Agenda packet, regular meeting, first session — Palo Alto City Council, October 19, 2026 (part 1 of 3)

CITY COUNCIL
Regular Meeting
Monday, October 19, 2026
Council Chambers & Hybrid
5:30 PM
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 1-3 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 1-3 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.

TIME ESTIMATES
Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, change the order of items and/or continue items to another meeting. Items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. 1 October 19, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

CALL TO ORDER
SPECIAL ORDERS OF THE DAY (Item 1: 5:30 - 5:40 PM; Item 2: 5:40 - 5:55 PM)

1. Caltrain Presentation of Framework for a ”No External Funding Scenario”. CEQA Status – Not a Project

2. Celebrating Palo Alto's Relationship with Tsuchiura, Japan and Denis Shovkoplyas, the Palo Alto 2026 Tsuchiura Marathon Runner

AGENDA CHANGES, ADDITIONS AND DELETIONS
IN-PERSON PUBLIC COMMENT (5:55 - 6:25 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 (6:25 - 6:35 PM) Members of the public may not speak to the item(s).

CONSENT CALENDAR (6:35 - 6:40 PM)
Items will be voted in one motion unless removed from the calendar by three Council Members.

3. Approval of Minutes from September 28 and October 5, 2026 Meetings

4. Approve $15,000 from Council Contingency to the Know Your Neighbors Grant Program; CEQA – Not a Project

5. Approval of a Letter of Intent with Palo Alto Community Child Care for collaboration on a long-term public-private partnership for expanded child care at the Cubberley site; CEQA status – Mitigated Negative Declaration Approved on May 19, 2026.

6. Adoption of an ordinance to amend PAMC Chapter 10.44 prohibiting overnight parking of oversized vehicles (OSVs) in residential areas, and a resolution to support implementation of the Embarcadero Road OSV parking permit pilot program and Approve Budget Amendments in the Capital Improvement Fund. CEQA status – categorically and statutorily exempt.

7. Adoption of an Ordinance Amending the Special Setback Map to Reduce the Special Setback Along a Portion of Hansen Way at 3300 El Camino Real from 50 Feet to 20 Feet.

CEQA Status: Exempt Pursuant to CEQA Guidelines Section 15305 (Minor Alterations in 2 October 19, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

Land Use Limitations).

8. Approve Two Purchase Orders with Packet Fusion, Utilizing One NASPO Cooperative and One CMAS Cooperative Agreement, to Procure Zoom Government Unified Communications Solutions for a Five-Year Term for a Total Not-To-Exceed Amount of $1,206,456; CEQA Status – exempt under section 15061(b)(3).

9. QUASI-JUDICIAL. 751 Waverley Street [26PLN-00034]: Appeal of Director’s Decision to Uphold the Issuance of the Permit, Confirming Approval to Remove Four Protected Coast Redwoods (Sequoia sempervirens) Located at 751 Waverley Street under the Right Tree in the Right Place Principles for Removal in Palo Alto Municipal Code 8.10.050; CEQA Status: Exempt Pursuant to CEQA Guidelines Section 15061(b)(3) CITY MANAGER COMMENTS (6:40 - 6:45 PM)
SPECIAL ORDERS OF THE DAY (Item 10: 6:45 - 9:00 PM)

10. Interview Candidates for Vacancies on the Public Art Commission (PAC) and Stormwater Management Oversight Committee (SWMOC); CEQA Status – Not a Project - Appointments
BREAK (7:40 - 7:55 PM)
CLOSED SESSION (9:00 - 10:45 PM)

11. CONFERENCE WITH CITY ATTORNEY – POTENTIAL LITIGATION Subject: Significant exposure to litigation
One Case, as Defendant
Authority: Government Code Section 54956.9(d)(2)

12. CONFERENCE WITH CITY ATTORNEY – EXISTING LITIGATION; POTENTIAL LITIGATION Subject: Willow Project LLC v. City of Menlo Park et al.

Santa Mateo County Superior Court Case No. 26-CIV-07675 One Case
Authority: Government Code Section 54956.9(d)(1) and 54956.9(d)(2) 3 October 19, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

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.

A. California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation Reports as of June 30, 2025; CEQA Status—Not a Project.

OTHER INFORMATION
Standing Committee Meetings this week

Finance Committee October 20, 2026
Economic Development Committee October 21, 2026 CANCELED City Schools Liaison Committee October 22, 2026

Public Comment Letters
Schedule of Meetings
4 October 19, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

PUBLIC COMMENT INSTRUCTIONS
Members of the Public may provide public comments to 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 a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoombased meeting. Please read the following instructions carefully. ◦ You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below.
◦ You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak.
◦ When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak.
◦ When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments.

4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council.

You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted.

CLICK HERE TO JOIN Meeting ID: 362-027-238 Phone: 1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing [email protected]. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.
5 October 19, 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 to as the "Levine Act," prohibits an elected official of a local government agency from participating in a proceeding involving a license, permit, or other entitlement for use if the official received a campaign contribution exceeding $500 from a party or participant, including their agents, to the proceeding within the last 12 months. A “license, permit, or other entitlement for use” includes most land use and planning approvals and the approval of contracts that are not subject to lowest responsible bid procedures and have a value over $50,000. A “party” is a person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. A “participant” is a person who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use, and has a financial interest in the decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform Act, which encompasses interests in business entities, real property, sources of income, sources of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a “party” or “participant” to a proceeding, and you have made a campaign contribution to a Council Member exceeding $500 made within the last 12 months, you must disclose the campaign contribution before making your comments.
6 October 19, 2026
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.

City Council
Staff Report
From: City Manager
Report Type: SPECIAL ORDERS OF THE DAY
Lead Department: Transportation
Meeting Date: October 19, 2026
Report #:2610-6856
TITLE
Caltrain Presentation of Framework for a ”No External Funding Scenario”. CEQA Status – Not a Project

EXECUTIVE SUMMARY
Caltrain staff will provide an overview of the adopted framework for addressing a scenario in which there is no external funding for its operations. This includes the guiding principles that would shape evaluation of potential service and operational changes and the process for developing contingency scenarios. The framework emphasizes maintaining safety, complying with regulatory requirements, minimizing operating and maintenance costs, maximizing ridership and revenue opportunities, and preserving equitable access to the rail system.

Potential measures to be evaluated include changes to service frequency and span, station or segment closures, reductions in maintenance activities, staffing adjustments, and opportunities to generate additional revenue. The presentation is intended to inform the Board of the planning process and the potential implications for Caltrain service should a sustainable external funding source not be secured."

BACKGROUND
Caltrain continues to face a structural operating funding gap beginning in Fiscal Year 2028 absent a new, ongoing external revenue source. While the agency has implemented significant cost-saving measures, seen significant ridership increases, increased non-fare revenues, and benefited from one-time bridge funding, current projections indicate that these actions alone are insufficient to sustain existing levels of service over the long term. As a result, the Caltrain Board of Directors adopted a framework in June 2026 to guide development of a "No External Funding Scenario" that will inform future budget and service planning should additional funding not materialize.

ENVIRONMENTAL REVIEW
This report is for informational purposes only with no action required by the Council and therefore is not a project subject to environmental review under the California Environmental Quality Act.

APPROVED BY: Ria Hutabarat Lo, Chief Transportation Official Item 1
Item 1 Staff Report
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City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Clerk
Meeting Date: October 19, 2026
Report #:2610-6841
TITLE
Approval of Minutes from September 28 and October 5, 2026 Meetings

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

ATTACHMENTS
Attachment A: September 28, 2026 Draft Action Minutes
Attachment B: October 5, 2026 Draft Action Minutes
APPROVED BY:

Mahealani Ah Yun, City Clerk
Item 3
Item 3 Staff Report
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CITY COUNCIL

DRAFT ACTION MINUTES

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Special Meeting
September 28, 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, Veenker Present Remotely: Stone (Just Cause Alternative Teleconference)

Absent:

Special Orders of the Day

1. Caltrain Presentation of Framework for a ”No External Funding Scenario”. CEQA Status – Not a Project Item Removed Off Agenda

2. Review Applications and Select Candidates to Interview for the Human Relations Commission (HRC), Planning and Transportation Commission (PTC), and Stormwater Management Oversight Committee (SWMOC) Vacancies; CEQA Status – Not a Project

NO ACTION
Closed Session

3. CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATION
Subject: Significant exposure to litigation
Authority: Government Code Section 54956.9(d)(2)
Number of potential cases: 1, as Defendant
MOTION: Councilmember Lauing moved, seconded by Councilmember Reckdahl to go into Closed Session.

MOTION PASSED: 7-0
Council went into Closed Session at 5:50 P.M.

Council returned from Closed Session at 6:20 P.M.

Item 3
Attachment A - September
28, 2026 Draft Action
Minutes
Item 3: Staff Report Pg. 2 Packet Pg. 9 of 280

DRAFT ACTION MINUTES

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Sp. City Council Meeting
Draft Action Minutes: 09/28/2026
Mayor Veenker announced City of Palo Alto v. Gary Wetzel, et al. on September 14, 2026 the Council authorized the City Attorney’s Office to accept a settlement offer in the amount of $244,254 paid by the Wetzel’s insurer in exchange for a global release of claims and the vote was 7-0. The settlement was finalized on September 17, 2026.

Agenda Changes, Additions and Deletions
In-Person Public Comment
Council Member Questions, Comments and Announcements
Consent Calendar
MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lythcott-Haims to approve Agenda Item Numbers 4-13.

MOTION PASSED: 7-0

4. Approval of Minutes from August 19, September 9, and September 14, 2026 Meetings

5. Approval of a Letter of Intent with Maker Nexus for collaboration on a long-term publicprivate partnership for a new multi-generational makerspace at the Cubberley site; CEQA status - Mitigated Negative Declaration Approved on May 19, 2026.

6. Approval of the Acceptance of State of California Citizens Options for Public Safety (COPS) Funds of $211,000 and a Budget Amendment in the Supplemental Law Enforcement Services Fund for revenue and municipal police service expenses; CEQA status – not a project.

7. Approval of a Term Sheet with Friends of the Recreation Wellness Center to Advance a Public-Private Partnership for a New Recreation Wellness Center at the Cubberley Site; CEQA status – Mitigated Negative Declaration Approved on May 19, 2026.

8. Approval of a Professional Services and SaaS Agreement C27195677 with TruePoint Solutions, LLC DBA GovPath for an Amount Not-to-Exceed $3,486,301 for the Licensing, Maintenance, and Support of the City’s Building Permitting System on the Accela Platform for a Period of Five Years; CEQA Status - Not a Project.

Item 3
Attachment A - September
28, 2026 Draft Action
Minutes
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DRAFT ACTION MINUTES

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Sp. City Council Meeting
Draft Action Minutes: 09/28/2026

9. Approval of Professional Services Contract No. C27197334 with Cascadia Consulting Group, Inc. for a Waste Characterization Study of the City’s Municipal Solid Waste Stream in an Amount Not-to-Exceed $270,233; CEQA Status – Exempt under CEQA Guidelines Sections 15061, 15262

10. Approval of Contract Amendment Number 2 to Contract C21181846 with CAD Masters, Inc. in the Amount of $420,000 for a total not to exceed $2,370,000 for Continued Support of Utility Engineering Systems and Applications through August 2, 2029 (a total of 8 years); CEQA Status: Not a Project Under CEQA Guidelines Section 15378

11. Approval of Amendment No. 4 to Contract No. C20176877 with Schaaf & Wheeler Consulting Civil Engineers to Extend the Contract Term Through June 30, 2027 for the Corporation Way System Upgrades and Pump Station (SD-21000), West Bayshore Road Pump Station (SD-20000), and West Bayshore Trunk Line Improvements (SD-23000) Projects; CEQA Status - Exempt Under CEQA Guidelines Section 15301

12. 706 Cowper Street [26PLN-00144]. Council Preliminary Review for Comprehensive Plan Land Use Plan Map Amendment to Allow an Approximately 400 Square Foot Commercial Addition to a Category 1 Historic Resource in the Multiple-Family Residential Land Use Designation. CEQA Status: Not a Project.

13. 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).

City Manager Comments
Kiely Nose, Assistant City Manager
Action Items

14. Direction to advance the Locally Preferred Alternatives for Grade Separation at Churchill Avenue, Meadow Drive, and Charleston Road crossings to 35% design and environmental documentation. CEQA Status – Statutorily Exempt.

Councilmember Reckdahl recused from agenda item number 14.

MOTION: Councilmember Lu moved, seconded by Councilmember Lauing to direct proceeding with the 35% design phase and preparation of environmental documentation for the selected Item 3
Attachment A - September
28, 2026 Draft Action
Minutes
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DRAFT ACTION MINUTES

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Sp. City Council Meeting
Draft Action Minutes: 09/28/2026
alternatives at the Churchill Avenue, Meadow Drive, and Charleston Road crossings and direction to evaluate the traffic impacts of constructing Charleston only.

MOTION PASSED: 6-0-1, Reckdahl Recused
Virtual Public Comment
Adjournment: The meeting was adjourned at 9:32 P.M.

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

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 3
Attachment A - September
28, 2026 Draft Action
Minutes
Item 3: Staff Report Pg. 5 Packet Pg. 12 of 280

CITY COUNCIL

DRAFT ACTION MINUTES

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Regular Meeting
October 5, 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:

Boards, Commissions, and Committees Appointments

1. Appointment of Candidates to the Human Relations Commission (HRC), Parks and Recreation (PRC), and Planning and Transportation Commission (PTC), CEQA Status - Not a Project
Human Relations Commission
First Round Voting for Two (2) full term vacancies (seats 1, 4) on the Human Relations Commission ending on October 31, 2029
Aji Oliyide: Burt, Lauing
Cynthia Wood:

Ellen Bob:

Haylea Hannah:

Katie Causey: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Raizel Rosenberg: Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Sunny Dykwel:

Candidate Katie Causey receiving seven votes is appointed to the full term expiring October 31, 2029 (seat 1).

Candidate Raizel Rosenberg receiving five votes is appointed to the full term expiring October 31, 2029 (seat 4).

First Round Voting for One (1) partial term vacancy (seat 7) on the Human Relations Commission ending on October 31, 2028
Item 3
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2026 Draft Action Minutes
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 10/05/2026
Aji Oliyide: Lythcott-Haims
Cynthia Wood:

Ellen Bob: Lauing, Reckdahl, Veenker
Haylea Hannah: Burt, Lu, Stone
Katie Causey:

Raizel Rosenberg:

Sunny Dykwel:

No candidate received the four votes necessary for appointment. A second round of voting is required.

Second Round Voting for One (1) partial term vacancy (seat 7) on the Human Relations Commission ending October 31, 2028
Ellen Bob: Lauing, Reckdahl, Veenker
Haylea Hannah: Burt, Lu, Lythcott-Haims, Stone
Candidate Haylea Hannah receiving four votes is appointed to the partial term expiring on October 31, 2028 (seat 7).

Parks and Recreation Commission
First Round Voting for Four (4) full term vacancies (Seats 1, 5, 6, 7) on the Parks and Recreation Commission ending October 31, 2029.

Aubrey Whitcomb: Lauing, Lythcott-Haims, Reckdahl
Virginia Ruiz Albacete: Lauing, Lu, Stone
Abhijit Solanki: Burt
Sterling Watson:

Shani Kleinhaus: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Ben Lenail: Burt, Reckdahl, Veenker
Marc Schoenen: Lauing, Lu, Stone, Veenker
Leo Hochberg: Burt, Lythcott-Haims, Reckdahl
Bing Betty Wei: Lu, Lythcott-Haims, Stone, Veenker
Candidate Shani Kleinhaus receiving seven votes is appointed to the full term expiring on October 31, 2029 (seat 5).

Candidate Mac Schoenen receiving four votes is appointed to the full term expiring on October 31, 2029 (seat 1).

Candidate Bing Betty Wei receiving four votes is appointed to the full term expiring on October 31, 2029 (seat 6).

Item 3
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2026 Draft Action Minutes
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 10/05/2026
No other candidate received the four votes necessary for appointment. A second round of voting is required.

Second Round Voting for One (1) full term vacancy (seat 7) on the Parks and Recreation Commission ending October 31, 2029.

Aubrey Whitcomb: Burt, Lythcott-Haims
Virginia Ruiz Albacete: Lauing, Lu, Stone
Ben Lenail: Reckdahl, Veenker
Leo Hochberg:

No candidate received the four votes necessary for appointment. A second round of voting is required.

Third Round Voting for One (1) full term vacancy (seat 7) on the Parks and Recreation Commission ending October 31, 2029.

Aubrey Whitcomb: Burt, Lythcott-Haims
Virginia Ruiz Albacete: Lauing, Lu, Stone, Veenker
Ben Lenail: Reckdahl
Candidate Virginia Ruiz Albacete receiving four votes is appointed to the full term expiring on October 31, 2029 (seat 7).

Planning and Transportation Commission
First Round Voting for One (1) partial term vacancy (seat 4) on the Planning and Transportation Commission ending on March 31, 2030.

Christopher Kao: Lythcott-Haims
Jeff Watt:

Tom Siegel: Burt, Lauing, Lu, Reckdahl, Stone, Veenker
Candidate Tom Siegel receiving six votes is appointed to the partial term expiring March 31, 2030 (seat 4).

Special Orders of the Day

2. Proclamation Recognizing Fire Prevention Week- October 4-10

NO ACTION
Item 3
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2026 Draft Action Minutes
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 10/05/2026
Agenda Changes, Additions and Deletions
In-Person Public Comment
Council Member Questions, Comments and Announcements
Study Session

3. Best Practices in Managing Consultant Services

NO ACTION
Consent Calendar
MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lythcott-Haims to approve Agenda Item Numbers 4-9.

MOTION PASSED: 7-0

4. Approval of Business Retention, Expansion, and Attraction (BRE/A) Strategy as Recommended by the Economic Development Committee: CEQA – Not a Project

5. Approval of Letters of Intent with Avenidas and HeartFit for Life for collaboration on a long-term public-private partnership for expanded services for aging adults at the Cubberley site; CEQA status – Mitigated Negative Declaration Approved on May 19, 2026.

6. Approval of Surveillance Use Policy for Security Cameras at the Palo Alto Animal Shelter; CEQA Status - Not a Project.

7. Approval of Surveillance Use Policy for Security Cameras at the Palo Alto Junior Museum & Zoo; CEQA Status - Not a Project.

8. Approval of FY 2026 Reappropriation Requests to FY 2027 Operating and Capital Improvement Budgets and Additional Technical Clean-Up Actions and Corresponding Amendments to the FY 2027 Budget Appropriation for Various Funds. CEQA Status: Not a Project
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2026 Draft Action Minutes
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 10/05/2026

9. Approval of Professional Services Contract Number C27196802 with BKF Engineers for the Design of Four Quadrant Gate Systems Improvements required for Quiet Zone Railroad Crossings at Churchill Avenue, Meadow Drive, and Charleston Road in an Amount Not to Exceed $1,294,522 for a term ending December 31, 2029; CEQA status:

Categorically Exempt, CEQA Guidelines Section 15301.

City Manager Comments
Ed Shikada, City Manager
Action Items

10. Approval of FY 2027 Architectural Review Board, Historic Resources Board, Planning and Transportation Commission, and Utilities Advisory Commission Work Plans; CEQA Status – Not a Project
MOTION: Councilmember Lauing moved, seconded by Councilmember Reckdahl to approve the Architectural Review Board, Historic Resources Board, Planning and Transportation Commission, and Utilities Advisory Commission respective Fiscal Year 2027 Work Plans.

MOTION PASSED: 7-0

11. Consideration of City Council Positions on State and Local Measures Presented to Palo Alto Voters on the November 3, 2026 Ballot; CEQA status – not a project MOTION: Councilmember Lauing moved, seconded by Mayor Veenker to take the following positions based on the Legislative Guidelines and previous City Council action:
• Proposition 1 – Support
• Proposition 2 – Support
• Proposition 4 – Support
• Proposition 37 – Support
• Proposition 39 – Oppose
• Proposition 43 – Oppose
• Proposition 45 – Oppose
• Public Transit Revenue Measure District (Measure RTM) – City Council already supported
• City of Palo Alto Measure J – Support
MOTION PASSED: 7-0
Item 3
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2026 Draft Action Minutes
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DRAFT ACTION MINUTES

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City Council Meeting
Draft Action Minutes: 10/05/2026
Closed Session
AA1. CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Authority: Government Code Section 54956.8
Property: 4000 Middlefield Road, Palo Alto (Informally known as the Cubberley Site) Negotiating Party: Palo Alto Unified School District
City Negotiators: Ed Shikada, Kristen O'Kane, Sunny Tong Subject of Negotiations:

Purchase,
Exchange, and/or Lease Price and Terms of Payment
Agenda Item Number AA1 was not heard.

Virtual Public Comment
Adjournment: The meeting was adjourned at 10:05 P.M.

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

Item 3
Attachment B - October 5,
2026 Draft Action Minutes
Item 3: Staff Report Pg. 11 Packet Pg. 18 of 280
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Manager
Meeting Date: October 19, 2026
Report #:2610-6850
TITLE
Approve $15,000 from Council Contingency to the Know Your Neighbors Grant Program; CEQA – Not a Project

RECOMMENDATION
Recommend transferring $15,000 from the Council Contingency to the Know Your Neighbors Grant Program as discussed at the October 5, 2026 City Council meeting.

BACKGROUND
The Know Your Neighbors Grant Program is designed to help neighbors better connect with each other while strengthening community and improving the quality of life and neighborhoods in Palo Alto. The goals of the Program are to:

1. Build a sense of community.

2. Develop or renew neighborhood relationships.

3. Encourage interaction between generations and cultures.

4. Increase governance and organizational leadership of neighborhood associations.

5. Develop collaborative partnerships between Palo Alto neighborhoods and the City.

Citizens or Neighborhood Associations may apply for a Know Your Neighbor Grant for activities such as block parties, neighborhood crime prevention and safety activities, and gatherings involving the building of connections between neighbors. Events hosted by individual community members can qualify for a grant up to $1,000. Events hosted by Neighborhood Associations can qualify for a grant up to $1,500. Grants may be applied for at any time throughout the year and are awarded on activities that meet eligibility requirements on a "first come, first served" basis. The grant program is managed by the Community Services Department. More information including eligibility requirements can be found on the program website: https://www.paloalto.gov/Departments/Community-Services/Other-Services/KnowYour-Neighbors-Grant Item 4
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ANALYSIS
The Mayor and Vice-Mayor recommended transferring $15,000 from the Council Contingency to the Know Your Neighbors Grant Program at the October 5, 2026 City Council meeting.

The Fiscal Year 2027 Adopted Operating Budget includes a $50,000 allocation for the Know Your Neighbors Grant Program. By early September 2026, the full program budget had been awarded to 47 grantees, demonstrating the popularity and community benefit of the program.

There are currently nine pending grant applications. With additional funding, the grant program would re-open and will accept applications until June 30, 2027 or until fully expended.

Section 4 of the City Council and Boards and Commissions Policy for Travel and Miscellaneous Expense Reimbursement requires any requests for expenditure of Council Contingency Funds over $10,000 require action by Council motion, which shall be by Colleagues’ Memo placed on Consent.

FISCAL/RESOURCE IMPACT
This action would transfer $15,000 from the Council Contingency account to the Know Your Neighbors Grant Program in the Community Services Department FY2027 operating budget, increasing the FY27 Grant Program budget from $50,000 to $65,000 (one-time). The Council Contingency Fund balance of $115,000, would be reduced to $100,000 after the transfer.

STAKEHOLDER ENGAGEMENT
Following Council approval, staff will promote the program to the community and will notify the pending applicants that additional funding has been made available.

ENVIRONMENTAL REVIEW
This action is not a Project as defined by the California Environmental Quality Act APPROVED BY:

Ed Shikada, City Manager
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1 City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Community Services
Meeting Date: October 19, 2026
Report #:2608-6604
TITLE
Approval of a Letter of Intent with Palo Alto Community Child Care for collaboration on a longterm public-private partnership for expanded child care at the Cubberley site; CEQA status – Mitigated Negative Declaration Approved on May 19, 2026.

RECOMMENDATION
Staff recommend the City Council approve and authorize the City Manager to execute a Letter of Intent (LOI) with Palo Alto Community Child Care (Attachment A) for collaboration on a longterm public-private partnership for expanded early child care and education at the Cubberley site.

EXECUTIVE SUMMARY
City staff and the Cubberley Ad Hoc committee are coordinating with community partners to advance elements of the Cubberley project using a public private partnership model. A proposed partnership with Palo Alto Community Child Care (PACCC) would expand availability of early child care and education at Cubberley. Staff recommend Council approve a Letter of Intent with PACCC (Attachment A) to formalize a joint commitment to advance this element of the project.

BACKGROUND
The City is advancing a plan to redevelop a 15-acre portion of Cubberley, guided by the Cubberley Conceptual Master Plan and associated CEQA environmental document adopted by the City Council on May 18, 20261. The City and the Palo Alto Unified School District (PAUSD) have a memorandum of understanding that would enable the City to purchase seven acres to support a reimagined community center and fund school improvements. The City currently owns eight acres at Cubberley; acquiring an additional seven acres would create an opportunity to update the aging facility for the benefit of the community. Funding the land purchase and 1 City Council, May 18, 2026; Agenda Item #13; SR #2512-5750, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=2a17e949-762d-4b3e-8ba5- f92086da72b0
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2 site improvements could be possible through a combination of funding sources including a ballot measure, nonprofit partnerships, philanthropy, grants, and fees from new development.

On June 8, 20263, the City Council voted to place a ½ cent (0.50%) Sales Tax (Transactions and Use Tax) measure on the November 3, 2026 ballot. A simple majority (50% plus 1) vote is required to pass. The Council also adopted advisory spending guidelines for proceeds of the Transactions and Use Tax. Resolution No. 102964 states the Council plans to allocate the proceeds to purchase the seven acres and implement part of the first phase of the Cubberley Conceptual Master Plan to modernize aging buildings, expand the amount of green space, and invest in spaces that provide recreation and culture. The City plans to leverage other funding sources, including investments from community partnerships and fees from new development along with this new revenue to advance the project. It is likely that the City will issue certificates of participation (COPs) or similar financing mechanisms to advance funds for land acquisition and to enable construction to proceed within the first few years after passage of the measure.

More information on Measure J is available at https://www.paloalto.gov/Departments/CityClerk/Municipal-Elections/November-3-2026-Ballot-Measure-J.

City staff and the Cubberley Ad Hoc committee are coordinating with community partners to advance elements of the Cubberley project using a public private partnership model. Letters of Intent (LOI) have been approved by the City Council with the Friends of the Recreation Wellness Center5, TheatreWorks Silicon Valley,6 Maker Nexus7, and Avenidas and HeartFit for Life8.

Additionally, a term sheet with the Friends of the Recreation Wellness Center was approved by the Council on September 289.

ANALYSIS
3 City Council, June 8, 2026; Agenda Item #14; SR #2603-6081, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887096&dbid=0&repo=PaloAlto&cr=1 4 City Council Resolution No. 10296,
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887259&dbid=0&repo=PaloAlto&cr=1 5 City Council, December 2, 2024; Agenda Item #18; SR #2410-3634, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83117&dbid=0&repo=PaloAlto 6 City Council, February 9, 2026; Agenda item #11; SR #2512-5774, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85859&dbid=0&repo=PaloAlto 7 City Council, September 28, 2026; Agenda Item #5; SR #2607-6546, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=0eccdd30-6277-4ca9-9e5ecd7dd02e350a 8 City Council, October 5, 2026; Agenda Item #5; SR #2608-6603, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=3cf67d0e-4a67-410d-bd69-3f0ff5d3c72c 9 City Council, September 28, 2026; Agenda Item #7; SR #2609- 6757,https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=db63b392-a0f9-4a52-9e99- 2732358ac520
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3 Public Private Partnerships provide an opportunity to advance elements of the Cubberley project through a combination of City and private investment while offering valuable programs and services to the community. Several community nonprofit organizations have expressed interest and both staff and members of the Ad Hoc are engaging in conversations with potential partners. A Letter of Intent establishes a framework for future actions and outlines mutually cooperative strategies to guide ongoing discussions on key terms and conditions of future agreements.

PACCC has been operating in Palo Alto since the early 1970s and now operates 18 child care centers throughout Palo Alto, from infants to fifth graders, serving over 1,200 children annually.

Through a long-standing agreement, the City has supported PACCC’s financial aid program to reduce or eliminate barriers for Palo Alto families to access quality childcare. PACCC provides childcare and education regardless of a family’s financial circumstances through Local, County, State Contracts and Subsidy Funds, as well as PACCC’s Scholarship Endowment.

As housing opportunities and population increases in Palo Alto, including near the Cubberley campus, it is expected that the need for affordable early child care and education will also increase. PACCC would supplement existing child care at Cubberley, offering care for infants, toddlers, and preschool-age children. PACCC and the City will work collaboratively to establish funding and cost sharing goals for PACCC’s capital investment, which could be achieved through fundraising or grants such as the California State Childcare Expansion grants.

FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with approval of this LOI, as it is not a legally binding agreement. Future agreements to further refine commitments could include fundraising goals, cost sharing, and operating agreements and would be brought forward to Council for review and consideration.

STAKEHOLDER ENGAGEMENT
Community outreach and stakeholder engagement efforts for the project have been extensive and remain a central component of the overall process. Engagement with community partners has been ongoing and is intended to understand which community organizations may have an interest in contributing financially to development of the site while bringing exciting community programs and events to Cubberley. Providing space for people of all ages and abilities where everyone belongs and feels welcome is part of the vision for a new community center at the Cubberley site.

ENVIRONMENTAL REVIEW
The Council adopted an Initial Study/Mitigated Negative Declaration for the Cubberley Conceptual Master Plan on May 19, 2026 (SCH Number 2026030129).

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4 ATTACHMENTS
Attachment A: Letter of Intent between the City of Palo Alto and Palo Alto Community Child Care
Attachment B: Background on the Cubberley Project
APPROVED BY:

Kristen O'Kane, Community Services Director
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Letter of Intent Between
Palo Alto Community Child Care and the City of Palo Alto March 20, 2026
City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
Attention: Ed Shikada, City Manager
PACCC would like to advance this Letter of Intent with the City of Palo Alto’s in the acquisition of the 15-acre portion of the Cubberley site, currently owned by the Palo Alto Unified School District, for a State Preschool Center to include infant, toddler and preschool education and care. This Letter of Intent is dependent on the City’s acquisition of land from the Palo Alto Unified School District.

Since 1974, PACCC has pursued its non-profit mission of providing exceptional education and care for Palo Alto’s children, regardless of a family’s financial circumstances, with unwavering determination. PACCC, a product of the City of Palo Alto’s Child Care Task Force, which recommended that the City take an active and supportive role in early childhood education and care. City Council’s first directive was to establish a childcare-focused nonprofit. This original vision and advocacy later became the blueprint for PACCC.

What began as a few centers in the 1970s became the PACCC we know today, which serves the needs of more than 1,200 children annually; providing developmentally-appropriate education and care for children from as young as two months old through fifth grade at 18 centers throughout Palo Alto, 52 weeks of the year.

In alignment with our long-standing partners, the City of Palo Alto, Palo Alto Unified School District, California Department of Social Services and California Department of Education, PACCC is committed to serving the current and future needs of Palo Alto’s families, and actively works to eliminate barriers. Over one-third of enrollment spots are designated for financial assistance through our long-standing partners and PACCC’s own fundraising efforts. To invest in exceptional education and care of our children is to help build a thriving community our children can always call ‘home’ – not just in Palo Alto, but in the world at large. This investment in our future is a challenge we have accepted with the utmost pride, determination, and care for more than 50 years!
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Attachment A - Letter of
Intent between the City of
Palo Alto and Palo Alto
Community Child Care
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In the past five decades since, PACCC has developed and maintained strong partnerships with the City of Palo Alto, Palo Alto Unified School District, California Department of Social Services and California Department of Education, which has allowed PACCC to reserve one-third of enrollment spots for families who need financial assistance.

The zoning changes adopted as a part of the City of Palo Alto’s Housing Element substantially increase the capacity of development along San Antonio Road, near the Cubberley site. The City is planning cohesive mixed-use neighborhoods with safe access to transportation, employment, community services, and recreation. PACCC is committed to serving the future needs of Palo Alto’s families and aims to expand capacity and access to early education and care alongside this growth.

The City and PACCC now wish to collaborate and negotiate a long-term public-private partnership to establish a new PACCC center at the Cubberley site, with the following strategic objectives:

1. Create an infant-toddler, and preschool center through the construction of new buildings or a renovation of a current space at the Cubberley site. The center and space would serve 50-70 children and include indoor and outdoor space.

2. Explore a capital investment and California State Childcare Expansion grants wherein PACCC will work collaboratively with the City to cover a portion of the expected capital development costs. The minimum and total goals will be agreed upon between the City and PACCC following the development of the project budget. Funds contributed by PACCC will be utilized for the PACCC center development efforts and will supplement funds acquired by the City.

3. Establish a management model under which PACCC would operate and exclusively utilize the new center in accordance with State childcare licensing requirements. The center may be co-located in a building or complex with other childcare and/or non-profit uses.

4. Co-develop architectural plans and specifications to align with the State's child care licensing requirements for the center. PACCC may incorporate additional functions into the facility, potentially including professional development, training, office, or meeting space.

5. Evaluate and align upon access and contracting authority for the project, between the City and PACCC.

6. Mutually agree to staffing and programs to be conducted.

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Attachment A - Letter of
Intent between the City of
Palo Alto and Palo Alto
Community Child Care
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PACCC and the City are interested in undertaking and completing the new center at Cubberley in accordance with one or more future agreements subject to mutually acceptable terms and conditions. The City and PACCC will endeavor to negotiate a potential agreement over the next six (6) months, as practicable. Elements to be included in the agreement(s) include:

Term of the agreement(s):

1. Establish a time frame and details, including applying for State California State Childcare Expansion grants and goals for capital investment activities. Contracting requirements to allow PACCC or the City to efficiently manage design and construction. PACCC and the City will mutually develop a budget.

2. Acknowledgement and stewardship of coordination with those City departments involved in the project.

3. Development of a community outreach and engagement plan to build support for the project and receive and address community comments.

4. Options for either party to terminate the partnership (or “joint planning process”) agreement.

This letter is not a binding contract between the City and PACCC and does not establish a legal partnership or any other legal relationship. Nor shall this letter create any reliance on either party to act or not act in any specific way. It is intended to facilitate discussion of the key agreement terms and conditions of the future agreements relating to this joint project.

Lee Pfab
CEO
Palo Alto Community Child Care
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Intent between the City of
Palo Alto and Palo Alto
Community Child Care
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The Cubberley Site
The 35-acre Cubberley site, located at 4000 Middlefield Road in Palo Alto, operated as Cubberley High School from 1956 to 1979. Beginning in the late 1980’s, the City began leasing portions of the facilities from the Palo Alto Unified School District (PAUSD) at the site. Today, the City operates the areas of Cubberley it controls as a community center, using some of the space for classes and activities in arts, culture, athletics, and sub-leasing additional space at City-subsidized rates to various non-profit and community serving groups. The current lease agreement expires December 31, 2029.1 Today, the City owns eight acres of the 35-acre site. PAUSD owns the remaining 27 acres, most of which are leased to the City. There are currently 23 tenants and 24 artists leasing space at Cubberley from the City and dozens of groups renting the theater, pavilion, classrooms, and athletic fields from the City. Combined, these groups provide the community with programs that support health and wellness, childcare, education, and visual and performing arts. PAUSD uses its retained space for educational purposes and staff offices and has leases with some third-party tenants.

The parking lot in the southeast corner of the property houses portable trailers as a temporary site for Hoover Elementary School during construction at the school’s site. A current site map can be found on the City’s website.2
Several master planning efforts have been completed over the years to reimagine and improve the Cubberley site, with the most recent being completed in 2019.3 Memorandum of Understanding with PAUSD
In October 2024,4 both the City Council and Palo Alto Unified School District (PAUSD or District) Board of Education approved a Memorandum of Understanding (MOU) related to the future of the Cubberley site. The MOU outlines key terms and conditions for the purchase and future planning of Cubberley. The land purchase, which would transfer ownership of seven acres from PAUSD to the City, is contingent on voter approval of a bond measure in November 2026. This condensed timeframe requires development of a master plan for the site by March 2026, conduct stakeholder and community engagement and outreach, polling, financial analysis, CEQA analysis, and other critical tasks. The addition of the seven acres, plus the eight acres already owned by the City of 1 City Council, December 2, 2024: https://portal.laserfiche.com/Portal/DocView.aspx?id=112707&repo=r704298fc&searchid=c3e3ed6f-6cda-4dd3-ba35-5d8d4be5579e 2 https://www.cityofpaloalto.org/files/assets/public/v/1/city-manager/communications-office/cubberleycommunity-center_mappdf.pdf 3 Cubberley Concept Plan 2019: https://www.pausd.org/about-us/committees-task-forces/archivedcommittees/cubberley-master-plan 4 City Council, October 7, 2024; Agenda Item AA1; SR #2409-3500, https://portal.laserfiche.com/Portal/DocView.aspx?id=98415&repo=r-704298fc&searchid=e199f724-22ab472b8ad8-ca162c4dcf8a Item 5
Attachment B - Background
on the Cubberley Project
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Palo Alto provides an opportunity to develop a new community center and other improvements on a combined 15 acres at the Cubberley site to provide a range of City programs, including health, wellness, and recreational opportunities for residents.

Master Plan Update and Pursuit of a Local Ballot Measure To advance the master planning effort the City Council took several actions on December 2, 20249 related to the future of the Cubberley site. These actions included approval of a contract with Concordia, LLC, and associated budget actions for development of a revised Master Plan for the Cubberley Community Center site, building on the previous master plan completed in 2019 by Concordia and guided by significant community input. Additionally, the Council approved a Letter of Intent with the Friends of the Palo Alto Recreation Wellness Center for the purpose of fundraising for a recreation wellness center (gymnasium) at the Cubberley site, and a workplan for pursuit of a November 2026 local ballot measure to fund the purchase of land and development of a new community center at the Cubberley site.

Subsequent Council actions included approving a five-year lease with PAUSD10 to continue the current use of the property, including playing fields, approval of a professional services agreement with Rincon for CEQA analysis,11 and approval of professional service agreements with Lew Edwards Group and Fairbank, Maslin, Metz & Associates12 for ballot measure strategy advisement and community polling.

Cubberley Ad Hoc Committee
The Council established the Cubberley Ad Hoc Committee (as a non-Brown Act body) to review and advise staff on efforts related to polling and development of a ballot measure that will successfully receive voter support in 2026. Efforts include polling, financial and revenue modeling for the community center, master planning, and community outreach to complete the Master Plan and place a measure on the November 2026 ballot.

The City Council will serve as the governing body for policy direction at key decision points. This includes direction to conduct polling, review of concept designs, direction on 9 City Council, December 2, 2024; Agenda Item 18, SR #2410-3634, https://portal.laserfiche.com/Portal/DocView.aspx?id=112713&repo=r-704298fc 10 City Council, December 2, 2024; Agenda Item 12; SR #2410-3651, https://portal.laserfiche.com/Portal/DocView.aspx?id=112707&repo=r-704298fc 11 City Council, December 16, 2024; Agenda Item 12; SR #2411-3813, https://portal.laserfiche.com/Portal/DocView.aspx?id=117742&repo=r-704298fc&searchid=96e9506bf1bd-485e-a4cb-fc804b5893d1 12 City Council, February 24, 2025; Agenda Item 4; SR #2501-4039, https://portal.laserfiche.com/Portal/DocView.aspx?id=143364&repo=r-704298fc&searchid=fef509a6- 4d34-4060-bc7a-6ab87db7a0ae
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on the Cubberley Project
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operating and financial models, and decisions on what should be placed on the November 2026 ballot.

April 21, 2025 City Council Meeting
At the April 21, 202517 City Council meeting, staff presented outcomes from the first community meeting held on March 19, an update on the Cubberley Master Plan Project workplan and sought Council authorization to initiate the first community poll.

First Cubberley Master Plan Community Meeting
The first community meeting for the Cubberley Master Plan Project was held on March 19, 2025, and was attended by over 120 community members and stakeholders.

Participants completed two activities in table groups of up to eight people with guided facilitation, focusing on the vision for the community center, programming, and place making. The first meeting goals included a review of the Vision from the City Council session and then using a list from the previous community engagement process, participants were asked to review and confirm desired programming and adjacencies for the future Community Center. The outcomes of the March 19 meeting were presented to the City Council on April 21, 202518 .

The first activity focused on a review of the Council Vision statement and participants were asked to expand the Vision statement with additional values and ideas.

Community members valued: Multipurpose, adaptable spaces to accommodate diverse uses over time; Gathering hubs for interconnectivity and communication between diverse social, cultural and generational groups; Accessibility for all ages, cultures and abilities to access holistic wellness resources; Integration of green space and sustainability features in experiential and infrastructural planning; and Affordability for local Palo Altans and for tenants who have a community focus. Overall, participants focused on flexibility, inclusivity, sustainability, and long-term community engagement as high-level themes.

The second activity focused on programming and adjacencies of indoor and outdoor spaces. The most selected indoor programs were Theater/Performance Space, Dance Classes, Art Studio, Art Classes, followed by Gym Facility, Flexible Rental Space, and a Café. For outdoor programs, Open Greenspace was the most selected program followed by Playground, Amphitheater, and Pool/Water Area. Compared to 2019, the most mentioned programs then (indoor and outdoor) were Adult Education, 17 City Council, April 21, 2025; Agenda Item 11; SR #2503-4310, https://portal.laserfiche.com/Portal/DocView.aspx?id=166428&repo=r-704298fc 18 Staff Presentation, April 21, 2025;
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Theater/Performance Space, Greenspace, Makerspace, and Senior/Multigenerational Programs.

Feedback on First Community Poll
Polling experts, FM3 presented themes for the first community poll designed to test voter opinions on the community center’s goals, preferred uses, and willingness to support funding through a tax or bond21. The poll themes and questions were developed with input from the Cubberley Ad Hoc Committee and will inform critical upcoming milestones in the project. The Council did not take an action but supported proceeding with the poll.

April 22,2025 Parks & Recreation Commission Meeting
On April 22, 2025,22 staff presented an informational update to the Parks and Recreation Commission, offering a comprehensive overview of the project's overall workplan and timeline. The presentation included a detailed summary of Community Meeting #1, highlighting key themes and priorities that emerged from the community’s feedback. Staff also introduced Poll #1, which was launched at the end of April, and encouraged Commissioners to help promote the survey to ensure broad community participation. In addition, the presentation outlined several ways the Commission can remain engaged and support the project, including serving as ambassadors within the community, helping to share information, and providing feedback. The creation of a PRC Cubberley ad-hoc committee was discussed and it was decided that this topic will be further considered during the upcoming workplan revisions scheduled for the coming months.

June 9, 2025 City Council Meeting
On June 9, 2025,23 staff presented to City Council the results of the first community poll, community engagement milestones coming up and updates to the workplan. The focus of the first poll was to survey voter input on the goals and future of the community center and possible support for a tax or bond measure. Staff also shared community engagement. Overall, the poll found broad majority support for improvement at the Cubberley site. Surveyed voters place highest priority on bringing the facility up to modern standards for electrical, plumbing, safety, and accessibility early childhood 21 FM3 Presentation, April 21, 2025;
https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=83ec6422-b6e4-4e83-9ca3- ca746a5971a0
22 Staff Presentation, April 22, 2025;
https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=dae0543c-e007-4fc1-9a69- fd08b156ee94
23 City Council, June 9, 2025, Agenda Item 2; SR#2503-4313, https://portal.laserfiche.com/Portal/DocView.aspx?id=182790&repo=r-704298fc&searchid=57dac2b5- 5c42-4ef0-978a-be940766f395
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education; affordability and efficient use of taxpayer dollars; and overall repairs for the facility. Lastly, staff shared with the City Council the community revised Vision Statement for the future of the Community Center.

June 12, 2025 Second Cubberley Master Plan Community Meeting On June 12, 2025, the City held the second community meeting for the Cubberley Community Center Master Plan, facilitated by Concordia. At the outset of the meeting, Concordia shared a revised Vision Statement based on community input gathered at the March 19 community meeting. The revised Vision Statement is, A vibrant, beloved, and adaptable destination that promotes learning, connections, joy, and wellbeing where all cultures and generations belong. Following this, staff provided an overview presentation to orient attendees to the three 3-D concept plans being presented. Each conceptual design includes an A, B, and C variations exploring different configurations of building placement, new construction vs renovation, green space, bike and pedestrian circulation, and parking—both above and below ground.

In the first activity community members were invited as a group to share their feedback on what aspects from all nine designs they liked and wanted “keep” and did not like and wanted to “leave behind”. They indicated aspects they liked with green dot stickers and aspects they did not like with red dot stickers. They were then asked to expand on their choices by writing explanations on the activity sheet provided for the table.

In the second activity, following the group discussion of the three concept designs—The Promenade, The Grid, and The Plaza—participants individually reviewed key design elements using a provided handout. They were asked to evaluate each concept’s primary layout across six categories: arrival & parking, pedestrian circulation, building scale & physical space organization, landscape & greenspace organization, balance of building & greenspace, and being a good neighbor. Each category was rated on a scale from 1 (not successful at all) to 5 (very successful).

Approximately 130 community members attended the second Cubberley Community Meeting and were highly engaged in providing feedback on the three presented concept designs. Attendees shared a wide range of reactions to various aspects of the designs, particularly discussing building layouts, the placement and amount of green space, parking structures, and preferences between above- and below-ground concepts. While perspectives varied, there was clear consensus around the excitement for the project’s progress and enthusiasm to see the plans taking shape. Community members expressed eagerness to continue the conversation, particularly around program placement, at the next meeting. A Meeting Summary can be found on the project website27.
27 Community Meeting #2 Summary, www.paloalto.gov/files/4280f185-ca1d-4965-940f-1e4fcaf6cb11/M2- Summary-Report-Final.pdf
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June 19, 2025 Public Art Commission Meeting
On June 19, 2025,29 City staff presented to the Public Art Commission and discussed potential opportunities to support the City’s Strategic Activation Plan for the Cubberley site, which was developed by staff in coordination with the City Council’s Cubberley Ad Hoc Committee. The plan outlined phased enhancements and activations aligned with the broader master planning process, community engagement efforts, and the anticipated November 2026 ballot initiative. As part of the discussion, Commissioners explored how the ArtLift grant program—previously identified at their January retreat as a potential tool—could be leveraged to support temporary public art installations at Cubberley and other key locations. Ideas included murals, ground art, freestanding sculptures, and performance-based activations to help generate community excitement and reinforce the role of the arts in creating vibrant, inclusive public spaces.

June 24, 2025 Parks & Recreation Commission Meeting
On June 24, 2025,30 City staff provided the Parks and Recreation Commission with an informational update on the Cubberley Community Center Master Plan. The presentation included a recap of the second community meeting held on June 12, where Concordia unveiled three concept designs for the site and invited community feedback. Staff also presented the results of the first community poll, released in late April, and shared a list of proposed near-term activation ideas for the Cubberley site, inviting the Commission’s input. In addition, staff sought feedback from the Commission on the three concept designs. The newly formed PRC Cubberley Ad Hoc Committee will continue to refine the activation plans in July.

July 9, 2025 Planning and Transportation Commission Meeting On July 9, 2025,31 the Planning and Transportation Commission (PTC) received an update on the Cubberley Master Plan and was asked to provide input to help inform the next phase of the planning process. Staff requested feedback on several key aspects recently reviewed by the community, including arrival and parking, pedestrian circulation, building scale and space organization, greenspace layout, the balance of 29 Staff Presentation, June 19, 2025;
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30 Staff Presentation, June 24, 2025;
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31 Staff Presentation, June 9, 2025;
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built and open space, and how the site can be a good neighbor. Additional PTC feedback emphasized the importance of clear cost comparisons between renovation and new construction, interest in public-private funding models, and support for a future bond measure and donor engagement. Commissioners favored partial underground parking and better integration with transit and surrounding neighborhoods. There was broad interest in maintaining flexible green space for events, ensuring safe and separate bike/pedestrian circulation, and preserving multigenerational, inclusive programming. Suggestions also included clearer diagrams, more tangible use examples, and consideration of impacts from surrounding development.

July 17, 2025 Architectural Review Board Meeting
On July 17, 202535, the Architectural Review Board (ARB) received a presentation on the Cubberley Master Plan and provided early feedback to help shape the next phase of planning. The Board expressed strong support for phased development and emphasized minimizing disruption to existing tenants and programs. Members praised pedestrian and bike circulation, supported the proposed balance of buildings and green space, and encouraged improvements to vehicle access and mobility hubs. There was general support for new construction over renovation and interest in enhancing the site's identity through public art and flexible community spaces. The ARB also encouraged a welcoming design that reflects Cubberley’s civic and cultural significance while being a good neighbor to the surrounding community.

September 17, 2025 Third Cubberley Master Plan Community Meeting On September 17, 2025, the City held the third and final community meeting for the Cubberley Master Plan, facilitated by Concordia. Approximately 150 community members attended and were highly engaged in reviewing the refined concept design. At the outset, City staff and Concordia recapped the first two community meetings, provided a project overview, and highlighted updates to the concept plan, including phasing strategies. Following this presentation, participants engaged in two interactive activities to provide focused feedback.

A draft concept design was presented in phases to demonstrate that the project will need to be constructed over time based on available funding, and to ensure that programs and services are not disrupted during construction. Phase 1 includes a mix of constructing new buildings and renovation of existing buildings to reflect likely timing needed between phases while additional funding is secured.

Activity 1- Phase 1 Concept Design: Recreation Wellness and Performing Arts 35 Staff Presentation, July 17, 2025;
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Phase 1 consists of two parts: a Recreation Wellness Center and a Performing Arts Center. Phase 1 also includes renovation of remaining buildings so the full site continues to be operational until phases 2 and 3 can be completed. Community members were invited to assess the Phase 1 concept designs for the recreation wellness and performing arts area and were asked to reflect on three key questions:

1. What is working well and excites you?

2. What is not working well or could be improved?

3. What creative ideas do you have to make the space exciting? Activity 2- Phase 2 and 3 Concept Design: Visual Arts & Technology and Community Services
In the second activity, community members were asked to provide feedback on Phase 2 and Phase 3, which includes the Visual Arts & Technology (Phase 2) and Community Services spaces (Phase 3). Participants responded to the same guiding questions as in the first activity: what is working well and is exciting about the proposed designs, what aspects are not working or could be improved, and what creative ideas, such as new events, programs, or installations—could make these areas more vibrant and impactful.

This exercise allowed the community to reflect on future phases of development and share ideas that will help shape a cohesive, dynamic, and inclusive vision for the campus.

Overall, the meeting reflected strong community engagement and generated valuable input on both programming and site circulation. Community members expressed enthusiasm about seeing program placement within the proposed buildings and noted their appreciation for the phased approach, which allows for continuity of programs during construction. The discussion was lively and engaging, with particular interest around the café, the outdoor amphitheater, parking access, and pedestrian and bicycle circulation pathways. The feedback gathered informed refinement of the preferred concept plan. The full meeting summary is included on the project website37.

September 23, 2025 Parks and Recreation Commission Meeting On September 23, 202538, the Parks and Recreation Commission (PRC) received a presentation on the refined Cubberley Community Center Master Plan concept following the third and final community meeting held on September 17, 2025. Commissioners reviewed updates on program placement, phasing, and site circulation, and were asked 37 Community Meeting #3 Summary; www.paloalto.gov/files/assets/public/v/1/communityservices/cubberley-project/2025.11.11_m3-summary.pdf 38 Staff Presentation, September 23, 2025;
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to provide input on the same questions posed to the community: what is working well, what could be improved, and what creative ideas could enhance the campus experience.

Commissioners engaged in a thoughtful discussion that highlighted both enthusiasm for the project and areas for refinement. They praised Phase I improvements—especially the café, amphitheater, and integration with existing buildings—and noted strong community excitement about program continuity during construction. Key suggestions included lighting for the tennis courts, enhancing pedestrian and bicycle circulation, and incorporating creative placemaking features such as gardens and artistic infrastructure.

Concerns focused on the cost and feasibility of large-scale facilities (e.g., the partial underground parking), potential displacement impacts in Phase I, and how to communicate a phased plan if bond funding only covers the first phase. Commissioners also stressed sustainable design choices and raised questions about circulation, office space, gym design, and pool impacts.

Overall, the PRC expressed appreciation for the progress made and reinforced the importance of balancing community goals, funding realities, and long-term sustainability.

October 20, 2025 City Council Meeting
Staff presented an updated concept plan41 with an emphasis on the first phase of site development showing a combination of renovated and new building construction. The focus on the first phase recognizes that funding will likely be a limiting factor in full site redevelopment. At this meeting, staff shared objectives and themes for the second community poll to determine voter support for a bond or tax measure to finance the land purchase, and the extent of how much voters are willing to pay annually. Following the October 20 meeting the second poll was conducted.

December 15, 2025 City Council Meeting
City Council received an update on the Cubberley Community Center Project42, including results from the second community poll and discussed next steps. Council discussed key findings from Poll #2, which indicate broad voter support for the City acquiring the Cubberley property and willingness to invest in limited funding focused on basic repairs, safety upgrades, and accessibility improvements. Results showed relatively higher support for parcel tax and sales tax funding mechanisms, with a $250 average annual parcel tax testing above 50% support and a 0.5% sales tax increase capable of supporting significantly greater capital financing, pending state authorization. 41 City Council, October 20,2025; Agenda Item #1; SR #2503-4353, https://portal.laserfiche.com/Portal/DocView.aspx?id=231071&repo=r-704298fc 42 City Council, December 15, 2025; Agenda Item #3; SR #2503-4355, https://portal.laserfiche.com/Portal/DocView.aspx?id=246305&repo=r-704298fc Item 5
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Council expressed alignment with staff and the Ad Hoc Committee’s recommendation to continue refining ballot measure options and to launch a third poll in January 2026 to further test potential parcel tax and sales tax scenarios.

Overall, Council affirmed the importance of a phased, long-term approach to redevelopment that balances community priorities, funding realities, and opportunities for partner contributions, while continuing to advance the master plan toward presentation in March 2026. Following the December 15 meeting, the third poll was finalized and released in early January 2026.

February 9, 2026 City Council Meeting
City Council received an update on the Cubberley Community Center Project45, including results from the third community poll and progress on public-private partnerships to advance key components of the project. Staff shared that, in anticipation of possible Council consideration of a November 2026 ballot measure to fund the purchase of seven acres from PAUSD and advance all or portions of the project, three of four planned community polls have been completed. Results show both parcel tax and sales tax funding options testing at approximately 48% support—an improvement from the prior poll, though still below the thresholds required for approval (two-thirds for a parcel tax and a simple majority for a general-purpose sales tax). Despite these challenges, Councilmembers remained optimistic, noting that support levels are approaching viability, particularly for a sales tax option, and that emerging public-private partnerships could strengthen the overall funding strategy.

Council also discussed partnership efforts being coordinated by staff and the Cubberley Ad Hoc Committee. A partnership with TheatreWorks was presented and would create a two-theater complex through renovation of the existing Community Theatre and Pavilion, with new construction to support TheatreWorks, and upgrades to the Cubberley Theatre for continued community use, including new restrooms, an expanded lobby, and improved accessibility. Staff recommended approval of a Letter of Intent with TheatreWorks to formalize this joint commitment, which Council approved. In addition, staff shared that the Friends of the Recreation and Wellness Center and the City are continuing to develop terms for an agreement to advance a future recreation and wellness center with new multi-court gymnasium space on the Cubberley campus.

Avenidas Executive Director, Kristina Lugo, was also in attendance and publicly 45 City Council, February 9, 2026; Agenda Item #11; SR#2512-5774, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=fd6f9939-83a3-4ea7-817ae7719c9194a4 Item 5
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expressed interest in exploring partnership opportunities with the City at the Cubberley site.

Council directed staff to develop Poll #4 to include information about the two major anchor tenants, explore community sentiment around expanding City programs at Cubberley, and provide clearer messaging about community benefits and funding strategies. Council also directed the City Manager to discuss contingency plans and alternative acquisition terms with the School District, and asked staff to return with options for acquiring the seven acres through mechanisms other than a ballot measure.

March 11, 2026 Planning and Transportation Commission and Architectural Review Board Special Joint Meeting
The Planning and Transportation Commission (PTC) and Architectural Review Board (ARB) held a special joint meeting to receive a presentation from staff47 on the proposed Cubberley Conceptual Master Plan and the Draft Initial Study/Mitigated Negative Declaration (IS/MND) prepared under the California Environmental Quality Act (CEQA).

Staff presented the City’s long-term vision to redevelop approximately 15 acres of the Cubberley campus, including the potential purchase of seven acres from the Palo Alto Unified School District (PAUSD) for $65.5 million. Staff noted that the purchase and implementation of the plan will depend on identifying funding sources, which may include a potential sales tax ballot measure in November 2026, development impact fees, grants, philanthropic contributions, and public-private partnerships.

Staff requested that the commissions review the Draft IS/MND and provide a recommendation to the City Council regarding adoption of the Conceptual Master Plan.

City Council is tentatively scheduled to consider adoption of the plan in April 2026, while staff continue advancing environmental review, partnership discussions, and funding and financing strategies.

Commissioners and Board members discussed topics including project phasing and funding, the status of the PAUSD lease and land acquisition, parking and circulation, recreation facilities such as the proposed pool, sustainability goals, long-term campus connectivity, elements of the site layout, the potential renovation versus replacement of existing buildings, and opportunities for philanthropic funding. Following discussion and public comment, both the Planning & Transportation Commission and Architectural Review Board voted separately, and unanimously (5–0) to recommend that City Council adopt the Cubberley Conceptual Master Plan, with a list of considerations for Council 47 Staff Presentation, March 11, 2026;
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and staff to evaluate as the project moves forward into future phases of planning and design. Below are the approved motions:

Architectural Review Board:

Moved by Board member Rosenberg, seconded by Board member Jojarth to move the staff recommendation and to recommend that City Council consider the following:
- Consider competition friendly pool size of 50 meters by 25 yards - Consider the phasing within Phase 1
- Revisit the cost effectiveness of buildings S, T, V, E, F, C, D - Consider the value of saving Building I, versus reutilizing that space as part of another program
- To review bike and pedestrian routes including the intent and use of the diagonal promenade as well as defining the existing safe routes to school on the property - To clarify that the City lease agreements with PAUSD provide flexibility to the City to make parking improvements including landscaping and paving and have a sufficient duration to adequately provide access to the improvements contemplated in the Master Plan
- Modify the preface and executive summary to include language from page 52 about flexibility and to add the words modern, safe, and sustainable to the project goals
- To encourage a formal process to raise funding from private sources - Review adequacy of parking
Planning and Transportation Commission:

Moved by Commissioner Templeton, seconded by Commissioner Chang to move the staff recommendation and to recommend that City Council consider the following:
- Consider competition friendly pool size of 50 meters by 25 yards - Revisit the cost effectiveness of buildings S, T, V, E, F, C, D - To review bike and pedestrian routes including the diagonal promenade and the existing safe routes to school on the property
- To clarify that the City lease agreements with PAUSD provide flexibility to the City to make parking improvements including landscaping and paving and have a sufficient duration to adequately provide access to the improvements contemplated in the Master Plan
- Modify the preface and executive summary to include language from page 52 about flexibility and to add the words modern, safe, and sustainable to the project goals
- To encourage a formal process to raise funding from private sources Item 5
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March 24, 2026 Parks and Recreation Commission Meeting
The Parks and Recreation Commission received a presentation from staff49 on the proposed Cubberley Conceptual Master Plan and the Draft Initial Study/Mitigated Negative Declaration (IS/MND) prepared under the California Environmental Quality Act (CEQA), and results of the second and third community polls. Staff presented the City’s long-term vision to redevelop approximately 15 acres of the Cubberley campus, including the potential purchase of seven acres from the Palo Alto Unified School District (PAUSD) for $65.5 million. Staff noted that the purchase and implementation of the plan will depend on identifying funding sources, which may include a potential parcel or sales tax ballot measure in November 2026, development impact fees, grants, philanthropic contributions, and public-private partnerships.

Staff requested that the commission review and consider the Draft IS/MND and provide a recommendation to the City Council regarding adoption of the Conceptual Master Plan. City Council is scheduled to consider adoption of the plan in April 2026, while staff continue advancing environmental review, partnership discussions, and funding and financing strategies.

Commissioners expressed strong appreciation for the work completed to date and shared overall excitement about the vision and direction of the project. Discussion included the use of a Mitigated Negative Declaration under CEQA and the level of detail at the conceptual stage, particularly related to architectural and landscape design, including tree preservation and future planting strategies. The Commission also considered key program elements such as recreation amenities and amphitheater capacity, as well as project phasing, funding flexibility, and timelines tied to land acquisition and partnership opportunities. Commissioners also discussed construction impacts on existing operations and opportunities to support the project through grants, partnerships, and continued community engagement and activation efforts. Following discussion and public comment, Commissioner Smith made a motion to recommend the City Council adopt the Cubberley Conceptual Master Plan, it was seconded by Vice Chair Wei, and the vote passed (5–0) with 1 commissioner choosing to abstain.

May 18, 2026 City Council Meeting
Staff presented the Draft Conceptual Master Plan, Mitigated Negative Declaration, and results of the fourth community poll to the City Council. Staff’s recommendation to adopt a Resolution adopting the Mitigated Negative Declaration and the Cubberley 49 Staff Presentation, March 24, 2026;
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Conceptual Master Plan was approved by Council unanimously. Staff also recommended the Council provide direction on next steps to advance the project.

Following a presentation on the fourth-round polling results, the Council directed staff to pursue a ½ cent sales tax measure on the November 2026 ballot.

June 8, 2026 City Council Meeting
Following direction provided by the City Council on May 18, 2026, staff presented51 an ordinance and resolution to place a ½ cent (0.5%) transactions and use tax measure on the November 3, 2026, ballot. The City Council approved placing the measure on the ballot, which would require a simple majority of voters to pass. If approved by voters, revenue from the tax would be deposited into the City’s General Fund. The Council also adopted advisory spending guidelines identifying improvements to the Cubberley Community Center as a priority use of the new revenue if the measure passes.

August 2026 Ballot Measure Milestones
Following the City Council’s action to place the ½ cent transactions and use tax measure on the November 3, 2026 ballot, several election milestones occurred in August. Final ballot language was due to the Santa Clara County Registrar of Voters on August 7, arguments for and against the measure were due August 11, and rebuttal arguments and the City Attorney’s impartial analysis were due August 18. The measure was officially designated Measure J – Palo Alto Community Safety/Services Measure. Election Day is November 3, 2026. Additional information, including the ballot question, City Attorney’s Impartial Analysis, and other election details, is available through the City’s Measure J election webpage and the City Clerk’s Measure J online resource.

September 28, 2026 City Council Meeting
The City Council approved two consent agenda items advancing public-private partnerships for the future Cubberley Community Center. Council approved a Letter of Intent with Maker Nexus52 to explore development of a new, expanded multigenerational makerspace serving people of all ages and abilities. Council also approved 51 Staff Presentation, June 8, 2026;
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52 City Council, September 28, 2026, Agenda Item 5; SR#2607-6546, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=0eccdd30-6277-4ca9-9e5ecd7dd02e350a Item 5
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a Term Sheet with the Friends of the Recreation Wellness Center,55 building upon the Letter of Intent approved in December 2024 and further defining the partnership to advance a new Recreation Wellness Center at Cubberley. Together, the agreements represent continued progress in working with community partners to advance key components of the Cubberley Conceptual Master Plan.

October 5, 2026 City Council Meeting
The City Council approved Letters of Intent with Avenidas and Cardiac Therapy Foundation/HeartFit for Life56 to advance long-term public-private partnerships for expanded services for aging adults at the future Cubberley Community Center. The proposed partnership with Avenidas would expand programming and services for aging adults, including the Avenidas Chinese Community Center currently located at Cubberley. The proposed partnership with HeartFit for Life would continue cardiac therapy and rehabilitation programs for adults. The agreements formalize the City’s and partners’ shared commitment to further explore and advance these components of the Cubberley Conceptual Master Plan.
55 City Council, September 28, 2026, Agenda Item 7; SR#2609-6757, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=db63b392-a0f9-4a52-9e99- 2732358ac520
56 City Council, October 5, 2026, Agenda Item 5; SR#2608-6603, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=3cf67d0e-4a67-410d-bd69- 3f0ff5d3c72c
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Manager
Meeting Date: October 19, 2026
Report #:2609-6714
TITLE
Adoption of an ordinance to amend PAMC Chapter 10.44 prohibiting overnight parking of oversized vehicles (OSVs) in residential areas, and a resolution to support implementation of the Embarcadero Road OSV parking permit pilot program and Approve Budget Amendments in the Capital Improvement Fund. CEQA status – categorically and statutorily exempt.

RECOMMENDATION
Staff recommend City Council:

1. Adopt an ordinance amending Chapter 10.44 to extend oversized vehicle (OSV) parking restrictions to all streets within 100 feet of a residential use and extend the hours of overnight OSV parking restrictions to the hours of 8:00 p.m. to 8:00 a.m.;

2. Adopt a resolution expanding the authorized area for the Embarcadero Road OSV parking permit pilot program area to allow for more flexible implementation; and

3. Approve amendments to the Fiscal Year 2027 budget appropriation for the Capital Improvement Fund (requires 2/3 vote) to:
a. Increase the Parking Infrastructure Improvements project (PL-12000) in the amount of $140,000; and
b. Decrease the infrastructure reserve ending fund balance by $140,000.

EXECUTIVE SUMMARY
This report implements part of the August 24, 2026 City Council motion related to Oversized Vehicle (OSV) parking restrictions in residential areas.1 The City Council directed staff to return to City Council with an ordinance prohibiting overnight OSV parking adjacent to any residential use in the City, including residential uses in planned community and mixed-use zones that are not covered by current restrictions on OSV parking.

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narrow. This edit revises the area to either side of Embarcadero Road between Embarcadero Way and the ”T“ intersection, without changing the number of vehicles accommodated. This enables accommodation of construction activities (currently the Regional Water Quality Control Plant) in the area and any unforeseen conditions that might impact segments of the roadway.

BACKGROUND
On August 24, 2026, the City Council approved an OSV Parking Permit Pilot program creating two street segments, on portions of Coyote Hill Road and Embarcadero Road. Additionally, the City Council also provided direction to:
• Install red curbs on certain streets with a heavy OSV presence; • Expand current restrictions on OSV parking in residential areas to include residential uses in non-residentially zoned areas, including planned community and mixed-use districts;
• Explore data collection to better understand Palo Alto OSV dweller demographics; • Continue exploring future safe parking partnerships including safe parking solutions in collaboration with County, State, Federal, and public/private partners; • Explore major employers’ willingness to accommodate on-site OSV parking for their employees who reside in OSVs; and
• Explore other possible sites for OSV parking in the greater downtown area.

ANALYSIS
Expand Residential Parking Restrictions
The Municipal Code currently prohibits OSV parking in residential and public facility districts from 2:00 a.m. to 6:00 a.m. On August 24, the City Council directed staff to expand these restrictions to address a limited number of residential properties located outside of residential districts, including properties in planned community and mixed-use zones. Based on Council’s direction and input from the OSV Ad Hoc Committee, staff prepared amendments to Municipal Code Chapter 10.44 to implement Council’s direction.

The attached ordinance (Attachment A) expands overnight restrictions on OSV parking to include streets within 100 feet of any residential use. In addition, the ordinance expands the duration of overnight parking restrictions to the hours of 8:00 p.m. to 8:00 a.m. The extended hours of the parking restriction are intended to facilitate enforcement. Finally, the ordinance simplifies existing ordinance language by defining OSVs as any vehicle over 7 feet in height or width or over 20 feet in length.

In order for the proposed amendments to the ordinance to be enforceable, signage needs to be installed to notify the community of the restrictions in place. Signage will be installed at all entrances to the city, in lieu of on all residential streets. This provided an enforceable solution that had managed fiscal and staff workload impacts. Approximately 50 entrances to the city Item 6
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have been identified and will receive appropriate signage following approval. Additional signage will be ordered to utilize in areas that may experience greater issues with compliance to the amendment.

Correction for Permit Parking Pilot Program Area on Embarcadero Road On August 24, City Council also adopted a resolution authorizing a pilot permit parking program for OSVs on segments of Coyote Hill Road and Embarcadero Road. Following the August 24 City Council meeting, staff identified the mapping area of Embarcadero Road included in the resolution was overly constrained. For example, it currently conflicts with construction activities in the public right-of-way adjacent to the Regional Water Quality Control Plant and would have been a conflict with recent utility emergency repair work completed in the area. The proposed resolution would define the authorized area for OSV permit parking to either side of Embarcadero Road between Embarcadero Way and the “T“ intersection to the east. Previously, the resolution included only specific sections of east and west bound roadway of Embarcadero Road. This small change, on the same stretch of roadway but both sides, allows for flexibility in implementing the program during construction or other unforeseen interruptions. This will not result in a change in the number of vehicles accommodated in the Embarcadero Road OSV Permit Parking Pilot area.

FISCAL/RESOURCE IMPACT
As part of the abovementioned August 24, 2026 motion, City Council directed the City Manager to appropriate the funding needed for the associated scope of work. For expanding OSV parking restrictions to all residential areas, the costs related to updating previously installed signage and installing new signage is $140,000. It is anticipated to reduce the infrastructure reserve to cover this additional cost.

With the proposed adjustments to the ordinance expanding overnight restrictions, PAPD will need to rely on police overtime to support additional public education and enforcement activities, resulting in budgetary impacts. Additional staff time will be needed immediately following adoption of the expanded restrictions, with enforcement needs expected to taper over time. Police overtime costs during the first three months following adoption will be approximately $9,600, to be absorbed by the Department. In the unlikely event significantly more police officer time is required after the initial three months, the Department will include a budget modification at the mid-year budget.

STAKEHOLDER ENGAGEMENT
Staff continue to monitor and respond to correspondence submitted to City Council and have included input from residents in the drafting of the amended ordinance. Additionally, in response to City Council and community interest in more timely information on this topic, staff created a new webpage where individuals can stay informed by visiting www.paloalto.gov/OSV and signing up to receive updates.

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Staff will do additional outreach as implementation progresses related to the red curbs as well as the Parking Permit Pilot program. Outreach information will be posted on the aforementioned website.

ENVIRONMENTAL REVIEW
The parking pilot programs as detailed in this staff report are exempt under CEQA regulation 15061(b)(3) (no possibility that the activity may have a significant effect on the environment), 15301 (existing facilities), 15304 (minor alterations to land), and Public Resources Code section 21080.10(c).

ATTACHMENTS
Attachment A: Ordinance of the City Council of the City of Palo Alto Amending PAMC Sections

10.44.15 and 10.44.020
Attachment B: Resolution of the City Council of the City of Palo Alto Amending the Embarcadero Road OSV Parking Permit District
APPROVED BY:

Ed Shikada, City Manager
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NOT YET APPROVED
1 10062026_ms29
Ordinance No. ____
Ordinance of the Council of the City of Palo Alto Amending PAMC Sections

10.44.015 and 10.44.020
The Council of the City of Palo Alto does ORDAIN as follows:

SECTION 1. Findings and Declarations. The City Council finds and declares as follows:

A. The City Council regulates parking in Palo Alto Municipal Code (PAMC) chapter 10.44, among other chapters in the PAMC.

B. The City Council now desires through this ordinance to amend the definition of “Residential Zone” to include additional parcels that have residential uses. The City Council also desires to amend the enforcement hours of PAMC section 10.44.020 to the hours between eight p.m. and eight a.m.

SECTION 2. Subsection (4) of Section 10.44.015 (Definitions) of Chapter 10.44 (STOPPING, STANDING AND PARKING - PROHIBITED OR RESTRICTED) of Title 10 (Vehicles and Traffic) of the Palo Alto Municipal Code to read as follows (underlined text is new):
(4) "Residential zone" means any of the following: (1) all lands located within the following zoning districts: RE, R1, R2, RMD, RM-20, RM-30, and RM-40; where one side of a street is located within one of these residential districts, then the portion of the opposite side of the street directly across from the residential district shall also be included in the definition of a residential zone; or (2) all streets that are within 100 feet of the boundary of any parcel containing a building having, in whole or in in part, a residential use, including the opposite side of any street within that distance.

SECTION 3. Subsection (a) of Section 10.44.020 (Standing or parking) of Chapter 10.44 (STOPPING, STANDING AND PARKING - PROHIBITED OR RESTRICTED) of Title 10 (Vehicles and Traffic) of the Palo Alto Municipal Code to read as follows (underlined text is new, strikeout text is deleted; all other subsections of Section 10.44.020 are unchanged):
(a) No person shall, between the hours of eight p.m. two a.m. and eight a.m. six a.m. of any day, unless authorized by a hardship permit issued pursuant to Section 10.44.021 or a construction or maintenance permit issued pursuant to Section 10.40.045, park upon streets or alleys located within a residential zone or public facility zone any oversized vehicle. of the following vehicles:
(1) Oversized vehicles;
(2) Trailers;
(3) Camper shells;
(4) Tow trucks as defined by California Vehicle Code Section 615; (5) Special construction equipment as defined by California Vehicle Code Section 565.

Item 6
Attachment A - Ordinance
of the City Council of the
City of Palo Alto Amending
PAMC Sections 10.44.15
and 10.44.020
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2 SECTION 4. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this Ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this Ordinance are hereby declared to be severable.

SECTION 5. Effective Date. This ordinance shall be effective on the 31st day after adoption.

SECTION 6. CEQA. The City Council finds and determines that this action is exempt from CEQA under section 15061(b)(3) of the CEQA guidelines because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Additionally, it is categorically exempt under CEQA regulation 15301 (existing facilities) and 15304 (minor alterations), and statutorily exempt under Public Resources Code section 21080.10(c).

INTRODUCED:

PASSED:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

ATTEST:
____________________________ ____________________________ City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
____________________________ ____________________________ Assistant City Attorney City Manager
____________________________
Chief Transportation Official
Item 6
Attachment A - Ordinance
of the City Council of the
City of Palo Alto Amending
PAMC Sections 10.44.15
and 10.44.020
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*NOT YET APPROVED*
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Resolution No. ____
Resolution of the Council of the City of Palo Alto Establishing the Embarcadero Road OSV Parking Permit District

R E C I T A L S
A. California Vehicle Code Section 22507 authorizes the establishment, by City Council action, of permit parking programs.

B. Palo Alto Municipal Code (PAMC) Chapter 10.49 establishes the procedures for Oversized Vehicle Parking Permit Districts (OSV Parking Permit District) within the City.

C. On August 24, 2026, through Resolution 10313, the City Council established an OSV Parking Permit District on a portion of Embarcadero Road, as permitted by PAMC section 10.49.020.

D. The City Council determines that the use of the permits will not adversely affect parking conditions for residents or merchants in the area pursuant to California Vehicle Code section 22507(b).

E. The City Council now desires to amend and restate Resolution 10313 to expand the area for this District.

NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:

SECTION 1. Definitions.

A. “Oversized Vehicle” or “OSV” shall have the same meaning as in PAMC section 10.49.010.

B. “Embarcadero OSV Parking Permit District” or “District” shall consist of both sides of Embarcadero Road between: (1) the intersection of Embarcadero Rd. and Embarcadero Way, and (2) the T-intersection where Embarcadero Road goes from an east-west street into a north-south street along the Baylands.

SECTION 2. Parking Restrictions within the District.

A. Permit Parking Only. Within the District, no person shall park a vehicle adjacent to any curb. This restriction shall be in effect every day at all times, except holidays as defined in PAMC section 2.08.100(a) (but holidays shall not include Saturdays and Sundays, on which days this restriction shall be active). Vehicles properly displaying a valid parking permit as described in Section 4 of this Resolution are exempt from these restrictions.

B. Exempt vehicles. Vehicles described in Palo Alto Municipal Code Section 10.49.030(e) are exempt from the parking restrictions in this Resolution.

Item 6
Attachment B - Resolution
of the City Council of the
City of Palo Alto Amending
the Embarcadero Road OSV
Parking Permit District
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*NOT YET APPROVED*
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C. Tow Authority. Where not inconsistent with the U.S. Constitution or other applicable law, vehicles parked in violation of this Resolution are subject to tow.

SECTION 3. Parking Permits.

The City may issue parking permits for use by a person needing to park an OSV, plus an additional vehicle(s) if allowed pursuant to administrative regulations.

A. Duration. Parking Permits shall be available in any duration as determined by the City Manager or designee, up to a maximum of one year.

B. Form of Permit. The City may issue Parking Permits in any form it deems practicable.

C. Maximum Number of Permits Issued. The number of permits issued shall be determined by the City Manager or designee.

SECTION 4. Parking Permit Fees.

The fee for Parking Permits in the District shall be set by the City’s Municipal Fee Schedule.

SECTION 5. Authority to Promulgate Regulations.

The City Manager or designee is authorized to promulgate regulations for this District pursuant to PAMC section 10.49.030(f). The regulations may have additional restrictions on permit eligibility or permit requirements beyond those in this Resolution.

SECTION 6. Conflicting Restrictions.

This Resolution amends and restates Resolution 10313, and any conflict shall be resolved in favor of this Resolution.

Parking restrictions indicated by painted curbs and implemented pursuant to Vehicle Code section 21458 are not superseded by this Resolution and remain in effect. If any existing or future parking restrictions conflict with this Resolution, the City Manager may choose which conflicting restriction(s) to enforce in compliance with all applicable laws.

SECTION 7. CEQA.

The City Council finds and determines that this action is exempt from CEQA under section 15061(b)(3) of the CEQA guidelines because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.

Additionally, it is categorically exempt under CEQA regulation 15301 (existing facilities) and 15304 (minor alterations), and statutorily exempt under Public Resources Code section 21080.10(c).
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Item 6
Attachment B - Resolution
of the City Council of the
City of Palo Alto Amending
the Embarcadero Road OSV
Parking Permit District
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SECTION 8. Effective Date.

This Resolution shall take effect upon adoption.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:
__________________________ __________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
_______________________ ___________________________
Assistant City Attorney City Manager
___________________________
Chief Transportation Official
Item 6
Attachment B - Resolution
of the City Council of the
City of Palo Alto Amending
the Embarcadero Road OSV
Parking Permit District
Item 6: Staff Report Pg. 9 Packet Pg. 51 of 280

CITY COUNCIL
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: October 19, 2026
Report #: 2608-6708
TITLE
Adoption of an Ordinance Amending the Special Setback Map to Reduce the Special Setback Along a Portion of Hansen Way at 3300 El Camino Real from 50 Feet to 20 Feet. CEQA Status:

Exempt Pursuant to CEQA Guidelines Section 15305 (Minor Alterations in Land Use Limitations).

RECOMMENDATION
Staff recommend that the City Council:

1. Find that the draft ordinance (Attachment A) is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15305, which applies to minor alterations in land use limitations that do not result in changes in land use or density; and

2. Adopt the draft ordinance (Attachment A) amending the Special Setback Map to reduce the special setback along the Hansen Way frontage of 3300 El Camino Real from 50 feet to 20 feet.

EXECUTIVE SUMMARY
The proposed amendment to the Special Setback Map implements the City Council’s direction from May 27, 2025. The proposed reduction of the special setback along the Hansen Way frontage of 3300 El Camino Real from 50 feet to 20 feet would reduce a significant development constraint created by the existing special setback in combination with an existing utility easement. The proposed 20-foot special setback would align with the applicable street side yard setback of the underlying zoning designation and retain frontage necessary to accommodate potential future pedestrian, bicycle, and other right-of-way improvements. The Planning and Transportation Commission recommended approval of the ordinance on June 10, 2026.

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BACKGROUND
Special setbacks are established under Palo Alto Municipal Code (PAMC) Chapter 20.08.1 The Special Setback Map sets forth setback lines beyond which structures may not be constructed.

The special setback is conceptually distinct from the standard front, side, and rear setbacks established by the underlying zoning district, though they operate similarly in practice.

The existing special setback along the Hansen Way frontage of 3300 El Camino Real is 50 feet.

The proposed ordinance would amend the Special Setback Map to establish a 20-foot special setback along this portion of Hansen Way. An amendment to the Special Setback Map requires legislative action by the City Council.

Previous Council Direction to Reduce Setback
On May 27, 2025,2,3 the City Council considered amendments to the El Camino Real Focus Area regulations, including a proposal to reduce a portion of the Hansen Way special setback. At that meeting, staff explained that the existing 50-foot setback could constrain redevelopment at the Hansen Way/El Camino Real intersection, particularly at 3300 El Camino Real. Staff noted that the purpose of the special setback appeared to be associated with future transportation and streetscape improvements, including bus access, bicycle facilities, and pedestrian improvements.

Council members discussed whether the full 50-foot setback remained necessary. Staff indicated that the Office of Transportation had been consulted but had not provided a specific recommendation regarding the appropriate reduced setback. Staff also indicated that a 50-foot setback appeared to be greater than necessary for the anticipated improvements.

The Council considered several alternatives. A 30-foot setback was discussed, but staff indicated that representatives of the property did not believe a 30-foot setback would provide sufficient area to facilitate redevelopment. Staff proposed that the Council direct staff to study a reduction to approximately 20 feet, while continuing to evaluate the transportation improvements that could be accommodated along Hansen Way.

Council members also discussed the possibility of eliminating the special setback entirely.

Ultimately, the Council supported pursuing a reduction to 20 feet rather than eliminating the setback, with the understanding that a subsequent zoning amendment would be required to implement the change.

The proposed ordinance implements that prior Council direction. 1 City of Palo Alto Municipal Code Chapter 20.08 Setback Lines:
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-82522 2 City Council Staff Report from May 27, 2025, on El Camino Real Focus Area:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83418&dbid=0&repo=PaloAlto 3 City Council Action Minutes from May 27, 2025 (Item 7, on Page 4):
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=43272&dbid=0&repo=PaloAlto Item 7
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Previous Council Action to Reduce Setback at 3200 El Camino Real On April 1, 2019, the City Council reviewed a development application at 3200 El Camino Real, located across Hansen Way from 3300 El Camino Real. The project proposed a four-story hotel and requested elimination of the special setback along Hansen Way. The proposal also included removal of the pork chop at the corner of El Camino Real and Hansen Way, straightening of the Hansen Way path, and bicycle and pedestrian facility improvements.

The City Council approved a motion on the development application that did not include complete elimination of the special setback. Instead, the Council accepted the Planning and Transportation Commission’s recommendation to eliminate the special setback for hotel and mixed-use developments only. The second reading of Ordinance 5461 was approved on April 22, 2019, and the ordinance became effective on May 23, 2019.

Although the development and associated right-of-way improvements approved under 18PLN00045 were never implemented and the entitlement is no longer effective, the special setback reduction approved under Ordinance 54617 remains in effect.

Planning and Transportation Commission Recommendation
The Planning and Transportation Commission (PTC) considered the proposed ordinance on June 10, 2026, and recommended 6-0 (Commissioner Hechtman absent) that City Council adopt the draft ordinance, with specific guidance to include a reference to 3300 El Camino Real in the ordinance.

During its discussion, the PTC considered whether the amendment should apply more broadly to other properties along Hansen Way. Commissioners discussed the property at 3200 El Camino Real, located across Hansen Way, and the possibility of considering a future reduction to the special setback for housing projects on that property. Staff explained that the current Council direction was specific to the segment at 3300 El Camino Real and indicated that any future changes to other properties could be considered separately.

The PTC also discussed the unique configuration of the 3300 El Camino Real site and the relationship between the special setback and the existing utility easement.

The PTC separately recommended that the City Council consider exploring a future reduction of the Hansen Way special setback for 3200 El Camino Real. That recommendation is not part of the ordinance currently before the City Council though Council may provide further direction to staff for a future ordinance if desired.

ANALYSIS
The proposed amendment is intended to remove a regulatory constraint that substantially limits the development potential of 3300 El Camino Real while retaining an area for future public improvements along Hansen Way.
7 Ordinance No.5461: https://www.paloalto.gov/files/assets/public/v/1/city-clerk/ordinances/ordinances-1909-topresent/ordinances-by-number/ord-5461.pdf?t=44883.75 Item 7
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The 50-foot special setback combined with the existing utility easement that runs diagonally across the property, significantly constrains the buildable area and results in an irregularly shaped buildable portions. Staff's analysis concluded that reducing the special setback to 20 feet would provide necessary relief from these overlapping constraints and create a more viable footprint for future development.

The proposed 20-foot setback also retains additional frontage between future development and the street line. Staff considers this area sufficient to preserve opportunities for future pedestrian, bicycle, and streetscape improvements along Hansen Way. The proposed setback is also consistent with the 20-foot street-side setback associated with the site's underlying zoning district.

The amendment is consistent with the objectives of the expanded El Camino Real Focus Area and the City’s Housing Element, which seek to facilitate higher-density, multifamily residential development along major transit corridors. The property at 3300 El Camino Real is identified as a Housing Element opportunity site and is specifically identified for future residential development. Maintaining the existing 50-foot setback would continue to constrain the buildable area available for such development. The Housing Element identifies this site for up to 96 housing units, while the El Camino Real Focus Area would allow even greater density.

Importantly, the proposed ordinance does not approve a development project or establish development entitlements for 3300 El Camino Real. There is no development currently proposed at this site. Any future development proposal would remain subject to applicable zoning, architectural review, transportation, building, and other City requirements.

FISCAL/RESOURCE IMPACT
The proposed amendment to the Special Setback Map is not anticipated to have a direct fiscal impact on the City budget. Any potential economic benefits associated with future redevelopment of the property would occur only if and when the property is developed.

STAKEHOLDER ENGAGEMENT
The Palo Alto Municipal Code requires notice of this public hearing be published in a local paper and mailed to owners and occupants of property within 600 feet of the subject property at least ten days in advance. Notice of a public hearing for this project was published in the Daily Post and postcard mailing occurred on October 9, 2026, which is 10 days in advance of the meeting.

A member of the public representing Sand Hill Property Company, the primary lessee from Stanford, supported the proposed 20-foot setback and stated that the reduction would provide critical additional buildable area on the site. Staff has not received any additional public comments since the June 10, 2026, PTC hearing.

ENVIRONMENTAL REVIEW
The City has reviewed the proposed ordinance in accordance with that authority and criteria set forth in the California Environmental Quality Act (CEQA). The City, as the lead agency, Item 7
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anticipates that this ordinance will be exempt from CEQA in accordance with Guidelines Section 15305, which includes minor alterations in land use limitation, which do not result in any changes in land use or density.

ATTACHMENTS
Attachment A: Draft Ordinance
APPROVED BY:

Jonathan Lait, Planning and Development Services Director Item 7
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1 0160211_20260923_ay16
Ordinance No. _____
Ordinance of the Council of the City of Palo Alto Amending the Special Setback Map to Reduce the Special Setback Along Hansen Way at El Camino Real to 20 Feet
The Council of the City of Palo Alto does ORDAIN as follows:

SECTION 1. Findings and Declarations. The City Council of the City of Palo Alto finds and declares as follows:

A. On May 27, 2025, the City Council directed staff to explore reducing the Special Setback along Hansen Way at El Camino Real to 20 feet.

B. On June 10, 2026, the Planning and Transportation Commission recommended that the City Council adopt the draft ordinance reducing the Special Setback.

C. The updated Special Setback of 20 feet along Hansen Way at El Camino Real provides sufficient space to accommodate expanded pedestrian sidewalks and bicycle facilities along a busy transit corridor.

D. The updated Special Setback removes overly restrictive regulatory barriers to encourage the higher-density housing envisioned for the expanded El Camino Real Focus Area, while also fostering a better corner presence.

E. The updated Special Setback aligns with the City’s Housing Element goals to encourage increased housing density along transit corridors by allowing more buildable area for future higher density housing projects.

SECTION 2. The Council finds that the public interest, health and welfare require an amendment to the Special Setback Map of the City of Palo Alto as set forth in Section 3.

SECTION 3. The Council hereby amends the Special Setback Map of the City of Palo Alto along Hansen Way at El Camino Real to 20 feet, as described in Exhibit 1 (Special Setback Map, Hansen Way at El Camino Real), attached hereto and incorporated herein by reference.

SECTION 4. The Council finds that the Ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15305 because adoption of this ordinance is considered a minor alteration in land use limitation which does not result in any changes in land use or density.
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Ordinance
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SECTION 5. This Ordinance shall be effective on the thirty-first date after the date of its adoption.

INTRODUCED:

PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

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Ordinance
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EXHIBIT A
187498802.7

EXHIBIT A

LEGAL DESCRIPTION OF PREMISES
All that certain real property in the City of Palo Alto, County of Santa Clara, State of California, described as follows:

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALO ALTO, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
(VARIAN UNIT NO. 8)

THE PREMISES AS IDENTIFIED ON THE PLAN ATTACHED TO THE MEMORANDUM OF SUBLEASE (UNIT 8, PALO ALTO) DATED AND RECORDED AUGUST 10, 1995, RECORDER'S SERIES NO. 12979121 AS EXHIBIT C, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCING AT A CONCRETE HIGHWAY MONUMENT SET ON THE SOUTHWESTERLY LINE OF EL CAMINO REAL (STATE HIGHWAY) OPPOSITE ENGINEER'S STATION 144+27.00

AS SURVEYED BY THE CALIFORNIA DIVISION OF HIGHWAYS AS SAID SOUTHWESTERLY

LINE WAS ESTABLISHED BY THAT DECREE IN CONDEMNATION, A CERTIFIED COPY OF

WHICH DECREE WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, ON JULY 07, 1930 IN BOOK 520 OF OFFICIAL RECORDS, AT PAGE 571; SAID MONUMENT ALSO MARKS THE POINT OF

INTERSECTION OF SAID SOUTHWESTERLY LINE WITH THE SOUTHEASTERLY LINE OF THAT CERTAIN 1289 ACRE TRACT OF LAND DESCRIBED IN THE DEED FROM EVELYN C.

CROSBY, ET AL TO LELAND STANFORD, DATED SEPTEMBER 08, 1885, RECORDED SEPTEMBER 08, 1885 IN BOOK 80 OF DEEDS, PAGE 382, SANTA CLARA COUNTY RECORDS; RUNNING THENCE SOUTH 33° 14' 40" WEST ALONG SAID SOUTHEASTERLY LINE OF SAID 1289 ACRE TRACT, 20.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE FROM SAID TRUE POINT OF BEGINNING NORTH 56° 39' WEST PARALLEL WITH AND DISTANT SOUTHWESTERLY AT RIGHT ANGLES 20.00 FEET FROM THE EXISTING SOUTHWESTERLY LINE OF EL CAMINO REAL (100 FEET IN WIDTH), 588.67 FEET; THENCE ON THE ARC OF A CURVE TO THE LEFT WITH A RADIUS OF 384.00 FEET THROUGH A CENTRAL ANGLE OF 10° 11' 23" AN ARC DISTANCE OF 68.29 FEET TO A POINT OF COMPOUND CURVE; THENCE ON THE ARC OF A CURVE TO THE LEFT WITH A RADIUS OF 67.00 FEET THROUGH A CENTRAL ANGLE OF 49° 38' 39", AN ARC DISTANCE OF 58.05 FEET TO A POINT OF COMPOUND CURVE; THENCE ON THE ARC OF A CURVE TO THE LEFT WITH A RADIUS OF 104.00 FEET THROUGH A CENTRAL ANGLE OF 2° 20' 34", AN ARC DISTANCE OF 4.25 FEET TO A POINT IN THE SOUTHEASTERLY LINE OF HANSEN WAY; THENCE ALONG SAID LINE SOUTH 33° 21' WEST 137.95 FEET TO THE MOST

NORTHERLY CORNER OF THAT CERTAIN

REAL PROPERTY LEASED BY THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY TO VARIAN ASSOCIATES BY LEASE RECORDED OCTOBER 11, 1951 IN THE OFFICE OF THE RECORDER OF SAID COUNTY OF SANTA CLARA IN BOOK 2297 AT PAGE 448; THENCE ALONG THE NORTHEASTERLY LINE OF SAID REAL PROPERTY SOUTH 56° 39' EAST 705.07 FEET TO A POINT IN SAID SOUTHEASTERLY LINE OF SAID 1289 ACRE TRACT; THENCE ALONG SAID LINE NORTH 33° 14' 40" EAST 180.00 FEET TO THE TRUE POINT OF BEGINNING.

APN: 142-20-046
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Ordinance
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*
*
* No Special Setback For Mixed Use Hotel Use
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: IT Department
Meeting Date: October 19, 2026
Report #:2608-6679
TITLE
Approve Two Purchase Orders with Packet Fusion, Utilizing One NASPO Cooperative and One CMAS Cooperative Agreement, to Procure Zoom Government Unified Communications Solutions for a Five-Year Term for a Total Not-To-Exceed Amount of $1,206,456; CEQA Status – exempt under section 15061(b)(3).

RECOMMENDATION
Staff recommend that the City Council:

1. Authorize the City Manager or their designee to execute Purchase Order C27198767 for Quote Number 65869455-COPA-ZM with Packet Fusion, utilizing the NASPO Contract Number AR2472 and State of California Participating Addendum 7-17-70-40-051, to procure Zoom for Government Unified Communications Solution for a five-year term (September 1, 2027 through August 31, 2032) with an annual amount of $231,688 and a total not-to-exceed amount of $1,158,441 (Attachment A); and

2. Authorize the City Manager or designee to execute Purchase Order C27198463 for implementation support with Packet Fusion, utilizing State of California Multiple Award Schedule (CMAS) Agreement Number 3-24-04-1026 for a one-year term (November 1, 2026 through October 31, 2027) and a total amount not-to-exceed $48,015 (Attachment B).

BACKGROUND
In June 2012, following a competitive request for proposals that received eight responses, the City Council approved Contract No. C12144216 with VOX Network Solutions for an Avaya Voice over Internet Protocol unified communications system, implementation services, and five years of maintenance and support2. The replacement was necessary because the prior telephone and 1 NASPO Cooperative Agreement: https://static.carahsoft.com/concrete/files/1817/5327/1627/Amendments_1- 5_to_Participating_Addendum.pdf
2 June 6, 2012 City Council Staff Report: https://www.cityofpaloalto.org/files/assets/public/v/1/fromarchive/agendas-minutes-reports/reports/city-manager-reports-cmrs/2012/cmr-2760.pdf Item 8
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voicemail systems were more than 20 years old, degraded, no longer supported by the manufacturer, and had experienced service interruptions.

The Avaya system was fully implemented in October 2013. On June 19, 2023, the City Council approved Contract No. C23187554 with VOX Network Solutions for an upgrade to a supported Avaya release and a three-year support term, using NCPA cooperative agreement5. The upgrade addressed end-of-life hardware, licensing limitations, security, reliability, compatibility, and specialized City integrations.

On April 20, 2026, the City Council approved Amendment No. 1 to Contract No. C23187554, extending the term through June 30, 20276. This extension maintained service continuity while staff evaluated long-term modernization alternatives and addressed additional licensing and support needs.

ANALYSIS
The Information Technology Department (ITD) used a two-step decision process resulting in the selection of Zoom for Government platform via Packet Fusion to replace the telephone system.

First, staff evaluated whether to further upgrade and retain the City’s on-premises Avaya system or transition to a cloud-based Unified Communications as a Service (UCaaS) platform.

After determining that a cloud-based replacement was the preferred long-term approach, staff evaluated available products and implementation providers.

With the assistance of Communication Strategies, a professional services provider known for its telecommunications expertise and familiarity with the City’s existing environment, an independent assessment of the City’s current voice infrastructure, stakeholder needs, technical readiness, alternatives, and long-term cost considerations was completed. The City’s onpremises Avaya Communications Manager system is aging, increasingly difficult to support, and no longer the preferred long-term platform for the City’s operational needs. The City is currently using Avaya version 10.1, which reached manufacturer end of support in early 2026.

Retaining the platform would require an estimated $130,000 upgrade to version 10.2, continued investment in on-premises hardware, and continued exposure to hardware procurement, patching, scalability, and service-continuity risks while minimal to no change adapting to the modern work business needs.

Alternatively, the City’s network is well-positioned to transition to and support cloud voice services. A cloud-based UCaaS platform would reduce reliance on City-owned voice infrastructure, provide improved resiliency and disaster-recovery capabilities, support employees working in field, remote, and hybrid settings, and provide modern call-center capabilities.
5 June 19, 2023 City Council Staff Report:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82463&dbid=0&repo=PaloAlto&cr=1 6 April 20, 2026 City Council Staff Report:
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Therefore, staff recommend Zoom for Government (as the product) and Packet Fusion (as the integration service provider), both of which leverage cooperative purchasing agreements to transition phone services to a UCaaS platform. This selection process involved engaging with other Bay Area and California cities with similar size and needs, as well as viewing demonstrations and reviewing pricing for the top product candidates.

The proposed Zoom for Government platform will replace the City’s aging Avaya telephone system with a cloud-based communications service for City employees and shared facilities. The service will provide core telephone and voicemail functions through City desk phones, computers, and authorized mobile devices, reducing reliance on City-owned voice infrastructure and the associated maintenance requirements. The platform will support the City’s emergency-calling configuration and location-management requirements.

New functionality from Zoom for Government will better support remote, field, and hybrid work - employees will be able to use their City phone number through a softphone or authorized mobile device and will have access to features such as visual voicemail and transcription. Platform integrations improve with the City’s Microsoft environment and provides improved call-queue and contact center capabilities for departments that manage high volumes of public calls.

Staff evaluated Zoom for Government and RingCentral as the primary cloud-based alternatives.

Both platforms met the City’s core requirements for telephone service, mobility, call queues, and contact center functionality. Zoom for Government was selected because it offers the best overall value based on functional fit, Microsoft integration, implementation approach, cooperative-contract pricing, and a five-year total cost of ownership approximately $73,965 (6%) lower than RingCentral.

Features involving call recordings, transcripts, text messages, or AI-generated summaries will be configured and governed before deployment in accordance with City security, privacy, recordsretention, and applicable notice requirements.

Packet Fusion is recommended as the Zoom implementation integrator based on its demonstrated expertise with Zoom’s communications platform, experience supporting publicsector organizations, and ability to provide end-to-end implementation support. Their services can help reduce project risk by addressing solution design, number porting, configuration, testing, training, and post-go-live stabilization through a coordinated delivery approach.

Selecting Packet Fusion provides the City with a qualified partner to support a smooth transition from the existing phone environment while maintaining continuity for City operations and customer-facing services.

Procurement via Cooperative Purchasing Agreement
The City will purchase licensing through NASPO Master Contract No. AR2472 and State of California Participating Addendum No. 7-17-70-40-05. This cooperative purchasing agreement Item 8
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provides competitively established terms and pricing. Staff negotiated pricing below the contract’s listed rates, with no annual price increase over the five-year term and secured ten months of service at no cost. Packet Fusion will provide Zoom licenses at no charge from November 1, 2026, through August 31, 2027, to support configuration, testing, training, and phased migration. The paid subscription term begins September 1, 2027.

FISCAL/RESOURCE IMPACT
The implementation costs with Packet Fusion will occur in FY 2027, and the annual $232,000 subscription costs will begin in FY 2028, after implementation. Funding for the subscription cost will be included in the annual budget development process, subject to City Council approval.

Funding for Zoom for Government UCaaS solution is expected to be offset through discontinuation of the City’s current annual costs of $329,000 to $389,999 for legacy telecommunications, Avaya, VOX, and third-party E911 costs. These figures are subject to final AT&T usage and service-transition requirements.

ITD is supported through an internal service fund model. Approximately 49% of ITD’s costs are funded by the General Fund, with the remaining 51% supported by enterprise and other funds.

STAKEHOLDER ENGAGEMENT
Staff conducted a citywide user survey in January 2026 and interviewed leaders of the City’s three primary call-center operations: Planning and Development Services, Utilities Customer Service, and Information Technology. Stakeholders identified reliable call routing, mobile access, continuity during remote operations, customer-service call handling, and ease of use as key requirements. These findings informed the functional requirements and implementation priorities for the proposed solution.

ENVIRONMENTAL REVIEW
The approval of this contract is exempt from review under the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15061(b)(3).

ATTACHMENTS
Attachment A: Packet Fusion Quote number 65869455-COPA-ZM Attachment B: Packet Fusion Implementation Support Proposal APPROVED BY: Darren Numoto, Chief Information Officer; Lisa Bolger, Assistant Director Information Technology/CTO
Item 8
Item 8 Staff Report
Item 8: Staff Report Pg. 4 Packet Pg. 64 of 280
Billed To Sold To
Customer: City of Palo Alto Customer: City of Palo Alto Contact: Darren Numoto Contact: Darren Numoto
Address 1: 250 Hamilton Avenue, 2nd Floor Address 1: 250 Hamilton Avenue, 2nd Floor Address 2: Palo Alto, CA 94301 Address 2: Palo Alto, CA 94301 Email: [email protected] Email: [email protected] Phone: (650) 329-2488 Phone: (650) 329-2488
Auto Renew: No Quote/Order No: 67011993-COPA-ZM
Paid Subscription Term: 60 Months Quote/Order Date: 8/19/2026 Paid Period Start Date: 9/1/2027 Quote/Order Expires: 10/1/2026 Free Period Start Date: 11/1/2026 (10 Months) Billing Type: Annual Zoom Account Number: 52223068 Billing Method: Email
OMNIA Software Solutions and Services contract: R240303 Payment Terms: Net 30 Qty. PFI # PROVIDER # DESCRIPTION List Price Quote Price Ext Price Free Period
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475 350284 ZFG1-ZP-COMM-1Y-1195 $ 61.78 $ - $ -
1 350158 ZFG1-ZP-UNIT-CS1Y-1195 $ 1,176.00 $ - $ -
36 350282 ZFG-ZCX-ESS-1Y-1195 $ 888.03 $ - $ -
1 350281 ZFG-ZCX-CS-1TB-1Y-1195 $ 1,554.40 $ - $ -
5 999999 ZFG-ZCX-VSN-1-1YR-1195 $ 77.22 $ - $ -
1 999999 ZCX-USG-1Y-1195 $ 6,000.00 $ - $ -
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$ -
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1300 350255 ZfG1-ZPUN-Pro-1Y-1195 $ 237.60 $ 134.00 $ 174,200.00 475 350284 ZFG1-ZP-COMM-1Y-1195 $ 61.78 $ 33.50 $ 15,912.50 1 350158 ZFG1-ZP-UNIT-CS1Y-1195 $ 1,176.00 $ 1,176.00 $ 1,176.00 36 350282 ZFG-ZCX-ESS-1Y-1195 $ 888.03 $ 576.00 $ 20,736.00 1 350281 ZFG-ZCX-CS-1TB-1Y-1195 $ 1,554.40 $ 1,176.00 $ 1,176.00 5 999999 ZFG-ZCX-VSN-1-1YR-1195 $ 77.22 $ 39.00 $ 195.00 1 999999 ZCX-USG-1Y-1195 $ 6,000.00 $ 6,000.00 $ 6,000.00 1229270 350102 USF-FEE-1195 $ 0.01 $ 0.01 $ 12,292.70
$ 231,688.20
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1300 350255 ZfG1-ZPUN-Pro-1Y-1195 $ 237.60 $ 134.00 $ 174,200.00 475 350284 ZFG1-ZP-COMM-1Y-1195 $ 61.78 $ 33.50 $ 15,912.50 1 350158 ZFG1-ZP-UNIT-CS1Y-1195 $ 1,176.00 $ 1,176.00 $ 1,176.00 36 350282 ZFG-ZCX-ESS-1Y-1195 $ 888.03 $ 576.00 $ 20,736.00 1 350281 ZFG-ZCX-CS-1TB-1Y-1195 $ 1,554.40 $ 1,176.00 $ 1,176.00 5 999999 ZFG-ZCX-VSN-1-1YR-1195 $ 77.22 $ 39.00 $ 195.00 1 999999 ZCX-USG-1Y-1195 $ 6,000.00 $ 6,000.00 $ 6,000.00 1229270 350102 USF-FEE-1195 $ 0.01 $ 0.01 $ 12,292.70
$ 231,688.20
ZCC for ZfG Essentials Annual
Zoom Phone for ZfG Monthly Usage Annual
Zoom Phone for ZfG Common Area Annual: Tier
Start:1 Tier End: 9
Zoom Phone for ZfG US/Canada Unlimited Calling
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USF Fee Estimate
ZCC for ZfG Monthly Usage Annual
ZCC for ZfG US/Canada Virtual Service Phone Number
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ZCC for ZfG Cloud Storage 1TB Monthly Usage Annual
4305 Hacienda Drive | Suite #440 | Pleasanton, CA 94588 Packet Fusion, Inc.

Phone (925) 701-2000 | www.packetfusion.com
Year 1 Subtotal
Zoom Phone for ZfG US/Canada Unlimited Calling
Named User Annual: Tier Start:1 Tier End: 9
Zoom Phone for ZfG Common Area Annual: Tier
Start:1 Tier End: 9
Zoom Phone for ZfG Monthly Usage Annual
ZCC for ZfG Essentials Annual
ZCC for ZfG Cloud Storage 1TB Monthly Usage Annual
ZCC for ZfG US/Canada Virtual Service Phone Number
Annual
ZCC for ZfG Monthly Usage Annual
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USF Fee Estimate
Zoom Phone for ZfG US/Canada Unlimited Calling
Named User Annual: Tier Start:1 Tier End: 9
Zoom Phone for ZfG Common Area Annual: Tier
Start:1 Tier End: 9
Zoom Phone for ZfG Monthly Usage Annual
ZCC for ZfG Essentials Annual
ZCC for ZfG Cloud Storage 1TB Monthly Usage Annual
Free Period Subtotal
ZCC for ZfG US/Canada Virtual Service Phone Number
Annual
ZCC for ZfG Monthly Usage Annual
USF Fee Estimate
Item 8
Attachment A - Packet
Fusion Quote number
65869455-COPA-ZM
Item 8: Staff Report Pg. 5 Packet Pg. 65 of 280
Year 3
1300 350255 ZfG1-ZPUN-Pro-1Y-1195 $ 237.60 $ 134.00 $ 174,200.00 475 350284 ZFG1-ZP-COMM-1Y-1195 $ 61.78 $ 33.50 $ 15,912.50 1 350158 ZFG1-ZP-UNIT-CS1Y-1195 $ 1,176.00 $ 1,176.00 $ 1,176.00 36 350282 ZFG-ZCX-ESS-1Y-1195 $ 888.03 $ 576.00 $ 20,736.00 1 350281 ZFG-ZCX-CS-1TB-1Y-1195 $ 1,554.40 $ 1,176.00 $ 1,176.00 5 999999 ZFG-ZCX-VSN-1-1YR-1195 $ 77.22 $ 39.00 $ 195.00 1 999999 ZCX-USG-1Y-1195 $ 6,000.00 $ 6,000.00 $ 6,000.00 1229270 350102 USF-FEE-1195 $ 0.01 $ 0.01 $ 12,292.70
$ 231,688.20
Year 4
1300 350255 ZfG1-ZPUN-Pro-1Y-1195 $ 237.60 $ 134.00 $ 174,200.00 475 350284 ZFG1-ZP-COMM-1Y-1195 $ 61.78 $ 33.50 $ 15,912.50 1 350158 ZFG1-ZP-UNIT-CS1Y-1195 $ 1,176.00 $ 1,176.00 $ 1,176.00 36 350282 ZFG-ZCX-ESS-1Y-1195 $ 888.03 $ 576.00 $ 20,736.00 1 350281 ZFG-ZCX-CS-1TB-1Y-1195 $ 1,554.40 $ 1,176.00 $ 1,176.00 5 999999 ZFG-ZCX-VSN-1-1YR-1195 $ 77.22 $ 39.00 $ 195.00 1 999999 ZCX-USG-1Y-1195 $ 6,000.00 $ 6,000.00 $ 6,000.00 1229270 350102 USF-FEE-1195 $ 0.01 $ 0.01 $ 12,292.70
$ 231,688.20
Year 5
1300 350255 ZfG1-ZPUN-Pro-1Y-1195 $ 237.60 $ 134.00 $ 174,200.00 475 350284 ZFG1-ZP-COMM-1Y-1195 $ 61.78 $ 33.50 $ 15,912.50 1 350158 ZFG1-ZP-UNIT-CS1Y-1195 $ 1,176.00 $ 1,176.00 $ 1,176.00 36 350282 ZFG-ZCX-ESS-1Y-1195 $ 888.03 $ 576.00 $ 20,736.00 1 350281 ZFG-ZCX-CS-1TB-1Y-1195 $ 1,554.40 $ 1,176.00 $ 1,176.00 5 999999 ZFG-ZCX-VSN-1-1YR-1195 $ 77.22 $ 39.00 $ 195.00 1 999999 ZCX-USG-1Y-1195 $ 6,000.00 $ 6,000.00 $ 6,000.00 1229270 350102 USF-FEE-1195 $ 0.01 $ 0.01 $ 12,292.70
$ 231,688.20
Note: This quote does not include applicable taxes and fees. $ 1,158,441.00 Accepted and agreed as of the date specified below by the authorized representative of Customer Acknowledge and agreed as of the date specified below by the authorized representative of Reseller Year 5 Subtotal
USF Fee Estimate
Zoom Phone for ZfG Monthly Usage Annual
ZCC for ZfG Essentials Annual
ZCC for ZfG Cloud Storage 1TB Monthly Usage Annual
ZCC for ZfG US/Canada Virtual Service Phone Number
Annual
ZCC for ZfG Monthly Usage Annual
Year 4 Subtotal
Zoom Phone for ZfG US/Canada Unlimited Calling
Named User Annual: Tier Start:1 Tier End: 9
Zoom Phone for ZfG Common Area Annual: Tier
Start:1 Tier End: 9
ZCC for ZfG US/Canada Virtual Service Phone Number
Annual
ZCC for ZfG Monthly Usage Annual
USF Fee Estimate
Zoom Phone for ZfG US/Canada Unlimited Calling
Named User Annual: Tier Start:1 Tier End: 9
Zoom Phone for ZfG Common Area Annual: Tier
Start:1 Tier End: 9
Zoom Phone for ZfG Monthly Usage Annual
ZCC for ZfG Essentials Annual
ZCC for ZfG Cloud Storage 1TB Monthly Usage Annual
Reseller Signature:

Print Name:

Date:

Print Name:

Customer Signature:

Total Quote
Year 3 Subtotal
Zoom Phone for ZfG US/Canada Unlimited Calling
Named User Annual: Tier Start:1 Tier End: 9
Zoom Phone for ZfG Common Area Annual: Tier
Start:1 Tier End: 9
Zoom Phone for ZfG Monthly Usage Annual
ZCC for ZfG Essentials Annual
ZCC for ZfG Cloud Storage 1TB Monthly Usage Annual
ZCC for ZfG US/Canada Virtual Service Phone Number
Annual
ZCC for ZfG Monthly Usage Annual
USF Fee Estimate
Item 8
Attachment A - Packet
Fusion Quote number
65869455-COPA-ZM
Item 8: Staff Report Pg. 6 Packet Pg. 66 of 280
Special Terms & Notes
https://explore.zoom.us/en/eula-terms-of-service/
The Privacy Policy has been updated and may be found here:
https://zoomgov.com/privacy
Zoom's standard Terms of Service are available here:
https://zoom.us/terms
https://support.zoom.us/hc/n-us/articles/360060661511-Cloud-recording-storage-capacity https://zoom.us/zoomconference/rates
Please note provisioning of Zoom licenses can take 4-7 business days.

Licensee further agrees that any order for public sector customers placed through a Zoom Reseller will be governed by the Zoom Reseller Customer Terms of Service which are found at:

Packet Fusion is a Reseller and Billing entity for the Zoom Services. All services and technical support to be provided directly by Zoom.

Overage charges can be incurred for cloud recording and audio conferencing licenses. Policy and pricing information may be found here:

Item 8
Attachment A - Packet
Fusion Quote number
65869455-COPA-ZM
Item 8: Staff Report Pg. 7 Packet Pg. 67 of 280
Vendor Packet Fusion, Inc., powered by Bridgepointe Technologies Vendor Address 4301 Hacienda Drive, Suite 400, Pleasanton, CA COOP CONTRACT # CMAS-3-24-04-1026
COOP TERM 04/15/2024–08/21/2028
CATEGORY Information Technology Goods and Services
The quoted services are provided under the referenced CMAS agreement and pursuant to the Packet Fusion ZOOM SERVICES RESELLER CUSTOMER AGREEMENT executed by City of Palo Alto and Packet Fusion. Packet Fusion will provide remote professional implementation support for the City's migration from its existing Avaya telephony environment to Zoom Phone for Government and Zoom Contact Center.

Overview (11/01/2026 – 10/31/2027) Implementation Objectives Zoom Phone for Government
• 1,300 Zoom Phone accounts
• Remote End User Training Sessions
• 450 desk phones remotely provisioned
• 25 Analog Telephony Adapters remotely
provisioned
• 5 Algo IP Page adapters remotely provisioned
• Nomadic E911 Setup
Zoom Contact Center
• 30 Zoom Contact Center Agents
• Remote Agent and Supervisor training sessions
• Inbound voice queue management
• Agent routing and call handling workflows
• Supervisor monitoring tools
Deploy Zoom Phone Cloud Telephony
Implement Zoom Phone for Government
as the primary enterprise telephony
platform to replace the existing Avaya
on-premises system, enabling reliable
inbound and outbound calling, voicemail,
and internal communications through the
Zoom cloud platform.

Establish a Scalable Contact Center
Platform
Deploy Zoom Contact Center to support
City of Palo Alto’s Utilities, Planning &
Development, and IT Helpdesk enabling
efficient handling of inbound calls related
to billing inquiries and payments through
structured queues, agent routing, and
supervisor monitoring tools.

Acceptance Criteria Cost
The implementation support will be considered complete
when Zoom Phone for Government and Zoom Contact
Center services are successfully configured, tested, and operational for City of Palo Alto, including user
provisioning, call routing, contact center queue
functionality, web chat deployment, and associated
platform features. User Acceptance Testing (UAT) will
confirm that inbound and outbound calling, agent
workflows, and core system functionality operate as
designed, and City of Palo Alto acknowledges that the
system is ready for production use.

Payment Milestone
• 50% due upon
authorization: $24,007.50
• 50% due upon successful
completion: $24,007.50
Total $48,015.00
Item 8
Attachment B - Packet
Fusion Implementation
Support Proposal
Item 8: Staff Report Pg. 8 Packet Pg. 68 of 280
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: October 19, 2026
Report #:2608-6616
TITLE
QUASI-JUDICIAL. 751 Waverley Street [26PLN-00034]: Appeal of Director’s Decision to Uphold the Issuance of the Permit, Confirming Approval to Remove Four Protected Coast Redwoods (Sequoia sempervirens) Located at 751 Waverley Street under the Right Tree in the Right Place Principles for Removal in Palo Alto Municipal Code 8.10.050; CEQA Status: Exempt Pursuant to CEQA Guidelines Section 15061(b)(3)

RECOMMENDATION
Staff recommends that the City Council uphold the Director's decision approving the Protected Tree Removal Application [26PLN-00034] to allow the removal of four protected coast redwood trees (Sequoia sempervirens) located at 751 Waverley Street based on "Right Tree, Right Place" principles pursuant to Palo Alto Municipal Code (PAMC) Section 8.10.050.

EXECUTIVE SUMMARY
On February 19, 2026, the Planning and Development Services Department approved a Tree Removal Permit allowing the removal of four protected coast redwood trees at 751 Waverley Street, the St. Thomas Aquinas Church. This approval was granted pursuant to the City’s Tree Protection Ordinance outlined in Palo Alto Municipal Code (PAMC) Section 8.10.050. Prior to the approval becoming effective, a timely request for Director’s Hearing was received and a Director’s Hearing was held on April 23, 2026. On May 26, 2026, the Director of Public Works issued a Director’s Decision (Attachment A) upholding the Tree Removal Permit.

BACKGROUND
The applicant, St. Thomas Aquinas Site Committee member Helen Baumann, requested the removal of four protected status coast redwood trees on behalf of the St. Thomas Aquinas Church at 751 Waverley Street. The reason for the removal application was the close proximity of the tree's trunks and roots to the existing church foundation.

Planning Permit 26PLN-00034 was issued by the Planning and Development Services Department, with technical review and recommendations provided by Urban Forestry staff. The permit was issued as an Over-the-Counter permit on February 19, 2026. The Public Notice was posted at the site on March 10, 2026.

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As part of this review, the Urban Forestry Section evaluated the submitted arborist report and conducted a site inspection. Based on this analysis, staff determined that the removal request met the applicable criteria under the City’s Tree Protection Ordinance (PAMC Chapter 8.10).

The permit was approved on the basis that the subject trees are too large for the space in which they are planted and are causing, or are reasonably likely to cause, substantial structural damage to an existing building. PAMC 8.10.050(a)(1)(iii & iv) The approval included standard mitigation requirements consistent with the Tree Protection Ordinance.

Request for Hearing
Hannah Ennerfelt, a neighbor residing at 735 Waverley Street, submitted an email containing her comments in opposition to the removal to the City on March 23, 2026. The request for a director’s hearing was received in a timely manner before the expiration of the final 14-day posting period. Staff confirmed that the appellant lives within the required 600-foot radius of the subject property to be eligible as an appellant.

ANALYSIS
Urban Forestry staff determined that the removal of the four coast redwood trees is warranted based on site conditions, structural impacts, and lack of feasible alternatives. These findings are consistent with the allowable criteria for removal of protected trees under PAMC Chapter 8.10.

The applicant’s arborist report is included as part of the Approved Tree Permit Packet (Attachment B).

City staff supported approval of the removal based on the following key findings:

1. Proximity to Structure
St. Thomas Aquinas Church is a registered historic landmark, completed in 1902 and the oldest church in Palo Alto. The four coast redwood trees are located less than three feet from the church foundation. Given the mature size and growth potential of this species, this proximity represents an inherent and ongoing conflict between the trees and the structure.

2. Evidence of Structural Impact
Multiple cracks are visible in the building foundation adjacent to the trees. In addition, a large surface root (approximately six inches in diameter) was observed growing directly against the foundation near one of the cracks. This condition constitutes direct evidence of tree–structure conflict.

3. Likelihood of Ongoing Damage
While root excavation was not performed, the proximity of the trees to the structure makes it highly likely that roots are interacting with the foundation and contributing to structural impacts.

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4. Limited Feasibility of Mitigation
Root pruning in this context is not considered a viable mitigation strategy, as it could destabilize the trees and introduce additional safety risks. Given the species, size, and proximity to the structure, neither staff nor the applicant’s arborist were able to identify a practical alternative that would both preserve the trees and adequately protect the building.

5. Site Suitability (“Right Tree, Right Place”)
Coast redwoods are among the largest tree species and are not well-suited for locations immediately adjacent to building foundations. The current conditions reflect a longterm incompatibility between the trees and the built environment and do not conform to right tree in the right place principles.

Based on these factors, staff determined that removal is justified and consistent with the intent of the Tree Protection Ordinance.

A director’s hearing was held on April 23, 20261. At the hearing, the appellant spoke about the historical significance of the trees, their ecological value and use by a number of bird and other species, and the trees’ contribution to property values and Palo Alto’s urban forest. She presented a petition against removal of the trees signed by over 250 individuals. She argued that there was insufficient evidence to justify removal because there was no independent structural assessment of the church foundation to prove that cracks in the foundation were caused by the trees.

The applicant’s arborist described his conclusion that the trees, which are between 1 foot 10 inches and 2 feet 11 inches from the church’s foundation, are far too close to the building, that planting the trees in this location was a mistake, and that the trees have outgrown their location. He described the cracks in the foundation and stated that the tree root plates have almost reached the foundation and that the trees will continue to grow and cause even more damage. He asserted that redwood trees should be at least 20 feet from any structure and require a lot of space to grow successfully. He also described that there is not enough space for root pruning, and that cutting structural roots to protect the foundation would cause the trees to become hazardous.

In addition to the appellant’s comments and the comments of the applicant’s arborist, community members spoke in favor of both possible outcomes. Some community members cited concerns about the impacts to neighborhood character, ecological value, and the 1 The municipal code sets forth the process for director’s hearings. To ensure the director is not both making a decision on a tree removal permit and then adjudicating on it at the hearing, the director is not involved in the review or decision making of any protected tree removal application. Decision on these applications are made by urban forestry managers. The director’s only involvement begins when an appeal is filed, a staff report is published, and the hearing conducted.

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possibility of engineered solutions to the foundation damage as reasons to support retention of the trees. Other community members cited the status of the church as a historic building and the probability that if the trees were to be retained, the issue would come up again in a few years as the trees continued to grow.

The Director‘s decision found that the trees do not conform to “Right Tree, Right Place” principles contained in the current Tree Protection Ordinance due to the very close proximity of the trees to the foundation structure. The Director considered the arguments by the appellant that additional analysis should be conducted to prove that the foundation cracks were caused by the trees, and to determine whether the four trees are contributing equally to any impacts.

Because the structure is not a residence, foundation damage alone is not an allowable criterion under the Tree Protection Ordinance for protected tree removal. Given how close these trees are to the foundation and the lack of mitigation options, the Director determined that removal should be allowed under the Right Tree, Right Place criterion even if the trees could be shown not to have caused existing foundation damage, because it is clear that the trees are too close to the building. The Director found that given the trees’ location, they will have worsening impacts on the structure over time, and that removal now aligns with the Tree Protection Ordinance and will allow more appropriate mitigation trees to be planted.

Next Steps
The City Council has two options on how it can proceed with this appeal:

1. Uphold the Director's decision and deny the appeal. This would allow the applicant to remove the trees in question.

2. Schedule this appeal for a full hearing, which requires three members to pull the item from the consent calendar.

FISCAL/RESOURCE IMPACT
A request for appeal requires a $618 fee from an appellant, which has been paid by the original appellant for the Director’s hearing.

STAKEHOLDER ENGAGEMENT
The Palo Alto Municipal Code requires notice of the public hearing (the Director’s Hearing) to be posted on the City’s website and mailed to owners and occupants of property within 300 feet of the subject property at least 3 days in advance. Notice of a public hearing for this project was posted to the City’s website on April 20, 2026 which is 3 days in advance of the meeting.

Postcard mailing occurred on April 15, 2026, to neighbors within 300 feet of the property.

ENVIRONMENTAL REVIEW
CEQA Status: Exempt pursuant to CEQA Guidelines Section 15061(b)(3).

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ATTACHMENTS
Attachment A: 751 Waverley-Director's Determination-26May2026 Attachment B: Approved Tree Permit Packet [26PLN-00034] APPROVED BY:

Brad Eggleston, Director Public Works/City Engineer
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Page 1 of 3 ends

PUBLIC WORKS DEPARTMENT
250 Hamilton Avenue, 6th Floor
Palo Alto, CA 94301
(650) 329-2151
May 26, 2026
Applicant:

Helen Bauman
151 Coleridge Avenue, Palo Alto, CA 94301
[email protected]
Appellant:

Hannah Ennerfelt
735 Waverley Street, Palo Alto, CA 94301
[email protected]
SUBJECT: 751 Waverley Street (26PLN-00034) Tree Removal Permit On February 19, 2026, the Planning and Development Services Department approved a Tree Removal Permit allowing the removal of four protected Coast Redwood trees at 751 Waverley Street. This approval was granted pursuant to Palo Alto Municipal Code (PAMC) Section 8.10.050 (the “Tree Protection Ordinance”).

Prior to the approval becoming effective, a timely request for Director’s Hearing was received and a Director’s Hearing was held on April 23, 2026. On May 26, 2026, the Director of Public Works upheld the Tree Removal Permit.

DIRECTOR’S HEARING
The hearing was requested by Hannah Ennerfelt. At the hearing, the appellant spoke about the historical significance of the trees, their ecological value and use by a number of bird and other species, and the trees’ contribution to property values and Palo Alto’s urban forest. She presented a petition against removal of the trees signed by over 250 individuals. She argued that there was insufficient evidence to justify removal because there was no independent structural assessment of the church foundation to prove that cracks in the foundation were caused by the trees. She also asserted that removal as a remedy did not seem proportional, and that alternatives such as root pruning, structural reinforcement, and adjustments to hardscape or drainage should be considered. The appellant asked that removal be denied or at least delayed until additional evidence could be provided to justify the permanent loss.

The applicant’s arborist, Eric Krebs, described his conclusion that the trees, which are between 1 foot 10 inches and 2 feet 11 inches from the church’s foundation, are far too close to the building, that planting the trees in this location was a mistake, and that the trees have outgrown their location. He described the cracks in the foundation and stated that the tree root plates have almost reached the foundation and that the trees will continue to grow and cause even more damage. He asserted that redwood trees should be at least 20 feet from any structure and require a lot of space to grow successfully. He also described that there is not enough space for root pruning, and that cutting structural roots to protect the foundation would cause the trees to become hazardous.

The Hearing Report from the Urban Forestry Section described the permit application and approval process, and Urban Forestry’s conclusion that the trees met the criteria for removal under Palo Alto Municipal Code Chapter 8.10.050(a)(1)(iii & iv) because the trees are too large for the space in which they are planted and are causing, or are reasonably likely to cause, substantial structural damage to an existing Docusign Envelope ID: A1290B62-8B16-8DD4-8011-16E7F26B3DB6 Item 9
Attachment A - 751
Waverley-Director's
Determination-26May2026
Item 9: Staff Report Pg. 6 Packet Pg. 74 of 280
751 Waverley Street Protected Tree Removal
Director’s Determination 26PLN-00034

Page 2 of 3 ends

building. The Hearing Report further described the trees’ proximity to the structure, evidence of structural impact, likelihood of ongoing damage, limited feasibility of mitigation, and site suitability (“Right Tree, Right Place”) as factors justifying removal.

The Hearing Officer inquired about the permit being an over-the-counter permit and any differences in the permit process and review by staff compared to a standard tree removal permit process. Urban Forestry staff described the relatively new over-the-counter permit process as following all of the same administrative steps and a full Urban Forestry review. The Hearing Officer also asked about the language in the report regarding substantial structural damage to an existing building and the citation of PAMC

8.10.050(a)(1)(iv), which references impacts to the foundation of a residence, given that the church is not a residence. Urban Forestry staff responded that the Right Tree, Right Place criterion in 8.10.050(a)(1)(iii) is the correct code section for this circumstance. They repeated the minimum 20 feet clearance mentioned by Mr. Krebs and said that they would recommend 25-30 feet of clearance, and that redwood tree buttress flares can become enormous as the trees age. The Hearing Officer inquired about the evidence that the trees caused damage to the foundation, and learned that the full foundation was not assessed, but that foundation cracks had been observed at three of the four trees. The Hearing Officer also asked about other mitigations beyond root pruning, as well as the potential to remove only the two closer trees, noting that the four trees are listed as being 2’7”, 2’11”, 2’0”, and 1’10” from the foundation.

There were no additional mitigation ideas specific to the building, although it was stated that the driveway could be redesigned to mitigate its damage by tree roots. With respect to removing two of the trees, Urban Forestry staff stated that it could introduce the possibility of a larger hazard, because root grafting by redwood trees could result in continued use of the abandoned root system of the removed trees by the remaining ones.

DECISION AND FINDINGS
The Director of Public Works finds that the trees in question meet the requirements for approval of a Tree Removal Permit, and the approval of the permit is upheld.

The Director finds that the trees do not conform to “Right Tree, Right Place” principles contained in the current Tree Protection Ordinance due to the very close proximity of the trees to the foundation structure. The Director considered the arguments by the appellant that additional analysis should be conducted to prove that the foundation cracks were caused by the trees, and to determine whether the four trees are contributing equally to any impacts. Because the structure is not a residence, foundation damage alone is not an allowable criterion under the Tree Protection Ordinance for protected tree removal. Given how close these trees are to the foundation and the lack of mitigation options, the Director determined that removal should be allowed under the Right Tree, Right Place criterion even if the trees could be shown not to have caused existing foundation damage, because it is clear that the trees are too close to the building. The Director finds that given the trees’ location, they will have worsening impacts on the structure over time, and that removal now aligns with the Tree Protection Ordinance and will allow more appropriate mitigation trees to be planted. Lastly, the applicant at the Hearing expressed a willingness to wait until after bird nesting season to proceed with the removals, and this approval is therefore conditioned that the trees may not be removed until after August 31, 2026.

This approval will become effective 14 calendar days from the postmark date of this letter, unless an appeal is filed, as provided by Chapter 8.10.140 of the PAMC. An appeal of this decision to City Council may be filed by written request with the City Clerk before the date the Director’s decision becomes Docusign Envelope ID: A1290B62-8B16-8DD4-8011-16E7F26B3DB6 Item 9
Attachment A - 751
Waverley-Director's
Determination-26May2026
Item 9: Staff Report Pg. 7 Packet Pg. 75 of 280
751 Waverley Street Protected Tree Removal
Director’s Determination 26PLN-00034

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final. The written request shall be accompanied by a fee, as set forth in the municipal fee schedule. Only an applicant, or the appellant may appeal this decision.

This approval expires in 12 months from the effective date.

Should you have any questions regarding this hearing decision, please feel free to contact Uriel Hernandez at [email protected].

Sincerely,
Brad Eggleston
Director of Public Works
cc: Neighbor notification list
Docusign Envelope ID: A1290B62-8B16-8DD4-8011-16E7F26B3DB6 Item 9
Attachment A - 751
Waverley-Director's
Determination-26May2026
Item 9: Staff Report Pg. 8 Packet Pg. 76 of 280
Certificate Of Completion
Envelope Id: A1290B62-8B16-8DD4-8011-16E7F26B3DB6 Status: Completed Subject: Complete with Docusign: 751 Waverley-Director's Determination-26May2026.pdf Source Envelope:

Document Pages: 3 Signatures: 1 Envelope Originator:

Certificate Pages: 1 Initials: 0 Peter Gollinger
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
[email protected]
IP Address: 2601:640:cb7c:7
Record Tracking
Status: Original
5/26/2026 12:46:45 PM
Holder: Peter Gollinger
[email protected]
Location: DocuSign
Security Appliance Status: Connected Pool: StateLocal
Signer Events Signature Timestamp
Brad Eggleston
[email protected]
Director of Public Works
City of Palo Alto
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 170.85.54.112
Sent: 5/26/2026 12:48:37 PM
Viewed: 5/26/2026 12:51:30 PM
Signed: 5/26/2026 12:52:00 PM
Electronic Record and Signature Disclosure:

Not Offered via Docusign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 5/26/2026 12:48:37 PM
Certified Delivered Security Checked 5/26/2026 12:51:30 PM Signing Complete Security Checked 5/26/2026 12:52:00 PM Completed Security Checked 5/26/2026 12:52:00 PM
Payment Events Status Timestamps
Item 9
Attachment A - 751
Waverley-Director's
Determination-26May2026
Item 9: Staff Report Pg. 9 Packet Pg. 77 of 280

CITY OF
PALO
ALTO
Planning Review Application
Department of Planning & Development Services 250
Hamilton Avenue, Palo Alto, CA 94301
Appointments are required for all application submittals. please call (650) 329-2496 (ext. 6, option 2)
or email [email protected] to schedule
Application Request
Architectural Review
Conditional Use Permit / Amendment
Design Enhancement Exception
Historic Review
Home Improvement Exception
2 Property Location
Address of Subject Property:

Zone District:

Individual Review
Preliminary AR Review
Council Prescreening
☐Coordinated Development (SOFA 1)
Site and Design Review
Subdivision
751 Waverly Ave., Palo Alto CA 94301
12016106 Assessor's Parcel Number:

For File Number, Date Received, Fees,
and Project Status please see Accela
(City Database)
bit.ly/PaloAltoACA
For general questions, please email
planner@palo
Temporary Use Permit
Transfer of Development Rights
☐ Variance
Zone Change
Planned Community or Amendment
Other:

Historic Category (if applicable):
③ Project Description Housing Development Project as Defined by the State:☐ Yes ☐ No Removal of 4 Redwood Trees
4 Applicant/Primary Contact/
Entitlement Recipient ☐ Architect ☐ Engineer
Name: Estanislao Mikalonis Name: Eric Krebs
Primary Contact If Different From
Applicant
Name: Helen Baumann
Address: 3290 Middlefield Road Address: Consulting Arborist Address: 151 Coleridge Ave City: Palo Alto City: City: Palo Alto
Zip Code: 94306 State: CA Zip Code: State: Zip Code: 94301 State: CA Phone: 650-494-2496 Phone: 650-851-8797 Phone: 650-520-3061 Email: [email protected] Email: [email protected] Email: [email protected] 5 Property Owner
Name: Estanislao Mikalonis Email: [email protected] Address: 3290 Middlefield Rd., Phone 1: 650-494-2496
City: Palo Alto State: CA Zip: 94306 Phone 2:

I hereby certify that I am the owner of record of the property described in Box #2 above and that I approve of the requested action herein. If this application(s) is subject to 100% cost recovery of planning costs, I understand that charges for staff time spent processing this application(s) will be based on the Policy and Procedures document provided to me. I understand that my initial deposit is an estimate of these charges and not a fee, and I agree to abide by the billing policy stated.

Sie e Date: 1/22/226
In accordance with Government Gode 65103.5, in addition to architectural drawings, a design professional or the owner of a copyright may submit a site plan or a massing diagram for posting dline or for distribution to the public. The City of Palo Alto requires that such site plan or massing diagram be provided as a separate electronic file. If the design professional or the owner of the copyright elects not to provide a separate electronic file containing a site plan or massing diagram upon submission of architectural diagrams, they willbe deemed to have granted permission for the City to share architectural drawings online and for distribution to the public.

Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 10 Packet Pg. 78 of 280

KREBS TREE CONSULTING
Eric Krebs, Consulting Arborist
Tree Report
Four Redwood Trees at 751 Waverley Street, Palo Alto
September 17, 2025
Prepared for: Pastor: Estanislao Mikalonis
STA Parish Office
3290 Middlefield Road
Palo Alto, СА
Attention: City of Palo Alto
Planning Department
Prepared by: Eric Krebs, Consulting Arborist
(650) 851-8797
Thank you for choosing Krebs Tree Consulting for your tree care needs.

Assignment The request for an inspection and recommendations was prompted by concerns regarding tree related damage to the church and the surrounding infrastructure at St Thomas Aquinas Church, 751 Waverley Street, Palo Alto, CA.

Following an inspection, I was asked to provide a written report for submittal to the City of Palo Alto Planning Department. This report includes current tree status, recommendations for tree removals due to current and future damage to surrounding infrastructure and a summary of my findings regarding the possibility mitigating damages while retaining the trees.

As agreed, on July 25, 2025, I visited the site; the following report details my findings.

My inspection involved a visual assessment from the ground. I measured the trunk diameters at standard height (DSH), took photos for documentation of conditions and to show the locations of the trees. I measured from the edge of the driveway to the trees and from the trees to the church foundation.

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8 Eric Krebs
(650) 851-8797
International Society of Arboriculture, Certified Arborist # WC-0829 RETIRED International Society of Arboriculture, Certified Tree Risk Assessor # CTRA 1185 RETIRED Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 11 Packet Pg. 79 of 280
751 Waverley Street, Palo Alto, CA Tree Status Report
Tree health and structural conditions
No signs of health decline or notable structural defects were observed during my inspection.

The overall condition of the trees appeared to be good.

Site conditions and impacts to the church, driveway and city sidewalk.

The trees are growing in an approximately eight to nine-foot-wide planting strip that runs between the church and the driveway. The driveway enters the property from Homer Street.

The damage from root intrusion to the church foundation, driveway and the city sidewalk is obvious. I took measurements from the edge of the driveway to the root plates and on the opposite side of the trees from the root plates to the church foundation on all four trees.

Observations
Tree #1
Tree Species
DSH
Height
Health
Tree Structure
Location
Tree #2
Tree Species
DSH
Height
Health

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Coast redwood (Segouia sempervirens).
30 inches
Estimated 75 feet
Good - the crown density and vigor seemed good and
evenly distributed throughout the existing canopy.

No structural defects were noted.

Tree #1 is the first tree in the planting strip closet to Homer St. The distance from the edge of driveway to the root plate is 2'6" and the distance from the root plate to the church foundation is 2'7".

Coast redwood (Segouia sempervirens).
31 inches
Estimated 75 feet
Good - the crown density and vigor seemed good and
evenly distributed throughout the existing canopy.

Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 12 Packet Pg. 80 of 280
751 Waverley Street, Palo Alto, CA
Tree Structure
Location
Tree Status Report
No structural defects were noted.

Tree #2 is the second tree in from Homer Street. The
distance from the edge of driveway to the root plate is 2'10" and the distance from the root plate to the church foundation is 2'11".

Tree #3
Tree Species
DSH
Height
Health
Tree Structure
Location
Coast redwood (Seqouia sempervirens).
34 inches
Estimated 75 feet
Good - the crown density and vigor seemed good and
evenly distributed throughout the existing canopy.

No structural defects were noted.

Tree #3 is the third tree in from Homer Street. The
distance from the edge of driveway to the root plate is 1'5" and the distance from the root plate to the church foundation is 2'
Tree #4
Tree Species
DSH
Height
Health
Tree Structure
Location
Coast redwood (Segouia sempervirens).
29 inches
Estimated 75 feet
Good - the crown density and vigor seemed good and
evenly distributed throughout the existing canopy.

No structural defects were noted.

Tree #4 is the fourth tree in from Homer Street. The
distance from the edge of driveway to the root plate is 6" and the distance from the root plate to the church
foundation is 1'10".

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Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 13 Packet Pg. 81 of 280
751 Waverley Street, Palo Alto, CA Tree Status Report
Discussion/Mitigation Measures and Recommendations
The four coastal redwoods were planted in a planting strip that runs between the driveway and the church. The width of this area varies from approximately eight to nine feet, measured from the edge of the driveway to the church foundation. Unfortunately, the trees are outgrowing the space provided, resulting in extensive damage to the driveway, city sidewalk and more importantly the heaving of the church foundation. This damage will continue to worsen as the trees grow.

It is important to note that the church was recently painted and the cracks in the foundation have been partially sealed, the result is some of the damage to the foundation is covered up.

Mitigation-I considered root pruning to protect the surrounding infrastructures, however, the limited area in the planting strip for root pruning would put the cuts well into the structural roots. Due to the potential for total tree failures and damage to the church and/or surrounding properties, I do not recommend root pruning. I do not know of any other means of mitigating future damage.

Recommendations-Unfortunately the only way to mitigate future infrastructure damage and to ensure the safety of the church and surrounding properties is to remove the trees.

Conclusion
(See supporting photos)
I'm not sure when these trees were planted but from all appearances they provided a beautiful tree scape along the side of the church. Unfortunately, it was only a matter of time before they would outgrow their space. Coastal Redwoods can grow to incredible heights and girth; they need a huge planting area. Retaining these trees will only compound the conflicts between the infrastructure and the tree roots.

If you have questions, please feel free to contact me at (650) 851 8797.

Respectfully submitted,
Eric Krebs

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Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 14 Packet Pg. 82 of 280
751 Waverley Street, Palo Alto, CA Tree Status Report
Photo showing the trees
proximity to the church
viewed from the
driveway. (looking in
from Homer St)
Photo showing the trees viewed
from Homer St. Note the damage
to the city sidewalk.

Page 5 of 8 ends

Photo showing the trees proximity
to the church. Looking towards
Homer St.

Item 9
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Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 15 Packet Pg. 83 of 280
751 Waverley Street, Palo Alto, СА

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Tree Status Report
Photo showing possible signs of
damage to the interior of the church.

Photo of the area on the
foundation that is sealed
and painted over.

Photo of another crack in the
foundation
Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 16 Packet Pg. 84 of 280
751 Waverley Street, Palo Alto, СА

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These two photos show more examples of the cracks that are sealed and painted
These two photos show some of the damage to the driveway Tree Status Report
Item 9
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Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 17 Packet Pg. 85 of 280
751 Waverley Street, Palo Alto, CА
Arborist Disclosure Statement
Tree Status Report
Arborists are tree specialists who use their education, knowledge, training and experience to examine trees, recommend measures to enhance the beauty and health of trees, and attempt to reduce the risk of living near trees. Clients may choose to accept or disregard the recommendations of the arborist, or to seek additional advice.

Arborists cannot detect every condition that could possibly lead to the structural failure of a tree. Trees are living organisms that fail in ways we do not fully understand. Conditions are often hidden within trees and below ground. Arborists cannot guarantee that a tree will be healthy or safe under all circumstances, or for a specified period of time. Likewise, remedial treatments, like any medicine, cannot be guaranteed.

Treatment, pruning and removal of trees may involve considerations beyond the scope of the arborist's services such as property boundaries, property ownership, site lines, disputes between neighbors, and other issues. Arborists cannot take such considerations into account unless complete and accurate information is disclosed to the arborist. An arborist should then be expected to reasonably rely upon the completeness and accuracy of the information provided.

Trees can be managed, but they cannot be controlled. To live near trees is to accept some degree of risk.

The only way to eliminate all risk associated with trees is to eliminate all trees.

I,_Estanislao Mikalonis, acknowledge that I have received a copy of this document and that I have read and understand this disclosure statement. Signed: Date: 4142025

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Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 18 Packet Pg. 86 of 280
(F)

PARKING
(E) Sian
(E) STAIRS

EXISTING BUILDING
·AREA OF NEW WORK

SHOMN SHADEP
(E) PORCH

WAVERLEY
#2

E) BRIVEWAY
HOMER
Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 19 Packet Pg. 87 of 280
From: Boozari, Bryan
To: Gollinger, Peter
Cc: Eric Krebs; Helen Baumann
Subject: RE: Replacement tree strategy for 751 Waverley Date: Thursday, February 19, 2026 5:30:59 PM
Attachments: image001.png
image002.png
Hello All,
The tree removal application has been approved under 26PLN-00034. Thank you all for your coordination.

Kind regards,

BRYAN BOOZARI
Building Planning Technician
Planning and Development Services Department
285 Hamilton Avenue, Palo Alto, CA 94301
(650) 329-2223 | [email protected]
www.PaloAlto.gov
From: Gollinger, Peter <[email protected]>
Sent: Thursday, February 19, 2026 5:04 PM
To: Boozari, Bryan <[email protected]>
Cc: Eric Krebs <[email protected]>; Helen Baumann <[email protected]> Subject: Re: Replacement tree strategy for 751 Waverley Hello Bryan,
Yes, Urban Forestry is comfortable working with the applicant and their arborist on replacements in the coming weeks/months pending the applicant getting species and location approval through their internal processes.

Thank you!
Peter Gollinger
Urban Forester
City of Palo Alto
Sent from my iPhone (please excuse any typos!)
Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 20 Packet Pg. 88 of 280
 
On Feb 19, 2026, at 5:01 PM, Boozari, Bryan <[email protected]> wrote:

Hello Eric,
Thank you for the tree replacement information. @Gollinger, Peter if Urban Forestry green lights this tree replacement strategy I will close out the review and approve the OTC tree removal.

Kind regards,
<image001.png> BRYAN BOOZARI
Building Planning Technician
Planning and Development Services Department
285 Hamilton Avenue, Palo Alto, CA 94301
(650) 329-2223 | [email protected]
www.PaloAlto.gov
<image002.png>
From: Eric Krebs <[email protected]>
Sent: Wednesday, February 18, 2026 1:53 PM
To: Boozari, Bryan <[email protected]>; Gollinger, Peter <[email protected]>
Cc: Helen Baumann <[email protected]>
Subject: Replacement tree strategy for 751 Waverley
CAUTION: This email originated from outside of the organization. Be cautious of opening attachments and clicking on links.

Hello Bryan, I just spoke with Helen Baumann regarding mitigation trees for 751 Waverley and she forwarded your email. They were under the impression that they had up to a year to get the mitigation trees approved. I spoke with Peter Gollinger a couple of times through this pro ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ i
This message needs your attention

1. This is a personal email address.

2. This is their first mail to some recipients.

Mark Safe Report

CGBANNERINDICATOR
Hello Bryan,
I just spoke with Helen Baumann regarding mitigation trees for 751 Waverley and Powered by Mimecast
Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 21 Packet Pg. 89 of 280
she forwarded your email. They were under the impression that they had up to a year to get the mitigation trees approved. I spoke with Peter Gollinger a couple of times through this process and assured him that the church is well aware of the need to replant and that they have three separate properties in Palo Alto to plant trees on.

Finding planting sites should not be a problem. The tree species and sites will need to be approved by the pastor and parishioners as well as the city forestry department.

This could take some time. To date, this is the strategy.

Your help through this process will be appreciated, the church would like to move forward with the removals.

Thank you,
Eric Krebs
Item 9
Attachment B - Approved
Tree Permit Packet [26PLN00034]
Item 9: Staff Report Pg. 22 Packet Pg. 90 of 280
City Council
Staff Report
Report Type: SPECIAL ORDERS OF THE DAY
Lead Department: City Clerk
Meeting Date: October 19, 2026
Report #:2606-6495
TITLE
Interview Candidates for Vacancies on the Public Art Commission (PAC) and Stormwater Management Oversight Committee (SWMOC); CEQA Status – Not a Project - Appointments

BACKGROUND
The Fall Boards, Commissions, and Committees (BCC) Recruitment was open from July 28, 2026 – September 2, 2026, and recruited for 11 vacancies across 5 meeting bodies. Applications were published as part of the September 14 agenda packet and are available online and linked in Attachment A1. The City Council is tentatively scheduled to appoint candidates for PAC and SWMOC on October 26, 2026.

Each candidate interview is scheduled for 10 minutes. Interviews may be conducted in-person or via Zoom. Candidates may begin with a 1-3 minute summary describing their experience and/or desire to serve. The remaining time will be allocated to questions from the City Council.

ANALYSIS
Public Art Commission
• Eligibility Requirements: PAC commissioners must shall be members of the architectural review board or shall be professional visual artists, professional visual arts educators, professional visual arts scholars, or visual arts collectors whose authorities and skills are known and respected in the community and, whenever feasible, who have demonstrated an interest in, and have participated in, the arts program of the city.2 Additionally, no member may be a councilmember, officer, or employee of the City. • Vacancies: There are two full-term vacancies (11/1/2026 – 10/31/2029). 1 City Council, September 14, 2026; Agenda Item #2; SR# 2606-6492 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=897242&dbid=0&repo=PaloAlto 2 Palo Alto Municipal Code Section 2.18.020 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0- 0-0-61257
Item 10
Item 10 Staff Report
Item 10: Staff Report Pg. 1 Packet Pg. 91 of 280
• The City Council selected candidates to interview on September 14, 2026. Candidate Ruth-Anne Siegel has since withdrawn her application. The interview schedule is below.

Time Applicant Participation Method
6:45 – 6:55 Claude Ezran Zoom
6:55 – 7:05 Harriet Stern In-person
7:05 – 7:15 Mette Huberman In-person
7:15 – 7:25 Marilyn Gottlieb-Roberts In-person
7:25 – 7:35 Eedit Bareket In-person
Stormwater Management Oversight Committee
• Eligibility Requirements: SWMOC members must be a Palo Alto resident, employee of a business located in Palo Alto, or an owner of real property within the City. Additionally, no member may be a councilmember, officer, or employee of the City.5 • Vacancies: There are two full-term vacancies (11/1/2026 - 10/31/2030). • The City Council selected candidates to interview on September 28, 2026. The interview schedule is below.

Time Applicant Participation Method
8:00 - 8:10 Susan Rosenberg Zoom
8:10 - 8:20 Gergory Bennett Zoom
8:20 - 8:30 Brian Hamachek In-person
8:30 - 8:40 Doug Burns To Be Determined
8:40 - 8:50 Catherine Perman In-person
8:50 - 9:00 Lee Taubeneck To Be Determined

FISCAL/RESOURCE IMPACT
None.

STAKEHOLDER ENGAGEMENT
City staff publicized the recruitment through the following methods:
• Electronic distribution via the City’s Uplift Local community newsletter, City Clerk’s Office newsletter, City’s website, and City’s social media channels; • Physical posting and flyer distribution at City facilities, including libraries, community centers, and City Hall;
• Print and online ads in the Palo Alto Daily Post and Palo Alto Weekly; and 5 Resolution 1310 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=897189&dbid=0&repo=PaloAlto Item 10
Item 10 Staff Report
Item 10: Staff Report Pg. 2 Packet Pg. 92 of 280
• Outreach to previous applicants, community-based organizations and groups related to the commissions’ subject matter jurisdiction

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

ATTACHMENTS
Attachment A: BCC Applications
APPROVED BY:

Mahealani Ah Yun, City Clerk
Item 10
Item 10 Staff Report
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Meeting Date: October 19, 2026
Staff Report # 2606-6495
Boards, Commissions, and Committees Applications
Applications were published in full as part of the September 14, 2026 and September 28, 2026 City Council agenda packets. In order to reduce paper consumption, staff is providing links to the applications in lieu of re-printing them.
• Public Art Commission
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=47ceb645-9ca4-430d86ce-3d99805126b5 • Stormwater Management Oversight Committee
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=4d4e030c-1fdf-4a6c8074-77a56d596df5 Item 10
Attachment A - Boards,
Commissions, and
Committees Applications
Item 10: Staff Report Pg. 4 Packet Pg. 94 of 280
City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: October 19, 2026
Report #:2512-5724
TITLE
California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation Reports as of June 30, 2025; CEQA Status—Not a Project.

RECOMMENDATION
No action is requested, this transmits the California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation Reports as of June 30, 2025 for the Miscellaneous and Safety Plans, reviewed by the Finance Committee September 15, 2026.

EXECUTIVE SUMMARY
The CalPERS Annual Valuation Report was reviewed with the Finance Committee on September 15, 2026, and the Committee recommended that the City Council accept the report.1 The June 30, 2025 CalPERS Annual Valuation report is used to inform the development of the upcoming FY 2028 Budget process and FY 2028 – 2037 Long Range Financial Forecast (LRFF).

This report estimates total employer contribution costs of $71.3 million in FY 2028, an increase of $0.2 million or 0.3% from estimated employer contribution cost of $71.1 million in FY 2027.

Despite CalPERS investment gains of 11.6% (FY 2025) and 9.3% (FY 2024), this was preceded by significant market volatility that triggered the CalPERS Risk Mitigation Policy. As a result the discount rate was reduced from 7.0% to 6.8%. Overall, the City’s combined funded status (not adjusted for the City’s Pension Trust) is projected to be 70.8% in FY 2028 as compared to 66.0% in FY 2027 and 64.0% in FY 2026.

The Unfunded Accrued Liability (UAL) is $504.5 million. This amount is reduced to $373.5 million or 78.4% funded status once adjusted for the City’s Pension Trust, which has $131.0 million of contributions/principal and net earnings as of June 30, 2026. Put another way, the City Council’s proactive work to address unfunded liabilities a little over a decade ago has 1 Finance Committee, September 15, 2026; Agenda Item #1, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=f3b819b3-2dc4-47e1-809c-413a8fbca45e Item A
Item A Staff Report
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improved the funded ration by 7.6%. In total, planned contributions (principal) of $101.8 million to the Pension Trust have been made through FY 2026 ($65.5 million, or 64.4% of the total, is from the General Fund). Contributions to this Trust continue in alignment with the City’s goal to reach 90% funded by FY 2036.

In comparing the CalPERS current and projected rates in the June 30, 2025 valuation with the prior year’s valuation, which was used to inform the FY 2027-2036 long-range financial forecast, the estimated reduction in Actuarial Determined Contribution (ADC) for FY 2028 is $1.7 million for all plans citywide, which is subject to more refined budget development.

BACKGROUND
The City of Palo Alto offers its employees and retirees a defined pension benefit plan which is managed and administered by CalPERS, a State of California Pension Trust Program. The CalPERS program maintains two pension plans for the City: one for safety employees (sworn fire and police personnel) and another for miscellaneous employees (all other non-safety personnel employed by the City, including field personnel, administrative support, and managers).

There are three tiers of benefits within the two plans described above. Table 1 below details the current pension plans and the different benefit levels in each tier. It takes City employees five (5) years of service to vest in any tier of the pension program. Attachment A outlines the number of employees in each tier by pension plan and employee group. As of the third quarter of calendar year 2026, 68% of the workforce in both plans are in Tier 3, or PEPRA. The employee ratios within the Miscellaneous Plans tier 1, tier 2 and tier 3 are 21.0%, 10.1%, and

68.9% respectively. The employee ratios within the Safety Plans tier 1, tier 2 and tier 3 are

30.3%, 5.1%, and 64.6% respectively for the same period.

Table 1: City of Palo Alto Pension Benefit Plans and Tiers Miscellaneous Safety: Fire Safety: Police
Tier 1 2.7%/service year worked;
eligibility starting at the age
of 55 (2.7% @ 55)

3.0%/service year worked;
eligibility starting at the
age of 50 (3.0% @ 50)

3.0%/service year worked;
eligibility starting at the age of
50 (3.0% @ 50)
Tier 2 Effective July 16, 2010:

2.0%/service year worked,
eligibility starting at age 60
(2.0% @ 60)
Effective June 7, 2012:

3.0%/service year worked,
eligibility starting at age 55
(3.0% @ 55)
Effective December 6, 2012:

3.0%/service year worked,
eligibility starting at age 55
(3.0% @ 55)
Tier 3
“PEPRA”*
Effective January 1, 2013:

2.0%/service year worked;
eligibility starting at age 62
(2.0% at 62)
Effective January 1, 2013:

2.7%/service year worked;
eligibility starting at age 57
(2.7% at 57)
Effective January 1, 2013:

2.7%/service year worked;
eligibility starting at age 57
(2.7% at 57)
* Under the California Public Employees’ Pension Reform Act (PEPRA), the benefit calculation is limited by a maximum salary of $191,679 in 2026 for both the Miscellaneous and Safety plans, therefore it is calculated based on service years but cannot exceed the maximum amount. The final salary calculation is based on the average of the highest three years.

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CalPERS Annual Valuations
The CalPERS Annual Valuation reports are included in Attachments B and C and provide an actuarial analysis of the City of Palo Alto pension trust plans based on member and financial data as of June 30, 2025. The purpose of these reports is to provide an update on the assets and accrued liabilities of plans, determine minimum employer contributions for the coming fiscal year, and communicate significant changes in actuarial assumptions or policies. The valuation reports included for review as part of this memo will be used to inform the FY 2028 – FY 2037 Long Range Financial Forecast (LRFF) and the FY 2028 budget development process.

The calculations for annual employer contributions are based on a set of actuarial assumptions for demographic (e.g., mortality, retirement, termination, and disability rates) and economic factors (e.g., investment returns, inflations, salary growth). These assumptions reflect CalPERS’ best estimate for future experience of the plans and are long term in nature. Valuation results will vary from one year to the next due to assumption or method changes, changes in plan provisions, and actuarial experience that is different than anticipated such as investment returns that do not meet the CalPERS 6.8% target.
2025 CalPERS Asset Liability Management (ALM) Study
In addition to the valuation reports issued annually, CalPERS completes a comprehensive review of plans every four years. In November 2025, CalPERS completed an Asset Liability Management (ALM) process to review the capital market assumptions and the strategic asset allocation to ascertain whether a change in the discount rate and other economic assumptions was warranted.

As part of this process, the Actuarial Office also completed an Experience Study to review pension demographics for potential modification. The November 2021 ALM held the discount rate at 6.8% after it was lowered from 7.0% in July 2021 due to the Funding Risk Mitigation Policy. Notable outcomes of the 2025 ALM process included but were not limited to the following:
 Maintaining the discount rate at 6.8%;
 New actuarial assumptions, including an increase for price inflation from 2.3% to 2.5% and total wage inflation from 2.8% to 3.0%; and
 Increased portfolio risk with the adoption of a Total Portfolio Approach and a 75%/25% equity-to-bond reference portfolio (Previously, it was Strategic Asset Allocation Approach and 72% equities and 28% bonds as of November 2025).

While not impacting the June 30, 2025 CalPERS Annual Valuation reports, it should be noted that the preliminary CalPERS investment gain for the period ending June 30, 2026 is 14.8% compared to target levels of 6.8%. On April 16, 2024, the CalPERS board suspended the CalPERS Risk Mitigation Policy which automatically reduced expected investment return when actual investment returns outperform the expected investment return by at least 2 percentage points replacing it with the CalPERS board decision whether the pension fund’s expected investment return should be adjusted and its asset allocation changed in line with the new expected rate of return. As of the date of this report, the CalPERS discount rate remains at 6.8% Item A
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With the CalPERS ALM concluding in November 2025, this kicks off preparation for the City’s internal comprehensive review of the Retiree Benefit Policy3. In alignment with City policy, the Retiree Benefit Policy review presented to the Finance Committee in November 2026. This will include collaboration with an outside actuary, transmittal of pertinent results from the CalPERS ALM, and any proposed amendments to the policy. The City’s Retiree Benefit Policy and impacts of the preliminary ALM were used to inform recommended budget balancing strategies presented to the Finance Committee on November 18, 2025 including a recommendation that funds in the Section 115 Pension Trust Fund (Pension Trust) held by the Public Agency Retirement Services (PARS) be transmitted to CalPERS. Continued implementation of this policy was incorporated into the development of the FY 2027-2036 LRFF and the FY 2027 Adopted Operating Budget.

Long-Term Financial Planning
The City has taken several proactive steps to address rising pension costs and long-term liabilities, including cost-sharing in labor agreements, establishing a Pension Trust4, and adopting a Retiree Benefit Funding Policy that guides financial planning of retirement benefits.

The City initially contributed to the Pension Trust in FY 2017 on an ad-hoc basis, using one-time savings or excess revenues. Beginning in FY 2019, the City Council directed staff to use a more conservative discount rate as compared to CalPERS for the Normal Cost (NC) portion of the payment, and transferring the additional “supplemental” funding beyond CalPERS required employer contributions to the Pension Trust5. This practice was reinforced in the development of a funding policy, as adopted by the City Council in FY 20216 and modified in FY 2023 (CMR 2212-05137). Most notably, these modifications included reducing the discount rate used to calculate supplemental contributions from 6.2% to 5.3% (compared to the CalPERS discount rate of 6.8%) and extending actuary reporting from three to four years to align with the CalPERS ALM Study. Additionally, the title of the policy was revised from the Pension Policy to the Retiree Benefit Policy to recognize actions approved by the City Council to proactively plan for retiree healthcare plans in a similar manner to pensions. Additionally, one-time contributions continue to be made each year if excess revenues or unspent savings are available, subject to 3 City Council, February 6, 2023; SR #2212-0513,
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82218&dbid=0&repo=PaloAlto&searchid=ca2b5a16 -b6c5-4fc0-84ec-8affafd4c45d
4 City Council, January 23, 2017; SR #7553, https://www.cityofpaloalto.org/files/assets/public/v/1/agendasminutes-reports/reports/city-manager-reports-cmrs/year-archive/2017/7553.pdf 5 City Council, October 29, 2018; SR #9740, https://www.cityofpaloalto.org/files/assets/public/v/1/agendasminutes-reports/reports/city-manager-reports-cmrs/year-archive/2018/9740.pdf 6 City Council, November 30, 2020; SR #11722, https://www.cityofpaloalto.org/files/assets/public/v/1/agendasminutes-reports/reports/city-manager-reports-cmrs/year-archive/2020-2/id-11722.pdf 7 City Council, February 6, 2023; SR #2212-0513,
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City Council approval. As part of policy goals, the City seeks to reach a 90% funded status by FY 2036.

Every four years, in alignment with the timing of the CalPERS ALM study, the policy requires that staff consult with an actuary to inform the City Council of progress the City has made towards achieving a 90% funded status goal and assess and respond to changes impacting the City’s retiree benefit plans. The most recent City pension actuary analysis encompassing the CalPERS assets/liabilities and the Pension Trust conducted in 2025 projects that the City will meet a 90% funded goal for all plans by FY 2032-33 (not adjusted for the Pension Trust) or by FY 2031-32 (adjusted for the Pension Trust)13.

It is important to note that this policy, and the funding elements within it, are subject to modification at any time by the City Council. Consistent with prior years, any changes to the budget or financial planning of retiree benefits in interim years will be implemented at the timing of City Council approval and formalized in the policy document in the next comprehensive reporting period.

ANALYSIS
CalPERS has two components designated in the annual billing for employer contributions:

1. The Normal Cost (NC) or “pay-go”
This cost reflects the employer contribution for the plan retirement benefits provided to current employees based on the current set of assumptions and is billed as a percentage of payroll.

2. The Unfunded Accrued Liability (UAL) or “catch-up”
This cost represents the employer amortization of unfunded accrued liability and is billed as a flat dollar rate. The CalPERS annual payment is calculated to pay down the City’s unfunded accrued pension liability over the amortization timeline. If all actuarial assumptions were realized through the amortization timeline, the City would eliminate its unfunded pension liability after making these annual payments.

The Actuarial Determined Contribution (ADC) or “blended rate” reflects the combined cost of NC and UAL to approximate total employer cost.

Current and Projected Employer Contributions
Table 2 summarizes the projected employer contributions required for each plan to fund the ADC and the NC and UAL that make up this rate. Over the next six years for the Miscellaneous Plan, CALPERS estimates that future ADCs will adjust from 37.6% of payroll or $44.1 million in FY 2027 to 29.7% of payroll or $42.2 million by FY 2033. Over the same six-year span for the Safety Plans, CalPERS estimates that the ADC will adjust from 82.4% of payroll or $27.0 million 13 Finance Committee, November 18, 2025; SR #2511-5392, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=f496f38a-e4f0-4e74-aa7d-f3ffec5e308d Item A
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in FY 2027 to 66.3% of payroll or $27.9 million in FY 2033. As projected in the table below, the cost fluctuations in the outyears are primarily due to investment returns of -6.1% as of June 30, 2022 (used to develop FY 2025), +5.8% as of June 30, 2023 (used to develop FY 2026), and +9.3% as of June 30, 2024 (used to develop FY 2027) where investment gains and losses are subject to a five-year ramp-up period. The full impact from these returns will be realized in FY 2029, FY 2030 and FY 2031, respectively. Based upon the returns and amortizations, the ADC peaks in FY 2029 and then declines.

TABLE 2: CalPERS Current and Projected Employer Contributions* Miscellaneous FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 NC (%)** 10.9% 10.5% 10.4% 10.1% 9.9% 9.6% 9.4% 9.2%
UAL (%) 32.8% 27.2% 25.3% 26.1% 24.8% 23.7% 21.4% 20.5% Total ADC
(% payroll)

43.7% 37.6% 35.7% 36.2% 34.7% 33.3% 30.8% 29.7%
NC ($) $10.9 12.3 12.7 12.8 12.9 12.9 13.0 13.1
UAL ($)** $32.8 31.8 31.1 33 32.4 31.7 29.6 29.1
Total ADC ($M) $43.7 $44.1 $43.8 $45.8 $45.3 $44.6 $42.6 $42.2 Safety FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 NC (%)** 20.6% 19.6% 19.7% 19.0% 18.4% 17.8% 17.2% 16.7% UAL (%) 61.1% 62.8% 55.8% 57.1% 54.9% 52.8% 51.3% 49.6% Total ADC
(% payroll)

81.7% 82.4% 75.5% 76.1% 73.3% 70.6% 68.5% 66.3%
NC ($) $6.3 6.4 7.1 7.1 7.1 7.1 7.0 7.0
UAL ($)** $18.5 20.5 20.3 21.4 21.2 21.0 21.0 20.9
Total ADC ($M) $24.8 $27.0 $27.4 $28.5 $28.3 $28.1 $28.0 $27.9 Total (Misc. &
Safety)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 NC ($) $17.1 18.7 19.9 19.9 20.0 20.0 20.0 20.1
UAL ($)** $51.3 52.3 51.4 54.4 53.6 52.7 50.6 50.0
Total ADC ($M) $68.5 71.1 71.3 74.3 73.6 72.7 70.6 70.1 * This table does not include cost savings for prepayment of the UAL, which confers 3.2% or $1.7 million in savings, or provisions in labor agreements for employees to pay a portion of employer normal costs; Miscellaneous groups pay 1-2% and Safety groups pay 3-4%. These savings will continue to be included in budget development. ** The City makes payments to CalPERS for NC as a percentage of payroll and for UAL as a flat dollar rate. For illustrative purposes, this table uses CalPERS estimates to restate the total ADC (NC and UAL) in respective terms.

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TABLE 3: CalPERS Investment Returns
Returns as of 6/30/17 6/30/18 6/30/19 6/30/20 6/30/21 6/30/22 6/30/23 6/30/24 6/30/25 6/30/26 Used to
develop
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Actual (%) 11.2 8.6 6.7 4.7 21.3 (6.1) 5.8 9.3 11.6 14.8* Target (%) 7.25 7.0 7.0 7.0 6.8 6.8 6.8 6.8 6.8 6.8
*This CalPERS report does not consider the preliminary 14.8% return on investments for the period ending June 30, 2026 (6.8 percent target)[5]. The estimated impact from this return will be included in long-term financial planning.

TABLE 4: FY 2027 - 2036 Long-Range Financial Forecast – Pension Rates by Plan * Plan Type FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 Miscellaneous 37.6% 37.6% 39.0% 38.3% 37.5% 34.6%
Safety 82.4% 75.5% 76.1% 73.3% 70.6% 68.5%
*Total ADC as % of payroll as of the June 30, 2024 valuation In comparing the CalPERS current and projected rates (Table #2) in the June 30, 2025 valuation with the prior year’s valuation, which was used to inform the previous FY 2027-2036 LRFF (Table #4), these new pension projected rates align and are favorable compared to the prior long-range projections within 2% to 4% for the Miscellaneous Plan and within 6% to 10% for the Safety Plan between FY 2027 and FY 2032. Note that only the next fiscal year (FY 2028) are definite rates, while the next years are projections, subject to change with annual actuarial reports especially future investment returns. The estimated reduction in ADC for fiscal year FY 2028 is $1.7 million for all plans citywide, which is subject to more refined budget development.

Pension Plan’s Funded Status
The funded status is a measure of how well funded, or how “on track” a plan is with respect to assets versus accrued liabilities. As of June 30, 2025, the funded status of the overall Public Employee’s Retirement Fund (PERF) increased from 75.0% to projected levels of 79.0%[6]. This rate is higher than the City’s funded status of 73.8% for Miscellaneous and 65.2% for Safety.

Table 5 details the City’s June 30, 2025 funded status for the Miscellaneous and Safety plans.

The total unfunded pension liability decreased from $573.5 million as of June 30, 2023 to $566.4 million as of June 30, 2024. This represents a decrease of $7.1 million, or 1.2% compared to the prior year. This change was predominantly due to investment returns. When investment returns come in lower than anticipated, this increases the City’s unfunded liability.

Conversely, when investment returns come in higher than anticipated this favorably impacts the City’s plans.

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TABLE 5: CalPERS Projected Unfunded Accrued Liability
As of
June 30, 2021
As of
June 30, 2022
As of
June 30, 2023
As of
June 30, 2024
As of
June 30, 2025
Miscellaneous $236,033,956 340,518,738 349,828,105 339,818,201 294,630,629 Misc. Funded Status 75.3% 65.8 66.3 68.7 73.8
Safety $155,885,841 212,812,772 223,707,130 226,573,506 209,856,279 Safety Funded Status 69.4% 60.0% 59.7% 61.1% 65.2%

TOTAL UNFUNDED

PENSION LIABILITY
$391,919,797 $553,331,510 $573,535,235 $566,391,707 $504,486,908 % Change from Prior Yr $ -23.2% 41.2% 3.7% -1.2% -10.9% TOTAL FUNDED STATUS %
(CalPERS only)

73.3% 63.8% 64.0% 66.0% 70.8%
Section 115 Trust (PARS) 2.7% 3.8% 5.3% 6.6% 7.6%
TOTAL FUNDED STATUS %
(including Trust)

75.9% 67.6% 69.3% 72.6% 78.4%
Pension Trust Status
In total, planned contributions (principal) of $101.8 million to the Pension Trust will have been made since inception in FY 2017 through FY 2026 ($65.5 million, or 64.4% of the total, is from the General Fund). The Pension Trust is invested in a Balanced portfolio, earning 15.5%, 12.6%, and 11.5% for the years ending June 30, 2026, 2025, and 2024 respectively. The annualized fiveyear return as of July 2026 is 6.85%. The total balance of $131.0 million as of June 30, 2026 includes contributions of $101.8 million and net earnings since inception of $29.2 million. The Pension Trust is not factored into the CalPERS reports funded status; however, when included the City’s combined funded status is 78.4%.

The Retirement Benefit Policy indicates that the City make Additional Discretionary Payments (ADPs) from the Pension Trust to CalPERS for amounts that exceed the one-year minimum employer contribution. CalPERS allows agencies to make ADPs at any time and in any amount at the agency’s discretion. These optional payments serve to reduce the UAL and future required contributions.

FISCAL/RESOURCE IMPACT
This report and feedback from the City Council will be used to inform the development of the FY 2028–2037 LRFF, the FY 2028 Budget, and other long-term financial planning. As previously noted, the estimated reduction in ADC for fiscal year FY 2028 is $1.7 million for all plans citywide, which is subject to more refined budget development. Staff will continue to update Item A
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the City Council and incorporate information as it becomes available. Below is a timeline for anticipated reporting:

November: Four-Year Palo Alto Retiree Benefit Policy Review The most recent CalPERS ALM concluded in November 2025. This kicks off preparations for the City’s internal comprehensive review of the Retiree Benefit Policy. In alignment with City policy, the Retiree Benefit Policy review will be brought forward in November 2026. This will include collaboration with an outside actuary, transmittal of pertinent results from the CalPERS ALM, and any recommended policy adjustments.

December/January: FY 2028 to FY 2037 LRFF
Annually, staff brings forward a LRFF that projects the City’s financial outlook over the next 10 years based on current City Council approved service levels and several alternative scenarios.

The financial implications of these reports and input from the Finance Committee are used to inform the development of the annual budget. Staff incorporates estimates in the base budget as part of the annual budget development process.

May/June: FY 2028 Budget Deliberations and City Council Adoption Consistent with current practice, staff will include the actuarially determined contributions as calculated by CalPERS in the June 30, 2025 valuation reports and the additional contributions per the pension funding policy including use of a lower 5.3% discount rate as part of the development of the FY 2028 budget for contributions to the pension trust fund. Staff has also been monitoring the potential impact of AB 1383, which was vetoed by Governor Newsom on September 20, 2026. If enacted, the bill would have increased the PEPRA compensation cap by resetting the calculation based on the 2027 federal wage base (current PEPRA uses the 2013 federal wage base). In addition, AB 1383 would have created new PEPRA safety formulas based on age 55 rather than age 57 for future service and allows for higher safety formulas to be negotiated through collective bargaining.

STAKEHOLDER ENGAGEMENT
The Administrative Service Department staff worked primarily with the City Manager’s Office on this informational report.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because accepting the CalPERS pension annual valuation report is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).

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ATTACHMENTS
Attachment A: Pension Plan Benefit Levels Enrollment by Plan and Employee Group Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2025 Attachment C: CalPERS Safety Valuation as of June 30, 2025 APPROVED BY:

Lauren Lai, Administrative Services Director
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Employee Group Employee Group
Q3 2026 Q3 2025 Q3 2026 Q3 2025
City Council & Council Appointees 9 8 IAFF 94 87
Tier 1 1 1 Tier 1 25 28
Tier 2 1 2 Tier 2 9 9
Tier 3 6 5 Tier 3 60 50
Management & Professional 230 218 Fire Chiefs' Association 4 4 Tier 1 45 54 Tier 1 4 4
Tier 2 41 36 Tier 2 0 0
Tier 3 144 128 Tier 3 0 0
Service Employees' International 557 556 Fire Management 4 4 Tier 1 107 127 Tier 1 4 4
Tier 2 37 38 Tier 2 0 0
Tier 3 413 391 Tier 3 0 0
Utilities Management 45 45 PAPOA 68 67
Tier 1 23 25 Tier 1 13 15
Tier 2 6 8 Tier 2 0 1
Tier 3 16 12 Tier 3 55 51
Police Management Association 7 7
Tier 1 7 7
Tier 2 0 0
Tier 3 0 0
Police Management 1 2
Tier 1 1 1
Tier 2 0 1
Tier 3 0 0
Grand Total Miscellaneous Plans 840 827 Grand Total Safety Plans 178 171 Tier 1 176 207 Tier 1 54 59
Tier 2 85 84 Tier 2 9 11
Tier 3 579 536 Tier 3 115 101
Tiered Percentage Miscellaneous Plans Tiered Percentage Safety Plans Tier 1 21.0% 25.0% Tier 1 30.3% 34.5%
Tier 2 10.1% 10.2% Tier 2 5.1% 6.4%
Tier 3 68.9% 64.8% Tier 3 64.6% 59.1%
Tier Definitions Tier Definitions
Tier 1 2.7% @ 55 Tier 1 3% @ 50
Tier 2 2% @ 60 Tier 2 3% @ 55
Tier 3 2% @ 62 Tier 3 2.7% @ 57
* Includes Police Trainee and Limited Hourly FTE
Attachment A:

City of Palo Alto Pension Plan Benefit Levels Enrollment by Plan and Employee Group as of Third Quarter Miscellaneous Plans Safety Plans
Employee Count Employee Count
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Plan Benefit Levels
Enrollment by Plan and
Employee Group
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California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795-3000 | Fax: (916) 795-2744 888 CalPERS (or 888-225-7377) | TTY: (877) 249-7442 | www.calpers.ca.gov July 2026
Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857) Annual Valuation Report as of June 30, 2025
Dear Employer,
Attached to this letter is the June 30, 2025, actuarial valuation report for the plan noted above. Provided in this report is the determination of the minimum required employer contributions for fiscal year (FY) 2027-28. In addition, the report contains important information regarding the current financial status of the plan as well as projections and risk measures to aid in planning for the future.

Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member contribution rates for FY 2027-28 along with an estimate of the employer contribution requirements for FY 2028-29. The required employer and member contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.

Fiscal Year Employer Normal
Cost Rate
Employer Amortization of
Unfunded Accrued Liability
PEPRA Member
Contribution Rate
2027-28 10.36% $31,091,460 7.25%
Projected Results
2028-29 10.1% $33,033,000 TBD
The actual investment return for FY 2025-26 was not known at the time this report was prepared. The projected UAL payment above assumes the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2025-26 differs from 6.8%, the actual UAL contribution requirement for FY 2028-29 will differ from that shown above. For additional information on future contribution requirements, please refer to Projected Employer Contributions. This section also contains projected required contributions through FY 2032-33.

Changes from Previous Year’s Valuations
On November 19, 2025, the CalPERS Board of Administration (board) adopted new actuarial assumptions based on the recommendations in the November 2025 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increase, inflation assumption, and various other assumptions for public agencies. These new assumptions are incorporated in this actuarial valuation and impact the required contributions for FY 2027-28.

In addition, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the framework for the management of CalPERS assets. The board adopted a discount rate of 6.80%, which is unchanged from the prior year’s valuation, and an increase in the price inflation assumption from 2.30% to 2.50% per year.

Besides the above noted changes, there may also be changes specific to the plan such as contract amendments and funding changes such as additional discretionary payments and amortization schedule fresh starts.

PEPRA Member Contribution Rate
The employee contribution rate for PEPRA members can change based on the results of the actuarial valuation. See Member Contribution Rates for more information.

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Miscellaneous Valuation as
of June 30, 2025
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CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 2 ends

Report Navigation Features
The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly.

The tables of contents are “clickable.” This is true for the main table of contents that follows the title page and the intermediate tables of contents at the beginning of sections. The Adobe navigation pane on the left can also be used to skip to specific exhibits.

There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined, while underlined links will take you to the CalPERS website. Examples are shown below.

Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool Member Contribution Rates Public Agency PEPRA Member Contribution Rates Summary of Key Valuation Results Pension Outlook Overview Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results Projected Employer Contributions Public Agency Actuarial Valuation Reports Further descriptions of general changes are included in the Highlights and Executive Summary section and in Appendix A - Actuarial Methods and Assumptions. The effects of any changes on the required contributions are included in the Reconciliation of Required Employer Contributions section.

Questions
A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer Contact Center at 888 CalPERS (or 888-225-7377).

Sincerely,
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Attachment B 2 of 87
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Miscellaneous Valuation as
of June 30, 2025
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California Public Employees’ Retirement System
Actuarial Valuation for the
Miscellaneous Plan
of the City of Palo Alto
as of June 30, 2025
(CalPERS ID: 6373437857)
(Rate Plan ID: 8)
Required Contributions for Fiscal Year
July 1, 2027 — June 30, 2028
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Miscellaneous Valuation as
of June 30, 2025
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CY Fin Job Instance ID: 517364 PY Fin Job Instance ID: 464138 Report ID: 517368 Table of Contents
Actuarial Certification .................................................................................................................................................................. 1 Highlights and Executive Summary............................................................................................................................................ 2 Introduction................................................................................................................................................................................. 3 Purpose ...................................................................................................................................................................................... 3 Summary of Key Valuation Results ............................................................................................................................................ 4 Changes Since the Prior Year’s Valuation.................................................................................................................................. 5 Subsequent Events..................................................................................................................................................................... 5 Assets............................................................................................................................................................................................ 6 Reconciliation of the Fair Value of Assets .................................................................................................................................. 7 Asset Allocation .......................................................................................................................................................................... 8 CalPERS History of Investment Returns .................................................................................................................................... 9 Liabilities and Contributions ..................................................................................................................................................... 10 Determination of Required Contributions.................................................................................................................................. 11 Development of Accrued and Unfunded Liabilities ................................................................................................................... 12 Required Employer Contributions............................................................................................................................................. 13 Member Contribution Rates...................................................................................................................................................... 14 Funded Status – Funding Policy Basis ..................................................................................................................................... 15 Additional Employer Contributions............................................................................................................................................ 16 Projected Employer Contributions ............................................................................................................................................ 17 (Gain)/Loss Analysis 6/30/24 – 6/30/25.................................................................................................................................... 18 Schedule of Amortization Bases............................................................................................................................................... 19 Amortization Schedule and Alternatives ................................................................................................................................... 21 Reconciliation of Required Employer Contributions.................................................................................................................. 23 Employer Contribution History .................................................................................................................................................. 24 Funding History......................................................................................................................................................................... 24 Risk Analysis .............................................................................................................................................................................. 25 Future Investment Return Scenarios ........................................................................................................................................ 26 Discount Rate Sensitivity .......................................................................................................................................................... 27 Mortality Rate Sensitivity .......................................................................................................................................................... 27 Maturity Measures .................................................................................................................................................................... 28 Maturity Measures History ........................................................................................................................................................ 29 Funded Status – Termination Basis.......................................................................................................................................... 30 Funded Status – Low-Default-Risk Basis ................................................................................................................................. 31 Supplementary Information ....................................................................................................................................................... 32 Normal Cost by Benefit Group.................................................................................................................................................. 33 Summary of Valuation Data...................................................................................................................................................... 34 Status of PEPRA Transition...................................................................................................................................................... 35 Plan's Major Benefit Options..................................................................................................................................................... 36 Appendix A - Actuarial Methods and Assumptions................................................................................................................. 38 Appendix B - Principal Plan Provisions.................................................................................................................................... 65 Appendix C - Participant Data ................................................................................................................................................... 76 Appendix D - Glossary ............................................................................................................................................................... 81 Attachment B 4 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 15 Packet Pg. 109 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 1 ends

Actuarial Certification
It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the applicable Standards of Practice promulgated by the Actuarial Standards Board. While this report is intended to be complete, our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with regard to pensions. The actuaries responsible for this report and their respective responsibilities are as follows.

Actuarial Methods and Assumptions
It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board of Administration, are internally consistent and reasonable for this plan.

Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Actuarial Data and Rate Plan Results
The assumptions and methods in this report are the responsibility of the CalPERS Chief Actuary and Deputy Chief Actuaries named above. These were established pursuant to their responsibility for setting actuarial policy and I relied upon them without independent assessment of the reasonableness of the assumptions and methods, as such an evaluation would have required substantial additional work beyond the scope of this assignment. To the best of my knowledge this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded condition of the Miscellaneous Plan of the City of Palo Alto and satisfies the actuarial valuation requirements of Government Code section 7504. This valuation and related validation work was performed by the CalPERS Actuarial Office. The valuation was based on the member and financial data as of June 30, 2025, provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this report was produced.

Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Attachment B 5 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 16 Packet Pg. 110 of 280
Highlights and Executive Summary
• Introduction 3
• Purpose 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5
Attachment B 6 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 17 Packet Pg. 111 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 3 ends

Introduction
This report presents the results of the June 30, 2025, actuarial valuation of the Miscellaneous Plan of the City of Palo Alto of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required contributions for fiscal year (FY) 2027-28.

Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using data as of June 30, 2025. This report contains actuarial information for the following rate plan(s). • 8, Miscellaneous First Level
• 30157, Miscellaneous Second Level
• 26004, Miscellaneous PEPRA Level
The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2025; • Determine the minimum required employer contributions for this rate plan for FY July 1, 2027, through June 30, 2028; • Determine the required member contribution rate for FY July 1, 2027, through June 30, 2028, for employees subject to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and • Provide actuarial information as of June 30, 2025, to the CalPERS Board of Administration (board) and other interested parties.

The pension funding information presented in this report should not be used in financial reports subject to Governmental Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit Pension Plan. A separate accounting valuation report for such purposes is available from CalPERS and details for ordering are available on the CalPERS website (www.calpers.ca.gov).

The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency should contact a CalPERS actuary before disseminating any portion of this report for any reason that is not explicitly described above.

Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies; changes in plan provisions or applicable law; and differences between the required contributions determined by the valuation and the actual contributions made by the agency.

Assessment and Disclosure of Risk
This report includes the following risk disclosures consistent with the guidance of the Actuarial Standards of Practice:
• A “Scenario Test,” projecting future results under different investment income returns. • A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 5.8% and

7.8%.
• A “Sensitivity Analysis,” showing the impact on current valuation results assuming rates of mortality are 10% lower or 10% higher than our current post-retirement mortality assumptions adopted in 2025. • Plan maturity measures indicating how sensitive a plan may be to the risks noted above. • The funded status on a termination basis.
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.

Attachment B 7 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 18 Packet Pg. 112 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 4 ends

Summary of Key Valuation Results
Below is a brief summary of key valuation results along with page references where more detailed information can be found.

Required Employer Contributions — page 13
Fiscal Year
2026-27
Fiscal Year
2027-28
Employer Normal Cost Rate 10.48% 10.36%
Unfunded Accrued Liability (UAL) Contribution Amount $31,802,552 $31,091,460 Paid either as
Option 1) 12 Monthly Payments of $2,650,213 $2,590,955
Option 2) Annual Prepayment in July $30,773,461 $30,085,379 Member Contribution Rates — page 14
Fiscal Year
2026-27
Fiscal Year
2027-28
Classic Member Contribution Rate 7.00%/8.00% 7.00%/8.00% PEPRA Member Contribution Rate 7.25% 7.25%
Projected Employer Contributions — page 17
Fiscal Year Normal Cost
(% of payroll)
Annual
UAL Payment
2028-29 10.1% $33,033,000
2029-30 9.9% $32,426,000
2030-31 9.6% $31,716,000
2031-32 9.4% $29,607,000
2032-33 9.2% $29,134,000
Funded Status – Funding Policy Basis — page 15
June 30, 2024 June 30, 2025
Entry Age Accrued Liability (AL) $1,085,448,984 $1,126,070,057 Fair Value of Assets (Assets) 745,630,783 831,439,428
Unfunded Accrued Liability (UAL) [AL – Assets] $339,818,201 $294,630,629 Funded Ratio [Assets ÷ AL] 68.7% 73.8%
Summary of Valuation Data — page 34

June 30, 2024 June 30, 2025
Active Member Count 833 833
Annual Covered Payroll $107,807,296 $112,499,318
Transferred Member Count 393 420
Separated Member Count 504 507
Retired Members and Beneficiaries Count 1,364 1,393
Attachment B 8 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 19 Packet Pg. 113 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 5 ends

Changes Since the Prior Year’s Valuation
Investment Policy and Discount Rate
On November 19, 2025, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the framework for the management of CalPERS assets. Consistent with that policy, the board also adopted a discount rate of 6.80% for use in this valuation, which is unchanged from the prior year’s valuation.

Actuarial Methods and Other Assumptions
On November 19, 2025, the board adopted new actuarial assumptions based on the recommendations in the November 2025 CalPERS Experience Study and Review of Actuarial Assumptions. This study assessed various assumptions including retirement rates, termination rates, mortality rates, rates of salary increase, and inflation. New assumptions stemming from the study are incorporated in this actuarial valuation and affect required contributions for fiscal year 2027-28. Among the changes were an increase in the price inflation assumption from 2.30% to 2.50% per year, and an increase in the wage inflation assumption from 2.80% to 3.00% per year.

Plan Assets
Plan assets are measured at fair value. In the prior year’s actuarial valuation report the term Market Value of Assets was used to describe the asset value used for funding purposes. The Actuarial Office has used this term interchangeably with Fair Value of Assets. Effective with the June 30, 2025, valuation, CalPERS will exclusively use the term Fair Value of Assets in actuarial reports. This is a change in terminology and does not represent any change in methodology.

Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. For rate plans that are not in a risk pool (non-pooled), benefit changes by contract amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the effective date of the amendment is after the valuation date.

Please refer to the Plan’s Major Benefit Options and Appendix B - Principal Plan Provisions for a summary of the plan provisions used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in the (Gain)/Loss Analysis 6/30/24 – 6/30/25 and the effect on the employer contribution is shown in the Reconciliation of Required Employer Contributions. It should be noted that no change in liability or contribution is shown for any plan changes which were already included in the prior year’s valuation.

Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 2025, as well as statutory changes, regulatory changes and board actions through January 2026.

The 2025 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IRC section 401(a)(17) and Government Code section 7522.10 were used for this valuation and are assumed to increase 2.5% per year based on the price inflation assumption. The actual 2026 limits, determined in October 2025, are not reflected.

To the best of our knowledge, there have been no other subsequent events that could materially affect current or future certifications rendered in this report.

Attachment B 9 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 20 Packet Pg. 114 of 280
Assets
• Reconciliation of the Fair Value of Assets 7
• Asset Allocation 8
• CalPERS History of Investment Returns 9
Attachment B 10 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 21 Packet Pg. 115 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 7 ends

Reconciliation of the Fair Value of Assets
Plan assets are measured at fair value. In addition, CalPERS does not use an asset valuation method to smooth the effect of market volatility on asset values. All current, historical and projected asset values used in this report are the Fair Value of Assets.

1. Fair Value of Assets as of 6/30/24 including Receivables* $745,630,783

2. Change in Receivables for Service Buybacks (115,598)

3. Employer Contributions 42,310,713

4. Employee Contributions 10,243,335

5. Benefit Payments to Retirees and Beneficiaries (57,851,591)

6. Refunds (352,043)

7. Transfers 0

8. Service Credit Purchase (SCP) Payments and Interest 131,109

9. Administrative Expenses (610,658)

10. Miscellaneous Adjustments 0

11. Investment Return (Net of Investment Expenses) 92,053,378

12. Fair Value of Assets as of 6/30/25 including Receivables* $831,439,428 * Note that the reserve against deficiency, established pursuant to Government Code section 20174, and the reserve for fiduciary selfinsurance have been excluded from the assets used for funding purposes, since those assets are generally not available for the payment of benefits.

Attachment B 11 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 22 Packet Pg. 116 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 8 ends

Asset Allocation
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in its entirety on the valuation date. The assets for City of Palo Alto Miscellaneous Plan are a subset of the PERF and are invested accordingly.

Asset Class
Allocation as of
June 30, 2025
Public Equity 38.9%
Private Equity 17.7%
Income 30.3%
Real Assets 13.1%
Private Debt 3.8%
Total Fund
Opportunistic 0.1%
Low Liquidity Enhanced Return 2.1%
Other 0.1%
Total Fund Financing
Active (2.3%)
Strategic (3.8%)
Total Fund 100.0%
On November 19, 2025, the board adopted a Total Portfolio Approach, which does not specify a target for each asset classification. Instead, there is an equity-bonds Reference Portfolio that sets the market risk exposure, captures passive returns, and becomes the singular total fund performance benchmark. The Reference Portfolio adopted by the board is 75% equities and 25% bonds. Consistent with this framework, the discount rate is based on the Reference Portfolio and the associated active risk limit adopted by the board.

For more information on the portfolio as of the valuation date, see the Trust Level Review as of June 30, 2025 and the Investment Section of the CalPERS 2024-25 Annual Comprehensive Financial Report, which are available on the CalPERS website.

Attachment B 12 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 23 Packet Pg. 117 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 9 ends

CalPERS History of Investment Returns
The following is a chart with 20 years of historical annual returns of the PERF for each fiscal year ending on June 30 as reported by the Investment Office. Investment returns reported are net of investment expenses but without reduction for administrative expenses. The assumed rate of return, however, is net of both investment and administrative expenses. Also, the Investment Office uses lagged private asset valuations for investment performance reporting purposes. This can lead to a timing difference in private asset influence on performance in the returns below and those used for financial reporting purposes. The investment gain or loss calculation in this report relies on final assets that have been audited and are appropriate for financial reporting.

Because of these differences, the effective investment return for funding purposes in a single year can be higher or lower than the return reported by the Investment Office shown here.

History of Investment Returns (2006 through 2025)
* As reported by the Investment Office with lagged private valuations and without any reduction for administrative expenses.

The table below shows annualized investment returns of the PERF for various time periods ending on June 30, 2025. These returns are the annual rates that if compounded over the indicated number of years would equate to the actual time-weighted investment performance of the PERF. It should be recognized that the annual rate of return is volatile, as the chart above illustrates, so when looking at investment returns, it is informative to look at average returns over longer time horizons.

PERF Realized Rates of Return as of June 30, 2025
1 year 3 year 5 year 10 year 20 year 30 year

11.6% 8.9% 8.0% 7.1% 6.7% 7.6%
Attachment B 13 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 24 Packet Pg. 118 of 280
Liabilities and Contributions
• Determination of Required Contributions 11
• Development of Accrued and Unfunded Liabilities 12
• Required Employer Contributions 13
• Member Contribution Rates 14
• Funded Status – Funding Policy Basis 15
• Additional Employer Contributions 16
• Projected Employer Contributions 17
• (Gain)/Loss Analysis 6/30/24 – 6/30/25 18
• Schedule of Amortization Bases 19
• Amortization Schedule and Alternatives 21
• Reconciliation of Required Employer Contributions 23
• Employer Contribution History 24
• Funding History 24
Attachment B 14 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 25 Packet Pg. 119 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 11 ends

Determination of Required Contributions
Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex calculations based on a set of actuarial assumptions and methods. See Appendix A for information on the assumptions and methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required contributions for the fiscal year that begins two years after the valuation date.

Contribution Components
Two components comprise required contributions:
• Normal Cost — expressed as a percentage of pensionable payroll • Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exactly matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The employer and employees each pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total normal cost.

When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL over time. This is called the UAL Contribution component. There is an option to prepay this amount during July of each fiscal year, otherwise it is paid monthly.

In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience different than expected, non-investment experience different than expected, assumption changes, and benefit changes. Each source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordance with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A for more information on the amortization policy.

Attachment B 15 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 26 Packet Pg. 120 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 12 ends

Development of Accrued and Unfunded Liabilities
June 30, 2024 June 30, 2025

1. Present Value of Projected Benefits
a) Active Members $500,299,849 $511,672,750
b) Transferred Members 50,315,737 55,744,213
c) Separated Members 24,294,459 22,278,718
d) Members and Beneficiaries Receiving Payments 670,851,688 708,865,341 e) Total $1,245,761,733 $1,298,561,022

2. Present Value of Future Employer Normal Costs $88,353,448 $94,309,239

3. Present Value of Future Employee Contributions $71,959,301 $78,181,726

4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $339,987,100 $339,181,785 b) Transferred Members (1b) 50,315,737 55,744,213
c) Separated Members (1c) 24,294,459 22,278,718
d) Members and Beneficiaries Receiving Payments (1d) 670,851,688 708,865,341 e) Total $1,085,448,984 $1,126,070,057

5. Fair Value of Assets $745,630,783 $831,439,428

6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $339,818,201 $294,630,629

7. Funded Ratio [(5) ÷ (4e)] 68.7% 73.8%
Attachment B 16 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 27 Packet Pg. 121 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 13 ends

Required Employer Contributions
The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.

Fiscal Year
Required Employer Contributions 2027-28
Employer Normal Cost Rate 10.36%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount $31,091,460 Paid either as
1) Monthly Payment $2,590,955
Or
2) Annual Prepayment Option* $30,085,379
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate (expressed as a percentage of payroll and paid as payroll is reported) and the Unfunded Accrued Liability (UAL) Contribution Amount (billed monthly (1) or prepaid annually (2) in dollars). * Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later than July 31).

For Member Contribution Rates see the following page.

Fiscal Year Fiscal Year
2026-27 2027-28
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost1 17.93% 17.78%
Offset due to Employee Contributions2(7.45%) (7.42%)
Employer Normal Cost 10.48% 10.36%
Projected Annual Payroll for Contribution Year $117,119,039 $122,931,042 Estimated Employer Contributions Based on Projected Payroll Total Normal Cost $20,999,444 $21,857,139
Expected Employee Contributions (8,725,368) (9,121,483) Employer Normal Cost $12,274,076 $12,735,656
Unfunded Liability Contribution $31,802,552 $31,091,460 % of Projected Payroll (illustrative only) 27.15% 25.29% Estimated Total Employer Contribution $44,076,628 $43,827,116 % of Projected Payroll (illustrative only) 37.63% 35.65% 1 The Total Normal Cost is a blended rate for all benefit groups in the plan. For a breakout of normal cost by benefit group, see Normal Cost by Benefit Group.
2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each benefit formula, see Member Contribution Rates.

Attachment B 17 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 28 Packet Pg. 122 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 14 ends

Member Contribution Rates
The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.

Classic Members
Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution rate above the breakpoint, if any, is as described below.

Benefit Formula
Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Auxiliary organizations of the CSU system may elect reduced contribution rates for Miscellaneous members, in which case the contribution rate above the breakpoint is 6% if members are not covered by Social Security and 5% if they are.

PEPRA Members
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas, final compensation period, and contribution requirements for “new” employees (generally those first hired into a CalPERS-covered position on or after January 1, 2013). In accordance with Government Code Section 7522.30(b), “new members … shall have an initial contribution rate of at least 50% of the normal cost rate.” The normal cost rate for the plan is dependent on the benefit levels, actuarial assumptions, and demographics of the plan, particularly members’ entry age into the plan. Should the total normal cost rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate shall be 50% of the new normal cost rate rounded to the nearest quarter percent.

The table below shows the determination of the PEPRA member contribution rates effective July 1, 2027, based on 50% of the total normal cost rate for each respective rate plan as of the June 30, 2025, valuation.

Basis for Current Rate Rates Effective July 1, 2027
Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in
Normal
Cost
Adj.

Needed
Member
Rate
26004 Miscellaneous PEPRA
Level 14.250% 7.25% 14.66% 0.410% No 7.25%
For a description of the methodology used to determine the Total Normal Cost for this purpose, see PEPRA Normal Cost Rate Methodology in Appendix A.

Attachment B 18 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 29 Packet Pg. 123 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 15 ends

Funded Status – Funding Policy Basis
The table below provides information on the current funded status of the plan under the funding policy. The funded status for this purpose is based on the fair value of assets relative to the funding target produced by the entry age actuarial cost method and actuarial assumptions adopted by the board. The actuarial cost method allocates the total expected cost of a member’s projected benefit (Present Value of Benefits) to individual years of service (the Normal Cost). The value of the projected benefit that is not allocated to future service is referred to as the Accrued Liability and is the plan’s funding target on the valuation date. The Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute measure of funded status and can be viewed as employer debt. The Funded Ratio equals the assets divided by the funding target. The funded ratio is a relative measure of the funded status and allows for comparisons between plans of different sizes.

June 30, 2024 June 30, 2025

1. Present Value of Benefits $1,245,761,733 $1,298,561,022

2. Entry Age Accrued Liability 1,085,448,984 1,126,070,057

3. Fair Value of Assets 745,630,783 831,439,428

4. Unfunded Accrued Liability (UAL) [(2) – (3)] $339,818,201 $294,630,629

5. Funded Ratio [(3) ÷ (2)] 68.7% 73.8%
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to the normal cost of the active plan members will be sufficient to fully fund all retirement benefits if future experience matches the actuarial assumptions. A funded ratio of less than 100% (positive UAL) implies that in addition to normal costs, payments toward the UAL will be required. Plans with a funded ratio greater than 100% have a negative UAL (or surplus) but are required under current law to continue contributing the normal cost in most cases, preserving the surplus for future contingencies.

Calculations for the funding target reflect the expected long-term investment return of 6.8%. If it were known on the valuation date that future investment returns will average something greater/less than the expected return, calculated normal costs and accrued liabilities provided in this report would be less/greater than the results shown. Therefore, for example, if actual average future returns are less than the expected return, calculated normal costs and UAL contributions will not be sufficient to fully fund all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those provided in this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative purposes, funded statuses based on a 1% lower and higher average future investment return (discount rate) are as follows:
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%

1. Present Value of Benefits $1,506,636,103 $1,298,561,022 $1,135,071,001

2. Entry Age Accrued Liability 1,269,121,453 1,126,070,057 1,007,569,035

3. Fair Value of Assets 831,439,428 831,439,428 831,439,428

4. Unfunded Accrued Liability (UAL) [(2) – (3)] $437,682,025 $294,630,629 $176,129,607

5. Funded Ratio [(3) ÷ (2)] 65.5% 73.8% 82.5%
The Risk Analysis section of the report provides additional information regarding the sensitivity of valuation results to the expected investment return and other factors. Also provided in that section are measures of funded status that are appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities.

Attachment B 19 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 30 Packet Pg. 124 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 16 ends

Additional Employer Contributions
The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL) over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is provided in Amortization Schedule and Alternatives. Certain aspects of the policy such as 1) layered amortization bases (positive and negative) with different remaining payoff periods, and 2) the phase-in of required payments toward investment gains and losses, can result in volatility in year-to-year projected UAL payments. Provided below is information on how an Additional Discretionary Payment (ADP), together with your required UAL payment of $31,091,460 for FY 2027-28, may better accomplish your agency’s specific objectives with regard to either smoothing out projected future payments or achieving a greater reduction in UAL than would otherwise occur when making only the minimum required payment. Such additional payments are allowed at any time and can also result in significant long-term savings.

Fiscal Year 2027-28 Employer Contribution Versus Agency Funding Objectives The interest-to-payment ratio for the FY 2027-28 minimum required UAL payment is 54%, which means the required payment of $31,091,460 includes $16,766,533 of interest cost and results in a $14,324,927 reduction in the UAL, as can be seen in Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If the interest-to-payment ratio is close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming years, which would be shown in Projected Employer Contributions. An alternative metric that provides similar information about the FY 2027-28 required UAL payment is the number of years it would take that payment, if held constant, to pay off the existing UAL (note: actual required UAL payments will vary each year). An annual payment of $31,091,460 would pay off the current UAL in 12.3 years (ignoring any unexpected changes in UAL occurring after June 30, 2025). If the agency would like their FY 2027-28 payment toward the UAL to be consistent with a faster pace for reaching 100% funded, an ADP can be added to the required minimum payment.

Provided below are select ADP options for consideration. Making such an ADP during FY 2027-28 does not require an ADP be made in any future year, nor does it change the remaining amortization period of any portion of unfunded liability. For information on permanent changes to amortization periods, see Amortization Schedule and Alternatives. Agencies considering making an ADP should contact CalPERS for additional information.

Fiscal Year 2027-28 Employer Contributions — Illustrative Scenarios If the Annual UAL
Payment Each
Year Were…
The Current
UAL Would be
Paid Off in…
This Would
Require an ADP1
in FY 2027-28 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$31,091,460 12.3 years $0 $12,735,656 $43,827,116
35,743,290 10 years 4,651,830 12,735,656 48,478,946
61,467,275 5 years 30,375,815 12,735,656 74,202,931
1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal year would have to be less or more than the amount shown to have the same effect on the UAL amortization.

The calculations above are based on the projected UAL as of June 30, 2027, as determined in the June 30, 2025, actuarial valuation. New unfunded liabilities can emerge in future years due to assumption or method changes, changes in plan provisions, and actuarial experience different than assumed. Making an ADP illustrated above for the indicated number of years will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one year to the next and can diverge significantly from projections over a period of several years.

Additional Discretionary Payment History
The following table provides a recent history of actual ADPs made to the plan.

Fiscal
Year ADP FiscalYear ADP
2018-19 $0 2022-23 $0
2019-20 0 2023-24 0
2020-21 0 2024-25 0
2021-22 0 2025-26 6,075,000
Attachment B 20 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 31 Packet Pg. 125 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 17 ends

Projected Employer Contributions
The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. The projection assumes that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2025-26 is assumed to be 6.80% per year, net of investment and administrative expenses. The actual long-term cost of the plan will depend on the actual benefits and expenses paid and the actual investment experience of the fund.

The projected normal cost percentages below reflect that the normal cost is expected to continue to decline over time as new employees are hired into lower cost benefit tiers. Future contribution requirements may differ significantly from those shown below. The actuarial valuation does not include payroll beyond the valuation date. For the most realistic projections, the employer should apply projected payroll amounts to the rates below based on the most recent information available, such as current payroll as well as any plans to fill vacancies or add or remove positions.

Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2025-26 and Beyond) 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33
Normal Cost % 10.36% 10.1% 9.9% 9.6% 9.4% 9.2%
UAL Payment $31,091,460 $33,033,000 $32,426,000 $31,716,000 $29,607,000 $29,134,000 Total as a % of Payroll* 35.65% 36.2% 34.7% 33.3% 30.8% 29.7% Projected Payroll $122,931,042 $126,618,973 $130,417,542 $134,330,069 $138,359,971 $142,510,771 *Illustrative only and based on the projected payroll shown.

The required UAL payments are expected to vary significantly from the projections above due to experience, particularly investment experience. For projected contributions under alternate investment return scenarios, please see the Future Investment Return Scenarios exhibit. Our online pension plan projection tool, Pension Outlook, is available in the Employers section of the CalPERS website. Pension Outlook can help plan and budget pension costs under various scenarios.

For ongoing plans, investment gains and losses are amortized using an initial 5-year ramp. For more information, please see Amortization of Unfunded Actuarial Accrued Liability in Appendix A. This method phases in the impact of the change in UAL over a 5-year period in order to reduce employer cost volatility from year to year. As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. However, required contributions can change gradually and significantly over the next five years. In years when there is a large investment loss, the relatively small amortization payments during the initial ramp period could result in contributions that are less than interest on the UAL (i.e. negative amortization) while the contribution impact of the increase in the UAL is phased in.

Attachment B 21 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 32 Packet Pg. 126 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 18 ends

(Gain)/Loss Analysis 6/30/24 – 6/30/25
To calculate the cost requirements of the plan, assumptions are made about future events that affect the amount and timing of benefits to be paid and assets to be accumulated. Each year, actual experience is compared to the expected experience based on the actuarial assumptions. This results in actuarial gains or losses, as shown below.

1. Total (Gain)/Loss for the Year
a) Unfunded Accrued Liability (UAL) as of 6/30/24 $339,818,201 b) Expected payment on the UAL during 2024-25 32,190,210 c) Interest through 6/30/25 [0.068 x (1a) - ((1.068)½ - 1) x (1b)] 22,031,170 d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 329,659,161 e) Change due to plan changes 0
f) Change due to AL Significant Increase 0
g) Change due to assumption changes (704,263)
h) Change due to method changes 0
i) Change due to discount rate change with Funding Risk Mitigation 0 j) Expected UAL after all other changes [(1d) + (1e) + (1f) + (1g) + (1h) + (1i)] 328,954,898 k) Actual UAL as of 6/30/25 294,630,629
l) Total (Gain)/Loss for 2024-25 [(1k) - (1j)] ($34,324,269)

2. Investment (Gain)/Loss for the Year
a) Fair Value of Assets as of 6/30/24 $745,630,783
b) Prior fiscal year receivables (274,142)
c) Current fiscal year receivables 158,545
d) Contributions received 52,554,048
e) Benefits and refunds paid (58,203,635)
f) Transfers, SCP payments and interest, and miscellaneous adjustments 131,109 g) Expected return at 6.8% per year 51,576,177
h) Expected assets as of 6/30/25 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 791,572,885 i) Actual Fair Value of Assets as of 6/30/25 831,439,428 j) Investment (Gain)/Loss [(2h) - (2i)] ($39,866,543)

3. Non-Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) ($34,324,269)
b) Investment (Gain)/Loss (2j) (39,866,543)
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $5,542,274
Attachment B 22 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 33 Packet Pg. 127 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 19 ends

Schedule of Amortization Bases
Below is the schedule of the plan’s amortization bases. Note that there is a two-year lag between the valuation date and the start of the contribution year. • The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2025. • The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: FY 2027-28.

This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their required employer contribution well in advance of the start of the fiscal year.

The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for the fiscal year and adjusting for interest. The expected payment on the UAL for FY 2025-26 is based on the actuarial valuation two years ago, adjusted for additional discretionary payments, if necessary, and the expected payment for FY 2026-27 is based on the actuarial valuation one year ago.

Reason for Base
Date
Est.

Ramp
Level
2027-28
Ramp
Shape
Escalation
Rate
Amort.

Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Method Change 6/30/04 No Ramp 2.80% 0 (179,482) (185,484) 0 0 0 0 Benefit Change 6/30/05 No Ramp 2.80% 0 3,976,371 4,109,344 0 0 0 0 Assumption Change 6/30/09 No Ramp 2.80% 4 15,428,102 8,876,667 7,303,703 1,626,980 6,118,967 1,672,536 Special (Gain)/Loss 6/30/09 No Ramp 2.80% 14 15,860,202 1,343,097 15,550,684 1,380,704 15,181,255 1,419,364 Special (Gain)/Loss 6/30/10 No Ramp 2.80% 15 1,336,098 108,326 1,315,004 111,359 1,289,341 114,477 Assumption Change 6/30/11 No Ramp 2.80% 6 8,503,902 1,250,770 7,789,571 1,285,792 6,990,472 1,321,794 Special (Gain)/Loss 6/30/11 No Ramp 2.80% 16 (57,207) (4,455) (56,493) (4,580) (55,601) (4,708) (Gain)/Loss 6/30/12 No Ramp 2.80% 17 25,633,692 1,923,514 25,388,945 1,977,372 25,071,896 2,032,739 Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 17 3,040,705 228,170 3,011,673 234,559 2,974,064 241,126 (Gain)/Loss 6/30/13 100% Up/Dn 2.80% 18 79,671,647 6,214,252 78,667,257 6,388,252 77,414,750 6,567,123 (Gain)/Loss 6/30/14 100% Up/Dn 2.80% 19 (51,151,569) (3,843,597) (50,657,746) (3,951,218) (50,019,123) (4,061,852) Assumption Change 6/30/14 100% Up/Dn 2.80% 9 36,306,911 4,850,480 33,763,097 4,986,293 30,905,949 5,125,910 (Gain)/Loss 6/30/15 100% Up/Dn 2.80% 20 32,024,155 2,324,387 31,799,681 2,389,470 31,492,683 2,456,376 (Gain)/Loss 6/30/16 100% Up/Dn 2.80% 21 37,030,001 2,602,415 36,858,599 2,675,283 36,600,237 2,750,191 Assumption Change 6/30/16 100% Up/Dn 2.80% 11 12,591,425 1,425,325 11,974,653 1,465,235 11,274,696 1,506,261 (Gain)/Loss 6/30/17 100% Up/Dn 2.80% 22 (20,993,192) (1,431,633) (20,941,221) (1,471,719) (20,844,289) (1,512,927) Assumption Change 6/30/17 100% Up/Dn 2.80% 12 14,239,960 1,503,557 13,654,440 1,545,657 12,985,597 1,588,935 (Gain)/Loss 6/30/18 100% Up/Dn 2.80% 23 (6,659,924) (441,574) (6,656,458) (453,938) (6,639,979) (466,648) Assumption Change 6/30/18 100% Up/Dn 2.80% 13 27,485,942 2,725,759 26,538,075 2,802,080 25,446,880 2,880,538 Method Change 6/30/18 100% Up/Dn 2.80% 13 5,324,156 527,992 5,140,550 542,776 4,929,181 557,974

Attachment B 23 of 87
Item A
Attachment B - CalPERS Miscellaneous
Valuation as of June 30, 2025
Item A: Staff Report Pg. 34 Packet Pg. 128 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 20 ends

Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.

Ramp
Level
2027-28
Ramp
Shape
Escalation
Rate
Amort.

Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 14 2,703,626 273,280 2,605,054 273,280 2,499,779 273,280 Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 14 5,188,024 524,400 4,998,873 524,400 4,796,860 524,400 Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 15 17,045,560 1,358,556 16,800,671 1,698,195 16,188,133 1,698,195 Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 15 9,525,242 931,019 9,210,805 931,019 8,874,987 931,019 Assumption Change 6/30/21 No Ramp 0.00% 16 1,979,929 187,720 1,920,567 187,721 1,857,167 187,721 Net Investment (Gain) 6/30/21 100% Up Only 0.00% 16 (87,715,916) (5,274,054) (88,230,175) (7,032,072) (86,962,596) (8,790,090) Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 16 (7,104,917) (673,629) (6,891,896) (673,630) (6,664,388) (673,629) Benefit Change 6/30/22 No Ramp 0.00% 17 922,842 85,107 897,642 85,107 870,729 85,107 Investment (Gain)/Loss 6/30/22 80% Up Only 0.00% 17 124,859,170 5,132,615 128,045,340 7,698,922 128,796,043 10,265,230 Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 17 9,757,107 899,827 9,490,672 899,827 9,206,120 899,827 Investment (Gain)/Loss 6/30/23 60% Up Only 0.00% 18 5,726,348 123,086 5,988,538 246,172 6,141,354 369,258 Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 18 11,839,644 1,064,663 11,544,474 1,064,663 11,229,232 1,064,663 Investment (Gain)/Loss 6/30/24 40% Up Only 0.00% 19 (19,524,071) 0 (20,851,708) (448,201) (21,806,435) (896,402) Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 19 15,044,678 0 16,067,716 1,444,866 15,667,137 1,444,866 Assumption Change 6/30/25 No Ramp 0.00% 20 (704,263) 0 (752,153) 0 (803,299) (72,236) Investment (Gain)/Loss 6/30/25 20% Up Only 0.00% 20 (39,866,543) 0 (42,577,468) 0 (45,472,736) (977,423) Non-Investment (Gain)/Loss 6/30/25 No Ramp 0.00% 20 5,542,274 0 5,919,149 0 6,321,651 568,465 Total 294,630,629 38,739,902 274,630,115 30,430,626 261,856,714 31,091,460 Attachment B 24 of 87
Item A
Attachment B - CalPERS Miscellaneous
Valuation as of June 30, 2025
Item A: Staff Report Pg. 35 Packet Pg. 129 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 21 ends

Amortization Schedule and Alternatives
The amortization schedule on the previous page(s) shows the minimum contributions required according to the CalPERS amortization policy. Each year, many agencies express a desire for a more stable pattern of payments or indicate interest in paying off the unfunded accrued liabilities more quickly than required. As such, we have provided alternative amortization schedules to help analyze the current amortization schedule and illustrate the potential savings of accelerating unfunded liability payments.

Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting the individual bases and remaining periods shown on the previous page, and 2) alternative “fresh start” amortization schedules using two sample periods that would both result in interest savings relative to the current amortization schedule. To initiate a fresh start, please contact a CalPERS actuary.

The current amortization schedule typically contains both positive and negative bases. Positive bases result from plan changes, assumption changes, method changes, or plan experience that increase unfunded liability. Negative bases result from plan changes, assumption changes, method changes, or plan experience that decrease unfunded liability. The combination of positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future years, such as:
• When a negative payment would be required on a positive unfunded actuarial liability; or • When the payment would completely amortize the total unfunded liability in a very short time period, and results in a large change in the employer contribution requirement.

In any year when one of the above scenarios occurs, the actuary will consider corrective action such as replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.

The current amortization schedule on the following page may appear to show that, based on the current amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact arise since there will be additional bases added to the amortization schedule in each future year. Should such a scenario arise in any future year, the actuary will take appropriate action based on guidelines in the CalPERS Actuarial Amortization Policy.

Attachment B 25 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 36 Packet Pg. 130 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 22 ends

Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 10 Year Amortization 5 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2027 261,856,714 31,091,460 261,856,714 35,743,290 261,856,714 61,467,275 6/30/2028 247,531,787 33,032,523 242,724,394 35,743,290 216,140,177 61,467,275 6/30/2029 230,226,790 32,426,253 222,291,077 35,743,290 167,314,916 61,467,276 6/30/2030 212,371,595 31,716,385 200,468,294 35,743,290 115,169,536 61,467,275 6/30/2031 194,035,858 29,606,885 177,161,562 35,743,289 59,478,271 61,467,275 6/30/2032 176,633,332 29,134,009 152,269,973 35,743,290 6/30/2033 158,536,124 27,054,953 125,685,755 35,743,289 6/30/2034 141,356,886 26,078,295 97,293,811 35,743,290
6/30/2035 124,018,776 24,632,878 66,971,214 35,743,289
6/30/2036 106,995,431 22,207,844 34,586,681 35,743,289
6/30/2037 91,320,628 20,982,417
6/30/2038 75,846,345 19,674,462
6/30/2039 60,671,505 18,699,918
6/30/2040 45,471,908 18,113,903
6/30/2041 29,844,351 13,675,901
6/30/2042 17,740,530 10,395,634
6/30/2043 8,203,612 8,477,948
6/30/2044
6/30/2045
6/30/2046
6/30/2047
6/30/2048
6/30/2049
Total 397,001,668 357,432,896 307,336,376
Interest Paid 135,144,954 95,576,182 45,479,662
Estimated Savings 39,568,772 89,665,292
Attachment B 26 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 37 Packet Pg. 131 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 23 ends

Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)

1. For Period 7/1/26 – 6/30/27
a) Employer Normal Cost 10.48%
b) Employee contribution 7.45%
c) Total Normal Cost 17.93%

2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.39%)
b) Effect of plan changes 0.00%
c) Effect of discount rate change due to Funding Risk Mitigation 0.00% d) Effect of assumption changes 0.24%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.15%)

3. For Period 7/1/27 – 6/30/28
a) Employer Normal Cost 10.36%
b) Employee contribution 7.42%
c) Total Normal Cost 17.78%
Employer Normal Cost Change [(3a) – (1a)] (0.12%)
Employee Contribution Change [(3b) – (1b)] (0.03%)
Unfunded Liability Contribution ($)

1. For Period 7/1/26 – 6/30/27 31,802,552

2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule (1,371,926) b) Effect of elimination of amortization bases 0
c) Effect of progression of amortization bases1 1,142,028 d) Effect of investment (gain)/loss during prior year2(977,423) e) Effect of non-investment (gain)/loss during prior year 568,465 f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0 g) Effect of Golden Handshake 0
h) Effect of plan changes 0
i) Effect of AL Significant Increase (Government Code section 20791) 0 j) Effect of assumption changes (72,236)
k) Effect of adjustments to the amortization schedule (e.g., Fresh Start) 0 l) Effect of method change 0
m) Net effect of the changes above [sum of (a) through (l)] (711,092)

3. For Period 7/1/27 – 6/30/28 [(1) + (2m)] 31,091,460
The amounts shown for the period 7/1/26 – 6/30/27 may be different if a prepayment of unfunded actuarial liability is made or a plan change became effective after the prior year’s actuarial valuation was performed. 1 Includes scheduled escalation in individual amortization base payments due to the 5-year ramp and payroll growth assumption used in the pre-2019 amortization policy.
2 The unfunded liability contribution for the investment (gain)/loss during the year prior to the valuation date is 20% of the “full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be included in line c) for each of the next four years.

Attachment B 27 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 38 Packet Pg. 132 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 24 ends

Employer Contribution History
The table below provides a 10-year history of the employer contribution requirements for the plan, as determined by the annual actuarial valuation. Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.

Valuation
Date
Contribution
Year
Employer
Normal Cost Rate
Unfunded Liability
Payment
06/30/2016 2018-19 10.217% $18,392,618
06/30/2017 2019-20 10.716% 21,287,260
06/30/2018 2020-21 11.487% 23,432,860
06/30/2019 2021-22 10.95% 26,358,094
06/30/2020 2022-23 10.58% 29,715,229
06/30/2021 2023-24 11.73% 28,654,772
06/30/2022 2024-25 11.34% 32,190,210
06/30/2023 2025-26 10.90% 32,780,459
06/30/2024 2026-27 10.48% 31,802,552
06/30/2025 2027-28 10.36% 31,091,460
Funding History
The table below shows the recent history of the actuarial accrued liability, fair value of assets, unfunded accrued liability, funded ratio and annual covered payroll.

Valuation
Date
Accrued
Liability
Fair Value of
Assets
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
6/30/2016 $730,382,476 $468,702,245 $261,680,231 64.2% $75,345,962 6/30/2017 772,526,669 511,805,893 260,720,776 66.3% 78,476,098 6/30/2018 831,958,865 547,102,617 284,856,248 65.8% 80,363,405 6/30/2019 868,716,440 574,012,871 294,703,569 66.1% 78,848,216 6/30/2020 909,429,635 592,313,289 317,116,346 65.1% 84,892,137 6/30/2021 956,179,582 720,145,626 236,033,956 75.3% 79,718,988 6/30/2022 996,201,108 655,682,370 340,518,738 65.8% 82,193,044 6/30/2023 1,037,247,281 687,419,176 349,828,105 66.3% 91,956,169 6/30/2024 1,085,448,984 745,630,783 339,818,201 68.7% 107,807,296 6/30/2025 1,126,070,057 831,439,428 294,630,629 73.8% 112,499,318 Attachment B 28 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 39 Packet Pg. 133 of 280
Risk Analysis
• Future Investment Return Scenarios 26
• Discount Rate Sensitivity 27
• Mortality Rate Sensitivity 27
• Maturity Measures 28
• Maturity Measures History 29
• Funded Status – Termination Basis 30
• Funded Status – Low-Default-Risk Basis 31
Attachment B 29 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 40 Packet Pg. 134 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 26 ends

Future Investment Return Scenarios
Analysis using the investment return scenarios from the Asset Liability Management process completed in 2025 was performed to determine the effects of various future investment returns on required employer UAL contributions. The CalPERS Funding Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2%, the board will consider adjustments to the discount rate. The projections below use a discount rate of 6.8% for all scenarios even though an annual return of 11.6% is high enough to trigger a board discussion on the discount rate. The projections also assume that all other actuarial assumptions will be realized and that no further changes in assumptions, contributions, benefits, or funding will occur.

The employer normal cost rates are not affected by investment returns, and since no future assumption changes are being reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.

The first table shows projected UAL contribution requirements if the fund were to earn either 1.9% or 11.6% annually. These alternate investment returns were chosen because 90% of long-term average returns are expected to fall between them over the 20-year period ending June 30, 2045.

Assumed Annual Return
FY 2025-26
through FY 2044-45
Projected Employer UAL Contributions
2028-29 2029-30 2030-31 2031-32 2032-33

1.9% (5th percentile) $34,031,000 $35,436,000 $37,758,000 $39,709,000 $44,335,000

11.6% (95th percentile) $32,054,000 $29,383,000 $25,406,000 $0 $0 Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns will average less than 1.9% or greater than 11.6% over a 20-year period, the likelihood of a single investment return less than

1.9% or greater than 11.6% in any given year is much greater. The following analysis illustrates the effect of an extreme, single year investment return.

The portfolio has an expected volatility (or standard deviation) of 12.7% per year. Accordingly, in any given year there is a 16% probability that the annual return will be -5.9% or less and a 2.5% probability that the annual return will be -18.6% or less. These returns represent one and two standard deviations below the expected return of 6.8%.

The following table shows the effect of one and two standard deviation investment losses in FY 2025-26 on the FY 2028-29 contribution requirements. Note that a single-year investment gain or loss decreases or increases the required UAL contribution amount incrementally for each of the next five years, not just one, due to the 5-year ramp in the amortization policy. However, the contribution requirements beyond the first year are also impacted by investment returns beyond the first year. Historically, significant downturns in the market are often followed by higher than average returns. Such investment gains would offset the impact of these single year negative returns in years beyond FY 2028-29.

Assumed Annual Return for
Fiscal Year 2025-26
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2027-28 2028-29
(18.6%) (2 standard deviation loss) $31,091,460 $38,210,000 (5.9%) (1 standard deviation loss) $31,091,460 $35,621,000 • Without investment gains (returns higher than 6.8%) in FY 2026-27 or later, projected contributions rates would continue to rise over the next four years due to the continued phase-in of the impact of the illustrated investment loss in FY 2025-26.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2028-29 as well as to model other investment return scenarios.

Attachment B 30 of 87
Item A
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2025
Item A: Staff Report Pg. 41 Packet Pg. 135 of 280
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Page 27 ends

Palo Alto City CouncilOctober 19, 2026

Palo Alto City Council
October 19, 2026