City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Clerk
Meeting Date: January 20, 2026
Report #:2511-5559
TITLE
Policy and Services Committee Recommendation to Adopt the 2026 State and Federal State Legislative Guidelines and 2026 Utility Policy Guidelines, and Receive an Update on State and Federal Legislative Advocacy; CEQA Status – Not a Project
RECOMMENDATION
The Policy and Services Committee recommends the City Council adopt the 2026 State and Federal Legislative Guidelines and 2026 Utility Policy Guidelines and receive an update on State and Federal Legislative Advocacy.
BACKGROUND
As part of the City’s legislative advocacy program, staff and City legislative advocates at Townsend Public Affairs (TPA), work to identify and analyze potentially impactful legislation and communicate the City’s interests to legislators. The program is guided by the Advocacy Process Manual1 and a set of City Council-approved Citywide Legislative Guidelines. These guidelines provide direction to staff and TPA on emerging legislative issues and other issues important to the City Council. In consultation with the Mayor and the Policy and Services Committee Chair, staff use the citywide legislative guidelines to respond to legislative affairs throughout the year.
These guidelines allow for flexible and prompt responses to emerging issues in the fast-paced legislative environment without returning to the City Council each time an issue arises. The City Council reviews and updates the citywide guidelines each January and reviews the utilities guidelines as necessary.
Due to the highly regulated nature of utilities, Utilities Legislative Guidelines have been used to enable effective staff advocacy in line with the Advocacy Process Manual. The broad and technical scope of the dozens of bills introduced annually requires frequent communication with utility associations and often direct staff advocacy to advance and protect the City of Palo Alto 1 Advocacy Process Manual: https://www.paloalto.gov/files/assets/public/v/2/intergovernmental- affairs/advocacy-process-manual-2025.pdf
Utilities (CPAU) and customers‘ interests. The Utilities Legislative Guidelines were created to guide these activities. These guidelines originated in 2009 3 and the review process, which requires annual staff review and City Council approval of proposed changes (only when there are changes to review), was formally adopted in 2017. 4 The current guidelines format was established in 2018.5
This year, staff is bringing both the State and Federal Legislative Guidelines and the Utilities Legislative Policy Guidelines to City Council to show the entire portfolio of the City’s legislative advocacy programs.
Both sets of guidelines were reviewed by the Policy and Services Committee on November 19, 2025. The Utilities Guidelines were also reviewed by the Utilities Advisory Commission (UAC) on November 5, 2025.
ANALYSIS
Federal and State Legislative Guidelines
The draft 2026 Federal and State Legislative Guidelines are included as Attachment A. Changes reflect topics the City Council has expressed interest in, updates from City staff, and issues expected to be prominent in the upcoming legislative cycle. The Policy & Services Committee revised the draft guidelines at its November 19, 2025 meeting and recommended the City Council adopt the guidelines. In addition to changes made during the meeting, the Committee also requested that staff study possible guidelines relating to homelessness and CEQA reform for public infrastructure and bring language to the City Council for consideration. Staff incorporated language on homelessness. Staff did further research with applicable departments on this topic after the Policy & Services Committee and do not recommend further advocacy regarding broader CEQA exemptions. Instead, if the City Council would like to pursue this topic, staff recommends advocating only for narrow CEQA exemptions specific to the type of infrastructure project of interest. Without further information on the specific types of projects of interest, staff does not have recommended language at this time to add to the guidelines.
Also, the Finance Committee at its October 21, 2025 meeting recommended that the City Council add support for any legislation that may arise related to tort reform to the legislative guidelines.
Cities throughout the state are facing rising insurance premiums due in part to increased jury 3 Utilities Advisory Commission, November 4, 2009: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/agendas-minutes/utilities-advisory-commission/archived-agenda-and-minutes/agendas-and- minutes-2009/11-04-2009-meeting/item-4_-util-legislative-policy-guidelines-2010.pdf 4 City Council, February 13, 2017, Resolution 9668:
https://portal.laserfiche.com/Portal/DocView.aspx?id=10407&repo=r-704298fc&searchid=aaa20151-e7c8-4a4f- b599-c57ead9a1530
5 City Council, January 22, 2018, SR 8750: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2018/final-staff-report-id-8750_2018-city-and-utilities- legislative-guidelines.pdf
verdicts in claims against public entities. Balanced tort reform would preserve funding for City services and help stabilize annual insurance premiums, long-range financial planning and future liability exposures. This topic is included in the draft Citywide Legislative Guidelines as approved by the Committee.
Utilities Legislative Policy Guidelines
The Draft 2026 Utility Legislative Policy Guidelines are included as Attachment B. These guidelines are intended to be evergreen and subject to annual staff review. When there are recommended changes, the guidelines are brought to the UAC for review and recommendation to the City Council for approval of any changes. The most recent guidelines were approved by the City Council on April 3, 2023. 9 Updates in 2024 and 2025 did not occur since the guidelines are evergreen and staff did not seek any updates. On November 5, 2025, staff presented the proposed guidelines to the UAC with only minor grammatical adjustments for discussion and recommendation to the Policy & Services Committee.10 The 2023 guidelines were almost entirely unchanged going back to the version approved in 2018, 11 as City Council direction has been consistent on issues pertaining to Utilities.
The UAC unanimously approved a slightly revised version of the guidelines and the adjustments are reflected in redline in Attachment B. The discussion expressed the UAC’s interest in legislative advocacy, impacts to the City of the Federal shutdown, and a greater understanding of how the guidelines empower staff to advocate on behalf of the City. The UAC approved an amendment to add the language to Utilities guideline #8, “while maintaining flexibility to support rate designs and policies that advance beneficial electrification and decarbonization in the public interest” to reflect their recommendation to enable staff to advocate for legislative revisions to cost allocation principles currently governed by Proposition 26 and Proposition 218 related to rate- making publicly owned utilities. On November 19, 2025, staff presented the UAC-amended guidelines to the Policy & Services Committee. The Policy & Services Committee unanimously approved the guidelines with the suggestion that, where appropriate, language be added that incorporates a “just decarbonization transition and equitable access.” The redlines in Attachment B show the changes made as suggested by Policy & Services Committee as well as the UAC.
Legislative Update
At the City Council meeting, Townsend Public Affairs will provide an advocacy update and preview issues expected to arise in the upcoming legislative cycle. An overview memo is included 9 City Council, April 3, 2023, SR 2301-0895: https://portal.laserfiche.com/Portal/DocView.aspx?id=65844&repo=r- 704298fc&searchid=d8930ab6-2c7f-46eb-afe0-d2d7d0f22149
10 Utilities Advisory Commission Meeting, November 5, 2025, Item #3:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17466 11 City Council, January 22, 2018, SR 8750: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2018/final-staff-report-id-8750_2018-city-and-utilities- legislative-guidelines.pdf
as Attachment C. In addition to the topics that will likely arise next session, and subsequent to the Policy & Services Committee discussion, staff became aware of several topics on which the City may be interested in supporting or sponsoring legislation. The topics relate to existing City services or programs that would benefit or require legislative amendments to advance the City‘s goals; they include:
-Raising the cap for local sales tax increments
-Preserving publicly owned utilities’ investment in flexible hydropower -Regulating the use of e-bikes and e-motos
-Streamlining the process for developing affordable housing on City-owned land -Preserving local permitting and zoning requirements for telecommunications infrastructure
Staff will keep the City Council informed as conversations progress and stay in communication with the Mayor and Policy & Services Chair about advocacy efforts. If bill sponsorship is needed, staff will seek City Council approval before attaching the City’s name as a bill sponsor.
FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with this action of approving the citywide legislative guidelines and utilities legislative policy guidelines. The City Council budgets annually for citywide legislative advocacy services, and these efforts are led by staff in the City Clerk and City Manager’s Offices, with stakeholder engagement across other City departments on key issues. The Utilities Department budgets for legislative and regulatory advocacy services separately linked to the respective Utilities.
STAKEHOLDER ENGAGEMENT
Staff from multiple departments meet regularly with Townsend Public Affairs to discuss legislative actions and advocacy on issues that could impact the City. Specifically related to the Utilities Department, Utilities staff meet directly with lobbyists, legislators, legislative staff, and regulators as well as leveraging advocacy staff at energy and water joint powers agencies.
ENVIRONMENTAL REVIEW
The City’s legislative advocacy activities are not a project under section 15378(b)(5) of the California Environmental Quality Act Guidelines (administrative activities that will not result in direct or indirect physical changes in the environment).
ATTACHMENTS
Attachment A: Draft 2026 Federal and State Legislative Guidelines Attachment B: Draft 2026 Utility Legislative Policy Guidelines Attachment C: Townsend Public Affairs Overview Memo
APPROVED BY:
Ed Shikada, City Manager
Mahealani Ah Yun, City Clerk