Agenda packet — Palo Alto City Council, August 10, 2026 (part 2 of 3)

shall be zero (0) upon the occurrence and during the continuance of an Event of Default.

"Credit Support Default" shall have the meaning set forth in Paragraph 10 herein.

“Credit Support Provider”, if applicable, shall mean the entity set forth in the elections on Page 1 herein.

“Custodian” shall mean an entity that meets the Custodian Requirements set forth in the elections on Page 1 herein.

"Defaulting Party" shall have the meaning set forth in Paragraph 10 herein.

"Demand Date " shall mean, with respect to a party's (i) demand for the Transfer of Eligible Collateral pursuant to Paragraph 4 herein, (ii) demand for Reduction or Substitution of Posted Collateral pursuant to Paragraph 5 herein, and/or (iii) demand for Disputed Calculations pursuant to Paragraph 6 herein:
(a) the date on which a demand is made, if such demand is received prior to the Notification Time on a Business Day; or
(b) the following Business Day if a demand is made on a non -Business Day or after the Notification Time on a Business Day.

"Eligible Collateral" shall have the meaning set forth in the elections on Page 1 herein.

"Exposure" shall mean the Net Settlement Amount, as calculated by the Secured Party in good faith and in a commercially reasonable manner, that the Pledging Party would owe to the Secured Party if an Early Termination Date had been designated as of the date of such calculation as provided for in Section 10 of the Base Contract; provided that such calculations shall be at the mid point between the bid price and the offer price.

"Interest Amount" shall mean the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Cash held by the Secured Party on tha t day, determined for each such day as follows: (x) the amount of Cash on that day; multiplied by (y) the Interest Rate for that day: divided by (z) 360.

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Agreement, Special
Provisions and Credit
Support Addendum

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"Interest Rate" shall have the meaning set forth in the elections on Page 1 herein.

"Letter of Credit" shall have the meaning set forth in Paragraph 7 (a) herein. “Letter of Credit Default” shall have the meaning set forth in Paragraph 7(b) herein.

“Minimum Transfer Amount” shall mean the amount set forth in the elections on Page 1 herein for a party.

“Notification Time” shall have the meaning set forth in the elections on Page 1 herein.

“Notice” shall have the meaning set forth in Paragraph 9 herein.

“Pledging Party” shall have the meaning set forth in Paragraph 3 herein.

"Posted Collateral" shall mean (1) all Eligible Collateral and all proceeds thereof that have been Transferred to or received by the Secured Party hereunder and not Transferred to the Pledging Party pursuant to Paragraph 4 or released by the Secured Party, (2) any Interest Amount or portion thereof held by the Secured Party and not Transferred pursuant to Paragraph 8(c), and (3) any Cash received and held by the Secured Party after drawing on any Letter of Credit.

"Reference Market Maker" shall mean a leading dealer in the relevant market that is not an affiliate of either party selected by a party determining any disputed calculations pursuant to Paragraph 6 herein in a commercially reasonable manner from among dealers which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit. “Rounding Amount” shall mean the amount set forth in the elections on Page 1 herein for a party.

“Secured Party” shall have the meaning set forth in Paragraph 3(b) herein.

"Letter of Credit Issuer Requirements" shall have the meaning set forth in the elections on Page 1 herein.

"Transfer” or “Transferred" shall mean, with respect to any Eligible Collateral, Posted Collateral, or Interest Amount, and in accordance with the instructions of the appropriate party:

(i) in the case of Cash, payment or delivery by wire transfer in immediately available federal funds into one or more bank accounts set forth on Page 1 herein (or as otherwise specified in a demand Notice);

(ii) in the case of Letters of Credit, delivery of the Letter of Credit by the Pledging Party to the Secured Party at the address specified in this CSA (or as otherwise specified in a demand Notice) or delivery of an executed amendment to such Letter of Credit (extending the term or increasing the amount available to the Secured Party thereunder) by the Pledging Party, to the Secured Party; and for purposes of Paragraph 5, return of the Letter of Credit by the Secured Party to the Pledging Party or delivery of an executed amendment (which amendment shall be given by the Pledging Party to the Secured Party) to the Letter of Credit in form and substance satisfactory to the Secured Party, reducing the amount available to the Secured Party thereunder, in each case to the address specified in the applicable demand letter or this CSA; and

(iii) in the case of any other Eligible Collateral, the Transfer methodology specified by the parties in the elections on Page 1 herein.

(iv) in any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit, the deadlines set forth in Paragraph 7 (h).

(v) In connection with each Transfer of any Eligible Collateral to the Secured Party pursuant to this CSA, the Secured Party will, upon request of the Pledging Party, provide a receipt in form and substance reasonably satisfactory to the Pledging Party showing the Eligible Collateral Item 7
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Agreement, Special
Provisions and Credit
Support Addendum

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“Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit Default shall apply with respect to such Letter of Credit or (ii) 20 or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0).

"Value" shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn under the Letter of Credit held by the Secured Party.

Paragraph 3. Calculation of Collateral Requirement.

On any Business Day, the " Collateral Requirement " for a party (the “ Pledging Party ”) means the Secured Party’s Exposure minus the sum of:

(a) the Pledging Party's Collateral Threshold; plus

(b) the Value of all Posted Collateral then held by the party other than the Pledging Party (the “Secured Party”), and any accrued Interest Amount that has not yet been Transferred to the Pledging Party;

provided, however, that, the Collateral Requirement of the Pledging Party will be deemed to be zero (0) whenever the calculation of such Pledging Party’s Collateral Requirement yields a number less than zero (0).

OPTION A: Paragraphs 4, 5, and 6
If the parties select Option A of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 shall apply.

Paragraph 4. Transfer of Eligible Collateral.

On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date has occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default or an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer exists prior to the time that such Eligible Collateral is required to be provided hereunder.

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___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 6 Adopted October 9, 2003
Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction.
(b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party of the substitute Eligible Collateral, the Secured Party shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the second Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party prior to, the release of the Posted Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, warranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Posted Collateral by the Secured Party to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Posted Collateral.

Paragraph 6. Disputed Calculations.

The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4 th) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5 th) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as originally demanded by the Secured Party.

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If the parties have not been able to resolve their dispute on or before the Notification Time on the second (2 nd) Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market -Maker by the Notification Time on the third (3 rd) Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Time on the third (3
rd) Business Day after the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4 th) Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5 th) Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party's demanded reduction.

OPTION B: Paragraphs 4, 5, and 6
If the parties select Option B of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 and the related timing requirements and party information set forth in the Exhibit A to this CSA shall apply.

Paragraph 4. Transfer of Eligible Collateral.

On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date has occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the (‘A’) Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default or an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer exists prior to the time that such Eligible Collateral is required to be provided hereunder.

Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving eff ect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral; (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing; (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing; and (iv) no Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Clos e of Business on the (‘B’) Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of Item 7
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Agreement, Special
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___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 8 Adopted October 9, 2003
the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction.
(b) Except when (i) a Credit Support Default with respect to the Pledging P arty has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value on the (‘C’) Business Day following the Demand Date thereof (provided that, if such substitute E ligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party and/or its Custodian of the substitute Eligible Collateral, the Secured Party and/or its Custodian shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the (‘D’) Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party and/or its Custodian simultaneously with, or has been Transferred to the Secured Party and/or its Custodian prior to, the release of the Eligible Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant her eto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, war ranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Eligible Collateral by the Secured Party and/or its Custodian to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Eligible Collateral.

Paragraph 6. Disputed Calculations.

(a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Sec ured Party of the existence and nature of the dispute not later than the Close of Business on the (‘A’) Business Day following the Demand Date that the demand for Eligible Collateral is made by the Secured Party pursuant to Paragraph 4, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the (‘E’) Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market -Maker by the Notification Time on the (‘F’) Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The (‘A1’) Party sh all inform the (‘A2’) Party of the quotation it has obtained, if any, by the Notification Time on the (‘G’) Business Day following the Demand Date. The (‘A3’) Party shall inform the (‘A4’) Party of the results of such recalculation in reasonable detail by the Notification Time on the (‘H’) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the (‘I’) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as demanded by the Secured Party.

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Paragraph 7. Letters of Credit.

Eligible Collateral provided in the form of a Letter of Credit shall be subject to the following provisions.

(a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the requirements of a Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein in a form reasonably acceptable to the Secured Party.
(b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein, (ii) the issuer of such Letter of Credit goes bankrupt; (iii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effect (other than in accordance with its terms) prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Letter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA.

Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof (or the fifth (5) Business Day after the occurrence thereof if and only if clause (i) under the definition of Letter of Credit Default applies). (c) Unless otherwise agreed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit, (ii) Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the expiration of the outstanding Letter of Credit, and (iii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), (ii), or (iii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0). (d) As one method of providing Posted Collateral, the Pledging Party may increase the amount of an outstanding Letter of Credit or establish one or more additional Letters of Credit. (e) Upon or at any time after the occurrence of an Event of Default with respect to the Pledging Party and/or the designation of an Early Termination Date by the Secured Party, the Secured Party may draw on the entire undrawn portion of any outstanding Letter(s) of Credit upon submission to the bank issuing such Let ter of Credit in accordance with the specific requirements of the Letter of Credit. Cash proceeds received from drawing upon the Letter of Credit shall be deemed Posted Collateral as security for the Pledging Party’s obligations to the Secured Party and the Secured Party shall have the rights and remedies set forth in this CSA with respect to such Cash proceeds. Notwithstanding the Secured Party’s receipt of Cash under the Letter of Credit, the Pledging Party shall remain liable (i) for any failure to Transfer sufficient Posted Item 7
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Agreement, Special
Provisions and Credit
Support Addendum

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Paragraph 8. Care and Use of Cash.

Eligible Collateral provided in the form of Cash shall be subject to the following provisions.

(a) Eligibility to Hold Cash.

(i) If a party is not eligible to hol d Cash as set forth in the elections on Page 1 herein, then such Cash shall be held in a Collateral Account in accordance with the provisions of Paragraph 8(e).

(ii) The Secured Party or its Custodian will be entitled to hold Cash provided that the following conditions, as applicable, are satisfied: (1) the Secured Party is not a Defaulting Party, (2) the Secured Party or its Credit Support Provider, if applicable, meets the Eligibility Requirements to Hold Cash requirements set forth in the elections on Page 1 herein, (3) Cash shall be held only in any jurisdiction within the United States, and (4) the Custodian meets the Custodian Requirements set forth in the elections on Page 1 herein.

If a party or its Custodian is not eligible, or subsequently becomes ineligible, to hold Posted Collateral pursuant to this Section, then it shall be considered a “Downgraded Party” or a “Downgraded Custodian”, as the case may be, and Posted Collateral shall be maintained in accordance with Paragraph 8(e).

(iii) Upon Notice by the Secured Party to the Pledging Party of the appointment of a Custodian, the Pledging Party’s obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Cash by a Custodian will be deemed to be the holding of Cash by the Secured Party for which the Custodian is acting. The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions.

(b) Use of Cash. Notwithstanding the provisions of applicable law, if the Secured Party is eligible to hold cash in accordance with Paragraph 8(a), is not a Defaulting Party and no Early Termination Date has occurred or been designated by the Pledging Party as a result of an Event of Default with respect to the Secured Party, then the Secured Party shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Cash it holds, f ree from any claim or right of any nature whatsoever of the Pledging Party, including any equity or right of redemption by the Pledging Party.

(c) Interest Payments on Cash. So long as no Event of Default with respect to the Pledging Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Pledging Party exist) has occurred or been designated as the result of an Event of Default with respect to the Pledging Party and to the extent that an obligation to Transfer Posted Collateral would not be created or increased by the Transfer, the Secured Party will upon written request Transfer to the Pledging Party, in lieu of any interest or other amounts paid or deemed to have been paid with respect to the Cash (all of which may be retained by the Secured Party), the Interest Amount on the third Business Day of each calendar month. On or after the occurrence of an Event of Default with respect to the Pledging Party or an Early Termination Date as a result of an Event of Default with respect to the Pledging Party, the Secured Party shall retain any such Interest Amount as additional Eligible Collateral hereunder until the obligations of the Pledging Party under the Base Contract have been satisfied.

(d) Care of Cash. Without limiting the Secured Party’s rights under Paragraph 8(b), the Secured Party will exercise reasonable care to assure the safe custody of all Cash held by it as Posted Collateral to the extent Item 7
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Agreement, Special
Provisions and Credit
Support Addendum

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(e) Holding of Cash by a Custodian. The provisions of Paragraph 8(b) will apply to the parties; provided, however, that if a party or its Custodian is not eligible to hold Cash pursuant to Paragraph 8(a) (the event that caused it or its Custodian, if any, to be ineligible to hold Cash shall be a “Credit Rating Event”; if such Credit Rating Event occurs with respect to a party, such party shall be the “Downgraded Party”; and if such Credit Rating Event occurs with respect to a party’s Custodian, such Custodian shall be the “Downgraded Custodian”), then: (1) the provisions of Paragraph 8(b) will not apply with respect to the Downgraded Party as the Secured Party for so long as either the Secured Party or its Custodian, if any, remain a Downgraded Party or a Downgraded Custodian, respectively, and (2) the Downgraded Party shall be required to deliver (or cause the Downgraded Custodian to deliver, as the case may be) by the Close of Business on the second (2
nd) Business Day following such Credit Rating Event all Cash in its possession or held on its behalf (i) to a Custodian that meets the Custodian Requirements, and (ii) to a segregated, safekeeping or custody account (“Collateral Account”) within such Custodian with the title of the Collateral Account indicating that the property contained therein is being held as Posted Collateral for the Downgraded Party; provided, that, if the Credit Rating Event occurs with respect to a party’s Custodian that is holding Posted Collateral on behalf of such party, then such Downgraded Custodian may also deliver such Posted Collateral to such party if such party is not a Downgraded Party, and (iii) the parties agree to enter into a control agreement (“Control Agreement”) with the Custodian maintaining the Collateral Account. The Control Agreement shall be in such form as shall be reasonably acceptable to each of the parties and shall provide for such items as the timing and release of the funds in the Collateral Account and the investment and reinvestment of Cash held in the Collateral Account. The Control Agreement shall further provide that Custodian shall serve as Custodian with respect to the Posted Collater al in the Collateral Account, and shall hold such Posted Collateral in accordance with the terms of this CSA and for the security interest of the Downgraded Party and, subject to such security interest, for the ownership of the non-Downgraded Party. The parties further agree that notwithstanding the fact that Cash is being held by a Custodian in a Collateral Account pursuant to a Control Agreement, the Downgraded Party shall be required to make interest payments to the non-Downgraded Party in an amount equal to the Interest Amount in accordance with the provisions of Paragraph 8(c).

Paragraph 9. Notices

(a) “Notice” shall mean a notice or other communication in respect of this CSA. Notice may be given in any manner set forth below to the address or number or in accordance with the electronic messaging system details provided on Page 1 of this CSA and will be deemed effective as indicated:

(i) if in writing and delivered in person or by courier, on the Business Day it is delivered;

(ii) if sent by facsimile transmission, on the date that transmission is received by the recipient in legible form (which may be evidenced by a transmission report generated by the sender's facsimile machine) unless such facsimile transmission is received on a non-Business Day or after the Close of Business then such facsimile shall be deemed to have been received on the next following Business Day.

(iii) if sent by certified or registered mail or the equivalent (return receipt requested), on the Business Day that mail is delivered or its delivery is attempted; or

(iv) if sent by electronic messaging system, on the date that electronic message is received, unless such electronic message is received on a non-Business Day or after the Close of Business, then such electronic message shall be deemed to have been received on the next following Business Day.

(b) Any other Notice, including but not limited to, Notice of an Event of Default, must be given pursuant to Section 9 of the Base Contract.

Paragraph 10. Credit Support Default

(a) A “Credit Support Default" shall exist with respect to a party (the "Defaulting Party") if:

(i) a party fails (or fails to cause its Custodian, as applicable) to make, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to be made by it, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or

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(iii) a party or its Custodian fails to comply with any of the obligations under Paragraph 8 herein and the failure continues for one (1) Business Day after notice of the failure is given to that party.

(b) Credit Support Default shall constitute and have the effect of an Event of Default set forth in Section 10.2 (vi) of the Base Contract.

Paragraph 11. Representations and Warranties.

Each party continuously represents and warrants to the other party that: (a) it has the power and authority under the law of the jurisdiction of its organization or incorporation and under its organizational and constituent documents to grant to the Secured Party a valid, enforceable, first -priority security interest in, and lien on, all Posted Collateral (other than Letters of Credit) that it Transfers as the Pledging Party, and has taken all necessary actions to authorize the granting and perfection of that security interest and lien; (b) as of each date on which it, as the Pledging Party, Transfers Eligible Collateral to the Secured Party or to any agent of the Secured Party for the benefit of the Secured Party (or, in the case of after -acquired Posted Collateral, at the time the Secured Party or its agent acquires rights therein), it has title to, and will be the sole owner of such Eligible Collateral, free and clear of any security interest, lien, pledge, charge, encumbrance, or other interests or restrictions other than the security interest granted to the Secured Party hereby; (c) the Secured Party will have a valid and perfected first -priority security interest in, and lien on, all Posted Collateral (other than Letters of Credit) upon receipt thereof; (d) the performance by it of its obligations under this CSA will not result in the creation of any security interest, lien or other encumbrance on any Posted Collateral other than the security interest and lien granted pursuant to this CSA; and (e) in connection with the delivery, issuance, renewal, substitution, or increase (as the case may be) which constitutes a Transfer of a Letter of Credit, such Letter of Credit is the legal, valid and binding obligation of the Issuer thereof, enforceable in accordance with its terms.

Paragraph 12. Certain Rights and Remedies.

(a) Secured Party’s Rights and Remedies . If at any time (i) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Early Termination Date has occurred or been designated as a result of an Event of Default with respect to the Pledging Party, then the Secured Party may do any one or more of the following: (x) exercise any of the rights and remedies of a secured party with respect to the Posted Collateral, including any such rights and remedies under law then in effect; (y) exercise its rights of setoff against any and all property of the Pledging Party in the possession of the Secured Party or its agent; and (z) draw on any outstand ing Letter of Credit issued for its benefit under its terms and this CSA. The Secured Party shall either (y) apply the proceeds of the Posted Collateral realized upon the exercise of any such rights or remedies to reduce the Pledging Party's obligations under the Base Contract or this CSA (the Pledging Party remaining liable for any amounts owing to the Secured Party after such application), subject to the Secured Party’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full and/or (z) hold such proceeds as collateral security for the Pledging Party's obligations under the Base Contract or this CSA, subject to the Secured Party’s obligation to return the proceeds after such obligations are satisfied in full.

(b) Pledging Party's Rights and Remedies . If at any time an Early Termination Date has occurred or been designated as the result of an Event of Default with respect to the Secured Party, then: (i) the Secured Party will be obligated immediately to Transfer a ll Posted Collateral and the Interest Amount, if any, to the Pledging Party; and (ii) the Pledging Party may do any one or more of the following: (x) exercise any of the rights and remedies of a pledgor with respect to the Posted Collateral, including any such rights and remedies under law then in effect; (y) to the extent that the Posted Collateral or the Interest Amount is not Transferred to the Pledging Party as required in (i) above, setoff amounts payable by the Pledging Party to the Secured Party against the Posted Collateral held by the Secured Party or to the extent its rights to setoff are not exercised, withhold payment of any remaining amounts payable by the Pledging Party, up to the value of any remaining Posted Collateral held by the Secured Party, until the Posted Collateral is Transferred to the Pledging Party; and/or (z) exercise rights and remedies available to the Pledging Party under the terms of any Letter of Credit.

Paragraph 13. General.

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(b) Each party will pay its own costs and expenses in connection with performing its obligations under this CSA and neither party will be liable for any costs or expenses incurred by the other party in connection herewith.

(c) This CSA has been and is made solely for the benefit of the parties and their permitted successors and assigns, and no other entity shall acquire or have any right under or by virtue of this CSA.

(d) No failure or delay by either party hereto in exercising any right, power, privilege, or remedy hereunder shall operate as a waiver thereof.
(e) The headings in this CSA are for convenience of reference only, and shall not affect the meaning or construction of any provision thereof.

DISCLAIMER: The purposes of this CSA are to facilitate trade, avoid misunderstandings and make more definite the terms of margining arrangements related to contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this CSA by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CSA ACKNOWLEDGES AND

AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS,

EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CSA OR ANY PART THEREOF, INCLUDING

ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR

FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON

TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING.

EACH USER OF THIS CSA ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY

DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CSA.

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Execution Version

SPECIAL PROVISIONS TO CREDIT SUPPORT ADDENDUM
DATED AS OF [ ], 2026

TO THE

BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS

BETWEEN

JPMORGAN CHASE BANK, N.A.
(“Party A”)

AND

CITY OF PALO ALTO
(“Party B”)

DATED AS OF [ ], 2026

These Special Provisions amend and form part of the Credit Support Addendum ( “CSA”) dated as of [ ], 2026 to that certain Base Contract for Sale and Purchase of Natural Gas ( “Base Contract”) published by the North American Energy Standards Board, Inc. ( “NAESB”) effective between the parties as of [ ], 2026. In the event of any inconsistency between the CSA and these Special Provisions, these Special Provisions shall govern. Except as amended herein, the Base Contract, the General Terms and Conditions thereto, and any Special Provisions to the Base Contract shall remain in full force and effect. All capitalized terms used in these Special Provisions not otherwise defined herein shall have the meaning set forth in the Base Contract.

References to sections not included her ein shall be to those sections set forth in the Base Contract.

Elections on Page 1 of CSA

[X]. The following shall be the “ Rating Matrix ” for each party or, if applicable, its Credit Support Provider and shall define each party’s Collateral Threshold:

“Collateral Threshold” means, with respect to a party, the amounts determined on the basis of the lower of the Credit Ratings set forth in the following table, provided, however, that if (i) a party has no Credit Rating, or (ii) an Event of Default or Pote ntial Event of Default has occurred and is continuing with respect to such party, such party’ s Collateral Threshold shall be U.S.$0:

CREDIT RATING
(S&P )

CREDIT
RATING
(Moody’s)

THRESHOLD
Party A

THRESHOLD
Party B

AAA+ to A+ Aaa1 to A1 US$25,000,000 US$25,000,000
A to A- A2 to A3 US$20,000,000 US$20,000,000
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2 BBB+ Baa1 US$15,000,000 US$15,000,000
BBB Baa2 US$10,000,000 US$10,000,000
BBB- Baa3 US$5,000,000 US$5,000,000
Below BBB- or
unrated
Below Baa3 or
unrated
US$0 US$0

Paragraph 2 – Definitions

1. The definition of “ Interest Period ” shall be amended and restated in its entirety as follows:

“Interest Period” means each calendar month, provided that (i) if this CSA is not entered into on the first day of a calendar month, the first interest period will be the period from (and including) the day on which this CSA is entered into to (and including) the last day of such calendar month and (ii) if an Early Termination Date has been designated or deemed to occur in relation to a party, the Interest Period shall mean the period from (and including) the first day of the calendar month in which such Early Termination Date occurred to (but excluding) such Early Termination Date.

2. The definition of “ Posted Collateral ” shall be amended by replacing the phrase “Paragraph 8(c)” in the fourth line thereof with the phrase “Paragraph 8(c)(i)”.

3. The definition of “ Transfer” shall be amended by replacing the words “or Interest Amount” in the first and second lines thereof with “positive Interest Amount, or AV Negative Interest Amount”.

4. The definition of “ Valuation Percentage” shall be amended and restated in its entirety as follows:

“Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided that with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit Default shall apply with respect to such Letter of Credit or (ii) twenty (20) or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0).

5. The definition of “Value” shall be amended and restated in its entirety as follows:

“Value” shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided that with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn by the Secured Party under the Letter Item 7
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3 of Credit held by the Secured Party; provided, however, that the Value of a Letter of Credit shall be zero if a Letter of Credit Default exists with respect to such Letter of Credit or twenty (20) or fewer Business Days remain prior to the expiration of such Letter of Credit.

6. The following definitions shall be added to the CSA:

“AV Negative Interest Amount ” means, in respect of any negative Interest Amount, the absolute value of such negative Interest Amount.

“Credit Rating ” means, with respect to a party, the rating assigned by either S&P or Moody’s to the long term, unsecured and unsubordinated indebtedness of such party, or, if applicable, the Credit Support Provider of such party.

“Moody’s” means Moody’s Investors Service, Inc. or its successor.

“Potential Event of Default ” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

“S&P” means S&P Global Ratings or its successor.

Paragraph 3 – Calculation of Collateral Requirement

1. Paragraph 3 of the CSA shall be amended and restated in its entirety as follows:

“On any Business Day, the “ Collateral Requirement” for a party (the “Pledging Party”) means the Secured Party’s Exposure minus the sum of:

(a) the Pledging Party’s Collateral Threshold; plus

(b) the Value of all Posted Collateral (as adjusted for any accrued positive Interest Amount or AV Negative Interest Amount that has not yet been Transferred to the Pledging Party or Secured Party, respectively) then held by the party other than the Pledging Party (the “Secured Party”);

Option A, Paragraph 4 – Transfer of Eligible Collateral

1. The second line of Paragraph 4 is amended by inserting the words “or Potential Event of Default” between “no Event of Default” and “with respect to the Secured Party”.

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4 Option A, Paragraph 5 – Reduction and Substitution of Posted Collateral

2. The sixth line of Paragraph 5(a) is amended by inserting the words “or Potential Event of Default” between “no Event of Default” and “with respect to the Pledging Party”.

3. The second line of Paragraph 5(b) is amended by inserting the words “or Potential Event of Default” between “an Event of Default” and “with respect to the Pledging Party”.

4. The word “will” in the fifteenth line of Paragraph 5(b) shall be replaced with the word “with”.

Option A, Paragraph 6 – Disputed Calculations

5. Paragraph 6(a) shall be deleted and replaced in its entirety with the following:

In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the date of notification of the dispute (the “Resolution Time ”), then the amount of the Exposure shall be recalculated with the Secured Party requesting quotations from four (4) Reference Market-Makers (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s original calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Resolution Time. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, upon demand. If the Pledging Party fails to dispute the amount of the Collateral Requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement, as originally demanded by the Secured Party.

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5 6. Paragraph 6(b) shall be deleted and replaced in its entirety with the following:

(b) If the Secured Party disputes the amount of Eligible Collat eral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the Business Day following the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance with Paragraph 5 and in an amount equal to the Secured Party ’s own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement as determined in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the date of notification of the dispute (the “ Resolution Time”), then the Secured Party’s Exposure shall be recalculated by Pledging Party requesting quotations from four (4) Reference Market-Maker (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Pledging Party’s original calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof.

The Pledging Party shall inform the Secured Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Resolution Time. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, upon demand. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of th e Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party ’s demanded reduction.

Paragraph 7 – Letters of Credit

1. Paragraph 7(a) shall be amended and restated in its entirety as follows:

(a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the Letter of Credit Issuer Requirements set forth in the elections in Page 1 herein utilizing the form set forth in Schedule 1 attached to the Special Provisions hereto, with such changes to the terms in that form as the issuing bank may require and as may be acceptable to the party in whose favor the letter of credit is issued, in its reasonable discretion.

2. Paragraph 7(b) shall be amended and restated in its entirety as follows:

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6 (b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credi t shall fail to meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein; (ii) any event analogous to an event specified in Paragraph 10.2(i) -(v) of the Base Contract shall occur with respect to the issuer of such Letter of Credit; (i ii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; ( iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effect prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Let ter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA . Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof.

3. Paragraph 7(c) shall be amended and restated in its entirety as follows:

(c) Unless otherwise ag reed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) either (a) at least thirty (30) Business Days prior to the then -current expiration date (the “Rollover Date”), renew or cause the renewal of each outstanding Letter of Credit for a period of at least one year from the Rollover Date or (b) if each such Letter of Credit is not renewed prior t o the date that is thirty (30) Business Days prior to the Rollover Date, Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the Rollover Date , and (ii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), or (ii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0).

Any change to an outstanding Letter of Credit other than an increase in amount or extension thereof will become effective only upon the written consent of the Secured Party.

4. The second line of Paragraph 7(e) shall be amended by adding the words “and/or in the event that an outstanding Letter of Credit is not renewed or substituted at least twenty (20) Business Days prior to the Rollover Date” between “by the Secured Party” and “,”.

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7 5. The fourth line of Paragraph 7(e) shall be amended by adding the words “by the Secured Party” between “received” and “from drawing”.

6. Paragraph 7(g) shall be amended and restated in its entirety as follows:

(g) In all cases, all costs and expenses relating to a Letter of Credit shall be borne by the Pledging Party.

Paragraph 8 – Care and Use of Cash

1. The second line of Paragraph 8(b) is amended by inserting the words “ , no Event of Default or Potential Event of Default has occurred and is continuing with respect to the Secured Party” between “not a Defaulting Party” and “and no Early Termination Date”.

2. Paragraph 8(c) is deleted and replaced in its entirety with the following:

(i) If the Interest Amount for an Interest Period is a positive number, then s o long as no Event of Default or Potential Event of Defa ult with respect to the Pledging Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Pledging Party exist) has occurred or been designated as the result of an Event of Default with respect to the Pledging Party and to the extent that an obligation to Transfer Posted Collateral would not be created or increased by the Transfer, the Secured Party will Transfer to the Pledging Party on or prior to the third Business Day of each calendar mont h, in lieu of any interest or other amounts paid or deemed to have been paid with respect to the Cash (all of which may be retained by the Secured Party), the Interest Amount as calculated by the Secured Party on the first Business Day of each calendar month with respect to the immediately preceding Interest Period . On or after the occurrence of an Event of Default or Potential Event of Default with respect to the Pledging Party or an Early Termination Date as a result of an Event of Default with respect to the Pledging Party, the Secured Party shall retain any such Interest Amount as additional Eligible Collateral hereunder until the obligations of the Pledging Party under the Base Contract have been satisfied.

(ii) If the Interest Amount for an Interest Period is a negative number, then s o long as no Event of Default or Potential Event of Default with respect to the Secured Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Item 7
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8 Secured Party exist) has occurred or been designated as the result of an Event of Default with respect to the Secured Party, the Secured Party will calculate the AV Negative Interest Amount on the first Business Day of each calendar month with respect to the immediately preceding Interest Period and shall provide Notice of such AV Negative Interest Amount to the Pledging Party on the same Business Day. The Pledging Party will Transfer to the Secured Party such AV Negative Interest Amount on or prior to the second Business Day following such Notice . If any Posted Collateral is in the form of Cash in the same currency as the AV Negative Interest Amount, any AV Negative Interest Amount or portion thereof not Transferred pursuant to this subsection (ii) of this Paragraph 8(c) (the “Untransferred Interest Amount ”) will constitute a reduction of Posted Collateral in the form of such Cash; provided that if the amount of Posted Collateral which is comprised of such Cash is less than the Untransferred Interest Amount, such reduct ion shall only be to the extent of the amount of such Cash which is Posted Collateral and the Pledging Party shall remain obligated to Transfer the remainder of the Untransferred Interest Amount to the Secured Party. Any reduction of Posted Collateral in the form of Cash shall be deemed to be a Transfer and shall fulfill the Pledgor’s obligation to Transfer the AV Negative Interest Amount or related portion thereof to the Secured Party.

3. Paragraph 8(e) is deleted and replaced in its entirety with the following:

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9 Paragraph 10 – Credit Support Default

1. Paragraph 10(a) is amended and restated in its entirety as follows:

(a) A “ Credit Support Default ” shall exist with respect to a party ( the “Defaulting Party”) if:

(i) a party fails (or fails to cause its Custodian, as applicable) to make, when due, any Transfer of Eligible Collateral, Posted Collateral , positive Interest Amount or AV Negative Interest Amount, as applicable, required to be made by it, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or

(ii) a party or its Custodian fails to comply with any of the obligations under Paragraph 8 herein and the failure continues for five (5) Business Day after notice of the failure is given to that party; or

(iii) a party fails to comply with or perform any material agreement or obligation provided for in this CSA (other than those specified in Paragraphs 10(a)(i) and (ii)), and such failure continues for thirty (30) days after Notice of that failure is provided to that party; or

(iv) a Letter of Credit Default occurs with respect to the Letter of Credit provided by such party as Pledging Party.

Paragraph 12 – Certain Rights and Remedies

1. Paragraph 12(a) is amended to insert the words “(including any obligation of the Pledging Party to Transfer any AV Negative Interest Amount to the Secured Party)” in the eleventh line thereof between the words “after such obligations” and “are satisfied in full”.

2. Paragraph 12(b) is amended to replace the words “Interest Amount” in the third and sixth lines thereof with the words “amount of any positive Interest Amount”.

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IN WITNESS WHEREOF, the parties hereto have executed this Credit Support Addendum in duplicate, as of the effective date written above.

CITY OF PALO ALTO
Approval by Mayor:

By: _______________
Name: _______________
Title: _______________
Date: __________ ___, 2026

JPMORGAN CHASE BANK, N.A.

By: _______________
Name: _______________
Title: _______________
Date: __________ ___, 2026

City of Palo Alto
Approved as to form:

By: _______________
Name: _______________
Title: _______________
Date: __________ ___, 2026

City of Palo Alto
Approval by City Manager:

By: _______________
Name: _______________
Title: _______________
Date: __________ ___, 2026

City of Palo Alto
Approval by Administrative Services Director:

By: _______________
Name: _______________
Title: _______________
Date: __________ ___, 2026

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2 SCHEDULE 1

[THIS TEMPLATE IS FOR ISSUANCES OF LETTERS OF CREDIT IN PAPER FORM.

ALTERNATIVELY, THE PARTIES MAY AGREE TO ISSUANCE VIA SWIFT MT760, IN

WHICH CASE STANDARD SWIFT FIELDS AND CODES MAY BE USED AND

COMMUNICATIONS, DRAWINGS AND TRANSFERS WILL BE VIA
AUTHENTICATED SWIFT MESSAGES THROUGH JPMORGAN CHASE BANK, N.A.

AS ADVISING BANK WITHOUT ANY REQUIREMENT TO PRESENT THE ORIGINAL LETTER OF CREDIT OR RELATED DOCUMENTS IN PAPER FORM]

FORM OF LETTER OF CREDIT
[BANK NAME and ADDRESS]
Irrevocable Standby Letter of Credit No:
[INSERT REFERENCE]

Beneficiary: JPMorgan Chase Bank, N.A.

Date of Issuance: [INSERT ISSUANCE
DATE]

Initial Expiration Date: [Must be at least
one year after date of issuance]

Applicant: City of Palo Alto

As the Issuing Bank (“Issuer”), we, [Bank Name], hereby establish this irrevocable Standby Letter of Credit No. [INSERT REFERENCE] (this "Letter of Credit") in favor of the above - named beneficiary (“Beneficiary”) for the account of the above- named applicant (“Applicant”) in the amount of US$__________ (_________________ Million U.S. Dollars).

Beneficiary may draw all or any portion of this Letter of Credit at any time and from time to time, and Issuer will make funds immediately available to Beneficiary upon presentation of Beneficiary’s draft(s) at sight in substantially the form attached hereto as Exhibit “A” (“Sight Draft”), drawn on Issuer and accompanied by this Letter of Credit.

All Sight Drafts must be purportedly signed on behalf of Beneficiary, and the signator must indicate his or her title or other official capacity. No other documents will be required to be presented. Issuer will effect payment under this Letter of Credit within twenty- four (24) hours after presentment of any Sight Draft. Payment shall be made in U.S. Dollars with Issuer’s own funds in immediately available funds.

Issuer will honor any Sight Draft presented in substantial compliance with the terms of this Letter of Credit at the Issuer’s letterhead office, the office located at [Bank Address], or any
other full service office of the Issuer on or before the above -stated expiration date, as such Item 7
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3 expiration date may be extended hereunder. Partial and multiple draws and presentations are permitted on any number of occasions. Following any partial draw, Issuer will endorse this Letter of Credit and return the original to Beneficiary. FUNDS UNDER THIS LETTER OF

CREDIT ARE AVAILABLE TO BENEFICIARY BY PRESENTATION I N STRICT

COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT ON OR BEFORE 5:00 P.M., NEW YORK TIME, ON OR BEFORE A BUSINESS DATE OF THE EXPIRATION DATE.

FOR THE PURPOSES OF THIS LETTER OF CREDIT, “BUSINESS DAY” MEANS ANY

DAY OTHER THAN A SATURDAY, SUNDAY, OR OTHER DAY ON WHICH

COMMERCIAL BANKS ARE AUTHORIZED OR REQUIRED TO CLOSE IN THE STATE OF NEW YORK.

This Letter of Credit is issued pursuant to the provisions of that certain NAESB Base Contract for Sale and Purchase of Natural Gas between B eneficiary and Applicant dated as of _______________, 20__ (as the same may have been or may be amended from time to time, the “Agreement”). Notwithstanding any reference in this Letter of Credit to the Agreement or any other documents, instruments or agreements, or references in the Agreement or any other documents, instruments or agreements to this Letter of Credit, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.

This Letter of Credit will be automatically extended each year without amendment for a successive period of one (1) year from the expiration date hereof, as extended, unless at least thirty (30) days prior to the expiration date, Issuer notifies Beneficiary by registered mail that it elects not to extend this Letter of Credit for such additional period. Notice of non- extension will be given by Issuer to Beneficiary at Beneficiary’s address set forth herein or at such other address as Beneficiary may designate to Issuer in writing at Issuer’s letterhead address.

This Letter of Credit is freely transferable by Beneficiary in whole or in part, and the number of transfers is unlimited. Issuer shall effect any transfers immediately upon presentation to Issuer of this Letter of Credit and a completed written transfer request substantially in the form attached hereto as Exhibit "B." Such transfer will be effected at no cost to Beneficiary. Any transfer fees assessed by Issuer will be payable solely by Applicant, and t he payment of any transfer fees will not be a condition to the validity or effectiveness of the transfer of this Letter of Credit. If the original Letter of Credit shall be lost or destroyed, this Letter of Credit may be transferred, in lieu of the original Letter of Credit, by you or one of your affiliates (reasonably acceptable to us) providing us with a commercially reasonable indemnity.

THIS LETTER OF CREDIT MAY NOT BE TRANSFERRED TO ANY PERSON WITH WHICH U.S. PERSONS ARE PROHIBITED FROM DOING BUSINE SS UNDER U.S.

FOREIGN ASSETS CONTROL REGULATIONS OR OTHER APPLICABLE U.S. LAWS

AND REGULATIONS
Issuer waives any rights it may have, at law or otherwise, to subrogate to any claims which Beneficiary may have against Applicant or Applicant may have against Beneficiary.

All commissions, expenses, and charges incurred with this Letter of Credit are for the account of the Applicant.

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4 This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplifie d or limited by reference to any document, instrument or agreement referred to herein.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LETTER OF CREDIT,

BENEFICIARY SHALL HAVE THE OPTION TO PRESENT TO US EACH DOCUMENT

REQUIRED UNDER THIS LETTER OF CREDIT AS AN ELECTRONIC OR PORTABLE DOCUMENT FORMAT (".PDF") ATTACHMENT TO AN EMAIL. TRANSMISSION MADE FROM BENEFICIARY'S EMAIL ADDRESS TO US AT OUR EMAIL ADDRESS [INSERT];

PROVIDED THAT SUCH EMAIL TRANSMISSION MUST CONTAIN THE FOLLOWING CERTIFICATION “(I) WE CER TIFY THAT WE ARE THE BENEFICIARY OF THE LETTER OF CREDIT INDICATED IN THE .PDF ATTACHMENT(S) AND (II) EACH

DOCUMENT WE HAVE TRANSMITTED TO YOU VIA ELECTRONIC MEANS RATHER

THAN IN THE FORM OF A PHYSICAL DOCUMENT REPRODUCES ALL TEST, IMAGES

AND OTHER FEATURES OF TH ORIGINAL DOCUMENT (INCLUDING ANY

SIGNATURES AND ANY UNIVERSALLY UNIQUE IDENTIFIER OR OTHER UNIQUE

STRING OF CHARACTERS, MARKS OR OTHER IDENTIFYING INFORMATION APPEARING ON SUCH DOCUMENT) AND HAS NOT BEEN ALTERED." ANY SUCH EMAIL TRANSMISSION SHALL BE DEEMED A SITE DRAFT.

THIS PRESENTATION MAY BE DELIVERED TO US IN ELECTRONIC FORM, AND

SUCH ELECTRONIC COPY SHALL BE DEEMED TO BE THE ORIGINAL AND VALID FOR PURPOSES OF PRESENTATION HEREUNDER. IN THE EVENT A REQUEST IS

PRESENTED VIA EMAIL TO THE ISSUER, IT IS UNDERSTOOD AND AGREED THAT

THE ISSUER MAY ACT ON SUCH REQUEST WITHOUT THE NEED OR THE OBLIGATION TO SECURE THE ORIGINAL. IN ANY EVENT, THE ISSUER SHALL NOT

BE LIABLE FOR ANY DISCREPANCY THAT MAY ARISE BETWEEN THE REQUEST

TRANSMITTED BY EMAIL AND THE ORIGINAL REQUEST DELIVERED AS PROVIDED HEREIN.

THIS LETTER OF CREDIT IS SUBJECT TO AND GOVERNED BY THE INTERNATIONAL STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590 ("ISP98"). AS TO MATTERS NOT GOVERNED BY ISP98, THIS LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED IN

ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT

REFERENCE TO THE CONFLICT OF LAW PROVISIONS THEREOF THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

VERY TRULY YOURS,
[BANK NAME]

_________________________________ _________________________________

AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
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5 (CONFIDENTIAL) EXHIBIT “A”

TO LETTER OF CREDIT

SIGHT DRAFT

Draft Number __________________
$____________________________

At sight (or electronic format as authorized in the Letter of Credit), pay to the order of [Name of Beneficiary to be inserted], the amount of USD $____________ (__________________ and 00/100ths U.S. Dollars).

Value received and charged to the account of: [BANK NAME and ADRESS]. Drawn under [BANK NAME] Standby Letter of Credit No. [INSERT REFERENCE] Dated: _____________ JPMorgan Chase Bank, N.A.

By: ________________________
[name and title]

Account: [Applicant to be inserted]

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6 EXHIBIT “B”

TO LETTER OF CREDIT

FORM OF TRANSFER REQUEST

Irrevocable Standby Letter of Credit No. ____________________

Current Beneficiary: Applicant:

__________________________ ____________________________ __________________________ ____________________________ __________________________ ____________________________ __________________________ ____________________________

To: [Name of Issuer] ("Issuer")

The undersigned, as the current "Beneficiary" of the above -referenced Letter of Credit, hereby requests that you reissue the Letter of Credit in favor of the transferee named below [insert transferee name and address below]:

_____________________________
_____________________________
_____________________________
_____________________________

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7 From and after the date this transfer request is delivered to Issuer, the transferee shall be the "Beneficiary" under the Letter of Credit for all purposes and shall be entitled to exercise and enjoy all of the rights, privileges and benefits thereof.

Dated: ________________ JPMorgan Chase Bank, N.A.

By: ______________________
Name: ______________
Title: ______________

[Notary Acknowledgement]

To be signed by a person purporting to be an authorized representative of Beneficiary and indicating his or her title or other official capacity, and acknowledged by a notary public.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: August 10, 2026
Report #:2601-5863
TITLE
Adoption of an Ordinance Amending Section 2.38.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code, as accepted by the Policy and Services Committee, to increase the thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make other technical changes.

RECOMMENDATION
Staff recommends that Council adopt an ordinance to amend Palo Alto Municipal Code Section

2.28.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures], as recommended by the Policy and Services Committee, to increase thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make technical changes.

EXECUTIVE SUMMARY
In January 2026 the City Council approved the City’s Auditor’s advisory report on contract solicitation and authority levels. The report recommended adjusting purchasing levels to keep up with inflation since they were last adjusted in 2016 and to reflect current market conditions and best practices in peer cities. A working group made up of city departments proposed changes to the municipal code to implement appropriate adjustments in accordance with the advisory report. Additional changes are proposed to increase operational efficiencies, ensure consistency in the code, and clarify existing provisions. If approved, these changes would go into effect thirty days after the second reading of the ordinance, which is expected to be in the September timeframe.

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BACKGROUND
On January 20, 2026, the City Council, as recommended by the Policy and Services Committee, approved the City Auditor’s advisory report on contract solicitation and authority levels1.

Overall, the advisory report recommended that the City review the solicitation requirements and authority levels as contained in the purchasing procedures of the municipal code. The report noted that procurement procedures were last amended in 20162 and compared to 15 benchmarked jurisdictions, Palo Alto’s solicitation and contract authority thresholds are among the lowest in the region. Moreover, costs have increased significantly while the purchasing thresholds have remained the same over this period. The auditor concludes in their report that “updating the City’s procurement procedures will improve purchasing processes, eliminate administrative inefficiencies and better align the City with peer and industry best practices.” Management’s response to the advisory report showed concurrence with the auditor’s observations and conclusion. Furthermore, staff believes that updating these levels is another step in the effort to improve the procurement process by implementing additional streamlining changes. Earlier steps have included updating the operational purchasing handbook, implementing a new procurement software system for greater administrative ease, standardizing contract templates for faster contract development, provision of citywide training on the purchasing process to improve effectiveness, and the automation of the intake process for solicitations.

Staff collaborated with the City Attorney's Office in reviewing and recommending adjustments to the municipal code and procurement policies. Additional review and input were solicited from departments to ensure that changes would be comprehensive and inclusive of input from across the organization.

ANALYSIS
Staff considered inflation since the last municipal code changes and applied a factor from the Consumer Price Index (CPI) for the San Francisco Bay Area along with comparing to the peer cities shown in Appendix B of the City Auditor’s report to adjust the purchasing thresholds to align with current market buying power. As a result, staff is recommending adjustments to the purchasing thresholds based on the above factors; changes are summarized in the tables 1 and 2 below.
1 2512-5773 Approval of the Advisory Report: Contract Solicitation and Authority Levels and Subsequent Management Responses as recommended by the Policy and Services Committee; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85260&dbid=0&repo=PaloAlto&searchid=c95c7248 -de48-4652-8992-ad4896787207
2 Finance Committee Recommends Adoption of an Ordinance Amending Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code to Establish Contracting and Purchasing Procedures and to Define the Contracting Authority of City Officers and Employees;
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By increasing the purchasing thresholds and making other changes outlined, this will improve government efficiencies by reducing the time incurred for solicitation and contract processing.

Administrative time supporting staff report writing, formal RFP processes for minor activities will be repurposed to ensuring solicitations will be more effective as the thresholds will be better aligned with the rigorous and more time-consuming nature of formal solicitations. Semi- annual reports will continue to maintain transparency to the Council summarizing all contracts approved by the City Manager and Chief Procurement Officer.

Table 1: Solicitation Process Levels
Table 2: Contract Approval Authority Levels
To ensure continued efficiency and relevance of these thresholds, staff recommends the adoption of an automatic CPI-based escalator for contract approval authority, and solicitations thresholds for goods and services, so these thresholds keep pace with market trends. Bid thresholds for public works projects will be consistent with the California Uniform Public Construction Cost Accounting Act (CUPCCA) and will automatically incorporate any increases made under State law. If approved starting July 1, 2031 and every five years after, the contract authority and solicitation dollar thresholds will adjust automatically based on the Bay Area CPI, rounded to the nearest $10,000. Council will be informed of the increase following the automatic adjustment.

Other key changes include:
Increased settlement authority for City Attorney from $35,000 to $50,000.

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Exemptions from competitive solicitation for recreation instructors and other service providers with unique talents (e.g., performers, speakers, trainers) and government-to- government purchases. This will streamline the hiring of independent contractors, such as class instructor and other instructor led activities wherein often only one or a limited number of appropriate providers are available.
Exemption for agreements with other agencies and government entities such as joint powers authorities and nearby cities. This will streamline the process for contracting with public agencies since such contracts are not the result of solicitations and currently require multiple steps to approve by staff in several departments. This will eliminate most of the steps for these contracts, which are infrequent. A new purchasing category for information technology (IT) contracts has been created to better reflect the broad array of technology products and services that have evolved over the past decade. This will increase efficiency for staff when formulating contracts and solicitation strategies. IT solicitation threshold reasonably aligns with professional services and contract authority threshold aligns with general and professional services.

This is also a more conservative response to the advisory report which recommended an exemption from competitive solicitations for information technology related purchases, which was cited in several peer cities.
City Manager authority to increase the amount of a contract previously approved by Council. This will allow the City Manager to make a one-time extension to a Council approved contract up to the amount of 10 percent or $100,000, whichever is lower. This will reduce some of the low dollar contract amendments that go to Council simply to add a relatively small portion to a contract by providing flexibility and address the operational inefficiencies noted in the City’s Auditor’s advisory report. After City Council approval of the vehicle replacement budget annually, the City Manager may award fleet vehicle purchase/retrofit contracts up to the Council authorized level. This will reduce the number of individual vehicle purchases that must be approved by Council and enable staff to execute more expeditiously on high demand vehicles. All purchases will continue to be reviewed by the multi-departmental Fleet Review Committee per vehicle policies. Council will still see the vehicle purchases in the semi-annual report to Council on City Manager approved contracts.

FISCAL/RESOURCE IMPACT
Impacts of increasing solicitation and signature authority level thresholds include improved and more efficient processes, better solicitation outcomes and continued transparency to the City Council. The timing of these proposed changes to the municipal code Chapter 2.30 aligns with the FY2027 budget balancing strategies and reductions which focused on harnessing more administrative efficiencies.

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STAKEHOLDER ENGAGEMENT
A cross department working group was formed to develop and review the proposed changes at multiple stages throughout the process. This group included staff from the City Manager, City Attorney, Administrative Services, Public Works, Information Technology and Utilities departments. The proposed changes were also reviewed with the Executive Leadership Team.

ENVIRONMENTAL REVIEW
This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably foreseeable indirect physical change in the environment.

ATTACHMENTS
Attachment A - Ordinance Amending PAMC Section 2.38.240 and Chapter 2.30 APPROVED BY:

Lauren Lai, Administrative Services Director
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Ordinance No. _____
Ordinance of the Council of the City of Palo Alto Amending Section

2.38.240 [Settlement of Claims and Actions] and Chapter 2.30 [Contracts and Purchasing Procedures] of the Palo Alto Municipal Code to increase the thresholds for solicitation of goods and services, increase contract approval and settlement authority, and to make other technical changes.

The Council of the City of Palo Alto ORDAINS as follows:

SECTION 1. Section 2.28.240 (Settlement of claims and actions) of Chapter 2.28 (Fiscal Procedures*) of Title 2 (Administrative Code*) of the Palo Alto Municipal Code is amended to read as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses):

2.28.240 Settlement of claims and actions.

As provided in Section 935.4 of the Government Code of California, the city attorney is designated to perform the functions of the city council relative to claims and actions against the city or any of its officers or employees under the provisions of Division 3.6 of the Government Code, as follows:
(a) Where the city has insured itself against liability for the claimed injury, the city attorney shall forward to the insurance carrier without prior council approval a written recommendation as to acceptance, settlement, or rejection of such claim, provided that the amount of any recommended allowance, compromise or settlement does not exceed $35,000.00;
(b) Where the city is uninsured, the city attorney shall be authorized to accept, settle or reject without prior approval of the council, claims against the city, provided that no allowance, compromise or settlement shall exceed $35,000.0050,000.00. Upon the written order from the city attorney, the director of administrative services shall cause to be issued a warrant upon the treasury of the city in the amount for which a claim has been allowed, compromised or settled;
(c) The city attorney is further authorized to compromise or settle, without prior approval of the council, except on a matter of policy, any actions which the city is either plaintiff or defendant and which are not covered by insurance, provided that the amount of such compromise or settlement shall not exceed $35,000.0050,000.00; (d) The city attorney shall make biannual reports to the council on action taken on claims and
actions against the city;
(e) A recommendation under subsection (a) above shall constitute "action" upon such claim within the meaning of Government Code Section 945.4.

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SECTION 2. Chapter 2.30 (Contracts and Purchasing Procedures*) of Title 2 (Administrative Code*) of the Palo Alto Municipal Code is amended to read as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses):

Ch
apter 2.30
CONTRACTS AND PURCHASING PROCEDURES*
Sections:
[…]
PART 2 -- CONTRACT TYPES

2.30.100 Public works contract.

2.30.110 Contract for goods.

2.30.120 General services contract.

2.30.130 Professional services contract.

2.30.140 Contracts for wholesale utility commodities and services.

2.30.150 Contracts for dark fiber optics licensing services.

2.30.155 Information Technology services contracts.

2.30.160 Emergency contracts.

PART 3 -- CONTRACTING AUTHORITY

2.30.200 Procurement officer contract award authority.

2.30.210 City Manager contract award authority.

2.30.220 City Attorney contract award authority.

2.30.221 Periodic automatic adjustments to contract award authority.

2.30.225 Wholesale utility commodity transactions.

2.30.230 Designated employee purchases of $10,000.0015,000.00 or less.

2.30.240 Designated employees’ use of petty cash, P-card or other credit card.

2.30.250 Council approval or award of contracts.

2.30.260 Contracts with terms exceeding one year — Appropriation.

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2.30.270 Delegations of authority to contract.

2.30.280 Authority to modify and terminate contracts not approved or awarded by the Council.

2.30.290 Authority to modify contracts awarded by the Council.

2.30.295 Limitations on contract authority; authority otherwise conferred.

PART 4 — COMPETITIVE SOLICITATION REQUIREMENTS

2.30.300 Public works contracts.

2.30.310 Contracts for goods.

2.30.320 General services contracts.

2.30.330 Professional services contracts.

2.30.335 Information Technology services contracts.

2.30.340 Contracts for wholesale utility commodities and services.

2.30.345 Periodic automatic adjustments to solicitation thresholds.

2.30.350 Contract splitting prohibited.

2.30.360 Exemptions from competitive solicitation requirements.

PART 5 – COMPETITIVE SOLICITATION PROCEDURES

2.30.400 Informal invitation for bids, request for quotes or requests for proposals.

2.30.410 Formal request for proposals.

2.30.420 Formal invitation for bids or request for quotes – Notice, submittal, opening.

2.30.430 Combined request for proposals and invitation for bids.

2.30.440 Determination of lowest responsive/responsible bidder.

2.30.450 Tie bids.

2.30.460 Correction or withdrawal of bids or proposals.

2.30.470 Cancellation of solicitations -- Rejections of bids/proposals.

2.30.480 Waiver of minor irregularities, defects and informalities.

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2.30.485 Delegation of awarding authority determinations.

2.30.490 Design-build contract procurement procedures. […]

PART 1 — GENERAL

[…]

2.30.040 Centralized purchasing.

All acquisitions and purchases shall be made by and through the Procurement Officer, except:
(a) Purchases of goods and services made from petty cash funds made in conformance with this chapter and pursuant to control procedures approved by the City Manager and contained in the administrative policies and procedures manual maintained by the City Manager;
(b) Emergency purchases made in conformance with this chapter and Federal Emergency Management Agency (“FEMA”) Public Assistance Program’s procurement orders, or other similar rules, regulations, guidelines and control procedures for cost reimbursement purposes approved by the City Manager and contained in the purchasing manual;
(c) Contracts for legal services;
(d) Purchases of goods and services, and payment of public works services, by city procurement card (“P-card”) or other credit card, made in conformance with this chapter and pursuant to control procedures approved by the City Manager and contained in the purchasing manual;
(e) Purchases where the total expenditure by the city does not exceed $10,000.0015,000.00, made in conformance with this chapter and pursuant to control procedures approved by the City Manager and contained in the purchasing manual; (f) Transactions negotiated under master contracts for wholesale utility commodities and services, as described in Section 2.30.140 made in conformance with Section 2.30.340; (g) Mutual aid agreements; and
(h) Delegations made according to Section 2.30.230.

[…]
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2.30.110 Contract for goods.
(a) A contract for goods includes a contract or purchase order for the purchase of supplies, materials or equipment, including, without limitation, office supplies, janitorial supplies, furnishings, equipment, machinery, tools, vehicles, computer hardware and software and other personal property, materials, or goods. A contract for goods includes a blanket purchase order contract, where a specified quantity of units to be purchased is not established at the time the contract is executed. A blanket purchase order contract must establish a maximum dollar amount of expenditure for the contract and set forth pricing terms for the items to be purchased. A contract for goods may include labor incidental to the purchase of goods, including any set-up, installation, and testing services.
(b) A contract for goods includes a contract or purchase order for the purchase of information technology equipment and computer hardware including, without limitation, desktop computers, laptops, mobile devices, tablets, peripherals, servers, and physical data storage infrastructure. This definition includes bundled service contracts that provide for the installation, support, and maintenance with the acquisition of computer hardware. Standalone maintenance and service agreements for computer hardware are excluded under this definition and are governed under Section 2.30.155.

2.30.120 General services contract.

A general services contract includes a contract providing for work, labor or services not requiring specialized experience, knowledge or training with or without the furnishing of goods, materials, supplies or equipment, including, without limitation:
(a) Maintenance of public buildings, streets, parks and playgrounds and other public improvements;
(b) Repair, modification and maintenance of equipment or other goods; (c) Licensing, installation and maintenance of or relating to information technology property, goods and services, including, without limitation, computer hardware and software, and data storage services, unless the information technology services would require specialized certification, knowledge, expertise, or training are needed and provided; (dc) Janitorial services, uniform cleaning, tree trimming, street sweeping, power washing and landscape maintenance;
(ed) Leasing or licensing of goods and other personal property for use by the city; and (fe) General class instruction, including, without limitation, recreation class instruction services.

2.30.130 Professional services contract.

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A professional services contract includes a contract for services which involves the exercise of professional discretion and independent judgment based on specialized certification, knowledge, expertise or training. These services may include, without limitation, those provided by accountants, actuaries, auditors, appraisers, architects, attorneys, engineers, financial advisors, information technology experts, instructors, and environmental and land use planners.

[…]

2.30.155 Information technology services contracts.
(a) An information technology services contract includes a contract for information technology experts and the acquisition, licensing, installation, maintenance, or support of computer software.
(b) For the purposes of this Section, computer software includes, without limitation:
(1) cloud-based, hosted, or managed subscription software; (2) electronic data storage and processing services;
(3) telecommunications and network services;
(4) vendor-provided standard-form agreements for software purchase or licensing; and (5) standalone computer hardware maintenance or service contracts. (c) This Section does not apply to the purchase of computer hardware as defined under Section 2.30.110(b) or public works contract as defined under Section 2.30.100. (d) The contracts referred to herein shall be subject to the City's information security policies, terms, conditions and other requirements established by the chief information officer with the concurrence and approval of the City Attorney. […]

PART 3 – CONTRACTING AUTHORITY

2.30.200 Procurement officer contract award authority.

The Procurement Officer may award and sign the following contracts:
(a) Public Works Contracts. Public works contracts, where the term does not exceed three years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first contract year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year.

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(b) Contracts for Goods. Contracts to purchase goods, where the term does not exceed three years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. (c) General Services Contracts. General services contracts, where the term does not exceed three years, and the contract price and any price contingency established for change orders or additional services, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first contract year, and do not exceed $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year.
(d) Professional Services Contracts. Professional services contracts, where the term does not exceed three years, and the contract price, and any price contingency established for additional services, but excluding sales tax or use tax, do not exceed the sum of $85,000.00150,000.00 in the first contract year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year.
(e) Software and Hardware Purchase, Licensing, Maintenance and Support Information Technology Services Contracts. Notwithstanding Subsection 2.30.200(c), the. The Procurement Officer may award and sign Information Technology services contracts other than general services agreements, including, without limitation, vendor-based standard form hardware and software purchase and licensing contracts, for the purchase of hardware and software, the licensing of software, and the maintenance and support of hardware and software where the term of licensing or maintenance and support services does not exceed five years and the contract price, excluding sales tax or use tax, does not exceed $85,000.00150,000.00 per year in the first contract year and does not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. The contracts referred to herein may include contracts for data storage services, which shall be subject to the city's information security policies, terms, conditions and other requirements established by the chief information officer with the concurrence and approval of the City Attorney.

2.30.210 City Manager contract award authority.

The City Manager may award and sign the following contracts:
(a) Public Works Contracts. Public works contracts, where the term does not exceed three years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $250,000.00350,000.00 in the first contract year, and do not exceed the sum of $250,000.00350,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year.

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(b) Contracts for Goods. Contracts to purchase goods, where the term does not exceed three years and the contract price and any contingency established for change orders, but excluding sales tax or use tax, do not exceed $250,000.00350,000.00 in the first contact year, and do not exceed the sum of $250,000.00350,000.00 and any unexpended monies carried forward from a prior contract year, in any subsequent contract year. (c) General Services Contracts. Contracts for services associated with the leasing or licensing of personal property other than hardware or software, where the term does not exceed seven years, and the contract price and any price contingency established for change orders, but excluding sales tax or use tax, do not exceed $85,000.00150,000.00 in the first contract year, and do not exceed the sum of $85,000.00150,000.00 plus any unexpended monies carried forward from a prior contract year, in any subsequent contract year. […]
(g) Contracts to Rent, Lease, License, Acquire, Transfer or Purchase Interests in Real Property from Other Parties. Contracts for the rental, leasing, licensing, or purchase by installment interests in real property from other parties for a term of seven years or less, where the contract price does not exceed $85,000.00150,000.00 per year, or to encumber or transfer any interest in real property from other parties for any term of years. The City Manager may enter into and sign a contract to acquire or purchase an interest in real property, where the contract price does not exceed $85,000.00150,000.00. […]
(l) Software and Hardware Purchase, Licensing, Maintenance and Support Information Technology Contracts Services Contracts. Notwithstanding Subsection 2.30.210(c), Information Technology service contracts the City Manager may award and sign contracts other than general services agreements, including, without limitation, vendor-based standard form hardware and software purchase and licensing contracts, for the purchase of hardware and software, the licensing of software, and the maintenance and support of hardware and software, where the term of licensing or maintenance and support services does not exceed seven years and the contract price, excluding sales tax or use tax, does not exceed $85,000.00150,000.00 per year in the first contract or fiscal year and does not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior fiscal year, in any subsequent contract or fiscal year. The contracts referred to herein may include contracts for data storage services, which shall be subject to the city's information security policies, terms, conditions and other requirements established by the chief information officer with the concurrence and approval of the City Attorney. (m) Contracts with a business operator implementing business tax offsets under Section

2.37.080.
(n) Other Contracts. All other types of contracts for which the contract term does not exceed three years and the total expenditure by the city does not exceed $85,000.00150,000.00 Attachment A
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in the first contract or fiscal year, and does not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior fiscal year, in any subsequent contract or fiscal year.
(o) Fleet Vehicles. Contracts for the purchase or retrofitting of fleet vehicles within the amount appropriated for such purchases by the Council.

2.30.220 City Attorney contract award authority.

The City Attorney may award and sign contracts for legal services, including, without limitation, services provided by outside counsel, investigators, consultants and other experts needed for litigation or other administrative and legal proceedings, to be provided to the city for any time period, where the contract price and any contingency established for additional services, but excluding sales tax or use tax, do not exceed the sum of $85,000.00150,000.00 in the first contract or fiscal year, and do not exceed the sum of $85,000.00150,000.00 and any unexpended monies carried forward from a prior fiscal year, in any subsequent contract or fiscal year. In addition to the authority described herein, the City Attorney may sign contracts, where the contract price exceeds the amounts set forth above, provided the Council has first approved the use of such services.
(a) Notwithstanding the foregoing, the City Attorney may use any funds under a legal services contract when necessary to pay for services related to active litigation or administrative proceedings.
(b) The City Attorney is authorized to enter into and execute on behalf of the city, without the prior approval of the Council, any amendment or change order to a contract, previously approved by the Council, that does not increase the compensation payable under the contract and to accomplish the following:
(1) To extend the term of the contract for a period not to exceed twelve consecutive months from the last Council-approved contract expiration date; (2) To make minor revisions to the scope of services or delivery schedule; (3) To reduce the scope of services, the term, or the compensation of a contract; or (4) To make clerical corrections.

2.30.221. Periodic automatic adjustments to contract award authority. (a) For the purposes of this Section, "CPI" means the Consumer Price Index, All Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics for the San Francisco-Oakland-Hayward area, with all items included. In the event the CPI is no longer published, the Procurement Officer shall use another index published by either the State of California or a federal department or agency that is charged with the Attachment A
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responsibility of measuring the cost of living in the geographical area that includes the City of Palo Alto.
(b) For the purposes of this Section, “Contract Award Authority Thresholds” means the monetary amounts set forth in Sections 2.30.200, 2.30.210, and 2.30.220. (c) Beginning on July 1, 2031, and continuing every five years thereafter on July 1st, the Contract Award Authority Thresholds will increase based on the percentage increase from the CPI published most recently preceding July 1st of the applicable adjustment year. The increase in the Contract Award Authority Thresholds shall be rounded to the nearest ten thousand and this amount will serve as the Contract Award Authority Thresholds for the next five years. If there is no increase in the CPI, then the Contract Award Authority Thresholds are unchanged.
(d) The Procurement Officer shall perform the foregoing calculations and report the adjusted Contract Award Authority Thresholds to the Council as soon as practical.

[…]

2.30.230 Designated employee purchases of $10,000.0015,000.00 or less.

Employees authorized, in writing, by their department heads may award and sign contracts for the purchase of goods and the procurement of general services, where the contract price does not exceed $10,000.0015,000.00 and the contract term does not exceed one year. All purchases and procurements shall be made in accordance with the contracting procedures and requirements contained in this chapter and in the purchasing manual. The written authorizations of department heads shall be kept on file by the Procurement Officer.

[…]

2.30.270 Delegations of authority to contract.

This Section establishes the exclusive source of authority to delegate any authority to contract granted by this chapter. The authority to delegate contracting authority shall not be implied from any other provision of this municipal code.
(a) Procurement Officer Delegations. The Procurement Officer may delegate the authority granted under Section 2.30.200, as follows: a city employee holding the position of contract manager administrator or senior buyer may be authorized to award and sign any contract in an amount of $50,000.0075,000.00 or less per year with a term not to exceed three years; and a city employee holding the position of buyer may be authorized to award and sign any contract in an amount of $25,000.00 or less per year with a term not to exceed three years.
[…]
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2.30.280 Authority to modify and terminate contracts not approved or awarded by the Council.
(a) Each employee with contracting authority conferred by this chapter may authorize and sign amendments or change orders to contracts he or she they awarded under the authority granted in this chapter subject to the following:
(1) All modifications to contracts, including, without limitation, changes to the scope of work, quantity of goods, price or term shall be made in writing and accomplished executed in accordance with the terms of the original contract; (2) The amendment or change order to a contract shall not cause the contract, as modified, to exceed the monetary or term limits of that city employee's contracting authority, as described in this chapter, except that the city employee may extend the term of a contract, with no increase in the compensation payable, for a period not to exceed six twelve consecutive months beyond the term limits of his or her contracting authority; and
[…]

2.30.290 Authority to modify contracts awarded by the Council.

[…]
(b) The City Manager is authorized to enter into and execute on behalf of the city, without the prior approval of the Council, any amendment or change order to a contract, previously approved by the Council, that does not increase the compensation payable under the contract or and to accomplish the following:
(1) To extend the term of the contract for a period not to exceed six twelve consecutive months from the last Council-approved contract expiration date; (2) To make minor revisions to the scope of services or delivery schedule; (3) To reduce the scope of services, the term, or the compensation of a contract; or (3 4) To make clerical corrections.
(c) The City Manager may approve and sign assignments of contracts, including, without limitation, leases and licenses, previously approved by the Council when he or she the City Manager has determined that the proposed assignee has the ability, capacity, experience and skill and is otherwise qualified to perform the contract. (d) Notwithstanding any other provision in this Section, the City Manager is authorized to enter into and execute on behalf of the city, without prior approval of the Council, a one- Attachment A
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time amendment or change order to a professional services, information technology services, or general services contract, previously approved by Council, provided that:
(1) The change does not to exceed ten percent (10%) of the amount of the original contract amount or $100,000, whichever is lower;
(2) the change is reasonably related to the scope of the work authorized under the original contract; and
(3) funding is available and appropriated for the work.

[…]

PART 4 – COMPETITIVE SOLICITATION REQUIREMENTS

2.30.300 Public works contracts.

Public works contracts that are not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action shall be solicited, as follows:
(a) In addition to any exemption under Section 2.30.360, public works contracts providing for an estimated expenditure less than the limit set forth in California Public Contract Code Section 22032(a), as may be amended, and not otherwise required to be formally bid by the Charter, may be performed without undergoing a competitive solicitation. (ab) Public works contracts, providing for an estimated expenditure less than the limit set forth in California Public Contract Code Section 22032(b), as may be amended of $85,000.00 or less, and not otherwise required to be formally bid by the Charter, shall be solicited by informal invitation for bids in accordance with Section 2.30.400. (1) In lieu of the solicitation requirements set forth in this subsection (b), public works contracts may be awarded from a list of qualified contractors, identified according to categories of work, to be created and maintained by the Procurement Officer, so long as the list is created and the award of contract to a contractor on the list is in compliance with procedures contained in this chapter and in the purchasing manual. (b c) Public works contracts, providing for an estimated expenditure exceeding the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00, shall be solicited by formal invitation for bids in accordance with Section

2.30.420.
(c d) Article VII, Section 6 of the City Charter requires formal bidding for public works contracts funded by bonded indebtedness of the city or by assessment against particular property in Palo Alto. Section 2.30.300 requires the formal bidding of all public works Attachment A
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contracts exceeding $85,000.00, unless an exemption is provided by Section 2.30.360 or is otherwise authorized by Council under Section 2.30.300(d). (d e) Design-build contracts, to the extent debt financing limitations do not apply, that provide for an expenditure of more than the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00, shall be solicited by requests for proposals in accordance with Section 2.30.490. Despite any law to the contrary, the design-build method of delivery may be used for any public works contract, including, without limitation, any design-build-operate contracts, where the City Manager determines, in writing, the delivery method will best fulfill the requirements of the public works project.
(e f) The Council may determine that a particular public works project may be solicited and contracted for by using alternate project delivery methods, including, without limitation, construction manager at risk or competitive negotiation. Any Council action authorizing an alternate project delivery method shall set forth the reasons and factual basis supporting the use of the alternate project delivery method for the project and describe the solicitation method to be used and the criteria for determining the successful bidder, to whom the public works contract should be awarded.

2.30.310 Contracts for goods.

Contracts for goods, not exempt from the competitive solicitation requirements under Section

2.30.360 or by Council action, shall be solicited, as follows:
(a) Contracts for goods, providing for an estimated expenditure by the city of $50,000.00100,000.00 or less, shall be solicited by informal request for quotes informal invitation for bids in accordance with the provisions of Section 2.30.400; and (b) Contracts for goods, providing for an estimated expenditure by the city exceeding $50,000.00100,000.00, shall be solicited by formal request for quotes formal invitation for bids in accordance with the provision of Section 2.30.420.

2.30.320 General services contracts.

General services contracts, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited, as follows:
(a) General services contracts, providing for an estimated expenditure by the city not exceeding $50,000.00100,000.00, shall be solicited by informal request for quotes invitation for bids or informal request for proposals in accordance with Section

2.30.400.

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(b) General services contracts, providing for an estimated expenditure by the city exceeding $50,000.00100,000.00 shall be solicited by formal invitation for bids request for quotes in accordance with Section 2.30.420 or by formal request for proposals in accordance with Section 2.30.410.
(c) The Procurement Officer shall determine, after consideration of whether the needs of the city or the circumstances require that a contract should be awarded based on significant factors in addition to price, whether the services subject to a general services contract shall be solicited by request for quotes bid or request for proposals. 2 .30.330 Professional services contracts.

Professional services contracts, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited, as follows:
(a) Professional services contracts, providing for an estimated expenditure by the city not exceeding $85,000.00150,000.00, shall be solicited by informal request for proposals in accordance with Section 2.30.400.
(b) Professional services contracts, providing for an estimated expenditure by the city exceeding $85,000.00150,000.00, shall be solicited by formal request for proposals in accordance with Section 2.30.410.
[…]

2.30.335 Information Technology services contracts.

Information technology services contracts, not exempt from the competitive solicitation requirements under Section 2.30.360 or by Council action, shall be solicited as follows:
(a) Information technology services contracts, providing for an estimated expenditure by the city not exceeding $150,000.00, shall be solicited by informal request for proposals in accordance with Section 2.30.400.
(b) Information technology services contracts, providing for an estimated expenditure by the city exceeding $150,000.00, shall be solicited by formal request for proposals in accordance with Section 2.30.410.
(c) In lieu of the solicitation requirements set forth in Subsections (a) and (b), Information Technology services contracts in any amount may be awarded from a list of qualified professionals to be created and maintained by the Procurement Officer, so long as the list is created and the award of contract to an entity on the list is in compliance with procedures contained in this chapter and in the purchasing manual.

2.30.340 Contracts for wholesale utility commodities and services.

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(a) Solicitation of Contracts.
(1) Contracts for the purchase or sale-incidental-to-purchase of wholesale utility commodities and services, providing for an estimated expenditure not exceeding $85,000.00150,000.00, shall be solicited by informal invitation for bids or informal request for proposals in accordance with Section 2.30.400. Contracts for the purchase or sale-incidental-to-purchase of wholesale utility commodities and services, providing for an estimated expenditure exceeding $85,000.00150,000.00, shall be solicited by formal invitation for bids, formal request for proposals or combination thereof, in accordance with Section 2.30.410, 2.30.420 or 2.30.430 or through solicitation of counterparties enabled to transact under a Council-approved master agreement in accordance with Section 2.30.340(a)(3). […]

2.30.345 Periodic automatic adjustments to solicitation thresholds. (a) For the purposes of this Section, "CPI" means the Consumer Price Index, All Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics for the San Francisco-Oakland-Hayward area, with all items included. In the event the CPI is no longer published, the Procurement Officer shall use another index published by either the State of California or a federal department or agency that is charged with the responsibility of measuring the cost of living in the geographical area that includes the City of Palo Alto.
(b) For the purposes of this Section, “Solicitation Thresholds” means the monetary amounts set forth in Sections 2.30.310, 2.30.320, 2.30.330, 2.30.335, and 2.30.340. (c) Beginning on July 1, 2031 and continuing every five years thereafter on July 1st, the Solicitation Thresholds will increase based on the percentage increase from the CPI published most recently preceding July 1st of the applicable adjustment year. The increase in the Solicitation Thresholds shall be rounded to the nearest ten thousand and this amount will serve as the Solicitation Thresholds for the next five years. If there is no increase in the CPI, then the Solicitation Thresholds are unchanged. (d) The Procurement Officer shall perform the foregoing calculations and report the adjusted Solicitation Thresholds to the Council as soon as practical.

[…]

2.30.360 Exemptions from competitive solicitation requirements. […]
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(b) Whenever solicitations of bids or proposals would for any reason be impracticable, unavailing or impossible, provided that in the case of a public works project, the project is not otherwise required by the charter to be formally bid. These situations are those where solicitations of bids or proposals would not be useful or produce any operational or financial advantage for the city. Situations where solicitations of bids or proposals would be impracticable, unavailing or impossible, include, without limitation, the following:
(1) Contract specifications cannot be drawn in a way that would enable more than one vendor, consultant or contractor to meet them;
(2) Due to circumstances beyond the control of the city, the time necessary to use the competitive solicitation process, procedures and requirements would result in a substantial economic loss to the city or the substantial interference with a required city operation;
(3) Special conditions attached to a grant, donation or gift requires the use of particular goods and/or services.
(4) A vendor, consultant or contractor possesses specialized knowledge, experience or familiarity with a city project, operation, or ongoing matter such that a competitive solicitation would not produce a materially better result or would result in added cost, delay, or disruption to city operations.
[…]
(e) Contracts for goods where, pursuant to Section 2.30.900, the City Manager has determined that standardization of the supplies, materials, services, or equipment is permissible.
[…]
(i) Professional services and Information Technology services contracts, where the estimated total expenditure by the city, regardless of term, does not exceed $50,000.00100,000.00.

The dollar threshold in this subsection shall be adjusted in accordance with Section

2.30.345.
(j) Cooperative purchases, with one or more other public agencies or through a cooperative purchasing agency, provided: (i) the services are solicited using methods substantially similar to those required by this chapter, as determined by the Procurement Officer the underlying purchase was made through a competitive solicitation; and (ii) the contract is consistent with the requirements specified in this municipal code. (k) The use of another governmental or public agency's contract or substantially the same contract terms provided: (i) the agency uses a solicitation method substantially similar to the method required by this chapter the underlying purchase was made through a competitive solicitation ; (ii) the contract is consistent with the requirements specified in Attachment A
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this municipal code; and (iii) the Procurement Officer determines that the city will realize overall value to utilizing the other agency's contract or contract terms compared to the city performing its own solicitation.
[…]
(r) Contracts, where the estimated total expenditure by the city does not exceed $10,000.0050,000.00. The dollar threshold in this subsection shall be adjusted in accordance with Section 2.30.345.
[…]
(u) Contracts for services where selection is based on a unique personal accomplishment or characteristic such as guest speakers, performers, artists, recreation instructors, trainers, and facilitators.
(v) Contracts with another government agency, including a joint powers authority, to purchase goods or services.

PART 5 – COMPETITIVE SOLICITATION PROCEDURES

2.30.400 Informal invitation for bids, request for quotes or requests for proposals.

(a) An informal invitation for bids, request for quotes, or requests for proposals may be solicited by any reasonable means, including, without limitation, mail, telephone, facsimile transmission, e-mail or posting to the city's web site. Quotations shall be solicited from a minimum of three bidders or proposers; if quotations from three bidders or proposers cannot be obtained by the exercise of due diligence, quotations shall be solicited from less than three bidders or proposers, as practicable. The Procurement Officer shall maintain a record of all informal invitations for bids, informal request for quotes, and informal requests for proposals received by the city for a period of time in compliance with California law and the city's records retention schedule. (b) An informal invitation for bids and informal request for quotes shall be awarded to the lowest responsive and responsible bidders, as described in Section 2.30.440. […]

2.30.420 Formal invitation for bids or request for quotes – Notice, submittal, opening. (a) Advertising. Contracts that must be solicited by formal invitation for bids or request for quotes shall be solicited by notices inviting bids by advertising the notices inviting bids on the City's website for no fewer than five days prior to the date set for receiving bids. As practicable, bids shall be solicited from a minimum of three bidders.

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(b) Notice. The notices inviting bids shall generally describe the goods and/or services to be purchased or acquired or the public works to be constructed, identify the place where the bid proposal form, specifications and other contract documents may be obtained, and specify the date, time and place when and where bids will be opened. (c) Bid Submittal. All bids shall be sealed. All bids shall be submitted at the place, and at or before the date and time, specified in the notice inviting bids. Bids received after the specified date and time shall not be accepted and shall be returned to the bidder unopened unless the opening is necessary for identification purposes. (d) Bid Opening. Bids timely received shall be opened in public, at the date, time and place specified in the notice inviting bids, and the aggregate bid of each bidder shall be announced.
[…]
PART 6 – CONTRACT TERMS AND CONDITIONS

2.30.500 Bid security, bonds and insurance.
[…]
(b) Bid Security. Bid security shall be submitted with the bid and shall be in the form of a certified check, cashier’s check or surety bond. Any surety bond shall be issued by an admitted surety authorized to conduct business in the State of California and shall be in a form acceptable to the City Attorney and as specified in the solicitation for bids document. If a bidder fails to submit the required bid security with the bid, the bid shall be deemed nonresponsive. After bids are opened, bid security shall be irrevocable for the period specified in the invitation for bids. If the successful bidder fails to execute the contract within the time specified, the total amount of the bid security shall be forfeited to the city. The bid security of an unsuccessful bidder shall be returned to the bidder by no later than sixty days from the date of contract award. Bids for public works projects costing in excess of the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00 shall require the submission of bid security in an amount equal to at least ten percent of the bid. On public works projects costing less than the limit set forth in California Public Contract Code Section 22032(b), as may be amended $85,000.00, and all other procurements of goods and services without regard to price, the Procurement Officer is authorized to determine whether any bid security in any amount shall be required on a project-by-project basis. […]
PART 10 – STANDARDIZATION

2.30.900 Standardization.

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Where the City Manager has determined that it is required by the health, safety or welfare of the people or employees of the city, or that significant costs savings have been demonstrated, the standardization of supplies, materials, services, or equipment, including, without limitation, information technology property or services, for purchase or to be used in a public works project is permitted and the supplies, materials or equipment specifications may specify a single brand or trade name. The City Manager may consider the following factors in determining to standardize on a single brand or trade name:
(a) Repair and maintenance costs would be minimized;
(b) User personnel training would be facilitated thereby; (c) Supplies or spare parts would be minimized;
(d) Modifications to existing equipment would not be necessary; (e) Training of repair and maintenance personnel would be minimized; and (f) Matching existing services, supplies, materials or equipment is required for proper operation of a function or program.

SECTION 3. 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 4. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment.

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SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:
____________________________ ____________________________ City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
____________________________ ____________________________ Assistant City Attorney City Manager
____________________________
Director of Administrative Services
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Item 8
Attachment A - Ordinance
Amending PAMC Section

2.38.240 and Chapter 2.30

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: August 10, 2026
Report #:2607-6524
TITLE
Approval of Purchase Order with JAM Services, Inc. for the purchase of Traffic Signal Network Switches for a Total Not-To-Exceed Amount of $714,639 for 2 years; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301).

RECOMMENDATION
Staff recommends that City Council:

1. Approve and authorize the City Manager or designee execute a Purchase Order with JAM Services, Inc. to procure traffic signal network switches and associated hardware for a total not-to-exceed amount of $714,639 (Attachment A).

2. Amend the Fiscal Year Budget Appropriation for the Capital Improvement Fund (requires a 2/3 vote) to:
a. Increase the Traffic Signal Cabinet Upgrades project (TR-27005) in the amount of $220,000;
b. Decrease the Traffic Signal and Intelligent Transportation Systems project (PL- 05030) in the amount of $220,000;
c. Increase revenue from Other Agencies (2016 Measure B Local Streets and Roads (LSR)) in TR-27005 in the amount of $220,000; and
d. Decrease revenue from Other Agencies (2016 Measure B Local Streets and Roads (LSR)) in PL-05030 in the amount of $220,000.

BACKGROUND
On November 13, 2017, City Council adopted the 2030 Comprehensive Plan, which directed staff to use appropriate technology to improve circulation safety in the City (Policy T6.7) and improve efficiency and effectiveness (Policy S1-9.1). In this context, staff identified a need to replace existing traffic signal network switches due to their age and industry best practices.

Staff developed needs and requirements for replacing existing traffic signal and core switches Item 9
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and released an RFQ with detailed specifications and requirements that would satisfy existing requirements as well as allow for growth to accommodate developing ITS and network communications needs that may develop in the near future (approximately ten to 15 years).

City Staff (Office of Transportation and Electric Utilities) maintains and operates 102 signalized intersections throughout the City, including one on the Stanford University campus, through a centralized traffic management system. At each individual traffic signal, a traffic signal cabinet contains necessary hardware essential to its operations, including a network switch which allows communications and operational management via a centralized traffic signal management system server. Network switches currently in use were procured in 2014 as part of complete citywide traffic signal controller and management system overhaul. Based on industry best practices as well as recommendations from the City’s Information and Technology Department, network switches should be replaced every six to 12 years, and thus the City’s Office of Transportation and Electric Utilities Department began development of a replacement plan in 2025 to replace all traffic signal related switches.

ANALYSIS
City Staff released a Request for Quotation (Link: RFQ 194354 - Traffic Network Communication Switch Replacement/Update) on April 27, 2026, and closed the bid period on May 20, 2026, for traffic signal switches and associated hardware and received two qualifying bids. JAM Services was the lowest qualified bid at a total of $651,151 (pre-tax), which comes to a total not-to- exceed amount of $714,639 including sales tax.

The bid item product list included:
105 Traffic Signal Edge Switches, including power supplies, which provide connection between the traffic signal controllers and the City’s fiber optic communications network Three (3) Core Switches, which connect the fiber optic communications network for the traffic signals to the centralized traffic management system servers and staff terminals 210 SFP (small form-factor pluggable) Transceivers, which are pluggable network interface modules used to connect fiber strands to the network switch ports to transmit and receive data related to the City‘s traffic signal operations This project, originally planned for phase implementation over several years, received approval as part of projects for the Measure B – Local Streets and Roadway funding allocation from Valley Transportation Authority. This enables the project implementation to be expedited, over an estimated 12-month period.

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FISCAL/RESOURCE IMPACT
This action is part of the Traffic Signal Cabinet Upgrades project (TR-27005), which was included in the City’s FY 2027 Proposed Capital Budget with Measure B LSR revenue of $500,000. The recommended actions in this memorandum will reallocate the remaining $220,000 of appropriation and Measure B LSR revenue from Traffic Signal and Intelligent Transportation Systems (PL-05030) to fully fund the TR-27005 project, for a total project budget of $714,639.

Reducing the budget for Traffic Signals and Intelligent Transportation Systems (PL-05030) will have no operational or financial impact because the $220,000 in Measure B Local Streets and Roadways (LSR) funding is not currently committed or earmarked for a specific project.

Reallocating these funds to the Traffic Signal Cabinet Upgrades project (TR-27005) fully funds the project while aligning the Measure B LSR funding with its intended use. This reprioritization improves financial transparency, grant tracking, and accountability without delaying or eliminating any planned projects or services under PL-05030.

City staff successfully qualified this purchase as a congestion relief project under the VTA 2016 Measure B – Local Streets and Roadways (LSR) Program. As a result of the City‘s high pavement condition index (PCI), the Measure B LSR Program will reimburse 100 percent of the anticipated expenditures totaling ($714,639) associated with this project.

STAKEHOLDER ENGAGEMENT
The Office of Transportation collaborated on this procurement process with the City’s Information Technology and Electric Utilities (primary maintenance provider) departments. OOT will continue to work closely with these departments through the deployment, configuration, and on-going maintenance of these network switches.

ENVIRONMENTAL REVIEW
This purchase would qualify for CEQA Categorical Exemption Section 15301, (Class 1 exemption), which applies to projects involving the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, provided there is negligible or no expansion of existing or former use.

ATTACHMENTS
None.

APPROVED BY:

Ria Hutabarat Lo, Chief Transportation Official
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: August 10, 2026
Report #:2605-6359
TITLE
Approval of Contract C27197195 with High Point Power Systems in the Amount of $286,660 for the Repair and Refurbishment of a Load Tap Changer Located at Adobe Creek Substation; and Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed $28,666, for a Total Contract Not-to-Exceed Amount of $315,326. CEQA Status – Categorically Exempt Under CEQA Guidelines Sections 15301 and 51302.

RECOMMENDATION
Staff recommends that the City Council:

1. Approve and authorize the City Manager or their designee to execute contract C271971951 with High Point Power Systems in the amount of $286,660 for the repair and refurbishment of a load tap changer at Adobe Creek Substation; and

2. Authorize the City Manager or their designee to negotiate and execute change orders for related, additional, and unforeseen work which may develop during the contract term, the total value of which shall not exceed $28,666 or 10% of total contract; for a total not-to-exceed contract amount of $315,326.

BACKGROUND
Adobe Creek Substation is vital to the City of Palo Alto Utilities’ (CPAU) electric distribution network. The subject transformer is currently off-line and unable to serve customers. This creates a reliability risk for customers served by the substation and those served by adjacent substations (Colorado & Maybell).

ANALYSIS
A 15MVA transformer has a long-lead item of 36-48 months for a new replacement. By performing these targeted repairs, CPAU defers a multi-million-dollar capital outlay of a new 1 Contract C27197195 with High Point Power Systems https://www.paloalto.gov/files/assets/public/v/2/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2026/august/c27197195-adobe-creek- transformer-final.pdf
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unit while addressing the failure modes. The repair specifically addresses “moisture ingress”, which shortens the life of the paper insulation contained inside the transformers. By re- gasketing the bushings and seals, we maintain the dielectric strength of the insulating oil, preserve the life of paper insulation and lower the risk of internal flashovers that could lead to extended power outages.

Project Scope of Work
The project will include the following tasks: refurbishment of existing OLTC; radiator & flange repair; comprehensive re-gasketing; and, oil processing & commissioning. Final testing and commissioning upon completion of the work will include TTR (Transformer Turns Ratio, Power Factor (Doble) testing, and Sweep Frequency Response Analysis (SFRA) to ensure proper operation of the refurbished OLTC and its mechanical configuration.

A request for bids was sent out and responses received from the vendors listed below in the table.

Bid Details
Adobe Creek Transformer-21; 15 MVA OLTC
Refurbishment & Radiator Flange Repair/Re-gasket
(IFB-197195)
Proposed Length of Project 120 Days
Number of Bid Packages downloaded by
Contractors 27
Total Days to Respond to Bid 15
Pre-Bid Meeting No
Number of Company Attendees at Pre-Bid
Meeting N/A
Number of Bids Received: 4
Public Link to Solicitation https://procurement.opengov.com/portal/palo-alto- ca/projects/248855
Bid Price Range $234,165 to $456,116
The City received four (4) bids ranging from $234,165 to $456,116. The lowest bid received was deemed unresponsive and disqualified for not meeting licensing requirements. The apparent and lowest responsive bid was received from High Point Power Systems with a quote of $286,660.

FISCAL/RESOURCE IMPACT
Funding for this project is available in the FY 2027 Electric Fund Capital Improvement Program (CIP) under project EL-89004. The estimated cost for parts, specialized field labor (oil processing crews), and engineering oversight is significantly lower than the cost of a full transformer replacement and the associated structural modifications.

POLICY IMPLICATIONS
The recommendation of this contract is consistent with the Council approved Utilities 2018 Strategic Plan (Staff Report 9022), especially the strategic objectives to: “Establish a proactive Item 10
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infrastructure replacement program, based on planned replacement before failure to support reliability and resiliency.”

STAKEHOLDER ENGAGEMENT
This project was advertised to prospective contractors through the City’s procurement platform. The contract does not impact customers that would require community outreach.

ENVIRONMENTAL REVIEW
This project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15301(b) as a repair or maintenance of existing facilities and section 15302(c), as replacement or reconstruction of existing facilities involving no or negligible expansion of capacity.

CONTRACT LINK: Contract C27197195 with High Point Power Systems APPROVED BY:

Alan Kurotori, Director of Utilities
Staff: Mohammad Fattah, Manager of Electric & Fiber Engineering Item 10
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: August 10, 2026
Report #:2601-5844
TITLE
Approval of Contract No. C27196740 with Blackhawk Painting Inc. in the Amount of $735,500 Over a Period of 18 Months for Electric Substations Equipment and Mechanical Structures Painting Services; Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed of $73,550, for a Total Not-to-Exceed Contract Amount of $809,050; and Approval of a Budget Amendment in the Electric Fund; CEQA Status:

Categorically Exempt Under CEQA Guidelines Section 15301.

RECOMMENDATION
Staff recommend that Council:

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

C27196740 with Blackhawk Painting Inc.1 (Blackhawk) for surface preparation and painting of substation electric equipment and mechanical structures in an amount not to exceed $735,500;

2. Authorize the City Manager or their designee to negotiate and execute one or more change orders to the contract with Blackhawk for related but unforeseen work which may develop during the contract term, the total value of which shall not exceed $73,550 or 10% of the contract amount, for a total contract not-to-exceed amount of $809,050; and

3. Amend the Fiscal Year 2027 Budget Appropriation for the Electric Operating and Capital budgets (requires a two-thirds approval by the Council) by:
a. Increasing the contract services operating budget in the Electric Fund by $809,050; and
b. Decreasing capital improvement budget EL-89044 (Substation Facility Improvements) in the Electric Fund by $809,050.
1 Contract No. C27196740 with Blackhawk Painting Inc. https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2026/august/c27196740-electric-substation- painting-contract.pdf
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BACKGROUND
The City of Palo Alto Utilities (CPAU) operates nine electric distribution substations. Regular maintenance, specifically the professional painting of energized equipment and structural steel, is critical to prevent corrosion and ensure the long-term reliability of the City’s electric grid. This contract provides specialized painting services including surface preparation, lead abatement (if required), and application of high-performance industrial coatings.

CPAU’s substations contain critical infrastructure including transformers, circuit breakers, and lattice steel structures. These components are exposed to environmental stressors that cause oxidation and coating degradation over time.

Failure to maintain protective coatings can lead to:
Structural Integrity Loss: weakening of mechanical supports and lattice towers due to corrosion.
Increased Outage Risk: Advanced rust can compromise the seals and dielectric integrity of energized equipment.
Reduced Equipment Life: rust and corrosion can lead to early replacement of major equipment, causing increased operating costs and higher utility rates.

ANALYSIS
On April 8, 2026, the City issued an Invitation for Bids (IFB No.196740) for “Electric Substation Equipment & Mechanical Structures Painting Work”. Because this work occurs within "energized" utility environments, contractors are required to possess specialized safety training and specific California Contractor Licenses (Class C-33 Painting).

The project’s scope of work and services includes the following:
Pressure washing and mechanical cleaning of surfaces.
Containment of debris in accordance with BAAQMD (Bay Area Air Quality Management District) requirements.
Painting of Transformers, Switchgear Enclosures, and Lattice Structures. Work at various sites including the Colorado Power Station (COP) and several neighborhood distribution substations
All work performed under this contract shall adhere to the industry standards and regulatory frameworks to ensure the safety of personnel, the integrity of the electric grid, and protection of the environment.

The City received bids from eight (8) vendors prices ranging from $735,500 to $1,379,415. The low and responsible bidder was Blackhawk with quoted price of $735,500. Details of the bid and project timelines are listed in the table below.

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Bid Details
Electric Substation Equipment & Mechanical
Structures Painting Work (IFB-196740)
Proposed Length of Project 18 Months
Number of Bid Packages downloaded by
Contractors 39
Total Days to Respond to Bid 27
Pre-Bid Meeting Yes
Number of Company Attendees at Pre-Bid
Meeting 5
Number of Bids Received: 8
Public Link to Solicitation https://procurement.opengov.com/portal/palo- alto-ca/projects/253002
Bid Price Range $735,500 - $1,379,415

Staff have reviewed the bid provided by Blackhawk and found it be responsive to the bid requirements and as providing the lowest cost to the City. Staff are recommending Council approve awarding a contract to Blackhawk for the amount of $735,500 and authorize the City Manager to approve change orders up to 10% of the originally submitted bid amount.

FISCAL/RESOURCE IMPACT
Funding for the maintenance work is available in the FY 2027 Electric Fund budget. Staff recommends transferring $809,050 from Electric Fund CIP EL-89044, Substation Facility Improvements to the Electric Fund Operations budget and increasing the Electric Operations Contract Services budget by $809,050. This will reduce available funding for EL-89044 from $1,591,000 to $781,950. EL-89044 originally had anticipated funding the repainting of this equipment. However, the minor nature of work is more appropriately funded as a maintenance project rather than a capital improvement project.

ENVIRONMENTAL REVIEW
This project is Categorically Exempt from the California Environmental Quality Act (CEQA) under CEQA Guidelines Section 15301(b) (Existing Facilities), as it involves the maintenance of existing utility facilities involving negligible or no expansion of use.

POLICY IMPLICATIONS
This recommendation is consistent with the City’s Utilities Strategic Plan to invest in infrastructure maintenance to ensure high levels of system reliability and safety.

Link:

Contract No. C27196740 with Blackhawk Painting
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APPROVED BY:

Alan Kurotori, Director of Utilities
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City Council
Staff Report
From: City Attorney
Report Type: CONSENT CALENDAR
Lead Department: City Attorney
Meeting Date: August 10, 2026
Report #:2607-6525
TITLE
Authorization to Execute Amendment to Legal Services Contract S25194587 with Atkinson Andelson Loya Ruud & Romo to Increase Amount by $100,000 for Total Not-to-Exceed Amount of $285,000; CEQA Status – Not a Project.

RECOMMENDATION
Authorize the City Attorney or designee to amend the contract for litigation defense services with the law firm of Atkinson Andelson Loya Ruud & Romo (Contract S25194587) to increase the contract amount by $100,000 for a total not-to-exceed amount of $285,000.

BACKGROUND/ANALYSIS
Atkinson Andelson Loya Ruud & Romo is a law firm representing cities in a variety of areas, including an emphasis in employment and labor matters. In March 2025, the City entered into a three-year agreement (S25194587) in the amount of $85,000 with Atkinson Andelson Loya Ruud & Romo for litigation defense services in Government Claim No. C25-0059 filed by Thomas Haxton and related litigation. In September 2025, an amendment was authorized to add $100,000 for continuing litigation defense1. Staff now seeks authority to increase the contract amount by an additional $100,000 which will bring the new not to exceed amount to $285,000. Litigation is continuing in the Haxton matter. Legal service contracts are exempt from solicitation requirements per Section 2.30.360(g) of the Municipal Code.

FISCAL/RESOURCE IMPACT
Funding for this amendment is within existing appropriations adopted in the City Attorney’s Office as part of the FY 2027 Adopted Operating Budget. 1 City Council, September 29, 2025, Item 2507-5011
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STAKEHOLDER ENGAGEMENT
The City Attorney‘s Office works closely with the City Manager and department personnel on government claims matters.

ENVIRONMENTAL REVIEW
Amendment of a legal services contract is not a project requiring environmental review under the California Environmental Quality Act (CEQA) (See CEQA Guidelines 15378(b)(5), administrative activities that will not result in direct or indirect physical changes in the environment).

APPROVED BY:

Christopher Jensen, City Attorney
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: August 10, 2026
Report #:2606-6505
TITLE
Approval of Amendment No. 1 to Contract No. C24189086 with Carollo Engineers, Inc., to Increase the Contract Amount by $551,755 for a Revised Total Not-to-Exceed Amount of $3,294,529, and to Extend the Contract Term by Six Months through December 2027, for the Long Range Facilities Plan Update for the Regional Water Quality Control Plant (WQ-19002); CEQA Status – Not a Project

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 1 to Contract No. C24189086 with Carollo Engineers, Inc. to increase the contract amount by $551,755 for the Long Range Facilities Plan Update supported by the Plant Repair, Retrofit, and Equipment Replacement project (WQ-19002), and to extend the term through December 2027. The revised total contract amount is not-to-exceed $3,294,529, including $2,995,026 for Basic Services and $299,503 for Additional Services.

BACKGROUND
The City owns and operates the Regional Water Quality Control Plant (RWQCP), which provides wastewater treatment and disposal services to Palo Alto, Mountain View, Los Altos, Los Altos Hills, the East Palo Alto Sanitary District, and Stanford University. The RWQCP is currently implementing major capital projects recommended in the 2012 Long Range Facility Plan (LRFP)1 following Council’s acceptance of the LRFP on July 2, 2012.2 These capital projects are in various stages of design and construction.

On June 10, 2024, the City Council approved a $2,742,774 contract (No. C24189086) with Carollo Engineers, Inc., to prepare an LRFP Update (LRFP-U) to guide RWQCP infrastructure 1 Long Range Facilities Plan for the Regional Water Quality Control Plant, 2012; https://www.cityofpaloalto.org/files/assets/public/v/1/public-works/water-quality-control-plant/lrfp-final-report- 08-2012.pdf
2 City Council, July 2, 2012; Agenda Item #7; SR# 2914, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=78611&dbid=0&repo=PaloAlto&searchid=9717d13 1-34d2-449b-9e0b-e67d3603d932&cr=1914
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investments and process improvements over the next 50 years.5 The LRFP-U also evaluates potential use of a portion of the adjacent Measure E site for future biosolids facilities, as directed by City Council on April 3, 2023.6
The existing contract term runs through June 30, 2027, and the original contract includes $2,493,431 for Basic Services and $249,343 for Additional Services. Key tasks include: 50-year treatment capacity evaluation and process modeling; update to the Biosolids Facilities Plan, including Measure E site analysis; RWQCP workspace planning; facility condition assessments; development of a 50-year capital improvement program; cost-of-service analysis; and a final LRFP-U report.

ANALYSIS
Since the City Council approved the original contract in June 2024, the scope of work for LRFP-U has expanded beyond what was anticipated. The RWQCP is concurrently undergoing or planning several major capital projects, including the Secondary Treatment Upgrades, the Advanced Water Purification System, the Headworks Replacement, and the Gravity Thickener Improvements. Coordinating the LRFP-U with these ongoing projects required substantially more review of project documentation, as well as supplementary biological process modeling to forecast how the future upgrade of the secondary treatment process would affect the resulting solids projections and process capacity evaluations for the 50-year planning horizon.

Staff recommends that City Council approve Amendment No. 1 (Attachment A) to add funds to the contract to address the following additional efforts:
Expanded facility condition assessments covering several additional onsite and offsite facilities not included in the original scope.
Additional effort to compile and verify equipment and piping information to support the facility condition assessment, including extensive review of historical design documents, O&M manuals, facility plans, and as-built records to confirm equipment capacities. Additional feasibility analysis for biosolids management alternatives at the RWQCP or the Byxbee Park site, including site layouts, life-cycle costs, evaluation criteria scores, and sensitivity analysis to test the robustness of the results. Additional alternatives analysis, prioritization, and documentation associated with a substantially greater volume of recommended capital improvement projects across the 50-year planning horizon than originally anticipated.
5 City Council, June 10, 2024; Agenda Item #6, SR#2405-2993, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82887&dbid=0&repo=PaloAlto 6 City Council, April 3, 2023; Agenda Item #12; SR #2302-0942, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82279&dbid=0&repo=PaloAlto&searchid=ead8a87e 302-0942
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Expanded public and partner agency engagement, including consultant support for biosolids public meetings held in May 2025, July 2025, and February 2026. This level of presentation support was not anticipated in the original scope and requires additional consultant services reflected in the amendment.

The amendment would increase the Basic Services budget by $501,595, from $2,493,431 to $2,995,026, and the Additional Services budget by $50,160 (10% contingency), from $249,343 to $299,503. The revised total contract amount is not to exceed $3,294,529.

FISCAL/RESOURCE IMPACT
This project is funded through the RWQCP partner-funded structure, with costs shared by the City and its regional partners consistent with established partner agreements and related amendments. Palo Alto’s share of this project is approximately 38%, with the remaining 62% funded by the partners based on wastewater flows and strength contributions.

Funding for this contract is included in the Fiscal Year 2027 Adopted Capital Budget for the Wastewater Treatment Fund Plant Repair, Retrofit, and Equipment Replacement Project (WQ- 19002). No additional budget appropriation is required at this time. Use of this professional services contract is more efficient than performing the work with City staff because the work requires specialized expertise in wastewater treatment and biosolids technologies, and advanced biological process modeling that is not available within existing staff capacity.

STAKEHOLDER ENGAGEMENT
City management has been kept informed through the RWQCP Monthly Strategies and Challenges Meetings, and partner agencies receive updates through quarterly meetings. Public and partner-agency engagement for the LRFP-U includes public workshops/meetings, Finance Committee meetings,9 City Council meetings, and partner-agency presentations. Project updates and public involvement opportunities are also shared through the RWQCP Capital Improvement Program website, Uplift Local, and the Sustainability e-Newsletter.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because the LRFP-U is an administrative planning activity that will not result in direct or indirect physical changes to the environment (CEQA Guidelines section 15378(b)(4)).

The LRFP-U will inform planning for future facilities at the RWQCP, and environmental review will be performed during the development of resulting projects, as necessary.

ATTACHMENTS
Attachment A: Amendment No. 1 to Contract C24189086 with Carollo Engineers, Inc.

APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
9 Finance Committee, Nov 4, 2025; Agenda Item #1, SR#2508-5132, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83790&dbid=0&repo=PaloAltoff Report 2508-5132 Item 13
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AMENDMENT NO. 1 TO CONTRACT NO. C24189086

BETWEEN THE CITY OF PALO ALTO AND
CAROLLO ENGINEERS, INC.

This Amendment No. 1 (this “Amendment”) to Contract No. C24189086 (the “Contract” as defined below) is entered into as of August 10, 2026, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CAROLLO ENGINEERS, INC., located at 2795 Mitchell Drive, Walnut Creek, CA 94598-1601 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.

R E C I T A L S

A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of updating the Long-Range Facilities Plan for the Regional Water Quality Control Plant (RWQCP), as detailed therein.

B. The Parties now wish to amend the Contract in order to (1) extend the contract term by 6 months, from June 30, 2027 to Dec 31, 2027; (2) expand the scope of service to include additional engineering services for biosolids management analysis, infrastruct ure condition assessments, coordination with concurrent capital improvement projects, and stakeholder engagement activities; and (3) increase the total not -to-exceed compensation by $551,755, including $501,595 for basic services and $50,160 for additional services, for a new total not -to- exceed amount of $3,294,529.

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

SECTION 1. Definitions. The following definitions shall apply to this Amendment:

a. Contract. The term “Contract” shall mean Contract No. C24189086 between CONSULTANT and CITY, dated June 10, 2024.

b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.

SECTION 2. Section 2 “TERM” of the Contract is hereby amended to read as follows:

The term of this Agreement shall be from the date of its full execution through December 31, 2027, unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.

SECTION 3. Section 4 “NOT TO EXCEED COMPENSATION ” of the Contract is hereby amended to read as follows:

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Attachment A - Amendment
No. 1 to Contract
C24189086 with Carollo
Engineers, Inc.

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SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Two Million Nine Hundred Ninety-Five Thousand Twenty-Six Dollars ($2,995,026). The hourly schedule of rates, if applicable, is set out in Exhibit C- 1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY.

Optional Additional Services Provision

In addition to the not -to-exceed compensation specified above, CIT Y has set aside the not -to- exceed compensation amount of Two Hundred Ninety-Nine Thousand Five Hundred Three Dollars ($299,503) for the performance of Additional Services (as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C, shall not exceed Three Million Two Hundred Ninety -Four Thousand Five Hundred Twenty-Nine Dollars ($3,294,529), as detailed in Exhibit C.

“Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A. CITY may elect to, but is not required to, authorize Additional Services up to the maximum amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this Section. Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A -1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement.

Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum.

To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall only be compensated for Additional Services performed under an authorized Task Order and only up to the maximum amount of compensation set forth for Additional Services in this Section 4. Performance of and payment for any Additional Services are subject to all requirements and restrictions in this Agreement.

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SECTION 4. The following exhibit(s) to the Contract is/are her eby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference:

a. Exhibit “A” entitled “SCOPE OF SERVICES”, AMENDED, REPLACES PREVIOUS.

b. Exhibit “B” entitled “SCHEDULE OF PERFORMANCE”, AMENDED, REPLACES PREVIOUS.

c. Exhibit “C” entitled “COMPENSATION”, AMENDED, REPLACES PREVIOUS.

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

SECTION 5. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.

SECTION 6. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.

(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)

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SIGNATURES OF THE PARTIES

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

CITY OF PALO ALTO

__________________________
City Manager

APPROVED AS TO FORM:

___________________________
City Attorney or designee

CAROLLO ENGINEERS, INC.

By:________________________
Name: Rick Chan
Title: Senior Vice President

By:________________________
Name: Anne E. Prudhel
Title: Executive Vice President

Attachments:

EXHIBIT A, “SCOPE OF SERVICES”, AMENDED, REPLACES PREVIOUS EXHIBIT B, “SCHEDULE OF PERFORMANCE”, AMENDED, REPLACES PREVIOUS EXHIBIT C, “COMPENSTATION”, AMENDED, REPLACES PREVIOUS
EXHIBIT C-1, “SCHEDULE OF RATES”, AMENDED, REPLACES PREVIOUS

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EXHIBIT A

SCOPE OF SERVICES
(AMENDED, REPLACES PREVIOUS)

CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF SERVICES”.

Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. CONSULTANT’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure that all bidd ers for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services.

I. INTRODUCTION
The City of Palo Alto (City) is requesting proposals from consultants to perform an update to their Long Range Facilities Plan (2012) for the Regional Water Quality Control Plant (RWQCP; Plant). The update will be known as the Long Range Facilities Plan Update (the Project). For this Project, the CONSULTANT shall provide engineering and other required services during all phases of the Project, as authorized by the City.

II. BACKGROUND
General
The City owns and operates the RWQCP , which treats wastewater from a total of six partner agencies (Partners), including the City. The RWQCP has a permitted dry weather capacity of 39 million gallons per day (MGD), annual average treated flow of 16 to 18 MGD, and a wet weather capacity of 80 MGD. In 2012, a Long Range F acilities Plan (LRFP) was completed to identify the needs at the RWQCP for continued, compliant operations. To date, several of the needs identified in the 2012 LRFP have resulted in projects that have either been completed or are underway. They are as follows:
• Sludge Dewatering and Loadout Facility (completed in 2019) • Primary Sedimentation Tank Rehabilitation and Electrical Room Upgrade (in construction and expected to be completed in June 2024)
• Secondary Treatment Upgrades (in construction and expect to be completed in June 2028) • 12kV Power Distribution Upgrades – Phase 1 (in construction and expect to be completed in June 2024)
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• 12kV Power Distribution Upgrades – Phases 2-7 (expect to issue NTP for construction in August 2024)
• Advanced Water Purification System (in design)
• Joint Interceptor Sewer Rehabilitation - Phase 1 (design completed; construction scheduled for summer 2024)
• Outfall Project (on hold)
• Headworks Replacement Project (in advanced planning)
Space Planning
The existing Administration Building was originally constructed in 1975 as a recycled water process and pumping facility and subsequently expanded in 1992, 1995, and 1998 as a staff building and pretreatment lab. The existing Operations Building was originally constructed in 1972 and houses laboratory testing stations and equipment, offices, a large lunchroom, and locker rooms. Per the LRFP , the need for a new building was identified to house Operations, Administration, Engineering, Watershed Protection, IT, and Solid waste staff, as well as to provide a new laboratory.

Subsequently, in 2017, RWQCP staff revisited the LRFP siting analysis which resulted in the identification of the project as a new, 2 story building which would house the laboratory, environmental services staff, and be located along the western periphery of the RWQCP (adjacent to the secondary clarifiers). Building costs were higher than budgeted and the Plant canceled the project to reevaluate alternatives.

The City also intends to construct and/or repurpose workspaces for RWQCP staff to meet future staffing levels, workspace upgrades and safety/code updates. There are several predefined workspace alternatives to be used independently or in aggregate to meet the Plant’s workspace needs, including:
• Buy 1900 Embarcadero Road and remodel for some or all groups. • Buy 2415-17 and/or 2425 Embarcadero Way, demolish existing structure and a build tech services building for some or all groups.
• Renovate and repurpose the Administration Building.
• Renovate the Operations Building for at least the Operations group. • Build a technical services building, that includes a lab function, engineering, technology, and watershed protection groups
• Construct a “lab only” building, that includes the laboratory, laboratory appurtenant spaces, and lab staff workspaces.
• Build a “mothership” adjacent to new lab only building, consisting of Operations, Engineering, Technology, and Watershed Protection groups. • Build a tech services building next to new lab only building, consisting of Engineering, Information Technology, and Watershed Protection Group.

The Plant’s preference is for the Operations Group to remain in the existing Operations Building, provided that alternative is favorable or similar in comparison to other alternatives costs.

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The workspaces need to include the programmed areas defined in Attachment B – Exhibit A (Space Needs Analysis), including:
• A primary point of entry of Plant visitors;
• An Operations staff and control room, equipped with SCADA monitoring and control system; • Sufficient exterior space for motor vehicle parking and bike storage; • Integrated security systems; and
• Sufficient common areas for large conferences, small meetings, meals (preparation and dining); note that the Admin Building has been repurposed for conference, training, job walk meetings with a large number of attendees, and all -hands meetings and meals; the repurposed Admin Building seems to be meeting the space planning needs the large gathering space needs without the need for these larger spaces to be placed in a more expensive new building (e.g., the former mothership concept of the prior staff building planning).

Biosolids Facilities Plan
In 2014, the City developed a Biosolids Facility Plan (BFP) to evaluate and recommend a biosolids technology to replace incineration and a biosolids disposal plan for review and approval by City Council. The 2014 BFP can be found at link below1. The BFP recommendation was to construct a Phase I sludge dewatering and truck loadout facility which is now in operation. A future Phase II facility was to include anaerobic digestion facilities including thermal hydrolysis processing (THP) of biosolids followed by mesophilic anaerobic digestion (MAD) with a combined heat and power (CHP) facility to utilize the biogas. This recommendation was based on a combination of economic and non-economic factors emphasizing energy production, greenhouse gas reduction, capital cost, and life-cycle cost.

The THP/MAD/CHP alternative was further developed in a Preliminary Design Report in 2015. This report can be found at link below2. With further project definition and design development, the estimated capital cost for the selected alternative increased from $57M to $71M. This revised cost estimate, coupled with the complexity of operating a new THP facility, led to the decision to abandon the THP/MAD/CHP project in early 2015. The design of the dewatering and truck loading facilities proceeded in 2015 and the new facility was operational in early 2019.

Since completion of the BFP and Sludge Dewatering and Loadout Facility, there have been several new developments in the industry that warrant revisiting the previous recommendations and updating the BFP . These include:

1 City of Palo Alto https://www.cityofpaloalto.org/files/assets/public/public-works/environmental- compliance/water-quality/2010-rwqcp-master-planning/parwqcp-biosolids-facility-plan-final.pdf

2 City of Palo Alto https://www.cityofpaloalto.org/civicax/filebank/documents/61625

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• The City has completed the new sludge dewatering and truck load -out facility and the incinerators have been decommissioned.
• Recent legislation in California is driving new regulations that impact biosolids disposal options, organic waste management options, as well as short -lived climate pollutants (including methane) and other air emissions from wastewater treatment facilities. • Several technologies that were nascent at the time of the BFP have advanced with recent installations and operational history in California. These include the Lystek low-temperature alkaline hydrolysis process and the Bioforcetech drying and pyrolysis process. • A BFP 2019 update that re-evaluated long-term biosolids management and energy recovery alternatives. The ultimate outcome for the near-term was to continue hauling and treating dewatered sludge at regional treatment facilities which would handle beneficial reuse. This update can be found at link below3.
• The City has awarded a five-year contract for offsite biosolids processing. A new five-year contract will be in place by April 1, 2024 for a term of April 1, 2024 to March 31, 2029. • The Regional Water Quality Control Board (RWQCB) has adopted a Nutrient Watershed Permit and is moving toward regulating total nitrogen in effluent discharged to the San Francisco Bay. This has led to a reassessment of the recommendations of the LRFP and the City has decided to replace the aging Fixed Film Reactor (FFR) facilities with a biological nutrient removal (BNR) process. This will result in a change in solids production rate (about 34% more WAS and 10% more total sludge) and solids quality and potential future dewatering side-stream treatment requirements.
• Wastewater flows have decreased and waste strength has increased due to water conservation measures and a drop in infiltration and inflow into sewers over the long-term.

The Biosolids Facility Plan needs to identify a layout and siting concept for near - and long-term solutions, within the Plant fence line and/or at the Measure E site, adjacent to the Plant’s southeast boundary. The Measure E site is owned by the General Fund and is former parkland. If authorized by Council, the Measure E site could be used by the Wastewater Treatment Fund for a biosolids facilities process (i.e., “an environmental technology” as defined in the Measure E language). City Council has the option to rededicate so me or all of the Measure E site as parkland at any time.

However, this LRFP Update is an important study to help City Council decide whether it is beneficial for the City to use the Measure E site for use for a future biosolids technology, and Council is likely to defer any decisions on park rededication until completion of this study. The 2019 Biosolids Facilities Plan update only analyzed biosolids technology facilities inside the plant fenceline because the technology evaluation did not dictate the need for supplemental land. This study, at the direction of Council, will be evaluating the Measure E site in addition to land inside the plant fenceline.

3 City of Palo Alto https://www.cityofpaloalto.org/files/assets/public/public-works/water-quality-control- plant/sludge-dewatering-building/finaldraft_palo_alto_bfp_update.pdf?t=47012.05 Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13
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III. INITIAL PROJECT DEFINITION
A successful Long Range Facilities Plant Update will address the RWQCP key issues and meet the RWQCP long term goals.

Key Issues (in no particular order):

Schedule
o The City needs to make RWQCP layout and space planning decisions as soon as possible. The Biosolids Facility Plan Update and the Workspace Planning tasks need to occur first and findings from these tasks need to be used by the City before the conclusion of the complete Long Range Facility Plan Update. • Existing Conditions and Capital Improvements:
o Project Location: The RWQCP is located within a flood plain, adjacent to the San Francisco Bay, a baylands park, a closed landfill, and an active airport. Associated conditions, including but not limited to, flooding, sea level rise and related rising shallow groundwater conditions (see City of Palo Alto Sea Level Rise Vulnerability Assessment section 8.2.5.2 for anticipated inundation and depth to groundwater changes in future decades, and Sea Level Rise Adaptation Policy at www.cityofpaloalto.org/sealevelrise), miscellaneous fill, young bay mud, and temporary and permanent facility height restrictions need to be considered. ▪ The RWQCP is located adjacent to light -industrial and commercial properties. Temporary and permanent aspects of the Project implementation, including traffic, noise, dust and odors need to be anticipated and mitigated.
▪ The RWQCP is located over “bay mud” and miscellaneous fill. Geotechnical investigations are required to understand soil conditions and seismic criteria.

All current Capital Improvement Plans (CIPs) utilize deep, drilled piles as part of the foundation system for structures, including equipment pads. o Reliability: The RWQCP is critical infrastructure, required to be staffed and operate through extreme events and future conditions (including anticipated sea level rise, changing shallow groundwater conditions, and potential 100 -year flood event; seismic events, and mechanical and power failures) with minimal impacts. o Costs: The Plant needs to understand the initial and long-term costs associated with proposed improvements and the costs/risks of no improvement alternatives to ensure the best value for the Partners is programmed.
o Project Prioritization and Sequencing: To the greatest extent possible, the City needs to understand its infrastructure’s risk of failure and consequence of failure.

Capital im provement projects need to be developed to minimize infrastructure failure harming public health, property, and the environment. Consideration also needs to be given to the space and resources available to complete projects and the logical sequencing of related projects (related by process or related by area).

Projects should be phased as needed to align with resources, including funding.

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o CIP Constructability: Staging, laydown, and parking constraints need to be considered when defining projects.
• Identification and Allocation of Costs
o Operations and Maintenance Costs: To ensure fair cost allocations to the Partners of the Plant based on flow and strength components of the wastewater, the City needs to understand the total cost components of its reoccurring services, including administration, operations, maintenance, and contractor/vender services. o Capital Cost (Debt) Shares: The City assigns to each Partner a proportion of the capital costs associated with each major project. The City needs to review their existing methodology for assigning costs and to evaluate alternative methodologies.

The City favors a methodology that is fair, transparent, and appropriately detailed. • Spatial Considerations: The Plant has had the same property line and footprint since 1972.

Over that time, the Plant has utilized the available footprint to adapt to its operations and infrastructure to meet community and regulatory drivers; the Plant has expanded its wastewater treatment capacity and recycled water production, reduced its ons ite air emissions, and improved effluent water quality. The fixed footprint has made it challenging to implement capital improvement projects and major maintenance activities while meeting all the Plant’s high standards and regulatory requirements (e.g., issues with staging, laydown, parking, and maintenance of screening and buffer lands). The Plant may have the opportunity to acquire adjacent properties and relocate some Plant staff groups outside the existing Plant footprint. The Plant needs to understand and quantify the benefits/opportunities of acquiring a new property. A significant part of the consideration is the planning-level costs for the several building construction and renovation alternatives, listed in Task 3.
• Biosolids Facilities and Management: Due to the changing disposal requirements and evolving opportunities and technologies, the City needs to again update their Biosolids Facility Plan (BFP). The plan, Biosolids Facility Plan Update, needs to: evaluate biosolids disposal options, onsite t reatment opportunities, and opportunities for regional partnerships; identify improvement projects required at the Plant and associated estimated costs and greenhouse gas emissions; and identify planning level layout(s) and space requirements. The BFP Update needs to include a 30-year planning horizon.

Long Term Goals (in no particular order):

Prior to the 2012 Long Range Facility Plan, a long-term Goals Study was conducted with extensive input from the community, other stakeholders, and Plant staff. That effort identified 18 goals to guide RWQCP activities. Fundamentally, the long-term goals remain the same and are the basis for the Long Range Facilities Plan Update. The long-term goals for the RWQCP are listed below. • Meet Future Capacity Needs
• Meet or Exceed Regulatory Requirements
• Minimize or Eliminate Toxins in the Influent
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• Minimize Energy Consumption and Maximize Energy Life Cycle Efficiency • Minimize or Eliminate Potentially Hazardous Chemical Usage • Minimize or Eliminate Total Release of Toxins to the Environment • Minimize Impact on Ecosystem
• Minimize Impacts on Community, Including Neighboring Communities • Minimize or Justify Financial Impacts on Ratepayer
• Involve Stakeholders in the Decision-Making Process
• Immobilize or Beneficially Reuse Persistent Toxins
• Take Leadership Role in Promoting Beneficial Reuse and Environmental Enhancement • Maximize Worker Safety
• Maximize Recycled Water as a Supplemental Water Source • Minimize the Plant’s Lifecycle Greenhouse Gas Emissions • Address Climate Change, Sea Level Rise and Changing Shallow Groundwater Conditions • Minimize Recycled Water Salinity

IV. CONSULTANT SCOPE OF SERVICES (BASIC SERVICES)
The CONSULTANT’s scope of work shall include the tasks described in the following sections. The CONSULTANT shall not perform work on a task prior to an explicit approval by the City to proceed with work for that specific task.

City anticipates the CONSULTANT’s work to proceed as follows with adjustments as needed by the CONSULTANT where mutually agreed to with the City:

Step 1: Update population and load projections for new planning horizon (50-year) (Task 4)

Step 2: After Step 1, Specific Facilities Plans for Workspaces and Biosolids

1. Workspace Planning Facilities Plan (Task 3)

2. Biosolids Facility Plan Update (Task 2)

Step 3: In parallel with Step 2

1. Cost of Service Assessment for Operating and Capital Cost Allocations (Task 7)

Step 4: After Step 1 and parallel or after Steps 2 & 3, investigate existing RWQCP condition and process needs (Task 5)

Step 5: After Step 4, Key assessments of capital assets and site planning (Task 6)

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Task 1 – Project Management
Task 1.1 – Invoicing/Project Controls
Provide necessary administration, project controls, quality assurance and professional oversight of the Project and the CONSULTANT's subconsultants to ensure the Project remains on schedule, remains within budget, maintains continuity of information, and satisfies the requirements of the CONTRACT.

Prepare and distribute a Project Management Plan (PMP) for City’s record. Within the PMP , include the baseline schedule, budget, spending projection, contacts/subcontracts and procedures. Include a Project Directory with roles and contact information and a Quality Assurance and Quality Control Plan.

Prepare and submit monthly invoice packages to the City. Billing period shall include the full calendar month and not overlapping two separate Fiscal years (i.e., not to combine June and July invoices). If reimbursable incurred, include a summary table listing the subject matter/ personnel name, date, purpose and associated expenses; label each receipt with a numerical number . Include a progress report with invoices to document progress. Progress reports shall include, for each task, a summary of work and budget status, including authorized amount, current billing, billed to date, amount remaining, and percent spent.

Provide monthly progress updates specifying, for each task, work accomplished, key action items, key decisions , upcoming workshops and deliverables, workshops and deliverables to date , outstanding issues, potential changes, and schedule updates. Identify and mitigate potential budget overruns.

Prepare, maintain, and update the status of Project schedule for City’s review and comments.

Identify and mitigate schedule changes.

Task 1.2 – Kick-Off Meeting
Facilitate a hybrid (in-person/virtual) meeting at the initiation of the Project (Kick -Off Meeting), with the City Project Manager and City staff to discuss overall project coordination, data collection, and project schedule. Walk the Project site. Provide meeting attendees with an agenda seven (7) calendar days in advance of the date of the meeting. Provide meeting attendees with summary minutes and electronic copies of any supplemental materials used during the meeting no later than fourteen (14) calendar days from the date of the meeting.

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Task 1.3 – Project Progress Meetings
Conduct virtual (via phone or web conference services) Project Progress Meetings with City Project Manager, twice a month. The frequency of Project Progress Meetings can be decreased at the City’s discretion.

Deliverables:
• Draft and final Project Management Plan.
• Baseline project schedule with milestones.
• Agenda and minutes for kick-off meeting.
• Monthly invoices, including monthly Progress Reports. • Monthly Progress Updates.
• Periodic updates on Project Schedule.

Assumptions:
• The kick-off meeting will be attended by up to five Carollo staff and up to two Jacobs staff.

The kick-off meeting will be a hybrid meeting, with some staff attending in person an d others attending virtually and will have a 2-hour duration. In-person attendees will walk the project site after the kick-off meeting.
• Monthly progress updates will be provided before the monthly project progress meetings. • Project progress meetings will be attended by up to two Carollo staff and one Jacobs staff.

Meetings will be virtual and have a 1-hour duration.
• Quality assurance and professional oversight of Project tasks will be performed under individual task budgets.
• All deliverables will be provided in electronic format.

Task 2 - Biosolids Facility Plan (BFP) Update
Task 2.1 - Update Background Information
The RWQCP currently co -thickens primary sludge and WAS in gravity thickeners and dewaters thickened sludge in belt filter presses. Dewatered cake is hauled for offsite processing by Synagro and Lystek.

Collect up to 5 years of available data on current solids (primary sludge, WAS, thickened WAS and primary sludge, and dewatered cake) quantities and characteristics (flow, total solids concentration, volatile solids concentration). Assess gravity thickener and belt filter press current operations (operating schedule, duty/standby units), process performance (hydraulic and solids loading rates, polymer dose, solids capture rate, and thickened and dewatered solids concentration).

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Assess current solids handling operating costs (power use, polymer use, operations and maintenance labor, equipment maintenance) and end -use costs to establish the baseline “do - nothing” solids processing alternative.

Review previous biosolids evaluations including the 2012 Long Range Facilities Plan, the 2014 Biosolids Facility Plan, and the 2019 Biosolids Facility Plan Update.

Develop draft BFP update priorities and evaluation criteria and methodology to be used in the biosolids alternatives screening and evaluation. The evaluation criteria and methodology used in the 2019 Biosolids Facility Plan Update will be used as a starting point for this BFP Update; CONSULTANT will review and modify as needed, with input from the City.

Conduct a kickoff workshop with Plant staff to review and confirm the draft BFP Update priorities, evaluation criteria and methodology, the current solids quantities, the current solids processes performance, and current solids handling and end-use costs. Draft a BFP Update Background and Introduction Technical Memorandum (TM) for the City’s review and comment. Incorporate City’s comments in the final BFP Update Background and Introduction TM.

Task 2.2 – Develop Baseline Solids Projections
The BNR/MABR secondary treatment upgrades, projected to be in service in 2028, are expected to result in a substantial change in solids production rate (about 34% more WAS and 10% more total sludge). This change in solids production rate and primary sludge to WAS ratio is expected to affect the gravity thickening and belt filter press dewatering performance.

The BFP Update will be based on a 30 -year planning horizon. CONSULTANT will use the primary sludge and WAS loading projections (pounds per day) and volatiles solids concentrations (%VS) from the BioWin model developed in Task 4.3 and thickening and dewatering process performance assumptions to develop annual average and maximum month solids projections (primary sludge, WAS, thickened primary sludge and WAS, and dewatered cake) for use as the basis of sizing potential future solids processing facilities and off-site management options. CONSULTANT will use the existing thickening and dewatering performance criteria from Task 2.1 as a baseline and modify them based on expected changes in performance criteria from the BNR/MABR upgrades.

Task 2.3 – Regulatory Requirements and Trends
Review regulatory review chapters of previous biosolids evaluations including the 2012 Long Range Facilities Plan, the 2014 Biosolids Facility Plan, and the 2019 Biosolids Facility Plan Update.

Review current and expected future regulations, including:
• Federal, state, and local regulations applicable to existing and potential future solids processing and beneficial reuse.

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• Regulations on short-lived climate pollutants (Senate Bill 1383) and emerging contaminants of concern: plastics/microplastics and PFAS.
• Regulations relating to air emissions from digester gas treatment, flares, boilers, cogeneration, drying, and gasification/pyrolysis (since alternatives to be evaluated in Tasks

2.4 and 2.5 may include anaerobic digestion and thermal processes). • Regulations on sea level rise and related shallow groundwater change adaptation, as applicable.

Conduct a Basis of Planning workshop with Plant staff to review the solids projections developed in Task 2.2 and the regulatory requirements and trends developed in Task 2.3. Draft a Regulatory Requirements and Trends TM for the City’s review and comment. Incorporate City’s comments in the final Regulatory Requirements and Trends TM.

Task 2.4 - On-Site Solids Processing and Off-site Management Alternatives Screening Evaluate potential on-site solids processing and off-site management alternatives. CONSULTANT will review the alternatives developed in the previous biosolids evaluations including the 2012 Long Range Facilities Plan, the 2014 Biosolids Facility Plan, and the 2019 Biosolids Facility Plan Update.

On-site solids processing alternatives may be sited at the Measure E site, immediately adjacent to RWQCP (see staff report below for more information)4. The City Council has authorized that the Measure E site can be used as a potential future biosolids processing facility. Evaluate the latest developments for established and emerging technologies. Potential on -site solids processing alternatives include:
• MAD (mesophilic anaerobic digestion) with recuperative thickening • TAD (thermophilic anaerobic digestion)
• TPAD (Two-Phase Anaerobic Digestion)
• MAD with THP (Thermal Hydrolysis Process)
• Low Temperature Alkaline Hydrolysis (Lystek International, Inc.) • Drying / Pyrolysis (Bioforcetech Corporation; Aqualine) • Gasification (this alternative is expected to be eliminated due to need for wood chip addition)
• Thermal Drying
• Greenhouse Solar Drying

CONSULTANT will take into consideration the possibility of using mechanical thickeners (such as rotary drum thickeners) immediately downstream of the gravity thickeners or blend tank to increase the solids concentration and reduce the required downstream biosolids facility footprint.

CONSULTANT will evaluate expected impact of digestion on downstream dewatering performance.

4 City of Palo Alto, April 3rd, 2023, SR 2303-1145 https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/reports/city-manager-reports-cmrs/2023/sr-2302-0942.pdf Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13
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Coordinate with the City to develop a list of up to five (5) off-site management alternatives for the City of Palo Alto. Off -site alternatives may be speculative. Potential off -site management alternatives include:
• San Jose WPCP Public Private Partnership (P3) imported feedstock opportunity

For each on -site and off -site alternative, evaluate high -level advantages, disadvantages, recent installations, relative greenhouse gas (GHG) emissions (including for the processes and required trucking/hauling), and relative capital and operations and maintenance (O&M) costs. For greenhouse solar drying and other large footprint alternatives, estimate footprint requirements to determine if there is sufficient space at the RWQCP and Measure E site for these processes.

Conduct an On -Site and Off -Site Solids Alternatives Screening Workshop with City staff. At the workshop, use the screening evaluation criteria and methodology established in Task 2.1 to screen the options down to up to five (5) alternatives for alternatives development and analysis (“selected alternatives”).

Task 2.5 - Alternatives Development and Evaluation
Develop the selected alternatives identified under Task 2.4. Focus on a comparative evaluation and identify major differences between alternatives that align with the evaluation criteria identified in Task 2.1. Develop planning-level capital and life-cycle cost estimates and non-economic evaluations.

Incorporate input from stakeholders, including input obtained in public meetings, in development of evaluation criteria and weights.

Evaluate compliance with and flexibility to meet anticipated future regulatory requirements.

Develop quantitative GHG emissions. Include in the GHG analysis the changing regulatory landscape that requires future sludge hauling trucks to be electric by 2036; evaluate hauling GHG emissions for two scenarios: current diesel trucks and future electric trucks.

Consider the spatial requirements of the selected alternatives and prepare a preliminary site layout plan for each, including trucking routes. Include required appurtenances for each alternative.

Provide key parameters for each alternative, including height, area, and o perations and maintenance areas.

Assess the feasibility of siting each alternative within the existing RWQCP site boundary or at the Measure E site, including development of site layouts, capital and life -cycle cost estimates, and evaluation criteria scores for each siting option.

Conduct a sensitivity analysis to test the robustness of the alternatives evaluation findings under varying future biosolids market conditions, regulatory scenarios, and evaluation criteria weights.

Draft an Alternatives Devel opment and Evaluation TM for the City’s review and comment. In addition to documenting the findings of this task, include a description of the solids projections Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13
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developed in Task 2.2 and of all alternatives considered and the basis for the initial screening conducted in Task 2.4. Conduct an Alternatives Development and Evaluation workshop. Incorporate City’s comments in the final Alternatives Development and Evaluation TM.

The City has determined that alternatives involving food waste receiving, microturbines, fuel cells, compressed biogas vehicle fueling and compressed biogas for pipeline injection will not be included in the evaluation.

Task 2.6 - Recommended Biosolids Alternatives(s)
Collaborate with the City to identify a recommended biosolids alternative. If the preferred alternative is speculative, also provide a non-speculative recommended biosolids alterative.

For the recommended biosolids alternative(s), develop:
• Process flow diagram
• Nutrient removal strategy (including struvite, side-stream treatment) • Ancillary facility requirements
• Preliminary site layout and square footage / acreage requirements • Constructability issues
• Beneficial reuse and final disposition of residuals
• Estimated capital costs
• Estimated operations and maintenance (O&M) costs
• Estimated GHG emissions
o For trucking alternatives, consider emissions for both diesel and electric vehicles • Risk management and mitigation strategy

Develop a draft Recommended Biosolids Alternative(s) TM detailing the recommended alternative(s). Conduct a Recommended Biosolids Alternative(s) Workshop. City’s review comments on the draft Recommended Biosolids Alternatives TM will be incorporated into the final Recommended Biosolids Alternatives TM.

Prepare a slide deck of technical support materials and exhibits for future City Council and partner agency presentations, detailing the BFP Update findings and recommendations. Target a 20-minute length of presentation. Incorporate two cycles of City’s review comments.

Task 2.7 - Biosolids Facility Plan Update
Provide a draft Biosolids Facility Plan Update, compiling the TMs developed in the preceding subtasks. The BFP Update will include an Executive Summary of the findings, conclusions, and recommendations. Conduct a workshop to review and discuss the draft BFP Update with City Staff.

Incorporate City’s comments and provide a final BFP Update.

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Deliverables:
• Agenda, materials, and minutes for all workshops:
o BFP Kickoff
o Basis of Planning Workshop (covering solids projections and regulatory requirements and trends)
o Biosolids Alternatives Screening Workshop
o Alternatives Evaluation Workshop
o Recommended Alternative(s) Workshop
o BFP Update Review Workshop
• BFP Background and Introduction TM, draft and final versions. • Regulatory Requirements and Trends TM, draft and final versions. • Alternatives Screening and Evaluation TM, draft and final versions and comment log. • Recommended Biosolids Facilities Alternative(s) TM, draft and final versions and comment log.
• Biosolids Facility Plan Update, draft and final versions, and comment log • Recommended Biosolids Facilities Alternative(s) presentation materials for future City Council and partner Agency presentations, two drafts and one final version.

Assumptions:
• Workshops will be attended by up to five Carollo staff and up to three Jacobs staff.

Workshops will be virtual and have a 2-hour duration.
• Cost estimates will be developed consistent with AACE Class 5. • All deliverables will be provided in electronic format.

Task 3 - Workspace Planning
Task 3.1 – Confirmation of RWQCP’s Workspace Vision, Needs and Constraints Review background information including preliminary design documents, record drawings, LRFP and other available documentation to understand site constraints and initial space and area requirements for Plant staff. Review of the background information will focus on the following:
• Sites for new or leased buildings located off the Plant site that were identified in the RFP . • Existing Administration building.
• Existing Operations Building

Conduct a kickoff meeting and up to two foll ow-up meetings to confirm and finalize the vision/purpose/uses, the requirements/restrictions for siting the facilities, by Group (up to three meetings total).

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CONSULTANT will summarize the updated vision/purpose/uses, space and needs requirements in a TM (Vision, Needs and Constraints TM, draft and final) to define the program requirements for the Plant’s workspaces and related facilities.

Task 3.2 – Workspace Concept Development and Evaluation Develop a series of initial workspace concepts for Plant workg roups, excluding Operations and Maintenance workgroups. Each concept will either be a standalone predefined workspace alternative or a combination of the predefined workspace alternatives. Provide a short narrative describing the concept and planning level capital cost estimates. Conduct a workshop to review the initial concepts with the City, characterize the potential advantages and disadvantages, and screen the series of initial concepts to result in up to three favorable concepts.

Develop the three favorable concepts, as determined by the City, including site layout schematics, schematic building elevations, other graphical representations (e.g., adjacencies), and planning level costs. Conduct a workshop to present the two favorable concepts, refine the associated advantages and disadvantages, and solicit City feedback to select one preferred concept.

Develop a draft Workshop Concept Development and Evaluation TM detailing the initial workshop concept screening, the three favorable concepts, the planning -level project life-cycle costs, key long-lead considerations (e.g., land acquisition, permit requirements) and findings (the preferred concept). Provide a discussion on the possible ways to phase alternatives to incrementally meet the City’s needs over the planning horizon. Collaborate with the City to identify a recommended alternative. Incorporate the City’s comments on the draft TM, workshop, and presentations in the final Workshop Concept Development and Evaluation TM.

Prepare technical support materials and exhibits for City Council and partner agency presentations.

Target a 20-minute length of presentation. Incorporate two cycles of City’s review comments.

Task 3.3 – Preliminary (10%) Design for Rehabilitation of Existing Buildings Reference record drawings, visit the site, and review available documentation to understand site constraints, existing building layout, and geotechnical conditions for the existing (1) Administration Building and (2) Operations Building.
• Operations Building:
o Develop two layout alternatives drawings to accommodate the Operations Group, SCADA/Control room, SCADA Development Cubicle/Area, and upgraded Server room on second floor, bathroom/change room/mud room and locker room on first floor, and a kitchen/lunchroom.
o In collaboration with the City, select a layout for the 10% design of the rehabilitation.

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• Administration Building:
o Develop two layout alternatives to accommodate a multipurpose space that can be utilized as a large meeting/gathering area for all-hands meetings, project pre-bid or pre-proposal conferences, trainings, community outreach meetings, as well as a private office, SCADA Development work area and miscellaneous training and tour sessions.
o Note that the Administration Building will be for common spaces only (no programmed workgroup areas).
o In collaboration with the City, select a layout for the 10% design of the rehabilitation.

• For both buildings, develop a 10% Design Package:
o Develop the design criteria for the building and identify major elements of the rehabilitation required to meet applicable codes (e.g., seismic upgrades, sea level rise adaptation).
o Identify major building support systems requiring upgrades (e.g., HVAC) during buildings’ design life.
o Update the project life cycle costs and project implementation schedule. o Identify any data gaps that will require additional, future investigations. o Develop 10% design drawings.

Conduct a workshop to present the 10% Design Package and solicit City feedback. Incorporate City’s comments from the draft design package and workshop in the final design package.

Deliverables:
• Agenda, materials, and minutes for all workshops and meetings:
o Vision, Needs and Constraints Kickoff Meeting.
o Up to two additional Vision, Needs and Constraints Meetings. o Workspace Concepts Screening Workshop.
o 10% Design Review Workshop.
• Vision, Needs, and Constraints TM, draft and final versions. • Workshop Concept Development and Evaluation TM, draft and final versions and comment log.
• Workspace Planning presentation materials for future C ity Council and partner agency presentations, two drafts and one final version.
• 10% Design Package for Operations Building and Administration Building rehabilitations, draft and final versions and comment log.

Assumptions:
• Workshops will be hybrid (in person and virtual) and attended by up to three Jacobs staff (in person) and one Carollo staff (virtually). Workshops will have a 2-hour duration. • All deliverables will be provided in electronic format.

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• Cost estimates will be developed consistent with AACE Class 5. • New workspace construction should have a minimum design life of 50 years. • Renovated workspaces need to include life-cycle costs to have comparable useful life as new workspace construction.

Task 4 – Background and Baseline Information
Task 4.1 – Wastewater Flow and Load Projections
Collect and summarize up to 5 consecutive years of Plant influent wastewater flows and characteristics. Determine the historical Average Day Dry Weather, Average Day Wet Weather, Maximum Month, and Peak Day Wet Weather flow and load conditions.

Develop population forecasts and expected per capita wastewater flows and loads for each Partner Agency in coordination with Partners’ planning efforts. These forecasts will consider the following information from the Partners:
• urban water management plans
• census data
• ABAG projections
• sewer master plans
• planning department projections
• other population projections formally adopted by each Partner Agency

Population forecasts and per capita wastewater flow and load projections will also be informed by a questionnaire developed by the CONSULTANT to determine each Partner Agency’s expected 2075 flow and load projections for City’s review and distribution. CONSULTANT will compile and analyze questionnaire responses, attend up to six (6) City coordinated meetings with each Partner Agency, and compile meeting information.

Based on historical flows and loads, population forecasts, and expected flow and load projections for each Partner Agency, develop Average Day Dry Weather, Average Day Wet Weather, Maximum Month, and Peak Day Wet Weather flows and loads for the year 2075.

Task 4.2 – Recent and Ongoing Plant Improvements
Summarize the major and minor capital improvements completed and underway at the Plant since the 2012 Long Range Facilities Plant. Perform one (1) site visit and meet with Plant staff to verify equipment rating of critical equipment, as needed. CONSULTANT shall not rely solely on record information. Based on record information and site verification of critical equipment rating, CONSULTANT will summarize the design criteria of the current and planned facilities, to be used in Task 4.3.

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Task 4.3 – Process Modeling, Capacity Assessment, and Solids Projections The City will provide the EnviroSim Associates BioWin process model to the CONSULTANT to use.

The process model was developed by Brown & Caldwell after completion of the Secondary Treatment Upgrade project design. The CONSULTANT will use the wastewater flow and load projections developed in Task 4.1 and the design crit eria for recent and ongoing plant improvements developed in Task 4.2 to update the process model, as needed.

CONSULTANT will use the model to develop primary sludge and waste activated sludge (WAS) loading projections for the 30 -year planning horizon to be used in Task 2 (Biosolids Facility Plan Update). These primary sludge and WAS load projections will be based on the Plant’s planned treatment process.

CONSULTANT will conduct a capacity assessment of existing Plant processes based on the 2075 projections developed in Task 4.1 and the design criteria determined in Task 4.2. CONSULTANT will compile a matrix of all major treatment processes and their capacities. Based on the capacity assessment, CONSULTANT will identify capacity limitations and capacity-driven expansion needs over the next 50 years. CONSULTANT will allocate capacities by Partner Agency allocation, according to the information tabulated in Task 7.2 and compare allocated Partner capacities with future projections to identify exceedances.

The updated BioWin simulator inputs and results will be shared with the City for future use.

Task 4.4 – Regulatory, Environmental and Community Constraints Review Plant’s current NPDES permit. Conduct a workshop with the Plant’s Regulatory Group staff to discuss current and potential future regulatory requirements. This task will include the following topics:
• Current and Potential Future Regulatory Requirements
o Monitoring and Effluent Water Quality
o Air Emissions Quality (except for potential future biosolids processes, which will be covered in Task 2.3)
o Environmental Compliance Laboratory TNI Requirements
o Pretreatment
• Community Goals and Concerns
• Regional Trends, Studies, and Opportunities
• Emerging Contaminants of Concern (specifically, ones that could require a project or change in Plant operations during the planning horizon)

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Task 4.5 - Development of Evaluation Criteria and Methodology Develop the criteria for the evaluation of existing infrastructure and potential improvements. The evaluation criteria and methodology used in the 2012 LRFP will be used as a starting point for this LRFP Update; CONSULTANT will review and modify as needed, with input from the City. Evaluation criteria may include:
• Planning-level capital, operational, and maintenance cost (including life cycle costs) • Estimated staffing requirements/costs
• Redundancy, reliability, and longevity
• Ease of operation and safety
• Ease of maintenance
• Modifiable – to increase capacity, link with a process change, etc. • Environmental considerations: e.g., release of nitrogen to the bay, etc. • Carbon footprint minimization, especially through in-plant energy use reduction and energy recovery
• Impacts on adjacent land uses (e.g., visual, odors, height, noise, traffic, etc.) • Treatment capacity and physical size, layout, footprint, and elevation impacts • Performance and usage history
• Risk Factor (determined by Risk of Failure and Consequence of Failure) • Constructability

Recommend a weighting/prioritization of criteria, or an alternative evaluation methodology. City to approve of final methodology.

Draft a Basis of Planning TM summarizing the findings from Tasks 4.1 to 4.5 for the City’s review and comment. Incorporate City’s comments in the final Basis of Planning TM.

Deliverables:
• Partner Agency’s flow and load questionnaire, draft and final versions. • Agenda, materials, and minutes for all workshops/ meetings:
o Flow and Load Projections, Recent Plant Improvements, and Regulatory and Community Constraints Workshop.
o Evaluation Criteria and Methodology Workshop.
o Capacity Limitations and Recommended Projects Workshop. • Basis of Planning TM, draft and final versions.

Assumptions:
• The site visit to confirm capacity information will be attended by up to three Carollo staff. • Workshops will be attended by up to four Carollo staff. Workshops will be virtual and have a 2-hour duration.
• All deliverables will be provided in electronic format.

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Task 5 – Existing Plant Infrastructure and Process Assessment Task 5.1 – Desktop Analysis
Perform a desktop analysis of existing Plant infra structure and assess the current processes (including but not limited to the list below). Use industry guidelines, project team experience, and City staff input to establish expected useful life estimates by classification. Install date and equipment and asset size/capacity information to be provided by the City to support the desktop calculation. Where data is lacking or insufficient, approximate install date from record drawings for original construction and from upgrade/expansion projects. Note the age, capacity, and estimated remaining useful life of the subject infrastructure in a TM. Identify data gaps in the desktop analysis, make recommendations for infrastructure in need of field condition assessment (investigations), and prepare a draft Field Investigations Plan.
• Onsite Infrastructure
o Dual Media Filters
o Secondary Clarifiers
o Primary Sedimentation Tanks
o UV Disinfection
o Sludge Dewatering and Truck Loadout (including Sludge Blend Tank) o Effluent Outfall
o Chemical Storage
o Yard Piping
o Recycled Water Facilities
o W4 (Plant Water) Pumps and Power Distribution
o Electrical Facilities
o Hazardous Material Storage Facility
o Compressed Air System (compressors and lines)
o Gravity Thickeners
o Equipment Room
o Warehouse
o Chlorine Building
• Offsite Infrastructure
o Renzel Marsh and Appurtenances
o Matadero Creek saltmarsh pump
o Golf course recycled water pipeline and pump station
o Joint Intercepting Sewer (60” / 72” diameter)
▪ Pipeline Analyses
▪ Metering Station
▪ Approximately 2,364 feet out of 9,000 linear feet of the j oint intercepting sewer closest to the Plant will be rehabilitated (via CIPP) in summer 2024.

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▪ Future rehabilitation of the remaining and upstream portions of the Joint Intercepting Sewer.
▪ Flow Meters
o Partner Agency Flowmeters
o CPA/MV recycled water pipeline

Conduct a workshop with Plant staff to review the draft Desktop Analysis TM and the draft Field Investigations Plan and to coordinate investigations with Operators. Incorporate the City’s comments from the workshop and the draft Field Investigations Plan in the final Desktop Analysis TM and Field Investigation Plan.

Task 5.2 – Sea Level Rise and 100-Year Flood Adaptation The CONSULTANT will review the following reference documents to identify paths forward to improve plant’s resiliency against sea level rise and 100-year flood events:
• City of Palo Alto Sea Level Rise Adaptation Policy (March 2019)5 • City of Palo Alto Sea Level Rise Vulnerability Assessment (June 2022)6 • The Plant’s LiDAR topography.

Based on the references, the Consultant will identify the projected flood elevation in the short‐term (2030), mid‐term (2050), and long‐term (2100). The consultant will identify key sea level rise and flood criteria, including sea level rise elevation, flood depth, and inundation duration with City staff.

The Consultant will interview staff and analyze previous Plant CIP projects to understand the current timeline of equipment replacement and the cost premium of raising assets as they reach the end of their useful life, as well as the potential long -term impacts to site access under this strategy.

The CONSULTANT will develop at least three alternatives for adaptation of the RWQCP over the planning horizon. Adaptation strategies included in these alternatives shall consider the feasibility, economic impacts, and environmental consequences of various mitigations that may include both natural and engineered adaptation alternatives and/or operational changes, including raising the foundation of critical equipment as they reach the end of their useful life; installing flood doors for existing building; and/or constructing a perimeter flood wall. The Project study area shall focus on City-owned infrastructure located within the boundaries of the RWQCP but shall also consider site access routes under future conditions. The CONSULTANT will collaborate with City staff through workshop(s) to review and finalize the measures to be included in each alternative.

5 City of Palo Alto. 2019. Sea Level Rise Adaptation.
https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/sea-level-rise/slr-adaptation- policy_web.pdf?t=71340.78
6 City of Palo Alto. 2022. Sea Level Rise Vulnerability Assessment. https://www.cityofpaloalto.org/files/assets/public/v/1/public-works/environmental-compliance/sea-level- rise/palo-alto-sea-level-rise-vulnerability-assessment-june-2022-062822-linked-final.pdf Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13
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Based on the final alter native concepts, the CONSULTANT will then develop a cost estimate and qualitative cost‐benefit analysis of each potential alternative, highlighting the recommended alternative, based on long -term costs of implementation, assuming no outside funding. The CONSULTANT will develop a reasonable implementation schedule for each alternative. Develop a 50-year timeline for each alternative, indicating the percentage of the Plant’s assets that would be protected each year, based on the projected flood elevations. Assume that no regional solutions (regional levee) are implemented during the subject period. For all alternatives:
• Estimate the conditions and assumptions that would be required to operate the Plant during an inundation event (if operation is possible).
• Estimate the impact inundation would have on the Plant’s ability to receive, treat, and properly discharge the Plant influent.
• Estimate the extent of damage, including cost impact, to City’s asset for baseline condition (do nothing) and for each alternative.
• Estimate the requirements to bring the Plant back to fully operational following an inundation event.
• Estimate the cost to implement each alternative using a present worth analysis.

Facilitate a workshop to present the analysis to City staff. Based on the results of the workshop, the CONSULTANT will prepare a Climate Adaptation Plan TM. The TM will summarize the recommended climate adaptation requirements, detail the potential alternatives for meeting the Plant’s requirements, and include graphics/figures for each alternative, including mapping of projected inundation areas at the planning horizons and the alignment and elevation of any protective measures considered. Provide the City staff two drafts for comments. For each draft log and respond to comments. Prepare a final TM.

Task 5.3 – Field Investigations
Following the City’s explicit approval, execute the Field Investigations Plan. Coordinate, oversee, manage, and provide the services required to assess the condition and capacity of existing infrastructure. Based on the findings from the desktop analysis (Task 5.1) and the field investigation results, develop a list of recommended improvements to be implemented over the next 50 years.

Submit a draft TM describing the field investigation methods, findings, and recommended improvements from the field investigation results. Conduct a workshop with Plant staff to review the findings from the field investigations and associated recommended improvements. Incorporate the City’s comments from the workshop and the draft Field Investigation Findings TM in the final Field Investigation Findings TM.

Deliverables:
• Agenda, materials, and minutes for all workshops:
o Sea Level Rise and Flood Criteria Workshop
o Climate Adaptation Alternatives Screening Workshop
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o Climate Adaptation Alternatives Evaluation and Recommended Alternative(s) Workshop
o Desktop Analysis Findings and Field Investigations Plan Workshop. o Field Investigations Plan Findings and Recommended Improvements Workshop. • Climate Adaptation Plan TM, two drafts and final versions. • Desktop Analysis TM, draft and final versions.
• Field Investigations Plan, draft and final versions.
• Field Investigation Findings TM, draft and final versions and comment log.

Assumptions:
• Field investigations will be performed by up to five Carollo staff and up to five Jacobs staff. • Workshops will be attended by up to five Carollo staff and up to three Jacobs staff.

Workshops will be virtual and have a 2-hour duration.
• All deliverables will be provided in electronic format.

Task 6 – Identification, Evaluation, and Recommendation of Alternatives/Improvements Task 6.1 – Draft Recommended Improvements
Compile the recommended improvements from Tasks 2, 3, 4, and 5 into a comprehensive draft list of foreseeable capital improvement projects to be implemented over the next 50 years. For reference, below is an initial list of anticipated projects. Additional projects shall be identified by the CONSULTANT based on their findings from Tasks 2, 3, 4, and 5. • Primary Sedimentation Tanks
• Secondary Process
o Clarifier Equipment Enhancements (e.g., Passavant hydrograv Adapt System; flocculation)
o Clarifier Reconfiguration (e.g., square to round; deeper) o 7th Clarifier (planning)
o Selective WAS Thickening
o RAS Lines
o MABR (second phase of implementation)
• Filtration Process
o Dual Media Filter Rehabilitation or Replacement
• UV Disinfection
• Sludge Dewatering and Truck Loadout (including Sludge Blend Tank) • Effluent Outfall
• Chemical Storage
• Electrical Distribution
o Arc Flash Study
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• Recycled Water System
• Warehouse
o Expansion (Identify whether additional storage space is needed for projected future construction projects.)
o Improvements (e.g., controlled facility, security, climate controls) • Workspaces
o Align with conclusions from Task 3, as applicable
• Repurposing and Recovery of Retired Process Area
o Fixed Film Reactors (Superstructure will be decommissioned following completion of Secondary Treatment Upgrades Project in 2028. Note that City is interested in evaluating whether the decommissioned fixed film reactors’ structure can be used as warehouse storage or as space for future treatment process.) o Incineration Building
o Chlorine Building
• Gravity Thickeners
• Biosolids Facilities
o Align with conclusions from Task 2, as applicable
• Miscellaneous
o Recycle water line replacement
o Hypochlorite tank and appurtenances replacement
o Low voltage and communication system improvements (including fiberoptic network and public address system improvements)

Conduct at least two workshops with Plant staff to review and amend the project list. For each project, determine with the City if an evaluation of alternatives (e.g., technologies; location; capacity) is appropriate at this stage and if future alternatives analyses are required.

Coordinate with the regulatory group, including conducting a workshop as needed, to determine applicable regulatory requirements for air quality and water quality compliance. Determine if additional projects are needed based on the regulatory review.

For each of the capital improvement projects, determine which projects sho uld be grouped, develop capital cost estimates, and prioritize projects to develop a reasonable implementation plan.

Compile these projects into a draft 50 -year Capital Improvements Plan (CIP). For each project, provide the following details:
• Name
• Description, capacity, and estimated useful life of the facility and major assets • Project development/definition steps
• LRFP Update to implementation schedule
• Estimated capital cost
• Estimated operations and maintenance cost
• Regulatory requirements
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• Projected start of construction (year) and construction duration

CONSULTANT will review Plant data, metered utility data, chemical costs, trucking costs, etc. and consult with Plant staff to estimate the O&M costs associated with each process (including recycled water facilities).

Develop a draft Recommended Improvements TM.

Task 6.2 – Final Recommended Improvements
Conduct at least one workshop with Plant staff to review the draft Recommended Improvements.

Incorporate City’s comments from the draft Recommended Improvements TM and the workshop comments in the final Recommended Improvements TM.

Deliverables:
• Agenda, materials, and minutes for all workshops:
o Project Identification Workshop.
o Project Prioritization and Sequencing Workshop.
o Recommended Improvements and 50-year CIP Workshop.
• Recommended Improvements TM, draft and final versions and comment log. • Schematic of recommended improvement projects overlaid on an aerial image of the Plant with keynotes and legend.
• 50-year CIP Excel Model.

Assumptions:
• Workshops will be attended by up to five Carollo staff and up to three Jacobs staff.

Workshops will be virtual and have a 2-hour duration.
• Cost estimates will be developed consistent with AACE Class 5. • All deliverables will be provided in electronic format.

Task 7 – Cost of Service Analysis
Task 7.1 – Operations and Maintenance Cost Allocation
Perform a Cost of Service Analysis for the Plant’s Operations and Maintenance (O&M) costs.

Allocate/proportion the estimated O&M costs from Task 6 based on each Partner Agency’s respective flows, loads, or other identified allocation parameters (as applicable).

Identify the share of O&M expenses for each process allocable for cost recovery from wastewater flow, BOD, suspended solids (SS), ammonia (NH3), and other parameters as warranted (e.g. some Docusign Envelope ID: 1A2F36FF-9300-8949-831F-201DEA2395A0 Item 13
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O&M costs may be equitably recovered based on the share of capacity owned by each member agency). The goal will be to determine cost recovery allocations for each Plant process for equitably recovering O&M costs from the City and its partner agencies.

Review how flow and load data is currently sampled and analyzed. Identify and evaluate options for establishing a consistent basis for measuring and determining wastewater flow and loadings for future O&M cost allocation. Consult with Plant staff and partner agencies to gain input and facilitate agreement regarding future flow and loading measurement.

Identify alternative approaches for using the flow and loading data for O&M cost allocation. For example, use of rolling multi -year data to help smooth annual changes in cost allocations, or evaluation of cost allocation based on the number of Equivalent Dwelling Units (EDUs) assigned to each agency.

Conduct a survey of other regional and comparable multi-agency wastewater treatment plants for purposes of identifying how other agencies a) measure flows and loadings for allocating costs to member agencies, and b) apportion O&M and capital cost to their member agencies.

Discuss how other comparable regional wastewater treatment facilities collect data and allocate O&M costs. As warranted, develop up to three alternative methods each for allocating O&M costs based on different combinations of allocation factors and assumptions of data availability for relevant allocation factors and assumptions of data availability for relevant allocation factors, which could include flow information, loading information, number of customers or other allocation factors identified as relevant to deve loping an efficient and equitable allocation approach. The following background context will be used to guide selection of appropriate allocation factors to include in the alternative methods:

Partners like Palo Alto, Mountain View, and Los Altos began using strength components in the cost of service by agreement on January 14, 1980 with an effective start date of July 1, 1980. This approach was formalized with EPASD in 1989 and Stanford and Los Altos Hills in 1986. The cost components are set at 34% flow, 22% ammonia (NH3), 22% total suspended solids (TSS), and 22% chemical oxygen demand (COD). The allocations may be altered “based upon actual cost data derived in accordance with generally accepted accounting principles and upon agreement of all parties hereto.” The City will use the results of this task to establish the cost data per generally accepted accounting principles to potentially change the allocation of total costs to be billed on annual basis for each of the six agencies and to potentially alter how data is collected for support of this calculation. City staff will handle Partner agreement changes and be supported by the CONSULTANT.

Compare the existing and alternative methods, including the impact of the various options on costs allocated to the partner agencies for O&M costs during a future budget year, such as FY 2025, that would be selected in collaboration with the City. Evaluate alternatives to current sampling practices used to generate load data. Make preliminary recommendation on cost allocation approach. Finalize recommended approach after discussion with the City of advantages and disadvantages of the approaches evaluated.

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Draft an Operations and Maintenance Cost of Service TM Section. Facilitate a workshop to present the findings. Incorporate City’s comments from the draft Operations and Maintenance Cost of Service TM Section and the workshop comments in the final Cost of Service Analysis TM.

Task 7.2 – Capital Cost Allocation
Perform a Cost-of-Service Analysis for the Plant’s Capital Costs. Review the Plant’s current allocation of capital costs (debt) to the Partner Agencies as capacity shares. Partners established current fixed capacity shares in about April 1985 as follows:

MAXIMUM FLOW CAPACITY RIGHTS EXPRESSED IN ANNUAL AVERAGE FLOW

MILLION GALLONS PER DAY
Los
Altos
Mountain
View
East Palo Alto
Sanitary District
Stanford
University
Los Altos
Hills
Palo
Alto Total

3.80 15.10 3.06 2.11 0.63 15.30 40.00

FIXED CAPACITY SHARE OF CAPITAL ASSETS FOR DEBT SERVICE SHARE Los
Altos
Mountain
View
East Palo Alto
Sanitary District
Stanford
University
Los Altos
Hills
Palo
Alto Total

9.47% 37.89% 7.64% 5.26% 1.58% 38.16% 100%

Provide examples of capital cost allocations by other, comparable regional wastewater treatment plants.

Evaluate alternative capital cost allocation approaches, such as different mixes of allocation factors.

Estimate the share of capital costs that would be allocated to the partner agencies in up to three alternative allocation approaches. The alternative approaches will use different combinations of allocation factors, such as capacity ownership, current and/or projected future wastewater flow, BOD, SS and NH3 and other factors such as number of customers, as warranted, to allocate costs of the major capital projects to the partner agencies. Incorporate input from Plant staff. The goal will be to determine an equitable approach for allocating the costs of the major capital improvement projects to each partner agency. After consultation with Plant staff, make recom mendation for capital cost allocation approach from among the ones evaluated, and identify the resulting costs for each partner for currently identified capital projects based on the recommended allocation approach.

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Draft a Capital Cost of Service TM Section. Incorporate City’s comments from the draft Capital Cost of Service TM Section and the workshop comments in the final Cost of Service Analysis TM.

Provide the City with a user-friendly Excel model of the proposed O&M and Capital cost allocation tables a nd projections. The model will be developed with input from Plant staff and will be designed to be easy to modify and update.

Task 7.3 – Presentation Materials
Prepare a slide deck of technical support materials and exhibits for future City Council and Partner agency presentations, detailing the Plant’s cost of service analysis method and Partner allocations.

Provide each agency with a projection of its allocated O&M costs for the future budget year selected for the cost of service analysis in Task 7.2. and its allocated share of capital projects based on the selected methodology for capital cost allocation. Make content suitable for general audience understanding. Target a 20-minute length of presentation. Incorporate two cycles of City’s review comments.

Deliverables:
• Agenda, materials, and minutes for all workshops:
o Operations and Maintenance Cost of Service Allocation Workshop. o Capital Cost of Service Allocation Workshop.
• Draft Operations and Maintenance Cost of Service TM Section. • Draft Capital Cost of Service TM Section.
• Final Cost of Service TM.
• Cost of Service presentation materials for future City Council and partner agency presentations, two drafts and one final version.
• Cost Allocation Excel Model.

Assumptions:
• Workshops will be attended by up to one BWA staff, up to one Jacobs staff, and up to one Carollo staff. Workshops will be virtual and have a 2-hour duration. • All deliverables will be provided in electronic format.

Task 8 – Long Range Facilities Plan Update Report
Task 8.1 – LRFP Update Report
Prepare a draft and a final Long Range Facilities Plan Update report that incorporates the findings from Tasks 2 through 8. Clearly note assumptions and append calculations. Submit a draft table of contents to the City for approval. The following shall be included in the report:

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• Executive Summary
• Summary of the planning process in general (including evaluation criteria and methods) • Characterize the existing conditions, including:
o Characterization of waste streams
o Existing plant assessment and deficiencies
o Environmental setting and land uses
o Regulatory, Environmental, Financial, and Community Opportunities and Challenges • Project Development
o Present and future requirements, needs, and opportunities o Selection of most promising alternatives
o Evaluation of alternatives
o Life cycle costs
• Recommended Projects
o Identify each Partner’s capacities by project, as applicable. o Present tables and figures that show projects by type (e.g., driver (increased capacity, regulatory, and/or rehabilitation); flow, load, or flow and load), assumed construction start year, assumed midpoint of construction, assumed useful life, preliminary size and location, etc.
• Financial plan
o Identify costs in aggregate and by Partner allocation. o Present project costs in both present value and in the assumed dollar value in the year of the construction start.

As directed by the City, prioritize the completion of Task 2 and Task 3 and summarize those findings prior to completion of the LRFP Update report.

All project recommendations, including recommended capital projects from Tasks 2 and 3, shall be ultimately incorporated into the report’s recommended projects and finance plan. As needed, reorganize and restructure the TMs developed in Tasks 2 to 7 to develop a cohesive and streamlined LRFP Update report.

Task 8.2 – Presentation Materials
Prepare technical support materials and exhibits for City Council and partner agency presentations.

This presentation will compile previous presentation sections developed in Tasks 2, 3, and 6. Make content suitable for a general public audience. Incorporate two cycles of City’s review comments.

Task 8.3 – Presentation Support
Support City staff with presentations to each partner agency, including an overview of the Long Range Facilities Plan Update, the cost of service methodology, and the capital cost allocated share methodology. Support City staff with presentations for public workshops on topics related to this scope of work.

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• Presentation for public workshops (2 day and 1 night meetings, in-person) • Presentation to Utilities Advisory Commission, Finance Committee, and Palo Alto City Council (3 night meetings, in-person)
• Presentation to Mountain View Council (1 night meeting, in-person) • Presentation to East Palo Alto Sanitary District, Engineering Committee and Board of Directors (1 day meeting and 1 night meeting, in-person) • Presentation to Los Altos City Council (1 night meeting, in-person) • Presentation to Los Altos Hills Town Council (1 night meeting, in-person) • Presentation to Stanford University staff (1 day meeting - virtual) • Presentation to all partners (3 day meetings - virtual)

In-person support at a presentation shall include a member of the CONSULTANT’s project management team. Other staff or subconsultants may support the presentation of the LRFP Update through virtual technology.

Deliverables:
• Draft Table of Contents for Long Range Facilities Plan Update Report. • Long Range Facilities Plan Update Report, draft and final versions and comment log. • Presentation materials for City Council and partner agency presentations, two drafts and one final version.

Assumptions:
• Presentations will be attended by up to one Carollo staff in person, up to two Carollo staff virtually, up to two Jacobs staff virtually, and up to one BWA staff virtually. Presentations and Q&A will have a 2-hour duration.
• All deliverables will be provided in electronic format.

Task 9 – Additional Stakeholder Engagement & Presentation Support Prepare technical support materials and provide presentation support for stakeholder engagement activities beyond those identified in Task 8. This task addresses expanded public and stakeholder engagement needs that may arise as the project progresses , i ncluding but not limited to preparation and coordination of presentation materials responsive to partner agency requests for additional stakeholder or commission meetings.

Deliverables:
• Presentation materials for additional stakeholder engagement meetings, one draft and one final version per meeting
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Assumptions:
• Presentations will be attended by up to two Carollo staff in person or virtually, as applicable; presentations and Q&A will have a 2-hour duration
• All deliverables will be provided in electronic format

Consultant shall not charge to this Task without prior authorization from the City's Project Manager .

V. ADDITIONAL SERVICES
The CONSULTANT shall provide additional services only by advanced, written authorization from the City. The CONSULTANT, at the City Project Manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the City Project Manager and CONSULTANT prior to commencement of the of the services. The additional services include, but not limited to, the following:
• Additional technical supports associated with unforeseen conditions encountered during construction.
• Any additional work related to this Project, as requested by the City Project Manager, which is not in Basic Services.

VI. TIME OF COMPLETION
The project is budgeted for an estimated start date in the third quarter 2024, with a total duration (Task 1 – 9) of 36 months.

VII. OTHER PROVISIONS
Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY . CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. CONSULTANT’s participation in the planning, discussions, or drawing of project plans o r specifications shall be limited to conceptual, preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services.

END OF SCOPE OF SERVICES
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EXHIBIT B

SCHEDULE OF PERFORMANCE
(AMENDED, REPLACES PREVIOUS)

CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed (“NTP”) from the CITY.

Milestones
Completion
Number of Days/Weeks (as specified below)
from NTP

1. Task 1 – Project Management 155 weeks

2. Task 2 – Biosolids Facility Plan (BFP)
Update
123 weeks

3. Task 3 – Workspace Planning 74 weeks

4. Task 4 – Background and Baseline
Information
50 weeks

5. Task 5 – Existing Plant Infrastructure and
Process Assessment
50 weeks

6. Task 6 – Identification, Evaluation, and
Recommendation of
Alternatives/Improvements
140 weeks

7. Task 7 – Cost of Service Analysis 149 weeks

8. Task 8 – Long Range Facilities Plan Update
Report
155 weeks

9. Task 9 –Additional Stakeholder
Engagement & Presentation Support
155 weeks

Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on -call agreements per Section 1 or agreements with Additional Services per Section 4.)

The schedule of performance shall be as provided in the approved Task Order, as detailed in Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case of Additional Services, provided in all cases that the schedule of performance shall fall within the term as provided in Section 2 (Term) of this Agreement.

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EXHIBIT C

COMPENSATION
(AMENDED, REPLACES PREVIOUS)

CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below.

CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below, provided that the total compensation for the Services, including any specified reimbursable expenses, and the total compensation for Additional Services (if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this Agreement.

CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY.

BUDGET SCHEDULE

TASK NOT TO EXCEED AMOUNT
Task 1 (Project Management) $153,810
Task 2 (Biosolids Facility Plan Update) $555,462
Task 3 (Workspace Planning) $656,665
Task 4 (Background and Baseline Information) $264,826
Task 5 (Existing Plant Infrastructure and Process Assessment) $391,906 Task 6 (Identification, Evaluation, and Recommendation of Alternatives/Improvements)
$415,125
Task 7 (Cost of Service Analysis) $139,364
Task 8 (Long Range Facilities Plan Update Report) $262,668 Task 9 (Additional Stakeholder Engagement &
Presentation Support)
$150,000
Sub-total for Services $2,989,826
Reimbursable Expenses (if any) $5,200
Total for Services and Reimbursable Expenses $2,995,026 Additional Services (if any, per Section 4) $299,503
Maximum Total Compensation $3,294,529

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REIMBURSABLE EXPENSES

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

Reimbursable expenses, if any are specified as reimbursable under this section, will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: Travel/Mileage up to the not-to-exceed amount of: $5,200.

A. Travel outside the San Francisco Bay Area, including transportation and meals, if specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses.

B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges, if specified as reimbursable, will be reimbursed at actual cost.

All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate backup documentation and information.

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EXHIBIT C-1

SCHEDULE OF RATES
(AMENDED, REPLACES PREVIOUS)

CONSULTANT’s schedule of rates is as follows:

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Subconsultant: Jacobs Engineering, Inc.

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Subconsultant: Bartle Wells Associates

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: August 10, 2026
Report #:2607-6535
TITLE
Approval of Contract Amendment No. 1 to Contract No. C25191297 with Kittelson & Associates to Extend the Term through September 9, 2028, and Update the Scope of Services and Schedule of Rates for the South Palo Alto Bike/Ped Connectivity Project (Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study), with No Increase to the Previously Approved Not-to- Exceed Compensation; CEQA Status – Categorically Exempt

RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 1 to Contract No. C25191297 with Kittelson & Associates for professional consultant services for the South Palo Alto Bike/Ped Connectivity Project (project) to extend the contract term through September 9, 2028, update the Scope of Services, Schedule of Performance, Schedule of Rates, and Compensation schedule to align with the current project work plan, and make these updates with no increase to the previously approved not-to-exceed compensation amount.

EXECUTIVE SUMMARY
The City entered into Contract No. C25191297 with Kittelson & Associates on September 9, 2024, for transportation planning and engineering services in support of the Southern Palo Alto Bicycle and Pedestrian Railroad Crossing Study, also referred to as the South Palo Alto Bike/Ped Connectivity Project. The consultant team is assisting the City with community outreach and engagement, existing conditions analysis, development and evaluation of crossing alternatives, preparation of a report, implementation planning, and grant application support.

Staff recommends approval of Amendment No. 1 to extend the contract term two years through September 9, 2028, and to update the scope of services so that the contract documents accurately reflect the remaining work needed to complete the project. The amendment is needed in response to community input requesting additional engagement and to align the project schedule with preferred community engagement periods in the spring and Item 14
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fall and scheduled Rail Committee and City Council meetings. The updated scope also aligns the contract with the proposed work plan based on what staff, the consultant team, and the community have learned through the project to date.

Importantly, this amendment does not increase the previously approved not-to-exceed project budget. Rather, it updates the contract documents to better tailor the remaining consultant work to the project’s actual needs while keeping the total authorized compensation unchanged.

BACKGROUND
On September 9, 2024, the City entered into Contract No. C25191297 with Kittelson & Associates to provide professional services to evaluate opportunities to improve bicycle and pedestrian access across the rail corridor and develop conceptual designs for up to two new grade-separated bicycle and pedestrian crossings in south Palo Alto.1 On December 1, 2025, the City Council passed a motion that selected the preliminary concept design at El Dorado Avenue (also called Alternative A) for further evaluation. 2 Alternative A involves two variants:
Alternative A1 with a signalized crossing of Alma Street at El Dorado Avenue. Alternative A2 with a tunnel under both Alma Street and the Caltrain tracks in the vicinity of El Dorado Avenue.

The next step in the process is for the City to further refine and confirm the overall concept design for Alternatives A1 and A2, recognizing that each variant still includes design flexibility as it advances. The City will also review potential network enhancements in the surrounding neighborhoods. Over the next 5 months, the City will facilitate events to gather community input and feedback on the concept design alternatives. The City expects to have this round of community engagement completed and presented for the City Council’s consideration in late 2026.

As the project has advanced, staff received additional community input regarding the need for more engagement opportunities for the public, stakeholders, and advisory bodies, including the Rail Committee and the City Council, to provide feedback at key milestones. The project team has also refined the work plan based on what has been learned through early technical work, community input, and coordination with community partners. 1 City Council, September 9, 2024; Consent Calendar Item #7; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=6496&dbid=0&repo=PaloAlto&searchid=5ceb3b7e- 41e9-4bf1-9ad4-fb0749407a24
2 City Council, December 1, 2025: Action Item #18;
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83952&dbid=0&repo=PaloAlto&searchid=d9f09a55 -fa77-4887-8005-bb508af17995
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To reflect these developments, staff is bringing forward Amendment No. 1 to update the contract term, scope, and schedule so the contract accurately matches the remaining work necessary to complete the project.

ANALYSIS
This amendment serves two primary purposes: extending the contract term and updating the scope of services to reflect the project’s current needs.

Term Extension
Staff recommends extending the contract term by two years through September 9, 2028. This additional time is needed to accommodate further community engagement requested during the project and to align the project schedule and major milestones with preferred community engagement periods in the spring and fall, when school is in session, including meeting dates for the Rail Committee and the City Council.

Updated Scope of Services
Staff also recommends updating the scope of services to align the proposed work plan based on input received from the community and direction provided by the City Council. Through the work completed to date, staff learned that the remaining consultant effort should be more specifically tailored and customized to the project’s evolving needs. The amendment therefore updates the scope so it better reflects the work that is required going forward, rather than leaving the contract tied to assumptions made at the beginning of the project.

The updated scope includes, among other items:
additional and more clearly sequenced community engagement; continued coordination with advisory bodies, including the Rail Committee and the City Council at key milestones;
refinements to evaluation criteria and alternatives analysis based on input received during the project;
updated reporting and documentation deliverables, including public draft and final study materials and responses to public comments; and
continued implementation and grant support to position the City for future project delivery.

These updates are not a change in direction so much as a refinement of how the remaining work will be carried out.

No Increase to Previously Approved Budget
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This amendment does not request any increase to the previously approved not-to-exceed compensation amount. The amendment updates the compensation schedule and schedule of rates to align with the revised scope and timing of work.

FISCAL/RESOURCE IMPACT
On September 9, 2024, the City Council approved the professional services contract (C25191297) with Kittelson & Associates for a not-to-exceed amount of $499,491 for the project for a term of two-years. Sufficient funding for anticipated expenses related to the project is available in the FY 2026 Adopted Capital Budget for the Bicycle and Pedestrian Transportation Plan Implementation project (PL-04010) in the Capital Improvement Fund.

There is no increase to the previously approved not-to-exceed amount of $499,491 associated with this amendment. The amendment updates the scope, schedule, and compensation allocations within the existing authorized contract budget only.

STAKEHOLDER ENGAGEMENT
Stakeholder engagement has been extensive and will continue to be a central component of this project. Efforts for each phase of community engagement are listed below:

Project Initiation – Completed
Special Joint Meeting with Palo Alto Pedestrian and Bicycle Advisory Committee and Mountain View Bicycle/Pedestrian Advisory Committee: August 28, 2024 City Council Meeting: September 9, 2024 (Contract Authorization, Consent Calendar Item 7)5
Small Group Discussions: November 2024 to December 2024 Phase 1 Community Engagement: Establish Design Priorities (Spring 2025) – Completed Online Survey: April 1, 2025, to May 22, 2025 6
Transportation Planning Workshop: April 2, 2025
California Ave Third Thursday Pop-Up Event: April 17, 2025 Earth Day Festival Pop-Up Event: April 27, 2025
Pedestrian and Bicycle Advisory Committee Meeting: May 6, 2025 7 5 City Council, September 9, 2024; Consent Calendar Item #7; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=6496&dbid=0&repo=PaloAlto&searchid=5ceb3b7e- 41e9-4bf1-9ad4-fb0749407a24
6 South Palo Alto Bike/Ped Connectivity Survey;
https://communityfeedback.opengov.com/portals/paloalto/Issue_14352 7 Pedestrian and Bicycle Advisory Committee, May 6, 2025; Discussion Item #7.a.; https://www.paloalto.gov/PABAC
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Planning and Transportation Commission Meeting: May 14, 2025 11 Bike to Work Day Pop-Up Event: May 15, 2025
Rail Committee Meeting: May 20, 2025 12
City/School Transportation Safety Committee Meeting: May 22, 2025 Parks and Recreation Commission Meeting: May 27, 2025 13 Phase 2 Community Engagement: Feedback on Alternatives (Fall 2025) – Completed Online Survey: August 15, 2025, to October 12, 2025 14 Bike/Ped Rail Crossings Workshop: September 9, 2025
Planning and Transportation Commission Meeting: September 10, 2025 15 Bike Palo Alto Pop-Up Event: October 5, 2025
California Ave Third Thursday Pop-Up Event: October 16, 2025 City/School Transportation Safety Committee Meeting: October 23, 2025 Pedestrian and Bicycle Advisory Committee (PABAC) Meeting: November 4, 2025 16 Rail Committee Meeting: November 18, 2025 17
City Council Meeting: December 1, 2025 18
A third round of engagement will occur in fall 2026 and will allow the community to review and provide feedback on the two shortlisted grade-separated bicycle and pedestrian rail crossings documented in the Public Draft Report. A Final Report will be shared in spring 2027 in Phase 4 for community review and potential adoption by the City Council. 11 Planning and Transportation Commission, May 14, 2025; Study Session Item #4; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=7648&dbid=0&repo=PaloAlto&searchid=953eac3d- 214a-4cea-a77b-5cfa3921c24f
12 Rail Committee, May 20, 2025; Study Session Item #2; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=9269&dbid=0&repo=PaloAlto&searchid=d661c2c2- 51aa-4f56-bdc3-9882fb61d4e3
13 Parks and Recreation Commission, May 27, 2025; Business Items Item #5; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=7060&dbid=0&repo=PaloAlto&searchid=b91d0517- cedc-4099-8940-84b874c6ccd0
14 South Palo Alto Bike/Ped Connectivity Preliminary Design Concept Survey; https://communityfeedback.opengov.com/portals/paloalto/Issue_14594 15 Planning and Transportation Commission, September 10, 2025; Study Session Item #4; https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=7671&dbid=0&repo=PaloAlto&searchid=cc55f36b- 8916-4c57-a84c-1aa231dab86e
16 Pedestrian and Bicycle Advisory Committee, November 4, 2025; https://www.paloalto.gov/PABAC 17 Rail Committee, November 18, 2025; Action Item #1;
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83878&dbid=0&repo=PaloAlto&searchid=e5ce0fb7 -ff7e-4ddf-aa36-356d39a32b5b
18 City Council, December 1, 2025: Action Item #18;
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83952&dbid=0&repo=PaloAlto&searchid=d9f09a55 -fa77-4887-8005-bb508af17995
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Because the project is intended to identify feasible bicycle and pedestrian grade-separated crossings of the rail corridor in a complex and sensitive area, public input is critical to understanding community priorities, concerns, and desired outcomes. Input received to date has indicated a desire for additional opportunities for community engagement and review before key project decisions are brought forward.

The amended scope supports that need by allowing the project team to continue outreach and engagement as the study advances and to better align the work program with the timing of scheduled meetings by the Rail Committee and the City Council. This will help ensure that the community and policymakers have appropriate opportunities to review project materials and provide direction at meaningful milestones.

ENVIRONMENTAL REVIEW
Council action on this item is categorically exempt under the California Environmental Quality Act (CEQA) section 15262 because this contract for planning and preliminary design does not commit the City to any specific project.

ATTACHMENTS
Attachment A: Kittelson & Associates Contract; C25191297 Amendment No. 1 APPROVED BY:

Ria Hutabarat Lo, Chief Transportation Official
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Vers.: Aug. 5, 2019

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Palo Alto City CouncilAugust 10, 2026

Palo Alto City Council
August 10, 2026