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Attachment A - Design Guidelines for Advanced Commercial Heat Pump HVAC Program

Palo Alto City Council
November 17, 2025

Document
Attachment A - Design Guidelines for Advanced Commercial Heat Pump HVAC Program
Meeting
November 17, 2025
Body
Palo Alto City Council
Original file
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Text extracted from the city's file for reading and search. Open the original on cityofpaloalto.primegov.com. That file is the official record.

Program Design Guidelines for Advanced Heating, Ventilation, and Cooling (HVAC) Pilot Program
These design guidelines are meant to guide development of a financially accessible Advanced Packaged HVAC Pilot Program for non-residential customers.

Program goals and scope
The program should:

1. Ease electrification of non-residential packaged HVAC units

2. Pilot financial designs that can be deployed community-wide with little or no additional funding from the City

3. Enable participation by a wide range of contractors, building types, and landlord-tenant arrangements for payment of energy bills

4. Address landlord/tenant split incentives while being economically attractive to both landlords and tenants
Program financial design
To ensure the program is cost-effective, legally viable, and scalable:

1. It should provide financing rather than up-front incentives, and ideally financing that will encumber a property owner’s balance sheet as little as is feasible, such as on-bill repayment out of utility bill savings

2. Financial incentives may be offered only if legally appropriate and available, and are intended to be offered on a temporary basis.

3. Repayment of any financing offered should come from those who benefit, which could include both tenants and landlords

4. Should not increase tenant utility bills

5. Should be accessible to a range of contractors

6. Should incorporate risk management measures to control risks to the City Program technical design
To keep program costs lower and easier for participants, staff should explore:

1. Streamlining of permit processes

2. Technical and permitting assistance for participants

3. Contractor training on program rules and operation

4. A courtesy contractor list

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