Agenda packet — Palo Alto City Council, August 10, 2026 (part 1 of 3)

CITY COUNCIL
Regular Meeting
Monday, August 10, 2026
Council Chambers & Hybrid
5:30 PM
Amended Agenda
Amended agenda items appear below in RED
Councilmember Keith Reckdahl Remote Call In
Teleconference Location: Holiday Inn Huntsville Research Park 5903 University Drive, Huntsville, Alabama 35806
City Council meetings will be held as “hybrid” meetings with the option to attend virtually or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Translation services are available upon request at least 24 hours before the meeting. The meeting will be broadcast on Cable TV Channel 76, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org.

VIRTUAL PARTICIPATION
CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900-6833

PUBLIC COMMENTS
Public Comment for items not on the agenda will be accepted for up to 3 minutes or an amount of time determined by the Chair. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. In-person general public comment will be heard for 30 minutes. Additional in-person public comments, if any, will be heard at the end of the agenda. Public comments for agendized items will be accepted both in person and via Zoom for up to 3 minutes or an amount of time determined by the Chair.

Requests to speak will be taken until 5 minutes after the staff’s presentation or as determined by the Chair. Written public comments can be submitted in advance to [email protected] and will be provided to the Council and available for inspection on the City’s website. Multiple individuals wishing to speak on the same item may designate a spokesperson. Spokespeople must be representing 5 or more verified individuals who are present in person or via Zoom. Spokespeople are allowed up to 10 minutes, at the discretion of the Chair. Speaking time may be reduced if the Chair reduces the speaking time for individual speakers. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to [email protected] at least 24 hours before the meeting. Once received, the Clerk will share them at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that:
sticks, posts, poles or similar/other type of handle objects are strictly prohibited; the items do not create a facility, fire, or safety hazard; and persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. 1 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

TIME ESTIMATES
Listed

times

are

estimates

only

and

are

subject

change

any

time,

including

while

the
meeting

progress.

The

Council

reserves

the

right

use

less

time

any

item,
change

the

order

items

and/or

continue

items

another

meeting.

Items

may

heard
before

after

the

time

estimated

the

agenda.

This

may

occur

order

best

manage

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

CALL TO ORDER

AGENDA CHANGES, ADDITIONS AND DELETIONS

IN-PERSON PUBLIC COMMENT (5:30 - 6:00 PM)
Members of the public may speak to any item NOT on the agenda. 1-3 minutes depending on number of speakers. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. In-person Public Comment is limited to 30 minutes. Additional in-person public comments, if any, will be heard at the end of the agenda.

COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (6:00 - 6:10 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (6:10 - 6:15 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

1. Approval of Minutes from June 8 and June 15, 2026 Meetings

2. Recommend City Council Approval to Extend Certain FY 2026 City Auditor Task Orders with No Impact to Task Order Budgets

3. Recommend City Council Approval of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders. CEQA Status: Not a Project.

4. Approve Program Guidelines for a Public Agency Electric Vehicle Charging Hub Grant Program; CEQA Status - Under CEQA Guidelines Section 15183, Projects Consistent with an Existing General or Comprehensive Plan do not Require Additional CEQA Review

5. Adoption of a Resolution Establishing the FY 2027 Property Tax Levy for City of Palo Alto General Obligation Bonds (2008 Measure N Library Projects); CEQA Status: Not a Project

6. Adopt a Resolution Making Required Findings in Support of Acceptance of Funding from Vehicle Registration Fee-Intelligent Transportation Systems (VRF-ITS) Cycle 5 Grant Program; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301b Existing Facilities).

2 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

7. Adoption of a Resolution Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements; CEQA Status: Not a Project, CEQA Guidelines 15378(b)(5)

8. 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.

9. 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).

10. 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.

11. 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.

12. 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.

3 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

13. 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

14. 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

15. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Section

18.18.120 of Title 18 (Zoning) of the Palo Alto Municipal Code to Allow Greater Flexibility for Noncomplying Facilities in the Commercial Downtown District (FIRST READING: June 15, 2026; PASSED: 7-0)

16. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) and Chapter 16.59 (Citywide Transportation Impact Fee of the Palo Alto Municipal Code, and the Zoning Map, to Implement Retail Vitality Measures (FIRST READING: June 15, 2026; PASSED: 7-0)

17. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter

12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations (FIRST READING: June 8, 2026; PASSED: 7-0)

18. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending the College Terrace Residential Parking Program (RPP) at PAMC Section 10.46.060 to Remove Fixed Permit Terms, Sale and Grace Periods (FIRST READING: June 15, 2026; PASSED: 7-0)
CITY MANAGER COMMENTS (6:15 - 6:25 PM)

BREAK (15 MINUTES)

4 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

ACTION ITEMS (Item 19: 6:40 - 6:55 PM, Item 20: 6:55 - 8:25 PM; Item 21: 8:25 - 9:25 PM; Item 22: 9:25 - 10:00 PM; Item AA1: 10:00 - 10:30 PM)
Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.

19. PUBLIC HEARING: Consideration of Objections for Weed Abatement Assessments; and Adoption of Resolution Confirming the Weed Abatement Report and Ordering Abatement Costs to be a Special Assessment on the Properties Specified in the Report; CEQA status – categorically exempt.

20. Approval to Proceed with Final Design for the Permanent Installation of the Crescent Park Traffic Calming Project including a Bulb-out on Southwood Drive and East Crescent Drive; CEQA status – categorically exempt.

21. Adoption of a Resolution Authorizing the Borrowing of Funds on an Interim Basis for Improvements to the City's Regional Water Quality Control Plant and Authorizing the Execution and Delivery of a Revolving Credit Agreement, Fee Letter and Related Note; CEQA Status - Not a Project

22. Adoption of a Resolution to Reduce the Membership of the Stormwater Management Oversight Committee and Direction Related to an Amendment to the Palo Alto Municipal Code to Streamline the Functions of the Historic Resources Board; CEQA Status - Not a Project
AA1.

Removal of Planning and Transportation Commissioner Forest Olaf Peterson New Item
Added

VIRTUAL PUBLIC COMMENT
Members of the public may speak to any item NOT on the agenda. 1-3 minutes depending on number of speakers. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. In-person Public Comment is limited to 30 minutes. Additional in-person public comments, if any, will be heard at the end of the agenda.

ADJOURNMENT

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

Monthly Investment Report - May 2026 (Unaudited)
B.

Monthly Investment Report - June 2026 (Unaudited)
C.

Sales Tax Digest Summary for Q1 2026 (January - March). CEQA Status - Not a project.

5 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

City Council Summer Recess Report

OTHER INFORMATION
Standing Committee Meetings this week

Policy & Services Committee August 11, 2026

Public Comment Letters
Schedule of Meetings

AMENDED AGENDA ITEMS

AA1.

Removal of Planning and Transportation Commissioner Forest Olaf Peterson New Item
Added

6 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

PUBLIC COMMENT INSTRUCTIONS
Members

the

Public

may

provide

public

comments

teleconference

meetings

via

email,
teleconference, or by phone.

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

2. For in person public comments
please complete a speaker request card located on the
table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item.

3. Spoken

public

comments

using

computer

smart

phone

will

accepted

through

the
teleconference

meeting.

address

the

Council,

click

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

Disability

Act

(ADA)

the

policy

the

City

Palo

Alto

offer

its

public
programs,

services

and

meetings

manner

that

readily

accessible

all.

Persons

with
disabilities

who

require

materials

appropriate

alternative

format

who

require

auxiliary
aids

access

City

meetings,

programs,

services

may

contact

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ADA

Coordinator

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(650)

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(voice)

emailing

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7 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

California

Government

Code

§84308
,

commonly

referred

the

"Levine

Act,"

prohibits

an
elected

official

local

government

agency

from

participating

proceeding

involving

a
license,

permit,

other

entitlement

for

use

the

official

received

campaign

contribution
exceeding

$500

from

party

participant,

including

their

agents,

the

proceeding

within

the
last

12 months.

“license,

permit,

other

entitlement

for

use”

includes

most

land

use

and
planning

approvals

and

the

approval

contracts

that

are

not

subject

lowest

responsible

bid
procedures

and

have

value

over

$50,000.

“party”

person

who

files

application

for,

or
is

the

subject

of,

proceeding

involving

license,

permit,

other

entitlement

for

use.

A
“participant”

person

who

actively

supports

opposes

particular

decision

proceeding
involving

license,

permit,

other

entitlement

for

use,

and

has

financial

interest

the
decision.

The

Levine

Act

incorporates

the

definition

“financial

interest”

the

Political

Reform
Act,

which

encompasses

interests

business

entities,

real

property,

sources

income,

sources
of

gifts,

and

personal

finances

that

may

affected

the

Council’s

actions.

you

qualify

a
“party”

“participant”

proceeding,

and

you

have

made

campaign

contribution

a
Council

Member

exceeding

$500

made

within

the

last

12 months,

you

must

disclose

the
campaign contribution before making your comments.

8 August 10, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.

City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: August 10, 2026
Report #:2606-6467
TITLE
Approval of Minutes from June 8 and June 15, 2026 Meetings

RECOMMENDATION
Staff recommends that the City Council review and approve the minutes.

ATTACHMENTS
Attachment A: June 8, 2026 Draft Action Minutes
Attachment B: June 15, 2026 Draft Action Minutes
APPROVED BY:

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

Item 1: Staff Report
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1 Packet Pg. 9 of 412

CITY COUNCIL

DRAFT ACTION MINUTES

Page 1 of 5 ends

Regular Meeting
June 08, 2026
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M.

Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely:

Absent:

Spe
cial Orders of the Day

1. Proclamation Expressing Appreciation to Daniel Bergen Upon Retirement

NO ACTION

2. Pro
clamation Expressing Appreciation to Julie Weiss Upon Retirement

NO ACTION
Ag
enda Changes, Additions and Deletions
Publ
ic Comment
Co
uncil Member Questions, Comments and Announcements
Co
nsent Calendar
MOTION: Councilm ember Reckdahl moved, seconded by Council member Lu to approve Agenda Item Numbers 3-12.

Item 1
Attachment A - June 8, 2026
Draft Action Minutes

Item 1: Staff Report
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 6/8/2026
MOTION PASSED: 7-0

3. Adoption of a Resolution Calling for a General Municipal Election to be held on November 3, 2026; CEQA Status – Not a Project

4. Recommendation from the Council Appointed Officers Committee to City Council to approve the FY26 Council Appointed Officers annual evaluation process timeline, the modified CAO self -evaluation questions and Council interview questions for the annual evaluation process - CEQA: Not a Project

5. Accept the City of Palo Alto Utility Reserves Advisory Report and Public Safety Staffing and Overtime Audit as recommended by the Policy & Services Committee. CEQA Status:

Not a Project.

6. Approval of the City of Palo Alto's Permanent Water Use Ordinance. CEQA Status:

Exempt under CEQA Guidelines Sections 15307 and 15308.

7. Approval of Purchase Order C27197380 with Optiv Security, Utilizing a State of California Department of General Services Software Licensing Program (SLP) SLP -24-70- 0184Z Contract, to Procure Varonis Systems for a Three -Year Term with an Annual Amount of $154,043 for a Total Not -To-Exceed Amount of $462,129. CEQA Status - exempt under CEQA regulation § 15061(b)(3).

8. Appr
oval of Construction Contract C26197221 with Valentine Corporation in an Amount Not-to-Exceed $503,990 and Authorization for the City Manager or Their Designee to Negotiate and Execute Change Orders for Related Additional but Unforeseen Work that May Develop During the Project up to a Not
-to-Ex
ceed Amount of $50,399, for the
Guardrail Repair Project, Capital Improvement Program Project PE-86070; CEQA Status – Exempt under Section 15301(c) and 15301(d)

9. App
roval of Professional Services Contract Number C27196575 with Presidio Systems, Inc. in the Amount Not-to- Exceed $938,452 for Closed-Circuit Television (CCTV) Sanitary Sewer Pipeline Inspection for a Period of Three Years; CEQA Status – Not a Project Under CEQA Guidelines Section 15378.

10. Approval of Amendment No. 1 with Eight Professional Services Contracts for IT On -Call Services: Contract C26193247A INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc., to Increase the Not-to-Exceed Amount by $1.5 Million and Extend the Term through June 30, 2027; CEQA Status – Not a Project

11. QUASI-JUDICIAL. 405 Kipling Street [25PLN -00322] Approval of a Record of Land Use Action to Upgrade the Property Located at 405 Kipling Street From a Category 4 Item 1
Attachment A - June 8, 2026
Draft Action Minutes

Item 1: Staff Report
Pg.
3 Packet Pg. 11 of 412

DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 6/8/2026
Resource on the Local Historic Inventory to a Category 2 Resource. CEQA Status: Not a Project Pursuant to Public Resources Code Section 21065.

12. QUASI-JUDICIAL. 3980 El Camino Real (Buena Vista) [26PLN -00090]: Request for a Final Map to Subdivide a Single, 4.52 -Acre Parcel into Two Parcels. The Subdivision would Facilitate Renovation of the Buena Vista Mobile Home Park as well as Future Construction of a 100% Affordable Apartment Building on the Resulting Parcels (24PLN - 00041). A Tentative Map was Previously Approved on August 12, 2024. CEQA Status:

Not a Project.

Ci
ty Manager Comments
Ed Shikada, City Manager
Ac
tion Items

13. PUBLIC HEARING: Adopt a Resolution Adopting the 2025 Urban Water Management Plan and a Resolution Adopting the 2025 Water Shortage Contingency Plan. CEQA Status: Exempt under Water Code Sec. 10652.

MOTION: Mayor Veenker moved, seconded by Vice Mayor Stone to adopt a resolution adopting the 2025 Urban Water Management Plan and a resolution adopting the 2025 Water Shortage Contingency Plan with the following caveat: “While our response is based on the SFPUC’s design drought and water supply reliability analysis, this is not an endorsement or concurrence in those analyses and the City reserves our right to object to those analyses in other fora.”, and to direct staff to return this back to C ouncil for a Study S ession after the Council break.

MOTION PASSED: 7-0

14. Ado
pt an Ordinance and Resolution Calling an Election and Placing a ½ Cent (0.5%) Transactions and Use Tax Measure on the November 3, 2026 Ballot; and a Resolution Adopting Advisory Spending Guidelines for the Use of the Proceeds if the Measure Passes to Support Improving the Cubberley Community Center; CEQA Status - Not a Project.

MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember Burt to:

1. Adopt an ordinance and a companion resolution to place a ½ cent (0.5%) transactions and use tax measure on the November 3, 2026 ballot (Attachments A and B). The Item 1
Attachment A - June 8, 2026
Draft Action Minutes

Item 1: Staff Report
Pg.
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 6/8/2026
ordinance designates the members of the Cubberley Ad Hoc Committee (Councilmembers Burt, Lythcott- Haims, and Reckdahl) to author the argument in support of the measure. (2/3 vote required).

2. Adopt a resolution approving advisory spending guidelines in support of improving the Cubberley Community Center if the measure passes. (Attachment C, to be published in late packet on June 4, 2026).

MOTION PASSED: 7-0

15. San An
tonio Road Area Plan Core Scenario and Transportation Analysis Work Plan. CEQA Status: Exempt under CEQA Guidelines Section 15262.

MOTION: Vice Mayor Stone moved, seconded by Mayor Veenker to:

1. Endorse the core scenario for the San Antonio Road Area Plan as the basis for Phase 3 analysis, modified as needed to reflect Council priorities; and

2. Direct staff to explore the replacement of commercial areas into the CTI (Commercial Street, Transport Street, Industrial Avenue) area and the replacement of jobs to jobs rather than square footage options; and

3. Authorize the transportation analysis described in Attachment A, to be completed and presented to Council in Q4 2026 alongside a recommended land use and transportation plan.

MOTION PASSED: 6-1, Reckdahl no
Cl
osed Session

16. CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATION
Subject: Potential exposure to litigation
Authority: Government Code Section 54956.9(d)(2)
Number of potential cases: 1, as Defendant.

MOTION: Councilm ember Lu moved, seconded by Council member Lauing to go into Closed Session.

MOTION PASSED: 7-0
Council went into Closed Session at 10:28 P.M.

Item 1
Attachment A - June 8, 2026
Draft Action Minutes

Item 1: Staff Report
Pg.
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 6/8/2026
Co
uncil returned from Closed Session at 11:27 P.M.

Mayor Veenker announced no reportable action.

Adj
ournment: The meeting was adjourned at 11:28 P.M.

AT
TEST: APPROVED:
____________________ ____________________
City Clerk Mayor
NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC)

2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section

2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website.

Item 1
Attachment A - June 8, 2026
Draft Action Minutes

Item 1: Staff Report
Pg.
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CITY COUNCIL

DRAFT ACTION MINUTES

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Regular Meeting
June 15, 2026
The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M.

Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely:

Absent:

Special Orders of the Day

1. Proclamation Expressing Appreciation to Bill Gutoff Upon His Retirement

NO ACTION

Agenda Changes, Additions and Deletions

Public Comment

Council Member Questions, Comments and Announcements

Action Items

2. PUBLIC HEARING & PROPOSITION 218 HEARING: Finance Committee Recommends Adoption of Seven Resolutions: 1) Approving the Fiscal Year 2027 Water Utility Financial Forecast, Reserve Management Practices and Reserve Transfer, and Amending Water Rate Schedules W -1, W -2, W -3, W -4, and W -7; 2) Approving the Fiscal Year 2027 Wastewater Collection Utility Financial Forecast and Reserve Management Practices, and Amending Wastewater Collection Rate Schedules S -1, S-2, S-6 and S-7; 3) Amending Refuse Utility Rate Schedules R -1 and R -C; 4) Approving the Fiscal Year 2027 Electric Utility Financial Forecast and Reserve Transfer, Amending the Electric Reserve Item 1
Attachment B - June 15,
2026 Draft Action Minutes

Item 1: Staff Report
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 06/15/2026
Management Practices and Electric Rate Schedules E -1, E-1 TOU, E -2, E-2-G, E-4, E-4-G, E-4 TOU, E-7, E-7-G, E-7 TOU, E-14, E-16, E-EEC-1, and E-NSE-1, and Directing the Use of Up To $225,000 in Renewable Energy Certificate Exchange Net Revenues in Fiscal Year 2027 to Reduce Electric Customers’ Photovoltaic Generation and Energy Storage System Installation Costs; 5) Approving the Fiscal Year 2027 Gas Utility Financial Forecast, Reserve Transfer, and General Fund Transfer, and Amending the Reserve Management Practices and Gas Rate Schedules G -1, G-2, and G-3; 6) Amending Utility Rate Schedules EDF-1, and EDF-2; 7) Amending Storm Water Utility Rate Schedule D-1; CEQA Status: Not a project under CEQA Guidelines Sections 15378(b)(4) and (5) and Exempt Under Section 15273(a)
Note: Resolutions are included in the packet as Attachments A – G, Attachment H reflects the Table of URLs for the Exhibits to Attachments A – G.

MOTION: Councilmember Lauing moved, seconded by Council member Burt to adopt the Water Utility Resolution (Attachment A):
a. Approving the FY 2027 Water Utility Financial Forecast and Reserves Management Practices; and
b. Approving the transfer of up to $5.5 million from the Operations Reserve to the CIP Reserve in FY 2026; and
c. Amending the Water Utility Rate Schedules effective July 1, 2026 (FY 2027):
i. W-1 (General Residential Water service),
ii. W-2 (Water Service from Fire Hydrants),
iii. W-3 (Fire Service Connections),
iv. W-4 (Residential Master-Metered and General Non-Residential Water Service), and
v. W-7 (Non-Residential Irrigation Water Service).

MOTION PASSED: 7-0

MOTION: Council member Lauing moved, seconded by Council member Lu to adopt the Wastewater Collection Utility Resolution (Attachment B):
a. Approving the Fiscal Year (FY) 2027 Wastewater Collection Utility Financial Forecast and Reserves Management Practices; and
b. Amending the Wastewater Collection Utility Rate Schedules effective July 1, 2026 (FY 2027):
i. S-1 (Residential Wastewater Collection and Disposal), ii. S-2 (Commercial Wastewater Collection and Disposal), iii. S-6 (Restaurant Wastewater Collection and Disposal), and iv. S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger).

MOTION PASSED: 7-0
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MOTION: Council member Burt moved, seconded by Council member Lu to adopt the Refuse Resolution (Attachment C):
a. Amending the Refuse Rate Schedules effective July 1, 2026 (FY 2027):
i. R-1 (Domestic Refuse Collection), and
ii. R-C (Commercial Refuse Collection).

MOTION PASSED: 7-0

MOTION: Councilmember Reckdahl moved, seconded by Vice Mayor Stone to approve:

1. The Electric Utility Resolution (Attachment D):
a. Approving the FY 2027 Electric Utility Financial Forecast, and Amending the Electric Utility Reserves Management Practices; and
b. Approving the transfer of up to $5 million from the Electric Utility Distribution Operations Reserve to the Electric Utility Capital Reserve in FY 2026; and c. Amending the Electric Utility Rate Schedules effective July 1, 2026 (FY 2027):
i. E-1 (Residential Electric Service),
ii. E-1 TOU (Residential Time of Use Electric Service)
iii. E-2 (Small Non-Residential Electric Service),
iv. E-2-G (Residential Master-Metered and Small Non-Residential Green Power Electric Service,
v. E-4 (Medium Non-Residential Electric Service),
vi. E-4-G (Medium Non-Residential Green Power Electric Service), vii. E-4 TOU (Medium Non-Residential Time of Use Electric Service), viii. E-7 (Large Non-Residential Electric Service),
ix. E-7-G (Large Non-Residential Green Power Electric Service), x. E-7 TOU (Large Non-Residential Time of Use Electric Service), xi. E-14 (Street Lights),
xii. E-16 (Unmetered Electric Service),
xiii. E-EEC-1 (Export Electricity Compensation),
xiv. E-NSE-1 (Net Surplus Electricity Compensation); and d. Directing the Use of Up To $225,000 in Renewable Energy Certificate Exchange Net Revenues in Fiscal Year 2027 to Reduce Electric Customers’ Photovoltaic Generation and Energy Storage System Installation Costs, as local decarbonization efforts, via:
i. Changing the funding mechanism for the Cap- and-Invest Reserve to allocate up to $225,000 less in Cap -and-Invest auction revenues in FY 2027 to the City’s Cap-and-Invest Reserve and instead allocate these funds for other local decarbonization efforts; and, as a related matter:

1. Directing staff to review existing HVAC incentive levels including consideration of financial offsets to lower the cost of related work including panel upgrades, electric utility service upgrades, or the cost Item 1
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of building permit fees; and

2. Directing staff to return to City Council within FY 2027 to review the Electric Supply Portfolio Carbon Neutral Plan and use of revenues derived from the REC Exchange program.

2. The Gas Utility Resolution (Attachment E):
a. Approving the FY 2027 Gas Utility Financial Forecast, and Amending the Gas Utility Reserves Management Practices; and
b. Approving the transfer of up to $1.5 million from the Gas Utility Operations Reserve to the Distribution Rate Stabilization Reserve in FY 2026; and c. Transferring up to 18% of gas utility gross revenues received during FY 2025 to the General Fund in FY 2027; and
d. Amending the Gas Utility Rate Schedules effective July 1, 2026 (FY 2027):
i. G-1 Residential Gas Service,
ii. G-2 Residential Master-Metered and Commercial Gas Service, and iii. G-3 Large Commercial Gas Service; and

3. The Fiber Optics Utility Resolution (Attachment F):
a. Amending the Dark Fiber Optic Utility Rate Schedules, consistent with the

applicable Consumer Price Index, effective July 1, 2026 (FY 2027):
i. EDF-1 (Dark Fiber Licensing Services), and
ii. EDF-2 (Dark Fiber Service Connection Fees); and

4. The Storm Water Management Resolution (Attachment G):
a. Amending the Storm Water Management Fee Rate Schedule, consistent with the applicable Consumer Price Index, D-1 effective July 1, 2026 (FY 2027):
i. D-1 (General Storm and Surface Water Drainage)
MOTION PASSED: 7-0

3. PUBLIC HEARING: Adoption of an Ordinance Adopting the Operating and Capital Budgets, Revised Table of Organization, and Municipal Fee Schedule for Fiscal Year 2027; Adoption of a Resolution Proposing the Appropriations Limit for Fiscal Year 2027 - State Law/ City Charter; Accept the Bi -Annual Actuarial Valuation Report of Palo Alto's Retiree Healthcare and Other Post-Employment Benefits (OPEB) as of June 30, 2025 and Approve Annual Actuarially Determined Contribution for Fiscal Years 2027 and 2028; Authorize the City Manager or their Designee to Negotiate and Execute a Memorandum of Understanding and Funding Agreement (or Lease Agreement Amendment) with the Palo Alto Museum to Provide Cost Sharing for Repairs to the Basement and Waterproofing in the Roth Building and Improvements to Heritage Park Drainage Councilmembers Lu, Veenker and City Manager Shikada recuse from Stanford -related items for the Fiscal Year 2027 Budget (outlined in Attachment C).

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MOTION: Councilmember Lythcott-Haims moved, seconded by Council member Burt to approve the Stanford-related items for the Fiscal Year 2027 Budget.

MOTION PASSED: 5-0-2, Veenker, Lu recused

MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to:

1. Adopt the Fiscal Year 2027 Budget Ordinance (Attachment A), which includes:
• City Manager’s Fiscal Year 2027 Proposed Operating and Capital Budgets, previously distributed at the May 4th City Council Meeting (Attachment A, Exhibit 1) • Amendments to the City Manager’s Fiscal Year 2027 Proposed Operating Budget (Attachment A, Exhibit 2)
• Amendments to the City Manager’s Fiscal Year 2027 Proposed Capital Budget (Attachment A, Exhibit 3)
• Fiscal Year 2027 City Table of Organization (Attachment A, Exhibit 4) • Fiscal Year 2027 Municipal Fee Changes (Attachment A, Exhibit 5)

2. Accept the Fiscal Year 2027 – 2031 Capital Improvement Program (CIP)

3. Adopt a Resolution determining the Appropriations Limit for Fiscal Year 2027 (Attachment B)

4. Accept the June 30, 2025 actuarial valuation of Palo Alto's Retiree Healthcare Plan and fund the annual Actuarially Determine Contribution (ADC) for Fiscal Year 2027 and 2028

5. Authorize the City Manager or their designee to negotiate and execute a Memorandum of Understanding and Funding Agreement (or Lease Agreement Amendment) with the Palo Alto Museum to provide cost sharing for repairs to the basement and waterproofing in the Roth Building and improvements to Heritage Park drainage in an expedited efforts to try to make sure that accomplished before the next rain season. a) City to waive the permitting and inspection fees for the Museum. b) Direct staff to move forward with cashflow support for the museum toward repairs and to support the continued expedited process that staff is already pursuing.
c) The City cover the expenses for the park repair to the extent that it can be determined that it is principally the city's responsibility, and the City Manager negotiate a cost-sharing on the building repairs.

6. Direct staff to return at mid-year or sooner to review whether there are any remaining Canopy budgetary requests or if resolved through donations.

MOTION PASSED: 7-0

Consent Calendar
Councilmember Lythcott-Haims requested to pull Agenda Item Number 23a, 23b.

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Councilmembers Stone, Lythcott-Haims, and Veenker requested to pull Agenda Item Number 23c.

Councilmembers Lu and Veenker recused from Agenda Item Number 12.

Councilmember Lu and Reckdahl recused from Agenda Item Number 23a-c.

MOTION: Vice Mayor Stone moved, seconded by Mayor Veenker to approve Agenda Item Numbers 4-17 (Item Number 18 Removed Off Agenda), 19-23a-b, and to pull off the Consent Calendar Agenda Item Number 23c for Action.

MOTION PASSED ITEMS 4-11, 13-17, 19-22: 7-0
MOTION PASSED ITEM 12: 5-0-2, Lu, Veenker recused
MOTION PASSED ITEM 23a-b: 4-1-2, Lythcott-Haims no, Lu, Reckdahl recused

4. Approval of Minutes from June 1, 2026 Meeting

5. Approve Submittal of the 2026 Annual Water Shortage Assessment Report; CEQA status:
exempt.

6. Approve Conceptual Design for Alma Street -Charleston Road Railroad Crossing Near- Term Section 130 Safety Improvement Project – Direct Staff to Complete Final Design, Environmental Analysis, Project Specifications, and Engineering Cost Estimates based off of the Conceptual Design as Recommended by Rail Committee; CEQA status:

Categorically Exempt under Section 15301 -Class 1 minor alternations to existing facilities.

7. Adoption of a Resolution Authorizing the City Manager to Submit the City’s Prohousing Designation Program Application to the California Department of Housing and Community Development. CEQA Status: Not a Project.

8. Adoption of Amended Salary Schedules for Service Employees‘ International Union, Utilities Management and Professional Association of Palo Alto, International Association of Fire Fighters, and Unrepresented Management and Professional Employees and Limited Hourly groups; and Adoption of Side letters for the International Association of Fire Fighters, Fire Chiefs‘ Association, and Palo Alto Police Officers‘ Association and Amendments to the FY 2027 Table of Organization to Reclassify 1.0 Economic Development Manager and 1.0 Treasury Manager - CEQA Status - Not A Project.

9. Approval of Construction Contract Number C26197272 with O’Grady Paving, Inc. in the Amount of $3,802,573 for the Fiscal Year 2026 Street Resurfacing Project, Capital Improvement Program Projects PE -86070, PO -12001, PG -06001, PO -11001, and OS - 09001; and Authorization for the City Manager or Their Designee to Execute Change Item 1
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Orders in an Amount Not -to-Exceed $910,258 for Related, Additional but Unforeseen Work Which May Develop During the Project; CEQA Status – Exempt under CEQA Guidelines Section 15301(c)

10. Approval of Amendment Number 1 to Purchase Order C26195416 with Carahsoft in the Amount of $375,246 for Additional SAP Business Data Cloud Capacity Units and Related Non-Productive Memory Extension; CEQA Status - Not a Project

11. Approval of a First Amendment to Lease With 1900 Embarcadero Property Owner, LP, to Continue Occupying an Approximate 5,469 Square Foot Portion of the Office Building at 1900 Embarcadero Road, Through June 30, 2031, at a Total Base Rent of $1,306,605; CEQA Status – Exempt under CEQA Guidelines Section 15301

12. Approval of Amendment No. 4 to Contract Number C23184827 with Nomad Transit, LLC (Via) in the Amount of $152,000 for a total not to exceed $5,053,550 to Extend the City of Palo Alto On -Demand Transit Service for Four Months through October 31, 2026; Approval of Amendment No. 3 to extend the Cost Sharing Agreement with Stanford University to Partially Fund Palo Alto Link Service up to $200,000 in FY 2027 through October 31, 2026; and Approval of a three -year Contract with the Palo Alto Transportation Management Association (PATMA), in the Amount of $500,000; CEQA status – not a project.

13. Approval of Contract Amendment Number 5 to Contract S20178065 with OIR Group, in the Amount of $40,000 and for a one -year extension to continue Independent Police Auditing Services in Palo Alto. CEQA Status – Not a Project.

14. Approval of Professional Services Contract Number C26195541 with HDA Architects, Inc. in an Amount Not- to-Exceed $221,650 to Provide Architectural Design Services for the Animal Shelter Renovation – Capital Improvement Program Project PE -19002; CEQA Status – Exempt under CEQA Guidelines Section 15301(e)

15. Approval of Professional Services Contract Number C26196545 with Michael Baker International (MBI) for $116,000 in FY 2027 and a Not- to Exceed Amount of $464,000 to Provide Administration and Consulting Services for the City’s Community Development Block Grant (CDBG) Program for a Term of Four -Years Through June 2030. CEQA Status:

Exempt in Accordance with CEQA Guidelines Section 15061(b)(3).

16. PUBLIC HEARING / QUASI -JUDICIAL. 929 Laurel Glenn Dr [25PLN -00005]: Adoption of a Record of Land Use Action Approving a Major Site and Design Application for the Construction of a New 6,581 -Square-Foot Single -Family Residence and Associated Site Improvements on a Vacant 4.23 -Acre Site. CEQA Status: Exempt Per CEQA Guidelines Section 15303. Zoning District: Open Space (OS).

17. QUASI-JUDICIAL. Approval of a Record of Land Use Action to Add the Property Located at 855 Hamilton Avenue to the City’s Historic Resources Inventory as a Category 2 Item 1
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Resource Based on Owner Interest Identified Through the 2023 Reconnaissance Survey.

CEQA Status: Not a Project.

18. QUASI-JUDICIAL. 3200 Park/340 Portage: Final Map and Street Naming [26PLN -00009]:

Request for a Final Map to Subdivide One Existing 3.92 -Acre Parcel for Condominium Purposes, Consistent with the Approved Development Agreement, and to Name the New Private Streets. Zone District: PC 5597. CEQA Status: Council Adopted Resolution 10123 Certifying the EIR for the Project on September 12, 2023 (SCH # 2021120444).

Item Number 18 Removed Off Agenda

19. FIRST READ: Adopt an Ordinance to Amend College Terrace Residential Preferential Parking Program Fixed Permit Terms, Sale and Grace Periods in PAMC 10.46.060; CEQA status: categorically exempt.

20. FIRST READING: Adoption of an Ordinance to Amend Palo Alto Municipal Code Title 18 (Zoning) Section 18.18.120 (Noncomplying Uses and Facilities) to Allow Existing Floor Area to be Replaced in New Buildings Without Increasing the Degree of Existing Non- Compliance as Recommended by the Economic Development Committee. CEQA Status:

Exempt from CEQA per Section 15061(b)(3) (Common Sense Exemption).

21. FIRST READING: Adoption of an Ordinance to Amend Various Sections of Title 16 (Building Regulations) and Title 18 (Zoning) of the Palo Alto Municipal Code to Implement Retail Vitality Policies in the Comprehensive Plan, Including Changes to the Zoning Map for Parcels Zoned CN(GF) as Recommended by the Economic Development Committee. CEQA Status: The Ordinance is Consistent with and Represents Implementation of Adopted Policies in the Comprehensive Plan, for Which an Environmental Impact Report (Comprehensive Plan EIR) was Certified on February 5, 2016.

22. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending the Sign Code (PAMC section 16.20.160) to Allow Certain Signs in Conjunction with Parklets (FIRST READING: June 1, 2025; PASSED: 6-1, Lu no)

23. SECOND READING and Adoption of Temporary Ordinances Implementing Senate Bill (SB) 79, and Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Historic Resource Sites and Transit -Oriented Development (TOD) Eligible Sites from Government Code Section 65912.157 and Authorizing Corresponding Zoning Map Updates. CEQA Status: Exempt Under Government Code Section 65912.160(c)(2). a. SECOND READING and Adoption of Temporary Ordinances Implementing SB 79 (Staff Recommendations 1 & 2)
b. Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Historic Resource Sites from Government Code Section 65912.157 (Staff Recommendation 3) c. Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Transit- Item 1
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Oriented Development (TOD) Eligible Sites from Government Code Section 65912.157 (Staff Recommendation 4)
Action Item
23c. Introduction and Adoption of Interim Urgency Ordinances Excluding Certain Transit- Oriented Development (TOD) Eligible Sites from Government Code Section 65912.157 MOTION: Mayor Veenker moved, seconded by Council member Lythcott-Haims to direct staff not to proceed with adopting the interim urgency ordinance of 23C.

MOTION PASSED: 5-0-2, Lu, Reckdahl recused

MOTION SPLIT FOR THE PURPOSE OF VOTING
MOTION: Mayor Veenker moved, seconded by Council member Lythcott-Haims to direct staff to explore opportunities to accelerate housing production on California Avenue and adjacent areas of E l Camino Real and bring back to Council a proposal for zoning revisions to effectuate such production within the next 6 to 12 months.

MOTION PASSED: 4-1-2, Burt no, Lu, Reckdahl recused

Closed Session
AA1. CONFERENCE WITH LEGAL COUNSEL—POTENTIAL LITIGATION (one case) Subject: Initiation of litigation in one case
Authority: Government Code Section 54956.9(d)(4) New Item Added MOTION: Councilmember Lu moved, seconded by Council member Reckdahl to go into Closed Session.

MOTION PASSED: 5-0-2, Lauing, Stone absent for vote
Council went into Closed Session at 9:46 P.M.

Council returned from Closed Session at 10:18 P.M.

Mayor Veenker announced that the City Council authorized the C ity Attorney to join an amicus brief in support of the plaintiff's position in County of Santa Clara versus U.S. Immigrations and Customs Enforcement, case number 26CV5604.

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City Manager Comments
Ed Shikada, City Manager

Action Items

24. Adopt a Resolution Approving the 2026 Bicycle and Pedestrian Transportation Plan (BPTP); CEQA Status: Exempt Pursuant to Public Resources Code Section 21080.20.

MOTION: Council member Burt moved, seconded by Council member Reckdahl to adopt a Resolution Approving the Final 2026 Bicycle and Pedestrian Transportation Plan (BPTP) (Attachment A), including staff -recommended changes from the Pedestrian and Bicycle Advisory Committee (PABAC) (Attachment B) with the following amendments and additions:
a) Evaluate extension of the two -way bike track on Middlefield between Cal ifornia Avenue and Garland,
b) Look at safety improvements for Newell/Embarcadero intersection, c) Add language from public commenter on access to the San Antonio station, d) Add PABAC language or equivalent to it, that clarifies what staff is already embraced on the interpretation of T- 4.1 regarding filters not being closures, e) Evaluate s top signs or other protections when roadways cross bike boulevards and bike routes,
f) Complete Streets policy within the bike plan including bicycle -friendly street design and the PABAC recommendation on bicycle-friendly street design, g) Refer staff the evaluation of reconciling bike access along car- free portion California Avenue particularly for school and other commutes with pedestrian safety during peak use hours including the possibility of time-of-day restrictions, h) Council supports PAUSD pursuing restrictions of class two and three e-bikes.

MOTION PASSED: 7-0

Adjournment: The meeting was adjourned at 11:44 P.M.

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ATTEST: APPROVED:
____________________ ____________________
City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC)

2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section

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1 0
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4 City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: August 10, 2026
Report #:2606-6475
TITLE
Recommend City Council Approval to Extend Certain FY 2026 City Auditor Task Orders with No Impact to Task Order Budgets

RECOMMENDATION
The City Auditor recommends that the City Council approve timeline extensions for the following FY 2026 task orders with a net zero impact to the Office of the City Auditor’s (OCA) contracted budget:
Task Order 4.35 – Below Market Rate Housing
Task Order 4.36 – Fleet Resources & Sustainability & Climate Action Plan (SCAP) Task Order 4.37 – Traffic Safety Improvements
Task Order 4.38 – CPAU Utility Program Reserves Advisory Project: this audit was presented to P&S in April 2026 and will be presented to the Utility Advisory Commission in September 2026 and later to the Finance Committee.
Task Order 4.41 – Follow-up Activities
FY26 Task 6 – Evaluation & Benchmarking

BACKGROUND
In accordance with our agreement with the City, Baker Tilly is required to conduct recurring activities each year. Task 4 – Execute the Annual Audit Plan comprises the majority of OCA’s budget and time. Specific audit task orders are approved annually by the City Council and executed by the Policy & Services Committee (P&S) Chair as the Project Manager for the Baker Tilly contract as stipulated in the contract terms.

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4 ANALYSIS
OCA is seeking to extend task order timelines for the first five task orders which are all associated with Audit Plan projects that are underway and at various stages of either fieldwork or reporting. All reports should be completed by the end of the calendar year. Work on both the CPAU Utility Program Reserves Advisory Project and the Audit Follow-Up Activities Project are complete and in final stages of reporting expected in August/September 2026.

The three remaining audits are in various stages of fieldwork and reporting. The Below Market Rate Housing Audit is with management for their review and response and is scheduled for presentation at the September P&S meeting. The Fleet Resources & SCAP and Traffic Safety Improvement Audits both experienced delays due to audit staff turnover. New teams have been assigned and both audits are in fieldwork. No additional funds are anticipated to complete this work.

For Task 6 – Evaluation & Benchmarking, Baker Tilly is in the process of initiating a third-party assessment of the City’s Audit function through the Institute of Internal Auditor.

FISCAL/RESOURCE IMPACT
Extension of these Tasks and Task Orders will not impact the approved scope or compensation for these audits and audit activities included in the FY26 Baker Tilly contract’s operating budget for the OCA.

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

ATTACHMENTS
Attachment A: Task Orders 4.35, 4.36, 4.37, 4.38, 4.41, and FY26 Task 6 APPROVED BY: Kate Murdock, City Auditor
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7 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY26-4.35 Below Market Housing Rate Program
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement
referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task
Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and
supporting personnel required by this Task Order as described below.

CONTRACT
NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340A 1B. TASK O RDER NO.: FY26-4.35

2. C
ONSULTANT NAME: Baker Tilly Advisory Group, LP

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

4. TOTAL TASK ORDER PRICE: $97,575

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Vicki Veenker, Chair of the City Council’s Policy and Services Committee

7. DESC
RIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

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

APPRO
VED:

CITY OF PALO ALTO
BY:______
______________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority
to sign on behalf of Consultant.

APPRO
VED:

COMPANY NAME: Baker Tilly Advisory Group,
LP
BY
:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB 8/7/2025
Senior Manager
Kate Murdock
9/5/2025
Council Member
Council Member Vicki Veenker
Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

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8 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
• Services and Deliverables To Be Provided
• Schedule of Performance
• Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the Below Market Rate Housing Program involves three (3) primary steps:
• Step 1: Audit Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Assess the audit risk
• Prepare an audit planning memo and audit program
o Refine audit objectives and scope
o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the Below Market Rate Housing Program maximizes the creation and retention of affordable housing stock in comparison to similar programs, and (2) determining whether services are provided to low- and moderate-income households in a timely manner that meets the needs of the community. Finally, the audit will evaluate the administration of the Below Market Rate Housing Program for adequate internal controls to safeguard the City from fraud, waste, and abuse. Procedures include, but are not limited to:
• Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Program
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
4 Packet Pg. 29 of 412

9 • Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness • Select samples of applications and projects to determine if in compliance with rules and regulations
• Compare processes and controls against best practices Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
• Developing findings, conclusions, and recommendations based on the supporting evidence gathered
• Validating findings with appropriate individuals and discuss the root cause of the identified findings
• Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses
• Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables:

The following deliverables will be prepared as part of this engagement:
• Audit Report
• Policy & Services Committee Audit Report Presentation

Schedule of Performance
Anticipated Start Date: July 1, 2025
Anticipated End Date: May 31, 2026
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $97,575.

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

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

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

The following summarizes anticipated reimbursable expenses:
• Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights)
• Food & Incidentals – $2,100
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
5 Packet Pg. 30 of 412

10 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY26-4.36 Fleet Resources & Sustainability / Climate Action Plan Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the
Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, t
echnical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY26-4.36

2. C
ONSULTANT NAME: Baker Tilly Advisory Group, LP

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

4. TOTAL TASK ORDER PRICE: $90,255

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Vicki Veenker, Chair of the City Council’s Policy and Services Committee

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

APPRO
VED:

CITY OF PALO ALTO
BY
:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority
to sign on behalf of Consultant.

APPRO
VED:

COMPANY NAME: Baker Tilly Advisory Group,
LP
BY
:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Senior Manager
8/7/2025
Kate Murdock
Council Member Vicki Veenker
Council Member
9/5/2025
Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
6 Packet Pg. 31 of 412

11 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
• Services and Deliverables To Be Provided
• Schedule of Performance
• Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the Building Permit and Inspection Fees involves three (3) primary steps:
• Step 1: Audit Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Assess the audit risk
• Prepare an audit planning memo and audit program
o Refine audit objectives and scope
o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the City is effectively and efficiently managing fleet resources; and (2) if the City is on track to achieve City Fleet Sustainability and Climate Action Plan goals established for 2030. Procedures include, but are not limited to:
• Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Fleet & S/CAP Programs • Analyze policies and procedures as well as the legislative and regulatory requirements to identify t
he criteria to be used for evaluation of control design and effectiveness • Gather data on fleet vehicles, including maintenance, disposal, driver training and safety programs • Analyze fleet utilization to identify underused or overused vehicles Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
7 Packet Pg. 32 of 412

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

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $90,255.

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

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

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

Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
8 Packet Pg. 33 of 412

13 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY26-4.37 Traffic Safety Improvements
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement
referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task
Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and
supporting personnel required by this Task Order as described below.

CONTRACT
NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE):C21179340A A 1B. TASK ORDER NO.: FY25-4.37

2. C
ONSULTANT NAME: Baker Tilly Advisory Group, LP

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

4. TOTAL TASK ORDER PRICE: $97,575

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Vicki Veenker Chair of the City Council’s Policy and Services Committee

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

APPRO
VED:

CITY OF PALO ALTO
BY
:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority
to sign on behalf of Consultant.

APPRO
VED:

COMPANY NAME: Baker Tilly Advisory Group,
LP
BY:______
______________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Kate Murdock
8/7/2025
Senior Manager
Council Member
9/5/2025
Council Member Vicki Veenker
Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
9 Packet Pg. 34 of 412

14 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
• Services and Deliverables To Be Provided
• Schedule of Performance
• Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the Building Permit and Inspection Fees involves three (3) primary steps:
• Step 1: Audit Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Assess the audit risk
• Prepare an audit planning memo and audit program
o Refine audit objectives and scope
o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine if the City is effectively and efficiently designing and implementing improvements to ensure traffic safety for residents. Procedures include, but are not limited to:
• Interviewing the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the Office of Transportation and Public Works Departments as they relate to the design and implementation of traffic safety improvements • Analyze policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness • Gather data on traffic safety programs and initiatives including calming measures, engineering design and implementation, data collection, performance measurement and public education Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
10 Packet Pg. 35 of 412

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

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

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

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

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
11 Packet Pg. 36 of 412

16 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY26-4.38 City of Palo Alto Utilities Reserves Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement
referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and
supporting personnel required by this Task Order as described below.

CONTRACT
NO. C21179340 A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 A 1B. TASK ORDER NO.: FY26-4.38

2. C
ONSULTANT NAME: Baker Tilly Advisory Group, LP

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

4. TOTAL TASK ORDER PRICE: $70,815

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Vicki Veenker, Chair of the City Council’s Policy and Services Committee

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

APPRO
VED:

CITY OF PALO ALTO
BY
:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority
to sign on behalf of Consultant.

APPRO
VED:

COMPANY NAME: Baker Tilly Advisory Group,
LP
BY
:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Senior Manager
8/7/2025
Kate Murdock
Council Member Vicki Veenker
Council Member 9/5/2025
Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
12 Packet Pg. 37 of 412

17 Attachment A

DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
• Services and Deliverables To Be Provided
• Schedule of Performance
• Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the City of Palo Alto Utilities Reserves (3) primary steps:
• Step 1: Assessment Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting
Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program
o Refine assessment objectives and scope
o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing
The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to assess the City of Palo Alto Utilities supply, operating, and capital expenditure reserve policies and provide related benchmarking and best practices information:
• Interviewing the appropriate individuals to gain an understanding of current procedures including h
ow the Utility projects peak demand, calculates reserve margins, models demand growth, etc. • Analyze policies and procedures related to reserves
• Assess compliance with regulatory reserve margin requirements and other relevant standards • Compare processes and controls against best practices Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
13 Packet Pg. 38 of 412

25 PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY26-4.41 Follow-Up Audit Activities
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement
referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task
Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and
supporting personnel required by this Task Order as described below.

CONTRACT
NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 A 1B. TASK ORDER NO.: FY26-4.34

2. C
ONSULTANT NAME: Baker Tilly Advisory Group, LP

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

June 30, 2026

4. TOTAL TASK ORDER PRICE: $59,390

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Vicki Veenker, Chair of the City Council’s Policy and Services Committee

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

APPRO
VED:

COMPANY NAME: Baker Tilly Advisory Group,
LP
BY:______
______________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB 8/7/2025
Kate Murdock
Senior Manager
Council Member Vicki Veenker
Council Member
9/5/2025
Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
14 Packet Pg. 39 of 412

26 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

The following deliverables will be prepared as part of this engagement:
• Annual Status of Audit Recommendations Report
• Policy & Services Committee Report Presentation

Schedule of Performance
Anticipated Start Date: July 1, 2025
Anticipated End Date: June 30, 2026

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $18,255.

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

Docusign Envelope ID: 3867CDA0-2394-4C73-A5C3-3AAA5E07A7CB Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
15 Packet Pg. 40 of 412

PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY26-06 Evaluation and Benchmarking
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)

1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340A 1B. TASK O RDER NO.: FY26 – Task 6

2. CONSULTANT NAME: Baker Tilly US, LLP

3. PERIOD OF PERFORMANCE: START: November 20, 2025 COMPLETION: June 30, 2026 4 TOTAL TASK ORDER PRICE: $45,450

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Vicki Veenker, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
▪ SERVICES AND DELIVERABLES TO BE PROVIDED
▪ SCHEDULE OF PERFORMANCE
▪ MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) ▪ REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the
work described in this Task Order.

APPROVED:

CITY OF PALO ALTO

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority to
sign on behalf of Consultant.

APPROVED:

Baker Tilly Advisory Group, LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

Docusign Envelope ID: FF6B5C7D-F637-4C0B-9098-EA017A266973 Manager
8/1/2025
Kate Murdock
Council Member Vicki Veenker
8/7/2025
Council Member
Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
16 Packet Pg. 41 of 412

Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Introduction

Attachment A, the Description of Scope of Services, contains the following four (4) elements:

• Services and Deliverables To Be Provided
• Schedule of Performance
• Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables

Baker Tilly’s approach to undergoing a peer review involves three (3) primary steps:

• Step 1: Preparation for a peer review
• Step 2: A peer review by and independent auditor
• Step 3: Cost per audit analysis

Step I – Preparation for a peer review
The Office of the City Auditor (OCA) will conduct a self-assessment before a peer review.

Step 2 – A peer review by a qualified organization
OCA will undergo a peer review conducted by an independent evaluator. In order to accomplish this task, OCA will:
• Request a peer review from the Association of Local Government Auditors (ALGA) • Provide documents and answer questions as requested by ALGA • Obtain a peer review report from ALGA

Step 3 – Cost per audit analysis
OCA will prepare a cost per audit analysis.

Deliverables:

Legislative documents will be prepared to present a peer review report from an independent evaluator:

Schedule of Performance

Anticipated Start Date: November 20, 2025
Anticipated End Date: June 30, 2026

Docusign Envelope ID: FF6B5C7D-F637-4C0B-9098-EA017A266973 Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
17 Packet Pg. 42 of 412

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $45,450. The not-to-exceed budget is based on an estimate of 100 total project hours, of which 80 are estimated to be completed by the City Auditor.

Reimbursable Expenses
As part of the peer review process, the City Auditor’s Office will be paying the peer review teams’ travel expenses should the peer review agency determine that the peer review will require an onsite visit. The City Auditor’s Office will have a better estimate of these expenses in the Fall of 2025, but a rough estimate is $10,000. This will cover airline, hotel, uber, and meal expenses for the peer review team (typically 2 to 3 individuals for 4 days). At this time, it is not anticipated that there will be other costs associated with the peer review if conducted through the Association of Local Government Auditors.

Docusign Envelope ID: FF6B5C7D-F637-4C0B-9098-EA017A266973 Item 2
Attachment A - Task Orders

4.35, 4.36, 4.37, 4.38, 4.41,
and FY26 Task 6

Item 2: Staff Report
Pg.
18 Packet Pg. 43 of 412

1 0
1 7
2 City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: August 10, 2026
Report #:2606-6469
TITLE
Recommend City Council Approval of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders. CEQA Status: Not a Project.

RECOMMENDATION
The Policy & Services Committee (P&S) and the Office of the City Auditor recommend City Council approve the Citywide Risk Assessment and FY 2027 Audit Plan.

BACKGROUND
The Palo Alto Municipal Code (Section 2.08.1301) requires the City auditor prepare and submit an annual audit plan to the City Council for review and approval. Baker Tilly, in its capacity as the City Auditor, and in accordance with its agreement with the City, performed a citywide risk assessment (Task 1 of the agreement2). The purpose of the assessment was to identify and prioritize risks to develop the annual audit plan (Task 2). During the risk assessment, Baker Tilly assessed a wide range of risk areas, including strategic, financial, technological, human capital, operational, reputational, economic, and including compliance risk categories.

ANALYSIS
Baker Tilly surveyed and interviewed City Council members and executive leadership across all departments within the City regarding risks to the City and individual departments. As part of this process, Baker Tilly also piloted a new risk assessment tool that enabled participants to engage in discussion around key risks to the City. Baker Tilly analyzed the results of all these inputs and other City documents, news articles, as well as information gathered from industry associations and publications. Identified risks were scored on their potential impact to the City 1 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-60361 2 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020-2/id-11624.pdf?t=64761.15
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2 and the likelihood that they might occur. The FY2027 Audit Plan was prepared based on the results of the FY2026 risk assessment.

Baker Tilly provided a presentation of both the risk assessment and audit plan results to the Committee. Committee members discussed the prioritization of the projects for this year’s plan noting that one of the selected projects was rated as “medium” versus the rest of the projects on the plan being rated as “high”. Risk ratings help to guide development of the plan, but other factors are also considered including, but not limited to, public interest, strategic importance, imminent operational challenges, or other projects/work underway. In addition, many of the “high” rated risks have been recently audited or are currently being addressed by management.

Topics for the FY 2028 audit plan were also discussed but no substitutions were recommended.

P&S recommended approving the plan as presented.

Upon Council approval of the attached Citywide Annual Risk Assessment and FY 2027 Audit Plan and associated task orders, these orders will be signed by the Policy & Services Committee Chair to authorize work to begin.

FISCAL/RESOURCE IMPACT
The FY2027 Audit Plan commences in August 2026 with anticipated completion of the entire plan in June 2027. The proposed audits are within the contract amount for FY2027. This year, the Audit Plan has a larger than typical “ad hoc” budget. This is to account for FY2027 reductions to the audit services contract which subsequently will reduce the budget available for Task 4 – Execute the Annual Audit Plan.

STAKEHOLDER ENGAGEMENT
The Office of the City Auditor engaged the City Council in interviews and worked with executive leaders from 15 departments across the City.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the audit activities are organizational or administrative activities that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).

ATTACHMENTS
Attachment A: Citywide Annual Risk Assessment and FY 2027 Audit Plan Report APPROVED BY:

Kate Murdock, City Auditor
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1 May 29, 2026
City of Palo Alto
Office of the City Auditor
Citywide Annual Risk Assessment
and FY 2027 Audit Plan
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Contents
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.

INTRODUCTION ............................................................................................................... 1 RISK ASSESSMENT APPROACH .................................................................................. 4 RISK ASSESSMENT RESULTS ...................................................................................... 5 PROPOSED AUDIT PLAN FOR FY 2027 ........................................................................ 9 APPENDICES ................................................................................................................. 11

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1 Introduction
Overview
According to the Palo Alto Municipal Code (Section 2.08.130) the mission of the Office of the City Auditor (OCA) is to promote honest, efficient, effective, economical, accountable, and transparent city government. To support this mission, the OCA conducts performance audits and financial and operational analyses of City departments, programs, services, and activities, and is responsible for preparing an annual audit plan for City Council approval.

As the City’s outsourced Office of the City Auditor, Baker Tilly Advisory Group, LP (Baker Tilly) conducted the Fiscal Year (FY) 2026 citywide risk assessment in accordance with Baker Tilly’s agreement with the City. The purpose of the risk assessment was to develop the FY 2027 Annual Audit Plan by identifying and prioritizing areas of greatest risk and opportunity across the City. The resulting audit plan is designed to direct limited audit resources toward activities that provide the greatest value to the City and support effective stewardship of financial, physical, and informational resources.

The City Auditor has the following responsibilities related to the planning and scope of internal audit activities:

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

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

California Government Code Section 1236 requires cities that conduct audit activities to perform their work in accordance with the standards prescribed by the Institute of Internal Auditors (IIA) or the Government Auditing Standards (GAO), as appropriate. Consistent with IIA Standard 2010, which requires the chief audit executive to establish a risk-based plan aligned with organizational objectives and informed by senior management and governing board input, Baker Tilly conducted a comprehensive assessment of the City’s audit universe, including departments, functions, processes, programs, and activities that may be subject to audit.

Risk Assessment Process Considerations
The annual risk assessment serves as the foundation for developing a risk-based internal audit plan. While risk assessment is a core component of the internal audit process, its scope and complexity vary based on factors such as the maturity of the internal audit function, the organization's risk management practices, coordination with other oversight functions, and stakeholder expectations. Because organizational risks and priorities Item 3
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2 INTRODUCTION
continue to evolve, the results of the annual risk assessment reflect conditions and information available at the time of the assessment.

The risk assessment process involved identifying, evaluating, and prioritizing risks that could affect the City's ability to achieve its strategic and operational objectives. To gather input, the Office of the City Auditor (OCA) surveyed members of the City Council, the Executive Leadership Team, and key management personnel across the organization. Responses were received from 15 departments and were supplemented by interviews, document reviews, and professional judgment. The results of this process were used to identify areas of elevated risk and develop the proposed FY 2027 Annual Audit Plan.

Consistent with Institute of Internal Auditors (IIA) Standards, the annual risk assessment represents a high-level evaluation of risk across the City's audit universe. In addition, before the commencement of each audit included in the approved audit plan, the internal audit function will perform an engagement-level risk assessment to further define the audit objectives, scope, timing, and resource requirements.

This process helps ensure that
each engagement addresses the most relevant risks and remains aligned with the City's priorities and operating environment.

Throughout the assessment, several organizational strengths were consistently observed, including:
• A strong commitment to public service demonstrated by a dedicated and highly professional management team
• A culture that values efficient and effective government operations • A focus on strategic planning and execution
• Continued investment in innovation and sustainability initiatives • A commitment to continuous improvement and organizational excellence

This report summarizes the risk assessment methodology, analysis, and results and presents the proposed FY 2027 Annual Audit Plan developed from those results.

Audit Planning Considerations
While maintaining its independence and objectivity in accordance with standards, the City Auditor considers a variety of matters when developing the Annual Audit Plan, including but not limited to:
• Risk Assessment – the OCA performed a risk assessment and summarized the results in a separate report (Task #1). Generally speaking, audit activities target high(er) risk areas. The results are shown on the following page.
• Ability to Add Value – audit and advisory projects seek to add value through independent and objective analysis.
• City Council – the City Auditor reports to the City Council and seeks input on audit priorities. • Coverage and Prior Audits – the City Auditor considers prior audits conducted by the OCA, the financial audit, and other audit and consulting reports recently issued. • “Ripeness” and On-Going Initiatives – certain risk areas may be addressed through operational activities, which could mean they are not ripe for audit to add value. • Scheduling – the City Auditor takes into consideration the timing of an audit and other on-going initiatives that directly relate. Putting an undue burden on City staff may exacerbate the risk at hand or other interrelated risks.

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

Performance Audits
According to the Government Auditing Standards (GAO-24-206786) Section 1.21 and 1.22, page 11-12), performance audits provide objective analysis, findings, and conclusions to assist management and those charged with governance and oversight with, among other things, improving program performance and operations, reducing costs, facilitating decision making by parties responsible for overseeing or initiating corrective action, and contributing to public accountability. Performance audits may include the following four (4) audit objectives:
• Program effectiveness and results
• Internal control design and effectiveness
• Compliance with laws, regulations, and policies
• Prospective analysis

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4 Risk Assessment Approach
Baker Tilly’s risk assessment approach this year focused on gathering information from the following inputs:

• Surveying and/or interviewing City Council, Executive Leadership Team members and other key management staff
• Analyzing key documents such as City Council Priorities, budget documents, the annual comprehensive financial report, news articles, and other relevant documents • Updating the risk assessment matrix with the gathered information • Scoring the auditable units (listed in Appendix A) in the risk assessment matrix based on the likelihood and impact of potential adverse events
• Identifying potential internal audit topics for the auditable units with high-risk scores • Summarizing the approach and results for presentation

At the start of our contract with the City, Baker Tilly conducted an initial comprehensive risk assessment in FY 2021 by interviewing all Council Members and Executive Leadership Team (ELT) members to create a risk assessment matrix. Each year, this matrix is updated to redevelop a comprehensive picture of the risk landscape which is continuously changing. For FY 2026, ELT members were asked to evaluate the functions under departments and identify any changes. Members then assessed these functional areas for key risks that could impact operations.

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

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5 Risk Assessment Results
Department Descriptions and Key Risk Areas
When identifying risk areas throughout the City, Baker Tilly worked with City management to identify each department’s key functions and potential risk areas. Based on this input, Baker Tilly identified the auditable risk areas for each department. Below is an overview of the City’s departments and their key risk areas.

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

Key Risk Areas
Financial Management & Reporting
Procurement & Purchasing Controls
Asset & Property Management
Contract, Grants, & Consultant Oversight
Governance, Compliance & Operational
Oversight
City Attorney’s Office
The City Attorney’s Office provides legal services to the City, including providing legal advice and training to City leaders, negotiating on behalf of the City, drafting contracts and other legal documents, investigating claims, and defending the City in litigation

Key Risk Areas
Identification of Legal Risks
Contracts & Legal Documents Oversight &
Advisory

City Clerk’s Office
The City Clerk serves as a liaison between the public and City Council. Office functions include Public Records Act requests, public hearings, local elections, board and commission
recruitments, record management, and others.

Key Risk Areas
Election Administration
Record Retention & Management
Council Meeting Management
Board and Commission Recruitment
Public Records Request

City Manager’s Office
The City Manager’s Office provides leadership to the City departments and is responsible for facilitating City Council legislative actions, managing special interdepartmental projects, and more. The Communications Office is housed under the City Manager’s Office and is the primary correspondent between the City and the public.

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

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

Key Risk Areas
Transportation Safety Improvements
Parking Management
Operations & Capital Project Oversight
Signals & Traffic Engineering

Community Services Department
The Community Services Departments offers a variety of
services administered through the following three divisions and the Office of Human Services: Arts and Sciences; Open Spaces, Parks, and Golf; and Recreation.

Key Risk Areas
Parks, Facilities & Asset Management
Recreation & Community Programming
Arts, Culture & Education Programs
Contract & Vendor Compliance
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Fire
The Fire Department oversees emergency response such as ambulance transports and fire response/rescue, emergency protection services such as fire prevention, and hazardous materials planning. The department highlights safeguarding the community and compassionate care.

Key Risk Areas
Emergency Response & Fire Operations
Fire Prevention & Hazardous Materials
Management
Emergency Preparedness

Human Resources
The Human Resources (HR) Department is responsible for
recruiting, developing, and retaining a well-qualified and professional workforce. The Department ensures compliance with relevant labor laws, adheres to record keeping practices, and serves as a strategic partner for executive decision making.

Key Risk Areas
Talent Acquisition & Workforce Planning
Compensation, Benefits & Employee
Support
HR Compliance, Safety & Risk
Management
H uman Resource Information System
(HRIS)
Information Technology
The Information Technology Department's provides innovative technology solutions that support City departments. The department oversees IT project management, operations,
enterprise systems, and security services.

Key Risk Areas
IT Governance, Strategy & Project
Management
Enterprise Systems & Technology
Operations
Cybersecurity & Regulatory Compliance
Infrastructure & Network Services
Geographic Information System (GIS)
Library
The Library Department operates five libraries throughout the City, each offering unique resources. The Library provides educational programming, multi-cultural events, and large and diverse book, information and technology resources.

Key Risk Areas
Library Operations & Resource
Management
Community Programs, Events & Cultural
Services
Volunteer & Public Engagement

Office of Emergency Services
The Office of Emergency Services is designed to prevent, prepare for, and recover from various hazards. The Office is responsible for overseeing various risk management programs.

Key Risk Areas
Emergency Preparedness, Continuity &
Risk Management
Educational Programming
Training & Compliance Administration
Intergovernmental & Interlocal Coordination

Planning and Development Services
The Planning Department supports the City in land use
development, planning, transportation, housing and
environmental policies, and plans and programs that “maintain and enhance the City as a safe, vital, and attractive community”.

Key Risk Areas
Planning, Development & Land Use
Services
Building Review, Inspection & Code
Enforcement
Long-Range Planning & Housing
Compliance
Development Services Administration

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7 RISK ASSESSMENT RESULTS

Overall Risk Scoring Distribution
Baker Tilly structured the audit universe based on the department/division/program from the budget document and management’s feedback, which resulted in 108 auditable units (Appendix A). We scored them based on the information gathered for each risk factor related to the likelihood, impact, or fraud. Appendix B lists the risk factors, definitions, and scoring method. The maximum score for an auditable unit is 20. The following chart shows the distribution of overall risk scoring.

Police
The Police Department oversees technical services such as dispatch and record management, field services such as patrol and emergency response, and animal control. The Police
Department also places a high value on community relations.

Key Risk Areas
Police Operations & Emergency Response
Investigations, Crime Reduction &
Specialized Response Programs
Communications, Records & Dispatch
Services
Traffic, Animal Control & Community Safety
Training, Staffing & Employee Wellness

Public Works
The Public Works Department is broken into four divisions:

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

Key Risk Areas
Engineering, Infrastructure & Capital Project
Management
Airport Operations & Transportation
Services
Environmental Services, Sustainability &
Climate Action
Public Services, Facilities & Infrastructure
Maintenance
Fleet Operations, Regulatory Compliance &
Accessibility Programs

Utilities
The Utilities Department owns and operates electric, gas, water, wastewater and fiber optic services to the City. The City purchases all their power from external sources. The mission of the Department is to “provide safe, reliable, environmentally sustainable and cost-effective services.”
Key Risk Areas
Water, Wastewater & Utility Operations
Gas Utility Operations
Financial Management, Rates & Reserves
Billing & Customer Account Services
Infrastructure & Asset Management
Workforce Planning & Staffing Management

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8 Baker Tilly rated the auditable units as follows:
• High Risk – Scores 16 and above
• Moderate Risk – Scores from 11 to 15
• Low Risk – Scores 10 and below

Appendix C of this report lists the risk rated auditable units with a score of 12 or over (out of 20) based on our scoring. The list includes 36 functions rated as High risk (with a score between 16 and 20) and 58 functions rated as Moderate risk (with a score between 11 and 15). In determining the audit activities to be performed in FY 2027, we further evaluated specific risks and functional areas and considered risk-based priorities as well as other factors such as requirements by law or regulation, timing of activities, special projects, and requests from City Council and management. The proposed audit plan for FY 2027 is on the following page.

0 10
20 30
40 50
60 70
2 to 10 (LOW) 11 to 15 (MEDIUM) 16 to 20 (HIGH)
Risk Scoring Distribution
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9 PROPOSED AUDIT PLAN FOR FY 2027

Proposed Audit Plan for FY 2027
The proposed audits and special advisory projects for FY 2027 are listed in the table below. These projects were selected from the auditable units assessed as having High or Moderate risk based on the results of the citywide risk assessment. As mentioned in the previous section, in addition to risk ratings, project selection considered factors such as the significance and pervasiveness of underlying processes and controls, prior audit coverage, the timing of related initiatives or non-audit activities, and the potential for the engagement to provide meaningful value to the City through enhanced risk management, accountability, operational efficiency, and effectiveness.

Preliminary objectives have been developed for each proposed project; however, the final scope and objectives will be refined through an engagement-level risk assessment conducted at the outset of each project. The annual audit plan is intended to remain flexible and may be modified during FY 2027 to address changes in the City's operating environment, organizational structure, strategic priorities, risks, systems, or control processes.

Consistent with the City Auditor's established process, task orders will be submitted to the City Council for approval before each project begins. To facilitate timely execution of the FY 2027 audit plan, six task orders have been prepared and are included in Appendix D. The Office of the City Auditor is requesting City Council approval to initiate all six projects during the first half of FY 2027, with work commencing as resources and scheduling permit.

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10 PROPOSED AUDIT PLAN FOR FY 2027
Proposed FY 2027 Audit Plan
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11 Appendix A: Resumes

Appendices

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12 Appendix A: Audit Universe
City Attorney’s Office
Contracts & Legal Documents
Legal Risk & Identification
Legal Representation to City Council & Departments
City Clerk’s Office
Board & Commission Recruitment
Council Meeting Management
Election Administration
Public Records Requests
Record Retention & Management
City Manager’s Office
Citywide Communications & Community Engagement
Citywide Risk Management
Consultant Management
Coordination of Citywide Housing and Homelessness Efforts Economic Development
Ensures Execution of Council Priorities
Government Efficiency
Human Services
Organizational Management
Administrative Services Department
Accounting
Budgeting
Contract and Consultant Oversight
Grant Management
Long-Range Financial Planning
Procurement
Property Management
Purchasing Cards
Treasury, Investment, and Debt Management
Community Services Department
Arts
Children’s Theater
Community Centers
Equipment & Materials Management
Golf
Junior Museum & Zoo
Parks
Recreation
Fire Department
Emergency Response
Emergency Medical Services (EMS)
Fire Prevention
Fire Response/Rescue
Fire Suppression
Hazardous Materials Management
Human Resources Department
Compliance with Labor Laws
Employee Benefits & Workers Compensation
Employee Retention
Human Resources Information System (HRIS)
Professional Development
Recruitment
Succession Planning
Workplace Safety
Information Technology Department
Adoption & Integration of New Technology
Enterprise Systems
Geographic Information Systems (GIS)
Fiber Internet Services
IT Project Management
Office of the CIO
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13 Operations
Security Services
Library Department
Collection
Education Programming
Library Branch Operations
Information Resources
Multi-Cultural Events
Technology Resources
Office of Emergency Services
Continuity of Operations Plans
Disaster & Emergency Preparedness
Disaster Mitigation Planning
Education Programming
Interlocal Agreements
Risk Management
Office of Transportation
Parking Management
Safe Routes to School
Signals & Traffic Engineering
Transportation Capital Projects
Transportation Contracts, Grants & Administration
Transportation Planning
Planning and Development Services Department
Code Enforcement
Current Planning
Development Center
Long Range Planning
Inspection Services
Plan Review Services
Police Department
Animal Control
Dispatch
Emergency Response
Investigations
Patrol
Public Safety
Records Management
Traffic Enforcement
Department of Public Works
Airport
Design & Implementation of Capital Projects
Engineering
Environmental Services
Fleet Operations
Infrastructure Maintenance
Public Services
Stormwater
Sustainability & Climate Action Plan Citywide Implementation Utilities Department
Billing
Electric
Fiber
Gas
Power Purchase Agreements
Rate Setting & Adjustments
Utility Asset Management
Utility Reserves
Wastewater
Water
Workforce Management
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14 Appendix B: Risk Factor Definitions

Impact

Score Description
Service Delivery
& Operational
Impact
Financial &
Resource Impact
(Illustrative)
Public Trust &
Reputational
Impact
Legal, Regulatory
& Political Impact
1 - Negligible
No discernible
impact or very
minor, easily
absorbed.

Minor
inconvenience; no
disruption to core
services.

Minimal financial
waste (e.g., <
$10,000); no impact
on budget.

No public notice;
minimal internal
concern.

No breach of
law/policy; minor
administrative error.
2 - Low
Minor impact,
manageable
with existing
resources,
minimal
disruption.

Minor disruption to
non-critical
services; easily
rectified.

Low financial impact
(e.g., $10,000 -
$100,000); minor
budget reallocation.

Limited negative
perception internally
or among
immediate
stakeholders.

Minor non-
compliance with
internal policies or
less significant
regulations.
3 - Medium
Moderate
impact, requiring
additional
resources to
manage, some
disruption.

Moderate
disruption to some
core services;
short-term delays
or reduced quality.

Moderate financial
impact (e.g.,
$100,001 -
$1,000,000);
potential for budget
shortfall requiring
minor adjustments.

Potential for
negative local
media attention or
stakeholder
concern; moderate
erosion of trust.

Non-compliance with
significant policies or
minor statutory
requirements;
potential for low-
level public inquiry.
4 - High
Significant
impact, major
disruption,
significant
resources
required to
manage.

Significant
disruption or failure
of critical services;
inability to meet
key mandates.

High financial
impact (e.g.,
$1,000,001 -
$10,000,000);
significant budget
deficit, requiring
major financial
intervention.

Widespread
negative media
attention; significant
loss of public trust;
political scrutiny.

Breach of significant
laws, regulations, or
constitutional
mandates; potential
for large fines,
sanctions, or
widespread public
outcry.
5 - Critical
Catastrophic
impact,
existential threat
to an
agency/program,
severe and long-
lasting
consequences.

Complete failure or
sustained inability
to deliver essential
services; poses a
threat to public
safety or welfare.

Catastrophic
financial impact
(e.g., >
$10,000,000);
severe budget
crisis, jeopardizing
long-term financial
stability.

Widespread public
outrage, severe
reputational
damage, potential
for loss of
mandates, political
fallout, loss of public
confidence in
government
function.

Major legal action,
criminal charges,
legislative
intervention, loss of
delegated authority,
impeachment
proceedings.

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15 Likelihood

Score Description Probability/Frequency Qualitative Description (Public Sector Context)
1 - Rare
May occur only in
exceptional
circumstances.
< 5%
Has never happened in this
or similar public entities;
highly unlikely given current
environment.
2 - Unlikely Could occur at some
time. 5% - 20%
Has occurred in other public
sector entities, or there are
very limited indicators it could
happen here.
3 - Possible Might occur or is likely to
occur at some time. 21% - 50%
Has occurred infrequently
within this entity, or there are
known, albeit manageable,
conditions that could lead to it
(e.g., pending legislative
changes).
4 - Likely Will probably occur in
most circumstances. 51% - 80%
Has occurred multiple times
within this entity or sector;
strong indicators or trends
suggest it will occur (e.g.,
identified recurring audit
findings, persistent capacity
issues).
5 - Almost Certain Is expected to occur in
most circumstances. > 80%
Is a recurring event or a
known systemic issue within
the entity; current conditions
make it highly probable or
inevitable (e.g., critical
staffing shortages, outdated
systems, consistent public
complaints).

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16 Appendix C: Possible Risks Rated1

1 Only risks rated 12 or higher are included in this report.

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20 Appendix D: Audit Plan Task Orders

PROFESSIONAL SERVICES TASK ORDER

TASK ORDER FY27-4.42 City’s Capital Improvement Project (CIP) Management

Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below.

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.42

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: September 1, 2026 COMPLETION: May 31, 2027

4. TOTAL TASK ORDER PRICE: $98,160

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

CITY OF PALO ALTO

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority
to sign on behalf of Consultant.

APPROVED:

COMPANY NAME: Baker Tilly Advisory Group,
LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
24 Packet Pg. 67 of 412

21 Attachment A

Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the City’s Capital Improvement Project (CIP) Management involves three (3) primary steps:
• Step 1: Audit Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting

Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Assess the audit risk
• Prepare an audit planning memo and audit program
o Refine audit objectives and scope
o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit

Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the City’s Capital Improvement Project management provides adequate oversight to support the timely, coordinated, and cost-effective delivery of capital projects, and (2) determining whether projects are delivered operationally ready. Finally, the audit will evaluate the administration of CIP projects for adequate internal controls to safeguard the City from fraud, waste, and abuse. Procedures include, but are not limited to:
• Obtain and review CIP policies, procedures, governance structures, project management standards, and reporting protocols.
• Assess whether roles, responsibilities, approval authorities, and accountability mechanisms are clearly defined.
• Select a risk-based sample of completed and active CIP projects. • Compare planned versus actual schedules, budgets, scope, and deliverables to evaluate whether projects were completed timely and cost-effectively.
• Review project status reports, budget tracking tools, change orders, risk logs, and escalation procedures. • Determine whether management receives accurate, timely, and sufficient information to monitor project performance and address issues.

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
25 Packet Pg. 68 of 412

22 • Examine whether projects included operational readiness activities such as staff training, testing/commissioning, documentation handoff, maintenance planning, and stakeholder acceptance prior to project closeout.
• Verify whether completed projects were fully functional and capable of achieving intended operational objectives

Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
• Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses
• Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee

Deliverables:

The following deliverables will be prepared as part of this engagement:
• Audit Report
• Policy & Services Committee Audit Report Presentation

Schedule of Performance
Anticipated Start Date: September 1, 2026
Anticipated End Date: May 31, 2026

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $98,160. The not- to-exceed budget is based on an estimate of 500 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor.

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

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
26 Packet Pg. 69 of 412

23 PROFESSIONAL SERVICES TASK ORDER

TASK ORDER FY27-4.44 Models/Approaches for Improving Outcomes for Individuals and Families Experiencing Homelessness

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.44

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: September 1, 2026 COMPLETION: May 31, 2027

4. TOTAL TASK ORDER PRICE: $60,455

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

CITY OF PALO ALTO

APPROVED:

COMPANY NAME: Baker Tilly Advisory Group,
LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
27 Packet Pg. 70 of 412

24 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Services & Deliverables
Baker Tilly’s approach to conducting an assessment of Models/Approaches for Improving Outcomes for Individuals and Families Experiencing Homelessness involves three (3) primary steps:
• Step 1: Assessment Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting

Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program
o Refine assessment objectives and scope
o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment

Steps may include:
• Obtain and review homelessness response plans, strategic initiatives, program documentation, and performance reports from selected smaller cities.
• Identify and document homelessness intervention models implemented in comparable cities, including program design, target populations, governance structures, and service delivery approaches. • Collect and analyze outcome data, such as housing placement rates, housing retention, reductions in unsheltered homelessness, returns to homelessness, and other relevant performance measures. • Review funding sources, program costs, staffing requirements, and partnership structures to assess the financial and operational sustainability of selected models. • Conduct interviews with local officials, service providers, community organizations, and individuals with lived experience to identify perceived strengths, challenges, and lessons learned. • Compare models across selected cities and evaluate which approaches have demonstrated the most effective and sustainable outcomes, as well as the factors contributing to their success.

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
28 Packet Pg. 71 of 412

25 Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include:
• Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the assessment results, findings, conclusions, and recommendations o Discuss management responses
• Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee

Deliverables:

The following deliverables will be prepared as part of this engagement:
• Assessment Report
• Policy & Services Committee Assessment Report Presentation

Schedule of Performance
Anticipated Start Date: September 1, 2025
Anticipated End Date: May 31, 2027

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $60,455. The not- to-exceed budget is based on an estimate of 300 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor.

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

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
29 Packet Pg. 72 of 412

26 PROFESSIONAL SERVICES TASK ORDER

TASK ORDER FY27-4.43 City and Departmental Performance Measures

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.43

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: August 1, 2026 COMPLETION: February 28, 2027

4. TOTAL TASK ORDER PRICE: $85,755

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

CITY OF PALO ALTO

APPROVED:

COMPANY NAME: Baker Tilly Advisory Group,
LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
30 Packet Pg. 73 of 412

27 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of the City and Departmental Performance Measures involves three (3) primary steps:
• Step 1: Audit Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting

Step 2 – Fieldwork and Testing
The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine if the City tracks meaningful performance measures to ensure efficiency of operations and that processes are actively monitored and managed. Procedures include, but are not limited to:
• Obtain and review policies, strategic plans, dashboards, and departmental performance management practices.
• Assess whether performance measures are clearly defined, aligned with organizational objectives, and focused on operational efficiency and effectiveness.
• Analyze a sample of departmental performance metrics to determine whether measures are meaningful, measurable, reliable, and outcome-oriented.
• Assess whether management uses appropriate benchmarks, targets, and trend analysis to evaluate performance.
• Review processes for collecting, validating, and reporting performance data. • Test a sample of reported metrics for accuracy, completeness, consistency, and supporting documentation.
• Review management reports, dashboards, meeting minutes, and corrective action processes to determine whether performance information is routinely monitored and discussed.

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
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31 Packet Pg. 74 of 412

28 • Assess whether management takes timely action to address underperformance or operational inefficiencies.
• Interview department leadership and staff to determine how performance results are used in decision- making, resource allocation, operational planning, and process improvement initiatives. • Assess whether departments establish accountability for achieving performance targets and implementing corrective actions.
• Compare the City’s performance management processes and metrics to industry standards, peer municipalities, or recognized best practices.
• Identify opportunities to improve operational efficiency, reporting transparency, and management oversight.

Deliverables:

The following deliverables will be prepared as part of this engagement:
• Audit Report
• Policy & Services Committee Audit Report Presentation

Schedule of Performance
Anticipated Start Date: August 1, 2026
Anticipated End Date: April 30, 2027

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $85,755. The not- to-exceed budget is based on an estimate of 445 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. We don’t plan to complete any on-site work for this engagement.

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
32 Packet Pg. 75 of 412

29 PROFESSIONAL SERVICES TASK ORDER

TASK ORDER FY27-4.45 Council Meeting Management

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.45

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: October 1, 2026 COMPLETION: March 31, 2027

4. TOTAL TASK ORDER PRICE: $53,885

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

CITY OF PALO ALTO

APPROVED:

COMPANY NAME: Baker Tilly Advisory Group,
LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
33 Packet Pg. 76 of 412

30 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the City’s Council Meeting Management Processes includes three (3) primary steps:
• Step 1: Assessment Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting

Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program
o Refine assessment objectives and scope
o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment

Steps include:
• Review and map the City’s council meeting planning and agenda development processes, including roles, timelines, approvals, and coordination workflows.
• Interview council members, City staff, and other stakeholders to identify challenges affecting meeting efficiency, agenda management, and execution of council priorities. • Analyze historical agendas, meeting schedules, deferred items, and supporting materials to evaluate the efficiency and effectiveness of current practices.
• Assess interdepartmental coordination, communication processes, and agenda preparation procedures to determine whether they support timely and accurate council decision-making. • Benchmark the City’s council meeting and agenda management practices against peer municipalities and governance best practices to identify improvement opportunities. • Evaluate the effectiveness of agenda management tools and develop recommendations to improve meeting efficiency, transparency, prioritization, and execution of council business.

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
34 Packet Pg. 77 of 412

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

Deliverables:

The following deliverables will be prepared as part of this engagement:
• Assessment Report
• Policy & Services Committee Assessment Report Presentation

Schedule of Performance
Anticipated Start Date: July 1, 2026
Anticipated End Date: January 31, 2027

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $53,885. The not- to-exceed budget is based on an estimate of 280 total project hours, of which a minimum of 35 are estimated to be completed by the City Auditor.

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

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

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
35 Packet Pg. 78 of 412

32 PROFESSIONAL SERVICES TASK ORDER

TASK ORDER FY27-4.46 AI Governance & Usage Best Practices & Pit Falls

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.46

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: August 1, 2026 COMPLETION: January 31, 2027

4. TOTAL TASK ORDER PRICE: $63,815

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

CITY OF PALO ALTO

APPROVED:

COMPANY NAME: Baker Tilly Advisory Group,
LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
36 Packet Pg. 79 of 412

33 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the AI Governance & Usage Best Practices & Pit Falls includes three (3) primary steps:
• Step 1: Assessment Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting

Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program
o Refine assessment objectives and scope
o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the audit

Steps include
• Review existing City policies, procedures, and governance structures related to AI, data management, cybersecurity, privacy, procurement, and technology oversight. • Interview City leadership, IT staff, legal counsel, department representatives, and other stakeholders to understand current and planned AI usage, operational needs, and governance concerns. • Assess how AI technologies are currently being used or evaluated across departments, including controls related to data privacy, security, transparency, accuracy, and human oversight. • Evaluate employee training, awareness, and acceptable use practices to determine whether staff are adequately prepared to responsibly and effectively use AI tools. • Benchmark the City’s AI governance, risk management, and training practices against peer municipalities, industry standards, and emerging regulatory guidance to identify leading practices and gaps.
• Identify key risks associated with AI adoption—including cybersecurity, data privacy, bias, legal liability, misinformation, and operational dependency—and develop recommendations to support responsible AI governance and implementation.

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
37 Packet Pg. 80 of 412

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

Deliverables:

The following deliverables will be prepared as part of this engagement:
• Assessment Report
• Policy & Services Committee Assessment Report Presentation

Schedule of Performance
Anticipated Start Date: August 1, 2026
Anticipated End Date: January 31, 2027

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $63,815. The not- to-exceed budget is based on an estimate of 315 total project hours, of which a minimum of 35 are estimated to be completed by the City Auditor.

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

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

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
38 Packet Pg. 81 of 412

35 PROFESSIONAL SERVICES TASK ORDER

TASK ORDER FY27-4.47 Employee Mental Health & Wellness

CONTRACT NO. C21179340
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.47

2. CONSULTANT NAME: Baker Tilly Advisory Group, LP

3. PERIOD OF PERFORMANCE: START: October 1, 2026 COMPLETION: May 31, 2027

4. TOTAL TASK ORDER PRICE: $60,455

BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD

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

6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:

Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee

7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
 SERVICES AND DELIVERABLES TO BE PROVIDED
 SCHEDULE OF PERFORMANCE
 MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)

8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A

I hereby authorize the performance of the work
described in this Task Order.

APPROVED:

CITY OF PALO ALTO

APPROVED:

COMPANY NAME: Baker Tilly Advisory Group,
LP

BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________

Item 3
Attachment A - Citywide
Annual Risk Assessment and
FY 2027 Audit Plan Report

Item 3: Staff Report
Pg.
39 Packet Pg. 82 of 412

36 Attachment A

DESCRIPTION OF SCOPE OF SERVICES

Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the Employee Mental Health & Wellness includes three (3) primary steps:
• Step 1: Assessment Planning
• Step 2: Fieldwork and Testing
• Step 3: Reporting

Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include:
• Gather information to understand the environment under review o Understand the environment under assessment
o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable
o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program
o Refine assessment objectives and scope
o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment

Step 2 – Fieldwork and Testing
The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to determine what are the most effective processes and programs to support employee mental health, wellness, and resilience in high-stress work environments. Steps include • Review existing City policies, programs, and resources related to employee mental health, wellness, resilience, critical incident support, and workplace safety. • Interview employees, supervisors, Human Resources staff, union representatives, and department leadership to identify workforce stressors, program needs, utilization barriers, and organizational culture concerns.
• Assess the availability, accessibility, and effectiveness of wellness resources such as employee assistance programs, peer support, counseling services, wellness training, and stress management initiatives. • Evaluate how the City supports employees in high-stress work environments through workload management, supervisor training, incident response protocols, leave practices, and return-to-work processes.
• Benchmark the City’s employee wellness and resilience practices against peer municipalities, public safety organizations, and industry best practices to identify effective strategies and program gaps. • Identify opportunities to improve employee mental health support, reduce burnout and turnover risks, strengthen organizational resilience, and promote a healthy and sustainable work environment.

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Annual Risk Assessment and
FY 2027 Audit Plan Report

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

Deliverables:

The following deliverables will be prepared as part of this engagement:
• Assessment Report
• Policy & Services Committee Assessment Report Presentation

Schedule of Performance
Anticipated Start Date: October 1, 2026
Anticipated End Date: May 31, 2027

Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $60,455. The not- to-exceed budget is based on an estimate of 300 total project hours, of which a minimum of 40 are estimated to be completed by the City Auditor.

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Annual Risk Assessment and
FY 2027 Audit Plan Report

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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 #:2606-6486
TITLE
Approve Program Guidelines for a Public Agency Electric Vehicle Charging Hub Grant Program; CEQA Status - Under CEQA Guidelines Section 15183, Projects Consistent with an Existing General or Comprehensive Plan do not Require Additional CEQA Review

RECOMMENDATION
The Climate Action and Sustainability Committee (CASC) and staff recommend that the City Council approve the proposed Program Guidelines to authorize a Public Agency Electric Vehicle Charging Hub Grant Program.

EXECUTIVE SUMMARY
The CASC and staff are recommending adoption of a set of guidelines for the program that ensures sites are close to multi-family housing, particularly dedicated affordable housing, that ensures charging rates are at cost and that chargers are accessible overnight, and that provides some cost recovery to the City in exchange for the grant. The City has already identified various City, PAUSD, and other public agency sites with high potential for these charging hubs.

Transportation emission reductions is a primary goal for emissions reductions in the S/CAP Goals and Key Actions, with increased access to electric vehicle (EV) charging for multi-family residents being a key approach to achieving that goal. One strategy for enabling access is siting EV charging and mobility hubs in locations near multi-family buildings. Public agencies have parking facilities spread throughout residential areas that are high potential locations for such hubs. Staff is recommending a grant program to public agencies to use in conjunction with external grant funding or their own funding streams to encourage more EV charging on these sites.

The City Council’s CASC unanimously recommended approval of these design guidelines (Attachment A) at its June 12, 2026 meeting.1 Staff is seeking City Council approval with the goal of making the program available on a short timeline compatible with timelines for a large 1 Climate Action and Sustainability Committee, June 12, 2026, Agenda Item 2, Recommendation to Approve Design Guidelines for a Public Agency EV Charging Hub Grant Program, https://recordsportal.paloalto.gov/WebLink/DocVi ew.aspx?id=887115&dbid=0&repo=PaloAlto
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Metropolitan Transportation Commission (MTC) grant that could facilitate some of these public agency charging hubs.

BACKGROUND
In April 2016, the City Council formally adopted the goal of an 80% reduction in GHG emissions relative to a 1990 baseline by 2030 (“80 x 30”) as a key climate target. A significant area for emissions reduction is EV adoption to reduce transportation emissions, and access to charging is a common barrier for multi-family households, which make up about 40% of households in Palo Alto. The City Council adopted an E-Mobility Strategic Roadmap on August 18, 20253 that included a variety of strategies for facilitating access to charging, such as Strategy 2, Action 1, which addressed active facilitation of EV charging for multi-family complexes, and Strategy 3, Action 2 and Action 3, which talked about facilitating access to e-mobility hubs that included EV charging and other amenities and partnerships to add EV charging for overnight charging near multi-family residences. On March 2, 2026 the City Council adopted the 2026-2027 Sustainability and Climate Action (S/CAP) Work Plan4 that included work item CA4 (Launch Enhanced Multi-Family EV Charging Infrastructure Program) consisting of multiple components, including publicly accessible charging at neighborhood e-mobility hubs. This program would partially implement this work item.

ANALYSIS
Publicly-owned amenities like parks, schools, public parking garages, and transit centers tend to be located in residential areas, many near concentrations of multi-family housing. The parking lots at these locations are primarily used during the day, leaving opportunities for overnight EV charging for nearby multi-family buildings in addition to EV charging during the day for people who use these locations. The City’s garages are an example of this type of model. Most City garages with EV chargers see some amount of overnight charging every month.

The City is looking at EV charging and mobility hubs in a variety of locations, including nonprofit and private properties near multi-family housing. But starting with public agency sites provides advantages because public agencies provide long-term, dependable, publicly accessible locations for EV charging. Operating without a profit motive, public agencies can be depended on to provide low-cost charging to residents and visitors.

Public agencies often have competing priorities for limited funding, sometimes even having difficulties finding local match funding for grants to enlarge charging access. This program will 3 City Council, August 18, 2025, Agenda Item 6, Staff Report 2507-4943, Staff and the Climate Action and Sustainability Committee Recommendation to Accept the E-Mobility Strategic Roadmap, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83554&dbid=0&repo=PaloAlto 4 City Council, March 2, 2026, Agenda Item 9, Staff Report 2602-5985 (Attachment G), 2026-2027 Sustainability and Climate Action Work Plan, https://www.paloalto.gov/files/assets/public/v/2/sustainability/policies- andplans/final-2026-2027-scap-work-plan.pdf
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help public agencies deploy public EV charging, either using their own funds or leveraging the City grant program as matching funds to take advantage of third-party grants. The City has, for example, obtained approval of a grant from the MTC for public EV charging hubs in Palo Alto.

The proposed City public agency EV charging hub grant program could provide local match funding for this grant. The same model could be used for additional grants pursued by the City and other public agencies with suitable parking lots in Palo Alto.

Staff recommends the program guidelines in Attachment A. These program guidelines:
Focus the program on public agency sites near multi-family buildings State a preference for EV charging near dedicated affordable housing Ensure a distance of at least ¼ mile between public agency EV charging hubs, with the goal of minimizing walking distance for residents (ideally 1/8 of a mile) Ensure overnight charging is provided at cost and charging is accessible to the public at all times
Provide for some cost recovery for the City in exchange for City grant assistance funding Allow and encourage City grant funding to be used to leverage other grant funding sources.

If the City Council approves these guidelines, staff would launch the program quickly after City Council approval.

FISCAL/RESOURCE IMPACT
The total funding for the Public Agency EV Charging Hub Grant Program is $550,000, funded from Low Carbon Fuel Standard (LCFS) and Electric Cap and Invest revenues within the FY 2027 Budget authority.

Staff is tentatively considering a $5,500 to $6,900 grant per charger installed, which is sufficient to cover a portion of the cost, with the expectation that the remainder would be funded through external grants or other agency funding sources. At this level of funding this budget would be enough to fund 80 to 100 chargers, with more potentially funded if parties are able to leverage external grant funding and efficient designs to maximize the number of charger heads per site, minimizing site preparation costs as a share of total costs.

Staff is projecting that a City project would utilize about $70,000 in funding, depending on the number of chargers installed, enabling leveraging an external MTC grant or other grants.

Remaining funds would be reserved for future public agency sites.

To preserve public funds, the City would not provide grant funding for a project that was not ultimately completed. Staff anticipates that the grant rules would enable payments related to design costs, but no grant funding would be provided unless projects were completed (or grant funding would need to be repaid if projects were not completed, if a progress payment were allowed).

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Staff also intends to incorporate a long-term cost recovery model through an electric charging adder (not to exceed $0.05 per kWh).

STAKEHOLDER ENGAGEMENT
The concept of EV charging and mobility hubs was discussed by the CASC in multiple public meetings and by the Climate Action and Sustainability Working Group in development of the E- Mobility Strategic Plan. Staff has had internal discussions about deployment at City sites and has discussed PAUSD interest in this program and their ability to leverage the program funding as local match for grant opportunities. City and PAUSD sites already identified could accommodate 80-110 EV chargers at 5-10 sites, with 60-70 near multi-family housing, and 45- 55 of those near dedicated affordable multi-family housing if these sites were developed. Staff will contact other public agencies with parking lots in Palo Alto, including the State’s Superior Court system, the Federal Veterans Affairs Hospital, and the Peninsula Corridor Joint Powers Board, whose Palo Alto and California Avenue Station parking lots are near multi-family buildings.

The City Council’s CASC unanimously recommended approval of these design guidelines at its June 12, 2026 meeting, after an extensive discussion that included the possibility of the City participating in this program for sites such as the Ventura Community Center.7

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

ATTACHMENTS
Attachment A: Guidelines for Public Agency EV Charging Hub Grant Program APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
7 Climate Action and Sustainability Committee, June 12, 2026, Agenda Item 2, Recommendation to Approve Design Guidelines for a Public Agency EV Charging Hub Grant Program, https://recordsportal.paloalto.gov/WebLink/DocVi ew.aspx?id=887115&dbid=0&repo=PaloAlto
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1 1
6 4
3 Guidelines for Public Agency EV Charging Hub Grant Program These guidelines are meant to guide development of an electric vehicle (EV) charging program designed to expand community access to publicly-owned EV charging located near concentrations of multi-family buildings, with a focus on locations near dedicated affordable housing.

Program goals and scope
The program should:

1. Enable convenient, affordable, and accessible overnight EV charging for multi-family residents at publicly-owned locations

2. Enable public agencies to leverage additional grant funding to expand the number of chargers installed and number of sites with EV chargers.

Program design
The Public Agency EV Charging Hub Grant Program will prioritize available funding for sites that meet the following conditions:
Charging hubs must be at locations owned by a public agency Charging hubs must be within ¼ mile of multi-family buildings, with a preference for dedicated affordable housing
Must be accessible to the public for overnight charging Includes cost recovery for City grant funding contributions through charging an adder and/or by receiving the Low Carbon Fuel Standard credits for charging delivered through chargers funded by City grant. Cost recovery should be designed so as not to make charging rates unattractive
Charging must be provided at cost, including the cost of electricity, operation, charger head replacement, and any additional City charges such as a cost recovery adder
Must be at least ¼ mile away from other publicly owned EV charging hubs City funding may be used to leverage other grant funding to provide additional publicly accessible chargers at other locations, so long as the original locations approved for City grant funds are built.

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Attachment A - Guidelines
for Public Agency EV
Charging Hub Grant
Program

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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 #:2512-5700
TITLE
Adoption of a Resolution Establishing the FY 2027 Property Tax Levy for City of Palo Alto General Obligation Bonds (2008 Measure N Library Projects); CEQA Status: Not a Project

RECOMMENDATION
Staff recommends that the City Council approve a resolution approving the establishment of the Fiscal Year 2027 property tax levy of $6.92 per $100,000 in Assessed Value for the secured and utility tax roll and $7.45 per $100,000 in Assessed Value for the unsecured tax roll for the City of Palo Alto’s Measure N General Obligation Library Bonds

BACKGROUND
On November 4, 2008, Palo Alto voters passed Measure N which gave the City authority to issue a maximum amount of $76 million of General Obligation bonds (the “Bonds”) for capital improvements to the Mitchell Park, Downtown, and Rinconada libraries and to construct the Mitchell Park community center. The City successfully sold the Bonds in two series to provide $76 million in funds for design and construction costs. Standard & Poor’s (S&P) and Moody’s awarded their highest credit ratings, Triple A, to both series of Bonds and these ratings were affirmed by S&P in May, 2022 and Moody’s in November, 2022. Annually, a property tax levy sufficient to pay debt service on the Bonds must be approved by the City Council and submitted to the County of Santa Clara for collection with property taxes.

On March 1, 2016, Council approved the decommissioning of the Library Bond Oversight Committee and accepted a financial report showing approximately $3.0 million in project savings1. In addition, bond premium of $3.1 million could be used to redeem and/or defease bonds.
1 Finance Committee, March 1, 2016:
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On June 6, 2016, Council authorized the use of $6.1 million of the Series 2010A and 2013A Bonds to defease and/or retire a portion of outstanding bonds and to pay associated redemption costs3. To maximize savings to property owners the longest bonds were paid off; total savings of $11 million were realized which includes $4.9 million in interest savings over time. Of the $11 million, $5.4 million will be saved through FY 2040, while $5.6 million will be saved from FY 2041 through FY 2044.

On March 2, 20224, Council approved the refinancing of the Series 2010A and 2013A Bonds.

Respectively, the outstanding principal of the 2010A Bonds and the 2013A Bonds was $40.6 million and $13.6 million. The call protection period for the Series 2010A Bonds had lapsed and were refinanced with tax-exempt bonds (Series 2022A) while the call protection period for the Series 2013A Bonds had not lapsed and therefore were partially refinanced as taxable bonds (Series 2022B). Portions of the Series 2013A bonds, or $2.1 million in principal, that had realized savings were refinanced. In total, net present value savings of $4.5 million or 10.6% were realized. The cash savings was $6.4 million and the average annual debt service savings over 18 years is $356 thousand.

There are three General Obligation Bonds outstanding, as outlined in Table 1 below:

Table 1: General Obligation Bonds Outstanding (in millions) Bond Issuance
Principal Outstanding
as of 6/30/2026 FY 2027 Debt Service
2013 General Obligation Bonds, Series A
Tax-exempt, 2-5%, due 8/1/2041
$10.7 $0.4
2022 General Obligation Bonds, Series A
Refinanced 2010A GO Bonds
Tax-exempt, 5%, due 8/1/2040
$30.0 $3.1
2022 General Obligation Bonds, Series B
Partially refinanced 2013A GO Bonds
Taxable, 4%, due 8/1/2028
$2.1 $0.6
Totals $42.8 $4.1

3 City Council, June 6, 2016:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=79555&dbid=0&repo=PaloAlto&cr=1 4 City Council, May 2, 2022:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81684&dbid=0&repo=PaloAlto&searchid=b673baf8 -cb40-4946-967b-842961e1f7fd&cr=1
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ANALYSIS
Debt service payments of these Bonds are paid through ad valorem taxes on all taxable land and improvements (both secured and unsecured assessment roll) within the City. Staff is seeking Council approval of the attached resolution (Attachment A) which authorizes the placement of an ad valorem property tax levy in the amount of $0.00692 per $100 or $6.92 per $100,000 in assessed value for the secured tax roll; and $0.00745 per $100 or $7.45 per $100,000 in assessed value for the unsecured tax roll. In comparison, prior year’s secured and unsecured tax levy was $7.45 and $7.61 respectively, per $100,000 of assessed value.

The assessment rate for FY 2027 decreased for both the secured and unsecured property taxes.

The rate decreases are attributable to the rise in the secured assessed value for properties throughout Palo Alto by 5.47%, an increase of $3.0 billion.

For unsecured property tax, per the County of Santa Clara’s methodology, the prior year secured tax rate becomes the current year unsecured tax rate. As a result the unsecured rate won’t benefit from the current year’s assessed value increase until FY 2028. However, unsecured rate did benefit from the increase in secured assessed value that occurred in FY 2026.

As of the end of July 2026, the average sales price for a single-family household is $3.6 million.

Based on this, the annual assessment for FY 2027 is estimated to be $249 on their property tax bill. In comparison, in FY 2026, a $3.6 million single-family home had an assessment of $268.

FISCAL/RESOURCE IMPACT
FY 2027 Debt service for the three outstanding Bonds totals $4.1 million. The attached resolution will result in ad valorem tax levy revenue totaling $4.0 million, with the difference attributable to available funds on hand.

STAKEHOLDER ENGAGEMENT
Staff works with the County of Santa Clara, who provides the property assessed value for the coming fiscal year that is used to calculate the property tax levy to pay debt service of these Bonds. Measure N was approved by Palo Alto voters in 2008 with 69% support. Expenditures of bond proceeds were monitored by the Library Bond Oversight Committee, which was decommissioned in 2016.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act because approval of the Measure N property tax levy is a government funding mechanisms or fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).

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ATTACHMENTS
Attachment A: Resolution Establishing the FY 2027 Property Tax Levy APPROVED BY:

Lauren Lai, Administrative Services Director
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1 ATTACHMENT A

NOT YET APPROVED

Resolution No.

Resolution of the Council of the City of Palo Alto Establishing Fiscal Year 2027 Property Tax Levy of $6.92 Per $100,000 of Secured and $7.45 Per $100,000 of Unsecured Assessed Valuations for the City’s General Obligation Bond Indebtedness
(Measure N Library Projects)

R E C I T A L S
A. At the City of Palo Alto’s (“City”) general election held on November 4, 2008, more than two-thirds of voters approved Measure N, authorizing the issuance of general obligation bonds in the amount not to exceed $76,000,000 (the “Authorization”) to fund construction of a new Mitchell Park Library and Community center and renovation and improvements to Downtown and Main libraries.

B. Pursuant to the Authorization, the City issued two series (Series 2010A and 2013A) of general obligation bonds in June 2010 and June 2013 that yielded $75.8 million for project needs. In June 2022, the Series 2010A was refinanced with a tax-exempt Series 2022A and the Series 2013A was partially refina nced with a taxable Series 2022B. As a result, there are three general obligation bo nds series outstanding, the Series 2013A portion that wasn’t refinanced and the refinanced Series 2022A and 2022B bonds.

C. The City is obligated to levy ad valorem taxes on all property within the City subject to taxation by the City, without limitation on rate or amount (except with respect to certain personal property which is taxed at limited rates), for the payment of the debt service on the Bonds.

D. The City is obligated to direct the County of Santa Clara to collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service on the Bonds.

E. The amount of the annual ad valorem tax levied by the City to repay the Bonds is determined by the relationship between the assessed valuation of taxable property in the City and the amount of debt service due on the bonds.

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

SECTION 1. Pursuant to the Authorization, an ad valorem property tax is hereby established to be levied on all land and improvements in the City of Palo Alto during Fiscal Year 2027 in the amount of $0.00692 per $100 in assessed value for the secured and utility tax roll and $0.00745 per $100 in assessed value for the unsecured tax roll based Item 5
Attachment A - Resolution
Establishing the FY 2027
Property Tax Levy

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2 ATTACHMENT A

NOT YET APPROVED

on the calculations set forth in the attached Exhibit "A".

SECTION 2. The City’s Director of Administrative Services shall cause a certified copy of this Resolution to be delivered to the County of Santa Clara for entry in the assessment book of the respective sums in dollars and cents, to be paid as established by this Resolution.

SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary.

INTRODUCED AND 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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City of Palo Alto
General Obligation Bonds, Election of 2008, Series 2010 Tax Rate Calculation Based on Assessed Values
A) Assessed Valuations (AV)
1 ) Taxable Secured Assessed Valuation (AV) $54,387,073,467.00 2 ) Taxable Unsecured AV $2,691,820,156.00
3 ) Less: Estimated Delinquency 0.65% ($17,496,831.01) 4 ) Net Taxable Unsecured AV $2,674,323,324.99
B) Tax Levy Requirement
5 ) 2027 Calendar Year Debt Service Payments
2013 (Tax-Exempt) GO Bonds - February 1,2027 $211,425.00 2013 (Tax-Exempt) GO Bonds - August 1, 2027 $211,425.00 $422,850.00 2022A (Tax-Exempt) GO Bonds - February 1,2027 $724,625.00 2022A (Tax-Exempt) GO Bonds - August 1, 2027 $2,324,625.00 $3,049,250.00 2022B (Taxable) GO Bonds - February 1,2027 $21,900.00
2022B (Taxable) GO Bonds - August 1, 2027 $556,900.00 $578,800.00 Total Calendar Year 2027 Debt Service Payments $4,050,900.00 6 ) Excess Funds on Hand Applied Toward Debt Service ($100,000.00) 7 ) Sub-total $3,950,900.00
8 ) Santa Clara County Administration Fee (0.25% of Principal & Interest) & Consultant Fees $13,377.25 9) Total Annual Debt Service Requirement $3,964,277.25 C) Secured and Unsecured Tax Rate
10 ) Unsecured Tax Rate per $100 of Unsecured AV (Prior Year's Secured Tax Rate) 0.007450 $ 11 ) Unsecured Tax Rate per $100,000 of Unsecured AV 7.45 $ 12 ) Estimated Revenue from Unsecured AV (line 4 divide by 100 times by line 12) 199,237.09 $ 13 ) Estimated Revenue from Secured AV (line 11 minus line 13) 3,765,040.16 14 ) Total Annual Debt Service Requirement 3,964,277.25$ 15 ) Secured Tax Rate per $100 of Secured AV (line 14 divided by line 1*100) 0.00692 $ 16 ) Secured Tax Rate per $100,000 of Secured AV (line 14 divided by line 1 times 100,000) 6.92 $ Exhibit A
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Attachment A - Exhibit A -
General Obligation Bonds,
Election of 2008, Series 20

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: August 10, 2026
Report #:2607-6522
TITLE
Adopt a Resolution Making Required Findings in Support of Acceptance of Funding from Vehicle Registration Fee-Intelligent Transportation Systems (VRF-ITS) Cycle 5 Grant Program; and amendment of the FY 2027 Budget in the Capital Improvement Fund. CEQA Status – Categorically Exempt (CEQA Guidelines section 15301b Existing Facilities).

RECOMMENDATION
Staff recommends that Council:

1. Adopt a Resolution making required findings in support of the City’s application and award for VRF-ITS Cycle 5 funds in the amount of $500,000 for the Embarcadero Road Traffic Signal Operations and ITS Upgrade Project.

2. Approve and Authorize the City Manager or their designee to execute a Funding Agreement with the Valley Transportation Authority (VTA) to accept a $500,000 grant as part of the 2010 Measure B Vehicle Registration Fee (VRF) Countywide Program Cycle Five.

3. Amend the Fiscal Year Budget Appropriation for the Capital Improvement Fund (requires a 2/3 vote) to:
a. Increase the Traffic Signal and Intelligent Transportation Systems project (PL-05030) in the amount of $500,000; and
b. Increase revenue from Other Agencies (2010 Measure B Vehicle Registration Fees Cycle 5 in PL-05030) in the amount of $500,000.

EXECUTIVE SUMMARY
Embarcadero Road between U.S. 101 and Palo Alto High School/Town & Country intersection 700 feet east of El Camino Real in Palo Alto is a residential arterial that serves both local and regional traffic. This roadway segment consists of eight signalized intersections with aging traffic signal hardware. This project will replace the older traffic signal cabinets, implement video detection and accessible pedestrian signals, and implement Automated Traffic Signal Item 6
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Performance Measures (ATSPM) to develop optimal signal operations. This VRF-ITS grant award would provide $500,000 of the $697,000 project cost.

BACKGROUND
On November 13, 2017, City Council adopted the 2030 Comprehensive Plan, which identified Embarcadero Road as one of the City’s primary community gateways and residential arterials (Policy T-4.4) and directed staff to prioritize safety particularly for school children in street modifications (Policies T-3.14 and T-6.1) and improve traffic flow when feasible (Policy T-2.1).

On June 2, 2025, Council approved the City of Palo Alto’s Safe Streets 4 All Safety Action Plan, which also identified Embarcadero Road as part of the City’s High Injury Network and a Safety Focus Area.

Embarcadero Road between U.S. 101 and Palo Alto High School/Town & Country intersection has a very high number of pedestrian and bicycle crossings by students. The roadway directly abuts three school campuses: Palo Alto High School, Castilleja Girls School, and Walter Hayes Elementary School, and is located within the catchment area for students accessing Greene Middle School and Duveneck Elementary School.

The Embarcadero Road corridor has been identified as a segment within the City’s signal network with aging infrastructure in need of substantial updates including new signal optimization, updated detection, and pedestrian accessibility upgrades. The City of Palo Alto is responsible for maintaining, updating, and operating the traffic signals at eight intersections along this corridor. Traffic signals along the corridor were previously updated between 2004 and 2018, with several cabinets and detection systems updated since then due to failures or collisions that resulted in damaged equipment. As a result, the signal equipment throughout the corridor consists of cabinets and related hardware from varying generations of equipment standards. Included with this project will be an update of corridor optimization and coordinate.

The traffic signals along Embarcadero were last optimized along Embarcadero Road in 2017.

ANALYSIS
The Embarcadero Road Traffic Signal Operations and ITS Upgrade Project would replace the cabinets at five intersections, update vehicle and bicycle detection at four intersections, and add accessible pedestrian signal (APS) push buttons at six locations; bringing the hardware used along the corridor to consistent and current standards. It would also optimize coordination to reduce delays and introduce automated traffic signal performance measures (ATSPM) to allow for advanced metrics and analytics related to signal operations and safety issues such as identifying locations with high red-light violations.

The total anticipated cost for the Embarcadero Road Traffic Signal Operations and ITS Upgrade Project is $696,000. The grant award would provide approximately $500,000 for contractor labor, procurement and installation of project elements and City Staff time for anticipated for project development, procurement and project implementation. City staff hours, development Item 6
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of as-built plans, and other costs in excess of a potential award amount would be considered as part of the City’s contribution toward the total project costs. There is no local match requirement associated with the VRF grant award.

This project is one of seven projects selected out of 16 project applications from various agencies as part of the Santa Clara County VRF-ITS Cycle 5 funding program.

FISCAL/RESOURCE IMPACT
To fully fund this improvement, staff recommends including the VRF-ITS grant in the Embarcadero Road ITS and Traffic Signal Upgrade project as part of the City’s Traffic Signal and Intelligent Transportation Systems PL-05030, FY 2027 Adopted Budget appropriation of $2.4 million. The awarded VRF grant will reimburse the City $500,000 of the estimated $697,000 project cost with the remaining cap to be funded by CIP funds. Staff will continue to pursue additional funding opportunities to minimize the use of CIP funds.

STAKEHOLDER ENGAGEMENT
City staff will provide updates on this project through City Communications channels such as the Transportation Connect newsletter, social media platforms, and the City/Schools Transportation Safety Committee, which represents a partnership between City staff, school district staff and PTSA leaders.

Staff will also continue to coordinate and provide required updates with Santa Clara Valley Transportation Authority, which administers the VRF-ITS grant funding program. City Staff applied for this grant and participated in the programs scoring, selection, and approval for six other projects considered as part of this program.

ENVIRONMENTAL REVIEW
The Embarcadero Road Traffic Signal and ITS update project is categorically exempt under CEQA Categorical Exemption Section 15301: Existing Facilities. This Class 1 exemption consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use.

ATTACHMENTS
Attachment A: VRF-ITS Cycle 5- Award Notification Letter APPROVED BY:

Ria Hutabarat Lo, Chief Transportation Official
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May 19, 2026

Dear Ria Hutabarat Lo,

This letter confirms that, on May 7, 2026, the VTA Board of Directors approved the Vehicle Registration Fee – Intelligent Transportation System Funds (VRF-ITS), Cycle 5 project list, as shown in Table 1 below. Attachment A is the VTA Board-adopted memo and related materials, for your reference.

Table 1: VRF-ITS Cycle 5 – Approved List of Projects
Project Name Agency Name Funding Amount
Campbell ITS Mobility and Safety
Improvements- Phase 1
Campbell $500,000
Stevens Creek Boulevard & De Anza Boulevard
Traffic Signal Synchronization Project
Cupertino $231,000
Grant Road Corridor Optimization with
Artificial Intelligence (AI) Detection
Mountain View $218,000
Embarcadero Road ITS Upgrade and
Optimization
Palo Alto $500,000
San José Arterial Management – Adaptive
Traffic Control System Deployment
San Jose $450,000
Mathilda Avenue/Sunnyvale-Saratoga Road
and Homestead Road Smart Corridor ITS
Upgrade
Sunnyvale $499,664
Santa Teresa & Tenth Traffic Signal Upgrades Gilroy $101,336

Next Steps
We will provide a draft Funding Agreement for your review shortly.

If you have any questions, you can contact me at 408-321-5804 or [email protected].

Sincerely,
Larissa Sanderfer
Transportation Planner III

CC: Rafael Rius
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Date: April 30, 2026
Current Meeting: May 7, 2026
Board Meeting: May 7, 2026

BOARD MEMORANDUM
TO: Santa Clara Valley Transportation Authority
Board of Directors
THROUGH: General Manager/CEO, Carolyn M. Gonot
FROM: Chief Engineering & Prog Delivery Officer, Casey Emoto SUBJECT: Vehicle Registration Fee - Intelligent Transportation System Funds - Cycle 5:

Project Selections
Policy-Related Action: No Governme nt Code Section 84308 Applies: No

ACTION ITEM
RECOMMENDATION:

Approve the recommended list of projects to receive $2.5 million in funding from the Vehicle Registration Fee for Intelligent Transportation Systems (VRF-ITS) - Cycle 5 competitive grant program.

EXECUTIVE SUMMARY:
x The purpose of this item is to seek approval from the Santa Clara Valley Transportation Authority (VTA) Board of Directors (Board) on the recommended list of projects to receive funding from the VRF-ITS - Cycle 5 competitive grant program.
x The recommended list of projects for funding award was evaluated by a committee composed of volunteer local agency staff from the cities of Campbell, Mountain View, San Jose, and Sunnyvale.
x The committee evaluated the grant submissions based on scoring criteria approved by the VTA Board at its October 2, 2025 meeting.

STRATEGIC PLAN/GOALS:

The award of VRF-ITS funds align with VTA's goal to create and support an integrated multimodal transportation system that serves all Santa Clara County residents efficiently. In addition, this action advances the goal to pursue, develop, and implement new technologies on Santa Clara County's transportation system.

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5/7/2026
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FISCAL IMPACT:

The requested action in this memorandum would result in awarding funds to projects from the VRF-ITS grant program funds totaling $2.5 million that were allocated to the program by the VTA Board at its October 2, 2025 meeting.

BACKGROUND:

The source of funding for this grant program is the 2010 Measure B VRF Program that levies a $10 annual vehicle registration fee on motor vehicles owned/registered by Santa Clara County residents. The fees collected must be used to pay for programs and projects that have a relationship or benefit to owners of motor vehicles paying the fee; and the programs and projects must be consistent with the regional transportation plan. The VTA Board adopted an expenditure plan that divides these funds with 80 percent proportionally directed back to Santa Clara County local agencies based on population, 15 percent directed to countywide programs, and five percent for VTA’s administration of the funds. The eligible countywide programs are environmental mitigations, local match for grants and ITS projects.

Since the inception of the VRF program, the countywide program has had four three-year funding cycles and is now on its fifth cycle. The VTA Board approved at its October 2, 2025 meeting an allocation of $2.5 million to fun d the fifth cycle of VRF-ITS projects. The competitive grant process was developed through the VTA’s ITS Working Group (ITSWG), a working group of VTA’s Technical Advisory Committee (TAC). VTA staff along with a subset of the ITSWG composed of volunteer staff from the cities of Campbell, Mountain View, San Jose, and Sunnyvale developed the project selection criteria. The scoring criteria were also approved by the VTA Board at its October 2, 2025 meeting. The following sections provide a summary of the scoring criteria.

Scoring Criteria:

Proposed projects will be evaluated based on six criteria: Mobility & Operations, Resilience & Reliability, CostǦeffectiveness, Responsiveness, Identified Community Need, and Project Readiness.
x Mobility & Operations: Measure the improvement of the movement of people and goods and enhance corridor performance, including traffic signal operations. x Resilience & Reliability: Evaluate how the project strengthens the consistency and dependability of the County’s transportation network, including improvements in travel times, traffic flow, and system performance.
x CostǦǦeffectiveness: Assess how efficiently project funds are used and prioritize projects that deliver substantial benefits relative to their cost. x Responsiveness: Project alignment with the goals and priorities identified in the current funding guidelines, Valley Transportation Plan (VTP), and VTA’s Transportation Technology Strategic Plan (TTSP), as well as the clarity and feasibility of the proposed approach.
x Identified Community Need: Documentation of community transportation need identified in an adopted plan or study, and how clearly the benefits are described. x Project Readiness: Evaluate project readiness for implementation, require no

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environmental clearance, and ability to implement within two years. A detailed scope of work and schedule (including a Gantt chart) are required for maximum points.

Total possible points for each criteria are listed in Exhibit A.

Exhibit A: VRF-ITS Funding Cycle 5: Scoring Areas
Criteria Maximum Possible Points
Mobility & Operations 40
Resilience & Reliability 20
Cost Effectiveness 15
Responsiveness 5
Identified Community Need 5
Project Readiness 15
Total Points: 100

Attachment A provides additional details on the scoring criteria.

DISCUSSION:

On October 16, 2025, VTA staff issued a call for projects for the VRF-ITS Cycle 5 with an end date of January 16, 2026. Staff received 16 project proposals that were evaluated by a selection committee comprised of volunteer local agency staff using the Board approved criteria.

Members of the selection committee did not score projects from their own agency. The following are the seven projects recommended for funding:

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Table 1: VRF -ITS Cycle 5 - Recommended List of Projects Project Name Agency
Name
Project Description Funding
Amount
Campbell ITS Mobility and Safety
Improvements- Phase 1
City of
Campbell
Replace traffic signal
controllers, implement
signal retiming, procure
analysis and simulation
software, replace pedestrian
signals and buttons.
$500,000
Stevens Creek Boulevard & De Anza
Boulevard Traffic Signal
Synchronization Project
City of
Cupertino
Implement signal retiming
and optimize traffic
operations.
$231,000
Grant Road Corridor Optimization
with Artificial Intelligence (AI)
Detection
City of
Mountain
View
Expand AI detection and
optimization system.
$218,000
Embarcadero Road ITS Upgrade and
Optimization
City of Palo
Alto
Upgrade traffic signal
cabinets, pedestrian
buttons, install video
detection and implement
signal performance
monitoring.
$500,000
San JosĠ Arterial Management Ͳ
Adaptive Traffic Control System
Deployment
City of San
Jose
Install video detection
equipment and expand
adaptive traffic control
system on two corridors.
$450,000
Mathilda Avenue/Sunnyvale-Saratoga
Road and Homestead Road Smart
Corridor ITS Upgrade
City of
Sunnyvale
Install video detection
equipment and procure and
implement adaptive traffic
control system.
$499,664
Santa Teresa & Tenth Traffic Signal
Upgrades
City of
Gilroy
Upgrade traffic signal
controllers and software,
replace video detection
equipment and install
battery back up systems.
$101,336
*
* City of Gilroy Santa Teresa & Tenth Traffic Signal Upgrades Project recommended to receive partial funding after fully funding the other 6 projects.

Attachment B provides a summary of the grant submissions and overall scores of each.

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ALTERNATIVES:

The VTA Board could choose to not award the VRF-ITS funds as recommended by staff. This would delay the implementation of the recommended ITS projects.

CLIMATE IMPACT:

The funding awarded to projects through this program involve improving mobility and traffic operations that could lead to reductions in greenhouse gas emissions.

ADVISORY COMMITTEE DISCUSSION/RECOMMENDATION:

The Technical Advisory Committee considered this item as part of its April 2026 Consent Agenda and recommended Board approval without comment.

STANDING COMMITTEE DISCUSSION/RECOMMENDATION:

The Mobility Management & Capital Programs Committee, meeting as a committee of the whole in April 2026, considered this item on its regular agenda. Committee members asked whether debriefs were provided to unsuccessful applicants, what regional goals the awarded projects support, and whether cost variability would continue. Staff confirmed that debriefs were provided, that the funded projects align with the Transportation Technology Strategic Plan’s focus on interoperability and improved traffic management, and that cost variability is expected to persist due to economic uncertainty. The Committee requested that this item be forwarded to the Board of Directors' consent agenda for May 7, 2026.

Prepared by: David Kobayashi, Traffic Engineer
Memo No. 9923

ATTACHMENTS:
x Attachment A_Scoring Criteria Memo (PDF)
x Attachment B_Scoring Summary (PDF)
x 4.16.26_MMCP_VRF-ITS Cycle 5 (PDF)

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Attachment A
Scoring Criteria Memo Excerpt for the Vehicle Registration Fee Intelligent Transportation Systems (VRF-ITS) Cycle 5 Competitive grant program.

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3331 N. First Street Administration 408-321-5555
San Jose, CA 95134-1927 Customer Service 408-321-2300
Solutions that move you
5 Scoring Areas
Submitted project proposals will be scored on how well the proposal meets each of the scoring areas shown in Table 2. The total maximum points for any project proposal shall be 100 points.

Table 2 - VRF-ITS Funding Cycle 5: Scoring Areas
Scoring Areas Maximum
Possible Points
Mobility & Operations 40
Resilience & Reliability 20
Cost Effectiveness 15
Responsiveness 5
Identified Community Need 5
Project Readiness 15
Total Points: 100

ESCRIPTION OF SCORING AREAS & SCORING OF PROJECTS
Submitted project proposals receiving the maximum score in that area will clearly describe how the proposed project meets an identified user need(s) in these areas.

Mobility & Operations projects encompass the improved movement of people and goods and the ability to get from one place to another using one or more modes of transport to meet daily needs on a corridor. An operations project seeks to improve the efficiency and performance of a group of traffic signals on a corridor, and this could be an identified significant daily need on a corridor.

Resilience & Reliability scoring was introduced in this cycle of VRF-ITS funding to ensure that proposed projects enhance the consistency and dependability of Santa Clara County's transportation network. Over the past two decades, Santa Clara County has emerged as a major employment hub, leading to a significant rise in traffic demand. Consequently, key arterial roadways have become increasingly unreliable for motorists. This scoring criterion is designed to incentivize project proponents to improve roadway reliability. Projects that earn the highest

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3331 N. First Street Administration 408-321-5555
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6 scores in this category will demonstrate measurable benefits, such as reduced travel times, improved traffic flow, or the integration of advanced traffic management systems over an extended period of time, under various weather conditions.

Cost-effectiveness scoring was introduced in this cycle of VRF-ITS funding to ensure that limited resources are directed toward projects that deliver the highest impact with the most efficient use of funds. This criterion encourages project proponents to optimize their budgets and pursue innovative, cost-conscious solutions that yield measurable transportation improvements.

Projects that demonstrate a strong return on investment by delivering substantial benefits relative to their cost will be prioritized, as they exemplify fiscal responsibility and maximize the overall value to the community.

Responsiveness scoring was introduced in this cycle of the VRF-ITS funding to assess how effectively the applicant’s proposed project aligns with the specific goals and objectives outlined in the funding guidelines in the latest VTP and TTSP. This criterion ensures that proposed projects directly address this cycle’s priorities while also evaluating the clarity, feasibility, and practicality of the applicant’s approach.

The identified community need scoring area was included in this cycle of VRF-ITS funds to address identified community needs. This need must be identified in a transportation plan or study. The objective of this scoring area is to encourage project proponents to deliver transportation improvements that address challenges faced in their communities, such as limited mobility, and air pollution. Submitted project must clearly describe how the community will benefit from the proposed project will receive a maximum score.

The final scoring area is project readiness. As described in the general requirements, projects must be substantially ready and not require any environmental clearance, including a completion within two years after receiving these funds. Submitted projects will receive the maximum score in this area if the project provides a sufficiently detailed scope of work and schedule, including meeting the requirements. The project proponent must submit a detailed scope of work, including Gantt chart showing the duration of each work tasks.

VTA as the grantor and its selection committee seeks a concise and cohesive application that demonstrates how the project follows up on the recommendation from the TTSP and clearly meets the immediate needs of the roadway users in the following areas: improves mobility and operations, improves accessibility, enhances safety, and addresses the needs of EPCs.

The above listed are key considerations in the scoring of submissions, including an inclusion of a realistic schedule for the project completion meeting the general requirements. Another final key component in the consideration of the submissions is the inclusion of an approach to measure performance and an evaluation how well the project meets the needs of the roadway users.

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Attachment B
Scoring summary for the Vehicle Registration Fee Intelligent Transportation Systems (VRF-ITS) Cycle 5 Competitive grant program.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: August 10, 2026
Report #:2602-6016
TITLE
Adoption of a Resolution Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements; CEQA Status: Not a Project, CEQA Guidelines 15378(b)(5)

RECOMMENDATION
Staff recommends that the City Council adopt a resolution (Attachment A):

1. Approving the NAESB Base Contract for Sale and Purchase of Natural Gas combined with the Special Provisions and Credit Support Addendum (“Master Agreement”) (Attachment B) with JPMorgan Chase Bank, N.A. (“JPMorgan”); and

2. Authorizing the City Manager, or their designee, to transact under the Master Agreement for a portion of the City’s natural gas requirements under specified terms and conditions during calendar years 2026 through 2035, inclusive, subject to the following limitations:
a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed;
b. The delivery date for any transaction shall not extend beyond December 2035; c. The maximum aggregate of all transactions executed under this Master Agreement shall be $150 million;
d. All transactions shall be subject to the Palo Alto Municipal Code; and e. All transactions shall be subject to the City’s Energy Risk Management Policy, Guidelines, and Procedures.

EXECUTIVE SUMMARY
Approval of the recommended Master Agreement with JPMorgan provides the City with an additional natural gas supplier with which to transact in a timely and competitive manner ensuring that the City’s objectives are met efficiently. An active set of creditworthy Item 7
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counterparties is essential to ensure that the City of Palo Alto (“City”) meets its obligations to meet customers’ natural gas demands. Executing the Master Agreement does not commit the City to any transactions with JPMorgan, but it allows for transactions to be executed efficiently in the future. The recommended Master Agreement was negotiated under terms and conditions acceptable to the City and has been reviewed and approved by the City Attorney’s Office.

BACKGROUND
Palo Alto Municipal Code Section 2.30.340 (Contracts for Wholesale Utility Commodities) allows for the use of master agreements to buy and/or sell electricity, gas and related services through various preapproved (“enabled”) suppliers. Contracts or transactions executed under Council- approved master agreements must be done in accordance with the City’s Energy Risk Management Policy, Guidelines and Procedures.

In August 2016, Council approved Ordinance No 5387 1 modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services and to allow for a Council-approved standard form master agreement. The ordinance modified Municipal Code Section 2.30.140 clarifying the process to enable suppliers by specifically allowing the use of a standard form master agreement that contains the City’s minimum contract terms and conditions. Execution of standard form master agreements and delegation of authority to transact under the standard form master agreements with specific suppliers is subject to Council approval. This process is used when contracting for the City’s natural gas requirements.

In October 2016, Council adopted Resolution 96282 approving the natural gas standard form master agreement that is now available to all financially strong natural gas suppliers for execution with non-substantive changes. The Master Agreement with JPMorgan (Attachment B) is the standard form master agreement with non-substantive negotiated changes. The attached proposed resolution (Attachment A) authorizes the City Manager, or their designee, to transact natural gas under the Master Agreement with JPMorgan within maximum expenditure and transaction term limits. The Master Agreement will enable potential future natural gas transactions between the City and JPMorgan.

ANALYSIS
The current set of active Council-approved natural gas counterparties includes:

1. BP Energy Company;

2. ConocoPhillips Company;

3. EDF Trading North America, L.L.C.;

4. Powerex Corp; and

5. Shell Energy North America (US), L.P.
1 Ordinance 5387: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=47269&dbid=0&repo=PaloAlto 2 Resolution 9628: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=54434&dbid=0&repo=PaloAlto Item 7
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With the approval of Resolution 100745 in October 2022, Council delegated authority to the City Manager or their designee to transact under the Master Agreements subject to certain conditions and restrictions including a $150 million expenditure limit applied to all transactions in aggregate under each Master Agreement. The cost of natural gas purchased under the Master Agreements is a function of market prices and the City’s actual natural gas use. Most of the city’s natural gas needs are purchased based on a monthly index price; retail natural gas commodity rates are based on that same monthly market price index. The City’s expected natural gas commodity cost is $11 million to $12 million annually; however, natural gas prices are volatile and unpredictable and actual costs incurred and passed through to ratepayers could be different.

Utilities staff has worked with JPMorgan staff and attorneys and the City Attorney’s Office to negotiate the Master Agreement language. The resulting Master Agreement (Attachment B) meets the City’s “must-have” contract provisions6 and has been approved as to form by the City Attorney’s Office. JPMorgan recently had its investment-grade issuer credit ratings affirmed by both Standard & Poor’s (AA-) and Moody’s Investors Services (Aa2), which meet the City’s minimum credit rating requirements.

Also, consistent with the City’s other current natural gas master agreements, staff recommends that transactions executed under the Master Agreement with JPMorgan be subject to the following limitations:
a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed;
b. The maximum aggregate of all transactions executed under this Master Agreement shall be $150 million;
c. All transactions shall be subject to the Palo Alto Municipal Code; and d. All transactions shall be subject to the City’s Energy Risk Management Policies, Guidelines, and Procedures.

Because JPMorgan was not included in Resolution 10074’s list of prequalified suppliers, staff is requesting, via this Council action, that JPMorgan be approved as one of the prequalified suppliers the City can transact with for natural gas supplies. In addition, because the transaction term authorized by Resolution 10074 only extends through the end of 2028, staff plans to return next year with another resolution replacing Resolution 10074 that will update the aggregate transaction volume limits and duration of transactions for all approved counterparties. 5 Resolution 10074:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887680&dbid=0&repo=PaloAlto 6 PAMC Section 2.30.340(c) requires that utilities contracts incorporate the following contract terms and conditions: (1) governing law shall be the laws of the State of California; (2) choice of venue shall be the County of Santa Clara; and (3) a counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody’s Investors Services.

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FISCAL/RESOURCE IMPACT
Approval of this Master Agreement with JPMorgan will help ensure that the City continues to have an active set of suppliers in the future so that it can continue to competitively and efficiently meet its natural gas requirements. Further, approval of this Master Agreement does not commit the City to any transactions with JPMorgan; therefore, this action will not result in any direct fiscal impact to the City. Costs and revenues associated with future transactions under the recommended Master Agreement (up to the aggregate transaction limit of $150 million) will be accounted for in the annual Gas Utility Fund budget.

STAKEHOLDER ENGAGEMENT
Utilities staff has coordinated with key staff from departments involved in the negotiation and/or implementation of natural gas master agreements, including the City Attorney’s Office and the Energy Risk Manager (Administrative Services Department). If the proposed resolution is adopted by Council, Staff will submit the Master Agreement with JPMorgan to the City Manager for execution.

ENVIRONMENTAL REVIEW
Council’s adoption of the attached resolution approving the Master Agreement with JPMorgan and authorizing the City Manager to purchase natural gas under the Master Agreement is not subject to California Environmental Quality Act (CEQA) review as it is an administrative governmental activity that will not result in any direct or indirect physical change to the environment (CEQA Guidelines 15378(b)(5)).

ATTACHMENTS
Attachment A: Resolution
Attachment B: Master Agreement, Special Provisions and Credit Support Addendum APPROVED BY:

Alan Kurotori, Director of Utilities
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NOT YET APPROVED Attachment A
6059776

Resolution No.

Resolution of the Council of the City of Palo Alto Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements

RECITALS

A. On April 23, 2012, the Council adopted Resolution 9244 amending the Gas Utility Long-Term Plan (GULP) Objectives, Strategies, and Implementation Plan to discontinue the laddering purchase strategy and implement gas supply rates that change monthly according to market prices.

B. In accordance with GULP, the City must purchase and, incidental to purchases, sell gas to meet the needs of its gas customers by contracting for terms varying from less than one month to one month. The City's Energy Risk Management Polic y provides that the City will transact in accordance with that Policy and the City’s Municipal Code, and in a manner consistent with authority granted by Council to the City Manager.

C. By Ordinance No. 5387, adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form master agreements.

D. The natural gas standard form master agreement is based on the North American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural Gas 2006 version and includes Special Provisions and a Credit Support Addendum (Master Agreement).

E. By Resolution 10074 adopted October 3, 2022, Council Authorized the City Manager to purchase a portion of the City’s natural gas requirements from certain prequalified natural gas suppliers under specified terms and conditions during calendar years 2023 through 2028, inclusive.

F. JPMorgan Chase Bank, N.A. (JPMorgan) desires to execute a Master Agreement with the City in order to be a supplier for delivery during calendar years, 2026 through 2035, inclusive, so long as JPMorgan continues to be qualified and otherwise eligible to transact with the City.

The Council of the City of Palo Alto does hereby RESOLVE as follows:

SECTION 1. The Council hereby approves the NAESB Base Contract for Sale and Item 7
Attachment A - Resolution

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NOT YET APPROVED Attachment A
6059776
Purchase of Natural Gas combined with the Special Provisions and Credit Support Addendum (“Master Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), attached as Exhibit A.

SECTION 2. The Council hereby authorizes the City Manager or their designee to transact under the Master Agreement for a portion of the City’s natural gas requirements from JPMorgan by negotiating one or more individual transactions under the Master Agreement, including, but not limited to, contracts, addenda, confirmations, and transactions, subject to Section 3.

SECTION 3. The transactions negotiated under the Master Agreement shall conform to the following requirements:
a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed;
b. The delivery date for any transaction shall not extend beyond December 2035; c. The maximum aggregate of all transactions executed under this Master Agreement = shall be $150 million;
d. All transactions shall be subject to the Palo Alto Municipal Code; and e. All transactions shall be subject to the City’s Energy Risk Management Policy, Guidelines, and Procedures.

SECTION 4. The Council delegates to the City Manager, or their designee, the authority to execute on behalf of the City the Master Agreement with JPMorgan, as well as any related documents or agreements necessary to administer the Master Agreement that are consistent with the requirements in Section 3 and approved by the City Attorney.

Item 7
Attachment A - Resolution

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NOT YET APPROVED Attachment A
6059776
SECTION 5. Adoption of this resolution is not subject to California Environmental Quality Act (CEQA) review as it is an administrative governmental activity that will not result in any direct or indirect physical change to the environment (CEQA Guidelines 15378(b)(5)).

INTRODUCED AND PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

ATTEST:

City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

Assistant City Attorney City Manager

Director of Administrative Services
Director of Utilities
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Attachment A - Resolution

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Base Contract for Sale and Purchase of Natural Gas
This Base Contract is entered into as of the following date: ____________________________________________, 2026 The parties to this Base Contract are the following:

PARTY A
JPMORGAN CHASE BANK, N.A.

PARTY NAME PARTY B

CITY OF PALO ALTO
Attention: Markets Legal Group
270 Park Avenue
New York, New York 10017

ADDRESS

250 Hamilton Avenue
Palo Alto, California 94301
www.jpmorgan.com BUSINESS WEBSITE www.

CONTRACT NUMBER __________
D-U-N-S® NUMBER 17-892-8479
 US FEDERAL: 13-4994650
 OTHER:

TAX ID NUMBERS
√ US FEDERAL:
 OTHER:

United States of America JURISDICTION OF
ORGANIZATION California
 Corporation  LLC
 Limited Partnership  Partnership
 LLP  Other: National Association COMPANY TYPE
 Corporation  LLC
 Limited Partnership  Partnership
 LLP √ Other:

California chartered
municipal corporation

N/A GUARANTOR
(IF APPLICABLE)
N/A
Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract:
 Yes  No  Not Selected

PARTY CFTC

CLASSIFICATION
Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract:
√ Yes  No  Not Selected

CONTACT INFORMATION
383 Madison Avenue, Floor 10, New York, New York 10017
ATTN: Lauren Pombar
TEL#: (212)834-4532 FAX#:

EMAIL: [email protected]
 COMMERCIAL

City of Palo Alto
ATTN: Jason Huang
TEL#: 650-329-2592 FAX#:

EMAIL: [email protected]
383 Madison Avenue, Floor 10, New York, New York 10017
ATTN: Physical Gas Team
TEL#: (713)750-2033 FAX#:

EMAIL: [email protected]
 SCHEDULING
City of Palo Alto
ATTN: Jason Huang
TEL#: 650-329-2592 FAX#:

EMAIL: [email protected]
270 Park Avenue, New York, New York 10017
ATTN: M arkets Legal Group______________________________ TEL#: FAX#: 1- (866)-338-8347
EMAIL: [email protected]
 CONTRACT AND

LEGAL NOTICES

City of Palo Alto
ATTN: Assistant City Attorney
TEL#: 650-329-2171 FAX#:

EMAIL: [email protected]
383 Madison Avenue, Floor 24, New York, New York 10017
ATTN: Credit Department
TEL#: FAX#:

EMAIL: [email protected]
 CREDIT
City of Palo Alto
ATTN: Kelly-Louis Poggetti
TEL#: 650-329-2677 FAX#:

EMAIL: [email protected]
383 Madison Avenue, Floor 10, New York, New York 10017
ATTN: Physical Natural Gas Confirms Team
TEL#: (212)834-7442 FAX#: 1- (866)338-8347
EMAIL: [email protected]
 TRANSACTION

CONFIRMATIONS
City of Palo Alto
ATTN: Jason Huang
TEL#: 650-329-2592 FAX#:

EMAIL: [email protected]

ACCOUNTING INFORMATION
383 Madison Avenue, Floor 10, New York, New York 10017
ATTN: Physical Natural Gas Settlements Team
TEL#: (212)834-7442 FAX#: 1- (866)338-8347
EMAIL: [email protected]
 INVOICES
 PAYMENTS
 SETTLEMENTS
City of Palo Alto
ATTN: Timothy Denterlein
TEL#: 650-617-3105 FAX#:

EMAIL: [email protected]
BANK: JPMorgan Chase Bank, N.A.________________________ ABA: ACCT:

OTHER DETAILS:

WIRE TRANSFER

NUMBERS
(IF APPLICABLE)
BANK: US Bank, NA
ABA: ACCT:

OTHER DETAILS:

BANK:

ABA: ACCT:

OTHER DETAILS:

ACH NUMBERS
(IF APPLICABLE)
BANK:

ABA: ACCT:

OTHER DETAILS:

ATTN:

ADDRESS:

CHECKS
(IF APPLICABLE)
ATTN:

ADDRESS:

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Attachment B - Master
Agreement, Special
Provisions and Credit
Support Addendum

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Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas
(Continued)
This Base Contract incorporates by reference for all purposes the General Terms and Conditions for Sale and Purchase of Natural Gas published by the North American Energy Standards Board. The parties hereby agree to the following provisions offered in said General Terms and Conditions. In the event the parties fail to check a box, the specified default provision shall apply. Select the appropriate box(es) from each section:

Section 1.2
Transaction
Procedure

√ Oral (default)
OR
 Written

Section 10.2
Additional
Events of
Default

 No Additional Events of Default (default)

√ Indebtedness Cross Default

√ Party A: 3% of Party A’s shareholders’ equity

√ Party B: $50,000,000

 Transactional Cross Default
Specified Transactions:

Section 2.7
Confirm Deadline

√ 2 Business Days after receipt (default)
OR
 Business Days after receipt

Section 2.8
Confirming Party

 Seller (default)
OR
 Buyer
√ Either Party

Section 3.2
Performance
Obligation

√ Cover Standard (default)
OR
 Spot Price Standard

Section 10.3.1
Early
Termination
Damages

√ Early Termination Damages Apply (default)

 Early Termination Damages Do Not Apply

Note: The following Spot Price Publication applies to both of the immediately preceding.

Section 10.3.2
Other
Agreement
Setoffs

√ Other Agreement Setoffs Apply (default)

√ Bilateral (default)

 Triangular

 Other Agreement Setoffs Do Not Apply

Section 2.31
Spot Price
Publication

√ Gas Daily Midpoint (default)
OR


Section 6
Taxes

√ Buyer Pays At and After Delivery Point (default)
OR
 Seller Pays Before and At Delivery Point

Section 7.2
Payment Date

√ 25th Day of Month following Month of delivery
(default)
OR
 Day of Month following Month of delivery

Section 15.5
Choice Of Law
California

Section 7.2
Method of Payment

√ Wire transfer (default)
 Automated Clearinghouse Credit (ACH)
 Check

Section 15.10
Confidentiality

 Confidentiality applies (default)
OR
√ Confidentiality does not apply

Section 7.7
Netting

√ Netting applies (default)
OR
 Netting does not apply
√ Special Provisions Number of sheets attached: 8
√Addendum(s): Credit Support Addendum

[SIGNATURES ON NEXT PAGE]
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Attachment B - Master
Agreement, Special
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Support Addendum

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Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 3 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate.

JPMORGAN CHASE BANK, N.A. PARTY NAME CITY OF PALO ALTO
Approval by Mayor:

By:

SIGNATURE

By:

Name: PRINTED NAME Ed Shikada
Title: TITLE City Manager, for Mayor
______________________, 2026 DATE ______________________, 2026

CITY OF PALO ALTO
Approval as to form:

By:

Amy Bartell
Assistant City Attorney
______________________, 2026

CITY OF PALO ALTO
Approval by City Manager:

By:

Ed Shikada
City Manager
______________________, 2026

CITY OF PALO ALTO
Approval by Administrative Services Director:

By:

Lauren Lai
Administrative Services Director
______________________, 2026

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Agreement, Special
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Copyright © 2006North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) General Terms and Conditions
Base Contract for Sale and Purchase of Natural Gas

SECTION 1. PURPOSE AND PROCEDURES

1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to the party receiving Gas and "Seller" refers to the party delivering Gas. The entire agreement between the parties shall be the Contract as defined in Section 2.9.

The parties have selected either the “Oral Transaction Procedure” or the “Written Transaction Procedure” as indicated on the Base Contract.

Oral Transaction Procedure:

1.2. The parties will use the following Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission or telephone conversation with the offer and acceptance constituting the agreement of t he parties. The parties shall be legally bound from the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered a “writing” and to have been “signed”. Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Trans action Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modif y or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not invalidate any transaction agreed to by the parties.

Written Transaction Procedure:

1.2. The parties will use the following Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, record that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge t hat their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the passage of the Confirm Deadline without objection from the receiving party, as provided in Section 1.3.

1.3. If a sending party's Transaction Confirmation is materially different from the receiving party's understanding of the agreement referred to in Section 1.2, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving party's agreement to the terms of the transaction described in the sending party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence.

1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with th e requirements of this Base Contract.

SECTION 2. DEFINITIONS
The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contr act and shall have the meanings ascribed to them herein.

2.1. “Additional Event of Default” shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract.

2.2. “Affiliate” shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of at least 50 percent of the voting power of the entity or person.

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Agreement, Special
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2.3. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer.

2.4. "Base Contract" shall mean a contract executed by the parties that incorporates these General Terms and Conditions by reference; that specifies the agreed selections of provisions contained herein; and that sets forth other information required herein and any Special Provisions and addendum(s) as identified on page one.

2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT).

2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S.

2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving party's time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m. in the receiving party's time zone, it shall be deemed received at the opening of the next Business Day.

2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party.

2.9. "Contract" shall mean the legally -binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into through an EDI transmission or by telephone, but that have not been confirmed in a binding Transaction Confirmation, all of which shall form a single integrated agreement between the parties.

2.10. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction.

2.11. "Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction.

2.12. "Cover Standard", as referred to in Section 3.2, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Sell er is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, consistent with:
the amount of notice provided by the nonperforming party; the immediacy of the Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party.

2.13. "Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit support for, or on behalf of, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a security interest in an asset, guaranty, or other good and sufficient security of a continuing nature.

2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction.

2.15. "Delivery Period" shall be the period during which deliveries are to be made as agreed to by the parties in a transaction.

2.16. "Delivery Point(s)" shall mean such point(s) as are agreed to by the parties in a transaction.

2.17. "EDI" shall mean an electronic data interchange pursuant to an agreement entered into by the parties, specifically relating to the communication of Transaction Confirmations under this Contract.

2.18. "EFP" shall mean the purchase, sale or exchange of natural Gas as the "physical" side of an exchange for physical transaction involving gas futures contracts. EFP shall incorporate the meaning and remedies of "Firm", provided that a party’s excuse for nonperformance of its obligations to deliver or receive Gas will be governed by the rules of the relevant futures exchange regulated under the Commodity Exchange Act.

2.19. "Firm" shall mean that either party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure; provided, however, that during Force Majeure interruptions, the party invoking For ce Majeure may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by the Transporter.

2.20. "Gas" shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane.

2.21. “Guarantor” shall mean any entity that has provided a guaranty of the obligations of a party hereunder.

2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements.

2.23. “Indebtedness Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it or its Guarantor, if any, experiences a default, or similar condition or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether pres ent or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable.

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Agreement, Special
Provisions and Credit
Support Addendum

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2.24. "Interruptible" shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability, except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter.

2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm.

2.26. "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month.

2.27. "Payment Date" shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month.

2.28. "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point.

2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management.

2.30. “Specified Transaction(s)” shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract.

2.31. "Spot Price " as referred to in Section 3.2 shall mean the price listed in the publication indicated on the Base Contract, under the listing applicable to the geographic location closest in proximity to the Delivery Point(s) for the relevant Day; provided, if there is no single price published for such location for such Day, but there is published a range of prices, then the Spot Pr ice shall be the average of such high and low prices. If no price or range of prices is published for such Day, then the Spot Price shall be the average of the following: (i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first D ay for which a price or range of prices is published that next follows the relevant Day.

2.32. "Transaction Confirmation" shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period.

2.33. “Transactional Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction.

2.34. “Termination Option” shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation.

2.35. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction.

SECTION 3. PERFORMANCE OBLIGATION

3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction.

The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract.

Cover Standard:

3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an am ount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which no replacement is available; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which no sale is available; and (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available for all or any portion of the Contract Quantity of Gas , then in addition to (i) or (ii) above, as applicable, the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoic e, which shall set forth the basis upon which such amount was calculated.

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Attachment B - Master
Agreement, Special
Provisions and Credit
Support Addendum

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3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties.

3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the lengt h of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated.

SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES

4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s).

4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s).

Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party.

4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer.

SECTION 5. QUALITY AND MEASUREMENT
All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter.

SECTION 6. TAXES
The parties have selected either “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery Point” as indicated on the Base Contract.

Buyer Pays At and After Delivery Point:

Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof.

Seller Pays Before and At Delivery Point:

Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof.

SECTION 7. BILLING, PAYMENT, AND AUDIT

7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available.

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7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day, payment is due on the next Business Day following that date. In the event any payments are due Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2.

7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming party for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Payment from the nonperforming party will be due five Business Days after receipt of invoice.

7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however, if the invoiced party disputes the amount due, it must provide supporting documentation acceptable in industry practice to support the amount paid or disputed without undue delay. In the event the parties are unable to resolve such dispute, either party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section.

7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate.

7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy.

7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided that no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent inconsistent herewith.

SECTION 8. TITLE, WARRANTY, AND INDEMNITY

8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s).

Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s).

8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 15.8, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED.

8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including reasonable attorneys' fees and costs of court ("Claims"), from any and all persons, arising from or out of claims of title, personal injury (including death) or property damage from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer.

8.4. The parties agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States 19 U.S.C. §1202, General Notes, page 3); provided, however, that in the event Seller took title to the Gas outside the Customs Territory of the United States, Seller represents and warrants that it is the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry and entry summary filings as well as the payment of duties, taxes and fees, if any, and all applicable record keeping requirements.

8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5.

SECTION 9. NOTICES

9.1. All Transaction Confirmations, invoices, payment instructions, and other communications made pursuant to the Base Contract ("Notices") shall be made to the addresses specified in writing by the respective parties from time to time.

9.2. All Notices required hereunder shall be in writing and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered.

9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sendin g party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next Item 7
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Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered del ivered five Business Days after mailing.

9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice.

SECTION 10. FINANCIAL RESPONSIBILITY

10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (“Y”) (including, without limitation, the occurrence of a material change in the creditworthiness of Y or its Guarantor, if applicable), X may demand Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient security in the form, amount , for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first priority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the extent possible, without any further action by either party.

10.2. In the event (each an "Event of Default") either party (the "Defaulting Party") or its Guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors; ( ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; ( iii) otherwise become bankrupt or insolvent (however evidenced); ( iv) be unable to pay its debts as they fall due; ( v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; ( vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default; then the other party (the "Non-Defaulting Party") shall have the right, at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contr act, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder.

10.3. If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a “Terminated Transaction”. On the Early Termination Date, all transactions will terminate, other than those transactions, if any, that may not be liquidated and terminated under applicable law (“Excluded Transactions ”), which Excluded Transactions must be liquidated and terminat ed as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual termination date shall be the Early Termination Date for purposes of Section 10.3.1.

The parties have selected either “Early Termination Damages Apply” or “Early Termination Damages Do Not Apply” as indicated on the Base Contract.

Early Termination Damages Apply:

10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (i) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section

3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non-Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions).

For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third-party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to “evergreen provisions”) shall not be considered in determining Contract Values and Market Values. For the avoidance of doubt, any option pursuant to which one party has the right to exten d Item 7
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Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 10 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) the term of a transaction shall be considered in determining Contract Values and Market Values. The rate of interest used in calculating net present value shall be determined by the Non-Defaulting Party in a commercially reasonable manner.

Early Termination Damages Do Not Apply:

10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section

3.2), for which payment has not yet been made by the party that owes such payment under this Contract.

The parties have selected either “Other Agreement Setoffs Apply” or “Other Agreement Setoffs Do Not Apply” as indicated on the Base Contract.

Other Agreement Setoffs Apply:

Bilateral Setoff Option:

Triangular Setoff Option:

10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option, and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff (i) any Net Settlement Amount against any margin or other collateral held by a party in connec tion with any Credit Support Obligation relating to the Contract; (ii) any Net Settlement Amount against any amount(s) (including any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to the Non- Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non-Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (iv) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party to the Non-Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non-Defaulting Party under any other agreement or arrangement.

Other Agreement Setoffs Do Not Apply:

10.3.3. If any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by the Non-Defaulting Party.

10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non-Defaulting Party. The Net Settlement Amount as well as any setoffs applied against such amount pursuant to Section 10.3.2, shall be paid by the close of business on the second Business Day following such Notice, which date shall not be earlier than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate.

10.5. The parties agree that the transactions hereunder constitute a "forward contract" within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each "forward contract merchants" within the meaning of the United States Bankruptcy Code.

10.6. The Non-Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract.

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10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close- out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith.

SECTION 11. FORCE MAJEURE

11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term "Force Majeure" as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2.

11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections or wars , or acts of terror ; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promul gated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance.

11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the perfor mance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as provided in Section 11.2.

The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges.

11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance.

11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event.

11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties.

SECTION 12. TERM
This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the expiration of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction.

SECTION 13. LIMITATIONS

FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY

HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS

EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE,

EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE

LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR

CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE

LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICU LT OR IMPOSSIBLE TO DETERMINE, OR

OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.

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Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) SECTION 14. MARKET DISRUPTION
If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non- affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party’s two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged.

SECTION 15. MISCELLANEOUS

15.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract.

No assignment of this Contract, in whole or in part, will be made without the prior written consent of the non-assigning party (and shall not relieve the assigning party from liability hereunder), which consent will not be unreasonably withheld or delayed; provided, either party may (i) transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally liable for and shall not be relieved of or discharged from any obligations hereunder.

15.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Contract.

15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent breach.

15.4. This Contract sets forth all understandings between the parties respecting each transaction subject hereto, and any prior contracts, understandings and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective transaction(s). This Contract may be amended only by a writing executed by both parties.

15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction.

15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof.

15.7. There is no third party beneficiary to this Contract.

15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract.

Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby.

15.9. The headings and subheadings contained in this Contract are used solely for convenience and do not constitute a part of this Contract between the parties and shall not be used to construe or interpret the provisions of this Contract.

15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 applicable to this Contract, neither party shall disclose directly or indirectly without the prior written consent of the other party the terms of any transaction to a third party (other than the employees, lenders, royalty owners, counsel, accountants and other agents of the party, or prospective purchasers of all or substantially all of a party’s assets or of any rights under this Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any transaction, (iv) to the extent necessary to comply with a regulatory agency’s reporting requirements including but not limited to gas cost recovery proceedings; or (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index. Each party shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction.

In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclos ure, and shall cooperate (consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain protective orders or similar restraints with respect to such disclosure at the expense of the other party.

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15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties.

15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissi bility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence.

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

USER OF THIS CONTRACT 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 CONTRACT 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 CONTRACT 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 CONTRACT.

The copyright in this Contract is owned by NAESB, and market participants are encouraged to review NAESB Copyright Policy and Companies with Access to NAESB Standards under the Copyright Policy posted by NAESB on its website at https://www.naesb.org/pdf2/copyright.pdf. Please review this posting and if your company’s name is not listed as having access, please obtain access by contacting the NAESB Office per the contact information in the Copyright Policy.

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TRANSACTION CONFIRMATION EXHIBIT A

FOR IMMEDIATE DELIVERY

Letterhead/Logo

Date: ____________________________, _____
Transaction Confirmation #: _______________

This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated ______________________. The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract.

SELLER:
_______________________________________________
_______________________________________________
_______________________________________________
Attn: ___________________________________________
Phone: _________________________________________
Fax: ___________________________________________
Base Contract No. ________________________________
Transporter: _____________________________________
Transporter Contract Number: _______________________

BUYER:
_______________________________________________
_______________________________________________
_______________________________________________
Attn: ___________________________________________
Phone: _________________________________________
Fax: ___________________________________________
Base Contract No. ________________________________
Transporter: _____________________________________
Transporter Contract Number: _______________________

Contract Price: $ /MMBtu or ______________________________________________________________________

Delivery Period: Begin: , ___ End: , ___

Performance Obligation and Contract Quantity: (Select One)

Firm (Fixed Quantity): Firm (Variable Quantity): Interruptible:

MMBtus/day MMBtus/day Minimum Up to MMBtus/day  EFP MMBtus/day Maximum
subject to Section 4.2. at election of
 Buyer or  Seller

Delivery Point(s): ________________________
(If a pooling point is used, list a specific geographic and pipeline location):

Special Conditions:

Seller: __________________________________________

By: ____________________________________________

Title: ___________________________________________

Date: __________________________________________

Buyer: __________________________________________

By: ____________________________________________

Title: ___________________________________________

Date: __________________________________________

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Execution Version
- 1 -

EXHIBIT B

SPECIAL PROVISIONS TO BASE CONTRACT FOR

SALE AND PURCHASE OF NATURAL GAS - GENERAL TERMS AND CONDITIONS (FORM NAESB Standard 6.3.1-9/5/06 (Revised by R15003/R15007, 4/4/16)

BY AND BETWEEN

CITY OF PALO ALTO
AND
JPMORGAN CHASE BANK, N.A.

DATED: ___________, 2026

SECTION 1.2 [Oral Transaction Procedure] , line 13: after “agree to” add “, in writing,”. The second sentence of Section 1.2 Oral Transaction Procedure is amended by deleting the words “effectuated in an EDI transmission or telephone conversation with the offer and acceptance” and replacing them with “effectuated in an EDI transmission, telephone conversation or other electronic means of communication indicating the offer and acceptance” and by adding the following sentence to the end of Section 1.2: “All Transactions are entered into in reliance of the fact that this Base Contract (including any Special Provisions and any Addenda hereto agreed upon by the parties) and all Transactions hereunder form a single integrated agreement between the parties and the parties would not otherwise enter into any Gas transactions.”

SECTION 1.3 shall be amended by deleting subsections (iii) and (iv) of the last sentence and replacing them with the following new subsections: “(iii) the Special Provisions, (iv) the Base Contract, and (v) these General Terms and Conditions”.

SECTION 1.4 is amended by adding the following after the third sentence: “ If there is a dispute, upon reasonable request by a party, the other party shall provide a copy of such recording to the party making the request.”

SECTION 1.4 is amended by adding the following sentence between the second and third sentences in that section:

“No party may knowingly destroy or erase a recording once the possessing party becomes aware of an actual dispute in which the recording may reasonably be anticipated to be discoverable.”

SECTION 1.5 is added to SECTION 1, as follows:

“City is a municipal utility governed by the City of Palo Alto, by and through its Council, which has all powers necessary and appropriate to a municipal corporation, including but not limited to the authority granted by the City Charter (https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-59239), Article XI, Section 9(a) of the California Constitution, California Government Code Section 39732 and California Public Utilities Code Section 10002, to establish, purchase, and operate public works to furnish its inhabitants with natural gas. Under this authority, City is engaged in the business of delivering natural gas to its residential and commercial customers in Palo Alto, California.”

SECTION 2.4, line 1: after “incorporates” add “the Cover Sheet and”.

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2 SECTION 2.6 is amended and restated in its entire ty, as follows: “’ Business Day’ shall mean any Day except Saturday, Sunday, a Day that is a regular holiday declared by City pursuant to Palo Alto Municipal Code Section 2.08.100 or a Day that is a Federal Reserve Bank holiday.”

SECTION 2.13 is amended to (i) replace the words “to provide or establish” with the words, “to provide, maintain, or establish”.

SECTION 2.23, at the end of the sentence after the words, “immediately due and payable”, the following:
“(after giving effect to any applicable notice requirement or grace period)”.

SECTION 3.1, line 3: add a third sentence, as follows: “If a transaction is not designated as Firm or Interruptible, the transaction shall be deemed to be Firm.”

SECTION 3.2 [Cover Standard], in the last sentence: after “payable” add “within”, and delete “presentation” and replace with “receipt”.

SECTION 3.5 is added to SECTION 3, as follows:

“Notwithstanding any other provision of this SECTION 3, if a party fails to deliver or receive Gas for three or more consecutive Business Days and such failure is not excused by the terms of the Transaction Confirmation, by Force Majeure, or by the other party’s failure of performance, then upon one Business Day’s prior written Notice and for so long as the non- performing party fails to deliver or receive Gas, the performing party may suspend its performance under such Transaction Confirmation and shall not be obligated to resume its performance until the non- performing party provides two Business Days’ prior written Notice of its intention to perform such obligation (“ Notice to Resume Contractual Performance ”); provided, however, if the performing party has entered into a replacement contract for a term of 31 Days or less during the suspension period, such performing party may defer its obligation to resume delivering or receiving Gas until after the expiration of the term of the replacement contract ; provided further, that the performing party provides written Notice of its execution of such replacement contract to the non-performing party within two Business Days of the performing party’s receipt of the Notice to Resume Contractual Performance.”

SECTION 7.1, line 3: after “actual quantity” add “delivered”.

SECTION 7.4, line 2: after “it must provide,” add “within 60 Days”; and line 3: delete “without undue delay”.

SECTION 7.5, line 3: delete “, plus two percent per annum”.

SECTION 8.3 is hereby amended by adding the following sentence to the end of this paragraph:

“Neither party shall be obligated to indemnify, defend, or hold the other party harmless to the extent any liability, suit, action, damage, loss or expense arises out of or in connection with any gross negligence or willful misconduct on the part of the other party, its officers, agents, or employees.”

SECTION 10.1 is amended and restated in its entirety, as follows: “During the term of this Contract, the parties shall comply with the requirements of the Credit Support Addendum to Base Contract for Sale and Purchase of Natural Gas and any subsequent amendments thereto.” Item 7
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3 SECTION 10.2 is amended by:

a.) Inserting “repudiate, withdraw or” immediately following “(vi)” in the sixth line; and

b.) Deleting the word “or” before (ix) in the ninth line, and adding the following as new Sections 10.2(x) and (xi), respectively, after the word “Default;” in the tenth line:

“(x) have made any representation or warranty which is false or misleading in any material respect when made or when deemed made or repeated; or”;

“(xi) during any 90 Day period on a rolling basis, fail to perform any material covenant or obligation set forth in this Contract (except to the extent constituting a separate Event of Default, and except for such party’s obligations to deliver or receive Gas, the exclusive remedy for which is provided in Section 3) if such failure is not remedied within thirty (30) Days after written notice;”;

SECTION 10.3: Insert the following at the end of Section 10.3:

“Failure by the Non- Defaulting Party to promptly exercise its rights to terminate and liquidate all transactions upon the occurrence of an Event of Default shall not be deemed to be a waiver of such right.”

SECTION 10.3.1 [Early Termination Damages Apply], add a third paragraph, as follows:

“The Non-Defaulting Party shall aggregate the costs that the Non-Defaulting party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non-Defaulting Party, including costs associated with hedging its obligations, transaction costs associated with obtaining replacement supplies or markets (e.g., brokerage fees, or other such payments), additional transportation balancing or hub services costs, and similar costs incurred in transporting the replacement Gas to or from the replacement Gas seller or buyer, and reasonable attorneys’ fees (at trial and on appeal) and other reasonable litigation and administrative fees and costs incurred in connection with recovering any such costs owed to it by the Defaulting Party under this Contract (collectively ‘ Costs’). Notwithstanding the limitation of liability set forth in Section 13, such Costs shall be due and payable by the Defaulting Party to the Non- Defaulting Party within 10 Business Days after receipt by the Defaulting Party of the Non-Defaulting Party’s statement of Costs.”

SECTION 10.3.2 [Other Agreement Setoffs Apply; Bilateral Setoff Option] , line 3: after the first sentence, add: “Notwithstanding any provision to the contrary herein, any Net Settlement Amount that the Non-Defaulting Party may owe the Defaulting Party shall be equal to zero dollars.”; at the end of the section add:

“The obligations of the Non- Defaulting Party and the Defaulting Party under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. The Non- Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall Item 7
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4 be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a party may be entitled (whether by operation of law, contract or otherwise).

‘setoff’ as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non- Defaulting Party is entitled or subject (whether arising under this Contract, another contract, and applicable law or otherwise) that is exercised by, or imposed on, the Non-Defaulting Party.”

SECTION 10.4, line 2: delete “, and whether the Net Settlement Amount is due to or due from the Non- Defaulting Party.”; line 8: delete “, plus two percent per annum;”.

SECTION 10.8 is added to SECTION 10, as follows:

“Upon request, each Party shall deliver to the other Party documentation reasonably requested to evidence the authority and power of such Party and/or its Guarantor, as the case may be, to enter into this Base Contract or any guaranty, as the case may be, which may include, without limitation, certified resolutions and certification of the signature and authority of the individual(s) executing this Contract or such guaranty, as the case may be and to the extent applicable and requested certificates, documents or other evidence sufficient to confirm the sales exempt status of such Party for each jurisdiction in which the purchase, sale and/or delivery of any physical commodity takes place under this Contract, such that the other party will bear no obligation in relation to such purchase, sale and/or delivery for charging, collecting or remitting sales, uses or other excise taxes to any local, municipal, state or federal taxing authority or agency.”

SECTION 11.5, line 1: after “the other party” add “of the dates on which Force Majeure commenced and terminated; line 3: after “Upon providing” add “such timely”; line 6: add a new sentence, as follows: “If the affected party fails to provide written notice of the event or occurrence to the other party as soon as reasonably possible, the affected party will not be relieved of its obligation to make or accept delivery of Gas to the extent and for the duration of Force Majeure.”

SECTION 15.1, line 4: after “either party may” add “without the prior approval of the other party”; line 6: delete clause (ii) and replace with the following through the end of that sentence: “transfer or assign its interest to any Affiliate of such party, so long as such Affiliate’s creditworthiness equals or exceeds that of such assigning party or its Credit Support Provider, as applicable, as of the date the Base Contract is entered into by such party ; provided, however, that in each of (i) and (ii) , before any such assignment, transfer and assumption becomes effective, any such assignee shall agree, in writing, to be bound by the terms and conditions of this Contract and the assigning party shall agree, in writing, to remain liable for the obligations of the assignee hereof and shall deliver such tax and enforceability assurance as the non - assigning party may reasonably request . Notwithstanding any provision to the contrary, any direct or indirect change of control of either party (whether voluntary or by operation of law) shall be deemed an assignment and shall require the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. Upon request, the party subject to a change of control shall promptly deliver financial statements, information and other evidence satisfactory to the requesting party regarding the proposed change of control and, among other things, creditworthiness of the other party after such change . For purposes of this section, change of control shall mean any change in the ownership of Party A greater than 51% of the then ownership of Party A prior to the transfer or assignment.”

SECTION 15.5 is hereby deleted in its entirety and replaced with the following provision in lieu thereof:

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5 “This Base Contract, all transactions and Transaction Confirmations and the rights and duties of the parties arising therefrom shall be governed by, interpreted and construed in accordance with the laws of the State of California (without reference to choice of law doctrine). With respect to any suit, action or proceedings relating to the foregoing (“Proceedings”) each party irrevocably submits to the non-exclusive jurisdiction of the federal and state courts located in the County of Santa Clara, State of California , waives any objection which it may have to the laying of venue of any Proceedings brought in any such court, and waives any claim that any such Proceedings have been brought in an inconvenient forum.

EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY

IN ANY SUIT, ACTION OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS BASE

CONTRACT OR ANY TRANSACTION AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S ENTERING INTO THIS BASE CONTRACT.

SECTION 15.8 is hereby amended by inserting at the end thereof the following:

“Each party will be deemed to represent to the other party on the date on which it enters into a transaction or Transaction Confirmation that (absent a written agreement between the Parties that expressly imposes affirmative obligations to the contrary for that transaction or Transaction Confirmation):

(i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that transaction and Transaction Confirmation and as to whether that transaction and Transaction Confirmation is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as recommendation to enter into that transaction or Transaction Confirmation; it being understood that information and explanation related to the terms and conditions of a transaction and Transaction Confirmation shall not be considered investment advice or a recommendation to enter into that transaction or Transaction Confirmation. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that transaction or Transaction Confirmation.

(ii) Assessment and Understanding . It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts the terms, conditions and risks of that transaction and Transaction Confirmation. It is also capable of assuming, and assumes, the risks of that transaction and Transaction Confirmation.

(iii) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that transaction or Transaction Confirmation. Each party understands and acknowledges that the other party may, either in connection with entering into a transaction or from time to time thereafter, engage in open market transactions that are designed to hedge or reduce the risks incurred by it in connection with such transaction and that the effect of such open market transactions may be to affect or reduce the value of such transaction.

(iv) Eligible Contract Participant . It is an “eligible contract participant” as such term is defined in Section §1(a)(18) of the Commodities Exchange Act, as Item 7
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6 amended.”

SECTION 15.13 is added to SECTION 15, as follows:

“If requested by either party, to the extent not publicly available, the other party shall deliver (i) within 180 days following the end of each fiscal year, a copy of its (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) certified financial statements or its (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) annual report containing that party’s audited consolidated financial statements for such fiscal year and (ii) within 45 days after the end of each of its first three fiscal quarters of each fiscal year, a copy of that party’s (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) quarterly report containing unaudited consolidated financial statements for such fiscal quarter. In all cases the statements shall be for the most recent accounting period and prepared in accordance with generally accepted accounting principles, provided, however, that should any such statements not be available on a timely basis due to delay in preparation or certification, such delay shall not be an Event of Default so long as the party diligently pursues the preparation, certification and delivery of the statements.”

SECTION 15.14 is added to SECTION 15, as follows:

“Scheduling. For all physical gas transactions, J.P. Morgan Ventures Energy Corporation is the agent/contracted marketer for JPMorgan Chase Bank, N.A.; therefore, all nominations will face J.P.

Morgan Ventures Energy Corporation.”

SECTION 15.15 is added to SECTION 15, as follows:

“With respect to any proceeding in connection with any claim, counterclaim, demand, cause of action, dispute and controversy arising out of or relating to this Contract, the parties hereby consent to the exclusive jurisdiction of the federal courts for the Northern District of the State of California; provided, however, that if such federal courts sitting in the Northern District of the State of California refuse jurisdiction, the parties agree to the exclusive jurisdiction of the state courts sitting in the County of Santa, Clara, State of California, wherever venue may properly be laid.”

SECTION 15.16 is added to SECTION 15, as follows:

“Mobile-Sierra. To the extent, if any, that a transaction does not qualify as a “first sale” as defined by the Natural Gas Act and § 2(21) of the Natural Gas Policy Act (‘‘NGPA”) and is not exempt from the provisions of the Natural Gas Act (‘‘NGA”) pursuant to § 601 of the NGPA, each party irrevocably waives its rights, including its rights under §§ 4 and 5 of the NGA, unilaterally to seek or support a change in the rate(s), charges, classifications, terms or conditions of this Contract, any transaction hereunder or any other agreements entered into in connection with this Contract (collectively, the “Covered Agreements”). By this provision, each party expressly waives its right to seek or support: (i) an order from the U.S. Federal Energy Regulatory Commission (“FERC”) finding that the market -based rate(s), charges, classifications, terms or conditions agreed to by the parties under the Covered Agreements are unjust and unreasonable; or (ii) any refund with respect thereto. Each party agrees not to make or support such a filing or request, and each party agrees that these covenants and waivers shall be binding notwithstanding any regulatory or market changes that may occur hereafter. Absent the agreement of both parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of the Covered Agreements, whether proposed by a party to a non- party or FERC acting sua sponte, shall be the “public interest” standard of review set forth in United Gas Pipe Item 7
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7 Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the “Mobile-Sierra” doctrine).”

SECTION 15.17 is added to SECTION 15, as follows:

“Qualified Financial Contracts. The parties acknowledge and agree that (i) to the extent that prior to the date hereof both parties have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a Protocol Covered Agreement, the J.P. Morgan entity that is a party to this Contract (“J.P. Morgan”) shall be deemed a Regulated Entity and the other entity that is a party to this Contract (“Counterparty”) shall be deemed an Adhering Party; (ii) to the extent that prior to the date hereof the parties have executed a separate agreement the effect of which is to amend the qualified financial contracts between them to conform with the requirements of the QFC Stay Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a Covered Agreement, J.P. Morgan shall be deemed a Covered Entity and Counterparty shall be deemed a Counterparty Entity; or (iii) if clause (i) and clause (ii) do not apply, the terms of Section 1 and Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral template entitled “Full- Length Omnibus (for use between U.S.

G-SIBs and Corporate Groups)” published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org and, a copy of which is available upon request), the effect of which is to amend the qualified financial contracts between the parties thereto to conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a “Covered Agreement,” J.P. Morgan shall be deemed a “Covered Entity” and Counterparty shall be deemed a “Counterparty Entity.” In the event that, after the date of this Contract, both parties hereto become adhering parties to the Protocol, the terms of the Protocol will replace the terms of this paragraph. In the event of any inconsistencies between this Contract and the terms of the Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as applicable, the QFC Stay Terms will govern. Terms used in this paragraph without definition shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this paragraph, references to “this Contract” include any related credit enhancements entered into between the parties or provided by one to the other. In addition, the parties agree that the terms of this paragraph shall be incorporated into any related covered affiliate credit enhancements, with all references to J.P.

Morgan replaced by references to the covered affiliate support provider.

“QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81–8, 12 C.F.R. 382.1-7 and 12 C.F.R. 47.1- 8, which, subject to limited exceptions, require an express recognition of the stay- and- transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation Authority under Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act and the override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency proceedings and any restrictions on the transfer of any covered affiliate credit enhancements.”

SECTION 15.18 is added to SECTION 15, as follows:

“The parties do hereby represent and warrant that the General Terms and Conditions of the Base Contract have not been modified, altered, or amended in any respect except for these Special Provisions which are attached to and made a part of the Base Contract.”

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8 IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate.

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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___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 1 Adopted October 9, 2003
Credit Support Addendum
to the
Base Contract for Sale and Purchase of Natural Gas

This Credit Support Addendum (“CSA”) is entered into as of this ______ day of _________, 2026.

The parties to this CSA are the following:

Party A Party B
JPMorgan Chase Bank, N.A. and CITY OF PALO ALTO

Base Contract Date: [ ], 2026 Base Contract Date: [ ], 2026 Base Contract Number: Base Contract Number:

Address for Demands and Notices under Paragraphs 4,5 and 6 of the CSA:

Address: JPM Collateral Services Address:
500 Stanton Christiana Road
NCC5/FL1 DE3-4184
Newark, Delaware 19713
Group Telephone No.: (302) 634-4607 Telephone:

Facsimile No.: (302) 552-6930 Fax:

Email: [email protected] Email:

Wire Transfer or ACH Numbers (if applicable):

Bank: JPMorgan Chase Bank, N.A. Bank:

ABA: ABA:

ACCT: ACCT:

Other Details: Other Details:

This CSA is published by the North American Energy Standards Board, Inc. The parties hereby agree to the following provisions offered in said CSA Elections.

Credit Support
Provider
Party A : _______________________
Party B : ______________________
Interest Rate SOFR. “SOFR” means, for any day, the rate published as the Secured Overnight Financing Rate (SOFR) that
appears on Bloomberg Page SOFRRATE for such
day, or as published in another source mutually agreed
by the parties
Eligible
Collateral

Valuation
Percentage
Party A:  Cash 100%
Letters of Credit 100%*
Other _____________ ___%
Party B:  Cash 100%
 Letters of Credit 100%*
Other _____________ ___%
* - See Definition of Valuation Percentage.

Minimum
Transfer
Amount
Party A: US$100,000; provided, however, that if an
Event of Default has occurred and is continuing with
respect to Party A, the Minimum Transfer Amount with
respect to Party A shall be US$0.

Party B: US$100,000; provided, however, that if an
Event of Default has occurred and is continuing with
respect to Party B, the Minimum Transfer Amount with
respect to Party B shall be US$0.

Letter of
Credit Issuer
Requirements
Major U.S. commercial bank or a United States branch
of a major foreign bank which in either case has a
Credit Rating of at least “A” by S&P or “A2” by Moody’s and which is satisfactory to Secured Party in Secured
Party’s reasonable discretion

Transfer
Method for
Other Eligible
Collateral

Party A: _________________________

Party B: _________________________
Notification
Time

Close of
Business
1 p.m. Eastern Prevailing Time
 Other: 12:00 noon, Eastern Prevailing Time

 5 p.m. Eastern Prevailing Time
Other __________________ Prevailing Time

Collateral
Threshold
 See attached Rating Matrix
Flat amounts
Party A: __________________________
Party B: __________________________
Rounding
Amount
Party A: US$10,000
Party B: US$10,000

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___________________________________________________________________________________________________________ Copyright  2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 2 Adopted October 9, 2003
Eligibility
Requirements
to Hold Cash
Party A: An Event of Default has not occurred
with respect to Party A.

Party B: N/A
Custodian
Requirements

The Custodian is a Bank (as defined in the Federal
Deposit Insurance Act) whose rating with respect to its long term unsecured, unsubordinated indebtedness is
at least A- by S&P or A3 by Moody's.

As used herein:

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

“S&P” shall mean Standard & Poor’s Ratings Group, or
its successor.
 OPTION A for CSA Paragraphs 4, 5 and 6 – OR – OPTION B for CSA Paragraphs 4, 5 and 6 (Exhibit A for elections is attached.)  Special Provisions Number of sheets attached: __16__________________________________________ IN WITNESS WHEREOF, the parties hereto have executed the first page of this CSA in duplicate.

JPMORGAN CHASE BANK, N.A. PARTY NAME CITY OF PALO ALTO
Approval by Mayor:

By:

SIGNATURE

By:

Name: PRINTED NAME [Insert Name]
Title: TITLE City Manager, for Mayor
______________________, 2026 DATE ______________________, 2026

CITY OF PALO ALTO
Approval as to form:

By:
[Insert Name]
Senior Assistant City Attorney
______________________, 2026

CITY OF PALO ALTO
Approval by City Manager:

By:
[Insert Name]
City Manager
______________________, 2026

CITY OF PALO ALTO
Approval by Administrative Services Director:

By:
[Insert Name]
Administrative Services Director
______________________, 2026
Item 7
Attachment B - Master
Agreement, Special
Provisions and Credit
Support Addendum

Item 7: Staff Report
Pg.
31 Packet Pg. 143 of 412

GENERAL TERMS AND CONDITIONS
of the

CREDIT SUPPORT ADDENDUM
to the

BASE CONTRACT FOR PURCHASE AND SALE OF NATURAL GAS

Paragraph 1. Purpose

This CSA constitutes an Addendum to that certain Base Contract for Sale and Purchase of Natural Gas, as identified on the front page herein, between the parties (“Base Contract”), and supplements, forms part of, and amends the Base Contract affecting transactions thereunder. Capitalized terms used in this CSA that are not herein defined will have the meanings ascribed to them in the Base Contract. In the event of a conflict between the terms of this CSA and the Base Contract, the terms of this CSA shall apply for the purposes of this CSA.

The terms set forth below shall have the meanings ascribed to them below. Other terms are also defined elsewhere in the Base Contract and shall have the meanings ascribed to them therein.

Paragraph 2. Definitions.

As used in this CSA:

“Cash” shall mean United States Dollars.

“Close of Business” shall have the meaning set forth in the elections on Page 1 herein.

"Collateral Requirement" shall have the meaning set forth in Paragraph 3 herein.

"Collateral Threshold" shall mean, with respect to a party, the amount, if any, set forth in the elections on

Page 1 ends

Palo Alto City CouncilAugust 10, 2026

Palo Alto City Council
August 10, 2026