18.52.030 Basic Parking Regulations
[. . .]
(i) Transportation Demand Management Plan
(1) Requirement for TDM Plan: A Transportation Demand Management (TDM) Plan to reduce and manage the number of single-occupant motor vehicle trips generated by the project shall be prepared and submitted by the applicant in the following circumstances:
A. For all projects that generate 50 or more net new weekday (AM or PM peak hour) or weekend peak hour trips; or
B. For all projects claiming a reduction in net new trips due to proximity to public transit, exclusive of subsection (D); or the implementation of a TDM plan; and C. For all projects requesting a parking reduc tion, except a retail or retail-like use proposing an addition of less than 1,500 sq. ft. or change of use to other retail or retail-like; or
Exempts small
retail
additions and
changes in
retail use
from onerous
TDM
requirements.
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D. For all projects with reduced parking pursuant to California Government Code Section 65863.2 (AB 20 97, 2022), except a retail or retail-like use proposing an addition of less than 1,500 sq. ft. or change of use to other retail or retail-like. (2) The Director shall have the authority to ad opt guidelines for preparing TDM plans and when applicable shall coordinate such guid elines with the Transportation Management Association.
[. . .]
18.52.040 Off-Street Parking, Loading and Bicycle Facility Requirements [. . .]
(c) Tables 1, 2, 3 and 34: Parking, Bicycle, and Loading Requirements Tables 1, 2 and 23 below outline vehicle and bicycle parking requirements in general and for Parking Assessment Districts, respectively. Where bicycle parking standards differ from California Green Building Standards for bicycle parking, the more stringent standards shall apply.
Table 34 outlines loading requirements for each land use.
For mixed-use projects, the requirements for each land use shall be applied and required for the overall project.
Table 1
Minimum Off-Street Parking Requirements
Use
Vehicle Parking
Requirement
(# of spaces)
Bicycle Parking Requirement
Spaces
Class 1 Long
Term (LT) and
Short Term (ST)
…
Eating and Drinking Services:
(a) With drive-through drive-in
or take-out facilities
1 per 200 sq. ft. of gross floor area, plus
minimum queue line for 10 cars, subject to
further evaluation for higher demand drive-
through uses. 3 per 100 sq. ft. of gross floor
area
3 per 400 sf 40% - LT 60% - ST
(b) All othersFull Service 1 space for each 15060 sq. ft. gross floor area sq. ft. of public service area, plus 1
space for each 200 gross sq. ft. for all other
areas.
1 per 600 sf of
public service
area, plus 1 per
2,000 sf for other
areas
40% - LT 60% - ST
(c) Limited Service 1 space for each 250 sq. ft. gross floor area 1 per 2,000 sf 40% - LT 60% - ST (d) Bars 1 space for each 150 sq. ft. gross floor area 1 per 1,000 sf 40% - LT 60% - ST [. . .]
Updates use classifications to match new
definitions; modifies ratios to align with demand.
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4. For residential mixed-use developments in the CD-C zone, CC(2) zone, on CN and CS zoned sites abutting El Camino
Real, and on CS zoned sites abutting San Antonio Antonia Road between Middlefield Road and East Charleston Road, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle
parking requirement.
[. . .]
Table 2
Minimum Off-Street Parking Requirements for Parking Assessment Districts Use Vehicle Parking Requirement (# of spaces) 1
For Downtown University Avenue Parking Assessment District:
Residential Uses See Table 1
All Other Uses 1 per 250 square feet
For California Avenue Parking Assessment District:
Residential Uses See Table 1
Hotel/Motel/Inn See Table 1
All Other Uses 1 per 250 square feet
1. For residential mixed-use developments in the CD-C zone, CC(2) zone, and on CN and CS zoned sites abutting El Camino Real, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle parking requirement.
[. . .]
Table 23
Minimum Off-Street Bicycle Parking Requirements for Parking Assessment Districts (IF USE IS NOT LISTED, REFER TO TABLE 1 FOR REQUIREMENTS)
Use Vehicle Parking Requirement
(# of spaces)
Bicycle Parking Requirement
Class1 Spaces
For Downtown University Avenue Parking Assessment District:
All uses (except residential) 2 1 per 250 square feet 1 per 2,500 square feet
40% - LT 60% -
ST
Residential Uses See Table 1
For California Avenue Parking Assessment District:
Automobile Service Stations
1 per 310 square feet of gross
enclosed floor area, plus queue
capacity equivalent to the service
capacity of gasoline pumps
1 per 10
employees 100%-ST
Automotive Se
rvices
1 per 150 square feet of gross
floor area, display, or storage on
site
1 per 10
employees 100%-ST
Eating and Drinking Services:
Establish blended rate for California
Avenue, consistent with
Downtown, to simplify regulations
and acknowledge that parking
standards for these areas cannot be
enforced pursuant to AB2097/Gov.
Code Section 65863.2
Maintain bike
parking
standards
by use
classification.
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Use Vehicle Parking Requirement
(# of spaces)
Bicycle Parking Requirement
Class1 Spaces
(a) With drive-through drive-in or
take-out facilities
3 per 100 sf of gross floor area 3 per 400 sf 40% - LT 60%-ST (b) All others 1 per 155 sf of gross floor area 1 per 1,550 sf Financial services:
(a) Bank, savings and loan offices
with 7,
500 square feet of floor
area or less:
1 per 180 sf of gross floor area 1 per 1,800 sf 40%-LT 60% - ST (b) Banks, savings and loan offices
with more than 7,500 square feet
of floor area:
1 per 310 sf of gross floor area
(c) Others 1 per 180 sf of gross floor area 1 per 1,800 sf General Business Services:
(a) Enclosed 1 per 360 sf of gross floor area 1 per 3,600 sf 80%- LT 20%- ST (b) Open lot 1 per 500 sf of sales, display or
storage site area
1 per 5,000 sf 100%- ST
Medical, professional, and
general business offices
1 per 310 sf of gross floor area 1 per 3,100 sf 60%-LT 40% - ST Personal Services 1 per 450 sf of gross floor area 1 per 4,500 sf 20% - LT 80% - ST
Retail:
(a) Intensive 1 per 240 sf of gross floor area 1 per 2,400 sf 20%-LT 80% -ST (b) Extensive 1 per 350 sf of gross floor area 1 per 3,500 sf (c) Open lot 1 for each 500 square feet of
sales, display, or storage site area.
1 per 5,000 sf 100%-ST
OTHER USES
Any use not specified See Table 1
1. Long Ter
m (LT) and Short Term (ST) bicycle spaces as described in Section 18.54.060.
2. For residential mixed-use developments in the CD-C zone, CC(2) zone, and on CN and CS zoned sites abutting El Camino Real, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle parking requirement.
Table 34
Minimum Off-Street Loading Requirements
[. . .]
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18.52.050 Adjustments by the Director
Automobile parking and off-street loading requirements prescribed by this chapter may be adjusted by the director in the following instances and in accord with the prescribed limitations in Table 4, when in his/her opinion such adjustment will be consistent with the purposes of this chapter, will not create undue impact on existing or potential uses adjoining the site or in the general vicinity, and will be commensurate with the reduced parking demand created by the development, including for visitors and accessory facilities where appropriate. No reductions may be granted that would result in provision of less than ten (10) spaces on a site. The following are adjustments that apply to developments not located within a parking assessment district.
Adjustments within the parking assessment districts are contained in Section 18.52.080. The decision of the regarding parking adjustments may be appealed as set forth in Chapter 18.78 (Appeals).
Table 4 Allowable Parking Adjustments
Purpose of
Adjustment
Amount of Adjustment Maximum Reduction 2
[. . .] [. . .] [. . .]
Combined Park
ing
Adjustments
Parking reductions may be granted for any
combination of the above circumstances as
prescribed by this chapter, subject to limitations on
the combined total reduction allowed.
3060% reduction of the total
parking demand otherwise
required
40% reduction for affordable
housing projects
[. . .] [. . .] [. . .]
1. See Section 18.52.050(d) below regarding requirements for TDM programs.
2. No parking
reductions may be granted that would result in provision of less than ten (10) parking spaces on site.
2. 3. No parking reductions may be granted for projects that are entitled to the reduced parking standards in Table 1 of Section 18.52.040 for senior housing.
3. 4. Applies to 100% affordable housing projects and the residential component of 100% affordable housing mixed-use projects. "100% affordable housing" as used herein means a multiple-family housing project consisting entirely of affordable units, as defined in Section 16.65.020 of this code, available only to households with income levels at or below 120% of the area median income, as defined in Chapter
16.65, except for a building manager's unit.
(a) Combining Parking Adjustments
Parking reducƟons may be granted for any combinaƟon of circumstances, prescribed by this chapter, so long as in total no more than a 3060% reducƟon of the total parking demand otherwise required occurs, or no less than a 40% reducƟon for affordable housing projects (including Single Room Occupancy (SRO) units).
[. . .]
Allow more
flexibility
for shared
parking
arrangements.
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SECTION 14. Section 18.76.015 (Additional Findings for Specified Retail Uses) of Chapter 18.76 (Permits and Approvals) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby deleted in its entirety.
SECTION 15. Section 16.59.040 (Exemptions) of Chapter 16.59 (Citywide Transportation Impact Fee) of Title 16 (Building Regulations) of the Palo Alto Municipal Code are hereby amended as follows (additions underlined; deletions struck-through; text omitted but unchanged noted by bracketed ellipses):
16.59.040 Exemptions.
The provisions of this chapter shall not apply to:
(a) City buildings or structures.
(b) Public school buildings or structures.
(c) Affordable units, either for sale or rental, that exceed the minimum number required for projects under the city's below market rate (BMR) housing program or other provisions of this code, which units are, by recordable means, obligated to be and remain affordable units for a period consistent with the requirements of Section 16.65.075(c) of this code. (d) Day care centers used for childcare, nursery school or preschool education. (e) Accessory dwelling units (ADU).
(f) Junior accessory dwelling units (JADU).
(g) Retail service, eating and drinking service, personal service, or automotive service when the total additional square footage is 1,500 square feet or less. Th is exemption shall apply only when the additional square footage of new development does not exceed 1,500 square feet.
New development that is larger than 1,500 square feet shall pay a fee for all square footage, including the first 1,500 square feet.
(h) (g) New development which is exempt from the fee by virtue of the Constitution of the United States or California or by virtue of other applicable state or federal law.
SECTION 16. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid.
SECTION 17. The Council finds that the Ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the foregoing amendments to reduce retail vacancies will have a significant effect on the environment.
Removes
subjective
findings
Add fee exemption for small retail additions, consistent with fee exemptions in Section 16.45.050 and 16.58.030.
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SECTION 18. This Ordinance shall be effective from the thirty-first day after the date of its adoption. Once effective, this Ordinance shall repeal Ordinance no. 5642.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST: APPROVED:
__________________________
City Clerk
APPROVED AS TO FORM:
__________________________
Assistant City Attorney
_________________________
Mayor
_________________________
City Manager
__________________________
Director of Planning and
Development Services
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Exhibit A (Remove Ground Floor (GF) Combining District)
Charleston Shopping Center
Midtown Shopping District
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Attachment B: Summary of Draft Ordinance
PAMC Chapter/Section # Proposed Amendments
Ch. 18.04.030:
Definitions
Make permanent changes to definitions.
Split “Animal Care” definition into two use
classifications, based on impact.
Split “Eating and Drinking Services” into three use
classifications, to create distinct parking requirements, and allow bars without food service.
Remove “take out service” as it pertains to food service Relocate “neighborhood-serving” use definitions here
Ch. 18.16:
Neighborhood,
Community, and Service
Commercial (CN, CC and
CS) Districts
Streamline overlapping, confusing, and contradictory
use regulations for Midtown and Charleston Shopping
Centers.
Allow neighborhood-serving offices and residential uses in the Midtown and Charleston Shopping Centers
(except along public frontages).
Expand allowed uses in the CC and CS districts,
including some from the “retail-like” category, and bars with a CUP.
Revised permit levels (i.e., by right vs. CUP) to expand by right uses.
Ch. 18.18: Downtown
Commercial (CD) District
Streamline overlapping use regulations.
Expand allowed uses, including some from the “retail-
like” category, and bars with a CUP.
Ch. 18.29 North Ventura Expand allowed uses, including some from the “retail- like” category, and bars with a CUP.
Ch. 18.30(A): Retail
Shopping (R) Combining
District Regulations
(Applicable on California
Avenue)
Ch. 18.30(C): Ground
Floor (GF) Combining
District Regulations
(Applicable in Downtown
core)
Make permanent 2024 additions to allowed uses.
Expanded allowed uses.
Remove subjective findings, and Waiver and
Adjustments.
Allow neighborhood-serving offices, except along
University Ave. and California Ave. frontages.
Allow medical office, with a retail sales component, on University Ave. and California Ave.
Ch. 18.38: Planned
Communities (PC)
Districts
Allow Director authority to interpret list of allowed uses in commercial PCs and allow "similar" uses, except
where use is listed as a community benefit.
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Attachment B - Summary of
Draft Ordinance
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Ch. 18.40.180: Retail
Preservation
Exempt multifamily residential and office/manufacturing zones from retail preservation regulations.
Ch. 18.42: Standards for
Special Uses
Modify Section 18.42.090 (Alcoholic Beverages) to
streamline permitting and apply conditions for bars and restaurants with alcohol service, regarding noise,
training, hours of operation, etc.
Establish Section 18.42.130 (Animal Care) to create
generally applicable conditions for animal care uses,
regarding nuisances, drainage, ventilation, waste, etc.
Ch. 18.52: Parking and
Loading Requirements
Establish blended parking rate for the California Avenue Parking district (similar to Downtown).
Modify ratios for eating and drinking services.
Modify thresholds for when a transportation demand
management (TDM) program is required.
Increase shared parking opportunities.
Ch. 18.76.010 &
18.77.060 Process and
Administration (and
throughout PAMC)
Replace all references from CUP to Administrative Use
Permit (AUP) to better reflect the primarily
administrative nature of this permit process.
Ch. 16.59: Citywide
Transportation Impact
Fee
Exempt small retail uses from the citywide
transportation fee, consistent with other fee exemptions, in Sections 16.45.050 and 16.58.030.
Item 15
Attachment B - Summary of
Draft Ordinance
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2 5
Attachment C: Overlapping Use Regulations Applicable to Charleston and Midtown Shopping Centers This document analyzes four sets of use regulations and size limitations that apply to the Charleston and Midtown Shopping Centers. The -GF combining district use regulations stipulate that they supersede all other use regulations, so columns two through four become moot.
Ground-Floor Use Regulations
18.16.040 Table 2
Land Uses
CN Use Regulations
18.16.040 Table 1
and CN Maximum
Size 18.16.060
Table 5
Charleston
Shopping
Center
Midtown
Shopping Center
GF Combining
District (18.30(C))
(Ground-Floor Use
Regulations) Comments
EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES
Business and Trade Schools X X X CUP
Private Educational Facilities CUP CUP CUP X
Private Clubs, Lodges, or
Fraternal Organizations CUP CUP CUP X
Inconsistent with same
use category under
“Recreation Uses” below
OFFICE USES
Medical Offices
P (<5,000 sq. ft.) -
Charleston
CUP – Midtown
X (except see
below)
CUP (<2,500 sq.
ft. only) X
Professional and General
Business Offices
P (<5,000 sq. ft.)
CUP (>5,000 sq. ft.) X X (except see
below) X
Neighborhood-serving offices
(including medical offices,
professional offices, travel
agencies, and insurance
agencies)
P
P (<2,500 sq.
ft.)
CUP (>2,500
sq. ft.) not to
exceed 7,850
sq. ft
X X
Professional offices, travel
agencies, and insurance
agencies only
P X
CUP not to
exceed 7,850
sq. ft
X
Confusing and
inconsistent across
subsections
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Overlapping Use Regulations
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Ground-Floor Use Regulations
18.16.040 Table 2
Land Uses
CN Use Regulations
18.16.040 Table 1
and CN Maximum
Size 18.16.060
Table 5
Charleston
Shopping
Center
Midtown
Shopping Center
GF Combining
District (18.30(C))
(Ground-Floor Use
Regulations) Comments
RECREATION USES
Commercial Recreation P (<5,000 sq. ft.)
CUP (>5,000 sq. ft.) CUP CUP
P (<5,000 sq. ft.)
CUP (>5,000 sq.
ft.)
Inconsistent permit
thresholds
Outdoor Recreation Services CUP CUP CUP X
Private Clubs, Lodges, or
Fraternal Organizations X CUP CUP X
Inconsistent across
regulations and with same
use category under
“Education, Religious, and
Assembly Uses” above
RETAIL USES
Eating and Drinking Services,
excl. drive-in and take- out
services
P (<5,000 sq. ft.)
CUP (>5,000 sq. ft.) P P P (allows drive-ins
and take-out)
Inconsistent permit
thresholds
Retail Services, excl. liquor stores
P (<15,000 sq. ft.)
CUP (>15,000 sq.
ft.)
CUP (>20,000 sq.
ft.) for grocery stores
P P P Inconsistent permit
thresholds
Liquor stores CUP CUP CUP X
SERVICE USES X
Ambulance Services CUP CUP CUP X
Animal Care, excl. boarding and
kennels P P P X
Automobile Service Stations CUP CUP CUP X
Automobile showroom X X X P GF is most permissive
Convalescent Facilities CUP CUP CUP X
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Attachment C - Midtown & Charleston
Overlapping Use Regulations
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Ground-Floor Use Regulations
18.16.040 Table 2
Land Uses
CN Use Regulations
18.16.040 Table 1
and CN Maximum
Size 18.16.060
Table 5
Charleston
Shopping
Center
Midtown
Shopping Center
GF Combining
District (18.30(C))
(Ground-Floor Use
Regulations) Comments
Day Care Centers P P P CUP
Banks and Financial Services CUP CUP CUP X
Retail financial services, except
drive-in services; P P P P
Not explicitly listed in CN,
Charleston or Midtown,
but interpreted by staff as
retail/personal service
General Business Services X X X CUP
GF is most permissive
Also see “Neighborhood
Business Services” below
Hotels X X X P GF is most permissive
Mortuaries CUP CUP CUP X
Neighborhood Business Services P (<3,000 sq. ft.)
CUP (>3,000 sq. ft.) P P X
Inconsistent permit
thresholds (18.04
Definition limits use to
2,500 sq. ft.)
Personal Services P (<3,000 sq. ft.)
CUP (>3,000 sq. ft.) P P P Inconsistent permit
thresholds
Pet Grooming Services X X X P GF is most permissive
Reverse Vending Machines P P P X
Theaters P P P P
Not explicitly listed in CN,
Charleston or Midtown,
but interpreted as by staff
as retail/personal service
Travel agencies P P P P
Not explicitly listed in CN,
Charleston or Midtown,
but interpreted as by staff
as retail/personal service
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Attachment C - Midtown & Charleston
Overlapping Use Regulations
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Attachment C - Midtown & Charleston
Overlapping Use Regulations
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Item 15
Attachment D - Retail Preservation and Businesses in Residential Multi-family, Office, and Industrial Zones
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2657 Spring Street, Redwood City, CA 94063 | thehayesgroup.com 650.365.0600 | 350 Sansome Street, Suite 750, San Francisco, CA 94104 Architecture & Interiors March 25, 2026 Planning Commission Chair Aikin and fellow Planning Commissioners SENT VIA EMAIL [email protected] [email protected] Re: Agenda Item 3 PTC Meeting March 25, 2026, Dear Chair Aikin and fellow commissioners, As you evaluate and discuss the staff recommendations regarding policies to increase retail vitality in the city, I would like to address policies related to historic properties which appear to have been overlooked. Historic properties are a treasure. We want to preserve them as part of the fabric and history of Palo Alto. These properties are often building types that are unusual or present with architectural nuances associated with their historic use. Examples include historic churches, civic buildings, and old theaters. To keep these buildings viable and part of the community after a change from their original use there needs to be flexibility in permitted uses. Having these buildings occupied with tenants is imperative to the financial health of the maintenance of the historic building and its ongoing disposition. And, having them occupied increases the vitality of the neighborhood. The Palo Alto Comprehensive plan has policies and programs that address this need for flexibility and historic preservation. Policy L-7.8 Promote Adaptive reuse of historic buildings. Program L7.8.1 Promote and expand available incentives for the retention and rehabilitation of buildings with historic merit in all zones and revise existing zoning and permit regulations to minimize constraints to adaptive reuse. Policy L-7.9 Allow compatible nonconforming uses for the life of historic buildings. These excerpted policies and programs around historic properties needs to be addressed in these revised ordinances under consideration.
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Attachment E - Public
Comment
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2657 Spring Street, Redwood City, CA 94063 | thehayesgroup.com 650.365.0600 | 350 Sansome Street, Suite 750, San Francisco, CA 94104 Architecture & Interiors An example of one historic property, a Category I historic property, the highest historic integrity, is the Varsity Theater. Since Hana Haus moved out this building has about 2/3 of the ground floor vacant. Blu Bottle continues to operate. The theater is a perfect example of an historic building with an architectural nuance or impediment to the permitted uses under PAMC in the GF overlay (retail or retail like uses). Entering from University Avenue, there is a ninety-foot-long courtyard before there is any entry to the building. The frontage along University Avenue is only 35 feet but the property widens at the rear to three times this distance where there are no street facing walls or windows facing the sidewalk. Retailers are not interested in this building because of this lack of frontage, the size of the ground floor and the courtyard in front and I believe this is a perfect example of where there needs to be flexibility in the permitted uses as envisioned in Program L7.8.1. For the Varsity Theater, allowing office as a permitted use in the non-street facing rear portion of the building while requiring retail in the portion where Blu Bottle is located will open up the options for tenants. It is better for Palo Alto, and specifically the University Avenue corridor, to have all buildings occupied but especially these beautiful historic buildings in our downtown. Allowing flexibility in the permitted uses for these properties will allow them to be occupied by different uses that will all add to the vitality of the downtown with more people walking the streets and alleyways, supporting our retailers and restaurants. Please consider tonight a Retail Vitality Policy that encourages adaptive reuse and flexibility in permitted uses for historic properties. Yours truly, Ken Hayes, AIA Principal Item 15
Attachment E - Public
Comment
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Attachment F: March 25, 2026 PTC Comments on the Draft Ordinance and Staff Responses
This table identifies specific issues where the PTC requested further consideration and provides staff’s responses, including changes to the draft ordinance in Attachment A.
PTC Comments Changes to Draft Ordinance
Ch. 18.30(A) & Ch. 18.30(C):
Contemplation about which types of
medical office uses might be appropriate
on California and University Avenues;
ultimately, the PTC deferred to the City
Council which types of medical and
medical office uses may be appropriate.
For further discussion by the City
Council. See discussion in the staff
report for options and staff
recommendations regarding medical
offices.
Ch. 18.52: Concerns about streamlining
office parking ratios across districts.
Removed proposed changes to office
parking ratios.
Ch. 18.38: Concerns about effects that
allowing flexibility in Planned
Communities (PC) zones could have on
community benefits.
Specified that uses identified as being
part of the PC’s community benefit (e.g.,
grocery store) are excluded from being
changed to a similar use.
Ch. 16.59: Concerns about small retail
additions piecemealing development
proposals to avoid impact fees.
No change proposed since this is not
anticipated to be a major issue, but
would require staff resources to track. If
the Council would like to regulate
piecemealing, the ordinance could
include a trigger date (e.g., as of May 1,
2026).
Ch. 18.40.180: Remove retail
preservation modifications to the ROLM
and GM-zoned parcels in the San
Antonio Road corridor; allow the San
Antonio Road Area Plan to determine
appropriate regulations in that location.
Revised retail preservation exemptions
to exclude parcels within the San
Antonio Road Area Plan area, while that
planning effort is still underway.
Various Sections: Minor edits and
clarifications to definitions, standards for
alcohol sales and service, and other
zoning text.
Revised.
Item 15
Attachment F - March 25,
2026 PTC Comments on the
Draft Ordinance and Staff
Responses
Item 15: Staff Report
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City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: May 18, 2026
Report #:2512-5678
TITLE
Investment Activity Report for the Third Quarter (January – March), Fiscal Year 2026.
CEQA Status – Not a Project.
RECOMMENDATION
This is an informational report and no City Council action is required.
EXECUTIVE SUMMARY
This report is presented in accordance with California Government Code Section 53646 and the City’s Investment Policy.
As of March 31, 2026, the consolidated cash and investment holdings totaled $671.4 million (market value), including $526.4 million in investments and $145.0 million in liquid accounts.
The investment portfolio was in full compliance with the City’s Investment Policy, and staff projects adequate liquidity to meet expenditure requirements for the next six months.
Attachments and links in this report provide detailed cash and investment information, including portfolio holdings, performance metrics, and related financial summaries.
BACKGROUND
The City’s Investment Policy is reviewed and approved annually by Council and establishes the framework for managing public funds in accordance with the Prudent Investor Standard under state law. The policy outlines authorized investment types, maturity and credit quality limits, diversification requirements, and reporting standards to ensure the objectives of safety, liquidity, and return.
The policy also requires the Administrative Services Department to provide the City Council with monthly and quarterly investment reports, consistent with California Government Code 53646. Monthly reports provide details on investment activity during the period, such as purchases, calls, redemptions, and maturities. This quarterly report summarizes the City’s Item A
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investment holdings, portfolio performance, and compliance with the City’s Investment Policy and California Government Code.
Beginning in FY 2026, the City transitioned from managing its investment portfolio in-house to partnering with Chandler Asset Management (Chandler) for professional investment management services, including cash flow forecasting, investment advisory and strategy, policy review, and active portfolio management.
An overview of all City cash and investment holdings, including trust and debt-related funds, is included in Attachment A. The Investment Quarterly Report is included in Attachment B. A complete list of current and historical holdings, as well as the City’s Investment Policy, is available on the City’s website: www.paloalto.gov/investmentreporting.
ANALYSIS
As of March 31, 2026, the City’s consolidated portfolio totaled $671.4 million (market value), including $526.4 million in investments and $145.0 million in liquid accounts. The investment portfolio had an average duration of 2.63 years and an average credit quality of AA+. The duration is slightly above Chandler’s recommended positioning of 2.5 years within a one-to- five-year maturity range.
Graph 1 below illustrates the City’s portfolio by security type, reflecting how funds are allocated across permitted investment categories.
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Table 1 summarizes the portfolio’s maturity structure, which supports the City’s liquidity objectives and duration strategy.
Investment Performance and Activity
For the quarter ended March 31, 2026, the City’s portfolio average market yield was 4.06% compared to 3.84% for the ICE BofA 1-5 Year U.S. Treasury & Agency Index benchmark. The portfolio's total return for the quarter was 0.46%, exceeding the benchmark return of 0.20%.
During the quarter, approximately $72.5 million in securities were purchased, $5.5 million were called or redeemed, $58.8 million matured, and $1.9 million were sold.
Table 2 summarizes key portfolio characteristics including maturity, duration, yield, and credit quality. As of March 31, the yield for LAIF and the two-year US Treasury were 3.82% and 3.79%, respectively. While these are not direct performance benchmarks, they provide useful context for evaluating the portfolio’s positioning relative to short-term liquidity returns and broader market conditions.
Table 2: Portfolio Characteristics
Benchmark*
Portfolio as of
March 31
Portfolio as of
Dec 31
Average Maturity (yrs) 2.65 2.99 2.97
Average Modified Duration 2.47 2.63 2.56
Average Purchase Yield 3.04% 2.76%
Average Market Yield 3.84% 4.06% 3.87%
Average Credit Quality** AA+ AA+ AA+
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Compliance and Credit Standards
The City’s Investment Policy defines general portfolio limits and controls, including a maximum stated maturity of 10 years, no more than 30% of the market value of the total portfolio in maturities beyond five years, and maintaining a market value above 95% of book value. All marketable securities are held by a third-party custodian, and valuations are independently verified.
Specific limits also apply to each authorized investment type, covering maximum allocations, issuer exposure, credit quality, and maturity restrictions. The Investment Quarterly Report provides detailed compliance information and the portfolio’s current status relative to these limits. Downgrades below minimum credit rating thresholds are reported to the City Council in accordance with the policy. No securities experienced such downgrades during the quarter.
At quarter end, the investment portfolio’s market value was 98.0% of book value, exceeding the 95% minimum threshold, and remained in full compliance with all policy limits.
Economic Outlook
Inflation remained elevated in early 2026, with recent increases largely driven by higher energy prices. While underlying inflation has shown some signs of stabilizing, overall price levels remain above the Federal Reserve’s target. The Iran conflict contributed to this trend by disrupting global oil supply, leading to higher fuel costs and adding pressure to inflation.
The Federal Reserve held interest rates steady at a range of 3.50% to 3.75% as it continues to monitor inflation and economic conditions. US Treasury yields fluctuated during the quarter, reflecting ongoing uncertainty in financial markets. Geopolitical developments, particularly the Iran conflict, have added to this uncertainty and continue to influence interest rate expectations.
Cash Flow Outlook
Cash flow needs fluctuate over the course of the fiscal year as a result of cyclical revenue patterns, with larger inflows from major revenue sources such as property tax receipts occurring in the second half of the year. One-time activities, such as the annual prepayment of pension obligations and large capital expenditures, also influence these patterns. The City‘s investment strategy aligns with these cycles by timing maturities and maintaining sufficient liquidity to meet ongoing needs as they occur.
The portfolio is expected to meet all expenditure needs for the next six months.
Funds Held by Fiscal Agents and Trustees
The City holds bond proceeds, reserves, and debt service funds with fiscal agents, which are invested in accordance with the respective bond indentures. The City also maintains a Section 115 Pension Trust with Public Agency Retirement Services (PARS) and Retiree Medical Funds Item A
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(Other Post-Employment Benefits Trust or OPEB), governed by the City’s Retiree Benefit Funding Policy.
These funds are outside of the scope of the Chandler investment portfolio but are included in Attachment A of this report to provide a comprehensive view of City funds.
FISCAL/RESOURCE IMPACT
This report is for informational purposes only and has no direct fiscal impact.
STAKEHOLDER ENGAGEMENT
Staff collaborated with internal teams and external financial partners to gather the information included in this report.
ENVIRONMENTAL REVIEW
This informational report is not a project under the California Environmental Quality Act (CEQA) as defined in CEQA Guidelines Section 15378, as it is presented for informational purposes only and requires no Council action.
ATTACHMENTS
Attachment A: Consolidated Report of Cash Management
Attachment B: Investment Quarterly Report (as of March 31, 2026) APPROVED BY:
Lauren Lai, Administrative Services Director
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Book Value Market Value
City Investment Portfolio 536,991,494$ 526,367,008$ Other Liquid Accounts
Cash with Wells Fargo Bank 2,424,209 2,424,209 Cash with US Bank & Receivables 31,375,479 31,375,479 Fidelity Money Market Funds 58,703,584 58,703,584 Local Agency Investment Fund (LAIF) 52,521,162 52,521,162 Total - Other Liquid Accounts 145,024,434 145,024,434 CONSOLIDATED PORTFOLIO TOTAL (Attachment B) 682,015,928 671,391,442 Other Debt Service Funds*
Debt Service Proceeds
US Bank Trust Services **
2009 Water Revenue Bonds (Build America Bonds)
Debt Service and Reserve Funds 2,102,850 2,102,850 2011 Utility Revenue Refunding Bonds
Debt Service and Reserve Funds 588,004 588,004 2018 Capital Improvement (Golf Course & 2002B COP Refinance) (Taxable- Green Bond) Certificates of Participation
Debt Service Funds 708 708 2019 California Avenue Parking Garage Certificates of Participation (Tax-Exempt and Taxable Bonds)
Debt Service and Reserve Funds 2,984 2,984 2021 Public Safety Building Certificates of Participation Debt Service Funds 5,173 5,173 2022A & B General Obligation (Library) Bond
Cost of Issuance Funds 4,344 4,344 California Asset Management Program (CAMP) ***
2012 University Ave. Parking Refunding Bonds
Reserve Fund 3,223,929 3,223,929
Public Agencies Post-Employment Benefits Trust ****
Public Agency Retirement Services (PARS) 127,447,717 127,447,717 Total Other Funds 133,375,708 133,375,708 GRAND TOTAL 815,391,636$ 804,767,150$
* These funds are subject to the requirements of the underlying debt indenture. ** U.S. Bank investments are in money market mutual funds that exclusively invest in U.S. Treasury securities. *** CAMP investments are in money market mutual fund which invest in bankers acceptance, certificate of deposit, commercial paper, federal agency securities, and repurchase agreements. **** PARS investments are in moderately conservative index plus funds Attachment A
Third Quarter, Fiscal Year 2025-26
(Unaudited)
Consolidated Report of Cash Management
City of Palo Alto Cash and Investments
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INVESTMENT REPORT
City of Palo Alto | As of March 31, 2026
CHANDLER ASSET MANAGEMENT | chandlerasset.com
Chandler Team:
For questions about your account, please call (800) 317-4747, or contact [email protected]
Information contained herein is confidential. We urge you to compare this statement to the one you receive from your qualified custodian. Please see Important Disclosures at the end of the statement.
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TABLE OF CONTENTS
ECONOMIC UPDATE
ACCOUNT PROFILE
CONSOLIDATED INFORMATION
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ECONOMIC UPDATE
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March payrolls rebounded by178,000 after February’s revised 133,000 decline, but the war in Iran and its disruption of the Strait of Hormuz have pushed crude oil above $112, injecting a potential inflationary shock into an economy contending with sticky core prices above 3%.
The Federal Reserve has held the funds rate at 3.50–3.75% and is signaling a cautionary stance, keeping open the option of delaying cuts if oil
‑
related inflation proves persistent rather than transitory. As the data flow normalizes, the Chandler team anticipates additional yield curve steepening as the Federal Reserve gradually guides the policy rate toward a more neutral range. The Federal Reserve’s March dot plot still projects one cut this year, yet the Iran-driven energy shock has narrowed the path toward easing.
The Federal Reserve’s March 2026 FOMC meeting ended with policymakers again holding the target range at 3.50%–3.75%, as the Committee maintained its pause following three late 2025 rate cuts. Governor Stephen Miran dissented in favor of an additional quarter
‑
point reduction, while Christopher Waller joined the majority, tipping the vote 11–1 to leave the benchmark rate unchanged.
Meanwhile, President Trump’s nominationof Kevin Warsh to succeed Jerome Powell as chair has hit a roadblock after a Republican senator vowed to block Warsh’s confirmation amid the Justice Department’s ongoing probe of the central bank.
Treasury yields exhibited considerable first-quarter volatility as the Iran conflict injected energy-driven inflation fears into a market grappling with sticky core prices. At March month-end, the 2-year yield stood at 3.79%, up 32 basis points year-to-date, the 10-year at
4.32%, and the 30-year at 4.86%. The 2-year to 10-year spread narrowed to 52 basis points, reflecting pronounced flattening as short rates rose faster than longer maturities. One year ago, that spread stood near 32 basis points, providing context on normalization since the 2022 through 2024 yield curve inversion. The 3-month to 10-year spread was approximately 64 basis points at March month-end.
ECONOMIC UPDATE
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-400
-200
0 200
400
600
800
1,000MOM Change In Thousands (000's)
Nonfarm Payroll (000's)
Non-farm Payroll (000's)
3-month average (000's)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Unemployment Rate
Underemployment Rate (U6)
Unemployment Rate (U3)
Rate (%)
March nonfarm payrolls rose by 178,000, a decisive reversal from February’s revised 133,000 decline that had been distorted by a Kaiser Permanente strike affecting over 30,000 healthcare workers and severe winter weather. Healthcare contributed 76,000 positions as striking nurses returned, while construction and leisure reboundedfrom weather-induced troughs. The unemploymentrate edged lower to
4.3%, though partly from a labor force reduction rather than a hiring acceleration. Meanwhile, the underemployment rate edged up to
8.0% from 7.9% in February. Average hourly earnings rose 0.2% over the month and 3.5% year over year—the slowest annual pace since May 2021.
Source: US Department of Labor Source: US Department of Labor
EMPLOYMENT
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0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
Job Openings
Recession
Historical Average
In Thousands (000's)
Job openings fell t o 6.9 million in February froma revised 7.2 million in January, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. The ratio of openings to unemployed workers slipped to 0.9, reinforcing the gradual rebalancing of demand and supply. Hires decreased to 4.8 million, the lowest since April 2020, suggesting employers have grown selective about adding headcount. Quits were little changed at 3 million. The data reflects a labor market consistent with the Federal Reserve’s characterization of a no-hire, no-fire environment.
Source: US Department of Labor
JOB OPENINGS & LABOR TURNOVER SURVEY
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0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Consumer Price Index (CPI)
CPI YOY % Change
Core CPI YOY % Change
YOY (%) Change
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Personal Consumption Expenditures (PCE)
PCE Price Deflator
YOY % Change
PCE Core Deflator
YOY % Change
Fed Target
YOY (%) Change
Consumer Price Index ( CPI) for March surged 0.9%, the highest monthly rate since June 2022, and was up 3.3% on an annual basis primarily due to spikes in energy and airfare prices. Notably, Core CPI was little changed with a monthly increase of 0.2% and an annual rise of 2.6% as costs for services and other goods remained subdued. Personal Consumption Expenditures (PCE) were little changed in February, with the headline PCE Price Index up 0.4% month-over-monthand 2.8% year-over-year. The Fed’s preferred metric, Core PCE, which excludes food and energy, rose 0.4% during the month and 3.0% from February of 2025.
Source: US Department of Labor Source: US Department of Commerce
INFLATION
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0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Retail Sales YOY % Change
YOY (%) Change
The Conference Bo ard’s Consumer Confidence Index edged up to 91.8 in March from 91.0 in February, a second consecutive gain that nonetheless sits well below the all-time peak of 144.7 from early 2000. The Present Situation component rose 4.6 points to 123.3 on favorable assessments of business and labor conditions, while the Expectations Index slipped 1.7 points to 70.9. Inflation expectations climbed to their highest since August 2025, reflecting tariff passthrough and elevated gasoline prices. February retail sales rebounded
0.6% from January, with stronger auto and broad-based discretionary spending offsetting January’s weather- and vehicle-related weakness; the control group also advanced 0.5%, signaling firmer underlying consumer demand. 0 20
40 60
80 100
120
140
160
Index Level
Consumer Confidence
Recession
Source: US Department of Commerce Source: The Conference Board All time high is 144.70 (1/31/00); All time low is 25.30 (2/28/09)
CONSUMER
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-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Leading Economic Indicators (LEI)
Recession
YOY (%) Change
-1.00
-0.75
-0.50
-0.25
0.00 0.25
0.50 0.75
1.00 Chicago Fed National Activity Index (CFNAI)
Recession
3 Month Average
The Chicago Fed N ational Activity Index (CFNAI) fell to 0.11 in February, following a positive revision to 0.20 in January. The index’s three month movingaverage edged up to 0.01 from 0.02 the prior month.Production and employment related indicators turned negative in February, while sales, orders, and inventories also remained in negative territory. The personal consumption and housing categories slipped modestly but stayed in positive territory. The Conference Board’s Leading Economic Index (LEI) declined 0.1% in January, an improvement from
‑
0.2% in December, with consumer expectations and building permits the largest drags on the index. On a year
‑
over
‑
year basis, the LEI fell 3.8%, continuing to signal slower economic growthheading into 2026. Notably, the latest LEI data do not yet reflect the impact of the war in Iran.
Source: The Conference Board Source: Federal Reserve Bank of Chicago
LEADING INDICATORS OF ECONOMIC ACTIVITY
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0 200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
In Thousands of Units
Annualized Housing Starts
Multi Family Housing Starts
Single Family Housing Starts
Housing starts rose 7.2% in January to an annualized pace of 1.487 million units, including 935,000 single-family and 552,000 multifamily starts. The January S&P Cotality Case-Shiller 20-City Composite posted a 1.18% year-over-year gain, continuing deceleration from December’s revised 1.43% annual increase. Inflation again outpaced home price appreciation, extending the erosion of real housing returns that began in the second half of 2025. The Freddie Mac 30-year fixed mortgage rate climbed to 6.46% as of April 2, its fifth consecutive weekly rise, reversing progress made when rates dipped below 6% in February. Higher borrowing costs and elevated prices continue to constrain affordability.
Source: US Department of Commerce Source: S&P
-20.0%
-16.0%
-12.0%
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
24.0%
S&P/Case-Shiller 20 City Composite Home Price Index
Recession
YOY (%) Change
HOUSING
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40 45
50 55
60 65
70 Institute of Supply Management (ISM) Surveys
ISM Manufacturing ISM Services
EXPANDING
CONTRACTING
The Institute for Supply Management’s Manufacturing Index rose to 52.7 in March from 52.4, the fastest factory expansion since August 2022 and a third consecutive month above 50. Production accelerated to 55.1 from 53.5, though new orders decelerated to 53.5 from 55.8.
The prices subindex leaped to 78.3 from 70.5, reflecting elevated energy costs, metals tariffs, and Iran-related supply disruptions.
Employment remained in contraction at 48.7. The Services Index eased to 54.0 in March from 56.1 in February but still posted its 21st consecutive month of expansion. The expansion was mainly from an increase in prices, amid higher oil and fuel costs. With both measures above the 50 threshold, ISM data point toward a resilient if cost-pressured economy.
Source: Institute for Supply Management
SURVEY BASED MEASURES
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Components of GDP 3/25 6/25 9/25 12/25
0.4% 1.7% 2.3% 1.3%
3.8% -2.7% 0.0% 0.4%
-4.7% 4.8% 1.6% -0.2%
-0.4% -0.4% 0.2% -1.2%
0.2% 0.3% 0.2% 0.2%
-0.6% 3.8% 4.4% 0.5%
State and Local (Consumption and Gross
Investment)
Personal Consumption Expenditures
Gross Private Domestic Investment
Net Exports and Imports
Federal Government Expenditures
Total
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Gross Domestic Product (GDP)
GDP QOQ % Change
GDP YOY % Change
Source: US Department of Commerce Source: US Department of Commerce The third and f inal estimate of real gross domestic product (GDP) showed fourth-quarter growth revised down to 0.5% from the initial
1.4% estimate. The slowdown from 4.4% in the third quarter primarily reflected a sharp pullback in government spending, as the federal government shutdownweighed on activity. The Bureau of Labor Statistics expects statistical distortions will persist into the spring due to data collection disruptions. Personal Consumption Expenditures also declined across both goods and services.
GROSS DOMESTIC PRODUCT (GDP)
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Source: Federal Reserve Source: Bloomberg
0 1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
Federal Reserve Balance Sheet Assets
Recession
In $ millions
The Federal Reserve left its benchmark interest rate unchanged in March, keeping the target range at 3.50% to 3.75% following three late 2025 rate cuts that were justified by signs of softening in the labor market. The Federal Open Market Committee minutes showed some participants supported two-sided language on future rate direction given the upside risks to inflation and downside risks to employmentbeing elevated. However, policymakers have grown wary of potential inflationary pressures stemming from tariffs, the war in Iran, and the ensuing spike in commodity prices. The Federal Reserve now projects just one rate cut in 2026, even as inflation expectations rise. The Committee also reaffirmed its December decision to halt balance sheet runoff and to reinvest principal and interest payments from its securities holdings, signaling a continued emphasis on maintaining ample reserves and supporting orderly market functioning.
FEDERAL RESERVE
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Effective Federal Funds Rate
Recession
Yield (%)
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Source: Bloomberg Source: Bloomberg
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
US Treasury Note Yields
2-Year
5-Year
10-Year
Yield (%)
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
US Treasury Yield Curve
Mar-26
Dec-25
Mar-25
Yield (%)
At March month-end, the 2-year Treasury yield stood at 3.79%, down approximately 9 basis points from one year ago, while the 10-year finished at 4.32%, roughly 11 basis points higher year-over-year. The spread between the two narrowed to 52 basis points, wider by 20 basis points year-over-year. The prior 2-year to 10-year inversion from July 2022 through August 2024 was historically long. The average spread since 2005 is approximately 95 basis points, suggesting the current slope sits well below its long-run norm. The 3-month to 10- year spread stood near 64 basis points at March month-end.
BOND YIELDS
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ACCOUNT PROFILE
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OBJECTIVES
Investment Objectives
Safety of principal is the foremost objective of the investment program. The investment portfolio shall remain sufficiently liquid to meet all requirements that may be reasonably anticipated. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs.
Chandler Asset Management Performance Objective
The performance objective for the portfolio is to earn a total rate of return through a market cycle that is equal to or above the return on the benchmark index.
Strategy
In order to achieve these objectives, the portfolio invests in high quality fixed income securities that comply with the investment policy and all regulation governing the funds. 15 ATTACHMENT B
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STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Rules Name Limit Actual Compliance
Status Notes
AGENCY MORTGAGE SECURITIES
Max % Issuer (MV) 30.0 0.7 Compliant
Max Maturity (Years) 10.0 2.8 Compliant
ASSET-BACKED SECURITIES (ABS)
Max % (MV; ABS & MBS) 20.0 0.5 Compliant
Max % Issuer (MV) 5.0 0.3 Compliant
Max Maturity (Years) 5.0 4.6 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant
BANKERS' ACCEPTANCES
Max % (MV) 40.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Days) 180.0 0.0 Compliant
COLLATERALIZED BANK DEPOSITS
Max % (MV) 100.0 0.0 Compliant
COLLATERALIZED TIME DEPOSITS (NON-
NEGOTIABLE CD/TD)
Max % (MV; FDIC & Collateralized CD/TD) 20.0 0.0 Compliant Max % Issuer (MV) 10.0 0.0 Compliant
Min Rating (A-1 by 1; A- by 1 if > FDIC Limit) 0.0 0.0 Compliant
COMMERCIAL PAPER
Max % (MV) 40.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Days) 397.0 0.0 Compliant
Min Rating (A-1 by 1 or A- by 1) 0.0 0.0 Compliant
CORPORATE MEDIUM TERM NOTES
Max % (MV) 30.0 7.7 Co mpliant
Max % Issuer (MV) 5.0 0.7 Compliant
Max Maturity (Years) 5.0 5.0 Compliant
Min Rating (A- by 1) 0.0 0.0 Compliant
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STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Rules Name Limit Actual Compliance
Status Notes
FDIC INSURED TIME DEPOSITS (NON-NEGOTIABLE
CD/TD)
Max % (MV; FDIC & Collateralized CD/TD) 20.0 0.0 Compliant Max % Issuer (MV) 10.0 0.0 Compliant
Min Rating (A-1 by 1; A- by 1) 0.0 0.0 Compliant
FEDERAL AGENCIES
Max % (MV) 100.0 16.7 Compliant
Max % Issuer (MV) 30.0 5.6 Compliant
Max Callables (MV) 20.0 11.6 Compliant
Max Maturity (Years) 10.0 9.0 Compliant
GENERAL INVESTMENT GUIDELINES
Max % 5-10 Years Maturities (MV) 30.0 9.8 Compliant
Max Maturity (Years) 10.0 9.0 Compliant
LOCAL AGENCY INVESTMENT FUND (LAIF)
Max Concentration (MV) 75.0 52.5 Compliant
LOCAL GOVERNMENT INVESTMENT POOL (LGIP)
Max % (MV) 20.0 0.0 Compliant
MONEY MARKET MUTUAL FUNDS
Max % (MV) 20.0 0.5 Compliant
Max % Issuer (MV) 20.0 0.5 Compliant
Min Rating (AAA by 2) 0.0 0.0 Compliant
MORTGAGE -BACKED SECURITIES (NON-AGENCY)
Max % (MV; ABS & MBS) 20.0 0.5 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5.0 0.0 Compliant
Min Rating (AA- by 1) 0.0 0.0 C ompliant
MUNICIPAL SECURITIES
Max % (MV) 30.0 0.0 Compliant *Based on legacy Investment Policy and time of purchase Max % Issuer (MV) 5.0 1.1 Compliant
Max Maturity (Years) 10.0 8.8 Compliant
17 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Rules Name Limit Actual Compliance
Status Notes
Min Rating (A- by 1) 0.0 0.0 Compliant
NEGOTIABLE CERTIFICATES OF DEPOSIT (NCD)
Max % (MV) 30.0 2.5 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5.0 Compliant *Based on legacy Investment Policy and time of purchase Min Rating (A-1 by 1 or A- by 1 if > FDIC Limit) 0.0 0.0 Compliant
REPURCHASE AGREEMENTS
Max Maturity (Years) 1.0 0.0 Compliant
SRI PROHIBITED INVESTMENTS
Prohibited Investment - Fossil Fuels 0.0 0.0 Compliant
Prohibited Investments - Firearms 0.0 0.0 Compliant
Prohibited Investments - Tobacco 0.0 0.0 Compliant
SUPRANATIONAL OBLIGATIONS
Max % (MV) 30.0 7.4 Compliant
Max % Issuer (MV) 10.0 4.2 Compliant
Max Maturity (Years) 5.0 4.0 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant
U.S. TREASURIES
Max % (MV) 100.0 11.4 Compliant
Max Maturity (Years) 10.0 4.7 Compliant
18 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
United States US Treasury 11.39%
Fidelity Cash 8.79%
LAIF LAIF 7.86%
Federal Home Loan Banks Agency 5.62%
Federal Agricultural Mortgage Corp Agency 5.01%
US Bank Cash 4.63%
International Bank for Recon and Dev Supras 4.24%
Farm Credit System Agency 2.93%
Federal Home Loan Mortgage Corp Agency 2.62%
Inter-American Development Bank Supras 2.46%
State of Hawaii Muni Bonds 1.10%
San Francisco City & County of Muni Bonds 1.02%
City of Oakland, California Muni Bonds 1.00%
State of Oregon Muni Bonds 0.93%
San Francisco California City & Coun Muni Bonds 0.87%
State of Georgia Muni Bonds 0.86%
Commonwealth of Massachusetts Muni Bonds 0.84%
Santa Monica Community College Distr Muni Bonds 0.76%
City of Los Angeles, California Muni Bonds 0.76%
Stanford University Corporate 0.72%
Federal Home Loan Mortgage Corp Agency CMBS 0.72%
Los Angeles Community College Distri Muni Bonds 0.70%
Alphabet Inc. Corporate 0.69%
International Finance Corporation Supras 0.67%
San Bernardino Community College Dis Muni Bonds 0.64%
Solano California Community College Muni Bonds 0.62%
Appl
e Inc. Corporate 0.62%
San Diego County Water Authority Muni Bonds 0.56%
Contra Costa Community College Distr Muni Bonds 0.56%
San Mateo Union High School District Muni Bonds 0.56%
19 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
Andrew W. Mellon Foundation, The Corporate 0.56%
Marin California Community College D Muni Bonds 0.55%
First American Govt Oblig Fund Money Mkt Fd 0.54%
Federal National Mortgage Assoc Agency 0.54%
Palo Alto Unified School District Muni Bonds 0.50%
San Diego Unified School District Muni Bonds 0.47%
County of Alameda, California Muni Bonds 0.46%
The University of Chicago Corporate 0.46%
City of Glendora, California Muni Bonds 0.46%
Ohlone Community College District Muni Bonds 0.44%
State of Mississippi Muni Bonds 0.43%
State of Wisconsin Muni Bonds 0.42%
City of Manhattan Beach, California Muni Bonds 0.42%
Amazon.com, Inc. Corporate 0.41%
San Diego Community College District Muni Bonds 0.40%
City of Corona Muni Bonds 0.40%
State of New York Muni Bonds 0.38%
U.S. Bancorp Corporate 0.38%
Morgan Stanley Corporate 0.38%
Deere & Company Corporate 0.38%
Qualcomm Incorporated Corporate 0.38%
Northwestern Mutual Global Funding Corporate 0.37%
JPMorgan Chase & Co. Corporate 0.37%
Meta Platforms, Inc. Corporate 0.37%
Guardian Life Global Funding Corporate 0.37%
New York Life Insurance Company Corporate 0.37%
S
imon Property Group, Inc. Corporate 0.37%
Wells Fargo & Company Cash 0.36%
Santa Clara VY California Water Dist Muni Bonds 0.36%
City of Chula Vista, California Muni Bonds 0.35%
20 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
San Ramon Valley Unified School Dist Muni Bonds 0.34%
Santa Monica-Malibu Unified School D Muni Bonds 0.33%
Texas Public Finance Authority Muni Bonds 0.33%
City of Huntington Beach, California Muni Bonds 0.32%
Redwood City School District Muni Bonds 0.31%
State of Rhode Island Muni Bonds 0.30%
City of Fairfield, California Muni Bonds 0.30%
Riverside Community College District Muni Bonds 0.30%
Cabrillo California Cmmnty College Muni Bonds 0.29%
San Jose Unified School District Muni Bonds 0.29%
Los Angeles Department of Water and Muni Bonds 0.29%
Microsoft Corporation Corporate 0.28%
T-Mobile Us Trust 2026-1 ABS 0.28%
City of Santa Ana, California Muni Bonds 0.27%
Metropolitan Transport Commission Muni Bonds 0.26%
Deere & Company ABS 0.26%
Antelope Valley Cmnty College Dist Muni Bonds 0.24%
Yosemite Community California Colleg Muni Bonds 0.22%
Glendale California Unified School D Muni Bonds 0.22%
State of Colorado Muni Bonds 0.21%
Fullerton School District, Californi Muni Bonds 0.20%
South Pasadena Unified School Distri Muni Bonds 0.20%
The Regents of the University of Cal Muni Bonds 0. 20%
Palomar California Community College Muni Bonds 0.20%
Redondo Beach California Unified Sch Muni Bonds 0.20%
City of Covina Muni Bonds 0.20%
Tustin Unified School District Schoo Muni Bonds 0.19%
San Dieguito Union High School Distr Muni Bonds 0.19%
Calleguas California Municipal Water Muni Bonds 0.19%
Minnesota Housing Finance Agency Muni Bonds 0.19%
21 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
Santa Clarita California Community C Muni Bonds 0.19%
State of Texas Muni Bonds 0.18%
Sequoia Union High School District Muni Bonds 0.18%
Salesforce, Inc. Corporate 0.17%
Mountain View Whisman School Distric Muni Bonds 0.17%
Desert Community College District Muni Bonds 0.16%
Maryland Dep of Housing & Com Muni Bonds 0.16%
San Jose Evergreen California Commun Muni Bonds 0.16%
Sierra Joint Community College Distr Muni Bonds 0.15%
State of Alabama Muni Bonds 0.15%
State of Tennessee Muni Bonds 0.15%
Burbank California City Unified SD Muni Bonds 0.15%
Menlo Park California City School Di Muni Bonds 0.15%
Santa Cruz Metropolitan Transit Dist Muni Bonds 0.15%
The New York State Urban Development Muni Bonds 0.15%
Mount San Antonio California Communi Muni Bonds 0.14%
Los Angeles County California Public Muni Bonds 0.14%
City of La Habra, California Muni Bonds 0.14%
Beverly Hills Unified School Dist Muni Bonds 0.14%
Placentia-Yorba Linda California Uni Muni Bonds 0.13%
Desert Sands Unified School District Muni Bonds 0.13%
City of El Segundo Muni Bonds 0. 13%
Beverly Hills Cali Public Finance Muni Bonds 0.12%
San Francisco Bay Area Rapid Transit Muni Bonds 0.12%
State of California Muni Bonds 0.11%
Huntington Beach California Public F Muni Bonds 0.11%
Santa Cruz County Capital Financing Muni Bonds 0.11%
California Infrastructure & Economic Muni Bonds 0.10%
Auburn California Muni Bonds 0.10%
Rancho Santiago Community College Di Muni Bonds 0.09%
22 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
City of Buena Park, California Muni Bonds 0.09%
Rancho Water District Financing Auth Muni Bonds 0.09%
City of Ontario, California Muni Bonds 0.09%
Milpitas Unified School District Muni Bonds 0.09%
San Mateo-Foster City School Distric Muni Bonds 0.09%
Temecula Valley Unified School Distr Muni Bonds 0.09%
City of Pacifica, California Muni Bonds 0.09%
Pasadena Public Financing Authority, Muni Bonds 0.08%
San Juan Unified School District Muni Bonds 0.08%
Cash Cash 0.08%
Santa Clara County Muni Bonds 0.08%
State of Ohio Muni Bonds 0.08%
Liberty Union High School District Muni Bonds 0.07%
Oxnard Union High School District Muni Bonds 0.07%
Chabot-Las Positas Community College Muni Bonds 0.07%
City of Monterey Park, California Muni Bonds 0.07%
Tracy Joint Unified School District Muni Bonds 0.07%
Campbell California Union HS Muni Bonds 0.07%
Santa Barbara Unified School Distric Muni Bonds 0.07%
Santa Maria Joint Union High School Muni Bonds 0.07%
Roseville California Finance Authori Muni Bonds 0.06%
Torrance California Joint Powers Fin Muni Bonds 0.06%
San Jose, California Muni Bonds 0. 05%
San Jose Financing Authority Muni Bonds 0.05%
City of San Ramon, California Muni Bonds 0.05%
Carlsbad Unified School District Muni Bonds 0.05%
Chaffey Community College District Muni Bonds 0.04%
Sunnyvale School District, Californi Muni Bonds 0.04%
Ledyard National Bank Neg CD 0.04%
Global Federal Credit Union Neg CD 0.04%
23 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
Alliant Credit Union Neg CD 0.04%
American Express Company Neg CD 0.04%
The Peoples Bank Co. Neg CD 0.04%
Signature Federal Credit Union Neg CD 0.04%
The Pitney Bowes Bank Inc. Neg CD 0.04%
SPCO Credit Union Neg CD 0.04%
Workers Federal Credit Union Neg CD 0.04%
Austin Telco Federal Credit Union Neg CD 0.04%
County Schools Federal Credit Union Neg CD 0.04%
Baxter Credit Union Neg CD 0.04%
Enterprise Bank Neg CD 0.04%
UBS Bank USA, National Association Neg CD 0.04%
General Electric Credit Union Neg CD 0.04%
First Technology Federal Credit Unio Neg CD 0.04%
First Southwest Bank Neg CD 0.04%
Truist Bank Neg CD 0.04%
The Bippus State Bank Neg CD 0.04%
CNB Bank, Inc. Neg CD 0.04%
Capital Funding Bancorp, Inc. Neg CD 0.04%
Diversified Members Credit Union Neg CD 0.04%
Transportation Alliance Bank, Inc. Neg CD 0.04%
First Guaranty Bancshares, Inc. Neg CD 0.04%
Morgan Stanley Neg CD 0.04%
Wings Financial Credit Union Neg CD 0.04%
Heal
thcare Systems Federal Credit Un Neg CD 0.04%
Amerant Bank, National Association Neg CD 0.04%
Ally Bank Neg CD 0.04%
Southern Bank Neg CD 0.04%
Mutual Savings Association Neg CD 0.04%
Coöperatieve Rabobank U.A. NY Neg CD 0.04%
24 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
Public Service Credit Union Neg CD 0.04%
Merrick Bank Neg CD 0.04%
Ponce Bank, National Association Neg CD 0.04%
County of Riverside, California Muni Bonds 0.04%
Eaglemark Savings Bank Neg CD 0.04%
Toyota Financial Savings Bank Neg CD 0.04%
GreenState Credit Union Neg CD 0.04%
Institution for Savings in Newburypo Neg CD 0.04%
Decorah Bank and Trust Company Neg CD 0.04%
Synchrony Bank Neg CD 0.04%
BankFirst Neg CD 0.04%
Pentagon Federal Credit Union Neg CD 0.04%
Monet Bank Neg CD 0.04%
Beal Financial Corporation Neg CD 0.04%
Delta National Bank and Trust Comp Neg CD 0.04%
Capital One Financial Corporation Neg CD 0.04%
Kennett Trust Bank Neg CD 0.04%
Connexus Credit Union Neg CD 0.04%
First Oklahoma Bank Neg CD 0.04%
First National Bank of America Neg CD 0.04%
First Community Credit Union of Belo Neg CD 0.04%
Cinfed Federal Credit Union Neg CD 0.04%
Encore Bank Neg CD 0.04%
Live Oak Banking Company Neg CD 0.04%
Silicon Valley Clean Water Muni Bonds 0. 04%
Gesa Credit Union Neg CD 0.04%
Jonesboro State Bank Neg CD 0.04%
Sunwest Bank Neg CD 0.04%
Bank of Montreal Neg CD 0.03%
Minnwest Bank Neg CD 0.03%
25 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Issuer Investment Type % Portfolio
Legacy Bank & Trust Company Neg CD 0.03%
Farmers and Merchants State Bank Neg CD 0.03%
The Farmers & Merchants Bank Neg CD 0.03%
Central Bank Neg CD 0.03%
Country Club Bank Neg CD 0.03%
Berkeley California Unified SD Muni Bonds 0.03%
Pony Express Bank Neg CD 0.03%
Peoples Bank Neg CD 0.03%
USF Federal Credit Union Neg CD 0.03%
Fremont Union High School District Muni Bonds 0.03%
San Diego Association of Governments Muni Bonds 0.03%
City of Downey Muni Bonds 0.02%
Sonoma County California Junior Coll Muni Bonds 0.02%
Southern California Public Power Aut Muni Bonds 0.02%
Orchard California School District Muni Bonds 0.01%
TOTAL 100.00%
26 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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PORTFOLIO CHARACTERISTICS
Palo Alto Managed Acct | Account #11463 | As of March 31, 2026 Benchmark* 3/31/2026
Portfolio
12/31/2025
Portfolio
Average Maturity (yrs) 2.65 2.99 2.97
Average Modified Duration 2.47 2.63 2.56
Average Purchase Yield 3.04% 2.81%
Average Market Yield 3.84% 4.06% 3.87%
Average Quality** AA+ AA+ AA+
Total Market Value 526,367,008 523,954,812
*Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index **The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 27 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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SECTOR DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of March 31, 2026 Sector as a Percentage of Market Value
Sector 03/31/2026 12/31/2025
Muni Bonds 39.41% 40.63%
Agency 21.36% 24.07%
US Treasury 14.55% 11.15%
Corporate 9.78% 5.95%
Supras 9.42% 13.24%
Neg CD 3.18% 3.77%
Agency CMBS 0.92% --
Money Mkt Fd 0.69% 1.14%
ABS 0.69% --
CD -- 0.05%
28 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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QUALITY DISTRIBUTION
Rating 03/31/2026 12/31/2025
AAA 19.12% 24.06%
AA 63.49% 61.50%
A 3.77% 0.72%
BBB 0.19% 0.19%
A-1+ 1.89% 1.90%
NA 11.48% 11.58%
B 0.05% 0.05%
Rating 03/31/2026 12/31/2025
Aaa 20.84% 24.33%
Aa 61.99% 61.50%
A 3.82% 0.24%
P-1 1.89% 1.90%
NA 11.45% 12.04%
Rating 03/31/2026 12/31/2025
AAA 10.04% 9.39%
AA 45.55% 43.52%
A 1.55% 0.14%
BBB 0.05% 0.09%
F1+ 1.89% 1.90%
NA 40.91% 44.95%
Palo Alto Managed Acct | Account #11463 | As of March 31, 2026 S&P Rating Moody’s Rating Fitch Rating
29 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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0-.25 .25-.5 .5-1 1-2 2-3 3-4 4-5 5-7 7+
Portfolio 8.5% 8.7% 8.6% 16.8% 14.3% 13.6% 20.8% 7.7% 0.9% ICE BofA 1-5 Year Unsubordinated US Treasury &
Agency Index 0.0% 0.0% 2.5% 35.8% 29.1% 20.5% 12.1% 0.0% 0.0%
DURATION DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of March 31, 2026 Portfolio Compared to the Benchmark
30 ATTACHMENT B
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Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
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TOTAL RATE OF RETURN* 3 Months 12 Months 2 Years 3 Years 5 Years 10 Years Since Inception Palo Alto Managed Acct 0.46% 2.03%
Benchmark 0.20% 1.55%
*Periods over 1 year are annualized.
Total rate of return: A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending market value; it includes interest earnings, realized and unrealized gains and losses in the portfolio.
Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index
INVESTMENT PERFORMANCE
Palo Alto Managed Acct | Account #11463 | As of March 31, 2026 Total Rate of Return : Inception | 09/01/2025
31 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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PORTFOLIO CHARACTERISTICS
City of Palo Alto Reporting | Account #11464 | As of March 31, 2026 3/31/2026
Portfolio
12/31/2025
Portfolio
Average Maturity (yrs) 0.00 0.00
Average Modified Duration 0.00 0.00
Average Purchase Yield 1.95% 2.50%
Average Market Yield 1.95% 2.50%
Average Quality** AAA AAA
Total Market Value 145,024,434 121,364,206
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 32 ATTACHMENT B
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Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
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SECTOR DISTRIBUTION
City of Palo Alto Reporting | Account #11464 | As of March 31, 2026 Sector as a Percentage of Market Value
Sector 03/31/2026 12/31/2025
Cash 63.67% 65.29%
LAIF 36.33% 34.71%
33 ATTACHMENT B
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Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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CONSOLIDATED INFORMATION
34 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
Pg.
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PORTFOLIO CHARACTERISTICS
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 3/31/2026
Portfolio
12/31/2025
Portfolio
Average Maturity (yrs) 2.34 2.41
Average Modified Duration 2.06 2.08
Average Purchase Yield 2.81% 2.75%
Average Market Yield 3.60% 3.61%
Average Quality** AA+ AA+
Total Market Value 671,391,442 645,319,018
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 35 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
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SECTOR DISTRIBUTION
City of Palo Alto Consolidated | Account #11465 | As of March 31, 2026 Sector as a Percentage of Market Value
Sector 03/31/2026 12/31/2025
Muni Bonds 30.87% 32.97%
Agency 16.73% 19.53%
Cash 13.79% 12.32%
US Treasury 11.40% 9.04%
LAIF 7.87% 6.55%
Corporate 7.66% 4.83%
Supras 7.38% 10.74%
Neg CD 2.49% 3.06%
Agency CMBS 0.72% --
Money Mkt Fd 0.54% 0.93%
ABS 0.54% --
CD -- 0.04%
36 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
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IMPORTANT DISCLOSURES
2026 Chandler Asset Management, Inc, An Independent Registered Investment Adviser.
Information contained herein is confidential. Prices are provided by ICE Data Services Inc (“IDS”), an independent pricing source. In the event IDS does not provide a price or if the price provided is not reflective of fair market value, Chandler will obtain pricing from an alternative approved third party pricing source in accordance with our written valuation policy and procedures. Our valuation procedures are also disclosed in Item 5 of our Form ADV Part 2A.
Performance results are presented gross-of-advisory fees and represent the client’s Total Return. The deduction of advisory fees lowers performance results. These results include the reinvestment of dividends and other earnings. Past performance may not be indicative of future results. Therefore, clients should not assume that future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Economic factors, market conditions or changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio.
Index returns assume reinvestment of all distributions. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. It is not possible to invest directly in an index.
Source ICE Dat a Indices, LLC (“ICE”), used with permission. ICE permits use of the ICE indices and related data on an “as is” basis; ICE, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE data, its affiliates or their respective third party providers guarantee the quality, adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an “as is” basis and licensee’s use it at licensee’s own risk. ICE data, its affiliates and their respective third party do not sponsor, endorse, or recommend chandler asset management, or any of its products or services.
This report is provided for informational purposes only and should not be construed as a specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment.
Fixed income in vestments are subject to interest, credit and market risk. Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions, especially during periods of rising interest rates.
Ratings information have been provided by Moody’s, S&P and Fitch through data feeds we believe to be reliable as of the date of this statement, however we cannot guarantee its accuracy.
Security level ratings for U.S. Agency issued mortgage-backed securities (“MBS”) reflect the issuer rating because the securities themselves are not rated. The issuing U.S. Agency guarantees the full and timely payment of both principal and interest.
LGIP Yields: Reported yields for local government investment pools may be presented as either the 30-day yield or the monthly distribution yield, as applicable. For certain funds, the 30-day yield is calculated using reported daily yield data. Yield calculations are subject to change and may not be directly comparable across funds.
LAIF Yields: Addi tional Disclosure for CA Clients - As a result of a reporting lag from the Local Agency Investment Fund (LAIF), reported LAIF yields represent the most recently available Daily Effective Yield and may reflect data from approximately 7–10 days prior to month-end. 37 ATTACHMENT B
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Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
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BENCHMARK DISCLOSURES
Benchmark Disclosure
ICE BofA 1-5 Year UnsubordinatedUS
Treasury & Agency Index
The ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index tracks the performance of US dollar denominated US Treasury and nonsubordinated US agency debt issued in the US domestic market. Qualifying securities must have an investment grade rating (based on an average of Moody’s, S&P and Fitch). Qualifying securities must have at least one year remaining term to final maturity and less than five years remaining term to final maturity, at least 18 months to maturity at time of issuance, a fixed coupon schedule, and a minimum amount outstanding of $1 billion for sovereigns and $250 million for agencies. 38 ATTACHMENT B
Item A
Attachment B - Investment Quarterly
Report (as of March 31, 2026)
Item A: Staff Report
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Item No. 12. Page 1 of 3
City Council
Supplemental Report
From: Jonathan Lait, Planning and Development Services Director Meeting Date: May 18, 2026
Item Number: 12
Report #:2605-6369
TITLE
PUBLIC HEARING / QUASI-JUDICIAL. 4103 Old Trace Road [25PLN-00298]: Request for Approval of a Tentative Map to Allow for the Subdivision of a Vacant 1.02-Acre Lot to Create Nine Residential Lots and One Private Street to Facilitate Construction of Nine New Single-Family Residences and Seven Junior Accessory Dwelling Units (25PLN-00296). CEQA Status: Exempt Pursuant to Assembly Bill 130 (Public Resources Code Section 21080.66). Zone District: RE (Residential Estate)
RECOMMENDATION
Staff recommends that Council adopt an updated Record of Land Use Action (RLUA) incorporating revised conditions of approval from the Electrical Utilities Division.
BACKGROUND
This report provides revised conditions of approval from the Electrical Engineering Division under the Utilities Department for the 4103 Old Trace Tentative Map application. The revised conditions are as follows:
1. TRENCHING. The proposed trench shall meet the City of Palo Alto Utilities (CPAU) clearance requirements.
2. ELECTRICAL BOX AND CONDUITS. The electrical boxes and conduit requirements shall be finalized during the building permit application. No load calculations or requested service sizes have been provided as a part of this application but shall be finalized at the time of streamlined housing development application.
3. ELECTRICAL LOAD CALCULATIONS. CPAU scope may change based on estimated load calculations at the time of building permit application.
4. TRANSFORMER CLEARANCE. The proposed transformers shall maintain a minimum clearance of 3 feet on all sides except the front which shall have a clearance of 8 feet. A minimum distance of 10 feet shall be maintained from any proposed windows and doors.
5. EASEMENTS. All electrical easements will be required to be granted to CPAU for CPAU electric utility boxes and conduits per CPAU regulations and standards.
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6. STREETLIGHT MAINTENANCE. All privately owned streetlights shall be maintained by the applicant.
Additionally, this report provides brief supplementary analysis of two primary issues raised in public comment for this item: 1) that the City Council should deny the application because the project is inconsistent with the City’s objective standards for the RE zone; and 2) that the City should deny the application because the project will create substantial public safety issues.
1.For purposes of state housing laws, the proposed tentative map at 4103 Old Trace Road is consistent with the City’s objective standards.
The Housing Accountability Act (Gov. Code 65589.5) strictly limits the City’s discretion for housing development projects that comply with applicable, objective local standards. When determining whether a project complies with such standards, “the receipt of a density bonus, incentive, concession, waiver, or reduction of development standards pursuant to [State Density Bonus Law] shall not constitute a valid basis on which to find a proposed housing development project is inconsistent.” (Gov. Code 65589.5, subd (j)(3).)
As explained in the staff report, the proposed tentative map must be considered consistent with the City’s standards for the RE zone because the Comprehensive Plan Land Use Element allows a density ranging up to seven units per acre in this zone. Even though the zoning code provides a density of one unit per acre, State Density Bonus Law requires that the City apply the highest density allowed in the City’s planning documents. (Gov. Code 65915, subd. (o)(6).) In addition, because the project qualifies for a density bonus, the City must also provide unlimited waivers from physical development standards, including street width, lot size, and setback/special setback.
2.The Project will not have a specific, adverse impact on public health and safety that cannot be mitigated.
The City may only deny a waiver or deny/reduce the density of the project if it finds that the wavier or project approval will have a specific, adverse impact on public health and safety that cannot be mitigated. (Gov. Code 65915, subd. (e)(1) and 65589.5, subd. (j)(1).) (footnote: The City may also deny a waiver on the following bases, which are not relevant to 4103 Old Trace Road project: (1) the waiver would be contrary to state or federal law; or (2) the waiver would have a specific, adverse impact on real property listed in the California Register of Historic Resources.) “Specific, adverse impact” means “a significant, quantifiable, direct, and unavoidable impact on public health and safety, based on objective, identified written public health or safety standards.” (Gov. Code 65589.5, subd. (j)(1).)
The public health and safety concerns raised in public comment before the ARB and PTC Item 12
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do not rise to the level of “specific, adverse impacts” as defined in state law. Safety concerns generally relate to emergency vehicle access to Old Trace Road and conflicts between cars and bicycles/pedestrians. As explained in the staff report, the concern regarding emergency vehicle access is an existing condition that will be improved by the project. With respect to bicycle and pedestrian safety, the project was evaluated against objective traffic management standards by the Office of Transportation and was found not to warrant any intervention. The applicant is voluntarily adding a flashing crosswalk to improve conditions.
ATTACHMENTS
Attachment A: Draft Record of Land Use Action
APPROVED BY:
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DRAFT ACTION NO. 2026-__
RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 4103 OLD TRACE ROAD: TENTATIVE MAP, 25PLN-00298
At its meeting on ____________, the City Council of the City of Palo Alto (“City Council”) _____________the Tentative Map to subdivide a vacant lot into nine residential lots, making the following findings, determinations and declarations:
SECTION 1. Background.
A. On November 7, 2025, Steel Bridge Homes Palo Alto submitted a subdivision map application for a Tentative Map to subdivide a vacant lot into nine residential lots at 4103 Old Trace Road (“The Project”).
The project site is a vacant 1.02-acre lot situated at the intersection of Arastradero Road and Old Trace Road (APN 175-20-078). Adjacent uses include a mix of one- and two-story single- family residences to the east, west and south and a research facility to the north.
B. Following staff review, the Planning and Transportation Commission reviewed the project and recommended unanimous approval on April 29, 2026, subject to conditions of approval.
C. On _____________2026, the City Council held a public hearing in accordance with the City Council’s policies and procedures and __________the project subject to conditions of approval.
SECTION 2. Environmental Review. The City, as the lead agency for the Project, has determined the project is exempt from California Environmental Quality Act (CEQA) in accordance with AB 130 [Public Resources Code section 21080.66]. Documentation to support the streamlined review is available as part of the public record on file with the Planning and Development Services Division.
SECTION 3. Tentative Map Findings. A legislative body of a city shall deny approval of a Subdivision Map, if it makes any of the following findings (California Government Code Section 66474). The City Council cannot make these findings for the following reasons:
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1.That the proposed map is not consistent with applicable general and specific plans as specified in Section 65451:
There is no adopted specific plan for this project site. The site is consistent with the Comprehensive Plan as described below.
2.That the design or improvement of the proposed subdivision is not consistent with applicable general and specific plans:
There is no adopted specific plan for this project site. The proposed Tentative Map and related improvements are consistent with the Comprehensive Plan in that it facilitates housing development on a site designated for single-family use within the urban services area, consistent with Policy L-1.3 of the Land Use Element and Policy 3.2 of the Housing Element. The proposed density is consistent with the range of densities provided in the Land Use Element, as modified by State Density Bonus law. The Project includes nine residential lots, each with a single-family residence; seven of the nine residences include Junior Accessory Dwelling Units (JADUs). One of the single-family residences is provided at a rate affordable to moderate- income households earning no more than 100% of the Area Median Income (AMI). The Project proposes in-fill development and contributes to the housing inventory.
3. That the site is not physically suitable for the type of development:
The Project site is suitable for single-family residential development in that the Comprehensive Plan land use designation of “Single Family Residential allows for detached single-family residential neighborhoods with net densities ranging from 1-7 units per acre and can increase up to 14 units per acre on parcel that include a second unit or duplex. The proposed number of single-family units created on the resulting parcels complies with the applicable densities set forth in the land use element and zoning code. In addition, the Project is proposed pursuant to the State Density Bonus Law and Housing Accountability Act (Government Code section 65589.5) and is consistent with the standards set forth therein.
4.That the site is not physically suitable for the proposed density of development:
The proposed project consists of one single-family residence on each of the nine resulting lots, which is permitted use within the Residential Estate (RE) zoning district. In addition, Junior Accessory Dwelling Units (JADUs) are proposed on seven of the nine lots. Pursuant to State ADU law, the JADUs are considered accessory to the primary dwelling units and are not counted toward the maximum allowable residential density. The base density for the site is calculated at 7 dwelling units on a 1.02-acre lot, resulting in a fractional density of 7.14, rounded up to 8 dwelling units per acre pursuant to Palo Alto Municipal Code (PAMC) Section 18.15.020(u). The applicant proposes a total of 9 dwelling units, including one affordable unit, and is therefore entitled to a 7% density bonus pursuant to State Density Bonus Law. Accordingly, the proposed Item 12
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density of 9 dwelling units per acre is consistent with the density permitted under State Density Bonus Law.
Additionally, pursuant to State Density Bonus Law, the City is required to grant one concession and any number of waivers or reductions of development standards necessary to avoid physically precluding the project from being constructed at the permitted density. The applicant has requested waivers from the minimum lot size, minimum lot depth, and minimum private street width requirements which are within the allowances of State law. The applicant has also requested a waiver to reduce the special setback along Arastradero Road from 53 feet to 15 feet as measured from the property line to the proposed improvements; the 15 feet would be inclusive of the proposed drainage easements on Lots 6 and 9.
5. That the design of the subdivision or the proposed improvements are likely to cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat:
The project is located within the built environment that does not contain quality habitat for fish or other wildlife on the site or within the vicinity of the site. The nearest creeks are Barron Creek approximately 230 feet to the northwest of the project site and Dry Creek approximately 400 feet to the northeast of the project site. The adopted Palo Alto 2030 Comprehensive Plan includes Map N-1, which identified sensitive animal and plant species within the Palo Alto quadrangle, a large geographic area that includes the urban portions along the bay and within the foothills, based on information in the California natural Diversity Database (CNDDB). Based on this map, and the urban nature of the site, the subject property does not contain any habitat for endangered, rare, or threatened species.
6. That the design of the subdivision or type of improvements is likely to cause serious public health problems:
The subdivision of this parcel and associated improvements would not have the potential to result in serious health problems. The proposed single-family use would not include use or storage of hazardous materials, and the use is located within the urban environment adjacent to other urban residential or commercial uses. The site is also not located within a plume or hazardous waste site pursuant to Government Code Section 65962.5. In addition, the proposed private street width is sufficient to accommodate turning movements of passenger vehicles, emergency vehicles, and refuse trucks. As conditioned, the project will restrict right turn movements from Arastradero Road, reducing the potential for vehicle conflicts.
7. That the design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. In this connection, the governing body may approve a map if it finds that alternate easements, for access or for use, will be provided, and that these will be substantially equivalent to ones previously acquired by the public. This subsection Item 12
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shall apply only to easements of record or to easements established by judgment of a court of competent jurisdiction and no authority is hereby granted to a legislative body to determine that the public at large has acquired easements for access through or use of property within the proposed subdivision.
There are no public access easements over the property currently. Therefore, the design of the subdivision will not conflict with any public easements for access through, or use of, the property. New public utility easements will be provided to existing and proposed electrical utilities as part of this subdivision map as required in accordance with City of Palo Alto Utilities standards. A new 20-foot private street will be provided to provide access to the proposed residential lots, including an additional 10 feet width along Lots 6, 7 and 8 to provide a 4-foot wide sidewalk, consistent with project plans.
SECTION 4. Tentative Map Approval Granted. Tentative Map Approval is filed and processed in accordance to PAMC Section 21.12.090 and granted by the City Council under PAMC Sections
21.12 and 21.20 and the California Government Code Section 66452, subject to the conditions of approval in Section 6 of this Record of Land Use Action.
SECTION 5. Final Map. The Final Map submitted for review and approval by the City Council shall be in substantial conformance with the Tentative Map prepared by Steel Bridge Homes titled “THE OAKS SUBDIVISION TENTATIVE SUBDIVISION MAP” consisting of eleven pages, dated and submitted May 5, 2026, except as modified to incorporate the conditions of approval in Section 6. A copy of the Tentative Map is on file in the Department of Planning and Development Services, Current Planning Division. Prior to the expiration of the Tentative Map approval, the subdivider shall cause the subdivision or any part thereof to be surveyed, and a Final Map, as specified in Chapter 21.08, to be prepared in conformance with the Tentative Map as conditionally approved, and in compliance with the provisions of the Subdivision Map Act and PAMC Title 21 and submitted to the City Engineer (PAMC Section 21.16.010[a]).
SECTION 6. Conditions of Approval.
Planning
1. PROJECT PLANS. The Final Map submitted for review and approval by the City Council shall be in substantial conformance with the Tentative Map titled “THE OAKS SUBDIVISION TENTATIVE SUBDIVISION MAP”, prepared by Steel Bridge Homes and submitted May 5, 2026, except as modified to incorporate the conditions of this approval.
2. FINAL MAP COVER PAGE. At such time as the Final Map is filed, the cover page shall include the name and title of the Director of Planning and Development Services.
3. DEVELOPMENT IMPACT FEES. The Property Owner or their designee shall pay all applicable development impact fees associated with the proposed development and Item 12
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subdivision prior to issuance of the building permit(s) or recordation of the Final Map. Impact fees may be paid prior to occupancy in accordance with the requirements under PAMC
16.64.030 and as permitted by Sb 937.
4. BELOW MARKET RATE (BMR) HOUSING. Prior to issuance of a building permit or recordation of the Final Map, whichever occurs first, the applicant shall execute and record a BMR regulatory agreement in a form satisfactory to the City Attorney. The regulatory agreement shall restrict the sale of at least one (1) lot and improvements at prices affordable to moderate income households earning no more than 100% of the Area Median Income (AMI). The project shall conform to the approved regulatory agreement, which shall be recorded prior to issuance of building permit or Final Map, whichever occurs first. All BMR units constructed under this condition shall be in conformance with the City’s BMR Program rules and regulations, Failure to comply with the timing of this condition and any adopted BMR Program rules and regulations shall not waive its later enforcement.
5. IMPACT FEE 90-DAY PROTEST PERIOD. California Government Code Section 66020 provides that a project applicant who desires to protest the fees, dedications, reservations, or other exactions imposed on a development project must initiate the protest at the time the development project is approved or conditionally approved or within ninety (90) days after the date that fees, dedications, reservations or exactions are imposed on the Project. Additionally, procedural requirements for protesting these development fees, dedications, reservations and exactions are set forth in Government Code Section 66020. IF YOU FAIL TO INITIATE A PROTEST WITHIN THE 90-DAY PERIOD
OR FOLLOW THE PROTEST PROCEDURES DESCRIBED IN GOVERNMENT CODE SECTION 66020, YOU WILL BE BARRED FROM CHALLENGING THE VALIDITY OR REASONABLENESS OF THE FEES, DEDICATIONS, RESERVATIONS, AND EXACTIONS. If these requirements constitute fees, taxes, assessments, dedications, reservations, or other exactions as specified in Government Code Sections 66020(a) or 66021, this is to provide notification that, as of the date of this notice, the 90-day period has begun in which you may protest these requirements. This matter is subject to the California Code of Civil Procedures (CCP) Section 1094.5; the time by which judicial review must be sought is governed by CCP Section 1094.6.
6. STREET NAME. The applicant shall comply with City of Palo Alto Resolution 5739, which requires a recommendation from the Palo Alto Historical Association (PAHA) and approval by City Council for new street names prior to recordation of a Final Map.
7. HOUSING DEVELOPMENT APPROVAL. Prior to application for the Final Map, applicant shall obtain approval of a housing development project for at least sixteen (16) units on the site.
8. MULTIMODAL CIRCULATION IMPROVEMENTS. The applicant shall incorporate, either in the Final Map or the housing development project approval, as appropriate, at least the Item 12
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following multimodal transportation improvements as currently reflected in the Tentative Map:
a. Restricted right-turn movements from Arastradero Road into the private street.
This restriction shall be implemented through a reduced curb radius design to physically restrict right-turn movements, in conjunction with proper signage and striping at the west corner of the Arastradero entrance. b. New bicycle lane markings along the existing bikeway on Arastradero Road, including green pavement markings at the Arastradero Road site entrance. c. New four-foot sidewalks along property frontages on Arastradero Road and Old Trace Road, as well as the north side of the proposed private street. d. New Rectangular Rapid Flashing Beacon (RRFB) at the existing marked crosswalk on Arastradero Road.
9. CULTURAL SENSITIVITY TRAINING. Prior to any on-site grading work, the project applicant shall be required to submit evidence that a Cultural Awareness Training program has been provided to construction personnel. The training shall be facilitated by a qualified archaeologist in collaboration with a Native American representative registered with the Native American Heritage Commission for the City of Palo Alto and that is traditionally and culturally affiliated with the geographic area as described in Public Resources Code Section 21080.3.
10. SUB-SURFACE MONITORING. Prior to any tree removal, grading, demolition, and/or building activities, the applicant shall notify the Director of Planning, of grading and construction dates and activities that require a qualified archeologist and Native American monitor to be present on the project site. The City shall then notify the tribe via email correspondence 10 days prior to any grading or construction activities. If the tribe chooses not to send a monitor or does not respond within the 10 days, work shall continue without the monitor.
A qualified archaeologist and a Native American monitor, registered with the Native American Heritage Commission for the City of Palo Alto and that is traditionally and culturally affiliated with the geographic area as described in Public Resources Code Section 21080.3, shall be present during earthmoving activities including, trenching, initial or full grading, scraping or blading, lifting of foundation, boring, drilling, , or major landscaping. The qualified archaeologist and Native American monitor shall have the authority to halt construction activities in the event any cultural materials are encountered during ground-disturbing construction activities. The qualified archeologist and monitor shall keep a daily monitoring log on days that monitoring occurs documenting construction activities that were monitored, location of the monitoring, and any cultural materials identified. These daily monitoring logs shall be made available to the City upon request.
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11. EVALUATION. The project applicant shall notify the Director of Planning, Native American Monitor, and Archeological Monitor, of any finds during grading or other construction activities. Any historic or prehistoric material identified in the project area during excavation activities shall be evaluated for eligibility for listing in the California Register of Historic Resources as determined by the California Office of Historic Preservation. Data recovery methods may include, but are not limited to, backhoe trenching, shovel test, hand augering, and hand-excavation. The techniques used for data recovery shall follow the protocols identified in the approved treatment plan. Data recovery shall include excavation and exposure of features, field documentation, and recordation. All documentation and recordation shall be submitted to the Northwest Information Center, and the Director of Planning. The qualified archaeologist shall be responsible for submitting all required reports and documentation to the appropriate California Historical Resources Information System (CHRIS) Information Center.
12. TREATMENT PLAN. In the event that any significant cultural materials are encountered during construction, construction within a radius of 100 feet of the find would be halted, the Director of Planning shall be notified, and the on-site qualified archaeologist shall examine the find and make appropriate recommendations regarding the significance of the find and the appropriate treatment of the resource.
The qualified archeologist in collaboration with a Native American monitor, registered with the Native American Heritage Commission for the City of Palo Alto and that is traditionally and culturally affiliated with the geographic area as described in Public Resources Code Section 21080.3, shall prepare and implement a treatment plan that reflects permit-level detail pertaining to depths and locations of excavation activities.
The treatment plan shall contain, at a minimum:
Identification of the scope of work and range of subsurface effects (including location map and development plan), including requirements for preliminary field investigations.
Description of the environmental setting (past and present) and the historic/prehistoric background of the parcel (potential range of what might be found).
Monitoring schedules and individuals. While coordination will occur jointly, the consulting tribe monitors and archaeological staff shall be notified separately of all scheduling, updates, and field activities to ensure clear and direct communication. Development of research questions and goals to be addressed by the investigation (what is significant vs. what is redundant information). Detailed field strategy to record, recover, or avoid the finds and address research goals.
Analytical methods.
Report structure and outline of document contents.
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Disposition of the artifacts. All cultural materials and artifacts recovered during project-related activities shall remain the property of consulting tribe and shall be returned to the Tribe for final disposition, care, and curation in accordance with Tribal protocols.
Security approaches or protocols for finds. In the event that a significant quantity of cultural materials is encountered, the consulting tribe shall require the use of a secure, locked Conex box or equivalent storage unit, to be maintained on-site and managed by the consulting tribe monitor. All associated costs for security measures, including procurement and maintenance of the storage unit, shall be the responsibility of the project applicant/developer. Cultural materials shall remain secured on-site under the consulting tribe oversight until the completion of ground- disturbing activities, at which point the consulting tribe shall assume full possession and responsibility for curation.
Appendices: all site records, correspondence, and consultation with Native Americans, etc.
The treatment plan shall utilize data recovery methods to reduce impacts on subsurface resources. The treatment plan must be reviewed and approved by the Director of Planning, or the Director’s designee prior to implementation of the plan.
13. HUMAN REMAINS. If human remains are found, the State of California Health and Safety Code Section 7050.5 states that no further disturbance shall occur until the County Coroner has made a determination of origin and disposition pursuant to Public Resources Code Section 5097.98. In the event of an unanticipated discovery of human remains, the County Coroner must be notified immediately. If the human remains are determined to be of Native American origin, the Coroner will notify the Native American Heritage Commission, which will determine and notify a most likely descendant (MLD).
The MLD has 48 hours from being granted site access to make recommendations for the disposition of the remains. If the MLD does not make recommendations within 48 hours, the landowner shall reinter the remains in an area of the property secure from subsequent disturbance.
14. INDEMNITY. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice.
Public Works Engineering
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15. PUBLIC WORKS APPLICATIONS, FORMS, AND DOCUMENTS: Applicant shall be advised that most forms, applications, and informational documents related to Public Works Engineering conditions can be found at the following link: https://www. paloalto.gov/Departments/Public-Works/Engineering-Services/Forms-and-Permits
16. OVERVIEW AND GUIDELINES FOR THE REVIEW OF SUBDIVISION PROJECTS. Developer shall familiarize themselves with the guidelines described in the November 2007 revision of the document titled “Overview and Guidelines for the Review of Subdivision Projects”. Particularly Section II (items 5 through 12) and Section V (items A through C). https://www.paloalto.gov/files/assets/public/planning-amp-development-services/file- migration/current-planning/forms-and-guidelines/overview-and-guidelines-for-the- review-of-subdivision-projects.pdf
17. SUBDIVISION IMPROVEMENT AGREEMENT. The applicant shall execute a Subdivision Improvement Agreement and provide improvement securities (Bonds) for all proposed public improvements. THE AGREEMENT SHALL BE EXECUTED PRIOR TO MAP
RECORDATION OR ISSUANCE OF ANY PERMITS FOR CONSTRUCTION, ONSITE AND OFFSITE. ADVISORY -- The applicant shall provide a detailed itemized stamped and signed engineer's estimate for all off-site public improvements which will be reviewed to determine the security amount.
18. FINAL MAP. This project is subject to, and contingent upon the approval of a tentative map and recordation of a Final Map. The submittal, approval and recordation of the Map shall be in accordance with the provisions of the California Subdivision Map Act and Palo Alto Municipal Code Title 21 Subdivision requirements. All existing and proposed property lines, easements, dedications shown on the tentative map are subject to City’s technical review and staff approval during the map process prior to issuance of any construction permits.
19. MAP THIRD-PARTY REVIEW. The City contracts with a third-party surveyor that will review and provide approval of the map’s technical correctness as the City Surveyor, as permitted by the Subdivision Map Act. The Public Works Department will forward a Scope & Fee Letter from the third-party surveyor and the applicant will be responsible for payment of the fee’s indicated therein, which is based on the complexity of the map.
20. STREETWORK PERMIT. The applicant shall obtain a Streetwork Permit from the Department of Public Works for all public improvements.
21. UPGRADE OF EXISTING PUBLIC IMPROVEMENTS. As part of the plan review for improvements within the public right-of-way, any existing improvements to be re-used by the project, which are not to current City standards and are not specifically in these project conditions (such as streetlights, utility covers and lids, etc.), shall be upgraded to current City standards as required by the Director of Public Works and the Director of Utilities.
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22. MODIFICATIONS TO EXISTING PUBLIC UTILITIES. The Developer is responsible for any changes or modifications to existing utilities, streets, and public infrastructure within or adjacent to the project site. This includes, but is not limited to, the relocation of utility facilities, conduits, or vaults required due to grade changes in the sidewalk area resulting from the development. The utility design as shown in the Tentative Map is not final. The utility design submitted for the development application (25PLN-00296) shall take precedent.
23. DAMAGE TO EXISTING PUBLIC IMPROVEMENTS. The Developer is responsible for repairing any damage to existing public improvements fronting or adjacent to the project site caused by construction, to the satisfaction of the Public Works Department.
24. EXISTING UTILITY ABANDONMENT AND/OR RELOCATION. The Developer is responsible for researching all existing utility lines to ensure there are no conflicts with the project.
Any existing utility lines (public or private) or their appurtenances that conflict with the project or do not serve it must be capped, abandoned, removed, relocated, or disposed of to the satisfaction of the City.
25. GRADING AND EXCAVATION PERMIT. A Grading Permit is required per PAMC Chapter
16.28. The permit application and all applicable documents (see Section H of application) shall be submitted to Public Works Engineering. Add the following note:
“THIS GRADING PERMIT WILL ONLY AUTHORIZE GENERAL GRADING AND INSTALLATION OF THE STORM DRAIN SYSTEM. OTHER BUILDING AND UTILITY IMPROVEMENTS ARE
SHOWN FOR REFERENCE INFORMATION ONLY AND ARE SUBJECT TO SEPARATE BUILDING PERMIT APPROVAL.” The grading design as shown in the Tentative Map is not final. The grading design submitted for the development application (25PLN-00296) shall take precedent.
26. ROUGH GRADING. Provide a Rough Grading Plan for the work proposed as part of the Grading and Excavation Permit application. The Rough Grading Plans shall including the following: pad elevation, elevator pit elevation, ground monitoring wells, limits of over excavation, stockpile area of material, overall earthwork volumes (cut and fill), temporary shoring for any existing facilities, ramps for access, crane locations (if any), tree protection measures, etc.
27. CIVIL ENGINEER CERTIFICATION. Upon completion of the rough grading work and at the final completion of the work, applicant shall provide an as-graded grading plan prepared by the civil engineer that includes original ground surface elevations, as-graded ground surface elevations, lot drainage patterns and locations and elevations of all surface and subsurface drainage facilities. The civil engineer shall certify that the work was done in accordance with the final approved grading plan.
28. DIRECT CONNECTIONS TO STORM DRAIN SYSTEM. If the project proposes to replace and/or add connections to the City maintained storm drain system, then the applicant Item 12
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may be responsible for improvements to the system. These improvements may include, but not limited to, upsizing the storm drain facility, replacing or adding City standard catch basins, pipes and manholes. THIS MAY INCLUDE REPLACING BRICK AND MORTAR MANHOLES. The extent of required improvements will be at the public works staff discretion and shall be consistent with Storm Drain Master Plan and Public Works Construction Standards. Any work on the city's storm drain systems requires permits and inspection by Public Works inspectors.
29. CCTV OF STORM DRAIN SYSTEM. Post construction the applicant may be required to provide CCTV inspection of the City’s storm drain facilities to verify that any lines were not broken, cracked or damaged during construction. The video shall be high resolution and done by professional who is familiar with the process and meticulous. A CCTV inspection video is required for new storm drain connection (s) to verify proper connections were made into the City’s system and that no construction material was left behind. Videos of storm drain system may also be required where construction occurred less than 5-ft from the city’s storm drain system. Videos shall be provided from structure to structure, such as manhole to manhole. Contractor may want to conduct their own inspection in advance of construction to verify the existing pipe integrity. If existing damages are located, they shall be reported to Public Works inspectors prior to the start of construction. If not reported, the contractor may be responsible to restore the pipe segment as determined by Public Works prior to final.
30. GEOTECHNICAL ENGINEER STATEMENT. The grading plans shall include the following statement signed and sealed by the Geotechnical Engineer of Record: “THIS PLAN HAS
BEEN REVIEWED AND FOUND TO BE IN GENERAL CONFORMANCE WITH THE INTENT AND PURPOSE OF THE GEOTECHNICAL REPORT”.
31. SWPPP. This proposed development will disturb more than one acre of land.
Accordingly, the applicant shall apply for coverage under the State Water Resources Control Board’s (SWRCB) NPDES general permit for storm water discharge associated with construction activity. A Notice of Intent (NOI) shall be filed for this project with the SWRCB in order to obtain coverage under the permit. The General Permit requires the applicant to prepare and implement a Storm Water Pollution Prevention Plan (SWPPP).
The applicant is required to submit two copies of the NOI and the draft SWPPP to the Public Works Department for review and approval prior to issuance of the building permit. The SWPPP should include both permanent, post-development project design features and temporary measures employed during construction.
32. ENCROACHMENT PERMIT. Prior to any work in the public right-of-way, the applicant shall obtain an encroachment permit from the Public Works Department for any work that encroaches onto the City right-of-way.
33. LOGISTICS PLAN. A construction logistics plan shall be provided addressing all impacts to the public including, at a minimum: work hours, noticing of affected businesses, bus Item 12
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stop relocations, construction signage, dust control, noise control, storm water pollution prevention, job trailer, contractors’ parking, truck routes, staging, concrete pours, crane lifts, scaffolding, materials storage, pedestrian safety, and traffic control. All truck routes shall conform to the City of Palo Alto’s Trucks and Truck Route Ordinance, Chapter 10.48, and the route map. NOTE: Some items/tasks on the logistics plan may require an encroachment permit.
34. STORMWATER POLLUTION PREVENTION. All improvement plan sets shall include the “Pollution Prevention – It’s Part of the Plan” sheet.
35. C.3 THIRD-PARTY CERTIFICATION. Applicant shall provide certification from a qualified third-party reviewer that the proposed permanent storm water pollution prevention measures comply with the requirements of Provision C.3 and Palo Alto Municipal Code Chapter 16.11. Submit the following:
a. Provide a stamped and signed C.3 data form (April 2024 version) from SCVURPPP. https://scvurppp.org/2024/09/19/provision-c-3-data-form-2024/ b. Final stamped and signed letter confirming which documents were reviewed and that the project complies with Provision C.3 and PAMC 16.11.
36. C.3 STORMWATER AGREEMENT. The applicant shall enter into a Stormwater Maintenance Agreement with the City to guarantee the ongoing maintenance of the permanent storm water pollution prevention measures. The City will inspect the treatment measures yearly and charge an inspection fee. The agreement shall be executed by the applicant team prior to building permit final.
37. C.3 FINAL THIRD-PARTY CERTIFICATION PRIOR TO OCCUPANCY. Within 45 days of the installation of the required storm water treatment measures and prior to the issuance of an occupancy permit for the building, the third-party reviewer shall submit to the City a certification verifying that all the permanent storm water pollution prevention measures were installed in accordance with the approved plans.
38. PRIOR TO PUBLIC WORKS FINAL/ACCEPTANCE (STORM DRAIN LOGO). The applicant is required to paint “No Dumping/Flows to Barron Creek” in blue on a white background adjacent to all onsite storm drain inlets. The name of the creek to which the proposed development drains can be obtained from Public Works Engineering. Stencils of the logo are available from the Public Works Environmental Compliance Division, which may be contacted at (650) 329-2598. Include the instruction to paint the logos on the construction grading and drainage plan.
39. PRIOR TO PUBLIC WORKS FINAL/ACCEPTANCE (RECORD DRAWINGS). At the conclusion of the project applicant shall provide digital as-built/record drawings of all improvements constructed in the public right-of-way or easements in which the City owns an interest.
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40. PRIOR TO PUBLIC WORKS FINAL/ACCEPTANCE (INDEFINITE ENCROACHMENT PERMIT).
An approved indefinite encroachment permit will be required for any private infrastructure constructed in the public right-of-way, easement or on property in which the City holds an interest, but that was not authorized by a building permit.
Office of Transportation
41. PLAN SET REVISION REQUIRED PRIOR TO TRANSPORTATION APPROVAL. All items shall be addressed and incorporated into a revised plan set prior to Transportation approval.
42. FIRE ACCESS AND PARKING RESTRICTIONS. The fire truck path of travel shall include a "No Parking" sign. Signs meet the City's Fire Department requirements.
43. PARKING RESTRICTIONS. The curb along Old Trace Road shall be red-striped on both sides of the street to prevent parking within the fire truck path of travel.
44. SIGHT DISTANCE AND VISIBILITY. Sight triangles shall provide clear sight lines in accordance with stopping sight distance requirements in the Highway Design Manual.
Landscaping, walls, or any features within sight distance triangles shall be restricted to a maximum height above the roadway surface. Per PAMC 16.24.020(5), fences exceeding four feet in height shall not be located within a sight distance triangle. a. The sight distance triangles shown on C1.2 shall be drawn to scale on the plan set and be prepared and signed by a traffic engineer.
45. BICYCLE FACILITIES. Dedicated bike lanes shown along the Arastradero Road frontage shall meet design standards and maintain a typical width of 5 feet. Green pavement markings are shown in the bicycle conflict zone on Arastradero Road. Per CA MUTCD 2026, green pavement is an optional treatment to alert users of a conflict zone but shall be accompanied by appropriate pavement marking patterns (dotted lines through the driveway). A detail showing dotted extension lines through the driveway apron per CA MUTCD 2026 shall be provided.
a. Sharrow markings shall be removed from the plans for Arastradero Road, as no existing sharrows are present on the roadway.
46. PEDESTRIAN FACILITIES. For continuous pedestrian connection, a sidewalk shall be provided along Lots 8 and 9. New sidewalk shown on the project frontage shall conform to meet the City’s minimum standards.
47. DRIVEWAY & ACCESS STANDARDS. The minimum spacing between the two driveways, measured from radius return to radius return, shall be no less than 20 feet per PAMC
12.08.060(9)(A).
48. SIGNAGE AND TRAFFIC CONTROL DEVICES. A one-way sign shall be provided below the Item 12
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stop sign on the new private street, and one sign shall be provided in the median island for right-turning traffic. All traffic control devices proposed in the public right-of-way (ROW) shall meet CA MUTCD requirements, including size, mounting height, and location. Review and approval shall be obtained as part of the offsite improvement plan. RRFB installation shall comply with CA MUTCD 2026, including any advance line markings or as otherwise required or recommended. A STOP bar shall be provided per CA MUTCD 2026 requirements. Offsite improvements shall be routed to Transportation for review and approval.
Electrical Engineering – Utilities Department
49. TRENCHING. The proposed trench shall meet the City of Palo Alto Utilities (CPAU) clearance requirements.
50. ELECTRICAL BOX AND CONDUITS. The electrical boxes and conduit requirements shall be finalized during the building permit application. No load calculations or requested service sizes have been provided as a part of this application but shall be finalized at the time of streamlined housing development application.
51. ELECTRICAL LOAD CALCULATIONS. CPAU scope may change based on estimated load calculations at the time of building permit application.
52. TRANSFORMER CLEARANCE. The proposed transformers shall maintain a minimum clearance of 3 feet on all sides except the front which shall have a clearance of 8 feet. A minimum distance of 10 feet shall be maintained from any proposed windows and doors.
53. EASEMENTS. All electrical easements will be required to be granted to CPAU for CPAU electric utility boxes and conduits per CPAU regulations and standards.
54. STREETLIGHT MAINTENANCE. All privately owned streetlights shall be maintained by the applicant.
Water Quality Division – Public Works Department
55. DETENTION GALLERY. The applicant shall clarify if a detention gallery will be required. If required, it shall be included as a part of the C3 Stormwater Treatment Plan.
56. STORMDRAIN CONNECTIONS. Direct connections to the storm drain system is not permitted. The plans shall be revised in accordance with Public Works Engineering standards and addressed at the time of the Streamlined Housing Development Review application.
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57. STORMWATER MANAGEMENT PLAN. The proposed Stormwater Management Plan submitted under the Tentative Map application is not final and all stormwater treatment requirements for the project shall be adhered to in compliance with the Bay Area Municipal Regional Stormwater Permit. The Stormwater Management Plan in the development application (25PLN-00296) will take precedent.
Water-Gas-Wastewater (WGW) Engineering – Utilities Department
58. PRIOR TO PLANNING ENTITLEMENT APPROVAL. The following comments are required to be addressed prior to Planning entitlement approval:
a. A public utility easement for gas service on the private street for the gas main line will be recorded from property line to property line on the street.
59. PRIOR TO BUILDING PERMIT ISSUANCE. The following comments are required to be addressed prior to any future related permit application such as a Building Permit, Excavation and Grading Permit, Certificate of Compliance, Street Work Permit, Encroachment Permit, etc. These comments are provided as a courtesy and are not required to be addressed prior to the Planning entitlement approval:
a. The gas main line will be located 5 feet away from the sewer line shown on-site towards the center of the private street.
b. The City of Palo Alto Utilities Department CPAU will design the gas main and provide the developer with an invoice for the design work by the City. Payment for the invoice is required before the City starts designing. Provide the WGW reviewer with a contact for the invoice to be sent.
i. Schedule a meeting with CPAU reviewer once the estimated gas loads have been determined. CPAU will go over the steps for adding gas mains to the project.
60. PRIOR TO DEMOLITION PERMIT (IF REQUIRED). The applicant shall submit a request to disconnect utility services and remove gas meters. The utilities demo is to be processed within 10 working days after receipt of the request. The demolition permit will be issued by the building inspection division after all utility services and/or meters have been disconnected and removed.
For Building Permit:
61. WGW SERVICE CONNECTION APPLICATION. The applicant shall submit a completed water-gas-wastewater service connection application - load sheet for the City of Palo Alto Utilities. The applicant must provide all the information requested for utility service demands (water in fixture units/g.p.m., gas in b.t.u.h, and sewer in fixture units/g.p.d.).
The applicant shall provide the existing (prior) loads, the new loads, and the combined/total loads (the new loads plus any existing loads to remain).
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62. IMPROVEMENT PLANS FOR UTILITY CONSTRUCTION. The applicant shall submit improvement plans for utility construction. The plans must show the size and location of all underground utilities within the development and the public right of way including meters, backflow preventers, fire service requirements, sewer mains, sewer cleanouts, sewer lift stations, and any other required utilities. Plans for new wastewater laterals and mains need to include new wastewater pipe profiles showing existing potentially conflicting utilities especially storm drain pipes, electric and communication duct banks.
Existing duct banks need to be daylighted by potholing to the bottom of the duct bank to verify cross section prior to plan approval and starting lateral installation. Plans for new storm drain mains and laterals need to include profiles showing existing potential conflicts with sewer, water, and gas.
63. AUXILLARY WATER SUPPLY. The applicant must show on the site plan the existence of any auxiliary water supply, (i.e. water well, gray water, recycled water, rain catchment, water storage tank, etc).
64. UPGRADING EXISTING UTILITY MAINS/SERVICES. The applicant shall be responsible for installing and upgrading the existing utility mains and/or services, laterals as necessary to handle anticipated peak loads. This responsibility includes all costs associated with the design and construction for the installation/upgrade of the utility mains and/or services/laterals.
65. RPPA BACKFLOW PREVENTER DEVICE. An approved reduced pressure principle assembly (RPPA backflow preventer device) is required for all existing and new water connections from Palo Alto Utilities to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive. The RPPA shall be installed on the owner's property and directly behind the water meter within 5 feet of the property line.
RPPA's for domestic service shall be lead free. Show the location of the RPPA on the plans.
a. An approved reduced pressure detector assembly (RPDA backflow preventer device, STD. WD-12A or STD. WD-12B) is required for all existing and new fire water connections from Palo Alto Utilities to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive.
The RPDA shall be installed on the owner's property and directly behind the City owned meter, within 5' (feet) of the property line or City Right of Way.
66. APPROVAL OF BACKFLOW PREVENTION DEVICE. All backflow preventer devices shall be approved by the WGW engineering division. Inspection by the city inspector is required for the supply pipe between the meter and the assembly.
67. PAYMENT OF CAPACITY AND CONNECTION FEES. The applicant shall pay the capacity fees and connection fees associated with new utility service/s or added demand on existing services. The approved relocation of services, meters, hydrants, or other facilities will be performed at the cost of the person/entity requesting the relocation.
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68. FIRE SYSTEM USAGE. If a new water service line installation for fire system usage is required. Show the location of the new water service on the plans. The applicant shall provide to the engineering department a copy of the plans for fire system including all fire department's requirements.
69. WATER METERS. Each unit or building shall have its own water meter shown on the plans. Each parcel shall have its own water and sewer lateral connection shown on the plans.
70. SEWER LATERAL. A sewer lateral per lot is required. Show the location of the new sewer lateral on the plans. A profile of the sewer lateral is required showing any possible conflicts with storm, electric/communications ductbanks or other utilities.
71. ABANDONMENT OF EXISTING UTILITIES. All existing water, and gas. and wastewater services/laterals that will not be reused shall be abandoned at the main per the latest WGW utilities standards by CPAU.
72. LOCATION OF PROPOSED UTILITY CONNECTIONS. Utility vaults, transformers, utility cabinets, concrete bases, or other structures cannot be placed over existing water, gas, or wastewater mains/services. Maintain 1' horizontal clear separation from the vault/cabinet/concrete base to existing utilities as found in the field. If there is a conflict with existing utilities, Cabinets/vaults/bases shall be relocated from the plan location as needed to meet field conditions. Trees may not be planted within 10 feet of existing water, gas, and wastewater mains/laterals/water services/or meters. New water or wastewater services/laterals/meters may not be installed within 10' of existing trees. Maintain 10' between new trees and new water and wastewater services/laterals/meters.
73. COPY OF FIRE SYSTEM PLAN. The applicant shall provide to the WGW Utility Engineering department a copy of the plans for fire system including all fire department's requirements prior to the actual service installation.
74. PALO ALTO CODE COMPLIANCE. All utility installations shall be in accordance with the City of Palo Alto utility standards for water, gas, & wastewater.
SECTION 7. Term of Approval. Tentative Map. All conditions of approval of the Tentative Map shall be fulfilled prior to approval of a Final Map (PAMC Section 21.16.010[c]). Unless a Final Map is filed, and all conditions of approval are fulfilled within a two-year period from the date of Tentative Map approval, the Tentative Map shall expire and all proceedings shall terminate.
A request for an extension of time may be granted by the City Council after recommendation of the planning commission, after the written extension request of the subdivider is submitted, prior to the expiration of the Tentative Map approval, or any previous extension granted. Such extension(s) shall be subject to the maximum limitations set forth in the Subdivision Map Act.
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INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
_________________________ ____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
___________________________ ___________________________ Assistant City Attorney City Manager
___________________________
Director of Planning and
Development Services
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PLANS AND DRAWINGS REFERENCED:
Those plans prepared by Steel Bridge Homes “THE OAKS SUBDIVISION TENTATIVE SUBDIVISION MAP” consisting of eleven pages, dated and submitted May 5, 2026.
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