelter
Aquatics
Arts and Sciences
Open Space, Parks and Golf
Recreation and Cubberley
Fire Department
Administration
Emergency Response
Environmental Safety Management
Records and Information Management
Training and Personnel
Human Resources Department
Administration, Employee Org Development and HR Systems Benefits and Compensation
Employee and Labor Relations
Recruitment
Risk Management, Safety, Workers’ Compensation
Information Technology Department
Enterprise Systems
Office of the CIO
Operations
Project Services
Library Department
Administration
Collection and Technical Services
Public Services
Office of Emergency Services
Emergency Services
Office of Transportation
Administration
Parking Districts
Programs
Special Revenue Funds
Planning and Development Services Department
Administration
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11 Building
Development Services
Planning and Transportation
Special Districts
Police Department
Administration
Animal Control
Field Services
Investigations and Crime Prevention Services
Law Enforcement Services
Parking Services
Police Personnel Selection
Technical Services
Traffic Services
Department of Public Works
Administration
Airport
Engineering Services
Refuse
Storm Drainage
Streets
Structures and Grounds
Sustainability
Trees
Vehicle Replacement and Maintenance
Wastewater Treatment
Utilities Department
Electric Administration
Electric Customer Service
Electric Demand Side Management
Electric Engineering (Operating)
Electric Operations and Maintenance
Electric Resource Management
Fiber Optics Administration
Fiber Optics Customer Service
Fiber Optic Operations and Maintenance
Gas Administration
Gas Customer Service
Gas Demand Side Management
Gas Engineering (Operating)
Gas Operations and Maintenance
Gas Resource Management
Wastewater Collection Administration
Wastewater Collection Customer Service
Wastewater Collection Engineering (Operating)
Wastewater Collection Operations and Maintenance
Water Administration
Water Customer Service
Water Engineering (Operating)
Water Operations and Maintenance
Water Resource Management
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12 Appendix B: Risk Factor Definition
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1 May 15, 2025
City of Palo Alto
Office of the City Auditor
FY2026 Annual Audit Plan
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INTRODUCTION ...............................................................................................................1 RISK ASSESSMENT RESULTS ......................................................................................3 PROPOSED AUDIT PROJECTS FOR FY2024................................................................4 APPENDICES ...................................................................................................................6 Item 2
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1 Introduction
Introduction
The purpose of the audit activities performed by Baker Tilly Advisory Group, LP (Baker Tilly) as the outsourced Office of the City Auditor (OCA) for the City of Palo Alto (the City) is “to ensure that city management is using its financial, physical, and informational resources effectively, efficiently, economically, ethically, and equitably, and in compliance with laws, regulations, contract and grant requirements, and city policies and procedures”, according to the Palo Alto Municipal Code (Section 2.08.130). It requires the City Auditor to prepare an annual audit plan for the City Council’s approval.

Conformance with Local Ordinances and Standards
Section 2.08.130 of the Palo Alto Municipal Code defines that the mission of the OCA is to promote honest, efficient, effective, economical, and fully accountable and transparent city government. Audits are conducted and non-audit services provided in accordance with Government Auditing Standards, as established by the Comptroller General of the United States, Governmental Accountability Office.

The following duties of the City Auditor exist regarding the plan and scope of internal audits.

Palo Alto City Charter
Article IV Sec. 12 requires the City Auditor to perform the following:
– Conduct audits in accordance with a schedule approved by the City Council and may conduct unscheduled audits from time to time.
– Conducts internal audits of all the fiscal transactions of the City.

Title 2 Administrative Code
Section 2.08.130 requires the City Auditor to perform the following:
– Prepare an annual audit plan for City Council approval. – Identify the preliminary objectives of each audit to be performed, reflecting the purpose of the engagement and a preliminary description of the areas that may be addressed. – Conduct performance audits and perform non-audit services of any City department, program, service, or activity as approved by the City Council.

California Government Code
Section 1236 requires all cities that conduct audit activities to conduct their work under the general and specified standards prescribed by the Institute of Internal Auditors (IIA) or the Government Auditing Standards (GAO) issued by the Comptroller General of the United States, as appropriate.

Audit Activity Type
The OCA will conduct performance audits and perform financial/operational analyses of any City department, program, service, or activity as approved by the City Council in accordance with the Baker Tilly agreement.

Performance Audits
According to the Government Auditing Standards (GAO-18-568G, Section 1.21 and 1.22, page 10-12), performance audits provide objective analysis, findings, and conclusions to assist management and those charged with governance and oversight with, among other things, improving program performance and operations, reducing costs, facilitating decision making by parties responsible for overseeing or initiating corrective action, and contributing to public accountability. Performance audits may include the following four (4) audit objectives:
– Program effectiveness and results
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2 INTRODUCTION
– Internal control design and effectiveness
– Compliance with laws, regulations, and policies
– Prospective analysis
Audit Planning Considerations
While maintaining its independence and objectivity in accordance with standards, the City Auditor considers a variety of matters when developing the Annual Audit Plan, including but not limited to:
– Risk Assessment – the OCA performed a risk assessment and summarized the results in a separate report (Task #1). Generally speaking, audit activities target high(er) risk areas. The results are shown on the following page.
– Ability to Add Value – audit seeks to add value through independent and objective analysis. – City Council – the City Auditor reports to the City Council and seeks input on audit priorities. – Coverage and Prior Audits – the City Auditor considers prior audits conducted by the OCA, the financial audit, and other audit and consulting reports recently issued. – “Ripeness” and On-Going Initiatives – certain risk areas may be addressed through operational activities, which could mean they are not ripe for audit to add value. – Scheduling – the City Auditor takes into consideration the timing of an audit and other on-going initiatives that directly relate. Putting an undue burden on City staff may exacerbate the risk at hand or other interrelated risks.

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3 Risk Assessment Results
The OCA performed a citywide risk assessment to plan for FY2026 audit activities and documented the methodology and the detailed results in a separate Risk Assessment Report. In summary, we identified the following areas rated as High or Moderate risks. In determining the audit activities to be performed in FY2026, we further reviewed these risks and functional areas and considered the matters listed in the previous page.

Proposed Projects for FY2026
Summary
The proposed audits, special advisory projects and follow-up project for FY2026 are listed on the next page. The projects were selected from the auditable units that were rated as High or Moderate in the results of our risk assessment and selected based on some factors such as risk rating, the pervasiveness of the processes or Item 2
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4 PROPOSED PROJECTS FOR FY2026
controls, the audit coverage, the timing of projects, and the value-adding activities that help the City enhance the ability to manage risks, strengthen accountability, and improve efficiency and effectiveness.

The preliminary audit objectives are described for each audit listed. These objectives and scope will be further defined based on the result of the engagement level risk assessment performed at the beginning of each audit.

Amendments to this audit plan may be proposed during FY2026 in response to changes in the City’s environment such as organizational structure, operations, risks, systems, and controls.

For each audit, a task order is submitted to the City Council for approval before an audit commences. We prepared seven task orders which are included in the Appendix. The OCA is seeking approval from the City Council to begin all seven projects over the course of the first quarter of FY2026. In addition, the OCA is leaving a larger “ad hoc” budget this year to account for projects that may be requested later in the year.

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5 Proposed Audit Plan for FY2026
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6 Appendix A: Resumes
Appendices
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7 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.35 Below Market Housing Rate Program
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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY25-4.29

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: May 31, 2026

4. TOTAL TASK ORDER PRICE: $97,575

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

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): N/A 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: Baker Tilly Advisory Group,
LP
BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
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8 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
•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) Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the Below Market Rate Housing Program involves three (3) primary steps:
•Step 1: Audit Planning
•Step 2: Fieldwork and Testing
•Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
•Gather information to understand the environment under review oUnderstand the environment under assessment
oAssess the City code, regulations, and other standards and expectations oAssess prior audit results, as applicable
oAssess additional documentation and conduct interviews as necessary •Assess the audit risk
•Prepare an audit planning memo and audit program
oRefine audit objectives and scope
oIdentify the audit procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the audit and kick-off meeting with key stakeholders oDiscuss audit objectives, scope, audit process, timing, resources, and expectations oDiscuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the Below Market Rate Housing Program maximizes the creation and retention of affordable housing stock in comparison to similar programs, and (2) determining whether services are provided to low- and moderate-income households in a timely manner that meets the needs of the community. Finally, the audit will evaluate the administration of the Below Market Rate Housing Program for adequate internal controls to safeguard the City from fraud, waste, and abuse. Procedures include, but are not limited to:
•Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Program
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9 •Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness •Select samples of applications and projects to determine if in compliance with rules and regulations
•Compare processes and controls against best practices
Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
•Developing findings, conclusions, and recommendations based on the supporting evidence gathered
•Validating findings with appropriate individuals and discuss the root cause of the identified findings
•Complete supervisory review of working papers and a draft audit report •Distribute a draft audit report and conduct a closing meeting with key stakeholders oDiscuss the audit results, findings, conclusions, and recommendations oDiscuss management responses
•Obtain written management responses and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The following deliverables will be prepared as part of this engagement:
•Audit Report
•Policy & Services Committee Audit Report Presentation
Schedule of Performance
Anticipated Start Date: July 1, 2025
Anticipated End Date: May 31, 2026
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $97,575.

The not-to-exceed budget is based on an estimate of 475 total project hours, of which a minimum of 70 are estimated to be completed by the City Auditor.

Reimbursable Expenses
We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task.

The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.

The following summarizes anticipated reimbursable expenses:
•Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) •Ground transportation – $800 (car rental or Uber/taxi) •Hotel accommodation – $3,000 (2 rooms x 4 nights)
•Food & Incidentals – $2,100
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10 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.36 Fleet Resources & Sustainability / Climate Action Plan 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY25-4.30

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: May 31, 2026

4. TOTAL TASK ORDER PRICE: $90,255

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

Item 2: Staff Report
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11 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
•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) Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the Building Permit and Inspection Fees involves three (3) primary steps:
•Step 1: Audit Planning
•Step 2: Fieldwork and Testing
•Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
•Gather information to understand the environment under review oUnderstand the environment under assessment
oAssess the City code, regulations, and other standards and expectations oAssess prior audit results, as applicable
oAssess additional documentation and conduct interviews as necessary •Assess the audit risk
•Prepare an audit planning memo and audit program
oRefine audit objectives and scope
oIdentify the audit procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the audit and kick-off meeting with key stakeholders oDiscuss audit objectives, scope, audit process, timing, resources, and expectations oDiscuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the City is effectively and efficiently managing fleet resources; and (2) if the City is on track to achieve City Fleet Sustainability and Climate Action Plan goals established for 2030. Procedures include, but are not limited to:
•Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Fleet & S/CAP Programs •Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness •Gather data on fleet vehicles, including maintenance, disposal, driver training and safety programs •Analyze fleet utilization to identify underused or overused vehicles Item 2
Attachment B - OCA -
FY2026 Annual Audit Plan

Item 2: Staff Report
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12 •Analyze maintenance and repair records
•Assess progress in achieving S/CAP goals
•Other steps as identified during planning
•Compare processes and controls against best practices
Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
•Developing findings, conclusions, and recommendations based on the supporting evidence gathered
•Validating findings with appropriate individuals and discuss the root cause of the identified findings
•Complete supervisory review of working papers and a draft audit report •Distribute a draft audit report and conduct a closing meeting with key stakeholders oDiscuss the audit results, findings, conclusions, and recommendations oDiscuss management responses
•Obtain written management responses and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The not-to-exceed budget is based on an estimate of 440 total project hours, of which a minimum of 60 are estimated to be completed by the City Auditor.

Reimbursable Expenses
We plan to complete some fieldwork steps for this audit on-site if the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task.

The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.

Item 2: Staff Report
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13 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.37 Traffic Safety Improvements
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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY25-4.30

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: April 30, 2026

4. TOTAL TASK ORDER PRICE: $97,575

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

Item 2: Staff Report
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14 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
•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) Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the Building Permit and Inspection Fees involves three (3) primary steps:
•Step 1: Audit Planning
•Step 2: Fieldwork and Testing
•Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
•Gather information to understand the environment under review oUnderstand the environment under assessment
oAssess the City code, regulations, and other standards and expectations oAssess prior audit results, as applicable
oAssess additional documentation and conduct interviews as necessary •Assess the audit risk
•Prepare an audit planning memo and audit program
oRefine audit objectives and scope
oIdentify the audit procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the audit and kick-off meeting with key stakeholders oDiscuss audit objectives, scope, audit process, timing, resources, and expectations oDiscuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine if the City is effectively and efficiently designing and implementing improvements to ensure traffic safety for residents. Procedures include, but are not limited to:
•Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Office of Transportation and Public Works Departments as they relate to the design and implementation of traffic safety improvements •Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness •Gather data on traffic safety programs and initiatives including calming measures, engineering design and implementation, data collection, performance measurement and public education Item 2
Attachment B - OCA -
FY2026 Annual Audit Plan

Item 2: Staff Report
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15 •Analyze project plans and justification and evaluate design criteria •Analyze cost estimates and budgeting
•Assess stakeholder input and engagement
•Assess installation/implementation of traffic safety features •Assess performance data
•Compare processes and controls against best practices
Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
•Developing findings, conclusions, and recommendations based on the supporting evidence gathered
•Validating findings with appropriate individuals and discuss the root cause of the identified findings
•Complete supervisory review of working papers and a draft audit report •Distribute a draft audit report and conduct a closing meeting with key stakeholders oDiscuss the audit results, findings, conclusions, and recommendations oDiscuss management responses
•Obtain written management responses and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The following deliverables will be prepared as part of this engagement:
•Audit Report
•Policy & Services Committee Audit Report Presentation
Schedule of Performance
Anticipated Start Date: July 1, 2025
Anticipated End Date: April 30, 2026
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $97,575.

The not-to-exceed budget is based on an estimate of 475 total project hours, of which a minimum of 70 are estimated to be completed by the City Auditor.

The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.

Item 2: Staff Report
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16 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.38 City of Palo Alto Utilities Reserves 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY25-4.32

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: December 31, 2025

4. TOTAL TASK ORDER PRICE: $70,815

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

Item 2: Staff Report
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17 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
•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) Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the City of Palo Alto Utilities Reserves (3) primary steps:
•Step 1: Assessment Planning
•Step 2: Fieldwork and Testing
•Step 3: Reporting
Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
•Gather information to understand the environment under review oUnderstand the environment under assessment
oAssess the City code, regulations, and other standards and expectations oAssess prior audit results, as applicable
oAssess additional documentation and conduct interviews as necessary •Prepare an assessment program
oRefine assessment objectives and scope
oIdentify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders oDiscuss assessment objectives, scope, audit process, timing, resources, and expectations oDiscuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to assess the City of Palo Alto Utilities supply, operating, and capital expenditure reserve policies and provide related benchmarking and best practices information:
•Interviewing the appropriate individuals to gain an understanding of current procedures including how the Utility projects peak demand, calculates reserve margins, models demand growth, etc. •Analyze policies and procedures related to reserves
•Assess compliance with regulatory reserve margin requirements and other relevant standards •Compare processes and controls against best practices
Item 2
Attachment B - OCA -
FY2026 Annual Audit Plan

Item 2: Staff Report
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18 Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
•Developing observations and recommendations based on the supporting evidence gathered •Validating observations with appropriate individuals
•Complete supervisory review of working papers and a draft audit report •Distribute a draft assessment report and conduct a closing meeting with key stakeholders oDiscuss the observations and recommendations
oDiscuss management responses
•Obtain written management responses if appropriate and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The following deliverables will be prepared as part of this engagement:
•Assessment Report
•Policy & Services Committee Assessment Report Presentation Schedule of Performance
Anticipated Start Date: July 1, 2025
Anticipated End Date: December 31, 2025
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $70,815.

The not-to-exceed budget is based on an estimate of 345 total project hours, of which a minimum of 40 are estimated to be completed by the City Auditor.

The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.

Item 2: Staff Report
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19 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.39 Consultant Management Practices
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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY25-4.33

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: August 1, 2025 COMPLETION: March 31, 2026

4. TOTAL TASK ORDER PRICE: $57,165

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

Item 2: Staff Report
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20 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
•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) Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the City Consultant Management Practices includes three (3) primary steps:
•Step 1: Audit Planning
•Step 2: Fieldwork and Testing
•Step 3: Reporting
Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
•Gather information to understand the environment under review oUnderstand the environment under assessment
oAssess the City code, regulations, and other standards and expectations oAssess prior audit results, as applicable
oAssess additional documentation and conduct interviews as necessary •Prepare an assessment program
oRefine assessment objectives and scope
oIdentify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders oDiscuss assessment objectives, scope, audit process, timing, resources, and expectations oDiscuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to assess and provide best practice frameworks for when to engage consulting services and how to best project manage consulting engagements to optimize results and deliverables. Steps include:
•Interviewing the appropriate individuals to gain an understanding of the organizational structures, processes, and controls related to soliciting consulting services and understand outcomes •Assess challenges the City has experienced with consulting services •Review best practices and provide recommendation frameworks related to determining when to engage consulting services vs. keeping services “in house” and project management practices to optimize consulting project deliverables and results.

Item 2
Attachment B - OCA -
FY2026 Annual Audit Plan

Item 2: Staff Report
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21 Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
•Developing observations and recommendations based on the supporting evidence gathered •Validating observations with appropriate individuals
•Complete supervisory review of working papers and a draft audit report •Distribute a draft assessment report and conduct a closing meeting with key stakeholders oDiscuss the observations and recommendations
oDiscuss management responses
•Obtain written management responses if appropriate and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The following deliverables will be prepared as part of this engagement:
•Assessment Report
•Policy & Services Committee Assessment Report Presentation Schedule of Performance
Anticipated Start Date: August 1, 2025
Anticipated End Date: March 31, 2026
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $29,440.

The not-to-exceed budget is based on an estimate of 345 total project hours, of which a minimum of 20 are estimated to be completed by the City Auditor.

Reimbursable Expenses
We plan to complete all work remotely including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task.

The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.

Item 2: Staff Report
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22 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.40 Contract Solicitation & Authority Levels 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY25-4.33

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: August 1, 2025 COMPLETION: February 28, 2026

4. TOTAL TASK ORDER PRICE: $54,165

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

Item 2: Staff Report
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23 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
•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) Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the City Consultant Management Practices includes three (3) primary steps:
•Step 1: Audit Planning
•Step 2: Fieldwork and Testing
•Step 3: Reporting
Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
•Gather information to understand the environment under review oUnderstand the environment under assessment
oAssess the City code, regulations, and other standards and expectations oAssess prior audit results, as applicable
oAssess additional documentation and conduct interviews as necessary •Prepare an assessment program
oRefine assessment objectives and scope
oIdentify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders oDiscuss assessment objectives, scope, audit process, timing, resources, and expectations oDiscuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to assess and benchmark the City’s current solicitation and authority thresholds. Steps include:
•Interviewing the appropriate individuals to gain an understanding of current thresholds and authority levels
•Conduct a benchmarking study to determine thresholds in similar sized cities •Assess best practices in establishing thresholds
Item 2
Attachment B - OCA -
FY2026 Annual Audit Plan

Item 2: Staff Report
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24 Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
•Developing observations and recommendations based on the supporting evidence gathered •Validating observations with appropriate individuals
•Complete supervisory review of working papers and a draft audit report •Distribute a draft assessment report and conduct a closing meeting with key stakeholders oDiscuss the observations and recommendations
oDiscuss management responses
•Obtain written management responses if appropriate and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The following deliverables will be prepared as part of this engagement:
•Assessment Report
•Policy & Services Committee Assessment Report Presentation Schedule of Performance
Anticipated Start Date: August 1, 2025
Anticipated End Date: March 31, 2026
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $54,165.

The not-to-exceed budget is based on an estimate of 285 total project hours, of which a minimum of 30 are estimated to be completed by the City Auditor.

The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.

Item 2: Staff Report
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25 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.41 Follow-Up Audit Activities
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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY25-4.34

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: July 1, 2025 COMPLETION: June 30, 2026

4. TOTAL TASK ORDER PRICE: $59,390

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Lydia Kou, Chair of the City Council’s Policy and Services Committee

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

Item 2: Staff Report
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26 Attachment A

The following deliverables will be prepared as part of this engagement:
•Annual Status of Audit Recommendations Report
•Policy & Services Committee Report Presentation
Schedule of Performance
Anticipated Start Date: July 1, 2025
Anticipated End Date: June 30, 2026
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $18,255.

The not-to-exceed budget is based on an estimate of 90 total project hours, of which a minimum of 10 are estimated to be completed by the City Auditor.

Item 2
Attachment B - OCA -
FY2026 Annual Audit Plan

Item 2: Staff Report
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: June 17, 2025
Report #:2506-4785
TITLE
Climate Action and Sustainability Committee Recommendation to Council to Direct Staff to Develop an Affordable Multi-Family Housing Electrification Grant Program and to Approve a Budget Amendment in the Gas Utility Funds; CEQA Status: Under CEQA Guidelines section 15183, projects consistent with an existing general or comprehensive plan do not require additional CEQA review

RECOMMENDATION
Staff and the Climate Action and Sustainability Committee recommend that the City Council:

1. Direct staff to develop a program to provide incentives for electrification of dedicated affordable multi-family housing central and in-unit gas equipment;

2. Direct staff to explore including a provider cost-share contribution in the program;

3. Authorize staff to use up to $6.6 million in Gas Utility Cap and Trade Revenues for the program, and

4. Amend the FY 2026 Budget Appropriation (requires a 2/3 vote) for the Gas Utility Funds:
a. Increase Gas Resource Management Operating Expenses for Contract Services by $6.6 million; and
b. Decrease the Cap and Trade Reserve by $6.6 million.

EXECUTIVE SUMMARY
This action would enact an affordable housing electrification retrofit pilot program with the objective of helping local affordable housing providers take advantage of State and Federal incentive programs. This program has been on an accelerated timeline as these programs have limited budgets, have expressed great demand and need, and critical Federal funding support is uncertain so timing of the City support program is important.

The proposed budget for the program is $6.6 million, funded from the Gas Cap and Trade Reserves. The program budget will not directly impact utility rates or the General Fund budget, but will indirectly affect both by facilitating the conversion of gas equipment to electricity. The Item 3
Item 3 Staff Report

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Climate Action and Sustainability Committee also unanimously recommended that the City Council direct staff to explore including a provider cost-share contribution in the program. The program will have the capacity to electrify central heating or water heating systems serving up to 500 units (about 20% of Palo Alto affordable housing units) and equipment in up to 275 individual units (about 10% of Palo Alto affordable housing units). In addition, this program will have the capacity to save about 800 to 1,000 metric tons of carbon-dioxide equivalent (MT CO2- e) per year, comparable to the emissions savings of the Advanced Heat Pump Water Heater Pilot Program’s capacity.

The program fulfills 2023-2025 Sustainability and Climate Action Plan (S/CAP) Work Plan items

2.1(I) and 2.1(K) focused on affordable housing pilots and are consistent with City Council priorities related to Climate Change and Housing. Alternative program designs with differing costs and emissions impacts are also included in this report.

BACKGROUND
On June 3, 2023 the Council adopted the S/CAP, including California Environmental Quality Act (CEQA) analysis, and the 2023-2025 S/CAP Work Plan. The S/CAP includes the goal of reducing carbon emissions 80% from 1990 levels by 2030, which requires extensive electrification of vehicles and buildings. The 2023-2025 Work Plan includes work items to achieve that goal, including work items focused on affordable housing electrification. Affordable housing electrification retrofits will be important to equitably achieving the community’s emissions reduction goals. Without these retrofits low-income renters in Palo Alto could be exposed to higher gas prices as other Palo Altans electrify their homes and businesses. Pursuing these goals is consistent with the 2024 Council priorities on Climate Action and Housing, which were also City Council priorities in the four previous years.

There are 1,843 units of subsidized affordable rental housing in Palo Alto in 37 developments1, 299 below market rate (BMR) rental units in market-rate rental complexes, and 265 BMR ownership units in 48 market-rate condo developments. 2023-2025 S/CAP Work Plan work items 2.1(I) (Affordable Housing EV Charging and Electrification Pilot) and 2.1(K) (Multi-family and Affordable Housing Electrification and EV Charger Access Strategy Development) both focus on piloting scalable strategies for electrifying these units and providing EV charging. In addition, work item 4.A (Multi-Family and Commercial End Use Study) focuses on doing studies to identify opportunities for electrifying equipment in multi-family buildings.

On January 16, 2024 the City Council approved a contract with Energy and Environmental Economics, part of Willdan, to complete a study of multi-family and non-residential 1 23 managed by Alta Housing, three by Front Porch, two by Eden, two by MidPen Housing, two by Abode, one by Bridge Housing, as well as Stevenson House, Terman Apartments, the Moldaw Residences, and the HomeKey transitional housing project still under development
Item 3
Item 3 Staff Report

Item 3: Staff Report
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electrification opportunities (along with other studies).2 The study is nearly complete and will be ready for Council review once the final report is written. Over the course of the study Willdan visited several multi-family buildings, including buildings managed by three different affordable housing providers who between them manage most of Palo Alto's dedicated affordable housing (27 properties out of 37 total). Staff consulted a fourth provider for data from a study they did on their own. The studies identified aging equipment representing good opportunities for building electrification in six buildings with 428 units of affordable housing in them. Equipment nearing end of life across all six surveyed properties included six central water heaters, one central space heater, as many as 240 in-unit space heaters, and a central kitchen.

The providers are ready or close to ready to replace the equipment and eager to electrify it, providing a unique opportunity to electrify equipment serving about 20% of the dedicated affordable units in Palo Alto. Some of these replacements could be showcase projects for which the provider and the City could submit for awards, allowing the community to demonstrate that fully electrified affordable housing is an attainable goal.

ANALYSIS
Staff is recommending an affordable housing electrification program based on the results of the Willdan study. Electrifying multi-family building equipment is expensive and will not happen without incentives. Having identified these opportunities, the community is well-positioned to take advantage of State programs (and Federal programs if funding is released) that provide substantial incentives for multi-family affordable housing building electrification:
•The Home Energy Efficiency Retrofits and Residential Assistance (HEEHRA) program offers rebates of up to $14,000 per household, covering up to 100% of electrification costs for low- and moderate-income households, including heat pumps, electric panel upgrades, and energy-efficient appliances (note that project costs tend to exceed the incentive cap). The program is funded by the Inflation Reduction Act, and California’s share of the funding that has been allocated specifically for multi-family housing is $35 million. Initial interest in the program is high, which may result in limits on per-project or per-provider incentives that can be received. This program is unlikely to be available in the near term or at all, however, due to Federal funding currently being withheld. •The State has allocated over $120 million to the Low-Income Weatherization Program (LIWP) Multi-Family Program since State Fiscal Year 2014/2015,3 providing incentives on a $/MT CO2-e basis for energy efficiency and solar photovoltaic systems, and electrification upgrades, focusing on reducing energy costs for low-income individuals and greenhouse gas emissions.
2 Staff Report 2308-1939, https://www.cityofpaloalto.org/files/assets/public/v/1/administrative-services/budget- adjustments-and-monitoring/fy-2024-budget-adjustments/january/january-18-ccm-item-4.pdf 3 Low Income Weatherization Program Guidelines, State Dept of Community Services & Development, June 8, 2022. https://www.csd.ca.gov/Shared%20Documents/LIWP-2022-Multi-Family-2.0-Final-Program-Guidelines.pdf Item 3
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•The Technology and Equipment for Clean Heating (TECH) multifamily program has offered incentives of up to $1,200 per unit in the past for multi-family central water heating. Renewed funding and adjustments to incentive levels are expected to be announced soon.4
While the above programs provide significant incentives, electrification projects are costly and most housing providers will need local matching funds to be able to take advantage of the State and Federal programs, particularly for in-unit improvements. Assuming that these incentive funds remain available, staff believes affordable housing providers in Palo Alto may be eligible to receive nearly $7 million in State and Federal incentives for these projects, based on the equipment to be electrified and the incentive program rules, though over half of that is Federal funds unlikely to be delivered. However, these projects are estimated to cost over $10 million (of which an estimated $6.5 million would be related to in-unit measures). Costs average about $10,400 per unit for projects focused primarily on central systems and $34,500 for projects that include in-unit heating electrification as well. This implies a need for at least $3.7 million in local incentives to cover 100% of known project costs, likely closer to $6 million without Federal funding.

Other providers, aside from those who participated in the Willdan study, may also wish to apply, which would necessitate an increased budget to support those projects as well. Staff is proposing a budget of $6.6 million; $2.5 million for central system incentives and $4.1 million for in-unit + central incentives. This provides adequate funding for 500 units of central heating incentives plus 275 units of in-unit incentives, assuming the City will provide incentives of up to $7000 per unit for projects involving central systems only and an additional $15000 per unit when both central and in-unit electrification measures are included. These incentives would only be available after the provider has applied for all State and Federal incentives and would only cover any residual cost. Staff proposes funding these incentives from the Electric Utility Public Benefits reserves and Gas Cap and Trade reserves as described in the “Fiscal Impact” section below.

In practice, the program budget might not be used completely. As noted above, if estimated State and Federal incentives were received, the known electrification projects would require $6 million in local incentives. However, logistical challenges may prevent some projects from proceeding. In some cases project costs may come in lower or higher than expected. Staff could report back to Council in late 2025, once State and Federal incentive allocations are known and projects are underway, and unused budget could be returned to reserves.

Another factor is the potential provider contribution, which the Climate Action and Sustainability Committee (Committee) recommended the City Council direct staff to explore.

This would involve requiring a funding contribution from providers (a cost share) representing 4 Technology and Equipment for Clean Heating
https://techcleanca.com/documents/3829/Multifamily_Incentives_for_Heat_Pump_Water_Heaters_240102.pdf Item 3
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the cost of like for like replacement. Replacing equipment at end of life would normally be a provider’s responsibility. Staff could determine the funding contribution required for each project to electrify by having a building consultant calculate a cost estimate for a like for like gas replacement, with the option for the affordable housing vendor to provide actual contractor quotes as an alternative.

The budget for the program could be reduced using this approach, but the exact amount of reduction is difficult to estimate without having actual quotes for like for like gas replacements.

Willdan performed a rough analysis of one property that estimated like for like replacement costs at 20% of the cost of central water heating and 40% of the cost of in-unit space heating.

This analysis relied on average costs in the Bay Area for gas equipment replacement and likely did not include some project-specific additional costs that would be incurred. Based on those numbers, the maximum provider contribution could reach up to $1.9 million, or $460,000 if only a central equipment program is considered. But these numbers are very uncertain and will depend on actual project design and quotes, and a lower provider contribution may be needed to avoid deterring participants who have not yet accumulated the capital to pay for their contribution.

Staff is only aware of one other program providing similar grants, the Silicon Valley Clean Energy (SVCE) Multifamily Retrofit program, which provides direct install services for affordable housing owners or up to $450,000 in grants to affordable housing owners who hire their own contractors. The program budget is about $12 million. Sacramento Municipal Utility District (SMUD) provides multifamily building electrification rebates in the range of $1000 to $2000 per unit served. Other multifamily services in PG&E territory focus primarily on energy efficiency.

Committee Review
On March 21, 2025, the Committee considered the staff proposal and budgets for a set of potential alternatives5 that included:
•A grant program with no provider contribution
•Starting with a smaller budget and increasing if necessary •Requiring a provider contribution, or
•A smaller grant program only covering central equipment.

Variations on these themes were also presented, including the possibility of loans rather than grants for the provider contribution. The Committee recommended that that Council approve the staff proposal with the recommended direction that staff consider a provider contribution at a size that would not deter potential participants.
5 For more detail, see Staff Report 2503-4392
(https://portal.laserfiche.com/Portal/DocView.aspx?id=152221&repo=r-704298fc), Climate Action and Sustainability Committee, March 21, 2025, Recommendation to Council to Direct Staff to Develop an Affordable Multi-Family Housing Electrification Grant Program and to Approve a Budget Amendment in the Gas Utility Funds Item 3
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Comments and questions from the Committee included:
•Questions aimed at demonstrating the public purpose return on investment for the program, that is, how many metric tons of emissions reduction would be obtained at what cost, how that compared to other programs, and the overall impact of the program. Staff explained how the program had a scale of impact and cost-effectiveness comparable to the 1000-unit Advanced Heat Pump Water Heater Program in those terms.
•Questions about the regulations governing the use of Cap and Trade funds, a clarification that transformer upgrades and induction cooktops would be eligible aspects of the grant funding, and whether parts of the gas system would be retired as a result (staff did not see obvious opportunities to do so from these projects). •Explorations of possible additional funding sources, including philanthropy and rehabilitation grants, as well as the potential alternatives and the idea of a provider contribution, which ultimately settled on this report’s recommendations.

FISCAL/RESOURCE IMPACT
The staff recommendation would be implemented using existing staff, but would increase program spending by up to $6.6 million, funded by the Gas Cap and Trade reserves. Those reserves are currently at $13.5 million, with projected annual revenues of $3 million to $4 million per year as authorized through 2030. This spending would not directly impact gas rates.

The use of Gas Cap and Trade revenues is governed by Title 17 California Code of Regulations Section 95893(d), which requires that it be used for the primary benefit of retail natural gas ratepayers, subject to any limitations imposed by Council, and must be used for:
•Energy efficiency, including energy efficiency equipment rebates, building retrofits and other projects that reduce energy demand;
•GHG emissions reducing activities, which include projects to reduce gas leaks that are not mandated by federal, state or local health and safety requirements; •Non-volumetric return to some or all ratepayers in the form of a climate credit; •Administrative and outreach costs and educational programs.

The Council adopted a policy on the use of Gas Cap and Trade Revenue on January 26, 2015 (Resolution 5397) and updated it October 3, 2022 (Resolution 10077),6 which stated that:

The following uses of the City’s auction proceeds from the sale of Allocated Allowances are permitted, with a preference that greenhouse gas reduction measures be pursued before providing rebates:
a. Investment in energy efficiency programs for the natural gas portfolio and retail customers; b. Purchases or investment in cost effective renewable bio-gas resources for the gas portfolio; c. Fuel switching from natural gas to electricity that reduces greenhouse gas emissions; 6 Resolution 10077 https://portal.laserfiche.com/Portal/DocView.aspx?id=38224&repo=r-704298fc Item 3
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d. Investment in other carbon reduction activities for the natural gas utility, including system maintenance or replacement to reduce fugitive gas emissions; e.Rebates to natural gas retail ratepayers. Rebates, if provided, must be allocated on a non- volumetric basis as stated in Title 17 CCR Section 95893 (d)(3).

STAKEHOLDER ENGAGEMENT
Affordable housing electrification has been discussed extensively as part of the stakeholder engagement for the S/CAP as a whole, and during adoption of the 2023-2025 S/CAP Work Plan, but this program has not received any stakeholder engagement due to the rapid turnaround needed to avoid missing out on access to State and Federal incentives. In developing this program staff consulted with various affordable housing providers to understand their needs and relied on studies performed by Willdan of various properties.

ENVIRONMENTAL REVIEW
Potential environmental impacts of an affordable housing building electrification pilot program were analyzed as part of the Sustainability and Climate Action Plan (S/CAP) Addendum to the Comprehensive Plan Environmental Impact Report. On June 5, 2023 (Staff Report #2303-1158) Council certified the Addendum, which found that the S/CAP programs would not result in any significant or substantially more severe effects beyond what was previously analyzed in the Comprehensive Plan EIR. Under CEQA Guidelines section 15183, projects consistent with an existing general or comprehensive plan do not require additional CEQA review.

ATTACHMENTS
None.

APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 17, 2025
Report #:2504-4487
TITLE
Adopt a Resolution Declaring Surface Parking Lot T (APN: 120-15-100) Exempt Surplus Land and Approve an Exclusive Negotiation Agreement with Alta Housing for Development of 100% Affordable Housing on City-Owned Property Located at the Corner of Kipling Street and Lytton Avenue in Downtown Palo Alto; CEQA Status – Not a Project.

RECOMMENDATION
Staff recommends that the City Council:

1. Adopt a Resolution (Attachment A) declaring the City-owned property located at the corner of Kipling Street and Lytton Avenue ("Lot T") as Exempt Surplus Land pursuant to Government Code Section 54221(f)(1)(A) and 54221(f)(1)(B); and

2. Approve and authorize the City Manager or their designee to execute an Exclusive Negotiation Agreement (ENA) with Alta Housing (Attachment B) to develop 100% affordable housing on Lot T.

BACKGROUND
Implementation Program 1.4 of the City’s 2023–2031 Housing Element identifies redevelopment of City-owned surface parking lots for 100% affordable housing projects, prioritizing opportunities to incorporate replacement public parking and housing serving households earning up to 80% of Area Median Income (AMI) or designated workforce housing for City and school district employees.

In 2022 and 2023, the City conducted a Request for Information (RFI) process identifying Lot T as a preferred site for implementation of Program 1.4. In 2024, the City Council adopted Priority ED&T 8, which directed staff to pursue refined proposals for Lot T. Following a Request for Refined Proposals issued in September 2024, the Council on January 21, 2025, directed staff to prepare an ENA with Alta Housing for Council action to advance predevelopment work.

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ANALYSIS
Surplus Land Act Compliance
Before a local government agency may sell or enter into a long-term lease of land for development, the Surplus Land Act (California Government Code Sections 54220–54234) requires agencies to follow certain notice procedures to make the land available for the development of affordable housing. Under certain circumstances, an agency may declare the land "exempt surplus" in which case the notice procedures do not apply. Two such circumstances exist for Lot T.

First, and perhaps most obvious, under Government Code 54221(f)(1)(A), surplus land may be declared exempt if it will be transferred for the purpose of developing affordable housing.

Under the proposed Exclusive Negotiating Agreement, Alta will design, and submit for the City’s planning approval, a proposal to develop Lot with 100% affordable housing, which will be deed restricted to preserve affordability to extremely low, very low, and low-income households, for a term no shorter than 30 years. Therefore Lot T qualifies for an exemption on this basis.

Second, under Government Code 54221(f)(1)(B), surplus land may be declared exempt if it is smaller than one-half acre (21,780 square feet) in area, and is not adjacent to publicly-owned land used for open space or affordability housing purposes. According to City records, Lot T is approximately 19,236 square feet in area and the adjacent properties are privately owned and used for commercial purposes. Therefore, Lot T separately qualifies for an exemption on this basis.

These findings are included in the Resolution (Attachment A). City staff received technical assistance from HCD in preparing the Resolution, and once adopted, the Resolution will be transmitted to the California Department of Housing and Community Development (HCD) as required by Government Code Section 54222.3.

Exclusive Negotiation Agreement with Alta Housing
The ENA formalizes the City’s partnership with Alta Housing and outlines the framework for negotiating a long-term ground lease, project financing terms, regulatory agreements, and other documents necessary to support project development. The ENA:
•Does not entitle or approve a specific development project; •Requires good faith negotiations toward a Disposition and Development Agreement (DDA) for a project that satisfies the affordability requirements of the Surplus Land Act and other direction that may be provided by the Council during the term of the ENA; •Sets a timeline and terms for predevelopment due diligence and community engagement;
•Establishes roles, responsibilities, and deliverables during the ENA term; Item 4
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•Allows Alta Housing to request reimbursement of actual costs incurred, not to exceed $200,000, if the City does not proceed with the Lot T project.

The ENA was prepared by the City Attorney’s Office and negotiated with Alta Housing and reflects typical provisions used in similar public-private affordable housing projects.

FISCAL/RESOURCE IMPACT
Approval of the ENA and declaration of exempt surplus status do not have a fiscal impact as work associated with these efforts is already accounted for in department budgets. Should the City cancel the project, staff will return to Council at a future date to request the necessary appropriation from the Housing In Lieu Residential Fund to reimburse Alta Housing. Future agreements, including the DDA and potential funding commitments for the ultimate development of the parcel, will have fiscal implications and will be presented to Council for review and approval.

STAKEHOLDER ENGAGEMENT
The proposed ENA and exemption resolution were publicly noticed as part of the June 16, 2025 City Council agenda. Prior engagement activities included:
•Issuance of a Request for Refined Proposals in 2024;
•Council review of refined proposals and direction to staff to prepare the subject ENA in January 2025;
•Housing Element community meetings and discussions identifying Lot T as a City-owned site suitable for affordable housing.

Additional engagement is anticipated during the ENA term and future project review process.

ENVIRONMENTAL REVIEW
Approval of the ENA and exemption resolution is not a project subject to environmental review under the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15378(b)(2). Any future development of Lot T will require CEQA review prior to entitlement.

ATTACHMENTS
Attachment A: Draft Resolution Declaring Lot T as Exempt Surplus Land Attachment B: Exclusive Negotiation Agreement with Alta Housing APPROVED BY:

Jonathan Lait, Planning and Development Services Director Item 4
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Resolution No. _______
Resolution of the Council of the City of Palo Alto Declaring Property Known as Lot T (APN 120-15-100) Exempt Surplus Land under the Surplus Land Act (Government Code 54220 et. seq)

RECITALS
The City of Palo Alto (“City”) is the owner in fee simple of that certain real property approximately 19,236 square feet in size and situated at the corner of Lytton Avenue and Kipling Street in Palo Alto, CA (“Lot T Property”), APN 120-15-100.

The parcels adjacent to the Lot T Property are privately-owned and are not currently used as open space, or for low- or moderate-income housing purposes.

The Lot T property was acquired through City of Palo Alto Parking Assessment District Project 75-63, which proceedings were conducted through the Special Assessment Investigation, Limitation, and Majority Protest Act of 1931 and Sections 13.12.040 and 13.12.050 of Title 13 of the Palo Alto Municipal Code.

Since being acquired by the City, the Lot T property has been constructed and used as a surface parking lot with approximately 52 parking spaces.

Subdivision (g) of Section 13.12.050 of the Palo Alto Municipal Code provides that the Council may lease one or more parking spaces and facilities, when, its opinion, the public interest and economy will be served thereby.

Cities across California are facing a severe housing shortage. The housing shortage is particularly acute in the San Francisco Bay Area region, where the demand for housing—specifically affordable housing— vastly exceeds the available supply.

The City’s 2023-2031 Housing Element seeks to develop significant additional housing in the City’s downtown area to meet its Regional Housing Needs Allocation targets.

Program 1.4 of the City’s 2023-2031 Housing Element contemplates increasing the City’s affordable housing stock through redevelopment of City-owned surface parking lots with a stated objective of providing replacement public parking and 100% affordable housing units serving households earning up to 80% of the Area Median Income or for workforce housing for City employees and Palo Alto Unified School District employees.

In furtherance of Housing Element Program 1.4, the City has identified the Lot T Property for redevelopment with affordable housing.

In January 2023, City staff issued a Request for Information seeking development concepts for affordable housing and public parking structures on one or more of the City’s twelve surface parking lots in the downtown and received submittals from two firms, Alta Housing and MidPen Housing.

In December 2023, the Council directed City staff to solicit refined proposals that focused on redeveloping the Lot T Property with 100% affordable housing.

In September 2024, City staff issued a Request for Refined Proposals for an affordable housing development on the Lot T Property from Alta Housing and MidPen Housing.

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Resolution Declaring Lot T
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On December 2, 2024, the Council approved a contract for design, environmental review, and construction administration services for a new downtown parking garage on a City-owned surface parking lot situated at the corner of Hamilton Avenue and Waverley Street (Lot D Garage Project). The Lot D Garage Project is intended to provide the replacement public parking contemplated by, and in furtherance of, Housing Element Program 1.4.

On January 21, 2025 the Council selected Alta Housing as its preferred development partner and provided preliminary direction on key project components, including the provision of parking, maximum building height, and the number, composition, and affordability levels of the housing units.

On April 14, 2025, the Council reviewed design options for the Lot D Garage Project and directed City staff to proceed with design on a six-level structure that would provide approximately 274 parking spaces.

On June 16, 2025, the City and Alta Housing entered into an exclusive negotiating agreement to provide Alta Housing the exclusive right to, for a limited term, to design and submit a planning application for an affordable housing development on the Lot T that meets the requirements Housing Element Program

1.4 and the development and affordability requirements of Government Code 54221(f)(1)(A).

The Surplus Land Act, Government Code sections 54220 et seq., imposes certain procedural requirements when a local agency “disposes” of “surplus land,” as those terms are defined in Government Code section 54221, to promote affordable housing development on unused or underutilized public land throughout the State to respond to the affordable housing crisis.

The Surplus Land Act requires public agencies, including charter cities, to follow certain procedures to dispose of “surplus land” or declare land to be “exempt surplus land” at a public hearing prior to disposition.

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

SECTION 1. The recitals above are true and correct and are incorporated by this reference as findings of fact by the Council.

SECTION 2. Consistent with subdivision (g) of Section 13.12.050 of the Palo Alto Municipal code, the Council finds that the public interest and economy will be served by entering into a long-term ground lease of the Lot T Property. Such lease will facilitate the development of the Lot T property with affordable housing and provide below market rate housing opportunities for individuals and families in a desirable area of the city, consistent with Program 1.4 of the City’s 2023-2031 Housing Element. The Council further finds that new residential development in downtown will increase the number of potential employees and customers to work in and patronize the shops, services, and restaurants. The Council further finds that the construction of the Lot D Garage Project will adequately replace the public parking currently provided on the Lot T property.

SECTION 3. The Council finds and declares the Lot T property is exempt surplus land as defined by Government Code section 54221(f)(1)(B) in that the Lot T property is less than one-half acre in area, and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes.

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SECTION 3. Alternatively, the Council finds and declares the Lot T property is also exempt surplus land as defined by Government Code section 54221(f)(1)(A) because the Lot T property will be developed to provide 100% affordable housing; and the housing units will be deed-restricted to remain continually affordable for the time required, and at the affordability levels, required by Government Code section 37364.

SECTION 4. The Council finds and declares that its determination that the Lot T property is exempt surplus land is not a “project” as defined by the California Environmental Quality Act (CEQA) because this determination does not authorize any disposition or entitle development of the property and is therefore an administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines Section 15378(b)(4).

INTRODUCED AND PASSED: June ___, 2025
AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

City Clerk

APPROVED AS TO FORM:

Chief Assistant City Attorney

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EXCLUSIVE NEGOTIATION AGREEMENT FOR THE

DEVELOPMENT OF AFFORDABLE HOUSING ON LOT T

PROPERTY BY AND BETWEEN THE CITY OF PALO ALTO

AND ALTA HOUSING CORPORATION

This EXCLUSIVE NEGOTIATION AGREEMENT (ENA) is entered into by and between the City OF PALO ALTO, a chartered municipal corporation (City) and ALTA HOUSING, a California nonprofit public benefit corporation (Developer) under the terms and conditions set forth below. The City and Developer shall collectively be referred to herein as the “Parties” and individually as “Party.”

RECITALS
Cities across California are facing a severe housing shortage. The housing shortage is particularly acute in the San Francisco Bay Area region, where the demand for housing—specifically affordable housing— vastly exceeds the available supply.

The City’s 2023-2031 Housing Element seeks to develop significant additional housing in the City’s downtown area to meet its Regional Housing Needs Allocation targets.

The City is the fee title owner of a surface parking lot, APN 120-15-100, situated at the corner of Lytton Avenue and Kipling Street in Palo Alto, CA (Lot T Property).

In furtherance of Housing Element Program 1.4, the City has identified the Lot T Property for redevelopment with affordable housing.

In January 2023, the City issued a Request for Information seeking development concepts for affordable housing and public parking structures on one or more of the City’s twelve surface parking lots in the downtown and received submittals from two firms, Alta Housing and MidPen Housing.

In December 2023, the City directed City staff to solicit refined proposals that focused on redeveloping the Lot T Property with 100% affordable housing.

In September 2024, the City issued a Request for Refined Proposals for an affordable housing development (Project) on the Lot T Property from Alta Housing and MidPen Housing.

On December 2, 2024, the City Council approved a contract for design, environmental review, and construction administration services for a new downtown parking garage on a City-owned surface parking lot situated at the corner of Hamilton Avenue and Waverley Street (Lot D Garage). The Lot D Garage is intended to provide replacement public parking in furtherance of Housing Element Program

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Attachment B - Exclusive
Negotiation Agreement
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On January 21, 2025 the Palo Alto City Council directed City staff to enter into an exclusive negotiating agreement with Alta Housing and provided preliminary direction on key project components, namely parking, building height, and the number and composition of housing units.

The City and Developer wish to negotiate and reach agreement on the terms and conditions for the ground lease of the Lot T Property and a project to design, construct, operate, and maintain an affordable housing development, all in furtherance of Housing Element Program 1.4.

The purpose of this ENA is to establish the procedures and desired outcomes for the Parties’ negotiation of a ground lease, project agreement, project financing, regulatory agreements, and any ancillary agreements necessary to design, construct, and operate the affordable housing development on the Lot T Property.

AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Developer mutually agree as follows:

ARTICLE 1. Negotiations

A. Agreement Term.

This agreement shall commence on the date on which the agreement is executed by the Parties (“Effective Date”). If the agreement is executed in counterparts, the Effective Date shall be the later of the dates indicated on either counterpart. Unless earlier terminated in accordance with Article 3, Section D, the Parties shall exclusively negotiate with one another in good faith regarding the items set forth in Article 2 for a period of One Year (“Term”), commencing on the Effective Date, or as such Term may be extended pursuant to Article 1, Section D below. The Term of this agreement shall be tolled during any period of time in which either Party’s is enjoined from performing its obligations by order of a court with competent jurisdiction.

B. Good Faith Negotiations

During the Term, the Parties shall negotiate a proposed Disposition and Development Agreement (“DDA”) for the Project. The DDA shall incorporate provisions from the Term Sheet attached hereto and incorporated herein as “Exhibit A” (the “Term Sheet”), which will be subject to modification, the addition of greater details regarding the proposed Project, and such other matters as the Parties shall mutually agree, as set forth in Article 2 below. The Term Sheet is not intended to be binding on either Party, but rather to a starting point for the negotiations anticipated herein.

The parties shall meet and confer with one another as is reasonably necessary to discharge their respective obligations under this ENA.

C. Scope of Exclusivity
During the Term, the City shall not: (1) solicit, receive, entertain, negotiate with, or consider any offers or solicitations from any person or entity other than from Developer, to acquire or lease all or any portion of the Lot T Property; (2) propose or process any legislative or administrative actions, Item 4
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authorizations, or entitlements for any change of use of the Lot T Property from its present use other than pursuant to this ENA; (3) conduct any public hearing to consider approve, or conditionally approve any development of the Lot T Property other than pursuant to this ENA.

D. Extension of ENA Term by City
If this ENA has not been terminated in accordance with Article 3 Section D and Developer, as determined by the Palo Alto City Manager (“City Manager”) in the exercise of his/her reasonable and good faith discretion, is in substantial compliance with this ENA, and the Parties’ negotiation of the items set forth in Article 2 have not been completed, the City Manager may approve an extension for up to twelve (12) months.

E. Extension of ENA Term by Mutual Agreement of the Parties If this ENA has not been terminated in accordance with Article 3 Section D and completion of the Negotiation Tasks set forth in Article 2 is delayed, through no action or omission of Developer, then Developer and the City Manager may mutually agree to an extension for a period no longer than twelve (12) months. The Parties may agree to an extend this ENA under this Section separately from, or in addition to, an extension granted by the City under Article 1 Section D above.

ARTICLE 2. Negotiation Tasks
A. Drafting of Disposition and Development Agreement (DDA) The Parties will prepare a mutually acceptable DDA Term Sheet addressing and expanding upon each of the issues identified in Term Sheet, including but not limited to the description, uses, configuration, design, and timeline of a mutually acceptable Project.

The Parties shall agree upon a definition and timeline of key pre-development and development milestones (e.g., design development drawings, entitlement submissions, etc.) that will form the basis of Project progress in the DDA.

The Parties shall prepare a mutually acceptable DDA setting forth the terms and conditions upon which Develop will lease the Lot T Property from the City consistent with the agreed upon DDA Term Sheet.

The Parties shall prepare mutually acceptable terms for property management and resident/supportive services to be provided in connection with the Project.

B. Community Outreach and Engagement Plan
City and Developer will confer and jointly prepare a plan for community outreach and engagement regarding the proposed Project.

C. Developer’s Obligations in Connection with Negotiation Tasks Developer shall, at its sole cost and expense consistent with the proposed Project and the Term Sheet:

1. Retain such architects, engineers, market analysts, financial Developers, attorneys and environmental consultant as are necessary to assist Developer in the discharge of its responsibilities under this ENA.

2. During the Term, the Developer will prepare and submit the following to the City for the DDA:

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a. A proposed draft DDA Term Sheet, which builds from the Term Sheet at Exhibit A;
b. A market feasibility study for all aspects of the Project; c. A proposed draft DDA based upon and consistent with the DDA Term Sheet; d. A detailed pro forma showing the financial feasibility for all aspects of the Project consistent with the proposed draft DDA; and
e. Such additional analysis, information, documents and reports for the City’s review, processing, and approval as are requested by the City to enable the City to comply with its obligations.

C. City’s Obligations in Connection with Negotiation Tasks

1. Comply with the City’s lead agency responsibilities, as applicable, under the California E
nvironmental Quality Act (“CEQA”), subject to reimbursement for any necessary environmental review documents.

2. The City shall retain such architects, engineers, market analysts, financial Developers, attorneys and environmental and planning Developers as are necessary to assist the City in the discharge of its obligations under this ENA.

D. Due diligence

1. Due Diligence. Developer shall conduct, at its sole cost and expense, all due diligence investigation in connection with its potential lease of the Lot T Property and its suitability for development of the Project as Developer deems appropriate and necessary in its absolute and sole discretion.

2. Within thirty (30) business days after the Effective Date, the City will provide copies of all leases, agreements, covenants, tests, surveys, maps, plans, records, studies, reports, operating statements, rent rolls, property records, documents, permits and entitlements and materials, soils and hazardous materials reports and other relevant documents pertaining to the Lot T Property, that are in City’s possession or reasonable control. City will reasonably cooperate with Developer as required in connection with all of Developer’s due diligence investigations, at Developer’s sole cost and expense, and will timely provide Developer with all additional documents and other materials in City’s possession or control reasonably requested by Developer.

3. During the term of this ENA, Developer and its representatives may, during normal business hours and upon not less than one (1) business day prior notice (which may be oral notice) to City, enter upon the Lot T Property to conduct such inspections, investigations and tests of the Lot T Property (including, but not limited to geologic, soil and water testing) as Developer deems appropriate in its sole and absolute discretion. Prior to entering upon the the Lot T Property to conduct any invasive o r
potentially destructive testing, including without limitation a Phase II environmental s
urvey or any testing or investigation that might disrupt or materially interfere with City’s normal use of the Lot T Property or cause physical disturbance or damage to the Item 4
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Lot T Property or any buildings or infrastructure thereon, Developer shall obtain City’s written approval of a written scope of work and protocol prepared by Developer for conducting such invasive or potentially destructive testing. Developer shall conduct its invasive or potentially destructive testing only in accordance with such approved protocol. Upon the conclusion of Developer’s inspections, investigations and tests, Developer shall promptly restore the Lot T Property to substantially the same condition as it was in prior to such inspections, investigations and tests at Developer’s sole cost and expense. Developer shall cause Developer’s inspections, investigations and tests to be conducted (i) in a safe and professional manner, (ii) so as not to create any dangerous or hazardous condition on or the Lot T Property, and (iii) in compliance with all applicable laws and only after obtaining all permits required to be obtained with respect to such activities. Developer shall have no obligation to repair any problems or defects disclosed by Developer’s inspections, investigations and tests.

Upon City’s request thereof, Developer shall provide copies of all tests and reports generated in connection with Developer’s investigation activities on the Lot T Property, at no cost to City. Developer shall indemnify, hold harmless, and defend City, its officers, employees and agents from and against any and all claims, demands, suits, liabilities, losses, damages and payments, including reasonable attorney fees and court costs, claimed or made against City, its officers, employees or agents resulting from or arising out of Developer’s inspection activities on the Lot T Property, except to the extent caused by City’s gross negligence or willful misconduct. Developer and Developer’s contractors performing any work or conducting any investigations on the Lot T Property, if any, shall obtain and maintain in full force and effect during the Term, insurance consistent with the requirements in Attachment One to this ENA which is incorporated herein by this reference.

E. Planning Approvals
The Parties acknowledges that the proposed Project will require the City’s approval of certain land use or other discretionary approvals and/or other entitlements and permits (collectively, “Entitlements”).

Developer will be required to obtain any and all discretionary approvals and Entitlements for the proposed Project.

Developer shall be responsible for submitting all planning applications and required information required for Entitlements, including, but not limited to site plans, preliminary designs, building plans and specifications for the proposed Project.

The Parties acknowledge and agree that: (1) nothing in this ENA shall obligate the City to approve any Entitlement, approve the DDA, or sell or convey all or any part of the Property to Developer; (2) nothing in this ENA shall obligate Developer to enter into the DDA, acquire, or lease all or any part of the Property from the City, or develop all or any part of the Project.

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ARTICLE 3. General Terms and Conditions
A. Notices
Formal notices, demands and communications between the City and Developer shall be sufficiently given if, and shall not be deemed given unless, dispatched by certified mail, postage prepaid, return receipt requested, or sent by express delivery or overnight courier service, to the office of the Parties shown as follows, or such other address as the Parties may designate in writing from time to time:

To City:

City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
Attn: Ed Shikada, City Manager
With a Copy to:

Jonathan Lait, Director of Planning and Development Services

To Developer:

Alta Housing
3460 West Bayshore Road, Suite 104
Palo Alto, CA 94303
Attn: Randy Tsuda, President and CEO

Such formal notices, demands and communications shall be effective on the date shown on the delivery receipt as the date delivered or the date on which delivery was refused. For purposes of obligations to be performed by the City or of calculation of noticing under this Agreement, a business day on which the City is closed will not constitute a business day under this Agreement.

B. Limited Right of Entry to Property
During the Term of this Agreement, Developer shall have the right to enter upon the Property for purposes of fulfilling the terms, conditions, and obligations of this Agreement, including but not limited to Developer’s due diligence tasks described in Article 2.

C. Defaults and Remedies

1. Default. If a Party defaults with regard to any of the provisions of this Agreement, then the non- defaulting Party shall give formal notice of a default to the defaulting Party, specifying the nature of the default and the required action to cure the default. If a default remains uncured thirty (30) calendar days after receipt by the defaulting Party of such formal notice, the non- defaulting Party may immediately exercise the remedies set forth in Paragraph 2, below. If such default cannot reasonably be satisfactorily cured in such thirty-day (30-day) period, then, Item 4
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provided Developer has and continues to diligently pursue the cure, Developer shall have up to such additional time as is reasonably necessary to cure, but in no event more than ninety (90) days to cure, satisfactorily, the failure or material breach, as long as Developer has initiated the cure of the same within such thirty-day (30-day) period and thereafter diligently prosecutes such cure to completion.

2. Remedies. Neither Party would have agreed to any part of this ENA if it were to be liable to the other Party for any amount of monetary damages. Accordingly, except for a default or breach of Developer with respect to Developer’s indemnification, defense and hold harmless obligations set forth in this ENA or any amendment thereto, for which the City shall have all remedies available at law or in equity, the non-defaulting Party’s sole and exclusive remedy in the event of an uncured default by the City or Developer shall be to terminate this Agreement or seek specific performance of this ENA, as applicable. Following such termination, no Party shall have any further duties, obligations, rights, or liabilities under this Agreement, except that Developer’s indemnification, defense and hold harmless obligations set forth in this Agreement shall survive such termination and be enforceable against Developer. The prevailing Party in any action brought pursuant to this subsection shall also be entitled to an award of actually incurred and reasonable attorney’s fees and costs.

3. No Liability. Except as expressly provided in Paragraphs 1 and 2, above, no Party shall have any liability to any other Party for damages or otherwise for any default or breach, nor shall any Party have any other claims with respect to performance under this Agreement. Each Party specifically waives and releases any such rights or claims it may otherwise have at law or in equity.

D. Termination

1. Failure of Good Faith Negotiations. Either Party may terminate this ENA at any time by formal notice given in accordance with Section A above to the other Party in the event that the terminating Party is in compliance with its obligations under the ENA and the Parties, after good faith negotiations in accordance with this ENA, have been unable to agree on a mutually acceptable Project and proposed DDA for processing by the City.

2. Termination after City Council Consideration. In the event this ENA is not otherwise terminated pursuant to the provisions of this Section D, this ENA shall automatically be terminated at the end of the Term, unless extended as otherwise provided herein, whether or not the parties were able to successfully negotiate a proposed DDA for the Project. This ENA shall automatically terminate after the City Council’s consideration and final actions regarding the proposed DDA and the City’s Discretionary Actions, in which case this ENA shall be superseded by the City Council’s final actions regarding the DDA and the City’s Discretionary Actions, whether approved or denied by the City Council.

3. Developer’s Breach. In the event Developer materially breaches any of its obligations under this ENA, then, provided the City is not in material breach of its obligations, the City Manager may terminate this ENA provided the City has given Developer formal notice of the failure or material breach and Developer has failed to cure such failure or material breach in the allowable period.

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4. Termination as a Result of Litigation. If the Parties mutually determine, in their reasonable discretion, that City’s performance of its obligations under this ENA will be made impossible or impracticable as a result of litigation initiated by a third party then either or both Parties may terminate this Agreement upon 30 days' written notice. Such termination will be effective on the date stated in the notice. Notwithstanding any provision in this ENA to the contrary, Developer shall be entitled to reimbursement of its actual costs to the date of such termination incurred in connection with its performance of its obligations under this ENA, which reimbursement shall not exceed Two Hundred Thousand Dollars ($200,000.00). As used in this paragraph, the phrase actual costs shall mean costs, including Developer staff time, and expenses incurred and paid by Developer to third party architects, consultants, and engineers hired by Developer for the performance of Negotiation Tasks from the effective date of this ENA through the effective date of termination. Developer shall request reimbursement in writing and provide an accounting of actual costs, along with any other supporting documentation reasonably request by City. City shall use reasonable efforts to provide reimbursement in a prompt manner, not to exceed ninety (90) days from the date of receipt of the reimbursement request and supporting documentation. All of Developer’s work product, including but not limited to designs, drawings, analyses, and applications for funding assistance, shall become the sole property of City, and Developer agrees to execute all necessary documents to assign all rights, title, and interest in such work product to City.

E. Assignment
Developer understands the City is entering into this Agreement based on the experience and qualifications of Developer and of the key individuals representing or employed by Developer as of the date of this Agreement. Therefore, Developer will not assign, sell, or otherwise transfer any or all of its rights under this Agreement, or interest herein, without the prior written approval of the City, which approval may be withheld in the City’s sole and absolute discretion. Further, no voluntary or involuntary successor in interest of Developer will acquire any rights or powers under this Agreement except as expressly set forth herein. For the reasons cited herein, Developer represents and agrees for itself and any successor in interest that prior to the expiration of the Term, and without the prior written approval of the City (which approval may be withheld in the City’s sole and absolute discretion), there will be no significant change in the management or control of Developer. Developer will promptly notify the City of all changes whatsoever in the identity of the parties in control of or exercising the management of Developer, or the degree of control or management, of which it or any of its officers have been notified or otherwise have knowledge or information. This Agreement may be terminated by the City if there is any significant change (voluntary or involuntary) in membership, management or control, of Developer.

For purposes of this paragraph, a significant change will mean any change in the identity of the CEO, President, or similar person or persons having ultimate control over the day to day management of Developer, or the appointment of a receiver or trustee to operate or exercise direct or indirect control over Developer). Periodic, routine changes in membership that cumulatively affect less than 50% of the membership of the Developer’s board of directors will not be considered a “significant change”.

F. No Third-Party Beneficiaries.

This Agreement is made and entered into solely for the benefit of the City and Developer and no other person shall have any right or cause of action under or by reason of this Agreement.

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G. Governing law; venue.

This Agreement and the legal relations between the Parties will be governed by and enforced in accordance with the Palo Alto Municipal Code and the laws of the State of California without reference to the rules governing the conflict of laws. This Agreement is made and entered into in the County of Santa Clara, California, and any legal actions or proceedings arising from or related to this Agreement will be brought in the Superior Court of California, County of Santa Clara.

H. Time is of Essence
Time is of the essence of every portion of this Agreement in which time is a material part.

I. Headings/Captions
The headings and captions of the various sections and paragraphs of this Agreement have been inserted only for the purpose of convenience and are not a part of this Agreement and will not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement.

J. Severability
Every provision of this Agreement is intended to be severable. If any provision of this Agreement or the application of any provision hereof to any Party or circumstance is declared to be illegal, invalid or unenforceable for any reason whatsoever by statute or a court of competent jurisdiction, such invalidity will not affect the other terms and provisions hereof or the application of the provision in question to any other Party or circumstance, all of which will continue in full force and effect.

K. Waivers/Amendments
All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of the Parties. Except as otherwise expressly provided in this Agreement, any failure or delay by any Party in asserting any of its rights or remedies as to any default will not operate as a waiver of said default or of any rights or remedies in connection therewith or of any subsequent default or any rights or remedies in connection therewith, or deprive such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

L. Independent Contractor
Developer acknowledges and agrees that Developer and any agent or employee of Developer 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 Developer performs the Services requested by City under this Agreement. Developer and any agent or employee of Developer will not have employee status with City, nor be entitled to participate in any plans, arrangements, or distributions by City pertaining to or in connection with any retirement, health or other benefits that City may offer its employees. Developer will 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 related to Developer’s performance of the Services, or any agent or employee of Developer providing same. Nothing in this Agreement shall be construed as creating an employment or agency relationship between City and Developer or any agent or employee of Developer. Any terms in this Agreement referring to direction from City shall be construed as providing Item 4
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for direction as to policy and the result of Developer’s provision of the Services only, and not as to the means by which such a result is obtained.

M. Conflicts of Interest
In executing this Agreement, Developer 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.

Developer further covenants that, in the performance of this Agreement, it will not employ subcontractors or other persons or parties having such an interest. Developer 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. Developer agrees to notify City if any conflict arises.

If the Developer meets the definition of a “Consultant” as defined by the Regulations of the Fair Political Practices Commission, Developer 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.

N. Nondiscrimination; Compliance with the Americans with Disabilities Act As set forth in Palo Alto Municipal Code Section 2.30.510, as amended from time to time, Developer 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. Developer 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.

Developer understands and agrees that pursuant to the Americans with 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. Developer 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. Developer will not discriminate against persons with disabilities in the provision of services, benefits or activities provided under this Agreement.

O. Environmentally Preferred Purchasing and Zero Waste Requirements Developer shall comply with the 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.

Developer 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, Developer shall comply with the following Zero Waste requirements:

1. All printed materials provided by Developer to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public Item 4
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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.

2. Goods purchased by Developer 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.

3. Reusable/returnable pallets shall be taken back by Developer, at no additional cost to City, for reuse or recycling. Developer shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed.

P. Counterparts.

This Agreement may be executed in counterparts, each of which when so executed will be deemed an original, and all of which, when taken together, will constitute but one and the same instrument.

Q. Entire Agreement.

This Agreement represents the entire agreement of the Parties hereto and integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements, oral or written, between the Parties with respect to acquisition and development of the Property or the proposed Project.

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For Alta Housing: For City of Palo Alto:

____________________

____________________
Name: Ed Shikada
Title: City Manager
Date:_______________ Date:_______________

Approved as to form

_________________
Caio Arellano
Chief Assistant City Attorney

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City of Palo Alto - Lot T Affordable Housing
Scenario A - 54 Units Updated 6/4/2025

UNIT MIX
Unit Size No. Units % AMI RRH Units Family PB V Base Rent Subsid y Income 1 BR 10 30% 10 114,960 114,960
2 BR 8 30% 2 6 109,248 135,936 245,184
3 BR 9 30% 2 7 140,616 216,216 356,832
3 BR 3 50% 3 81,396 58,140 139,536
1 BR 13 60% 311,220 311,220
2 BR 6 60% 171,504 171,504
3 BR 4 60% 131,520 131,520
2 BR 1 Mgr Unit 0
TOTAL 54 44.2% 14 16 1,060,464 410,292 1,470,756

PERMANENT SOURCES
Amoun
t Per Unit Interest Term-Yrs DCR
Permanent Loan 7,373,950 136,555 7.14% 35 1.15
CA HCD MHP 13,500,000 250,000 3% 55
City of Palo Alto 4,140,000 76,667 3% 55
Gap (County, Regional, FHLB) 2,034,314 37,672
Equity from LIHTC (Federal & State) 30,802,206 570,411
Total Sources 57,850,470 1,071,305

CONSTRUCTION SOURCES
Amoun
t Per Unit Interest Term-Mos
Tax Exempt Construction Loan 29,090,000 538,704 7.16% 28 Taxable Construction Loan 18,921,454 350,397 7.26% 28
City of Palo Alto 4,140,000 76,667 3% 28
Costs Deferred until Perm Closing 2,618,795 48,496
Equity from LIHTC 3,080,222 57,041
Total Sources 57,850,470 1,071,305
USES
Amoun
t Per Unit
Hard Costs 41,345,415 765,656
Design & Engineering 2,139,801 39,626
Development Impact & Permit Fees 986,205 18,263
Insurance During Construction 1,364,399 25,267
Developer Fee 2,500,000 46,296
Other Soft Costs 2,134,717 39,532
Financing Costs 7,379,932 136,665
Total Development Cost 57,850,469 1,071,305

CASH FLOW ANALYSI
S
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Gross Potential Income
Gross TCAC Rent 1,060,464 1,086,976 1,114,150 1,142,004 1,170,554 1,199,818 1,229,813 1,260,558 Section 8 Incremental Income 410,292 420,549 431,063 441,840 452,886 464,208 475,813 487,708 Miscellaneous Income 6,750 6,919 7,092 7,269 7,451 7,637 7,828 8,024 Less Vacancy/Loss - TCAC Rents (53,023) (54,349) (55,707) (57,100) (58,528) (59,991) (61,491) (63,028) Less Vacancy/Loss - Sec 8 Incr (20,515) (21,027) (21,553) (22,092) (22,644) (23,210) (23,791) (24,385) Effective Gross Income 1,403,968 1,439,067 1,475,044 1,511,920 1,549,718 1,588,461 1,628,173 1,668,877 Less Operating Expenses (648,000) (670,680) (694,154) (718,449) (743,595) (769,621) (796,557) (824,437) Less Replacement Reserve (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) Less HCD Annual Fee 0.42% (56,700) (56,700) (56,700) (56,700) (56,700) (56,700) (56,700) (56,700) Less City Annual Fee 125 (12,150) (12,150) (12,150) (12,150) (12,150) (12,150) (12,150) (12,150) Net Operating Income 660,118 672,537 685,040 697,621 710,273 722,990 735,765 748,590 Less Debt Service (574,016) (574,016) (574,016) (574,016) (574,016) (574,016) (574,016) (574,016) Less Issuer Fee 4,000 (4,000) (4,000) (4,000) (4,000) (4,000) (4,000) (4,000) (4,000) Net Cash Flow, First Cut 82,102 94,522 107,024 119,605 132,257 144,975 157,749 170,574 Debt Coverage Ratio 1.15 1.17 1.19 1.22 1.24 1.26 1.28 1.30 Less Ptrship Mgmt Fee - LP 7,500 (7,500) (7,725) (7,957) (8,195) (8,441) (8,695) (8,955) (9,224) Less Ptrship Mgmt Fee - GP 19,500 (19,500) (20,085) (20,688) (21,308) (21,947) (22,606) (23,284) (23,983) Net Cash Flow, 2nd Cut 55,102 66,712 78,380 90,102 101,869 113,674 125,510 137,368 Deferred Fee/Incentive Mgmt Fee 33% (18,349) (22,215) (26,101) (30,004) (33,922) (37,854) (41,795) (45,743) Cash Distribution
CA HCD 13,500,000 69.1% (25,400) (30,751) (36,130) (41,533) (46,957) (52,399) (57,855) (63,321) Gap Source 2,034,314 10.4% (3,828) (4,634) (5,444) (6,259) (7,076) (7,896) (8,718) (9,542) City 4,000,000 20.5% (7,526) (9,111) (10,705) (12,306) (13,913) (15,526) (17,142) (18,762) 19,534,314 100.0%
Remaining Cash Flow 0 0 (0) (0) 0 (0) 00
Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15
Gross Potential Income
Gross TCAC Rent 1,292,072 1,324,374 1,357,484 1,391,421 1,426,206 1,461,861 1,498,408 Section 8 Incremental Income 499,901 512,398 525,208 538,339 551,797 565,592 579,732 Miscellaneous Income 8,224 8,430 8,641 8,857 9,078 9,305 9,538 Less Vacancy/Loss - TCAC Rents (64,604) (66,219) (67,874) (69,571) (71,310) (73,093) (74,920) Less Vacancy/Loss - Sec 8 Incr (24,995) (25,620) (26,260) (26,917) (27,590) (28,280) (28,987) Effective Gross Income 1,710,599 1,753,364 1,797,198 1,842,128 1,888,181 1,935,386 1,983,770 Less Operating Expenses (853,292) (883,157) (914,068) (946,060) (979,172) (1,013,444) (1,048,914) Less Replacement Reserve (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) (27,000) Less HCD Annual Fee 0.42% (56,700) (56,700) (56,700) (56,700) (56,700) (56,700) (56,700) Less City Annual Fee 125 (12,150) (12,150) (12,150) (12,150) (12,150) (12,150) (12,150) Net Operating Income 761,457 774,356 787,280 800,218 813,159 826,092 839,006 Less Debt Service (574,016) (574,016) (574,016) (574,016) (574,016) (574,016) (574,016) Less Issuer Fee 4,000 (4,000) (4,000) (4,000) (4,000) (4,000) (4,000) (4,000) Net Cash Flow, First Cut 183,441 196,341 209,264 222,202 235,143 248,076 260,990 Debt Coverage Ratio 1.33 1.35 1.37 1.39 1.42 1.44 1.46
Less Ptrship Mgmt Fee - LP 7,500 (9,501) (9,786) (10,079) (10,382) (10,693) (11,014) (11,344) Less Ptrship Mgmt Fee - GP 19,500 (24,702) (25,443) (26,206) (26,993) (27,802) (28,636) (29,495) Net Cash Flow, 2nd Cut 149,238 161,112 172,978 184,827 196,647 208,426 220,151 Deferred Fee/Incentive Mgmt Fee 33% (49,696) (53,650) (57,602) (61,548) (65,484) (69,406) (73,310) Cash Distribution
CA HCD 13,500,000 69.1% (68,792) (74,266) (79,736) (85,198) (90,646) (96,076) (101,480) Gap Source 2,034,314 10.4% (10,366) (11,191) (12,015) (12,838) (13,659) (14,478) (15,292) City 4,000,000 20.5% (20,383) (22,005) (23,625) (25,244) (26,858) (28,467) (30,068) 19,534,314 100.0%
Remaining Cash Flow (0) (0) (0) (0) 00 (0)
Exhibit A
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: June 17, 2025
Report #:2504-4486
TITLE
Approval of the 2025 update to the Sewer System Management Plan (SSMP) and Authorization for Staff to Make Future Administrative or Minor Updates to the SSMP as Needed; CEQA Status – Exempt under CEQA Guidelines sections 15301, 15302, 15308.

RECOMMENDATION
Staff recommends that the City Council:

1. Approve the 2025 update to the SSMP 1, as required by the State Water Resources Control Board (SWRCB) Order No. WQO-2022-0103-DWQ, Statewide Waste Discharge Requirements General Order for Sanitary Sewer Systems (General Order).2

2. Authorize future SSMP updates that are administrative or minor in nature to be approved by staff without returning to Council for approval.

EXECUTIVE SUMMARY
The 2025 update to the SSMP aligns the City with current regulatory requirements under SWRCB’s General Order. The SSMP serves as the City's guiding document for managing, operating, maintaining, and improving the sanitary sewer system, and aims to reduce sanitary sewer overflows (SSOs). The SSMP documents the City’s Sanitary Sewer System, defines the City’s goals for improving its sewer system infrastructure, and establishes an implementation plan and schedule for achieving these goals. This update reflects current system conditions and includes improvements in maintenance practices, spill response, and infrastructure planning.

The General Order requires that the City Council approve the document prior to submittal to the SWRCB.
1 2025 SSMP: Link to SSMP:
https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/staff-report-2504-4486/sewer-system-management-plan-2025-update-2.pdf 2 State Water Resources Control Board (SWRCB) Order No. WQO-2022-0103-DWQ, Statewide Waste Discharge Requirements General Order for Sanitary Sewer Systems (General Order) https://www.waterboards.ca.gov/board_decisions/adopted_orders/water_quality/2022/wqo_2022-0103-dwq.pdf Item 5
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BACKGROUND
The first SSMP to be adopted by City Council was in July 2009. Since the first adoption of the SSMP, the plan has been audited and updated to remain compliant with the SWRCB’s regulations.

The 2022 General Order applies to all California municipalities that own and/or operate a sanitary sewer system greater than one (1) mile in length. Accordingly, the City is required by the State to ensure the proper management and operation of its sanitary sewer system, and to comply with the SWRCB General Order by developing, implementing, auditing, and periodically updating its SSMP in accordance with the State’s prescribed schedule.

The SSMP must be updated and certified by the City’s governing body, its City Council, every six (6) years. Upon City Council approval, the Legally Responsible Official will upload and certify the SSMP in the online California Integrated Water Quality System (CIWQS) Sanitary Sewer System Database. The last update was approved by Council in May 2023 ( Staff Report ID #2301-0789) 3 to address two (2) key requirements of the re-issued 2022 General Order, both due before June 5, 2023:

1. The designation of the Legally Responsible Official in the CIWQS database and the certification of continued regulatory coverage under the 2022 General Order, which became available for certification on April 5, 2023.

2. The update and implementation of the Spill Emergency Response Plan (SERP) within the SSMP.

An update to the existing 2023 SSMP 4 is now necessary to reflect current conditions and for compliance with the 2022 General Order, which is due on August 2, 2025. Revisions focus on improving clarity, consistency, and structure through editorial updates, elimination of duplicate content, and reorganization of sections of the Plan to align with SSMP elements. A redline version of the revised Plan is available for reference. The revisions also include updated staffing details, performance data through 2024, refined system mapping, and simplified appendices to reflect current operational practices and regulatory standards. The updated SSMP must be presented to the Council at a public meeting and formally adopted to ensure that the public has the opportunity to comment on the collection systems policies and procedures.

DISCUSSION
The City’s SSMP describes the City's wastewater collection system management activities. The purpose of these activities is to maintain and improve the condition of collection system infrastructure, control infiltration/inflow, provide appropriate sewer capacity, and minimize the number and impact of Sanitary Sewer Overflows (SSOs).
3 Staff Report ID #2301-0789 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=11197 4 2023 Sanitary Sewer Management Plan https://www.paloalto.gov/files/assets/public/v/1/utilities/utilities- engineering/wastewater/2023-ssmp-final.pdf
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The 2022 General Order requires internal audits of the SERP annually and the SSMP every three years and updates as needed. The City’s Utilities Department will complete the required audits, update the SERP and SSMP, and implement identified changes based on the audit findings. The SSMP will be reviewed and updated annually to ensure any significant program changes, after audits, or when there are changes in the Implementation Team's membership or responsibilities.

To streamline future updates, staff recommends that administrative and minor program changes be approved by staff without returning to Council. These changes will be documented in the SSMP’s Appendix O: SSMP Change Log for transparency. The SSMP will continue to be reviewed annually, audited every three (3) years, and certified by Council every six (6) years, in compliance with State requirements.

There are also two (2) significant initiatives currently in progress that will impact the SSMP but are not aligned with the deadline for the 2025 SSMP update. These will be incorporated into future SSMP updates once finalized.

1. Sewer Use and FOG Ordinance Updates – The Public Works Department’s Environmental Services Division, through the Watershed Protection Group (WPG), oversees the City’s Fats, Oils, and Grease (FOG) program. Updates to the City’s Sewer Use and Stormwater Ordinances (Chapters 16.09 and 16.11) are underway to align with new state regulations and permitting requirements. Additionally, a new FOG Ordinance (Chapter 16.13) will be introduced to enhance clarity, usability, and regulatory alignment. Final revisions are expected to be presented to the City Council in Fall 2025.

2. The 2025 Sewer Master Plan Update – The Wastewater Engineering and Operations Division is working with a consultant to complete the 2025 Sewer Master Plan Update Study, anticipated for completion in winter 2025. In the interim, the Division is relying on currently available data to evaluate and assess system needs.

FISCAL/RESOURCE IMPACT
There are no immediate fiscal or resource impacts due to adoptions of this 2025 update to the SSMP. Potential long-term impacts include additional, unquantifiable increases in operational and capital costs to comply with increasingly stringent regulatory requirements.

STAKEHOLDER ENGAGEMENT
This staff report and recommendations are intended to promote transparency and keep the public informed about the City’s sewer system management practices, offering the community an opportunity to review and provide feedback. Once approved, the updated 2025 SSMP will be made available to the public on the City of Palo Alto Utilities Department website.5

5 City of Palo Ato Utilities Department Website https://www.paloalto.gov/Departments/Utilities/Utilities-Services- Safety/Safety#panel-1-4
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ENVIRONMENTAL REVIEW
Implementation of the SSMP will apply to sanitary sewer collection systems that constitute "existing facilities" of the City, or may require the installation of minor sewer system facilities which will involve either minor alterations to existing facilities, or repair or replacement of existing facilities involving negligible or no expansion of sewer capacity. Such activities are exempt from review under the California Environmental Quality Act (CEQA). (CEQA Guidelines sections 15301 and 15302.) The adoption of the SSMP is also exempt from environmental review because it requires the implementation of management operations programs and plans to enhance and protect the environment by limiting the occurrence of SSOs in the City. (CEQA Guideline section 15308.).

ATTACHMENTS
None.

Link to 2025 SSMP: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2025/june-16/staff-report-2504- 4486/sewer-system-management-plan-2025-update-2.pdf
APPROVED BY:

Alan Kurotori, Director of Utilities
Staff: Matt Zucca, Utilities Assistant Director WGW Engineering & Operations Item 5
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: June 17, 2025
Report #:2504-4545
TITLE
Approval for the City Manager or their Designee to Execute Contract No. C25194016 with SCA of CA, LLC, Utilizing Sourcewell Cooperative Contract No. 062421-SWP, to Procure Services for the Sweeping of Residential and Commercial Streets for a Period of Five Years for a Total Not- to-Exceed Amount of $9,883,850; CEQA Status – Not a Project

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Contract No. C25194016 with SCA of CA, LLC, utilizing Sourcewell Cooperative Contract No. 062421-SWP to procure street cleaning services for a 5-year term (July 1, 2025 to June 30, 2030) with a Year 1 annual amount of $1,658,772 and 4% annual increases rate for a total amount Not-to-Exceed $9,883,850, which includes $8,985,318 for basic services and $898,532 for additional services.

BACKGROUND
The Public Works Department’s Public Services Division is responsible for the maintenance of most City-owned facilities and public areas, including the annual sweeping of over 18,000 curb miles of roadways within the City. Street sweeping keeps the community clean and safe by removing dirt, fine metals, petroleum products, vegetation, and other debris that regularly collect on the streets and bike lanes. This routine maintenance prevents pollutants from entering storm drains, which ultimately discharge into local creeks and the San Francisco Bay.

Keeping the storm drains clear not only helps to reduce pollution but also reduces the likelihood of flooding during heavy rain.

SCA of CA, LLC1, the current contractor, has provided reliable sweeping services to the City over the past ten years, meeting City staff standards for quality and responsiveness. Their personnel 1 SCA of CA, LLC, Street Sweeping Contract Amendment No. 1 C20177684A; https://www.paloalto.gov/files/assets/public/v/1/public-works/public- services/contracts/c20177684a_sca_amend-1-fully-executed.pdf Item 6
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have demonstrated flexibility in accommodating service requests and have been effective in addressing concerns raised by City staff and residents.

ANALYSIS
The sweeping services and frequency will remain unchanged from previous years: University Avenue and California Avenue business districts will be swept three times per week, El Camino Real once per week, and residential and light commercial areas will be serviced every other week. Sweeping frequency for residential and light commercial areas increases to weekly service during “leaf season”, which typically occurs between mid-October and mid-February.

Without the recommended sweeping services contract, the City may fall out of compliance with its storm water discharge permit. The San Francisco Bay Municipal Regional Stormwater National Pollutant Discharge Elimination System (NPDES) Permit2, also known as the Municipal Regional Permit (MRP), requires the City to use an effective approach to reduce trash from entering the City’s storm water system. Street sweeping is an accepted service to reduce trash generation and meets the requirements of the MRP. In the absence of a contractor, the City would be required to hire additional staff and purchase additional equipment to provide sweeping services in-house. This is estimated to include hiring five staff members and purchasing five street sweepers.

Procurement Process
Palo Alto Municipal Code section 2.30.360 (j) allows the use of cooperative purchasing agreements in lieu of conducting a competitive solicitation. Sourcewell, a cooperative purchasing agency serving governmental, higher education, K-12 education, not-for-profit, tribal government, and other public agencies, conducted a Request for Proposal (RFP). The RFP for the procurement for Facilities Maintenance Services posted on the Sourcewell Procurement Portal in May 2021, with Sweep America Intermediate Holdings, LLC being awarded the contract on August 8, 2021. The City requested a quote from SCA of CA, LLC (whose parent company is Sweep America Intermediate Holdings, LLC) on March 24, 2025, and received it on April 11, 2025.

The current 2020-2025 street sweeping contract was extended by three months through June 30, 20253, and included an increase for both Department of Industrial Relations (DIR) and Consumer Price Index (CPI) adjustment for the extension period. The newly proposed 2025- 2030 Street Sweeping Contract will not include a price increase for the first year (see Table 1). 2 Municipal Regional Stormwater NPDES Permit, May 11, 2022; https://www.waterboards.ca.gov/sanfranciscobay/board_decisions/adopted_orders/2022/R2-2022-0018.pdf 3 SCA of CA, LLC, Street Sweeping Contract Amendment No. 2; https://www.paloalto.gov/files/assets/public/v/1/public-works/public- services/contracts/c20177684a_sca_amend2_3.24.2025_docusign.pdf Item 6
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After the first year of the contract, a 4% price increase will be added to each subsequent contract year (see Table 2).

The quote received is consistent with the 3-month 2025 extension rate as shown in Table 1 below and their current service level meets the City’s needs; therefore, staff recommends approval of the contract with SCA of CA, LLC. 4
Table 1: Comparison of contract rate schedules
Sweeping Categories Annual Quantity
2020-2025
Contract
Rate
2025 Contract
Extension Rate
2025-2030
Proposed
Rate, Year 1
Residential and Light
Commercial (Task 1)
13,617.28 Curb Miles $79.50 $83.48 $83.48
University Downtown (Task 1) 2,052.33 Curb Miles $79.50 $83.48 $83.48 California Downtown (Task 1) 1,679.18 Curb Miles $79.50 $83.48 $83.48 El Camino Real (Task 1) 971.73 Curb Miles $79.50 $83.48 $83.48 Sweeping Services for
Protected Bike Lanes & Other
Obstructed Areas (Task 3)
250 Hours $200.00 $225.00 $225.00
Non-Routine (Task 4) 250 Hours $200.00 $225.00 $225.00
Emergency Service (Task 4) 75 Hours $200.00 $225.00 $225.00

Table 2: Compensation by contract year
Year Sweeping Services
Contract Year 1 $1,658,772
Contract Year 2 $1,725,122
Contract Year 3 $1,795,001
Contract Year 4 $1,865,892
Contract Year 5 $1,940,528
Total $8,985,318

FISCAL/RESOURCE IMPACT
Funding for the contract will be provided by the Public Works Department’s Refuse Fund, and the Office of Transportation’s University and California Avenue Parking District Funds. Funding for Year 1 of the contract, totaling $1,658,772, is included in the Fiscal Year 2026 Proposed budgets and subsequent contract years will be requested and appropriated through the City’s annual budget development process.
4 SCA of CA, LLC Street Sweeping Contract No. C25194016; https://www.paloalto.gov/files/assets/public/v/1/public-works/public-services/contracts/c25194016-sca-of- ca_street-sweep-svc_halfexecv2.pdf
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The funding breakdown for Year 1 is as follows:
•Refuse Fund: $1,347,266
•University Avenue Parking District Fund: $171,329
•California Avenue Parking District Fund: $140,178

STAKEHOLDER ENGAGEMENT
Stakeholder engagement was not conducted for this contract as it continues the same level and frequency of sweeping services. Palo Alto residents are asked about the quality of street sweeping services annually through the Palo Alto Community Survey.

ENVIRONMENTAL REVIEW
This contract is exempt from the provisions of the California Environmental Quality Act (CEQA) under Sections 10560 and 10561.

ATTACHMENT
None.

APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: June 17, 2025
Report #:2505-4621
TITLE
Approval of General Services Contract No. C25193659 With Community Tree Service LLC for Utility Line Clearance Services in an Amount Not-to-Exceed $16,500,000 for a Period of Five Years; CEQA Status – Exempt Under Section 15301(h)

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Contract No. C25193659, with Community Tree Service LLC for utility line clearing services in an amount not to exceed $16,500,000 over a five-year term.

BACKGROUND
The City has contracted services for utility vegetation management since the mid-1980s to ensure the clearing of trees and other vegetation from electrical conductors, poles, substations, fiber optic lines, traffic signals, streetlights and other relevant electrical facilities throughout Palo Alto. The most recent utility vegetation management contract was with Davey Tree Surgery, Inc. for a five-year term ending on May 31, 2025, with a not-to-exceed total of $14,486,057 1.

The work to be performed under the contract includes the resolution of utility-related vegetation conflicts: mainly the clearing of trees and other vegetation from the overhead electric system throughout the City. Clearing vegetation from power lines is an on-going operation necessary to ensure that the City provides safe, reliable power to the City’s utility customers. Clearance requirements have been established by the California Public Utilities Commission for Investor-Owned Utilities and these requirements have been accepted as the applicable standard for vegetation clearance in the City of Palo Alto. All tree work must conform to the techniques and standards specified in the Tree Care Industry Association 1 City Council, June 1, 2020; Agenda Item #3; SR #10883; https://portal.laserfiche.com/Portal/DocView.aspx?id=169226&repo=r-704298fc Item 7
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standard of care (ANSI A300 – Tree, Shrub and Other Woody Plant Maintenance – Standard Practices). As a utility operator, the City of Palo Alto is subject to thorough regulatory requirements to keep all vegetation away from utility infrastructure regardless of ownership of said vegetation. This contract for vegetation management is separate from the City’s overall tree trimming contract in that it specifically addresses utility line clearance. Utility line clearance work requires additional personnel certifications and equipment requirements not needed for standard tree trimming. The proposed contract with Community Tree Service LLC requires adherence to these standards and equipment requirements for utility line clearing.

Grid Modernization and Fiber to the Premise projects are currently underway and are supported by the line clearance contract. Continuing to support these projects will require additional line clearance resources and coordination. For Fiber to the Premise, much of the communication space in the overhead system has been historically under-maintained from a vegetation perspective by the communication companies who lease that space. This vegetation overgrowth encroaches into the City’s utility space. This has led to additional work assigned to the line clearance contractor so the equipment can be safely and efficiently installed. For grid modernization, additional resources are also needed from the line clearance contractor, mostly through vegetation clearing for personnel and equipment access.

In the past few years, the Foothills Undergrounding project has also been supported by the line clearance contract. Line clearance resources will continue to be utilized in support of this project until its completion. For example, vegetation clearing of the right of way (ROW) has been key in supporting the undergrounding of electrical lines in elevated fire threat areas of the service territory. While much of the electrical lines in the elevated fire threat areas have been undergrounded, the project will continue and is likely to expand as the areas considered to have elevated fire risks become more expansive.

ANALYSIS
The term of the proposed contract is five years.2 Staff has found that a multi-year contract is advantageous to the City as it allows a contractor to better amortize major equipment purchases and retain highly qualified workers, and in turn lower prices are offered for the work.

Familiarity with the trees in the City also improves efficiency as areas are returned to by the same contractor within that five-year time frame. Tree growth is highly dependent on precipitation and other conditions; therefore, the actual work levels and costs in each work item may be higher or lower than the estimated quantities in the contract documents. The rate schedule establishes the unit, hourly and span unit rates for each type of work included in the contract scope.
2 Community Tree Service LLC, Utility Line Clearance Contract, C25193659; https://www.paloalto.gov//files/assets/public/v/1/public-works/tree-section/new-folder/contracts/community- tree-service-llc-utility-line-clearing-contract-c25193659-partially-executed.pdf Item 7
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Summary of RFP Process
The Request for Proposals (RFP) for utility vegetation management services was distributed to potential contractors via opengov.com and a competitive solicitation notification was sent directly to companies on February 20, 2025. A pre-proposal meeting was held on March 5, 2025. The proposal period was 43 days and proposals were received from 9 contractors.

The quantities given in the cost proposal schedules were based on an average amount of work that might be expected in a twelve-month period and were given as a basis for comparison of proposal costs. The City did not guarantee that the actual amount or proportion of work would correspond to the cost proposal schedule amounts.

RFP Name/Number  193659 Utility Line Clearing Services
RFP Issued  February 20, 2025
Proposals Due  April 4, 2025
# of Tree Industry Firms Notified 1144 RFP views, 54 Tree Firms Downloaded RFP Total Days to Respond to RFP  43
# of Proposals Received  9
Non-responsive bidders/ Responsive bidders 0 / 9
Public Link to Solicitation  https://procurement.opengov.com/portal/palo-alto- ca/projects/148575
Proposals Price Range $12,741,910 - $33,153,181
An evaluation committee consisting of three City staff members from the Public Works department reviewed and evaluated the proposals according to the criteria identified in the RFP.

Staff recommends that the rates from the Community Tree Service LLC (CTS) proposal of $12,741,910 for a maximum five-year term submitted be accepted based on responsiveness to the City’s needs as defined by the evaluation criteria. The proposal from CTS scored highest and thoroughly addressed the needs of the line clearance program.

The proposed contract not-to-exceed amount is greater than the CTS proposal of $12,741,911 for a five-year term due to changes in specific work quantities between the RFP and the proposed contract. The proposed contract work quantities included in the contract are based on recent work by the current line clearing contractor and estimated increases in work scope to accommodate future phases of the Grid Modernization and Fiber to the Premise projects. Staff believes it is possible to meet minimum regulatory compliance and facilitate these infrastructure improvement projects with the proposed budget. Should additional work be needed, staff will return to Council with a contract amendment.

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Year Five hourly crew rate for the previous contract was $252.00 per hour, while the CTS proposal’s average hourly crew rate is $240.00 per hour, a reduction of 4.8%.

Staff confirmed with the Contractor’s State License Board that CTS has an active license on file.

CTS has performed satisfactory work for other utilities and agencies on a similar multi-year contract basis.

FISCAL/RESOURCE IMPACT
Funding for the first year of this contract is available in the Fiscal Year 2026 Electric Fund operating budget. Continued work and funding under this contract for Fiscal Year 2027 through Fiscal Year 2030 will be subject to Council approval of annual budget appropriations.

The contractor’s rates for contract years 2-5 during the term include annual escalation of approximately 3% as shown in the table below.

FY2026 FY2027 FY2028 FY2029 FY2030 5 YR TOTAL
Base Amount $2,828,075 $2,909,419 $2,996,728 $3,086,582 $3,179,196 $15,000,000 Contingency $282,808 $290,942 $299,673 $308,658 $317,920 $1,500,000 Annual
Contract Total
$3,110,883 $3,200,361 $3,296,401 $3,395,239 $3,497,116 $16,500,000

STAKEHOLDER ENGAGEMENT
Stakeholder engagement for this contract consisted of consultations with the Utilities Department on the required scope of work and the City’s procurement process notification to prospective RFP respondents.

ENVIRONMENTAL REVIEW
The recommended action is exempt from review under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301(h) [maintenance of existing landscape].

ATTACHMENTS
None.

APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: June 17, 2025
Report #:2506-4806
TITLE
Approval of a Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property Located at 2575 East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million, with Six-Month Leaseback to Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month This will be a late packet report to be published on June 12, 2025.

APPROVED BY:

Lauren Lai, Administrative Services Director
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: June 17, 2025
Report #:2504-4587
TITLE
Approval of Professional Services Contract Number C26193797 with Chandler Asset Management, Inc. in an Amount Not to Exceed $750,000 for Investment Management Services for a Period of Three Years; CEQA Status - Not A Project

RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or designee to execute Contract No. C26193797 (Attachment A), with Chandler Asset Management, Inc. to provide investment management services for a period of Three Years and a total amount not-to-exceed of $750,000.

EXECUTIVE SUMMARY
Staff recommends transitioning investment management services to a specialized asset portfolio management firm. It is best practice to periodically evaluate and update our City policies and procedures and this action is in alignment with findings from an audit completed by Baker Tilly on Investment Management services citing risk in redundancies in service delivery. The City’s current investment management structure is supported by Administrative Services staff and in a recent survey, it was determined that two-thirds of cities within Santa Clara County enlist the expertise of professional investment portfolios managers from specialized firms.

Staff recommend a blend of leveraging local knowledge with a professional specialized firm to further optimize performance, results and adapt to increasing market complexity while supporting a service delivery model that ensures continuity of the City’s investment program, regardless of changes or fluctuations in City staff resources.

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management firm. Additionally, on June 3, 20251, the Finance Committee reviewed and recommended that the City Council amend the City Investment Policy to reflect best practices in broker/dealer due diligence, timeliness of reporting and including consultants within the listing of authorized investment personnel. Should the City Council approve this contract, Chandler Asset Management, Inc. will onboard with Staff and the City Council/Finance Committee through an initial discussion of roles, responsibilities, objectives and onboard workplan. Then upon implementation, Chandler will have a follow-up discussions on observations, recommendations, workplan for related improvements and clarify periodic discussions and reporting of portfolio performance and compliance. The plan is to have an onboard study session with the Finance Committee.

BACKGROUND
City funds needed for immediate disbursement are maintained in a liquid checking account and funds that are temporarily idle or not needed for disbursement are held in the City’s pooled investment portfolio. Currently, City staff manages the investments of the City’s pooled portfolio in accordance with the City’s Investment Policy. The City’s Pension Trust Fund (Section 115), Deferred Compensation Plan (Section 457), the City’s pension plan with CalPERS, Other Post-Employment Benefits (OPEB) Trust, debt issuance proceeds, and investments of the City’s risk pool (ACCEL) are all currently managed by specialized firms.

The City Council first adopted the Investment Policy2, the policy that governs the investment of City funds, on October 22, 1984. Key philosophies of the City’s Investment Policy are:

1. Safety, the most important objective, ensuring safety of principal, undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio;

2. Liquidity, the second most important objective, meeting all operating requirement that may be reasonably anticipated; and

3. Yield, the last priority, ensuring that the portfolio is designed to obtain a market rate of return that reflects the authorized investments, risk constraints, and liquidity needs outlined in the Investment Policy.

The City Council reviews and adopts the Investment Policy annually, before the start of the new fiscal year to ensure its consistency with the overall objectives of preservation of principal, liquidity, and return, and its relevance to current law and financial and economic trends. In addition, the Investment Policy follows the Government Code and includes additional restrictions on some investments, such as a lower allowable percentage per investment type or issuer than State law.
1 Finance Committee, June 3, 2025, Item #3:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16128 2 Adopted by Council on June 17, 2024: https://www.paloalto.gov/files/assets/public/v/1/administrative- services/investment-policies/adopted-investment-policy-1-39-asd.pdf Item 9
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California Government Code Section 53600 et seq., strictly governs which investments public agencies can hold. In some cases, State law also governs what percentage of the portfolio can be invested in certain security types, maximum maturities, and minimum credit ratings by the major rating agencies (Standard & Poor’s and Moody’s Investors Service). Public agencies can only invest in fixed income securities. The purchase of stock is prohibited. Therefore, the City primarily invests in highly rated securities such as U.S. Treasury, Federal agencies, and government sponsored enterprise debt.

The City’s investment strategy has been focused on making short-term investments in anticipation of rising interest rates and holding investments until maturity dates to avoid the incurrence of losses that result from disposition of investments at market value lower than cost. For the past three years, the City’s investment portfolio statistics are as follows:

Table 1: Investment Balance, Yield, and Years-to-Maturity Fiscal Year
(Ending 6/30) Investment Balance Yield Years-to-Maturity 2024 $640.9M 2.6% 2.6
2023 $623.2M 2.3% 2.3
2022 $584.7M 1.6% 1.6
Investment advisory and portfolio management firms have specialized expertise, technology skills, and research tools necessary to reasonably achieve a higher rate of return and they can design and manage an investment portfolio that meet individual needs and preferences of public agencies and comply with applicable federal laws and California Government Codes.

The recent Investment Management Audit conducted by the City Auditor, Baker Tilly, and adopted by the City Council on January 16, 20243, identified segregation of duties and oversight of investment activities as a finding. This finding recommends that staff implement a formal process for review and approval of investment activities and that ASD should continue efforts to adjust the staffing of the investment function. Staff has made progress on these improvements and this recommended hybrid approach with a specialized firm will further segregate the duties, with appropriate oversight and internal controls.

ANALYSIS
It is best practice to periodically evaluate and update City policies and procedures. The Administrative Services Department (ASD) reviewed other agency practices and current trends.

Staff found that two-thirds of the cities within Santa Clara County utilize a specialized firm to professionally manage their investment portfolios. These services are either fully or partially 3 City Council, January 16, 2024: https://portal.laserfiche.com/Portal/DocView.aspx?id=70175&repo=r- 704298fc&searchid=8612bc60-125a-4964-9c0f-b6de5a04f68d; Office of the City Auditor Investment Management Audit: https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=45e60ff6-0073-4805-bd0f- d06b82d471ac
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supported and include services such as cash flow forecasting, investment advisory and strategy services, and investment policy updates.

Moving forward with a specialized firm is consistent with investment portfolio management trends. Most recent investment activity reports for cities of Mountain View, Santa Clara, and Sunnyvale reported yield to maturity that ranged between 3.3% to 4.2%. These agencies have a blended approach utilizing a specialized firm and it is important to also note that the composition of their portfolios, policies, and practices may differ from the City. The selected professional firm will serve as a key partner of the City to provide comprehensive portfolio oversight, including diversification and performance optimization, risk management, regulatory compliance, reporting, and periodic investment policy updates. Quarterly investment reports will be completed in partnership between Staff and the firm to ensure compliance with City investment policy and transparency to the City Council and Finance Committee.

Solicitation Process
On February 7, 2025, ASD staff released a Request for Proposals (RFP), seeking to receive proposals from qualified firms with investment management services experience, with a focus on public agencies, to provide in-depth perspective on supporting the City in this area.

Table 2: Summary of Request for Proposals
Proposal Description/Number Investment Management Services RFP #193797
Proposed Length of Project July 1, 2025 to June 30, 2028 (Three Years) Number of Vendors Notified 3,471
Number of Proposal Packages Downloaded 36
Total Days to Respond to RFP 28
Pre-Proposal Meeting and Date N/A
Number of Proposals Received 10
Proposal Price Range $540,000 to $1,440,000
(Proposed Three Year Cost)
Public Link to Solicitation https://procurement.opengov.com/portal/palo-alto- ca/projects/145131
The RFP was sent to 3,471 firms and received 10 proposals. Proposals were reviewed by an evaluation team consisting of staff from Administrative Services Department (ASD). The proposals were evaluated on quality of proposal, proposed solution, experience, financial condition and stability, timely performance, prior record of performance for government agencies, and ability to provide ongoing services, and compliance with applicable laws and regulations. Following the proposal evaluation process, three firms were invited for interviews on April 14, 2025.

Throughout the evaluation process, Chandler demonstrated a high level of expertise, public sector experience, and research resources available to customize the City’s portfolio in accordance with the City’s investment objectives and goals. As of December 31, 2024, Chandler Item 9
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managed $27.3 billion for over 165 public agency clients in California, including over 80 California cities. For over 35 years, Chandler has assisted public agencies with fiduciary duties related to investment solutions and investment framework. Total asset under management (AUM) is $41.6 billion including $36.5 billion for over 200 local government clients, as of December 31, 2024.

Chandler’s investment philosophy for the portfolio will be to maintain a balanced portfolio that is focused on safety, liquidity, and yield. This philosophy helps manage the portfolio in both increasing and decreasing interest rate environments. Other benefits of that partnering with Chandler include:
•Proprietary software to ensure all transactions meet Government Code and the City’s Investment Policy guidelines
•Analysis of the City’s cash flow needs,
•Active management of the City’s investments,
•Access to market resources such as Bloomberg, Trade Web and proprietary optimizing models,
•Volume pricing optimization on transactions and other services, •Monthly online reporting and monitoring tools for all transactions and current balances, Assurance of portfolio compliance with all federal and State of California laws as well as ordinances, resolutions and policies of the City relating to the investment of public funds,
•Annually perform due diligence reviews of the broker/dealer, custodian bank and financial institutions utilized by the City and provide supporting documentation to the City,
•Keep the City informed of changing economic conditions through flash communications and formal periodic reports including discussions of key economic indicators relevant to the regional, State, national and global economies, and •Continuity of the investment program regardless of changes or fluctuations in staff levels or City personnel.

Chandler dedicated team members include the primary portfolio strategist with 30 years of industry tenure located in northern California, and four other investment managers and client services team members throughout the Bay Area and southern California. Chandler will provide monthly and quarterly reporting to the City Council, hold quarterly meetings with staff to discuss quarterly results, and be available to present to the Finance Committee or Council as needed. In addition, Chandler will be assisting ASD staff with the annual update of the Investment Policy, which ultimately is submitted for Council approval.

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FISCAL/RESOURCE IMPACT
Fees for investment management services are included in the FY 2026 Proposed Budget and are structured into the tier format below:

Table 3: Chandler Asset Management Fee Structure
Assets Under Management
(Market Value) Investment Management Fee Estimated Fee
First $150 million 0.06 of 1% (6 basis points) $90,000
Next $100 million 0.04 of 1% (4 basis points) $40,000
Assets in Excess of $250 million 0.03 of 1% (3 basis points) $96,000 For example, if the City has $600 million of assets under management with Chandler, the total annual fees would be approximately $235,000 or approximately 0.04 of 1% (4 basis points). The firm’s expertise is anticipated to garner higher investment earnings to offset the contract costs.

The total contract spans three years at an estimated $243,000 per year. Staff is requesting a total not-to-exceed of $750,000 to account for continued potential growth in the City’s investment pool (asset under management value).

STAKEHOLDER ENGAGEMENT
This contract was reviewed and coordinated with ASD staff, the City Attorney's Office, and Purchasing to ensure alignment with city policies and procedures.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because a contract for investment management services is an administrative activity which does not involve any commitment to any specific project which will not result in direct or indirect physical changes in the environment. CEQA Guidelines, section 15378(b)(5).

ATTACHMENTS
Attachment A: Contract C26193797 with Chandler Asset Management, Inc.

APPROVED BY:

Lauren Lai, Administrative Services Director
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CITY OF PALO ALTO CONTRACT NO. C26193797

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND CHANDLER ASSET MANAGEMENT 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 CHANDLER ASSET MANAGEMENT INC., a California Corporation, located at 9255 Towne Centr e Drive Suite 600, San Diego, CA 92121 (“CONSULTANT”).

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

RECITALS

A. CITY intends to transition the management of the City’s investment portfolio to a specialized investment management firm ( the “Project”) and desires to engage a consultant to provide comprehensive portfolio oversight 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 July 1, 2025 through June 30, 2028 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 Docusign Envelope ID: 4AE8689B-E5E8-4692-952A-508F7B027DEB Item 9
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Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT.

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

SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Seven Hundred Fifty Thousand Dollars ($750,000). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “ SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY.

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

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

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.

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

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

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

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

SECTION 13. PROJECT MANAGEMENT . CONSULTANT will assign Carlos Oblites Email: [email protected] 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 Docusign Envelope ID: 4AE8689B-E5E8-4692-952A-508F7B027DEB Item 9
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key personnel for any reason, the appointment of a substitute Project Manager and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s Project Manager. CONSULTANT, at CITY’s request, shall promptly remove CONSULTANT personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Services or a threat to the safety of persons or property.

CITY’s Project Manager is Christine Paras, Administrative Services Department, 250 Hamilton Ave Palo Alto, CA, zipcode: 94301, Telephone: (650) 329-2486. 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. CITY is assigning Tarun Narayan, Administrative Services Department, and Jessie Deschamps, Administrative Services Department, to represent CITY during day-to-day work on the Project.

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.

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

16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from a Claim arising from the active Docusign Envelope ID: 4AE8689B-E5E8-4692-952A-508F7B027DEB Item 9
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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 primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days ’ prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT , CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement.

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

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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:

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.

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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 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 Docusign Envelope ID: 4AE8689B-E5E8-4692-952A-508F7B027DEB Item 9
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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.

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

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

This Project is not a 9204 Public Works Project.

SECTION 28. CONFIDENTIAL INFORMATION.

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

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

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

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.

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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.

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.

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executed by the authorized representatives of the parties, shall together constitute a single binding agreement.

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

EXHIBIT A: SCOPE OF SERVICES
EXHIBIT B: SCHEDULE OF PERFORMANCE
EXHIBIT C: COMPENSATION
EXHIBIT C-1: SCHEDULE OF RATES
EXHIBIT D: INSURANCE REQUIREMENTS
EXHIBIT E: ADDITIONAL TERMS AND CONDITIONS

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

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CONTRACT No. C26193797

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

CHANDLER ASSET MANAGEMENT
INC.

Officer 1

By:

Name:

Title:

Officer 2

By:

Name:

Title:

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Nicole Dragoo
Secretary
Jayson Schmitt
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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 thi s Scope of Services.

CONSULTANT will provide the following services:

1. Full-time investment management services in accordance with the City’s Investment Policy and State law.

2. Assist with reviewing and recommending any appropriate amendments to the City's Investment Policy at the outset of the contract term and assist with the annual review and update of the Investment Policy.

3. Assist CITY with developing an appropriate cash flow model to minimize balances held in highly liquid but low interest accounts (e.g., bank accounts and LAIF).

4. Assist the City with maturity analysis.

5. Establish and recommend appropriate investment benchmarks.

6. Provide credit analysis and assess risk of portfolio investments.

7. Work with CITY’s third-party custodian (currently US Bank) for safekeeping of securities and provide services required to execute and settle investment trades.

8. Recommend and justify appropriate investment benchmarks.

9. Provide detailed monthly and quarterly reports to City Council of investment portfolio activity, performance, holdings by investment type, maturity, broker, weighted average maturity, duration, benchmark comparison, and other such reports normally provided to governmental clients. Provide separate annual portfolio holding, activity, and performance reports and relevant GASB reports based on the City’s fiscal year (July 1 – June 30).

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10. Be available to Administrative Services Department staff in a timely manner by telephone or email and meet with and provide information to Administrative Services Department staff upon request, and if requested, to other interested parties such as the Finance Committee, City Council and/or City Manager.

11. Attend City Council meetings for the annual review of the investment policy.

12. Provide assurance of portfolio compliance with all federal and State of California laws as well as ordinances, resolutions, and policies of the City relating to the investment of public funds.

13. Annually perform due diligence reviews of the broker/dealers, custodian bank, and financial institutions utilized by the City and provide supporting documentation to the City.

14. Will not act as a CITY’s custodian of assets in the account or have possession of any such assets.

15. Will act as a fiduciary agent to CITY, serving as an independent advisor to represent the best interests of the CITY.

16. Demonstrate independence from any financial institution or securities brokerage firm, or fully disclose any such relationships relevant to qualified investments for public sector entities.

17. Keep CITY informed of changing economic conditions through flash emails, daily, weekly, and/or monthly reports including discussion of key economic indicators relevant to the regional, State, national, and global economies.

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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. City Council reports of investment
portfolio, as described in SCOPE OF

SERVICES
Monthly and quarterly

2. Review and recommendation of
appropriate amendments to the City’s
Investment Policy.

Outset of contract and annually

3. Review of brokers/dealers, custodian bank
and financial institutions utilized by the
City and provide supporting
documentation.

Annually

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EXHIBIT C

COMPENSATION

CITY agrees to compensate CONSULTANT for the Services performed in accordance with the terms and conditions of this Agreement, including Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4 of the Agreement), based on the hourly rate schedule attached as Exhibit C-1.

The compensation to be paid to CONSULTANT under this Agreement for all S ervices, any specified reimbursable expenses, and Additional Services (if any, per Section 4), shall not exceed the amount(s) stated 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.

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 reimburs able 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:

CITY will compensate CONSULTANT monthly on an amount calculated on the average market value of CITY’s non-pool, non-money market investment portfolio, including accrued interest, in accordance with the following schedule:

Asset Under Management Investment Management Fee
First $100 Million of Assets 0.06 of 1% (6 basis points) Next $100 Million of Assets 0.04 of 1% (4 basis points) Assets in Excess of $200 Million 0.03 of 1% (3 basis points) Total 3-Year Contract Not-to-Exceed Amount $750,000

The fees above do not include any custody fees that may be charged by CITY’s bank or other third-party custodian.

Fees will be prorated to the effective date of termination on the basis of actual days elapsed, and any unearned potion of prepaid fees shall be refunded. CITY is not required to pay any start-up or closing fees. CONSULTANT may not assess penalty fees against the CITY.

CONSULTANT shall bill fees monthly, in arrears.

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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

ADDITIONAL TERMS AND CONDITIONS

1. Investment Policy. In investing and reinvesting the CITY’s assets, CONSULTANT shall comply with the CITY’s Investment Policy, as may be amended. The Investment Policy as of the date of this Agreement is attached hereto as Exhibit E-1.

2. Authority of Chandler. CONSULTANT is hereby granted full discretion to invest and reinvest all assets under its management in any type of security it deems appropriate, subject to the instructions given or guidelines set by Representative.

3. Proxy Voting. CONSULTANT will vote proxies on behalf of the CITY unless otherwise instructed.  CONSULTANT has adopted and implemented written policies and procedures and will provide the CITY with a description of the proxy voting procedures upon request.  CONSULTANT will provide information regarding how the CITY’s proxies were voted upon request.  To request proxy policies or other information, please contact us by mail at the address provided, by calling 800-317-4747 or by emailing your request to [email protected].

4. Custody of Securities and Funds. CONSULTANT shall not have custody or possession of the funds or securities that the CITY has placed under its management. The CITY shall appoint a custodian to take and have possession of its assets. The CITY recognizes the importance of comparing statements received from the appointed custodian to statements received from CONSULTANT. The CITY recognizes that the fees expressed above do not include fees the CITY will incur for custodial services.

5. Valuation.  CONSULTANT will value securities held in portfolios managed by CONSULTANT no less than monthly. Securities or investments in the portfolio will be valued in a manner determined in good faith by CONSULTANT to reflect fair market value.

6. Investment Advice. The CITY recognizes that the opinions, recommendations and actions of CONSULTANT will be based on information deemed by it to be reliable, but not guaranteed to or by it. Provided that CONSULTANT acts in good faith, the CITY agrees that CONSULTANT will not in any way be liable for any error in judgment or for any act or omission, except as may otherwise be provided for under the Federal Securities laws or other applicable laws.

7. Payment of Commissions. CONSULTANT may place buy and sell orders with or through such brokers or dealers as it may select. It is the policy and practice of CONSULTANT to strive for the best price and execution and for commission and discounts which are competitive in relation to the value of the transaction and which comply with Section 28(e) of the Securities and Exchange Act. Nevertheless, it is understood that CONSULTANT may pay a commission on transactions in excess of the amount another broker or dealer may charge, and that CONSULTANT makes no warranty or representation regarding commissions paid on transactions hereunder.

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8. Other Clients. It is further understood that CONSULTANT may be acting in a similar capacity for other institutional and individual clients, and that investments and reinvestments for the CITY's portfolio may differ from those made or recommended with respect to other accounts and clients even though the investment objectives may be the same or similar. Accordingly, it is agreed that CONSULTANT will have no obligation to purchase or sell for the CITY's account any securities which it may purchase or sell for other clients.

9. Confidential Relationship. The terms and conditions of this Agreement, and all information and advice furnished by either party to the other shall be treated as confidential and shall not be disclosed to third parties except (i) as required by law, rule, or regulation, (ii) as requested by a regulatory authority, (iii) for disclosures by either party of information that has become public by means other than wrongful conduct by such party or its officers, employees, or other personnel, (iv) for disclosures by either party to its legal counsel, accountants, or other professional advisers, (v) as necessary for CONSULTANT to carry out its responsibilities hereunder, or (vi) as otherwise expressly agreed by the parties.

10. Receipt of Brochure and Privacy Policy. The CITY hereby acknowledges receipt of the disclosure statement or "brochure" and “brochure supplement” also known as Part 2A and Part 2B of Form ADV, required to be delivered pursuant to Rule 2043 of the Investment Advisers Act of 1940 (Brochure). The CITY further acknowledges receipt of CONSULTANT’s Privacy Policy, as required by Regulation S-P.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 17, 2025
Report #:2504-4489
TITLE
Approval of Professional Services Contract Number C25193814 with Alta Housing BMR Services LLC in an Amount Not to Exceed $450,600 for Administration and Consulting Services for the City's Below Market Rate Housing Program for a Period of Two Years and Approve a FY 2026 Budget Amendment in the Residential Housing In-Lieu Fund. CEQA Status: Exempt under CEQA Guidelines 15262.

RECOMMENDATION
Staff recommends that the City Council:

1. Approve and authorize the City Manager or their designee to execute Contract No.

C25193814 (Attachment A) with Alta Housing BMR Services LLC, to provide administration and consulting services for the Below Market Rate Housing Program over a two-year term in the amount not-to-exceed $450,600; and

2. Amend the Fiscal Year 2026 Budget Appropriation in the Residential Housing In-Lieu Fund (requires 2/3 approval) by:

1. Increasing the Planning and Development Services contract services appropriation in the amount of $31,000; and

2. Decreasing the Ending Fund Balance in the amount of $31,000.

EXECUTIVE SUMMARY
The City of Palo Alto released a Request for Proposals (RFP) for administration of the City’s Below Market Rate (BMR) housing program in February 2025. Staff reviewed the proposals and selected Alta Housing BMR Services LLC to provide administration and consulting services for the City’s BMR Program. Staff recommends that City Council approve and enter into a twenty- four-month contract with Alta Housing for an amount not to exceed $450,600.

BACKGROUND
Palo Alto adopted one of the nation’s first inclusionary zoning policies requiring that all residential development include ten percent of units as BMR units. In 1972, the policy required a mix of housing types and affordability levels within residential Planned Unit Developments. In 1973, the City Council expanded the policy to all new residential developments. In 1974, Item 10
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anticipating the sale of BMR units in several new developments, the City contracted with Alta Housing to administer the City’s BMR Program. The BMR program Administrator’s responsibilities include managing the initial sale and re-sale of BMR ownership units and the occupancy of BMR rental units. Since the program’s inception, BMR administration has been funded through the Residential Housing Fund.

Under contract with the City, the BMR Administrator provides the following services:
•Administering the sale and re-sale of new and existing BMR owner units; •Maintaining the home purchase waiting list;
•Monitoring occupancy of BMR ownership units;
•Conducting annual income certifications of BMR rental units; and •Addressing special issues related to the program.

While the BMR Administrator performs most tasks required for the ongoing administration of the home ownership and rental components of the BMR program, Planning and Development Services Department staff also devote time to the BMR program. Staff responsibilities primarily include negotiating BMR requirements for new developments, drafting and managing agreements, leading program improvement initiatives, and management oversight of the service provider contractor performance.

ANALYSIS
Solicitation Process
The term of the City’s existing agreement with Alta Housing is concluding on June 30, 2025. As a result, the City issued a Request for Proposals (RFP) for BMR program administration on January 30, 2025, for a term of two years. Table 1 summarizes the RFP process.

The City received three responses for the BMR RFP issued. Staff formed a review panel following the standard procedures to review the proposals received and evaluate them based on the scoring criteria established. The proposals received from Alta Housing BMR Services LLC, Table 1: Summary of Request for Proposal
Proposal Description RFP193814 Below Market Rate Housing Administrator
Proposed Length of Project 2 years
Number of Vendors Notified 3,465
Number of Proposal Packages Downloaded 24
Total Days to Respond to Proposal 42
Pre-Proposal Meeting No
Pre-Proposal Meeting Date N/A
Number of Proposals Received 3
Proposal Price Range $84,680 - $316,136
Public Link to Solicitation https://procurement.opengov.com/portal/palo- alto-ca/projects/144215
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MNS Engineers, Inc., and Housing Inc. were deemed to be complete. The proposed cost of the scope of services provided by the firms ranged between $84,680 and $316,136 per year, with Alta Housing submitting a proposed budget of $225,300 per year.

An Intent to Award the contract to Alta Housing was issued on April 8, 2025. Alta Housing provided a comprehensive and well-organized proposal that specifically addressed the elements listed in the RFP. The proposal demonstrated a high quality of content and a strong understanding of Palo Alto’s BMR program. It balanced program compliance with responsiveness to resident needs and included proposed innovations to improve program effectiveness and meet the evolving needs of the program.

Alta Housing was selected based on its strong performance across all evaluation criteria. The organization has administered the City’s BMR program continuously for over 40 years, providing consistent service and institutional knowledge. Their experienced staff is able to offer in-person and multilingual support with an office in Palo Alto to ensure accessibility. Alta Housing has demonstrated financial stability, met contract timelines reliably, and maintained compliance with applicable laws and City policies.

Below Market Rate Program Administration
With the selection of Alta Housing, the administration of the program will continue uninterrupted. There are 250 BMR ownership units and 357 BMR rental units managed by Alta Housing as part of the City’s inclusionary housing program. There are an additional 72 entitled BMR inclusionary units that could come online during the contract period. Alta Housing coordinates the sale of both newly built BMR units and the resale of existing units. Sales activities include establishing resale prices; marketing units to the waiting list; scheduling open houses; qualifying and selecting buyers; coordinating the transaction between the buyer, seller, lender, and escrow; and explaining the requirements of the BMR deed restrictions. Alta Housing maintains a database of all units and statistics on the number and characteristics of the households served by the program.

The ownership BMR units require periodic monitoring of occupancy and title, which Alta Housing conducts in cooperation with City staff. Monitoring activities include reviewing online assessor’s records to detect transfers in title or ownership and an annual self-certification letter to owners. These letters verify owner occupancy, reminding the owners of program rules, and provide updates on procedural changes. If a violation of a deed restriction is discovered, Alta Housing undertakes initial attempts to remedy the situation. More complex enforcement matters are referred to planning staff and/or the City Attorney.

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for homeownership, understanding credit and mortgage financing, and the regulations of the BMR program.

POLICY IMPLICATIONS
The recommendation in this report does not represent any change to the City’s existing policies. Implementation of the Agreement is consistent with the City’s adopted Housing Element and various housing policies that support the provision of affordable housing and a variety of housing opportunities.

FISCAL/RESOURCE IMPACT
The administration of the BMR program has historically been funded from residential housing in-lieu fees collected from ownership residential developments of three or more units (including mixed-use with ownership housing) in lieu of providing the required below market rate unit(s) to low- and moderate-income households (Palo Alto Municipal Code Chapter

16.65). As of March 10, 2025, the preliminary unaudited balance of the Residential Housing In- Lieu special revenue fund is $3,202,420.

The Fiscal Year 2026 Proposed Budget includes approximately $195,000 for contract services related to the BMR program. At the time of budget development, the request for proposals was underway and the total cost of the new contract was not included in the budget. The Alta Housing proposal is for $225,300 per year for a two-year total of $450,600. Therefore, an increase of $31,000 to the FY 2026 budget is recommended to align with the proposed annual contract cost. For reference, the prior contract for BMR administration was $178,278 for both FY 2024 and FY 2025 for a total of $356,556. This increase can be partially tied to increased staff time necessary for initial BMR sales, general trends of increased labor costs, and projected increases in BMR sales activities during the contract period.

Funding for the second year of the contract will be included as part of the FY 2027 budget development process and subject to Council approval.

STAKEHOLDER ENGAGEMENT
An RFP for the project was posted on OpenGov Procurement, the City’s eProcurement platform, and 3,465 vendors were notified. The solicitation period was posted for 42 days, and 3 proposals were received. The solicitation closed on March 12, 2025.

ENVIRONMENTAL REVIEW
The approval of an agreement for administration and consulting services is not an action subject to environmental review under the California Environmental Quality Act (CEQA).

ATTACHMENTS
Attachment A: Alta Housing BMR Services LLC, Contract C25193814 APPROVED BY:

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CITY OF PALO ALTO CONTRACT NO. C26193814

AGREEMENT FOR PROFESSIONAL SERVICES

BETWEEN THE CITY OF PALO ALTO AND ALTA HOUSING BMR SERVICES LLC This Agreement for Professional Services (this “Agreement”) is entered into as of the 1st day of July, 2025 (the “Effective Date”), by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and ALTA HOUSING BMR SERVICES LLC, a California corporation (#200318610121), located at 3460 W. Bayshore Road Suite # 104 Palo Alto, CA 94303 (“CONSULTANT”).

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

RECITALS
A. CITY intends to provide administrative services for the City’s Below Market Rate Program (the “Project”) and desires to engage a consultant to manage program outreach, ownership, rental, and the Stanford West BMR unit programs within the policy framework set forth by the City 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.

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 Four Hundred Fifty Thousand Six Hundred Dollars ($450,600). 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.SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the Services 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 email address [email protected] 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 Agreement 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 Item 10
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stated construction budget by ten percent (10%) or more, CONSULTANT shall make recommendations to CITY for aligning the Project 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 Services 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 CITYpertaining to or in connection with any retirement, health or other benefits that CITY may offer its employees. CONSULTANT will 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 related to CONSULTANT’s performance of the Services, 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 CITYshall 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 City 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. 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. SECTION 13. PROJECT MANAGEMENT.CONSULTANT will assign Sheryl Klein, Email: [email protected], Telephone: 650-321-9709 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 Project Manager. CONSULTANT, at CITY’s request, shall promptly remove CONSULTANT personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Services or a threat to the safety of Item 10
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persons or property. CITY’s Project Manager is Robert Feign, Planning and Development Services Department, 250 Hamilton Ave. Palo Alto, CA, 94301, Telephone: 650-329-2195. 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 14. OWNERSHIP OF MATERIALS.All work product, including without limitation, all writings, drawings, studies, sketches, photographs, plans, reports, specifications, computations, models, recordings, data, documents, and other materials and copyright interestsdeveloped 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 City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the Scope of Services. SECTION 15. AUDITS. CONSULTANT agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for four (4) years from the date of final payment, CONSULTANT’s records pertaining to matters covered by this Agreement, including without limitation records demonstrating compliance with the requirements of Section 10 (Independent Contractor). CONSULTANT further agrees to maintain and retain accurate books and records in accordance with generally accepted accounting principles for at least four (4) years after the expiration or earlier termination of this Agreement or the completion of any audit hereunder, whichever is later. SECTION 16. INDEMNITY. 16.1. To the fullest extent permitted by law, CONSULTANT shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorney’s fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified 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 Item 10
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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 29.4 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 primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days’ prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT’s liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. If CONSULTANT fails to perform any of its material Item 10
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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 will 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 Services 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: To CITY: Office of the City ClerkCity of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the Project 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.

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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 Section 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 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 the 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, CONSULTANT shall comply with the following Zero Waste requirements: (a) All printed materials provided by CONSULTANT to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or Item 10
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greater post-consumer material and printed with vegetable-based inks.(b) Goods purchased by CONSULTANT 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) hours 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 Section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 26. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS.26.1.This Project is not subject to prevailing wages and related requirements. CONSULTANT is not required to pay prevailing wages and meet related requirements under the California Labor Code and California Code of Regulations in the performance and implementation of the Project if the contract: (1) is not a public works contract;(2) is for a public works construction project of $25,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j); or (3) is for a public works alteration, demolition, repair, or maintenance project of $15,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j). SECTION 27. CLAIMS PROCEDURE FOR “9204 PUBLIC WORKS PROJECTS”. For purposes of this Section 27, a “9204 Public Works Project” means the erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind. (Cal. Pub. Cont. Code § 9204.) Per California Public Contract Code Section 9204, for Public Works Projects, certain claims procedures shall apply, as set forth in Exhibit F, entitled “Claims for Public Contract Code Section 9204 Public Works Projects”.

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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 Section 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 SERVICESEXHIBIT B: SCHEDULE OF PERFORMANCE EXHIBIT C: COMPENSATION EXHIBIT C-1: SCHEDULE OF RATESEXHIBIT D: INSURANCE REQUIREMENTS THIS AGREEMENT IS NOT COMPLETE UNLESS ALL SELECTED EXHIBITS ARE ATTACHED.

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CONTRACT No. C26193814 SIGNATURE PAGEIN 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 ManagerAPPROVED AS TO FORM: __________________________ City Attorney or designeeCONSULTANT ALTA HOUSING BMR SERVICES LLCOfficer 1By: Name: Randy TsudaTitle: CEO & President, Alta [email protected] Officer 2(Required for Corp. or LLC) By: Name: Sheryl KleinTitle: COO, Alta [email protected] Item 10
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EXHIBIT ASCOPE OF SERVICESCONSULTANT 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.CONSULTANT shall provide professional services for the City’s Below Market Rate (BMR) housing program in compliance with policy, guidelines, applicable deed restrictions, BMR Program Procedures Manual and in a manner which increases affordable housing opportunities for low- and moderate-income households. The CONSULTANT shall manage program outreach, ownership, rental, and the Stanford West BMR unit programs within the policy framework set forth by the City and act with independent judgement to ensure deliverables are met in accordance with the terms of this exhibit. TASK 1 - PROGRAM OUTREACH:CONSULTANT shall handle all questions and comments through CONSULTANT’S office. CONSULTANT’S BMR assistant and Program Administrator are to be available to take phone calls, e-mails, and walk-ins Monday through Friday from 8:00 a.m. to 5:00 p.m. CONSULTANT shall do program marketing and outreach via CONSULTANT’S search-engine optimized program information on CONSULTANT’S website, posting flyers at local community centers, libraries, and affordable housing communities as well as to other local affordable housing providers to spread the word about the programs offered by the CONSULTANT.TASK 2 - OWNERSHIP PROGRAM: 1. Maintain all applicant information and perform an annual update to ensure applicants are still interested and/or qualified for the BMR program and to assist in managing the size of the waiting list.2. Provide a list of primary lender contacts, serve as an intermediary between the buyer and lender to make sure the buyer understands all costs and details associated with the loan and if needed, point the buyer towards other subordinate loans to assist with the purchase. CONSULTANT shall also actively look to add new lenders to the BMR lender list. 3. Use the most current version of the California Association of Realtors (CAR) purchase forms for use of each BMR sale. CONSULTANT shall coordinate the review, explanation, and signing of the Purchase Agreement. CONSULTANT shall coordinate with the escrow company to send over all signed documents and escrow Item 10
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instructions. CONSULTANT shall assist in holding open houses and ordering necessary inspections. CONSULTANT shall stay in contact with escrow officer throughout the escrow period to ensure the sale closes on time. Copies of all closing documents to be sent to the CONSULTANT’S office after closing and filed in the respective BMR owner’s file.4. Committing to promoting longevity of the BMR housing inventory shall make every effort to ensure BMR owners’ compliance by maintaining consistent contact with relevant HOA’s and to investigate every complaint and/or concern received regarding a BMR owner potentially being in violation of the Deed Restrictions, e.g., renting out a portion of or their entire home.5. Troubleshoot homeownership problems that arise with BMR owners that may endanger the BMR Purchase stock. CONSULTANT shall have an open-door policy to encourage BMR owners and renters to seek assistance on any situation which may jeopardize their home. CONSULTANT shall reach out to Alta Housing Resident Services Department for referrals and/or resources to assist owners with various services.6. Work with a local HUD approved housing agency to provide a bi-annual workshop in Palo Alto, covering topics ranging from program eligibility requirements to loan financing. The workshop is offered at no charge to attendees. A prospective buyer must have attended a workshop to be eligible to purchase a BMR home. CONSULTANT shall be present at every seminar to meet applicants and to answer program questions.7. Mail a letter out annually to each BMR owner requiring copies of documentation verifying primary owner-occupancy. Documentation includes utility bills, pay stubs, tax returns and property tax bills. 8. Work closely with the CITY to formalize a screening and eligibility process whereby BMR owners facing financial hardship due to unforeseen special assessments could get assistance from the CITY. CONSULTANT shall interview the BMR owner, obtain all relevant income vs. expense documents to prove hardship and either refers the BMR owner to the CITY for approval or denial of the request based on written criteria. 9. Work closely with CITY to assist with creation of and assessment of new BMR Agreements for upcoming housing developments. CONSULTANT shall be involved prior to Regulatory/Development Agreements are signed, CONSULTANT shall review and provide feedback on the language to ensure the Agreements are understandable from the perspective of implementation. 10. Assist the CITY in the growth of the BMR Purchase program by acquisition and rehabilitation of BMR units and properties.11. Coordinate with CITY staff in the implementation of any BMR Ordinance revisions. 12. Provide advice, consultation, and assistance to CITY staff in negotiations of BMR agreements for new housing developments. 13. Coordinate the process of evaluation, negotiation and financing related to the acquisition and rehabilitation, if necessary, of off-site units or properties contributed under the BMR program. 14. Maintain records and statistics as required by CITY, specifically; a. Annual statistics about the BMR ownership and rental units and the households served; and b. A permanent database and record of all ownership units placed in the program Item 10
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and statistics about current BMR owners, and all households served over the life of the program, including maintenance of files on each BMR owner unit and retention of copies of the actual recorded deed restrictions for the ownership units; andc. Contact information for current BMR owners with mailing labels and, when available, telephone numbers and e-mail addresses. 15. Conduct bi-annual workshops for BMR owners about estate planning. The workshops will include information about what is a living trust, the potential benefits, and the process of putting their residence in a living trust. TASK 3 - RENTAL PROGRAM: 16. Work closely with applicants who are next in line for BMR rental units, not including Stanford West Apartments, to answer questions about the property and help gather all necessary documentation for income verification. Applications are approved once all verifications and background checks have been received, income and asset calculations are complete, and a determination is made regarding a household’s eligibility. Applicants who do not meet the eligibility criteria are sent denial letters with an option to appeal within 14 days. 17. Send out notices to all BMR tenants approximately 90 days in advance of the effective date, schedules re-certification interviews, obtains relevant income and asset documents, completes income calculations, and determines continued eligibility by the process described above. Tenants who are deemed over income are notified that they have 90 days to either move out of the unit or start paying market rate rent. CONSULTANT shall notify site managers of the results of the tenant recertification immediately following the completion of the calculations.18. Review and approve all new BMR rental move-in files prior to occupation of a BMR unit. Annually monitor all BMR rental units to ensure that all BMR rental obligations are being met at each property and that the rents do not exceed the maximum allowable for each respective unit.19. Maintain contact with site staff and provide on-going training with property managers at BMR properties to ensure compliance with the CITYs BMR program. 20. AH staff calculates annual rent increases based on CPI and provides Developers & BMR site staff with updated move in income limits and rents based on published HCD Income limits.TASK 4 – STANFORD WEST BMR UNITS21. Continue to provide on-going training to site managers and staff to ensure compliance with the CITYs BMR program. 22. Receive quarterly reports from site managers and reviews best practices at the site level as it relates to waitlist management and tenant selection to ensure compliance with the BMR program. 23. Perform initial certification reviews, re-certification interviews, obtain relevant income and asset documents, complete income calculations and determine continued eligibility of all BMR units to assure compliance with the BMR program.

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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. Milestones Schedule1. TASK 1 - PROGRAM OUTREACHDaily/Ongoing2. TASK 2 - OWNERSHIP PROGRAM Daily/Ongoing 3. TASK 3 - RENTAL PROGRAMDaily/Ongoing4. TASK 4 – STANFORD WEST BMRDaily/Ongoing Item 10
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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 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 TASKS Fiscal Year 2026 AMOUNT Fiscal Year 2027 AMOUNT TASK 1 - PROGRAM OUTREACH $54,000 $54,000TASK 2 - OWNERSHIP PROGRAM $118,000 $118,000TASK 3 & 4- RENTAL PROGRAM and STANFORD WEST BMR $51,300 $51,300Reimbursable Expenses $2,000 $2,000Annual Compensation $225,300 $225,300Total Not to Exceed (Fiscal Years 2026+2027) $450,600REIMBURSABLE 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: postage and photocopying up to the not-to-exceed amount of: $4,000.

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A. Travel outside the San Francisco Bay Area, including transportation and meals, if specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges, if specified as reimbursable, will be reimbursed at actual cost. All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate backup documentation and information.

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EXHIBIT C-1 SCHEDULE OF RATESCONSULTANT’s schedule of rates is as follows: POSITION HOURLY RATEPresident & CEO $300Chief Financial Officer $190Program Director/COO $190BMR Administrator $100BMR Manager $145 Item 10
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EXHIBIT DINSURANCE REQUIREMENTSCONSULTANTS 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 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 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]. 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] Item 10
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: IT Department
Meeting Date: June 17, 2025
Report #:2504-4544
TITLE
Approval of 14 Professional Services Contracts for GIS On-Call Services, supplemental staffing, and programming services: C26193271A with Lynx Technologies Inc, C26193271B with Seven Tablets Inc, C26193271C with iSpatial Techno Solutions Inc, C26193271D with Geodesy, C26193271E with UDC, C26193271F with NV5 Geospatial Inc, C26193271G with SSP Innovations, C26193271H with Timmons Group, C26193271I with Infojini Inc, C26193271J with Sybyte Technologies Inc, C26193271K with 360S2G, C26193271L with Enterprise Maps, C26193271M with Farallon Geographics, C26193271N with Arini Geographics in an Amount Not-to-Exceed $2,000,000 in Fiscal Year 2026; CEQA Status – Not a Project.

RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or designee to execute fourteen separate five-year contracts for time-limited, on-call, as-needed, GIS project support services for a collective total not-to-exceed amount of $2,000,000 in Fiscal Year 2026 with:

1. Lynx Technologies Inc, Contact Number C26193271A 1;

2. Seven Tablets Inc, Contract Number C26193271B 2;

3. iSpatial Techno Solutions Inc, Contract Number C26193271C 3;

4. Geodesy, Contract Number C26193271D 4;

5. Utility Data Contractors, LLC, Contract Number C26193271E 5;

6. NV5 Geospatial Inc, Contract Number C26193271F 6;
1 Lynx Technologies: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/lynx-technologies-c26193271a.pdf
2 Seven Tablets: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/seven-tablets-c26193271b.pdf
3 iSpatial Techno Solutions: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis- on-call/ispatial-techno-solutions-c26193271c.pdf
4 Geodesy: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/geodesy- c26193271d.pdf
5 Utility Data Contractors: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis- on-call/udc-c26193271e.pdf
6 NV5 Geospatial: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/nv5-geospatial-c26193271f.pdf
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7. SSP Innovations, Contract Number C2619327G 7;

8. Timmons Group, Contract Number C26193271H 8;

9. Infojini Inc, Contract Number C26193271I 9;

10. Sybyte Technologies Inc, Contract Number C26193271J10;

11. 360S2G, Contract Number C26193271K11;

12. Enterprise Maps, Contract Number C26193271L12;

13. Farallon Geographics Contract Number C26193271M13; and

14. Arini Geographics, Contract Number C26193271N14.

Staff will return for City Council approval in Fiscal Year 2027 through Fiscal Year 2030 based on anticipated needs in the future.

EXECUTIVE SUMMARY
With the expiration of the City’s previous GIS on-call contracts awarded in 2019, staff issued a new Request for Proposals (RFP No. 19327115) in early 2025 to identify multiple qualified vendors who can provide project-based, time-limited professional services on an as-needed basis. Following a competitive and structured evaluation process, fourteen firms are recommended for contract award based on qualifications, experience, past performance, and competitive pricing. These contracts will enable the City to meet evolving GIS project needs over the next five years.

BACKGROUND
In 2019, the City’s Information Technology Department (ITD) issued RFP (CMR #1041316) and awarded ten contracts for GIS on-call services. These contracts allowed City departments to engage qualified firms to support time-limited GIS projects through task orders. 7 SSP Innovations: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/ssp-innovations-c26193271g.pdf
8 Timmons Group: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/timmons-group-c26193271h.pdf
9 Infojini: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/infojini- c26193271i.pdf
10 Sybyte Technologies: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/sybyte-technologies-c26193271j.pdf
11 360S2G: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/360s2g- c26193271k.pdf
12 Enterprise Maps: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/enterprise-maps-c26193271l.pdf
13 Farallon Geographics: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/farallon-geographics-c26193271m.pdf
14 Arini Geographics: https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on- call/arini-geographics-c26193271n.pdf
15 January 15, 2025 GIS On-Call Professional Services RFP: https://procurement.opengov.com/portal/palo-alto- ca/projects/140924
16 May 11, 2020 City Council Staff Report: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/year-archive/2020/id-10413.pdf?t=50115.8 Item 11
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In support of the City's transition to a modern, enterprise-level GIS architecture centered on ArcGIS Enterprise, staff issued RFP No. 193271 in early 2025 to replace the expiring contracts.

The goal was to establish a new pool of qualified vendors capable of delivering these services from July 1, 2025, through June 30, 2030. The on-call structure allows the City to access GIS expertise as needed, without committing to full-time staffing.

ANALYSIS
The solicitation was posted on OpenGov, the City’s eProcurement platform, for 29 days. 3361 vendors were notified of the opportunity. The RFP closed on February 13, 2025. Work under each contract will be assigned through individual Task Orders. The City is not obliged to assign any specific amount of work to any contractor. The proposed annual not-to-exceed amount is an increase of $500,000 over the current Fiscal Year 2025 contract year. Historically, the department has utilized 65% of the not-to-exceed amount in recent years. It is estimated that 60% of the task orders will be funded by the Utilities Department in Fiscal Year 2026. Staff has received an increase in request for enhancements and process improvements which warrants the increase of the not-to-exceed amount.

1. ESOS – Electric Service Order System (New Project)
•Currently, electric service orders are tracked using manual workflows and multiple SharePoint sites. ESOS will provide a centralized, GIS-integrated portal to streamline customer service from planning through construction. This will reduce delays, improve coordination, and automate a process that is currently inefficient and fragmented.

2. Electric Utility – UNM Migration & Integration
•Migrated to Esri’s Utility Network Model (UNM) from outdated CAD-based mapping.
•Integration with SAP, Accela, Outage Management System (OMS), and Automated Utility Design (AUD) is still pending—this is a multi-year effort.

3. Future UNM Migrations – Water, Gas, Wastewater
•These utilities will require similar migrations and integrations in upcoming years.

4. Modernizing Legacy Utility Applications
•Replacing outdated, custom tools with modern ArcGIS-based systems across all utilities.

5. Electric Grid Modernization
•GIS support needed for smart grid projects: Advanced Metering Infrastructure (AMI), Distribution Management System (DMS), Fault Location, Isolation, and Service Restoration (FLISR), Electric Vehicle (EV) load forecasting, and analytics.

6. New Utility GIS Tools in Development
•Includes: Water sampling, hydrant maintenance, backflow prevention, and main replacement tracking.

7. ArcGIS Integrations
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•Laserfiche: Department-specific integrations starting FY2026. •Accela: BuildingEye replacement in progress, projected to save $60K/year in license fees.

8. Public Works Asset Management
•Transitioning from DaveyTree to an ArcGIS-based in-house system, improving SAP/Accela integration and reducing external license costs.

9. Rapid GIS Infrastructure Growth
•The City’s ArcGIS platform has quadrupled in size in two years due to rising demand for internal and public-facing apps.

Professional Services may include:
•Upgrading and maintaining the City’s GIS system
•Supporting data migration from older mapping systems to newer platforms •Building and improving web maps, dashboards, and mobile apps for staff and public use •Helping departments track and manage assets and infrastructure, such as electric lines, water pipes, and street trees
•Automating routine GIS workflows to save time and reduce errors •Connecting GIS with other City systems, for example customer service, utility management, and permitting tools
•Keeping foundational maps and spatial data up to date, such as parcels, utilities, and maintenance records
•Technical support to ensure systems/applications are secure, highly available, and performing efficiently.
•Assisting with real-time mapping and data tools for operations like outage tracking or field inspections
•Utility GIS Consultants to support migration of Water, Gas, and Wastewater data to Esri’s Utility Network Model
•System Integration Experts to connect UNM with ancillary systems (SAP, Accela, OMS, AUD, etc.)
•Electrical Utility Consultants with expertise in Smart Grid technologies and GIS alignment
•GIS Integration Specialists for linking GIS with AMI, DMS, OMS, and FLISR systems •Data Scientists/Machine Learning Engineers to develop forecasting and optimization tools (e.g., load prediction, EV planning) and supporting integration of CAD drawings into GIS, especially for utilities and public works projects Vendors were asked to provide hourly rates for roles such as project managers, software engineers, GIS analysts, database administrators, CAD engineers, and system administrators, among others.

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Table 1: Summary of Request for Proposal
Proposal Description GIS On-Call Professional Services RFP 193271 Date Solicitation was Issued January 15, 2025
Date Solicitation was Closed February 13, 2025
Proposed Length of Project 5 years
Number of Vendors Notified 3361
Number of Proposal Packages Downloaded 104
Total Days to Respond to Proposal 29
Pre-Proposal Meeting No
Pre-Proposal Meeting Date N/A
Number of Proposals Received 25
Proposal Price Range $25 – $325/hour depending on consultant roles
Public Link to Solicitation https://procurement.opengov.com/portal/pa lo-alto-ca/projects/140924
Proposals were evaluated by staff from the Information Technology Department based on criteria outlined in the RFP, including proposal quality, feasibility and effectiveness of the proposed solution, relevant experience and staff qualifications, financial stability, ability to meet deadlines, past performance with the City and other agencies, and capacity to provide ongoing support. This is an on-call contract for as-needed services, and each vendor submitted hourly rates that vary by level of service and expertise, reflecting their specialization in different areas of the scope of work. The selected vendors submitted well-structured proposals, demonstrated proven experience, and showed a strong ability to meet current and future City needs. Several have successfully worked with the City in the past and received positive feedback for their responsiveness and service delivery. In addition to technical qualifications, vendors were selected for their ability to meet operational and compliance requirements and to support the City’s long-term goals.

On-call services will be assigned on a Task Order basis. A contractor will be selected based on their resource availability and relevant expertise. Staff will be responsible for evaluating the adequacy of each task order's proposed scope of work, contractor experience, and billing rates.

To provide checks and balances, department directors or designee will be required to approve all task orders, reviewing contractor selection and budget adherence. The City Manager or designee will approve any task order over $100,000. Designated staff will manage the deliverables and budget of each task order, approving invoices to ensure that the billed hours match the hours actually worked as well as acceptance of work progress and products.

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Before entering into a task order, staff will review whether work demands and specialized skills not available internally require use of a consultant. Task orders will also require consultants provide documentation and effective knowledge transfer.

These on-call contracts are on the City’s professional services template, which permits the City to terminate without cause/for convenience by providing written notice to the contractor.

Other options include termination due to non-appropriation of funds or simply not issuing any new task orders. The contract may also be temporarily suspended by written notice of the City Manager.

FISCAL/RESOURCE IMPACT
Funding for these on-call contracts in FY 2026 ($500,000) is within proposed budgeted levels adopted by the City Council; no additional funding is requested. The Not-to-exceed amount is higher than the budgeted amount to allow for other departments to be able to utilize these on- call contracts with their contract services or capital budgets.

Funding for subsequent years of the contract will be subject to approval through the annual budget development process. The Information Technology Department is funded by an internal service fund. Approximately 49% of the department is General Fund funded with the remaining 51% funded by enterprise and special revenue funds.

STAKEHOLDER ENGAGEMENT
Vendors were evaluated by City Staff and chosen through the City’s RFP process, RFP No. 193271.

ENVIRONMENTAL REVIEW
The approval of this contract is exempt from review under the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15061(c)(3) because it can be seen that there is no possibility that the activity in question may have a significant effect on the environment.

LINKS TO CONTRACTS
GIS On-Call Project Support Services Contracts:
• Lynx Technologies Inc, Contact Number C26193271A17
• Seven Tablets Inc, Contract Number C26193271B18
17 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/lynx-technologies- c26193271a.pdf
18 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/seven-tablets- c26193271b.pdf
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• iSpatial Techno Solutions Inc, Contract Number C26193271C19 • Geodesy, Contract Number C26193271D20
• Utility Data Contractors, LLC, Contract Number C26193271E21 • NV5 Geospatial Inc, Contract Number C26193271F22
• SSP Innovations, Contract Number C2619327G23
• Timmons Group, Contract Number C26193271H24
• Infojini Inc, Contract Number C26193271I25
• Sybyte Technologies Inc, Contract Number C26193271J26 • 360S2G, Contract Number C26193271K27
• Enterprise Maps, Contract Number C26193271L28
• Farallon Geographics Contract Number C26193271M29
• Arini Geographics, Contract Number C26193271N30
APPROVED BY:

Darren Numoto, Chief Information Officer
19 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/ispatial-techno- solutions-c26193271c.pdf
20 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/geodesy- c26193271d.pdf
21 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/udc- c26193271e.pdf
22 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/nv5-geospatial- c26193271f.pdf
23 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/ssp-innovations- c26193271g.pdf
24 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/timmons-group- c26193271h.pdf
25 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/infojini- c26193271i.pdf
26 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/sybyte- technologies-c26193271j.pdf
27 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/360s2g- c26193271k.pdf
28 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/enterprise-maps- c26193271l.pdf
29 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/farallon- geographics-c26193271m.pdf
30 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/gis-on-call/arini-geographics- c26193271n.pdf
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: IT Department
Meeting Date: June 17, 2025
Report #:2504-4543
TITLE
Approval of Professional Services Contracts for SAP Enterprise Resource System On-call Programming Services: Contract C26193272A with 360S2G, C26193272B with Sage Group Technologies Inc, C26193272C with Avertra Corp, C26193272D with Amick Brown LLC, C26193272E with 2iSolutions Inc, C26193272F with the Peloton Group, C26193272G with Phoenix Business Inc, C26193272H with EPI-USE America in an Amount Not-to-Exceed $2,000,000 in Fiscal Year 2026; CEQA status – Not a project.

RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or their designee to execute eight separate five-year contracts for time-limited, on-call, as-needed, SAP project support services for a collective total not-to-exceed amount of $2,000,000 in Fiscal Year 2026 with:

1. 360S2G, Contract Number C26193272A 1;

2. Sage Group Technologies Inc, Contract Number C26193272B 2;

3. Avertra Corp, Contract Number C26193272C 3;

4. Amick Brown LLC, Contract Number C26193272D 4;

5. 2iSolutions Inc, Contract Number C26193272E 5;

6. The Peloton Group, Contract Number C26193272F 6;
1 360S2G SAP On-Call Contract No. C26193272A; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call/amick-brown-c26193272d.pdf 2 Sage Technologies Group SAP On-Call Contract No. C26193272B; https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/sage-technologies- group-c26193272b.pdf
3 Avertra SAP On-Call Contract No. C26193272C; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call/avertra-c26193272c.pdf 4 Amick Brown SAP On-Call Contract No. C26193272D; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call-project-support-services/2025-contracts/amick-brown-c26193272d.pdf 5 2iSolutions SAP On-Call Contract No. C26193272E; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call/2isolutions-c26193272e.pdf 6 Peloton Group SAP On-Call Contract No. C26193272F; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call/peloton-group-c26193272f.pdf Item 12
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7. Phoenix Business Inc, Contract Number C26193272G 7; and

8. EPI-USE America, Contract Number C26193272H 8.

Staff will return for City Council approval for services in Fiscal Year 2027 through Fiscal Year 2030 based on anticipated needs in the future.

EXECUTIVE SUMMARY
SAP is the City’s Enterprise Resource Planning (ERP) software platform for citywide financial and personnel management, and evolving business operations require a wide range of software programming projects. With the expiration of the City’s previous SAP on-call contracts awarded in 2019, staff issued a new Request for Proposals (RFP No. 193272) in early 2025 to identify multiple qualified vendors who can provide project-based, time-limited professional services on an as-needed basis. Following a competitive and structured evaluation process, eight firms are recommended for contract award based on qualifications, experience, past performance, and competitive pricing. These contracts will enable the City to meet evolving SAP requirements, upgrades and support needs over the next five years.

BACKGROUND
In 2019, the City’s Information Technology Department (ITD) issued RFP (CMR #113609) and awarded six contracts for SAP on-call services. These contracts allowed City departments to engage qualified firms to support time-limited SAP projects through task orders.

Staff issued RFP No. 19327210 in January 2025 to replace the expiring contracts. The goal was to establish a new pool of qualified vendors for contracts from July 1, 2025, through June 30, 2030. As the City continues to upgrade and expand its SAP platform - including tools like Fiori apps, business intelligence dashboards, and utility-specific solutions - specialized support is needed for tasks such as system configuration, data integration, troubleshooting, and project delivery. The on-call structure allows the City to access skilled resources for any department on a limited time basis.

ANALYSIS
The solicitation was posted on OpenGov, the City’s eProcurement platform, for 32 days; 3,339 vendors were notified of the opportunity. The RFP closed on February 17, 2025. Work under each contract will be assigned through individual Task Orders. The City is not obligated to assign any specific amount of work or budget to any contractor. The proposed annual not-to-exceed 7 Phoenix Business SAP On-Call Contract No. C26193272G; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call/phoenix-business-c26193272g.pdf 8 EPI-USE America SAP On-Call Contract No. C26193272H; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/sap-on-call/epi-use-america-c26193272h.pdf 9 June 22, 2020 City Council Staff Report no. 11360: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/year-archive/2020/id-11360.pdf 10 January 16, 2025 SAP On-Call Professional Services RFP: https://procurement.opengov.com/portal/palo-alto- ca/projects/141183
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amount increases these contracts by $350,000 over the Fiscal Year 2025 contract year. In FY2025 the department spent 95% of the not-to-exceed amount. It is estimated that 40% of the task orders will be funded by the Utilities Department in Fiscal Year 2026. Staff has received an increase in request for enhancements and process improvements which warrants the increase of the not-to-exceed amount.

FY26 through FY27 Consulting Needs:
•$1.12M for Ongoing Production Support
(Payroll/HR, CRM, Utilities, Finance, Budget) — tied to staff vacancies and operational continuity
•$1.05M for In-Progress & Planned Enhancements
(e.g., Fiori upgrades, Year-End closing automation, SAP integration, HR and utility reporting)
Tentative Pipeline Projects (FY26–FY27):
•SAP S/4 HANA Migration (Administrative Services Department, HR, Utilities) •Fiber Billing Integration
•SEW Portal Upgrade Project (Utilities)
•Telecom OSS/BSS Project (Utilities)
•Bill Redesign Project (Utilities)
•OMS Upgrade Project (Utilities)
Professional Services may include:
•Upgrading and customizing the City’s SAP software to meet changing business needs •Improving user interfaces and staff experience
•Supporting payroll, timekeeping, benefits, and HR processes •Enhancing financial and utility billing systems
•Developing dashboards and reports
•Troubleshooting technical issues and keeping critical systems highly available •Integrating SAP with other City systems
•Providing expert advice and hands-on support for specialized projects across departments
Vendors were asked to provide hourly rates for a range of specialized SAP roles, including developers, analysts, architects, and project managers. These roles support key areas such as finance, human resources, utility billing, procurement, customer service, data reporting, system security, and application development.

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Table 1: Summary of Request for Proposal
Proposal Description SAP On-Call Professional Services RFP 193272 Date Solicitation was Issued January 16, 2025
Date Solicitation was Closed February 17, 2025
Proposed Length of Project 5 years
Number of Vendors Notified 3339
Number of Proposal Packages Downloaded 67
Total Days to Respond to Proposal 32
Pre-Proposal Meeting No
Pre-Proposal Meeting Date N/A
Number of Proposals Received 26
Proposal Price Range $45 – $250/hour (depending on consultant roles as outlined above)
Public Link to Solicitation https://procurement.opengov.com/portal/pa lo-alto-ca/projects/141183
Proposals were evaluated by staff from the Information Technology and Utilities Departments based on criteria outlined in the RFP, including proposal quality, feasibility and effectiveness of the proposed solution, relevant experience and staff qualifications, financial stability, ability to meet deadlines, past performance with the City and other agencies, and capacity to provide ongoing support. This is an on-call contract for as-needed services, and each vendor submitted hourly rates that vary by level of service and expertise, reflecting their specialization in different areas of the scope of work. The selected vendors submitted well-structured proposals, demonstrated proven experience, and showed a strong ability to meet current and future City needs. Several have successfully worked with the City in the past and received positive feedback for their responsiveness and service delivery. In addition to technical qualifications, vendors were selected for their ability to meet operational and compliance requirements and to support the City’s long-term goals.

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These contracts operate on an on-call, project-by-project basis and do not guarantee a minimum level of work or budget. The contract terms allow the City to terminate without cause/for convenience by providing written notice to the contractor. In the event the City finds itself facing a challenging budget situation, and it is determined that City resources need to be refocused elsewhere, the City can terminate. Other options include termination due to non- appropriation of funds or amending the contract to reduce the cost, for example, by reducing the scope of work. The contract may also be temporarily suspended by written notice of the City Manager.

FISCAL/RESOURCE IMPACT
Funding for these on-call contracts in FY 2026 ($350,000) is within proposed budgeted levels; no additional funding is requested. The not-to-exceed amount is higher than the budgeted amount to allow other departments to utilize these on-call contracts with their approved operating and capital budgets.

STAKEHOLDER ENGAGEMENT
Service providers were evaluated by City Staff and chosen through the City’s RFP process, RFP No. 193272.

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LINKS TO CONTRACTS
SAP On-Call Project Support Services Contracts:
• 360S2G SAP On-Call Contract No. C26193272A11
• Sage Group Technologies SAP On-Call Contract No. C26193272B12 • Avertra SAP On-Call Contract No. C26193272C13
• Amick Brown SAP On-Call Contract No. C26193272D14
• 2iSolutions SAP On-Call Contract No. C26193272E15
• Peloton Group SAP On-Call Contract No. C26193272F16
• Phoenix Business SAP On-Call Contract No. C26193272G17 • EPI-USE America SAP On-Call Contract No. C26193272H18 APPROVED BY:

Darren Numoto, Chief Information Officer
11 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/360s2g- c26193272a.pdf
12 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/sage- technologies-group-c26193272b.pdf
13 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/avertra- c26193272c.pdf
14 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/amick-brown- c26193272d.pdf
15 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/2isolutions- c26193272e.pdf
16 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/peloton-group- c26193272f.pdf
17 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/phoenix- business-c26193272g.pdf
18 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on-call/epi-use-america- c26193272h.pdf
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: IT Department
Meeting Date: June 17, 2025
Report #:2504-4542
TITLE
Approval of Eight Professional Services Contracts for On-Call IT Project Support and supplemental staffing: Contract C26193247A with INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc in an Amount Not to Exceed $1,500,000 in Fiscal Year 2026; CEQA Status – Not a Project;

RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or designee to execute eight separate five-year contracts for time-limited, on- call, as-needed, IT project support services for a collective total not-to-exceed amount of $1,500,000 in Fiscal Year 2026 with:

1. INSPYR Solutions, Contract Number C26193247A 1;

2. AgreeYa Solutions, Contract Number C26193247B 2;

3. TechLink Systems, Contract Number C26193247C 3;

4. Compunnel Software Group, Contract Number C26193247D 4;

5. Progile Tech, Contract Number C26193247E 5;

6. Omm IT Solutions, Contract Number C26193247F 6;
1 INSPYR Solutions, Contract No. C26193247A; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/it-on-call/inspyr-solutions-llc-c26193247a.pdf 2 AgreeYa Solutions, Contract No. C26193247B; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/it-on-call/agreeya-solutions-c26193247b.pdf 3 TechLink Systems, Contract No. C26193247C; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/it-on-call/techlink-systems-c26193247c.pdf 4 Compunnel Software Group, Contract No. C26193247D; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/it-on-call/compunnel-software-group-c26193247d.pdf 5 Progile Tech, Contract No. C26193247E; https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr- attachments/it-on-call/progile-tech-c26193247e.pdf
6 Omm IT Solutions, Contract No. C26193247F: https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/it-on-call/omm-it-solutions-c26193247f.pdf Item 13
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7. Infojini, Contract Number C26193247G 7; and

8. California Creative Solutions, Contract Number C26193247H 8.

Staff will return for City Council approval for services in Fiscal Year 2027 through Fiscal Year 2030 based on anticipated needs in the future.

EXECUTIVE SUMMARY
With the expiration of the City’s previous IT on-call contracts awarded in 2020, staff issued a new Request for Proposals (RFP No. 1932479) in early 2025 to identify multiple qualified vendors who can provide project-based, time-limited professional services on an as-needed basis. Following a competitive and structured evaluation process, eight firms are recommended out of 34 proposals (two proposals were deemed unresponsive) for contract award based on qualifications, experience, past performance, and competitive pricing. These contracts will enable the City to meet evolving IT project needs over the next five years.

BACKGROUND
In 2019, the City’s Information Technology Department (ITD) issued RFP (CMR #1136010) and awarded seven contracts for IT on-call services. These contracts allowed City departments to engage qualified firms to support time-limited IT projects through task orders.

Recognizing the continuing and evolving need for specialized IT support across various domains and departments, staff issued RFP No. 193247 in early 2025 to replace the expiring contracts.

The goal was to establish a new pool of qualified vendors capable of delivering these services from July 1, 2025, through June 30, 2030. The on-call structure allows the City to access skilled resources as needed for any department for a limited time. The proposed annual not-to-exceed amount increases by $250,000 over the Fiscal Year 2025 contract year.

ANALYSIS
Solicitation Process
The solicitation was posted on OpenGov, the City’s eProcurement platform, for 32 days. 3,339 vendors were notified of the opportunity. The RFP closed on February 17, 2025. Work under each contract will be assigned through individual Task Orders. The City is not obliged to assign any specific amount of work to any contractor. Historically, the department has utilized 50% of the not-to-exceed amount in recent years. As the City’s reliance on technology continues to 7 Infojini, Contract No. C26193247G; https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr- attachments/it-on-call/infojini-c26193247g.pdf
8 California Creative Solutions, Contract No. C26193247H; https://www.paloalto.gov/files/assets/public/v/1/it- department/cmr-attachments/it-on-call/california-creative-solutions-c26193247h.pdf 9 January 16, 2025 IT On-Call Professional Services RFP: https://procurement.opengov.com/portal/palo-alto- ca/projects/141382/addenda
10 June 22, 2020 City Council Staff Report: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2020/id-11360.pdf Item 13
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grow, there is an increasing demand for enhanced capabilities such as workflow automation, interactive dashboards, SharePoint improvements, and data governance. Staff has received an increase in requests for enhancements and process improvements which warrants the increase of the not-to-exceed amount.

Professional services may include:
•Server, network, and infrastructure
•Cloud migration and evaluation
•Security and audit compliance
•Disaster recovery and business continuity
•System architecture, VoIP, SharePoint, Exchange, and firewall •Application development, report generation, and mobile device management Vendors were requested to submit hourly rates for multiple labor categories, including:
•Project Manager
•Systems Administrator
•Helpdesk Technician (Levels 1 and 2)
•Network Engineer
•Application Developer
•Web/SharePoint Developer
•Financial Analyst
•Business Analyst
•BI Developer
Table 1: Summary of Request for Proposal
Proposal Description IT On-Call Professional Services RFP 193247 Date Solicitation was Issued January 16, 2025
Date Solicitation was Closed February 17, 2025
Proposed Length of Project 5 years
Number of Vendors Notified 3339
Number of Proposal Packages Downloaded 107
Total Days to Respond to Proposal 32
Pre-Proposal Meeting No
Pre-Proposal Meeting Date N/A
Number of Proposals Received 34, 2 proposals were deemed non- responsive
Proposal Price Range $12 – $200/hour depending on consultant roles as outlined above
Public Link to Solicitation https://procurement.opengov.com/portal/pa lo-alto-ca/projects/141382
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Proposals were evaluated by staff from the Information Technology Department based on criteria outlined in the RFP, including proposal quality, feasibility and effectiveness of the proposed solution, relevant experience and staff qualifications, financial stability, ability to meet deadlines, past performance with the City and other agencies, and capacity to provide ongoing support. This is an on-call contract for as-needed services, and each vendor submitted hourly rates that vary by level of service and expertise, reflecting their specialization in different areas of the scope of work. The selected vendors submitted well-structured proposals, demonstrated proven experience, and showed a strong ability to meet current and future City needs. Several have successfully worked with the City in the past and received positive feedback for their responsiveness and service delivery. In addition to technical qualifications, vendors were selected for their ability to meet operational and compliance requirements and to support the City’s long-term goals.

These on-call contracts do not guarantee the vendor any minimum level of work, and specific projects will be assigned by Task Order as needed and approved by the City. In addition, the contracts permit the City to terminate without cause/for convenience by providing written notice to the contractor. In the event the City finds itself facing a challenging budget situation, and it is determined that City resources need to be refocused elsewhere, the City can terminate for convenience. Other options include termination due to non-appropriation of funds or simply choosing not to assign any new task orders. The contract may also be temporarily suspended by written notice of the City Manager.

FISCAL/RESOURCE IMPACT
Funding for these on-call contracts in FY 2026 ($380,000) is within levels already proposed for IT; no additional funding is requested. The not-to-exceed amount is higher than the budgeted amount to allow for other departments to be able to utilize these on-call contracts with their own contract services budget.

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Funding for subsequent years of the contract will be subject to approval through the annual budget development process. ITD is funded by an internal service fund. Approximately 49% of the department is General Fund funded with the remaining 51% funded by enterprise and special revenue funds.

STAKEHOLDER ENGAGEMENT
Vendors were evaluated by City Staff and chosen through the City’s RFP process, RFP No. 193247.

LINKS TO CONTRACTS
IT On-Call Project Support Services Contracts
• INSPYR Solutions, Contract Number C26193247A11
• AgreeYa Solutions, Contract Number C26193247B12
• TechLink Systems, Contract Number C26193247C13
• Compunnel Software Group, Contract Number C26193247D14 • Progile Tech, Contract Number C26193247E15
• Omm IT Solutions, Contract Number C26193247F16
• Infojini, Contract Number C26193247G17
• California Creative Solutions, Contract Number C26193247H18 APPROVED BY: Darren Numoto, Chief Information Officer
11 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/inspyr-solutions-llc- c26193247a.pdf
12 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/agreeya-solutions- c26193247b.pdf
13 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/techlink-systems- c26193247c.pdf
14 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/compunnel- software-group-c26193247d.pdf
15 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/progile-tech- c26193247e.pdf
16 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/omm-it-solutions- c26193247f.pdf
17 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/infojini- c26193247g.pdf
18 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on-call/california-creative- solutions-c26193247h.pdf
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Community Services
Meeting Date: June 17, 2025
Report #:2505-4680
TITLE
Approval of Professional Services Contract No. C26193874 with Palo Alto Community Child Care in an Amount Not-to-Exceed $3,228,146 to Provide Management of the City’s Childcare Subsidy Program for a Term of Five Years. CEQA Status – Not A Project

RECOMMENDATION
Staff recommends that the Council approve and authorize the City Manager or designee to execute Contract No. C261938741 with Palo Alto Community Child Care (PACCC), to provide management of the City’s Childcare Subsidy program for low-income children, for a term of five years and a total not to exceed $3,228,146.

EXECUTIVE SUMMARY
The scope of services in this contract covers the administration and management of a childcare subsidy program for up to 45 low-income children annually enrolled in PACCC’s childcare and afterschool programs. Services include all paperwork and processes related to eligibility certification, maintenance of an eligibility list, data tracking and compilation, program revenue and expenditure tracking, contract reporting, as well as other subsidy administration services as requested by the City.

BACKGROUND
The City of Palo Alto has had a long commitment to childcare in the community and PACCC as illustrated by the key historical points listed below:
1 Palo Alto Community Child Care, provide management of the City’s Childcare Subsidy program for low-income children, Contract # C26193874; https://www.paloalto.gov/ /files/assets/public/v/1/community-services/human- services/palo-alto-community-child-care-contract-c26193874.pdf Item 14
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•In 1974, the Council established a Childcare Task Force to develop and implement priorities for childcare services. The Task Force recommended the City take an active role in childcare and that a nonprofit be created to coordinate these efforts. •As a result, Palo Alto Community Child Care (PACCC) was formed and incorporated as a 501(c)(3). On March 25, 1974, the Council approved a contract with PACCC to fund administrative support and implement components of the Task Force Plan. •In 1984, the City reduced administrative funding, retaining only a contract with PACCC to administer the City’s childcare subsidy program. PACCC’s funding continued through the Human Services Resource Allocation Process (HSRAP). •In 2014 (FY15), Council approved direct contracts with Avenidas and PACCC, removing them from the HSRAP review process, with 2015–2020 (FY16-FY21) being the first contract term.
•The current contract (C21178948) term is July 1, 2020, to June 30, 2025, and was approved by the Council on November 9, 2020.2
PACCC was removed from the HSRAP process in May 2014, and separately contracts with the City for management of the City‘s Childcare Subsidy Program. These contracts have each had five-year terms with CPI increases applied when funding was available. The table below summarizes these contracts.

Table #1: Contracts with PACCC since FY2016
FY2016-FY2020 $2,425,925
FY2021-FY2025 $2,775,614
PACCC is the only childcare provider in the community with sufficient organizational capacity and experience to perform the services requested, justifying award as a sole source contract and exempt from solicitation. An exemption from competitive solicitation per Palo Alto Municipal Code 2.230.360(d) was approved by the City Manager.

PACCC is also the only local provider of financial aid support for families and children who qualify through the State of California, Child Development Division. PACCC can therefore combine City and State subsidy funds, when appropriate, to assist low-income families, therefore leveraging city funds to provide assistance to more children.

Families also benefit from PACCC’s ability to manage both City and State funding because 2 City Council, November 9, 202; Summary Minutes, Item 9; https://portal.laserfiche.com/Portal/DocView.aspx?id=1142&repo=r-704298fc Item 14
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parents need only work with one agency regardless of the funding stream. Since PACCC operates infant, preschool and afterschool childcare (TK-5th), children who remain eligible for a subsidy can receive continuity of care for several years, greatly reducing both the financial burden and stress placed on low-income families. If PACCC were no longer the administrator of the program, the currently enrolled 37 children of low-income families would most likely lose Staff prepared the proposed contract to align with the standards for nonprofit contracts identified3. These standards include defining specific service levels, goals and objectives, and reporting requirements. This contract will be closely monitored by staff in the Office of Human Services (OHS), including review of semi-annual reports and payments requests. Additionally, on a biennial basis, PACCC will submit a copy of an independent financial audit and OHS staff will conduct a status review of PACCC’s agreed upon performance indicators that may include a site visit.

ANALYSIS
Access to affordable and quality childcare is key to the ability of parents to work. The burden to pay for market rate childcare is out of reach financially for many low-income parents, therefore subsidized care is a lifeline.

A 2023 study commissioned by the Santa Clara County Office of Education reports4 that the average annual cost for full-time infant care in the County is $33,456, while full-time preschool care averages $20,256. Staff analysis indicates that costs in Palo Alto are at least 20% higher, though often significantly more. Direct comparisons are challenging due to variations in how programs define age groups, services included in full-time care, and how fees are presented. Despite these variables, the cost of full-time childcare in Palo Alto is unaffordable for most low-income families. For currently enrolled families in the City funded childcare subsidy program, over 65% are headed by a single parent and the average family (one- or two- income earners) income is around $5,000/month or $60,000/year. This makes it extremely difficult to pay for childcare and other essential expenses such as housing in Palo Alto without assistance.

The City’s childcare subsidy program allows parent(s) to work and provide for their families - often at multiple jobs - and/or go to school to increase their ability to earn higher wages. Access to high quality childcare at a young age can improve a child’s social and emotional well-being and help get children “kindergarten ready”. Childcare centers such as those operated by PACCC also help connect parents to vital services in the community such as social services, healthcare 3 Policy and Services Committee, June 14, 2022; Item 1; https://portal.laserfiche.com/Portal/DocView.aspx?id=30868&repo=r-704298fc 4 Santa Clara County Child Care Average Tuition Rate Survey 2023; https://www.sccoe.org/supoffice/lpc/Documents/Reports/Average_Rate_Survey_Brief_Digital.pdf Item 14
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and mental health support, which further sustains the low-income families in the subsidy program.

Eligibility in the program is based on meeting residency and income guidelines (Attachment A, Exhibit B) and a stated priority list governs the process as a space becomes available. Once in the program, participants are required to re-certify for continued eligibility on an annual basis.

A co-payment is determined based on total family income and an established Family Fee Schedule (see contract, Exhibit B-25).

Contract Specifics
The following tasks currently performed by PACCC in the management of the City’s Childcare Subsidy Program will continue for the next five years, 2025 – 2030, if Council approves the staff recommendation. The work plan includes but is not limited to the following tasks:

1. Administer and manage childcare subsidy program for up to 45 low-income children annually enrolled in childcare and afterschool programs.

2. Comply with state Program Specifications and PACCC Operating Procedures related to the administration and management of subsidy funding, including verification of family and child eligibility, need, residency, and attendance; completion of annual re- certifications for enrolled families; and maintenance of Contracts for Services that appropriately reflect changes in the above.

3. Collect, track, and compile data sufficient to provide annual financial reports, including all agency revenue and expenditures as required under City of Palo Alto contract.

4. Adhere to the Family Fee Schedule.

5. Coordinate with the Office of Human Services to conduct an annual evaluation of program services and goals.

6. Maintain a ranked Eligibility List for participation in the program, with enrollment priority based upon income level, initially using established priorities as detailed in the Program specifications of the contract. The eligibility list will be reviewed and ranked each time a new family is added.

7. Conduct detailed Eligibility List analysis to identify trends in community need and groups of applicants with the longest waiting periods.

8. Communicate all changes in policies/procedures/eligibility of the state subsidy program to the City as it relates to the service of any family with co-mingled funds. 5 Palo Alto Community Child Care, provide management of the City’s Childcare Subsidy program for low-income children, Contract # C26193874; https://www.paloalto.gov/ /files/assets/public/v/1/community-services/human- services/palo-alto-community-child-care-contract-c26193874.pdf Item 14
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9. Provide referrals to local community service agencies and programs that offer resources that PACCC cannot for low-income families.

For the full scope of services including program goals and objectives, see the Palo Alto Community Child Care Contract C26193874.6

FISCAL/RESOURCE IMPACT
The FY 2026 Proposed Operating Budget includes $606,794 for this contract in the Community Services Department budget, which is sufficient to fund year one of the agreement. For Fiscal Years 2027 - 2030, the cost for the contract will be subject to the City Council review and annual appropriation of funds.

STAKEHOLDER ENGAGEMENT
The Human Relations Commission held a Listening Session on childcare issues on May 8, 2025.7 Human Services staff worked closely with PACCC leadership to review and develop the agreement.

ENVIRONMENTAL REVIEW
Council action on this item is exempt from review under the California Environmental Quality Act (CEQA) because it can be seen with certainty that there is no possibility that a contract to administer the City’s Childcare Subsidy Program will have a significant effect on the environment. CEQA Guidelines 15061(b)(3).

ATTACHMENTS
None.

APPROVED BY:

Kristen O'Kane, Community Services Director
6 Palo Alto Community Child Care, provide management of the City’s Childcare Subsidy program for low-income children, Contract # C26193874; https://www.paloalto.gov/ /files/assets/public/v/1/community-services/human- services/palo-alto-community-child-care-contract-c26193874.pdf 7 Human Relations Commission, May 8, 2025; Item 1;
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 17, 2025
Report #:2505-4690
TITLE
Approval of Seven (7) On-Call Consulting Contracts to Provide Planning Application Processing and Supplemental Staffing for the Planning and Development Services Department over a Five- Year Term, as needed: 1) Arnold Mammarella, Architecture + Consulting, 2) CTC Media Group INC., 3) Good City Company 4) Metropolitan Planning Group, 5) Michael Baker International Inc., 6) Stantec Consulting Services, Inc., 7) Urban Planning Partners Inc. in the Amount not to exceed $2,000,000 ; CEQA Status: Not a Project.

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Contract No. C25193458K – C25193458Q (Attachments A-G) for consulting services in an amount not to exceed $2,000,000 through June 2030. The firms will provide on- call staffing support associated with general planning services. The use of the contracts must be consistent with the funding available in the adopted budget(s). The contracts are:

1. C25193458K - Arnold Mammarella, Architecture + Consulting

2. C25193458L - CTC Media Group INC

3. C25193458M - Good City Company

4. C25193458N - Metropolitan Planning Group

5. C25193458O - Michael Baker International Inc.

6. C25193458P - Stantec

7. C25193458Q - Urban Planning Partners Inc.

EXECUTIVE SUMMARY
The Planning and Development Services Department utilizes planning consultant firms to augment staffing levels in development review and application processing. These firms offer planners capable of processing development applications, drafting notices and decision letters, supporting the City’s Single-Family Individual Review (IR) program, and conducting entitlement reviews. They also offer expert support in community development functions such as Community Development Block Grant (CDBG) administration and wireless facility siting analysis, including Radio Frequency (RF) engineering expertise. Through a competitive request for Item 15
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proposal (RFP) process, seven firms have been selected to provide services for these general planning functions. Staff recommends the approval of seven contracts and a shared not to exceed amount of $2,000,000 over a five-year term. The use of these contracts will be subject to available funding within the annually adopted budget.

BACKGROUND
The Planning and Development Services (PDS) Department relies on the use of on-call service providers for project specific expertise and application processing for development activity. In June 2020, the City Council approved eight planning services on-call contracts for a combined not-to-exceed amount of $1.5 million over a four-year period, through June 30, 2024. Although the original anticipated total not-to-exceed amount was for $5.0 million, staff requested a reduced initial amount of $1.5 million given the financial uncertainty at the time and notified Council of the need to return for additional contract authority before the end of the contract term. In April 2023, the City Council approved Amendment No. 1, which increased the not-to- exceed amount to $3.0 million. In April 2024, the City Council approved Amendment No. 2, which increased the not-to-exceed amount to $3.5 million and extended the term through June 2025. Ultimately, this resulted in a total not to exceed amount of $3.5 million over five years.

Solicitation Process
City staff issued a Request for Proposals (RFP) on December 27, 2024, for the provision of planning on-call services.

Table 1: Summary of Request for Proposals
Proposal Description RFP 193458 Planning On-Call Services Proposed Length of Project Four years, with the possibility of two additional one-year extensions.

Request for Proposal Issued December 27, 2024
Number of Vendors Notified 3,349
Total Days to Respond to Proposal 45
Number of RFP Packages Downloaded 85
Pre-Proposal Meeting and Date N/A
Number of Company Attendees at Pre-Proposal
Meeting(s) N/A
Proposal Price Range* $175 - $335 hourly rate
Number of Companies Interviewed N/A
Final Negotiated Contract Price (Basic Services) N/A
Public Link to Solicitation https://procurement.opengov.com/po rtal/palo-alto-ca/projects/138159
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* For standardization purposes, the hourly billing rates for principals are listed.

The proposals were evaluated, and 32 proposals were determined to be responsive to the criteria identified in the RFP. An evaluation committee consisting of PDS managers convened to evaluate the proposals that met the RFP criteria. Seven firms were selected as planning staffing on-call support.

ANALYSIS
Given the volume of development activity and the fluctuating demands on City staff, the seven selected firms under the staffing service area will supplement City capacity in delivering planning services. These firms offer planners capable of processing development applications, drafting notices and decision letters, supporting the City’s Single-Family Individual Review (IR) program, and conducting entitlement reviews. They also offer expert support in community development functions such as Community Development Block Grant (CDBG) administration and wireless facility siting analysis, including Radio Frequency (RF) engineering expertise.

These consultants can be deployed quickly through task orders to ensure continuity of services, especially during periods of peak workload, staffing transitions, or project-specific surges. The staffing contracts assist in meeting State-mandated timelines for processing development applications and are a critical operational tool for implementing local programs and regulations and sustaining high service levels across the Department’s core functions, including the critical experts that support staff for IR and wireless application reviews.

Process for Selecting On-Call Consultant
To ensure equity in distribution of work while ensuring alignment between project needs and consultant qualifications, an internal process is in place for selecting and assigning consultants specific task orders.

1. Develop Scope of Work (SOW): Staff project manager will develop a SOW that reflects the planning project requirements, including any technical needs and community engagement.

2. Solicit Proposals: Staff will contact all relevant firms via email notifying them of the request for proposals.

3. Comparison and Analysis: Staff will compare submitted proposals using the following, but not limited to, criteria to determine the best firm for the proposed task:
a. Technical Expertise
b. Relevant Experience and Past Performance on Similar Projects c. Project Cost
d. Timeline of Service Delivery

4. Selection of Consultant: After a consultant is selected, the firm will be notified, and a task order will be issued finalizing the scope of work, budget, and schedule for delivery.

These task orders will be issued in accordance with the terms of the master agreement.

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deliverables and budget of each task order, approving invoices to ensure that the billed hours match the hours actually worked as well as acceptance of work progress and products. This internal process will allow the Department to be effective in managing concurrent initiatives while leveraging the capabilities and technical expertise of on call consultants.

FISCAL/RESOURCE IMPACT
Use of consultants for specific assistance is an efficient and effective use of resources, allowing the department to quickly access needed technical skills. The cost of the contracts is offset by fees collected by the department for application processing, consistent with the FY 2026 Adopted Municipal Fee Schedule.

The budget for these contracts is included in the PDS Department’s adopted budget. The use of consultants for planning work is contingent on (1) approved contracts with capacity to support the required scope, and (2) availability of funding in the department’s approved budget. Staff is not requesting a budget increase. No work will be assigned to consultants under these contracts unless there is sufficient operating budget to cover the costs.

STAKEHOLDER ENGAGEMENT
Professional planners and managers in the PDS Department participated in the development of this recommendation.

ENVIRONMENTAL REVIEW
Approval of these contracts is not a project under the California Environmental Quality Act (CEQA); therefore, no environmental review is required.

ATTACHMENTS
Attachment A: Links to Contracts
APPROVED BY:

Jonathan Lait, Planning and Development Services Director Item 15
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Attachment A
Meeting Date: June 17, 2025
Staff Report #: 2505-4690
Links to Contracts
In order to reduce paper consumption, the contract documents are available online at the below links. •C25193458K Arnold Mammarella Architecture Consulting
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/new-folder/c25193458k- arnold-mammarella-architecture-consulting.pdf
•C25193458L CTC Media Group Inc
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/staff-report-2505- 4690/c25193458l-ctc-media-group-inc.pdf
•C25193458M Good City Company
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/staff-report-2505- 4690/c25193458m-good-city-company.pdf
•C25193458N Metropolitan Planning Group
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/staff-report-2505- 4690/c25193458n-metropolitan-planning-group.pdf
•C25193458O Michael Baker International Inc
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/staff-report-2505- 4690/c25193458o-michael-baker-international-inc.pdf
•C25193458P Stantec Consulting Services Inc
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/staff-report-2505- 4690/c25193458p-stantec-consulting-services-inc.pdf
•C25193458Q Urban Planning Partners Inc
http://paloalto.gov/files/assets/public/v/1/city-clerk/staff-report-links/staff-report-2505- 4690/c25193458q-urban-planning-partners-inc.pdf
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: June 17, 2025
Report #:2505-4728
TITLE
Amend the Fiscal Year (FY) 2026 Budget Appropriation for the Community Development Block Grant (CDBG) Fund to Reflect Final Entitlement Grant Allocation. CEQA Status: Exempt under CEQA Guidelines Section 15378(b)(4).

RECOMMENDATION
Staff recommend City Council amend the FY 2026 Budget Appropriation for the Community Development Block Grant Fund (2/3 vote needed) by:

1. Increasing Revenue estimate from Other Agencies by $616,233; and

2. Increasing General Expense appropriation by $616,233.

BACKGROUND
On June 9, 2025 (Attachment A), City Council will consider the FY 2025-2026 Annual Action Plan (AAP) and 2025-2030 Consolidated Plan, including the associated funding allocations for the City’s CDBG Program. In the June 9 report, staff recommended that Council provide direction to staff to return following budget adoption to amend the FY 2026 Budget to reflect the City’s actual CDBG entitlement allocation. If necessary, a late packet will be brought forward with any amendments based on Council direction prior to the Council’s final consideration.

ANALYSIS
The U.S. Department of Housing and Urban Development (HUD) notified the City of a CDBG entitlement award of $516,233 for FY 2025-2026. In addition, staff estimates that $100,000 in Program Income will be available for allocation. This Program Income is derived from loan repayments of previously funded CDBG housing projects. To implement the AAP and enable expenditure of CDBG funds, the adopted FY 2026 City budget must be amended to reflect this revenue and associated expenses.

This budget amendment ensures compliance with Federal requirements and supports the continued administration of CDBG-funded activities benefiting low- and moderate-income Palo Alto residents.

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FISCAL/RESOURCE IMPACT
This budget amendment has no net impact on the General Fund. All proposed revenue and expense adjustments are within the CDBG Fund, supported by federal entitlement funds.

STAKEHOLDER ENGAGEMENT
Stakeholder and community engagement occurred as part of the development and adoption of the Fiscal Year 2025-2026 Annual Action Plan and 2025-2030 Consolidated Plan. Public outreach included a 30-day public comment period from May 5 to June 4, 2025, as well as two public hearings. The Human Relations Commission held the first hearing on May 8, 2025, and the City Council held the second hearing on June 9, 2025. No additional engagement was required for this budget amendment, which implements previously approved funding allocations.

ENVIRONMENTAL REVIEW
For the purposes of the National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA), budgeting by itself is not a project. Prior to the commitment or release of funds for each of the proposed programs, projects, and activities, staff will carry out the required environmental reviews or assessments and certify that the review procedures under HUD, NEPA, and CEQA regulations have been satisfied for each activity.

ATTACHMENTS
Attachment A: CDBG Staff Report 2505-4614
APPROVED BY:

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CITY OF PALO ALTO

CITY COUNCIL
Monday, June 09, 2025
Council Chambers & Hybrid
5:30 PM

Agenda Item

16. Adoption of the Community Development Block Grant (CDBG) Fiscal Year (FY) 2025-2026 Annual Action Plan, 2025-2030 Consolidated Plan, and a Resolution Approving Use of CDBG Funds for FY 2025-2026 as Recommended by the Human Relations Commission.

CEQA Status: Exempt under CEQA Guidelines Section 15378(b)(4).

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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: June 9, 2025
Report #:2505-4614
TITLE
Adoption of the Community Development Block Grant (CDBG) Fiscal Year (FY) 2025-2026 Annual Action Plan, 2025-2030 Consolidated Plan, and a Resolution Approving Use of CDBG Funds for FY 2025-2026 as Recommended by the Human Relations Commission. CEQA Status:

Exempt under CEQA Guidelines Section 15378(b)(4).

RECOMMENDATION
The Human Relations Commission (HRC) and staff recommend City Council take the following actions:

1. Adopt the draft Fiscal Year (FY) 2025-2026 Annual Action Plan (AAP), 2025-2030 Consolidated Plan (ConPlan)1, and the associated resolution (Attachment A) allocating Community Development Block Grant (CDBG) funding for FY 2025-2026;

2. Authorize the City Manager to execute the FY 2025-2026 CDBG application to fund the FY 2025-2026 AAP and any other necessary documents concerning the application, and to otherwise bind the City with respect to the applications and commitment of funds;

3. Authorize staff to submit the FY 2025-2030 Consolidated Plan and 2025-2026 AAP to U.S. Department of Housing and Urban Development (HUD) by the extended deadline of August 16, 2025;

4. Authorize the City Manager or designee to draft and execute amendments to a loan agreement, regulatory agreement, and related documents necessary to implement City Council direction on the Alma Garden Rehabilitation Project in a form consistent with the City’s affordable housing loan documents and approved by the City Attorney; and

5. Direct staff to return to Council following budget adoption to amend the FY 2026 Budget Appropriation for the Community Development Block Grant Fund (2/3 vote needed) by:
1 https://www.paloalto.gov/files/assets/public/v/3/planning-amp-development-services/cdbg-general- information/plans-and-reports/consolidated-plans/attachment-a-2025-2030-conplan-and-2025-2026-aap.pdf Item 16
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1. Increasing Revenue from Other Agencies by $616,233.

2. Increasing General Expenses by $616,233.

EXECUTIVE SUMMARY
HUD requires jurisdictions to prepare a five-year strategic plan, the ConPlan, which outlines priority housing and community development needs and establishes related goals. Each year, jurisdictions must also submit an AAP that identifies the specific projects and activities to be funded during the upcoming program year to implement the ConPlan’s strategies.

On May 8, 2025, the HRC developed funding recommendations for the CDBG FY 2025-2026 funding cycle. Given that the City’s CDBG grant entitlement amount for FY 2025-2026 was unknown at the time, the HRC also recommended the implementation of a contingency plan to be used if FY 2025-2026 funds differed from the amount estimated by staff.

On May 14 2025, the City received HUD’s formal notification of the City’s CDBG FY 2025-2026 entitlement grant amount. Subsequently, staff updated the draft FY 2025-2026 AAP to:
Incorporate the City’s CDBG FY 2025-2026 entitlement grant amount; and Update the CDBG FY 2025-2026 funding allocation amounts to implement the HRC’s recommended contingency plan because the HUD allocation exceeded the staff estimate by $16,233.

The draft 2025-2030 ConPlan and FY 2025-2026 AAP contains proposed funding allocations to spend all available CDBG funds. CDBG funds available for allocation in FY 2025-2026 total $616,233, including the City’s entitlement grant and estimated program income to be received.

It is not possible to fund all applications at the requested amounts due to the limitations of available funds. However, the proposed recommendations:
Allocate all available CDBG program funds;
Are consistent with the City’s CDBG ConPlan;
Are consistent with the City’s 6 th Cycle Housing Element goals and programs as they pertain to CDBG; and
Will result in funding key services and projects that benefit many low and very low- income Palo Alto residents.

Staff recommends that Council review and approve the draft FY 2025-2030 ConPlan and 2025- 2026 AAP2, the associated draft Resolution (Attachment A), and authorize staff to submit and execute associated documents necessary to implement the FY 2025-2030 ConPlan and 2025- 2026 AAP.
2 https://www.paloalto.gov/files/assets/public/v/3/planning-amp-development-services/cdbg-general- information/plans-and-reports/consolidated-plans/attachment-a-2025-2030-conplan-and-2025-2026-aap.pdf Item 16
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On May 2, 2025, the White House Office of Management and Budget released its topline discretionary budget request for Fiscal Year 2026 to Congress, which proposes the elimination of the CDBG program. If this request is enacted, the City would be unable to award CDBG funds in FY 2026-2027. Staff will continue to monitor the status of the FY 2026 federal budget and keep potential CDBG subrecipients informed regarding the availability of funds in the upcoming funding cycle.

BACKGROUND
The CDBG program, administered by HUD, provides annual grants on a formula basis to states, cities, and counties to develop viable urban communities by providing decent housing, a suitable living environment and by expanding economic opportunities, principally for low- and moderate-income persons. The HUD regulations require all CDBG-funded activities to meet one of the three national objectives:

1. Benefit low- and very-low-income persons;

2. Aid in the prevention or elimination of slums or blight; or

3. Meet other community development needs having a particular urgency or posing a serious and immediate threat to the health or welfare of the community.

The City’s CDBG program has primarily been focused on meeting the first objective of benefiting low- and very-low-income persons.

Consolidated Plan & Annual Action Plan
HUD requires preparation of a five-year strategic plan, referred to as a ConPlan, which must address priority housing and community development needs and set goals related to those needs. The CDBG program is currently guided by the 2020-2025 ConPlan adopted by Council on June 15, 2020. HUD also requires the submittal of an AAP, which must identify the specific projects to be funded to implement strategies identified in the ConPlan.

To update both documents, Planning and Development Services staff coordinated with the County of Santa Clara and other entitlement jurisdictions to select a consulting firm to prepare the draft 2025-2030 ConPlan and 2025-2026 AAP. Staff presented the draft plans to the HRC on May 8, 2025. The plans were made available for a public review period beginning May 5, 2025, through June 4, 2025, which constitutes the required 30-day public review period. Once adopted by City Council, the ConPlan will be effective July 1, 2025, through June 30, 2030.

The ConPlan is designed to support CDBG entitlement grantees assessment of affordable housing and community development needs, with public participation playing a central role. In 2024, a consortium including Santa Clara County and participating jurisdictions conducted a comprehensive outreach process to identify needs and enhance coordination with social service providers. Comments received through this outreach effort, in addition to Palo Alto’s locally identified needs, informed the development of the five-year strategic plan.

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Projects funded through the City by the CDBG program must be consistent with the goals outlined in the draft 2025-2030 ConPlan. The projects identified for funding in the draft AAP are consistent with these goals and, following the City Council's final approval of funding allocations, will be reported to HUD in the FY 2025-2026 AAP.

Citizen Participation for the Annual Action Plan and Consolidated Plan HUD's regulations and the City's adopted "Citizen Participation Plan3" ensure adequate citizen participation in the CDBG funding process.

Per the City’s Citizen Participation Plan, the HRC supports the preparation of the draft AAP and ConPlan by facilitating public input and providing advisory recommendations. On March 19, 2025, the HRC Selection Committee reviewed the applications received for FY 2025-2026. The HRC Selection Committee’s recommendations were then presented at a public hearing to the full HRC on May 8, 2025. The HRC approved a motion 6-1 to recommend that Council approve the draft FY 2025-2026 AAP and 2025-2030 ConPlan with staff consideration being given to a 25% reduction of the allocation to Upwards and that the monies remaining be allocated to the other uncapped entities with special emphasis on Alma Garden. The Commissioner who voted in opposition expressed concern about providing public funding to Upwards, citing the company’s for-profit status and business model. Based on the HRC‘s recommendation, staff confirmed that the Alma Garden project could utilize additional funding and reallocated $30,000 from Upwards to the Alma Garden project. As the City’s CDBG grant entitlement amount for FY 2025-2026 was unknown at the time, the HRC also recommended the implementation of a contingency plan to be used if FY 2025-2026 funds differed from the amount estimated by staff.

Prior to the submission of the AAP and ConPlan to HUD, the City must hold two public hearings.

This HRC meeting served as the first public hearing, and the June 9, 2025, City Council meeting, will serve as the second public hearing.

Annual Action Plan Allocation Process
CDBG funding applications were made available on November 26, 2024, with completed applications due January 10, 2025. A notice of CDBG funding availability was published in the Daily Post on November 26, 2024. The City hosted a pre-proposal conference on December 4, 2024. Additionally, staff provided technical assistance to applicants during the open application time window regarding program regulations and project eligibility questions.

ANALYSIS
This section provides a description of the CDBG funds available for allocation and recommendations for the FY 2025-2026 funding cycle.
3 Adopted Citizen Participation Plan: https://www.paloalto.gov/files/assets/public/v/1/planning-amp- development-services/cdbg-general-information/plans-and-reports/amended-citizen-participation-plan-2022- approved-by-city-council-9-12-22-final.pdf
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Funds Available for Allocation in FY 2025-2026
CDBG funds available for allocation in FY 2025-2026 total $616,233, including the City’s entitlement grant and estimated program income to be receipted.

Program Income (PI) comes from Palo Alto Housing Corporation (Alta Housing) for loan repayments and rental income in excess of expenses on specific properties acquired or rehabilitated with CDBG funds. Cities are required to estimate anticipated program income for the activity budget for the upcoming year. Based on past years, PI for FY 2025-2026 is estimated to be $100,000.

Table 1. FY 2025-2026 CDBG Estimated Funds Available
CDBG Funds Available Available for Funding
FY 2024-25 Entitlement Grant $616,233.00
Program Income in FY 2025-2026 (Estimated) $100,000.00
Estimated Total CDBG Funds Available for Allocation $616,233.00 CDBG Funding Categories and Funding Caps
The CDBG program has five primary activity areas in which to allocate funds: Public Services, Economic Development, Housing Rehabilitation, Public Facilities & Improvement, and Planning & Administration.

Federal regulations cap the amount that can be spent on Public Services and Planning & Administration as follows (Table 2):
Public Services (15% Cap) — The amount of any CDBG funds that may be obligated toward Public Services during a program year is capped at 15 percent of the sum of the grant allocation plus the total amount of program income received during the prior program year.
Planning & Administration (20% Cap) — The amount of any CDBG funds that may be obligated toward Planning & Administration during a program year is capped at 20 percent of the sum of the grant allocation plus the total amount of program income received during the current program year.

Table 2. FY 2025-2026 Breakdown of Capped/Un-Capped Funds CDBG Amount
Public Services 15% Maximum
15% x [Grant allocation ($516,233) + prior year FY 2024-2025 program income ($129,950)]
$96,927.40
Estimated Planning and Administration 20% Maximum
20% x [Grant allocation ($516,233) + current year FY 2025-2026 estimated program income ($100,000)]
$123,246.60
Un-capped Funds $396,059.00
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CDBG 2025-2026 Funding Allocations
Ten (10) applicants are recommended for CDBG FY 2025-2026 funding allocations (Table 3) in the draft AAP. It is not possible to fully fund all applications at the levels requested in the Public Services category. However, the City is able to fully fund applications in the Economic Development and Housing Rehabilitation categories. The draft FY 2025-2026 AAP reflects the HRC’s funding recommendations and the FY 2025-2030 ConPlan goals and priorities.

Table 3: Fiscal Year 2025-2026 CDBG Budget
Applicant Agency Requested Funding Recommended
Allocation
CDBG Applicants
Public Services (15% Cap = $96,927.40)
LifeMoves – Case Management at Opportunity
Center $69,919.00 $39,154.64
Silicon Valley Independent Living Center (SVILC) –
Case Management Services $37,290.00 $20,067.43
Project Sentinel – Fair Housing Services $35,835.00 $22,005.33 Next Door Solution to Domestic Violence $10,000.00 $7,200.00 Catholic Charities – Long Term Ombudsmen
Program $12,908.00 $8,500.00
Subtotal $96,927.40
Economic Development (No Cap)
WeeCare / Upwards – Training for Family Child
Care Home $120,000.00 $90,000.00
Subtotal $90,000.00
Housing Rehabilitation (No Cap)
Rebuilding Together Peninsula – Safe at Home $73,585.00 $73,585.00 Community Working Group/Abode – Alma
Garden N/A* $162,474.00
Subtotal $236,059.00
Public Facilities & Improvements (No Cap)
Homekey Palo Alto – Recreation Project N/A* $70,000.00
Subtotal $70,000.00
Planning & Administration (20% Cap = $123,246)
City of Palo Alto Administration N/A $123,246.60
Subtotal $123,246.60
Grand Total for CDBG Budget $616,233.00
*“N/A” indicates that no formal application was submitted. These uncapped projects were previously awarded funds, and additional funding was determined to be necessary through staff and HRC review based on identified need.

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Should the 2025-2030 ConPlan and FY 2025-2026 AAP be adopted by City Council, it would be submitted to HUD prior to the August 16, 2025, extended deadline.

POLICY IMPLICATIONS
The programs, projects, and activities recommended for funding in the draft FY 2025-2026 CDBG AAP are consistent with the priorities established in the City’s draft FY 2025-2030 CDBG ConPlan.

Staff has reviewed the HUD Allocation Letter associated with the CDBG program and confirms that the City complies with the provisions. When the complete CDBG contract is made available by HUD, staff will again conduct a thorough review to ensure that this remains true.

FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with this action as CDBG funding is provided by HUD.

Associated grant funding is also used to support program administration for consultant services and liability insurance. On December 16, 2024, Council previously authorized the City Manager to enter into a Revenue Agreement with the County of Santa Clara to fund the development of the Consolidated Plan. With Council direction, staff will return to Council on June 16, 2025, to amend the FY 2026 Budget Appropriation for the CDBG Fund.

STAKEHOLDER ENGAGEMENT
Prior to the submission of the FY 2025-2026 AAP and 2025-2030 ConPlan to HUD, the City must hold a public hearing on the draft AAP and ConPlan, a 30-day circulation and public comment period, and hold an additional public hearing.

The HRC meeting on May 8, 2025 served as the first public hearing.

The 30-day circulation, public review, and comment period on the draft AAP and ConPlan began on May 5, 2025 and ended on June 4, 2025. At the time of this report staff did/did not receive public comment on the draft FY 2025-2030 ConPlan and 2025-2026 AAP.

The City Council public hearing on June 9, 2025, will serve as the second public hearing for review and approval of the FY 2025-2030 ConPlan and 2025-2026 AAP.

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ATTACHMENTS
Attachment A: Draft Resolution to Adopt FY 2025-2030 Consolidated Plan and 2025-2026 Annual Action Plan
APPROVED BY:

Jonathan Lait, Planning and Development Services Director Item 16
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Resolution No. ______XXXX_________
Resolution of the City Council of the City of Palo Alto Approving The Use of Community Development Block Grant Funds for
Fiscal Year 2025-2026

A. On June 9, 2025, the Palo Alto City Council approved and adopted a document entitled “Consolidated Plan” which identified and established the Palo Alto housing an d non-housing community development needs, objectives, and priorities for the period July 1, 2025, to June 30, 2030.

B. The Fiscal Year 2025-2026 Annual Action Plan, the annual funding update to the Consolidated Plan, was subjected to public review and commentary during the period from May 5, 2025, through June 4, 2025.

C. The potential uses of Community Development Block Grant (CDBG) funds were evaluated in light of the needs and objectives identified in the Consolidated Plan and reflected in the recommendations and comments of the Human Relations Commission Selection Committee, Human Relations Commission, and other interested citizens.

D. Under the CDBG program, the highest priority is given to activities which will benefit persons with low and moderate incomes.

E. The City Council and the Human Relations Commission have held publicly noticed public hearings on the proposed uses of the CDBG funds for Fiscal Year 2025-2026.

F. CDBG funds allocated to the City for Fiscal Year 2025-2026 are proposed to implement the programs described in this resolution.

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

SECTION 1. The uses of CDBG funds for Fiscal Year 2025-2026 are hereby approved and authorized for the following programs:

Name of Program Amount

1. Catholic Charities of Santa Clara County – Long Term Care Ombudsman Program. Advocate for the rights of seniors and disabled residents in long term care facilities.
$8,500.00

2. LifeMoves – Opportunity Services Center. Provide case management services to Opportunity Services Center and Hotel De Zink clients in locating housing and/or employment and be connected to benefits. $39,154.64

3. Silicon Valley Independent Living Center – Housing and Emergency Services.

Provide case management services to low-income individuals with disabilities to secure affordable and accessible housing.
$20,067.43
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4. Project Sentinel – Fair Housing Services. Provide fair housing services including complaint investigation, counseling, advocacy and community education
$22,005.33

5. Upwards/WeeCare. A microenterprise business that will provide Palo Alto childcare business improvement services. $90,000.00

6. Next Door Solutions to Domestic Violence. Provide client-centered services to residents identifying as victims/survivors of domestic/intimate partner violence.
$7,200.00

7. Rebuilding Together Peninsula – Safe at Home. Provision of critical health and safety related home repair needs for low-income Palo Alto homeowners.
$73,585.00

8. Community Working Group/Abode – Alma Garden. The rehabilitation of a 10-unit affordable housing development. $162,474.00

9. Homekey Palo Alto – Recreation Project. This project will provide a recreation area and recreation equipment at the Homekey Palo Alto shelter.
$70,000.00

10. CDBG Program Planning and Administration. $123,246.60

Total CDBG Funds $616,233.00

SECTION 2. The total amount set forth under Section 1 of this resolution represents the proposed allocation of $516,233, in CDBG funds from the United States Department of Housing and Urban Development (HUD) for F iscal Year 2025-2026, and $100,000, in anticipated program income for F iscal Year 2025-2026 from Palo Alto Housing Corporation.

SECTION 3. The City staff is hereby authorized to submit the Fiscal Year 2025 -2030 Consolidated Plan and Fiscal Year 2025-2026 Annual Action Plan, update and appropriate funding to HUD for the Fiscal Year 2025-2026 CDBG funds, and such money shall be spent as set forth in this resolution.

The Mayor, City Manager and any other designated City staff or officials are hereby authorized to execute such application forms and any other necessary documents to secure these funds. The City Manager or designee is authorized to sign all necessary grant agreements with the program providers set forth in Section 1.

SECTION 4. The funding amounts set forth in Section 1 of this resolution are based on final allocation amounts from the Federal Fiscal Year 2025-26 HUD appropriations; City Staff is authorized to adjust increasing or decreasing the funding amounts set forth herein as consis tent with the adopted Citizen Participation Plan.

SECTION 5. The City Council hereby fi nds that the Fiscal Year 20 25-2026 CDBG program authorized under Section 1 of this resolution is not a project under the California Environmental Quality Act (CEQA). However, the Council further authorizes and directs City staff to prepare certifications that Item 16
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may be required, under CEQA and the National Env ironmental Policy Act (NEPA), for each project under the Fiscal Year 2025-2026 CDBG program prior to the release of funds for any such project.

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INTRODUCED AND PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

ATTEST: APPROVED:

City Clerk Mayor

APPROVED AS TO FORM:

City Manager

Sr. Assistant City Attorney Director of Planning and
Development Services

APPROVED AS TO CONTENT:

Director of Administrative Services

CDBG Coordinator
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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Manager
Meeting Date: June 17, 2025
Report #:2506-4786
TITLE
Approve a Resolution to Allow Dining and Retail Encroachments on Car Free California Avenue under PAMC Ch. 12.11; Direct Staff to Approve the Car Free California Avenue Outdoor Activation Program Regulations Including Reference to the Program fees in the FY 2026 Municipal Fee Schedule; Adopt a Resolution Allowing Open Containers in Conjunction with Third Thursday Performances in 2025; Direct Staff to Review Differences Between the Open Container Resolution and an Entertainment Zone as Recommended by the Retail Committee.

CEQA Status – categorically exempt.

RECOMMENDATION
The Retail Committee and staff recommend that the City Council:

1. Approve the Car Free California Avenue Outdoor Activation Program Regulations (Attachment A)
a. Set program fees (application fee, renewal fee, license fee for use iof the public right-of-way, and deposit) in alignment with the existing Ongoing Parklet Program as recommended in the FY 2026 Municipal Fee Schedule (scheduled for Council adoption on June 16);

2. Adopt a Resolution allowing dining and retail encroachments on Car Free California Avenue under existing PAMC Ch. 12.11 (Parklets) Attachment B.

3. Adopt a Resolution to allow open containers in conjunction with the Third Thursday music performances in 2025 (Attachment C); and
Refer to staff a review of differences between the expired open container resolution and an entertainment zone for future consideration.

EXECUTIVE SUMMARY
The Outdoor Activation Program sets forth the permit design requirements for outdoor dining and merchandising for the car-free section of California Avenue in alignment with the City Council direction for staff to return with guidelines for outdoor activation in advance and in Item 17
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preparation for the 2025 winter weather months. The proposed program, reviewed and recommended for Council approval by the Retail Committee (“Committee”)1, will facilitate flexible outdoor dining and merchant activities, enabling the commercial use of public sidewalks and roadway space. This staff report highlights:
Vision for outdoor dining
Merchant feedback regarding outdoor dining
Key differences between parklets and the outdoor activation program Outdoor dining requirements and guidance
Signage
Impact of outdoor dining on sanitary sewer infrastructure Restroom capacity
Outdoor Activation fees
Issues with building structures in the public right-of-way Revisions per Retail Committee feedback
Implementation timeline
Open Container Resolution and Entertainment Zone
The document serves as guidance to businesses, City staff, designers, and the public. The program will be administered by the Public Works Department via the City’s existing parklet permit process but will be subject to these guidelines that are specific to car-free California Avenue. Included in the program is the fee structure for use of the public right of way, with the recommendation from the Retail Committee to remain consistent with fees used in the Ongoing Parklet Program with some consideration for the costs of additional public infrastructure specific to California Avenue.

The program is consistent with Council economic development priorities and the specific 2025 priority objective “Council approval of outdoor activation guidelines for California Avenue” and advances Council action for California Avenue to be a “community street.”

BACKGROUND
Since the COVID-19 pandemic in 2020, the City Council has repeatedly affirmed its desire to have portions of California Avenue remain a car-free street. This action was continued through interim ordinances, with final action to amend the Comprehensive Plan and permanently designate California Avenue between Birch and El Camino Real as a community street on March 10, 2025. As part of efforts to enhance the aesthetics of the car-free street, staff presented preliminary information on place identity, signage, and wayfinding, as well as outdoor activation guidelines to the City Council on February 3, 2025. On May 21, 2025, Staff presented 1 Retail Committee voted two (2) in support of recommending City Council approval and one (1) absent (Councilmember Burt).

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the Car Free California Avenue Outdoor Activation Program to the Retail Committee,2 which voted to advance the program to the City Council.

In addition to supporting the activation program, the Committee included in its motion a recommendation for the Council to have staff explore the adoption of an open containers resolution and the establishment of an entertainment zone. Notably, in June 2024, the Council approved a resolution under PAMC section 9.04.010 allowing the consumption of alcohol on California Avenue during the 3rd Thursday Events, effective from June through December 2024.3

ANALYSIS
The outdoor activation program advances the City’s comprehensive economic development strategy, to “Reinforce each districts’ distinct scale and offerings by embracing California Avenue as a community and neighborhood serving place.” And “Adopt policies that reflect changing market conditions by easing regulatory burden for businesses, removing outdated restrictions that create hurdles to tenancy, and focus retail and retail like uses in places where they are market supported.”
Purpose and Vision
The purpose of the outdoor activation program is to enable restaurants to occupy the public right of way for outdoor seating to support the economic and community vitality of the street, through a streamlined permitting program, that does not impose undue time and cost burdens on applicants, nor impact the safety and function of the street.

The vision for the outdoor activation program is:
A community-oriented, car-free street environment
Prioritizing economic vitality, pedestrian experience and social interaction Flexible, open, visually cohesive public space
Lively, inclusive atmosphere for residents and visitors Accessible, safe, high design quality, and regularly maintained Merchant Preferences
The program is responsive to California Avenue merchant feedback on their preferences for outdoor dining:
Desire for design equity and aesthetic improvements
Interest in weather protection (shelter, wind screens, heating) Support choice in materials, colors, signage
2 Retail Committee, May 21, 2025,
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17618 3 Staff Report 2405-3093 on Consumption of Alcohol on California Ave:
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Permit variety of seating and merchandizing, decorative lighting, flowers and plants on the enclosures, outdoor host stations, hanging blade signs and other elements Preference to avoid temporary-looking or low-cost construction that avoids such things as corrugated plastic roofing, overly brightly colored furniture, post and rope barriers and unneeded traffic safety elements

Outdoor Dining Requirements
The program is organized into general requirements and design elements as presented in the following table:

Design ElementsGeneral Requirements
(applies to all permits) Required Optional
Planters
Lighting
Electrical
Waste management

Railings
Sidewalls
Overhead shelter
Branding and signage
Heating
Platforms (where
appropriate)

Location
Setbacks
Use
Accessibility
Operator
responsibilities
Permitting process
and conditions
Design Guidance applies to each element

Design elements are either required, or optional per the applicant‘s discretion. When an applicant selects a design element, they must meet all of the requirements for that element.

Design Guidance is to encourage best practice, promote high quality design, and ensure consistency for the aesthetics of the street. This structure allows businesses to customize their outdoor space while maintaining safety, accessibility, and a cohesive street environment.

Signage
Staff recommends allowing limited use of sandwich boards within designated outdoor activation areas to support visibility of businesses for pedestrians walking down the center of the street. The City’s sign code currently prohibits freestanding signs in the public right-of-way, including sandwich boards. This allowance would support merchant visibility while maintaining pedestrian flow and safety. Per discussion at Retail Committee, Merchants will be permitted up two signs in outdoor activation areas, with no more than one sandwich board sign. Staff will need to coordinate to make any necessary adjustments to the City’s Sign Ordinance.

Differences from Ongoing Parklet Program
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environment. At the May 21, 2025 Retail Committee, staff noted the following differences from the City’s parklet program:
(1) Design elements are to be free-standing and not attached to the roadway to enable immediate response to an emergency, such as a gas leak, as required to meet the City’s utilities responsibilities.
(2) Businesses can choose electric or propane heaters, however the use of propane heaters requires two sides of an outdoor dining area to be open air per fire/life safety requirements.
(3) No changes are proposed from city requirements regarding permitting amplified music. (4) Parklet roof and enclosures are not permitted on Cal Ave. (See discussion below on permanent structures.)
(5) Lighting and electricity are required. Electrical service is to meet electrical code, and service is to be provided overhead in areas with glass mosaic sidewalks, so as to not damage the sidewalk.
(6) Outdoor activation enables more right-of-way to be available for outdoor dining than what can be permitted under the on-going parklet program.

Impacts of Outdoor Activation Dining
Sanitary Sewer Infrastructure: The expansion of outdoor dining on California Avenue has significantly increased total restaurant capacity, leading to more meals served and a higher potential discharge of fats, oils, and grease (FOG) into the City’s sanitary sewer system. Grease Control Devices (GCDs) in many restaurants were originally sized for pre-pandemic indoor seating. Expanded seating is increasing the risk of FOG entering building drainage systems and the City's sanitary sewer (SS).

Several restaurants have high efficiency hydromechanical grease interceptors (HGIs) connected to most kitchen fixtures, but others operate with outdated or undersized GCD systems (e.g., legacy HGIs, no GCD, or limited fixture connections). These conditions increase the risk of untreated FOG entering the sewer system and raise concerns regarding additional maintenance costs.

Currently, approximately 13,700 square feet of public right-of-way is used for dining. Using the building code standard of 15 square feet per person, this equates to roughly 880 additional seats. Data from 14 establishments indicates an average increase in seating of 180 percent.

The proposed outdoor activation program will partially reduce the current area to approximately 11,000 square feet, or 734 seats, though the figures will depend on the number of restaurants, building frontage, setbacks and seating arrangement. This reduction is due to locating outdoor dining in front of establishments, emergency egress setbacks and street access. Future outdoor dining area may increase with new establishments. Staff conducts regular inspections to track impacts to both GCDs and the potential for impacts to the building’s drainage systems and the City’s sanitary sewer system.

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Staff recommends continuing proactive inspections, requiring businesses to more frequently maintain restaurant GCD systems, identifying higher-risk systems for improvement, and mitigating future problems through plan review to correct GCD type, size and fixture connections. Depending on the success of these efforts, supplemental fees may be required for outdoor dining permits to fund increased City maintenance costs.

Restroom Capacity: Similar to sanitary sewer system demands, outdoor dining also increases the demand for restroom capacity. Increasing dining capacity or occupancy load can increase the need for additional restroom fixtures. Given the increased demand for restrooms with the overall expansion of dining, provision of public restrooms to serve multiple establishments may offer a more cost-effective and space-efficient alternative to businesses providing their own additional bathrooms. Possible locations will depend on the number and size of facilities.

Location of restrooms will depend on the number of fixtures, size of facilities and convenience of location. Larger facilities could be accommodated at surface parking however this would displace parking spaces. The Retail Committee was keen to see investment in public restroom facilities to support outdoor activation additional capacity needs and events. This investment would depend on temporary versus permanent installations and the Committee recommends the Council provide direction to staff to further evaluate and return on this issue. Staff agrees there is a need, and expect that options could be brought forward for temporary facilities and these additional costs should be considered when the program total cost and fees or shared contributions are considered. Staff recognize that further discussion with merchants on longer term solutions is needed, but can continue in parallel.

Operations and Maintenance: Operating and maintenance costs are heightened in the car-free street of California Ave. with staffing needed to support the program initiation and implementation, additional cleaning, and installation and maintenance of infrastructure. Costs for additional restrooms are being evaluated.

Outdoor Activation Fees
The Committee and staff recommend use of fees established for other outdoor activation programs in the City including Parklets and the currently closed portion of Ramona St. in Downtown Palo Alto for these outdoor activation spaces on the car-free portion of California Avenue. Specific fees (including all additional reserve and technology charges) include:
An initial application fee (FY 2026 fee expected to be $5,004) An annual renewal fee (FY 2026 fee expected to be $604) A fully refundable deposit (FY 2026 expected to be $2,750) A license fee for use of the public right-of way (Downtown charge currently $10.71/square foot annually)
Each fee is outlined in greater detail below. The retail committee did recommend consideration of alternative license fees, in consideration of the additional benefits for this specific use of the public right of way and the impacts and costs associated with it.

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Initial Application Fee: An initial application fee is required to establish an outdoor activation space to fully recover cost necessary to process an application, conduct site inspections, including Public Works, Utilities, and others such as Planning if applicable review. A portion is also based on staff time required for ongoing program administration such as customer service, compliance with standards, and complaint response. The Committee and staff recommend maintain the fee consistent with the ongoing parklet program.

Annual Renewal Fee: An annual renewal fee is required to review the encroachment permit annually to fully recover costs at a flat rate. An application renewal is not expected to require the same level of staff effort as processing a new application and therefore the fee is less than the initial fee. The Committee and staff recommend maintain the fee consistent with the ongoing parklet program.

Deposit Fee: Consistent with other programs in the City, a deposit fee may be considered to address any unrepaired damage to the roadway or sidewalk or any costs that may be incurred due to the City having to remove things in the activated space. Given the recommended guidelines, this fee could be lowered or eliminated for the car-free portion of California Avenue as parklet structures are currently not authorized, however staff would recommend retaining use of it for consistency with the existing programs as there remains a cost to remove an installation from the permitted space in the event of a necessary removal.

License Fee: A license fee for use of the public right-of-way is proposed. This fee can be set based on the City Council’s reasonable assessment of the value of the land used by the operator and incorporate a certain amount of discount or subsidy for that use. The Retail Committee recommended maintaining use of the rate used for the ongoing parklet program with a request for alternative scenarios that considered the value of the use of the land in a car- free environment, without the same restrictions of space that regulate parklets. When considering the license fee, the Council may consider establishing different rates based on the permitted use of the space to align with the impacts more closely, namely, retail use versus restaurant uses and increased value of the land such as if the City provided supplemental restroom capacity as noted earlier. These variations could be studied and implemented at a later time.

The City’s existing Ongoing Parklet Program and outdoor programs operate with an annual license fee of $10.71 per square floor for use of the public right-of-way, which represented an 85% discount on the average 2022 ground floor retail rents in Palo Alto of $71 per square foot.

This fee is being used for parklets and outdoor dining spaces on the closed portion of Ramona St. that are in the public right-of-way as well as for parklets along University Avenue and its adjacent streets.

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As of Q1 2025 as reported by CoStar, the average rent in the University Avenue (downtown ‘DT’) analysis area is reported at $76 per square foot. On California Avenue, the average rent for Q1 2025 is $59 per square foot. Outdoor spaces will vary in size with some of the larger spaces currently reflecting upwards of 1,000 square feet in the public right-of-way. The table below shows the California Avenue rates with Downtown in grey for reference.

As noted previously, staff expect approximately 11,000 square feet of use with the recommended outdoor activations guidelines. There are currently 20 permitted spaces today.

The Committee recommended consideration of alternative “discount” from the market rent and below provides examples.
A $10.71 per square foot fee would result in approximately $118,000 in annual revenue, or $5,355 for a 500 square foot space.
A 70% discount, or $18 per square foot rate would generate $198,000 in annual revenue, and cost a 500 square foot activation space $9,000 annually. A 50% discount, or $30 per square foot rate would generate $300,000 in annual revenue, and cost a 500 square foot activation space $15,000 annually. No discount, or $59 per square foot rate would generate $649,000 in annual revenue, and cost a 500 square foot activation space $29,500 annually Revenue generated will be dependent on permits requested and vary based on square footage usage. The above are estimates.

Discount Rate/SqFt
320 Sq Ft
(~2 parking spaces,
Parklet size)
500 sq Ft
(approximately 33
additional seats*)
1,000 Sq Ft
(approximately 66
additional seats*)

DT CA DT CA DT CA DT CA
90% $8 $6 $2,560 $1,920 $4,000 $3,000 $8,000 $6,000
80% $15 $12 $4,800 $3,840 $7,500 $6,000 $15,000 $12,000 70% $23 $18 $7,360 $5,760 $11,500 $9,000 $23,000 $18,000 60% $30 $24 $9,600 $7,680 $15,000 $12,000 $30,000 $24,000 50% $38 $30 $12,160 $9,600 $19,000 $15,000 $38,000 $30,000 40% $46 $35 $14,720 $11,200 $23,000 $17,500 $46,000 $35,000 30% $53 $41 $16,960 $13,120 $26,500 $20,500 $53,000 $41,000 20% $61 $47 $19,520 $15,040 $30,500 $23,500 $61,000 $47,000 10% $68 $53 $21,760 $16,960 $34,000 $26,500 $68,000 $53,000 0% $76 $59 $24,320 $18,880 $38,000 $29,500 $76,000 $59,000 *Calculation reflects use of the building code standard of 15 square feet per person Concerns with Building Parklet with Roofs and Permanent Structures At Retail Committee, the question was raised, “Why not allow parklet structures on Cal Ave, as permitted on University Avenue, i.e. with plexi-glass roofs and without enclosure walls, within Item 17
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permitted parklet area limits?” Also raised, by a restauranteur, is their interest to build a permanent outdoor dining structure extending out from their building and onto the public roadway and across the sidewalk. They envision something similar to outdoor dining at Stanford Shopping Center, as it offers the following advantages:
Weather protection from the sun, wind and rain throughout the year, with lighting and heating.
Design consistency with interior restaurant space
One-time merchant investment in long-term, high-quality solution As discussed at Retail Committee, staff does not recommend permitting parklets per existing requirements akin to University Avenue, or permanent structures in the public right of way.

California Avenue has four times higher density of restaurants per fifth of a mile compared to University Avenue. In some locations, there are not enough parking spaces for existing restaurants to have a single parking space parklet. Setting aside the issue of which business could have a parklet, a building to minimum parklet standards, would result in a continuous row of parklets occupying all parallel parking spaces on the south side of the street and most of the diagonal parking spaces on the north side of the street. This would block storefront visibility and impede pedestrian and emergency access. The street will feel narrow and enclosed rather than open and walkable. This would also limit the space available to businesses.

The amount of space permitted for outdoor dining on the roadway, not including the sidewalk, is approximately double what is permitted under the current parklet program. Permitting permanent structures on Cal. Ave. under the outdoor activation program with the current restaurant density would increase the impact on storefront visibility and emergency access.

In either case, parklets or permanent structures, staff recommends not permitting this type of structure for the following reasons:
Utility access: many utilities (water, gas, sewer, stormwater, electrical, other) run beneath the right-of-way and require unimpeded emergency and maintenance access.

Structures impeding access will need to be removed, with associated replacement costs and business disruption.
Fire safety: structures can pose a fire hazard and obstruct fire access. Fire can move from one structure to another, rapidly engulfing the entire street. Restricts storefront visibility: structures would be larger in area and taller than parklets, and there could be several along both sides of the street, blocking visibility of adjacent retail storefronts and reducing the openness of the environment. Building Code requirements: structures require attachment to the roadway, foundation work and plan review by the Building Division, improvements which will increase merchant costs, time delays and conflict with below grade utilities.

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Lease complexity: structures on public property would require long-term leases, requiring analysis of market value and legal restrictions on use of specific property parcels.
Architectural Review: structures will trigger Architectural Review Board oversight, extending timelines and increasing costs.
Removal: Long-term maintenance and removal concerns if a business closes.

The success of this program relies on the interest of merchants to improve their outdoor activation areas based on the design guidance to evolve the street as a whole to be an open and vibrant. As a part of the longer-term design of California Avenue, appropriate locations for structures within the public right-of-way can be more appropriately considered.

Car Free California Avenue Outdoor Activation Program revisions based on Retail Committee feedback
Increase number of permitted signs from one to two, with a limit of one sandwich board Other overhead shelters may be permitted (beyond large format umbrellas and awnings), provided they are not attached to the roadway, are easily and quickly removable for utility access and meet clearance and design requirements. Limit requiring overhead electrical service only to areas with glass mosaic sidewalks.

Implementation Timeline (Tentative)
Staff recommend a phased implementation approach that mirrors the approach used when the ongoing parklet program was implemented. Below outlines an approximate timeline:
JUNE: Council review and approval of outdoor activation guidelines and accompanying resolutions and fees
JULY: Adopted standards go into effect, pre- applications / re-applications would be open and due to the City including associated fees (application and license) AUGUST: Applications accepted and installations without a pre application or application on fill will begin to be enforced for removal. SEPTEMBER/OCTOBER: Transition of outdoor spaces to follow the activation guidelines NOVEMBER: Outdoor activations must be in compliance with new standards Open Container Resolution and Entertainment Zone
The Retail committee expressed a desire and recommended that Council refer to staff further exploration of establishing an Entertainment Zone for the Car Free portion of California Ave.

Recognizing this interest, staff proactively prepared a resolution extending the open container ordinance previously in effect for Third Thursdays that sunset December 2024. Although not an Entertainment Zone, if adopted, could provide allowance for open containers throughout 2025 while the referral for further work on an Entertainment Zone in undertaken by staff.

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FISCAL/RESOURCE IMPACT
The outdoor activation of car-free California Avenue represents a unique environment that will require a higher level of maintenance than currently provided by the City. In addition to the ongoing needs for cleanliness of public spaces, fiscal impacts include staff time to review and process outdoor activation permits, additional costs associated with increased inspections, potential longer-term sewer system maintenance costs, and unknown costs and contributions for public restrooms, including daily operational expenses. Staff time is partially recovered through the existing encroachment permit process
In order to ensure that car-free California Avenue is maintained in a manner consistent with local businesses’ needs and priorities, as well as supporting economic success, some level of coordination and collective support among the businesses is essential. The City will need to continue encouraging stakeholders to work together on issues of collective interest.

STAKEHOLDER ENGAGEMENT
Since February 3, 2025 Council study session, staff has continued outreach, with regular monthly meetings with Merchants, individual meetings with merchants at their businesses, in- person meeting with Evergreen Park Neighborhood Association, tabling 3rd Thursday and Earth Day events, in-person presentation to facilities managers at Stanford Research Park, and in person meetings at the Sunday Farmers’ Market as well as feedback from the Architectural Review Board on March 20, 2025. The chronology of outreach can be found on the Car-Free Streets webpage4.

ENVIRONMENTAL REVIEW
The proposed actions are categorically exempt under CEQA Guidelines Sections 15301 (existing facilities), 15303 (new construction or conversion of small structures), 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment), 15305 (minor alterations in land use limitations), 15311 (accessory structures), and 15323 (normal operations of facilities for public gatherings).

ATTACHMENTS
Attachment A: Car-Free California Avenue Outdoor Activation Program Guidelines Attachment B: Resolution Authorizing Food/Drink and Retail Encroachments on Car Free California Avenue under PAMC Ch. 12.11.

Attachment C: Resolution Authorizing Consumption of Alcoholic Beverages under PAMC

9.04.010 for Third Thursdays in 2025
APPROVED BY: Ed Shikada, City Manager
4 Car-Free Streets: Cal Ave & Ramona Street Webpage:
https://www.paloalto.gov/Departments/Transportation/Transportation-Projects/Car-Free-Streets-Cal-Ave.- Ramona-Street
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Outdoor Activation Program Guidelines
California Avenue Community Street
Outdoor Activation
Permit Requirements and Design Guidance
for Outdoor Dining and Merchandising
➔ City of Palo Alto
➔ Effective starting xx 2025
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Outdoor Activation Program Guidelines
Table of Contents

01. Introduction

02. General Requirements

03. Design Elements

04. Encroachment Permit Application
Car-Free California Ave
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Outdoor Activation Program Guidelines
Introduction
Topics
➔ Purpose
➔ Vision
➔ Objectives
01 3
One Seaport
Boston, Massachusetts
Car-Free California Ave
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Outdoor Activation Program Guidelines

01.1 Purpose
4 The Outdoor Activation Program is an initiative by the City of Palo Alto to transform the car-free section of California Avenue into a vibrant Community Street, supporting local business activity and enhancing the community experience.
01 Introduction
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Outdoor Activation Program Guidelines

01.1 Purpose (continued)
5 The document describes requirements and design
guidance that apply to the commercial to use public
sidewalks and roadway spaces for outdoor dining,
retail and entertainment uses. This document sets
forth the City's expectations for issuing encroachment
permits for the commercial use of portions of the
street to ensure that public spaces remain accessible,
safe, equitable, and well-designed and maintained. It
serves as guidance to businesses, City staff,
designers, and the public to create a welcoming, open,
and attractive community-oriented environment.
01 Introduction
California Ave
Palo Alto, California
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Outdoor Activation Program Guidelines
The vision for Car Free California
Avenue is to be a community-oriented
main street that is an open, car-free
environment that prioritizes community
experience, meaningful social
interaction, and commercial vitality.

01.2 Vision
6 01 Introduction
One Seaport
Boston, Massachusetts
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Outdoor Activation Program Guidelines

01.2 Vision (continued)
7 By removing vehicle traffic and repurposing space
for pedestrian use, the street becomes a welcoming
community hub that invites spontaneous
gatherings, fosters neighborhood identity, and
stimulates economic vitality. Commercial use of
outdoor space supports local businesses, enhances
customer experience, and directly contributes to a
thriving community destination. Activation spaces
extend business activity into the public realm,
creating opportunities for flexible, creative, and
visually cohesive commercial use of the street. Well-
designed activation areas contribute to a lively,
inclusive, and safe atmosphere where residents and
visitors feel a strong sense of belonging.
01 Introduction
Car-Free Montreal
Montreal, Canada
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Outdoor Activation Program Guidelines

01.3 Objectives
8 This document advances
the following objectives:

A. Enhance Customer Experience and Local Business Vitality ○ Create visually appealing, comfortable outdoor spaces that attract and retain customers
○ Support diverse business needs through flexible
activation space configurations
○ Encourage private investment with consistent program
standards and clear expectations
B. Ensure Safety and Accessibility
○ Maintain ADA-compliant pedestrian pathways and
emergency access
○ Use safe, durable, weather-resistant materials for all installations
01 Introduction
C. Advance the Aesthetics and Livability of the Street
○ Promote a unified yet diverse aesthetic that reinforces Cal Ave's unique character
○ Provide aesthetic guidance for design elements to
enhance the overall ambiance of the street
○ Preserve visibility to adjacent storefronts and maintain open sightlines
D. Encourage Adaptive Design
○ Encourage Adaptive Design
○ Promote adaptability to respond to seasonal changes in weather
○ Maintain flexibility of the use of public space
E. Foster Community Connection
○ Promote the activation of street environments to invite shared experiences, events, and informal gatherings
○ Enable Cal Ave to function as a true community
destination and cultural hub
F. Efficient and Equitable Use of Public Space
○ Ensure efficient, equitable outdoor use of public right- of-way
○ Avoid conflict with utilities, infrastructure and public safety features
○ Support of long-term investment in well-managed
outdoor spaces
○ Enable a single, streamlined encroachment permit
process
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Outdoor Activation Program Guidelines
General
Requirements
Topics
➔ Street Zones
➔ Location
➔ Setbacks
➔ Permitted Activities
➔ Operator Responsibilities
02 Broadway Street
Redwood City, California 9
Car-Free California Ave
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Outdoor Activation Program Guidelines
02 General Requirements

02.1 Street Zones
This section describes the location, setback, permitted uses and operational requirements for outdoor activation areas.

The car-free portion of the California Avenue right-of-way consists of five zones, as shown in Figure 2.1.

Frontage
Zone
Pedestrian
Zone
Curbside/Street
Furniture Zone
Access Zone
Area designated for pedestrian,
bicycle, emergency vehicle and
certain service vehicles with
permission.

Sidewalk SidewalkRoadway
Activity Zone
Figure 2.1. Street Zones
10 Activity Zone Frontage
Zone
Pedestrian
Zone
Curbside/Street
Furniture Zone
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Area designated for
pedestrian, bicycle,
emergency vehicle and
certain service vehicles
with permission.

Provides pedestrian,
emergency, and
disabled access to the
building.

02.1 Street Zones (continued)
Extension of the
building with entryways,
recesses, doors,
windows, awnings, and
overhangs that extend
into the street right-of-
way.

Frontage Zone Pedestrian
Zone Access ZoneActivity ZoneCurbside/Street
Furniture Zone
Designated for street
furniture, landscape,
street trees, lighting,
benches, green
infrastructure, utilities,
bicycle parking,
planting, and other
amenities.

Area designated for
outdoor dining, retail
merchandise, and public
space for use, such as
the Farmers’ Market,
events, public art, and
other community,
cultural or public uses to
attract pedestrian
activity to the street.
02 General Requirements
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Outdoor Activation Program Guidelines
Businesses are required to locate their Outdoor Activation space directly in front of the operator’s storefront.

Commercial outdoor activation is permitted in the following three zones as shown in Figure 2.3. Location Map
● Frontage Zone
● Curbside/Street Furniture Zone
● Activity Zone
Outdoor Activation spaces shall not obstruct or
encroach upon the following:
● 8-foot pedestrian through zone on sidewalks
● 22-foot shared zone
● Designated pedestrian paths of travel
● Property Emergency Access Way
● Designated bike lanes
12 02.2 Location
Building Property Line
Building Property Line
02 General Requirements
Figure 2.2. Location Diagram
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Outdoor Activation Program Guidelines
Area A Area B
02 General Requirements
Figure 2.3. Location Map

CAL AVE CAL AVE

02.2 Location (continued)
Area A spans between El Camino Real and
Mimosa Lane, and Area B spans from
Mimosa Lane to Birch Street.

Ash St
Birch St
El Camino Real
Cambridge Ave
Sherman Ave
Grant Ave
Mimosa Ln
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Outdoor Activation Program Guidelines 14

02.3 Setbacks
Setbacks are required and define the
permitted area for outdoor activation.

Setbacks apply to all design elements
including – railings, screens, planters,
structures, cantilevered awnings,
umbrellas, or other elements.
02 General Requirements
Smith Street,
Brooklyn, New York
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15 02.3 Setbacks (continued)
Area A
02 General Requirements
Legend
Potential Permitted Zones
Property Emergency Access Way
Min. of 4 feet from each property edge, creating an 8-
foot emergency access zone between adjacent
properties
Fire Hydrant Setback, 15’
Tree Setback, 3’
Drain Setback, 5’
Fire Hydrant Light Post
Setback
Note: Pedestrian Zone can
vary in location on sidewalk,
aligning at the curb or
building front or in between.

However ped zone is to be
consistent across property
frontage, and not by tenant
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Outdoor Activation Program Guidelines 16

02.3 Setbacks (continued)
Area B
02 General Requirements
Match Line
Legend
Potential Permitted Zones
Property Emergency Access Way
Min. of 4 feet from each property edge, creating an 8-
foot emergency access zone between adjacent
properties
Fire Hydrant Setback, 15’
Tree Setback, 3’
Drain Setback, 5’
Fire Hydrant Light Post
Setback
Note: Pedestrian Zone can
vary in location on sidewalk,
aligning at the curb or
building front or in between.

However ped zone is to be
consistent across property
frontage, and not by tenant
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Outdoor Activation Program Guidelines 17

02.3 Setbacks (continued)
For Fire Safety
● Two means of emergency access to and from buildings to the street right of way are required.
● Minimum of 4-feet from each property line, creating an 8- foot emergency accessway between adjacent properties.
● Minimum of 8-feet between structures to allow for
emergency access.
● Structures must not overhang more than 12-inches into the emergency vehicle accessway.
● For multi-tenant buildings, boundary elements can adjoin, provided building setback requirements are met.

For Street Trees
● Maintain a 3-foot clearance from tree trunks or major branches.
● Closer encroachment requires urban forestry approval. ● To protect tree roots, boundary elements may be installed adjacent to tree wells to direct foot traffic away from roots.

For Utilities
No utilities access points shall be covered by the Outdoor Activation space improvements, this includes storm drain catch basins and all telecommunication vaults and manholes. A minimum of 5 linear feet clearance must be maintained between
improvements and any storm drainage feature such as catch basins. Outdoor Activation space improvements must allow access to the catch basin and shall not obstruct the catch basin.

Improvements must not obstruct:
● Public utilities: (e.g., water, gas, wastewater, electric, fiber, streetlight, telecommunication vaults).
● Gas mains or services: (to avoid potential hazards).
● Fire Hydrants: Minimum 15-foot clearance required.
● Manhole Covers: Maintain a 5-foot radius for access.
● Storm Drain Catch Basins: Minimum 5-foot clearance required; outdoor activation area must allow maintenance access.

If improvements to an outdoor activation area conflict with public infrastructure (e.g., signage, benches), applicants must consult Public Works for potential relocation. If relocation isn’t feasible, outdoor activation area must accommodate existing infrastructure.

For Access Zone
Include two foot planter setback in the outdoor activation area, facing the center of the street, along the accessway. Only planters, sandwich boards, hostess stations and ADA ramping up to a platform are permitted. No screens, tables, chairs, umbrellas, furniture, lighting, heaters, etc. are permitted.
02 General Requirements
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Outdoor Activation Program Guidelines
Commercial & Non-Commercial Activities
All activity must be contained within the applicant’s
permitted outdoor activation space.

The following commercial and non-commercial activities
are allowed within a permitted outdoor activation space:
● Dining
● Retail
● Community events
● Live music
● Pop-up installations
● Public art
18 02.4 Permitted Activities
02 General Requirements
The Shop
Iowa City, Iowa
12Degree Brewing
Louisville, Colorado
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02.4 Permitted Activities (continued)
For dining, businesses are required to:
● Hours of operation are the same as approved hours for the establishment or per approved Conditional Use Permit.
● Provide all furnishings.
● Tables shall be placed in conformance with the health and safety standards established by Santa Clara County and State of California. ● Be ADA compliant both on the roadway and sidewalk.
● Fire of any kind is prohibited - this includes tea lights or firepits. ● Conditional Use Permit is required for a business to serve alcohol. No amendment to an approved business’ Conditional Use Permit is required to serve alcohol in outdoor activation areas.
● Businesses are required to comply with California Department of Alcoholic Beverage Control (ABC) for licensing and regulation of alcohol service.

Dining
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02.4 Permitted Activities (continued)
For retail sales businesses are required to:
● Businesses must leave a minimum of 8’ of unobstructed walkway space for pedestrians.
● All displays must be removed daily. Nothing is permitted overnight.

Retail
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Outdoor Activation Program Guidelines
Non-Commercial Activities
Non-commercial activities, such as community events, live music, pop-up installations and public art are permitted and welcomed contributors to vibrant street life.

These uses are:
● Temporary and open to the public
● Not associated with a specific business or private benefit ● May include events hosted by non-profits, cultural
groups, or community members
Non-commercial activations may not require an
encroachment permit but could require other city approvals such as a temporary use permit. Contact the City of Palo Alto for requirements.
21 02.4 Permitted Activities (continued)
02 General Requirements
3rdThursday
California Ave, Palo Alto
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02.4 Permitted Activities (continued)
For live entertainment, businesses are required to:
● Live entertainment will not spill outside of permitted activation space ● Any cords spanning the pedestrian through zone on the sidewalk must be secured to avoid tripping hazards with a cable cover or other ADA accessible cover ● Businesses must comply with the Palo Alto Municipal Code for noise limits.

Entertainment
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Outdoor Activation Program Guidelines 23

02.5 Operator Responsibilities
Compliance
● Businesses owners must abide by the guidelines set forth in this document and the terms of their permit.
● If a business does not comply with these guidelines, the city reserves the right to enforce, modify or revoke a permit based on public safety, accessibility, operational conflicts, or other concerns.

Maintenance
● Businesses owners must maintain and upkeep outdoor
activation space. This includes cleaning furnishings daily, removing trash and recycling, replacing damaged lighting or heaters if applicable, and maintaining landscaping.
● Businesses must comply with the city requests to temporarily remove furnishings, such as seating and tables, for city maintenance or special events.
● Business owners are responsible for staying up to-date with permit fees, renewing their license and complying with
standards/guidelines that may be implemented in the future. 02 General Requirements
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Outdoor Activation Program Guidelines
Design Elements
Topics
➔ Platforms
➔ Boundary Elements - Planters,
Railings, Sidewalls and Weather Screens
➔ Overhead Shelter
➔ Branding and Signage
➔ Lighting
➔ Heating
➔ Electrical
➔ Trash and Recycling
➔ ADA Accessibility
03 Star Progetti
Modular Perimeter Structure 24
Car-Free California Ave
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Outdoor Activation Program Guidelines 25
03 Design Elements

03.0 Design Elements
Outdoor activation spaces on California Avenue will consist of a range of design elements to create a welcoming, open, visually attractive and safe public environment. Design elements include:

Platforms Boundary Elements
Planters
Boundary Elements
Railings & Partitions
Boundary Elements
Sidewalls and
Weather Screens
Overhead Shelter
Branding & Signage
Lighting Heating Electrical Trash and Recycling ADA Accessibility Item 17
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03 Design Elements

03.0 Design Elements (continued)
This is an example of a possible
configuration of design elements. This
is one of many possible
configurations.
26 Planters
Weather Screens
Overhead Shelter
Furniture
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03.0 Design Elements (continued)
Design Element Applies to All
Activation Areas
Required for
Outdoor Dining Optional
Required for all activation areas
(dining, retail, other)
Required specifically
for outdoor dining
To enhance customer comfort
and year-round usability

3.1 Platforms ✓

3.2.a Boundary Elements - Planters ✓ ✓

3.2.b Boundary Elements - Railings ✓

3.2.c Boundary Elements - Sidewalls and
Weather Screens ✓

3.3 Overhead Shelter ✓

3.4 Branding and Signage ✓

3.5 Lighting ✓ (for evening service)

3.6 Heating ✓

3.7 Electrical ✓

3.8 Trash and Recycling ✓ ✓

3.9 ADA Accessibility ✓ ✓
Design elements are required or optional per the table below. 03 Design Elements
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03.1 Platforms
Platforms are a level, horizontal surface
extending from the sidewalk into the
roadway, bringing the restaurant dining
experience outdoors, providing a stable,
accessible floor surface and protecting
patrons from water runoff on the street.

Applicants can choose whether to make platform
improvements depending on the level of the sidewalk and roadway.

Washington DC Pilot Streatery
Adams Morgan, Washington DC
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Platform Requirements (continued)

1. Layout
a. Be level with the sidewalk
b. Comply with ADA standards

2. Materials
a. Durable, weather-resistant, and safe for pedestrian use b. Constructed with exterior-rated, high-quality materials, including:
■ Natural, durable wood (e.g., redwood, cedar)
■ Preservative-treated wood
■ Light-gauge steel
■ Other engineered materials suitable for exterior conditions c. The floor shall have finish and slip resistance (BH is a minimum of 0.6 coefficient of friction).

3. Structural
a. Support a live load of 100 pounds per square foot.
b. All fastening hardware and fasteners used with preservative treated wood must be made of:
■ Hot-dipped zinc-coated galvanized steel
■ Stainless steel
■ Silicon bronze
■ Copper

4. Edge Conditions
a. Platform must be partially covered with the planters perpendicular to the line of travel.
b. Platform edge along the access way cannot be more than 25% covered
c. For a long platform, railings mounted on the platform are permitted here.

5. Drainage, Ventilation & Rodent Proofing
a. Platform underside must be constructed to allow for seasonal drainage.
b. Adequate cross-ventilation to enable the surface to dry within 12–24 hours.
c. Openings beneath the platform must be screened with corrosion - resistant material with a maximum mesh size of 0.25 inches. d. Platforms must not impede curbside drainage.
■ A minimum clearance of 6.5 inches from the sidewalk curb must be maintained along the platform's entire length.
■ Openings at either end of the platform must be covered with screens to prevent debris accumulation beneath the platform and in the gutter.
e. Closure decking must be removable to allow for under-platform inspections as needed.
f. Platform to be sloped a minimum ⅛ inch per linear foot towards the sidewalk for drainage.
g. Any debris and leaves shall be removed immediately by the permittee to allow free flow of water.
h. Leaves and litter shall not be blown in the street and shall be bagged and placed in the appropriate disposal bin.
i. Refer to drainage detail below for platform attachment to sidewalk. 03 Design Elements
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03.2 Boundary Elements
Planters, Railings and Sidewalls
The commercial use of outdoor space requires boundary
elements to spatially separate outdoor dining areas yet maintain an open, welcoming pedestrian environment.

Boundary elements are not intended to obstruct views to or from dining areas, retail storefronts, bicycle lanes, or pedestrian routes. The openness of the street — visually and acoustically — is essential to fostering a community-
friendly, vibrant environment.

Boundary elements:
● Define and organize active spaces
● Enhance customer comfort for year-round use
● Improve aesthetics for both the business and the street ● Maintain clear, safe circulation routes
● Enhance the overall public realm without enclosing or privatizing public space
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Boundary Element Guidelines (continued)

1. For Platforms
For those choosing to install a platform, the following guidelines on boundary elements must be implemented:
a. The edges of the platform shall be enclosed on three sides with planters or railings (only sidewalk open)
b. Boundary elements must ensure visibility to pedestrians and not create a visual barrier.
c. The edge treatment shall be substantially secured to the platform.

2. For Outdoor Dining or Retail Uses
The following table summarizes key differences in boundary requirements between outdoor dining and retail uses on sidewalk and roadway areas.

Outdoor Dining Retail
Activity Seated, longer stays
(eating/drinking)
Browsing, movement
(shopping)
Need for
Boundary
Yes
(defines service area, meet
ABC/alcohol regulations if
serving alcohol, can be
minimal)
Optional
(prioritize openness for
browsing)
Boundary Type Planters
Railings
or partial screens that
suggest an “area” without
fully enclosing
Planters
Movable displays
No fixed railings
Movable screens
Flexibility Moderate
Furniture and fixtures can
remain overnight, no fixed
furniture to sidewalk or
roadway
High
Merchandise can be moved
in/out daily; no overnight
merchandise and furnishings,
maintain flexibility for use of
roadway for Farmers’ Market
and street events
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03.2.a Boundary Elements:

Planters
Planters are a required design element for
all outdoor activation areas. They serve as
buffers, introduce garden planting and
color to enhance the appeal of the street,
and address limited in-ground landscaping.
03 Design Elements
32 Examples of
Preferred Planter
Types
Low, powder coated steel
Modular, movelable, with drought
tolerant planting
Wood planters with aluminum frame
Modular, movelable, with drought
tolerant planting
Wood planter, steel frame
Modular, moveable with integrated
casters, drought tolerant planting
Modular planter with integrated
glass screen
Attached to adjacent buildings
to provide broad coverage and
integration with architecture.

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Planter Requirements (continued)

1. Types
a. Free standing planters of various materials ranging in height from 24” - 3O”.

May be integrated with other boundary elements such as stanchions, railings, or wind screens.

2. Placement
a. Planters are required on sides of outdoor activation zones, perpendicular to the path of travel without blocking pedestrian access, emergency access, or visibility between storefronts.
b. A two foot planter setback is required where outdoor dining faces the center of the street along the accessway.
c. Planters are required a minimum of 25 percent of the frontage facing the center of the street and are optional facing the sidewalk for outdoor dining areas.. Each activation zone must provide a 4’ wide minimum accessible entry from the sidewalk.

3. Specifications
a. Planters must be freestanding, movable, and made of durable, weather - resistant materials
b. Must include planting, with regular maintenance by the business owner c. Not exceed 30 inches in height where creating the boundary of an outdoor dining area
d. Support seasonal planting or drought-tolerant species

4. Material Palette
a. Use high-quality materials such as:
b. Powder-coated metal
c. Fiberglass
d. ceramic
e. Finished wood with weatherproof seal

5. Avoid
a. Bright plastic, untreated wood, DIY containers, concrete or CMU blocks b. No plants shall have thorns, spikes, or sharp edges. c. Poisonous or invasive plants are not permitted.

Planter Design Guidelines

1. Selecting one planter shape, whether round, rectangular, or tapered, and then varying sizes, maintains uniformity of design, and can be arranged to create a layered garden, rather than mix of planter shapes of the same size which can be visually confusing.

2. Utilizing a diversity of plantings can enliven retail areas and support a colorful, active street life.

3. Arranging small, medium, and large planters together in a cluster increases the amount of planting visible at eye level than repetition of one planter size, for retail areas.

4. Coordinated plant palettes (native grasses, succulents, seasonal flowers) can unify the street experience.

Outdoor Dining

1. Planters should define a clear border around dining areas to promote visual harmony

2. Aim for unified planting design — consistent planter types, material palettes, and/or coordinated plant selections along each frontage.

Outdoor Merchandising

1. Planters may be arranged in flexible, clustered groupings to create an open and informal, and not a strictly bounded, environment.
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03.2.b Boundary Elements:

Railings and Partitions
Railings and Partitions can define the
boundary of each outdoor dining area and
adjacent pedestrian and bike path areas.

They are to support safety, maintain
visibility, and foster cohesive streetscape
design. They must meet minimum size,
stability, and accessibility standards
while creating a functional, attractive
urban aesthetic.

Free standing partition / planter
combination
Free standing, powder coated steel
partition with graphic elements
Metal railings affixed to sidewalk
Examples of
Prefered Railing
Types
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Railing & Partition Requirements (continued)

1. Location
a. Permitted to be attached to sidewalks and platform edges b. Not permitted to be attached to roadway

2. Height
a. Maximum of 42 inches
b. Minimum of 36 inches where required for separation or fall prevention

3. Transparency
a. Maintain at least 50% openness above 30 inches to preserve sightlines between the dining area and public realm

4. Stability
a. Modular systems should have interlocking connections or corner bracing

5. Clearances
a. Must not encroach on the 8-foot pedestrian path or ADA-compliant access routes
b. Railings must not obstruct fire hydrants, utility vaults, or emergency access zones

6. Materials
a. Use weather-resistant, durable materials such as:
i. Powder-coated metal (steel, aluminum)
ii. Treated hardwood
iii. Composite or engineered wood
iv. Painted steel cable systems
b. Avoid:
i. Corrugated plastic, fabric barriers, chain link, or unpainted raw wood
c. Finish:
i. Matte or satin, avoiding reflective or mirrored surfaces ii. Use neutral or coordinated colors unless the business is applying branded colors that align with Cal Ave’s design palette. See Appendix page [x] for more information on this.

Railing & Partition Design Guidelines

1. Visual Quality
a. Railings should enhance the architectural character of the building and neighboring storefronts
b. Where possible, integrate planter boxes, branded panels, or integrated signage within the railing system

2. Flexibility & Modularity
a. Modular Systems
■ Freestanding railing systems that can be easily removed, reconfigured, or relocated are encouraged
■ Where multiple businesses share a continuous frontage, systems should align or coordinate across property lines
b. Integrate with other elements
■ Attach to platforms, if present (and not installed resulting in damage to city infrastructure)
■ Combine with planter boxes, lighting elements, or sidewall systems
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03.2.c Boundary Elements:

Sidewalls & Weather Screens
Modular weather screens are to provide
flexible, seasonal weather protection for
dining spaces and preserve the openness,
pedestrian visibility, and access between
the street and storefronts.

Modular screens
Prefabricated modular panels with
glass wind screen
Wood planter with screen
Wood planters integrated glass
screen
Examples of
Prefered Sidewalls
& Weather Screen
Types
03 Design Elements
36 Movable planter
Moveable planter with integrated
glass screen
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Sidewall & Weather Screen Requirements
(continued)

1. Materials
a. Anodized aluminum, tempered glass, or durable composite

2. Transparency
a. Areas above 30 inches must be at least 50% transparent b. Must not block visibility between street and storefronts

3. Height
a. Recommended height 6 feet
b. Maximum height 8 feet
Weather Protection Design Guidelines

1. Wind and Weather Screens:
a. Free-standing panels or movable screens for seasonal wind, rain, or UV protection

2. Adjustable Height Glass Screens:
a. Systems where the upper panel can be raised or lowered based on weather

3. Planter-Integrated Screens:
a. Combined planter/screen units to green the space and buffer weather

4. Materials:
a. Tempered glass
b. Polycarbonate
c. Recycled composite

5. Avoid:
a. Opaque walls
b. Corrugated plastic
c. Patchwork or fabric-based solutions
Weather Protection Design Guidelines (continued)

6. Emphasize visual permeability and natural light

7. Not Allowed
a. Fully opaque walls over 30 inches
b. Temporary fencing, crowd-control barricades
c. Plastic sheeting or tarps as weather protection
d. Do it yourself structures using mixed salvage materials Outdoor Alcohol Service
● If alcoholic beverages are served in the activation space:
○ A physical boundary and signage must be provided to clearly delineate the licensed premises as required by the California Department of Alcoholic Beverage Control (ABC).
○ The boundary may consist of planters, railings, or modular screens and ■ Visibly defines the edge of the dining area
■ Complies with ADA and emergency access standards
■ Maintains openness and transparency above 30 inches
○ Businesses are responsible for maintaining their beverage barriers in good condition and ensuring compliance with all ABC conditions of licensure.
○ Reference: California ABC Premises Expansion Guidelines 03 Design Elements
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Outdoor Activation Program Guidelines 38
03 Design Elements
Example A: minimum allowed
enclosure facing promenade
The boundary condition of an outdoor activation
space can be designed in a variety of ways. These
are a few examples, viewed from the accessway.

Example C: Combination of low
planters and seating / benches with
min. 4’ entry

03.2.d Boundary Examples
Raili
Example B: Free standing partitions
with branding and 4’ min entry
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03.3 Overhead Shelter
To create a comfortable outdoor dining
experience and provide effective weather
protection that shields patrons from sun,
rain, and moderate wind, Cal Ave outdoor
outdoor activation areas may use robust,
high-quality umbrellas and awnings
designed for durability, stability, and
adaptability.

Large-format umbrellas complement dining areas
aesthetically while adhering to safety standards. Building- mounted awnings enhance coverage and visual cohesion,
ensuring a unified, inviting environment.
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Barcelona, Spain
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Overhead Shelter Requirements (continued)

1. Material Specifications
a. Canopy Fabric:
i. High-grade, solution-dyed acrylic (e.g., Sunbrella, Outdura). ii. UV-resistant, waterproof, mildew-resistant, minimum 9 oz/sq. yd fabric weight.
b. Frame Material:
i. Corrosion-resistant frames (marine-grade aluminum, stainless steel, or fiberglass).

2. Wind and Stability
a. All umbrellas placed in the public right-of-way must be commercial grade, intended for outdoor public and commercial use.
b. Umbrellas are to be free standing and not anchored to the roadway or sidewalk)
c. Wind Performance
i. Umbrellas must be secured in a free standing, weighted base per manufacturer recommendations.
ii. Umbrellas must be rated by the manufacturer to remain stable in wind conditions while open when installed per manufacturer’s instructions.
iii. Umbrellas must be closed and secured during wind conditions per manufacturer’s recommendations.
d. Applicant must submit product specifications and describe base and fastening methods with application.
e. Awnings:
i. Must be securely anchored to building façades.

Overhead Shelter Guidelines

1. Size and Coverage
a. Umbrella Diameter:
i. Typically between 13 to 20 feet.
ii. Fewer, larger umbrellas preferred over many smaller ones. b. Clearance Height:
i. Minimum 7–8 feet from ground to canopy edge when fully opened.

2. Wind and Stability
a. Wind Vents and Reinforced Seams:
i. Double-vented designs encouraged.

3. Weather and UV Protection
a. Waterproof coatings and reinforced seams.
b. UPF 50+ rating for UV protection.
c. Light or reflective canopy colors recommended for heat reduction.

4. Functionality and Flexibility
a. Tilt and Rotation Adjustments:
i. For cantilever umbrellas: 360-degree rotation and adjustable tilt preferred.
b. Ease of Operation:
i. Use crank or pulley systems for opening/closing.
c. Retractability:
i. Retractable awnings encouraged for year-round flexibility. d. Lighting Integration:
i. Ambient or task lighting within umbrellas/awnings (compliant with lighting requirements).
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Cantilever umbrellas
Flexible, unobstructed space
beneath the umbrella, enabling
open seating and multi-table
coverage.

Center-pole (market-style)
umbrellas
Anchored installations with a
central pole that does not obstruct
movement or seating.

Multi-canopy umbrella systems
Multiple canopies on a single frame,
allowing greater coverage and
flexibility for large spaces.

03.3 Overhead Shelter (continued)
Building facade-mounted
retractable awnings
Attached to adjacent buildings
to provide broad coverage and
integration with architecture.

Preferred
Overhead Shelter
Types
The following are allowed
● Cantilever umbrellas
● Center-pole (market-style) umbrellas
● Multi-canopy umbrella systems
● Building facade-mounted retractable awnings
Other overhead shelter types may be permitted provided
that location, setback, clearance and area requirements are met, they are not attached to the roadway, they are easily and quickly removable for utility access, and meet wind and stability requirements.
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03.3 Overhead Shelter (continued)
The following are NOT allowed
● Pop-up tents
● Permanent wood-framed roof structures
● Corrugated plastic or metal roofing materials
● Extending beyond the Outdoor Activation space
Pop-up tent
Customized overhead
shelters of any material or
form
Multi-colored, branded
umbrellas
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03.4 Branding & Signage
Branding and signage on Cal Ave
activation areas help define the district’s
identity, support business visibility, and
contribute to a cohesive and welcoming
public realm.
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Free-standing signs
Sandwich Boards made of metal
(durable material)
Surface-mounted signs
Branding on 30” boundary elements
(planters or screens)

03.5 Branding & Signage (continued)
Preferred
Branding & Signage
Types
Branding and signage are allowed on the
following locations:
● On Sandwich Boards
● On boundary elements
● Must be located within the Outdoor Activation space
03 Design Elements
44 Partition - mounted signs
Branding on 30” boundary elements
(planters or screens)
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03.5 Branding & Signage (continued)
Do not place signage in
pedestrian through zones
Signage cannot be placed
in streetscape garden
Outside the Outdoor
Activation space
Branding and signage are NOT allowed on
the following locations:
● On umbrellas, awnings, or vertical screens above 36 inches ● painted murals, decals, or wraps on activation area
surfaces
● Pedestrian through zones
● In planters
● Any location outside the designated outdoor activation space
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03.5 Lighting
Thoughtful, human scale lighting can
improve the comfort, safety, and
appearance of outdoor activation spaces,
and will significantly contribute to the
attractiveness of the street. Applicants
interested in lighting should consider
solar-powered lighting that uses a
rechargeable battery.
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Umbrellas mounted,
integrated lighting
Umbrellas mounted,
integrated lighting
1 2

03.6 Lighting (continued)
Preferred
Lighting Types
The following are allowed
● Lighting integrated into overhead canopies, umbrellas ● Lighting integrated into furniture, boundary elements ● String lights, wall-mounted downlights, solar or
rechargeable table lamps
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Lighting Requirements (continued)

1. Businesses must comply with the following standards, consistent with the City of Palo Alto and California Electrical Code:

2. Lighting is required for outdoor dining areas for food and beverage service in the evening hours.

3. Allowed Fixture Types:
a. LED-only lighting
b. String lights, wall-mounted downlights, solar or rechargeable table lamps

4. All lighting must be rated for exterior use, listed, and carry a product certificate for its intended use by a recognized electrical testing laboratory.

5. Power & Installation:
a. Power must come from a weatherproof GFCI outlet mounted on the building (min. 10 feet above ground)
b. Wiring must follow permanent wiring methods per code and run via a single overhead guide wire
c. No extension cords, power strips, or generator use
d. Electrical equipment must be UL or ETL certified for outdoor commercial use

6. Placement & Output:
a. Lighting must stay within the activation area and not encroach into pedestrian walkways
b. Fixtures must aim downward, with shielding to prevent upward light spill
c. Max output: 100 watts or 1,600 lumens per fixture
d. Lighting shall be of the lowest intensity and energy use adequate for its purpose and be designed to focus illumination downward to avoid excessive illumination above the light fixture with a maximum of 100 watts or 1600 lumens, whichever is greater, per fixture.

7. Permits:
a. An electrical permit is required for all permanent wiring and exterior receptacle installations
b. If installing permanent lighting on the Outdoor Activation space or adding the exterior GFCI receptacle at the building per IV(D)2a, an electrical permit shall be obtained and shall comply with permanent wiring methods as outlined in the adopted California Electrical code.

Lighting Guidelines
To support a comfortable, visually cohesive street experience, businesses are encouraged to:

1. Use ambient lighting for general glow, task lighting for tables, and accent lighting for architectural features or planters

2. Select fixtures that complement storefront architecture and minimize visual clutter

3. Use low-wattage (5–20W) warm LEDs to enhance atmosphere without over- lighting

4. Choose solar-powered or battery-operated lighting where feasible to reduce energy use

5. Incorporate timers, motion sensors, or photocells to automatically turn off lights when not needed

6. Avoid harsh glare near pedestrian or bike paths, and maintain consistent spacing to reduce dark spots
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Outdoor heating elements may be used to
enhance patron comfort in outdoor
activation areas during cold weather.

Electric and propane (LPG) heaters that meet City of Palo Alto safety, and permitting requirements are permitted. All heaters are to be weather rated, certified for commercial outdoor use and installed according to manufacturer
instructions and applicable fire and electrical codes.

03.6 Heating
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3. Proposed outdoor storage of 20-pound containers requires plan review and inspection.

4. On-site storage of 20-pound propane containers (5 gal) is prohibited indoors.

5. Propane storage is not allowed in the public right-of-way.

6. If businesses do not have an approved private outdoor storage area, all propane containers must be removed from the premises at the close of business every day.

7. LPG Heaters are not permitted on the sidewalk in the pedestrian path of travel

8. LPG heaters cannot be placed underneath overhead canopies, awnings, inside buildings or tents and they must have 5-feet clearance from any flammable materials

9. Any use of a portable heater, portable generator, candles, open flame, or any activity regulated by the Fire code must be approved and permitted by the Palo Alto Fire Department separately from the outdoor activation encroachment permit.

10. A fire extinguisher is required to be mounted within sight and have appropriate signage per the Fire Code.

Heating Requirements (continued)
Electric radiant or infrared heaters:

1. UL-listed, ETL certified, and labeled for outdoor commercial use

2. Located and installed per manufacturer’s instructions and specifications.

3. Meet City installation requirements
a. Comply with the power supply requirements in section IV.D.2. b. Electric heaters must be placed at least 3 feet away from any combustible materials or as required by Manufacturer’s installation instruction, whichever is more restrictive.
c. Mounted securely (8–12 feet above ground if overhead) ■ Ensure adequate airflow, and avoid installation in exposed, high- wind areas
■ Electrical cords must be rated for outdoor use, protected, and must not pose a trip hazard
■ Do not place heaters in pedestrian paths of travel, including on sidewalks or in any required accessible clearance zones d. A fire extinguisher is required to be mounted within sight and have appropriate signage per the Fire Code.

Propane heaters:

1. Permitted with an approved HAZMAT permit and CERS submittal.

2. HAZMAT permit is required for storage and use of liquid propane gas. A site plan with the desired location of each heater is required at time of the hazmat permit application. All storage locations and use areas must be noted in the HAZMAT permit application and approved during fire inspection. A final onsite hazmat inspection will be conducted to ensure the proper spacing of heaters form combustibles and emergency access/egress and storage of LPG.
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All outdoor heating and lighting systems
must be powered safely and in
compliance with the California Electrical
Code and City of Palo Alto requirements.

Electrical infrastructure must be reviewed as part of the permit process when installing fixed lighting, overhead heating, or building-mounted outlets.

03.7 Electrical
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Electrical Requirements (continued)

1. Power Source
a. Power must originate from a weatherproof GFCI outlet mounted to the exterior of the building
b. Outlet must be installed no lower than 10 feet above the walking surface
c. Power may not be sourced from:
■ City streetlights
■ Tree-mounted wiring
■ Temporary outlets or plugs

2. Wiring and Installation
a. Electrical connections must use permanent wiring methods per California Electrical Code
b. Power must be routed via one overhead guide wire from the building to the outdoor activation area in sidewalk areas with mosaic glass c. No cords may run along or under the sidewalk
d. No extension cords or power strips are permitted
e. Power cords between the building and the Outdoor Activation space shall be secured to one (1) single overhead guide wire between the building and the Outdoor Activation space structure.
f. Portable generators are prohibited for any outdoor activation use

3. Permitting
a. An electrical permit is required for:
■ Installation of any new building-mounted exterior outlet ■ Permanent lighting or fixed heating systems

4. All equipment must be:
a. UL or ETL certified
b. Rated for outdoor commercial use

5. Not allowed
a. Televisions are not permitted.
b. Amplified is not permitted on Outdoor Activation spaces. Any ambient sound may only originate from the interior of the business’s occupied building.
03 Design Elements
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Avenue Outdoor Activation Program
Guidelines

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Outdoor Activation Program Guidelines
Clean and well-managed outdoor spaces
are essential to maintaining public health,
supporting sustainability, and enhancing
the visual character of California Avenue.

All businesses participating in the Outdoor Activation
Program are responsible for proper waste management in
compliance with the City’s Zero Waste Palo Alto Ordinance and local solid waste sorting requirements.

03.8 Waste Management
03 Design Elements
53 Retrograde and Sunshine Cafe
Sebastopol, California
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Outdoor Activation Program Guidelines
Waste Management Requirements (continued)

1. Keep outdoor activation area and adjacent sidewalks free of litter, food waste, and stains

2. Clean surfaces daily, and power wash at least once per month

3. Prevent debris and liquids from entering storm drains or accumulating near planters or barriers

4. Maintain clear access to drainage grates and public
infrastructure

5. Comply with Palo Alto’s solid waste ordinance and support citywide zero waste goals:

6. Provide clearly labeled and color-coded containers for:
○ Recycling (blue-tinted liners)
○ Compost (green compostable liners)
○ Landfill (clear liners)

7. Containers must be:
○ Easily accessible to customers and staff
○ Routinely emptied and cleaned
○ Kept in a location that does not obstruct pedestrian
paths
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Guidelines

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Outdoor Activation Program Guidelines
Individual containers
Clearly defined trash, recycling
and compost bins.

Combined unit
Trash, compost and recycling bins
in a single unit.

03.8 Waste Management (continued)
Preferred
Trash & Recycling
Types
The following are allowed
● Individual Containers
● Combined Unit
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Guidelines

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Outdoor Activation Program Guidelines

03.9 Accessibility
All outdoor activation areas are required
to be accessible and usable by people
with disabilities.

All accessibility features are to be designed and
constructed to conform to the requirements of the
Americans with Disability Act accessibility guidelines and standards. Compliance with the ADA can include a surface flushed with the sidewalk or an outdoor activation space that provides an ADA compliant ramp, railing, landing, and associated eating and drinking facilities.
03 Design Elements
56 Sunday to Sunday
Manhattan, New York
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Guidelines

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Outdoor Activation Program Guidelines
Accessibility Requirements (continued)

1. Flush with Sidewalk Outdoor Activation:
a. The surface of the Outdoor Activation space platform must be flush with the adjacent sidewalk with a maximum gap of one quarter inch and one quarter inch vertical tolerance.
b. A minimum 4-foot wide accessible path of travel and 5-foot diameter turnaround space must be maintained within the Outdoor Activation space.
c. Any abrupt changes in elevation exceeding 4 inches along an accessible path of travel shall be identified by 6-inch tall warning curbs.

2. Depressed or Elevated Outdoor Activation:
a. If a ramp is required for access to the outdoor activation area or a portion thereof, it shall comply with all accessibility ramp provisions.

3. Seating
a. Any seating and dining must comply with the applicable accessibility requirements outlined in the adopted California Building Code. The establishment shall provide 5 percent accessible seating for each type of seating provided (table, booth, etc.) or a minimum of one seat per type, whichever is greater, in an outdoor seating area where the slope is no greater than 2 percent in any direction.
b. Such ADA accessible seating shall be of the same size and appearance as the establishment’s other outdoor seating.
c. Refer to Section [ ] for additional accessibility requirements (WIP) d. See Appendix [ ] for standards. (WIP)
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Guidelines

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Outdoor Activation Program Guidelines
Encroachment
Permit Application
Topics
➔ Permit Process
➔ Submittal Requirements
➔ Extension Beyond Establishment
➔ Removing an Outdoor Activation Area
➔ Outdoor Activation Area Fee
04 58
Car-Free California Ave
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Guidelines

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Outdoor Activation Program Guidelines

04.1 Permit Process
04 Encroachment Permit Application
The Outdoor Activation Program is effective
(date) through (date)
Please see [ ] for permitting process.
➔ Any applicant seeking to install a Outdoor Activation space in the public right-of-way in the City of Palo Alto must apply for and receive a valid Encroachment Permit before beginning construction of the Outdoor Activation space. The permit application will be reviewed by the Department of Public Works and other relevant City departments, prior to approval. ➔ The Department of Public Works shall be an applicant’s primary point of contact.
➔ Construction of a Outdoor Activation space cannot begin until a permit application has been approved and the permit issued to the applicant. If work begins prior to approved application, the Outdoor Activation space materials will be removed and the applicant will be fined.
➔ Prior to serving patrons and otherwise operating the Outdoor Activation space, the Outdoor Activation space must be
inspected by the Department of Publics Works and approved for use.
➔ An eligible establishment with a valid Encroachment Permit may construct and operate a Outdoor Activation space
subject to the standards and requirements contained in this document, applicable sections of the Palo Alto Municipal Code (PAMC), other documents associated by reference, and other documents declared relevant by the Director of Public Works and his or her designee.
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Guidelines

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Outdoor Activation Program Guidelines

04.2 Submittal Requirements
04 Encroachment Permit Application
Site Plan
➔ Site plan shall be drawn to scale on 11 x17 tabloid paper, include all pertinent dimensions and the following
information:
◆ Location of the business frontage
◆ Dimensions of the outdoor activation area
◆ ADA accessibility measurements
◆ Setbacks from adjacent property lines and the
accessway
◆ Location of public utilities including any manhole
covers, gutter drains, fire hydrants, and FDCs, light
poles, etc. and their distances to the outdoor activation area and proposed improvements
◆ Any adjacent installations on the sidewalk including
utility boxes, street signs, bike racks, street furniture, street trees, tree wells, etc. and their distances to the outdoor activation area and proposed improvements
◆ Crosswalks, bus stops, driveways and their distances to the outdoor activation area and proposed
improvements
◆ Width of sidewalk
60 ◆ Planters
◆ Locations and extent of affected neighbors and their
adjacent businesses
Floor Plan
➔ Floor Plan of the proposed outdoor activation area showing the following information:
➔ Total number and location of tables and seats and/or
benches
➔ Dimensions of tables, seats, and benches and other furniture Elevations
➔ Elevation drawing showing the following information:
➔ Height and design of any platform, railings and/or boundary elements
➔ Heating, lighting, other electrical equipment
➔ Power connection (show distance from ground to overhead wire)
➔ Storm water drainage
➔ Cross-section drawing of outdoor activation area
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Outdoor Activation Program Guidelines
04 Encroachment Permit Application
Construction Drawings showing the following
information:
➔ Structural drawings (platform, railings, electrical poles) ➔ Structural calculations
➔ Heating, lighting, other electrical equipment
➔ Electrical power connection/source
Pictures of Existing Conditions
➔ The application should include at least three photos
showing existing public right-of-way for the proposed
outdoor activation area, including the proposed sidewalk and roadway area to converted into an outdoor activation area, adjacent sidewalk and store frontage of the proposed business and adjacent store frontages
List of Materials and Equipment
➔ Materials palette showing the following information:
◆ Proposed materials for platform
◆ Proposed materials for railings/enclosures
◆ Equipment sheet including image of equipment
61 Outdoor Activation Information
➔ Proposed use
➔ Business hours of
operation
➔ Architect/Engineer/Construction firm contact (if
applicable)
Business Information
➔ Address
Business Owner Information
➔ xx

04.2 Submittal Requirements (continued)
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Outdoor Activation Program Guidelines
04 Encroachment Permit Application
Property Owner Information (if different from
applicant)
➔ xx
Insurance Documents
➔ Letter(s) of Consent – An outdoor activation applicant must get a letter of consent from neighboring ground-
floor tenant(s) if their activation space is to extend
beyond their storefront (see 04.2 extension beyond
establishment)
Indemnity Acknowledgement
➔ xx
62 04.2 Submittal Requirements (continued)
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Outdoor Activation Program Guidelines

04.3 Extension Beyond Establishment
Outdoor Activation areas may extend beyond
the applicant’s store front with a letter of
consent from neighboring ground-floor
tenants. If an outdoor activation area extends
in front of neighboring storefront(s) or
proposes to extend in front of neighboring
storefront(s), written notice will be sent to
the affected neighbor(s) at the time of permit
application and annual renewal. The business
adjacent to the affected neighbor(s) will also
receive notices.
➔ If the neighboring ground-floor property is vacant, then the letter of consent is not required for the duration of the permit. Outdoor activation sponsor must obtain an up-to-date letter of consent for any future license renewals as requested by Public Works during future permit renewal processes. ➔ If Outdoor activation sponsor cannot obtain an up-to-date letter of consent, or if the outdoor activation space occupancy in not in accordance with the terms of any applicable law, these regulations, and/or any permit requirement, the outdoor activation sponsor is responsible for the removal of any structure on the outdoor activation permit extending into a neighboring frontage within 90-days. ➔ If the affected neighbor(s) or adjacent business wish to claim the same space for their own outdoor activation area, they must notify the city in writing within 30 days of the notice.
➔ If a competing claim for the space from the adjacent business is confirmed, the affected neighbor has priority over the space. However, an outdoor activation area permit application must be submitted by the affected neighbor within 60 days of the first notice to claim the space.
➔ If a competing claim for the space from the adjacent business is confirmed, and the affected business does not claim the space, the adjacent business and original outdoor activation area permittee shall split the space. ➔ The Space shall be split from the centerline.
➔ If applicable, an outdoor activation area sponsor must remove and/or alter their outdoor activation area (applying for applicable permits) within 90 days of receiving notice of a competing claim for the space(s). 04 Encroachment Permit Application
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Guidelines

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Outdoor Activation Program Guidelines

04.4 Removing an Outdoor Activation Area
If for some reason the Outdoor Activation
sponsor decides they no longer want to
maintain an Outdoor Activation space, the
sponsor is responsible for notifying the City
and removing it at the sponsors’ own
expense. Immediately upon removal the
Outdoor Activation area shall be cleaned and
restored to its previous condition to the
satisfaction of the City.
➔ Failure to Maintain an Outdoor Activation: Sponsor who fails to properly and sufficiently maintain the cleanliness, safety, and accessibility of their space may be subject to violations and fines. If maintenance issues are not resolved, the City may revoke the encroachment permit and the sponsor may be required by the City to remove the Outdoor Activation space at their own expense.
➔ Utility Maintenance & Public Safety: Because an Outdoor Activation space may sit atop buried utilities, there may be instances where it will need to be removed to access, clean, maintain, repair or other action to the utilities beneath it. In the event of necessary utility maintenance or the unlikely event of a utility failure such as a gas leak or water main break that threatens public safety, the City may request the sponsor to move a platform or other improvement, or the City or utility owner may remove improvements with little or no notice. The sponsors are responsible for the cost of reinstalling and restoring any damage to the Outdoor Activation space. In instances of advanced notice (such as street repaving, planned maintenance, etc.), the sponsor may need to remove and reinstall the Outdoor Activation space at their sole expense. If the sponsor cannot remove the space, the City will remove it for them. Sponsor accepts street repairs may occur at anytime and may involve heavy construction work, noise and related disruptions, for which the City or utility owner is not responsible for any impact of inconvenience.
04 Encroachment Permit Application
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Guidelines

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Outdoor Activation Program Guidelines

04.5 Outdoor Activation Area Fees
Outdoor Activation spaces are subject to the
following fees outlined in the City’s Fee
Schedule.
➔ Permit Application Fee
➔ Deposit Fee (refundable). This deposit will be used to cover the cost of restoring the right-of-way to its original
condition if not done so by the permittee. This includes, but is not limited to, the following:
● Removing the Outdoor Activation space structure
● Removing bolts in the curb and the right-of-way
and filling in holes
● Removing exposed wiring
● Repairing damage to the sidewalk
● Removing construction debris and/or garbage
● Parking or traffic control striping
● Wheel stop removal or reinstallation
➔ Permit Renewal Fee
➔ Annual License Fee
◆ This fee will be charged per square foot based on the total Outdoor Activation space platform area
04 Encroachment Permit Application
65 Item 17
Attachment A - Car-Free California
Avenue Outdoor Activation Program
Guidelines

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NOT YET APPROVED Attachment B
134_20250529_ts24 1
Resolution No. _____
Resolution of the Council of the City of Palo Alto Allowing Eating/Drinking and Retail Parklets (as Defined in Palo Alto Municipal Code Ch. 12.11) on the Car Free Portion of California Avenue

R E C I T A L S

A. Palo Alto Municipal Code Chapter 12.11 allows the City Council to designate which areas of the City to allow “ parklets,” which is defined by PAMC section

12.11.010(a).

B. Through this Resolution, the City Council now intends to allow parklets on the car-free portion of California Avenue.

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

SECTION 1. Findings and Declarations . The Council hereby adopts the above Recitals as findings of the Council.

SECTION 2. Designated Area. The Council hereby designates the section of California Avenue between El Camino Real and Birch Street (“Designated Area”) as eligible for parklets pursuant to PAMC section 12.11.040. The permissible uses in this Designated Area are: (1) eating and drinking service; and (2) retail service. The Director of Public Works may promulgate regulations specific to this Designated Area under the authority granted in PAMC section 12.11.050.

SECTION 3. No Rights Granted. This Resolution does not create any right in any specific person or corporate entity to a parklet, parklet permit, or to create a parklet in a specific location within the area detailed in Section 2.

SECTION 4. CEQA. The Council finds that this Resolution is categorically exempt from CEQA under CEQA Guidelines Sections 15301 (existing facilities), 15303 (new construction or conversion of small structures), 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment), 15305 (minor alterations in land use limitations), 15311 (accessory structures), and 15323 (normal operations of facilities for public gatherings).

//
Item 17
Attachment B -
Resolution Authorizing
FoodDrink and Retail
Encroachments on Car

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NOT YET APPROVED Attachment B
134_20250529_ts24 2
SECTION 5. This Resolution shall be effective upon adoption. The City Manager may temporarily suspend (or partially suspend) the enforcement of PAMC Ch. 12.11 and its regulations as to the Designated Area in order to allow existing and new permittees to come into compliance.

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

Item 17
Attachment B -
Resolution Authorizing
FoodDrink and Retail
Encroachments on Car

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NOT YET APPROVED Attachment C
135_20250529_ts24 1

Resolution No. _____

Resolution of the Council of the City of Palo Alto to Authorize Consumption of Alcoholic Beverages under PAMC 9.04.010 for Third Thursdays on California Avenue in 2025

R E C I T A L S

A. Palo Alto Municipal Code (PAMC) section 9.04.010 makes it unlawful to consume any alcoholic beverage upon any street, sidewalk, highway or alley except as may be authorized by the City Council.

B. Through this Resolution, the City Council desires to authorize such consumption for a temporary period in conjunction with the Third Thursday street music festival events on the section of California Avenue closed to vehicular traffic.

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

SECTION 1. The City Council hereby authorizes the consumption of alcoholic beverages under PAMC section 9.04.010 upon the section of California Avenue between El Camino Real and Birch Street that is closed to traffic (the ‘designated area’) between the hours of 4:30 pm to 10:00 pm on the third Thursday of each month throughout 2025 only when the Third Thursday street festival event occurs. The City Manager may change these dates and times of this authorization in case any Third Thursday street festival date is rescheduled.

SECTION 2. This authorization is subject to any conditions, regulations, or limits imposed by the City through its City Manager, any City Department, or any relevant law, permit, or condition. The City Manager may promulgate regulations of such consumption in order to ensure public safety, health, and welfare , including but not limited to regulations regarding staffing, security and law enforcement requirements, refuse/trash/recycling, and bathrooms . The City Manager is authorized to further limit the de signated area and time duration than that allowed in Section 1 if necessary to ensure public safety, health, and welfare.

SECTION 3. This Resolution’s authority is limited to that which is granted under PAMC section 9.04.010. It does not authorize any event generally, nor does it grant or waive any other generally applicable requirements under law, regulation, or permit condition. It does not curtail or supersede any other applicable law, regulation, permit, or condition. It does not limit the ability of the City to issue or enforce any permit conditions that limit or forbid alcohol sales or consumption in the designated area under other laws or regulations. It does not create any right or vested interest in any person or business to sell alcoholic beverages. It does not prevent law enforcement from enforcing any provision of state law or the Palo Alto Municipal Code besides PAMC section 9.04.010 during the dates and times specified above. This Resolution shall not be interpreted to conflict with any state law, regulation, or permit condition imposed by the State of California’s Department of Alcoholic Beverage Control.

Item 17
Attachment C - Resolution
Authorizing Consumption
of Alcoholic Beverages
under P

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135_20250529_ts24 2

SECTION 4. Environmental Review. The Council finds that this Resolution is categorically exempt under CEQA Guidelines Sections 15301 (existing facilities) ; 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment) ; 15305 (minor alterations in land use limitations); and 15323 (normal operations of facilities for public gatherings).

SECTION 5. Effective Date and Sunset. This Resolution shall be effective immediately upon adoption and shall automatically sunset on December 31, 2025.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

__________________________ _____________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

__________________________ _____________________________ Assistant City Attorney City Manager

Item 17
Attachment C - Resolution
Authorizing Consumption
of Alcoholic Beverages
under P

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City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Public Works
Meeting Date: June 17, 2025
Report #:2411-3804
TITLE
Semiannual Update on the Status of Capital Improvement Program Projects; CEQA Status – Not a Project

RECOMMENDATION
This report is provided for information only and requires no Council action.

EXECUTIVE SUMMARY
The City Council and Palo Alto community can be proud of the City’s capital improvement program (CIP). The CIP represents major investments in infrastructure functionality and sustainability, funded largely through the transfer of funding from the General Fund, including dedicated Transient Occupancy Tax (TOT) funding, as well as utility rates and various other sources. The 2025-2029 five-year CIP totaled $1.7 billion for 206 projects as reviewed by the Council in its adoption of the FY 2025 Capital Budget. Since July 2016, the City of Palo Alto has completed 110 individual community-serving projects totaling over $434 million in improvements. A summary of all completed CIP projects is provided at the end of Attachment A. The CIP also represents a major effort for much of the City workforce. The following table summarizes the status of all projects for the six-month period of July to December 2024.

One Time ProjectsCIP Workgroup Recurring
Projects Pre-Design Design Procurement Construction Completed Airport 0 0 4 1 0 1
Buildings and Facilities 12 5 13 0 9 2
Electric 9 2 3 0 6 1
Fiber Optic 2 0 2 0 0 0
Gas 4 0 2 0 1 0
Parks and Open Space 9 2 7 0 7 1
Stormwater Management 2 0 4 0 0 3
Streets and Sidewalks 8 0 3 0 0 0
Traffic and Transportation 5 1 8 1 2 0
Wastewater Collection 4 0 0 0 1 0
Wastewater Treatment 2 2 3 0 2 0
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Water 7 1 1 0 1 1
Subtotals 64 13 50 2 29 9
Totals 167

BACKGROUND
This report provides Council with an update on the status of capital improvement program (CIP) projects, with detailed and useful information for the Council and public regarding general fund and enterprise fund projects that appear on Council agendas and will be visible throughout the community. The report does not include Internal Service Funds projects (Information Technology and Vehicle).

ANALYSIS
Project Update Organization
The City of Palo Alto has a robust capital improvement program, and many individual projects are in progress at any given time. The 2025-2029 five-year CIP totaled $1.7 billion for 206 projects as reviewed by the Council in the adoption of the FY 2025 Capital Budget. The attached CIP project tables are intended to provide a quick overview of each project, including budgetary information, the anticipated completion date, a brief description of the project scope, the status of the project, and upcoming activities including Council actions. Also included in the report is a list of all completed projects since the introduction of the Infrastructure Management System.

Major/Significant Projects Summary
The 2014 Council Infrastructure Plan is a major focus of staff’s capital improvement program efforts and ties to several 2024 City Council Priorities and related objectives. The following table details the Total Project Budget and Total Actual Expenses through January 25, 2025, for the Infrastructure Plan projects.

Council
Infrastructure
Plan Projects
CIP
Number Project Update Total Project
Budget
Total Actual
Expenses* Completion
Date
Fire Station 3
Replacement
PE-15003 Completed $10,600,734 $10,600,734 Summer
2019
New California
Avenue Area
Parking Garage
PE-18000 Completed (final punch list items
in progress)
$50,207,727 $49,454,479 Summer
2020
Highway 101
Pedestrian/Bicycle
Overpass Project
PE-11011 Completed $23,734,218 $23,734,218 Fall 2020
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Charleston
Arastradero
Corridor Project
PE-13011 Completed $20,684,799 $20,684,799 Summer
2024
Downtown
Automated
Parking Guidance
Systems
PL-15002 Council approved a design-build
contract in May 2023.

Construction is underway and
expected to be completed in
spring 2025.
$5,197,827 $2,790,599 Spring 2025
New Public Safety
Building
PE-15001 Phased staff move-in is expected
in summer 2025, following May
2025 issuance of a Temporary
Certificate of Occupancy.
$123,500,000 $119,375,833 Spring 2025
Fire Station 4
Replacement
PE-18004 Project is going through building
permit review. Staff completed a
pre-qualification process, with
construction bidding anticipated
in early 2025.
$18,225,946 2,117,901 Spring 2027
Byxbee Park
Completion
PE-18006 On hold pending completion of
the Baylands Comprehensive
Conservation Plan.
$3,699,189 $368,192 Spring 2028
Bicycle and
Pedestrian
Transportation
Implementation
Plan
PL-04010 This project funds the Bicycle and
Pedestrian Transportation Plan
Update, which has kicked off
recently and is slated to take
approximately 18 months to
complete. This project also funds
the implementation of various
bicycle and pedestrian projects.
$14,400,000 $9,912,240 On-Going
New Downtown
Parking Garage
PE-15007 Council directed staff to look at
the feasibility of partnering with a
private entity to develop new
parking using downtown in-lieu
parking fees in conjunction with
housing or other uses, including
the use of City surface lots or
privately held parcels. Council
gave direction to staff in
December 2023 to advance the
project in conjunction with
advancement of affordable
housing in the Downtown area. A
design contract for the garage was
approved on Council’s December
2, 2024 consent agenda.
$17,300,000 $1,469,301 TBD
*Total actual expenses through January 25, 2025
The last phase of the Public Safety Building project is expected to be completed in spring 2025.

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Current Infrastructure Plan project schedules can be found at https://www.infrastructure.cityofpaloalto.org/
Key considerations for the information presented in the project update tables include:
• Project status information is current as of December 31, 2024. • The individual project tables align with the Capital Improvement Fund categories in the Fiscal Year 2025-2029 capital budget: Buildings and Facilities, Parks and Open Space, Streets and Sidewalks, and Traffic and Transportation.
• Enterprise Fund projects follow the order of their respective Fund in the capital budget. • Department Technology Upgrades and Improvements projects and Cubberley Property Infrastructure Fund projects are included in the Buildings and Facilities table. • Additional project information is available in the Fiscal Year 2025-2029 capital budget. • Each project table is divided into a section for one-time projects and a section for recurring projects that have ongoing annual funding.
• Budgetary figures include staff oversight costs for projects to which staff costs have been allocated.
• The table of completed projects, located at the end of Attachment A provides a summary of all CIP projects completed since the Biannual CIP updates to council began in 2016. The data is sorted from most recent to oldest.

Completed Projects
There were nine completed one-time projects in the first half of Fiscal Year 2025 (July through December 2024).

• Airport Zero Emission Vehicle Fleet Replacement Program (AP-23000) •Baylands Boardwalk Piling Repair (PE-24000)
• Cameron Park Improvements (PG-14002)
• City Facilities Assessment and Record Plan Management System (PE-20002) • East Meadow Drive System Upgrades (SD-22000)
• East Meadow Circle Connection to Adobe Creek Pump Station (SD-26000) • Hanover Substation Improvement (EL-24001)
• Trash Capture Device Installation (SD-22002)
• Water Main Replacement Project 29 (WS-15002)
One-time projects do not include the significant amount of annual work completed under ongoing recurring projects, such as streets and sidewalks repairs, parking lot maintenance, roofing replacements, and regular maintenance of Utilities assets.

Below are some photos of completed projects:

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Baylands Boardwalk Piling Repair (PE-24000)
Trash Capture Device Installation (SD-22002)
East Meadow Drive System Upgrades (SD-22000)
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One-Time Projects Under Construction
The 29 projects that are currently underway include the following:

Capital Improvement Fund (general fund):
• Baylands Interpretive Signage Program (OS-24001)
• Boulware Park Improvements (PE-17005)
• Churchill Avenue/Alma Street Railroad Crossing Safety Improvements (PL-20000) • Civic Center Fire Life Safety Upgrades (PE-18016)
• Civic Center Waterproofing Study and Repairs (PE-15020) • Cubberley Field Restroom (CB-17002)
• Downtown Automated Parking Guidance Systems, Access Controls & Revenue Collection Equipment (PL-15002)
• Eucalyptus Tree Removal (PG-25002)
• Heritage Park Site Amenities Replacement (PG-21000)
• Homekey Facilities (PE-24005)
• JMZ Renovation (AC-18001)
• Library Automated Material Handling (LB-21000)
• Lucie Stern Community Theatre Stage Rigging System Refurbishment (AC-24000) • New Public Safety Building (PE-15001)
• Performing Arts Venues Seat Replacement (AC-18000)
• Ramos Park Improvements (PG-14000)
• Rinconada Park Improvements (PE-08001)
• Roth Building Rehabilitation Phase 1 (PF-23001)
Electric Fund:
• Colorado Distribution Feeder Outlet Replacement (EL-22002) • Grid Modernization for Electrification (EL-24000)
• Inter Substation Line Protection Relay (EL-17005)
• Foothills Rebuild Fire Mitigation (EL-21001)
• Smart Grid Technology Installation (EL-11014)
• Substation Physical Security (EL-16003)
Gas Fund
• Gas Main Replacement Project 24 (GS-14003)
Wastewater Collection Fund:
• Wastewater Collection System Rehabilitation Augmentation Project 31 (WC-19001) Wastewater Treatment Fund:
• Joint Intercepting Sewer Rehabilitation (Phase 1) (WQ-24000) • Secondary Treatment Upgrades (WQ-19001)
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Water Fund:
• Water Tank Seismic System Upgrades (WS-09000)
As described above for completed projects, the list of projects under construction does not include work currently being conducted under recurring CIP projects. Below are some photos of one-time projects under construction:

Boulware Park (PE-17005)
Cubberley Field Restroom (CB-17002)
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Homekey Facilities (PE-24005)
Capital Improvements of Note Implemented by Other Agencies The Caltrans paving project along El Camin Real is progressing well with several key milestones already completed. The pavement rehabilitation, including AC paving and concrete pavement repairs, has been finished. Electrical work is approximately 45% complete, including loop installations, modifications to lighting systems, and traffic signal work.

Roadway striping is about 80% complete, with bike lane striping underway in Mountain View.

The bike lane striping in Palo Alto is expected to begin in May. The bike lane implementation is tentatively scheduled for completion in fall 2025, pending weather and the progress of other related tasks.

Caltrain Electrification:

The Caltrain Electrification Project was completed on September 21, 2024, marking the start of full electric service between San Francisco and San Jose. To celebrate the milestone, Caltrain partnered with the City of Palo Alto to host a special launch event at the Palo Alto Caltrain Station. The event featured dignitaries, community performances, and informational booths, drawing over 8,000 attendees. In the first three months following the launch, Caltrain experienced a 41% increase in ridership compared to the same period in 2023. Caltrain extends its gratitude to the Palo Alto City Council, staff, and residents for their support of the Electrification Project.

FISCAL/RESOURCE IMPACT
Funding for the projects discussed in this report was appropriated in the Fiscal Year 2025 Adopted Capital Budget and reviewed for the 2025-2029 Five-Year CIP. Funding for projects in future years of the CIP is subject to Council approval as part of the annual budget process.

STAKEHOLDER ENGAGEMENT
This report was coordinated with staff in the Administrative Services, Community Services, Office of Transportation, Public Works, and Utilities Departments. Stakeholder engagement is conducted separately for each project.

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ENVIRONMENTAL REVIEW
This report is exempt from the California Environmental Quality Act (CEQA) as it is an informational report to Council. CEQA compliance is reviewed separately for each capital project.

ATTACHMENTS
Attachment A: Semiannual Update on the Status of Capital Improvement Program Projects APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
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ATTACHMENT A
Semiannual Update on the Status of Capital Improvement Program Projects Capital Improvement Fund CIP Projects
• Buildings and Facili�es Projects
• Parks and Open Space Projects
• Streets and Sidewalks Projects
• Traﬃc and Transporta�on Projects
Enterprise Fund CIP Projects
• Airport Projects
• Electric Projects
• Fiber Op�cs Projects
• Gas Projects
• Stormwater Management Projects
• Wastewater Collec�on Projects
• Wastewater Treatment Projects
• Water Projects
List of Completed Project
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Buildings and Facilities Projects Status as of December 2024 One‐Time Projects
Animal Shelter
Renovation
(PE‐19002)
Prior Years Actuals Total Project Budget
$2,921,108 $6,181,882
Implementing Department Project Phase
Public Works Design
Project Completion
Fall 2027
Project Status: A new five‐year agreement with Pets in Need (PIN) was approved by Council in March 2024.

Discussions with PIN and City staff regarding capital projects started in late 2024, with a scope of work to be finalized with PIN in early 2025. Tentative schedule shows design complete by summer 2026 and for construction to start afterwards.

Baylands Prior Years Actuals Total Project Budget
$182,854 $1,140,076
Implementing Department Project Phase
Public Works Completed
Project Completion
Fall 2024Boardwalk
Piling Repair
(PE‐24000)
Project Status: This project repaired damage caused by aquatic borers to The Lucy Evans Baylands Interpretive Center’s boardwalk pilings. The project received permits from the San Francisco Bay Regional Water Quality Control Board, Bay Conservation and Development Commission, United States Fish and Wildlife Services, and United States Army Corps of Engineers. The project was issued to bid in April 2024 and Council approved a construction contract in June 2024. Project construction began in early September and was completed by October 2024. The project will remain open until later fall 2025 after a one‐year monitoring report is submitted to the permitting agencies.

California
Avenue Parking $0
Prior Years Actuals Total Project Budget
$110,102
Implementing Department Project Phase
Public Works Design
Project Completion
Fall 2025
District Parking
Improvements
(PF‐25000)
Project Status: This project provides funding for parking improvements in the California Avenue parking district such as parking lot resurfacing, striping and signing; parking structure painting or staining; electrical system upgrades needed to support improved lighting security, parking, fountains and/or other systems; and replacement or rehabilitation of parking lot signs.

Prior Years Actuals Total Project Budget
$ 0 $ 137,628
Implementing Department Project Phase
Community Services Pre‐Design
Project Completion
Summer 2025
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Buildings and Facilities Projects Status as of December 2024 Children’s Project Status: This project will upgrade and repair the Children’s Theatre Facility, including backstage work and Theater Facility storage areas, classrooms, performance stages, restrooms and public spaces. Phase 1 will focus on procuring a Upgrade/Repair consultant to conduct a facility needs assessment and provide cost estimates. (AC‐28002)
City Facilities
Assessment and $288,961
Prior Years Actuals Total Project Budget
$333,134
Implementing Department Project Phase
Public Works Completed
Project Completion
Fall 2024
Record Plan
Management
System
Project Status: The Kitchell Report in 2008 summarized the last City‐wide facility condition assessment. A new facility condition assessment is warranted per the City’s APWA reaccreditation requirements. All City facilities will be assessed to bring current the “catch‐up” and “keep up” costs. In addition, an electrification assessment will be included to help the City reach its sustainability goals for 2030. Council awarded the contract in April 2022. All City facilities have been assessed for the Condition and Electrification assessments. A detailed list of buildings for electrification is being analyzed to determine prioritization for replacements. The data has been updated into the City’s Infrastructure Management System to provide long range capital planning based on the results of the FCA. The Electronic Records Management System, originally included in this project, is being implemented through TE‐13004 utilizing Laserfiche as the sole repository for Public Works Engineering. The project reached completion in fall 2024. (PE‐20002)
City Hall Space
Planning
Prior Years Actuals Total Project Budget
$52,615 $700,343
Implementing Department Project Phase
Public Works Design
Project Completion
Fall 2026
(PE‐19000) Project Status: This project involves space planning to determine future workgroup space needs and programming for the City Hall office building focused on the Police Department areas that will be vacated once the new Public Safety Building is complete and the City Hall Office Tower. The city completed solicitations for a qualified architectural firm to perform the space needs assessment for the two city facilities. A contract is anticipated to be awarded in February 2025, with work to begin by spring 2025.

Prior Years Actuals Total Project Budget
$0 $2,710,140
Implementing Department Project Phase
Police Department Design
Project Completion
Summer 2029
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Buildings and Facilities Projects Status as of December 2024 City Radio
Replacement
Program
Project Status: Two‐way commercial radios are used by many Departments in the City of Palo Alto. The City operates approximately 772 radios across 9 workgroups, including Police, Fire, Office of Emergency Services (OES), Community Services Park Rangers, Public Works, Utilities, Development Center, and Information Technology. This project will be used to replace the original digital radios.(PD‐25000)
Civic Center
Electrical
Prior Years Actuals Total Project Budget
$656,289 $2,176,935
Implementing Department Project Phase
Public Works Design
Project Completion
Winter 2027
Upgrade & EV
Charger
Installation
(PE‐17010)
Project Status: This project has installed EV chargers in existing downtown garages and will replace the aging Civic Center electrical switchgear and motor control centers. EV charger construction at the Civic Center, Bryant Street garage and Webster Street garage was completed in December 2021. A contract was awarded in June 2021 for the design of the Civic Center switchgear replacement and is currently at the 90 percent design stage. Lead times on switch gear are now taking 18 months, so the project completion date has been extended. The structural analysis design of the switchgear area and its permit set will be completed in April 2025. Recent plan check comments required a redesign to accommodate fire code updates and provided some cost savings benefit.

Civic Center Fire Prior Years Actuals Total Project Budget Implementing Department Project Phase Public Works Construction
Project Completion
Winter 2026Life Safety
Upgrades
(PE‐18016)
$904,269 $1,117,335
Project Status: This project will assess, update, and replace the Civic Center fire alarm system and the emergency responder radio communication system (ERRCS). The fire life safety system is approaching the end of its useful life.

The fire alarm panel and associated equipment need an upgrade to meet current code requirements. The award of a design‐build contract was approved by Council in June 2021. Construction in the main tower areas is nearly complete.

The ground floor and the garage levels have been completed. The project completion date for the fire alarm installation has been extended to winter 2025 due to ongoing testing issues. The ERRCS study will be conducted upon the completion of the planning and design for 275 Forest Avenue.

Civic Center Prior Years Actuals Total Project Budget Implementing Department Project Phase Project Completion Buildings and Facilities Projects – Page 3 of 13
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Buildings and Facilities Projects Status as of December 2024 Waterproofing $798,460 $1,830,089 Public Works Design Fall 2026 Study and
Repairs
(PE‐15020)
Project Status: This project includes a condition assessment of the Civic Center Plaza deck structural system. In 2016, RDH Building Science, Inc. determined that the expansion joint on the plaza could be repaired and that replacing the waterproof coatings on the inside of the plaza perimeter planter boxes was needed. Repair of the waterproofing joint in front of City Hall was completed in winter 2023. Further study of the water intrusion into the garage was performed by a consultant in summer 2024; a design contract for repair of the planter boxes and garage water damage is expected in summer 2025.

Cubberley Gym Prior Years Actuals Total Project Budget Implementing Department Project Phase Public Works Pre‐Design
Project Completion
Spring 2026HVAC $0 $826,113
Replacement
(CB‐24000)
Project Status: The existing heating system in Cubberley Gyms A & B is original to the building, which was constructed in the mid‐1950s. The system is currently not functioning because multiple leaks have developed in the steel hot water piping, which is in the walls and under the floor. These leaks contributed (in addition to a domestic water main supply leak) to significant water damage in the walls, floors, and crawl spaces of the gyms. Asbestos and mold were remediated from the under‐floor crawl space. All the old heating units and piping were removed from the ceilings in both gyms. The next step is to hire a consultant to create design drawings for a new heating system. This project has been put on hold due to the City’s pending purchase of the remaining Cubberley buildings and then ultimately rebuilding a new Cubberley Community Center.

Fire Station 4
Replacement
(PE‐18004)
Prior Years Actuals Total Project Budget
$1,860,907 $ 15,434,655
Project Status: This project will replace Fire Station #4 at the corner of Middlefield Road and East Meadow Drive. The design consultant completed design development and received Planning approval for the project in November 2023.

A construction management contract was awarded in December 2023. The project has been submitted for building permit review, and the architect is preparing resubmittal. Pre‐qualification of bidders was completed in November Implementing Department Project Phase
Public Works Design
Project Completion
Winter 2026
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Buildings and Facilities Projects Status as of December 2024 2024, and solicitation for construction is anticipated for spring 2025 with construction to follow in summer 2025.

Construction of the temporary station will start in winter 2025.

Fire Training
Facility
Prior Years Actuals Total Project Budget
$459 $55,293
Implementing Department Project Phase
Public Works Pre‐Design
Project Completion
Summer 2026
Replacement
(FD‐24000)
Project Status: This project will identify an appropriate site and construct a new fire training facility in Palo Alto. This will be the first City‐owned and City‐maintained permanent fire training facility, and it will allow training to be conducted within City limits and therefore reduce the downtime associated with the need for staff to travel for training and when responding to calls.

Homekey
Facilities
Prior Years Actuals Total Project Budget
$2,218,979 $4,944,710
Implementing Department Project Phase
Public Works Construction
Project Completion
Spring 2025
(PE‐24005) Project Status: This project involves relocating the City of Palo Alto (City) GreenWaste facility from its current site on one portion of 1237 San Antonio Road to the rear portion of the same site as a result of adding the Homekey Palo Alto interim housing shelter. Homekey Palo Alto will be operated by LifeMoves who will provide intensive, customized case management for clients including counseling, employment and housing search services with the goal of paving a dignified path to self‐sufficiency. The project is currently in construction. The site work, utility infrastructure, building foundations, and energization for the incoming modular units has been completed. Setting and finishing of the modular units will soon be underway, along with the interior completion of the conventional framed community building and site landscaping. Construction is anticipated to be completed in spring 2025.

JMZ Renovation Prior Years Actuals Total Project Budget (AC‐18001) $4,172,284 $5,020,310
Implementing Department Project Phase
Community Services Construction
Project Completion
Summer 2025
Project Status: This project provides for the temporary relocation of the Junior Museum and Zoo and the construction of a new facility and exhibits. The California Dinosaur Garden exhibit, which is partially funded by a reimbursable federal grant, was opened with a special ribbon cutting ceremony in October 2023. Funds associated with the grant Buildings and Facilities Projects – Page 5 of 13
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Buildings and Facilities Projects Status as of December 2024 are expended against the project until reimbursements are made. Reimbursement has been submitted and expected in the first quarter of FY 2025. A portion of the project was extended through FY 2025 to complete the list of remediations, and equipment not purchased in FY 2024 due to staffing shortages. Completion is expected in July 2025.

Library Prior Years Actuals Total Project Budget
$205,811 $1,898,292
Implementing Department Project Phase
Public Works Construction
Project Completion
Fall 2028Automated
Material
Handling
(LB‐21000)
Project Status: This project will provide the design and construction of three new Automated Material Handling (AMH) Systems for the Children’s, Mitchell Park and Rinconada Libraries. AMH systems efficiently sort returned library materials based on the Radio Frequency Identification Devices (RFID) on the materials. For the Children’s Library, the building permit has been issued. The construction contract was awarded in November 2024, and construction at Children’s Library will begin in February 2025. Construction is anticipated to be complete by summer 2025.

Lucie Stern
Community
Theatre
Prior Years Actuals Total Project Budget
$28,548 $2,443,408
Project Status: This project will upgrade and replace the Heating Ventilation and Air Conditioning (HVAC) system at the Lucie Stern Community Theatre. As a first step, the project will include a detailed feasibility study to determine if natural gas‐powered equipment in the facility can be electrified per the recommended results of the City‐wide electrification assessment. An RFP for design services is currently being compiled.

Implementing Department Project Phase
Public Works Pre‐Design
Project Completion
Winter 2027
Mechanical
Equipment
Replacement
(PE‐24002)
Lucie Stern
Community
Theatre Fire
Curtain
Prior Years Actuals Total Project Budget
$0 $241,374
Project Status: This project will replace the fire curtain and its associated rigging at the Lucie Stern Community Theatre.

The fire curtain work will be coordinated with the Theatrical and House Lighting System Replacement Project (PE‐ 24003).

Implementing Department Project Phase
Community Services Pre‐Design
Project Completion
Fall 2026
(AC‐24001)
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Buildings and Facilities Projects Status as of December 2024 Lucie Stern
Community
Theatre Stage
Prior Years Actuals Total Project Budget
$0 $116,113
Project Status: This project will refurbish the most heavily used components of the stage rigging system at the Lucie Implementing Department Project Phase
Community Services Construction
Project Completion
Winter 2025
Rigging System Stern Community Theatre. The construction contract was approved by City Council on June 3, 2024. Work was Refurbishment scheduled to start in July 2024, but parts needed for the installation were delayed. Anticipated construction is now (AC‐24000) early 2025.

Lucie Stern
Community
Theatre
Theatrical
and House
Prior Years Actuals Total Project Budget Implementing Department Project Phase Public Works Design
Project Completion
Winter 2027$21,177 $333,210
Project Status: This project will upgrade and replace lighting systems at the Lucie Stern Community Theatre for stage work areas, the performance stage, and audience areas. The bridging documents for the new system are complete and an RFP for a Design Build Entity will be submitted for bidding. The timing of this project will coincide with the Lighting System Community Theatre Mechanical Equipment Replacement (PE‐24002).

Replacement
(PE‐24003)
Mitchell Park
Library Repair
(PE‐24006)
Prior Years Actuals Total Project Budget
$15,083 $266,540
Implementing Department Project Phase
Public Works Design
Project Completion
Fall 2025
Project Status: This project will repair the damage caused by a vehicular accident in January 2023. A vehicle ran into the north wall of the Mitchell Park Library near the center of the building. The car impacted an area of the stone cladding on cold‐formed steel studs, causing the cladding to fall from the wall and the wall to bulge into the building’s interior. Architectural and structural surveys and reports were completed. The stone cladding wall will require replacement, but the structural steel frame was not damaged. The design contract was completed in October 2024.

Design documents are on track to be completed in spring 2025.

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Buildings and Facilities Projects Status as of December 2024 Municipal $1,195,776 $8,850,720 Public Works Design Winter 2027 Service Center
Lighting,
Mechanical,
and Electrical
Improvements
(PF‐16006)
Project Status: This project replaces original mechanical, electrical, and lighting systems installed in 1966. It also includes design and construction for office renovations for the Zero Waste group. The electrical design is complete and the planning permit was approved in spring 2024. However, additional stakeholder review is needed to ensure the scope aligns with anticipated future capacity requirements.

New Downtown Prior Years Actuals Total Project Budget
Parking Garage $1,440,311 $17,300,000
Implementing Department Project Phase
Public Works Design
Project Completion
Summer 2027
(PE‐15007) Project Status: In December 2021, Council directed staff to look at the feasibility of partnering with a private entity to develop new parking using downtown in‐lieu parking fees in conjunction with housing or other uses, including the use of City surface lots or privately held parcels. A Request for Information was issued in December 2022 and staff reviewed proposals and held interviews in May 2023. Council gave directions to staff in December 2023 to advance the project in conjunction with advancement of affordable housing in the Downtown area. In December 2024, the City executed a contract with Watry Design, Inc. to provide for design, environmental review, and construction administration services for the New Downtown Parking Garage. Concept designs will be presented to City Council in spring 2025.

New Public
Safety Building $113,275,793
(PE‐15001)
Prior Years Actuals Total Project Budget
$ 123,500,000
Implementing Department Project Phase
Public Works Construction
Project Completion
Spring 2025
Project Status: This project will provide a new, modern Public Safety Building (PSB) that will meet essential services standards and the current and future needs of the public safety departments. The PSB and new garage in the California Avenue business district are now an integrated project and both are part of the 2014 Council Infrastructure Plan.

Construction on the PSB started in March 2021 and will continue into spring 2025. The Tier 4 emergency generator has completed source testing. Punch list and department inspections are in progress. The project is expected to obtain temporary certificate of occupancy in early 2025.

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Buildings and Facilities Projects Status as of December 2024 Palo Alto Art
Center
Prior Years Actuals Total Project Budget
$0 $181,367
Implementing Department Project Phase
Community Services Design
Project Completion
Summer 2026
Ceramics
Equipment
(AC‐28003)
Project Status: This project renews and replaces ceramics program equipment, upgrades facility Wi‐Fi and electrical infrastructure, and waterproofs outdoor kiln sheds. The majority of the Art Center’s existing ceramics equipment was obtained during the renovation of the Art Center in 2011 and 2012. These pieces of equipment are showing signs of aging, necessitating facility updates.

Performing Arts Prior Years Actuals Total Project Budget Implementing Department Project Phase Public Works Construction
Project Completion
Summer 2025Venues Seat
Replacement
(AC‐18000)
$663,022 $1,281,909
Project Status: This project will replace all the seats in the Community and Children’s Theatres. Staff hired a consultant to design the seat replacements and ADA upgrades for the Children’s Theatre portion of the project. The Children’s Theatre seats replacement was completed in November 2022. A contract for the design of the Community Theatre was issued in June 2023. Council approved a construction contract on April 22, 2024, with project completion expected in fall 2024. The installation of the ADA upgrades and auditorium seats are complete with additional companion seats arriving in February. Painting of the auditorium will be completed in the summer 2025.

Rinconada Pool Prior Years Actuals Total Project Budget Family $34,922 $1,397,698
Implementing Department Project Phase
Public Works Design
Project Completion
Winter 2026
Changing Room Project Status: The project will construct a gender‐neutral restroom and family changing facility that is compliant with (PE‐24004) the Americans with Disabilities Act (ADA) at the Rinconada Pool. The facility will include two separate rooms, each consisting of a toilet, sink, shower, and child/adult changing station. The facility will provide community members who have special needs, and individuals who require privacy, an accessible space for changing and personal hygiene. Design of the family changing rooms started in December 2024.

Prior Years Actuals Total Project Budget
$6,927,119 $11,367,366
Implementing Department Project Phase
Public Works Construction
Project Completion
Winter 2024
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Buildings and Facilities Projects Status as of December 2024 Roth Building
Rehabilitation
Phase 1
Project Status: This project provides funding for Phase 1 of the rehabilitation and build‐out of the Roth Building facility.

Phase I will make the building suitable for occupancy, also known as a “warm shell. Phase II of the rehabilitation includes the interior build‐out of the museum and exhibits, readying the facility to welcome visitors, and will be funded by the Palo Alto History Museum (PAHM). A Tenant Work Letter was approved by Council in April 2023 and construction is underway including underground utilities, roof, demolition, and abatement. Phase I of this project will be substantially completed in February 2025.
(PF‐23001)
Recurring Projects
Americans
With
Prior Year Actuals
$0
Current Year Budget Implementing Department Project Phase Project Completion $880,820 Public Works N/A Recurring
Disabilities Act Project Status: This project provides accessibility upgrades to City facilities and equipment. It includes continued Compliance
(PF‐93009)
funding for improvements such as path of travel, restrooms, drinking fountains, and counters. An updated ADA Transition Plan was adopted by Council in June 2021. Staff is waiting to solicit new software that will allow staff to identify and log new barriers, track grievances from the public, and update the ADA Transition Plan Report.

Building
Systems
Prior Year Actuals
$77,759
Current Year Budget Implementing Department Project Phase Project Completion $1,366,177 Public Works N/A Recurring
Improvements Project Status: This project provides electrical, mechanical, plumbing, structural, and security upgrades for City (PF‐01003) facilities. The UCC Emergency Generator Replacement project is currently in permitting. Once permitting is approved, the project will be go out to bid in spring 2025. The City Hall Cooling Tower Overhaul project contract was signed in December 2024. The material lead time is 12 to 14 weeks, pushing back construction until spring 2025.

Palo Alto City CouncilJune 17, 2025

Palo Alto City Council
June 17, 2025