City Council - December 16, 2024

Water project financing advances as Council prepares for grid bonds

Palo Alto moved forward with financing for the Local Advanced Water Purification System and laid the groundwork for future grid-modernization bonds, approving both actions 7-0 on the consent calendar.

The water-project package authorized an installment sale agreement with the State Water Resources Control Board and a revised reimbursement resolution covering up to $67 million in project funds. The current agreement funding amount is $56.28 million at 1.7% interest over 30 years, with estimated total repayment of $72.31 million. The updated project cost estimate is $66.8 million.

The grid resolution declares the City’s intent to reimburse eligible modernization and electric-system expenses with future tax-exempt utility revenue bonds; it does not issue the bonds. The estimated project cost is $220 million to $306 million, with an anticipated first bond series of $70 million to $100 million and maximum expected principal of $350 million.

Council also unanimously authorized the City Manager or designee to buy or sell electric supplies and related services under approved master agreements through 2039. Each agreement has a $75 million aggregate transaction limit, and individual delivery terms may last up to 36 months.

Council adopts $2,000 annual expense policy in 6-1 vote

Council adopted a policy allowing each member to seek reimbursement of up to $2,000 per calendar year for technology and other actual and necessary expenses related to official duties. Lydia Kou cast the only dissenting vote.

The policy provides full reimbursement for technology used exclusively for City business and 25% reimbursement for mixed-use technology and cell-phone expenses. Claims must be submitted within 60 days, while expenses not specifically covered by the policy require Council approval.

At Ed Lauing’s suggestion, Council amended the policy to limit each member to one of each type of hardware during a four-year Council term. Supporters described the policy as a modest way to address technology costs and reduce financial barriers to public service. Pat Burt questioned reimbursements where personal devices carried no incremental cost and raised concerns about treating expenses as additional compensation, but ultimately voted for the amended policy. A public commenter also raised public-records and compensation concerns.

California Avenue and Ramona Street closures extended through 2025

Council unanimously extended the temporary California Avenue closure through Dec. 31, 2025, while approving a $345,000 increase in construction contingency for additional street improvements at California Avenue and El Camino Real.

The 7-0 consent vote also extended the temporary Ramona Street closure through 2025 and approved a $165,573 Phase I contract with Urban Planning Partners for the Car Free Ramona Street Project. Staff was directed to return with a proposed $233,763 Phase II contract amendment.

In a related retail action, Council unanimously adopted an interim ordinance implementing measures identified by the City as high-priority retail revitalization changes.

Council puts committee chair in charge of audit-contract talks

Council voted 7-0 to have Council Appointed Officers Committee Chair Ed Lauing lead negotiations over an extension of the Baker Tilly internal-audit services contract. The Human Resources Director and other appropriate City staff will provide technical support, and the resulting agreement must return to Council for approval.

The direction calls for negotiating an amendment through June 30, 2026, with a two-year renewal option. Council changed the staff recommendation, which had included the City Manager or designee in the negotiating role, after Greg Tanaka raised concerns about preserving the City Auditor’s independence. Council also directed that the City Auditor’s performance-review process be aligned with evaluations of other Council Appointed Officers.

In other oversight actions, Council approved $676,700 in fiscal year 2025 Baker Tilly task orders, along with completed audit reports and the 2025 audit plan. It also unanimously added $20,000 to the OIR Group agreement for independent police auditing, bringing the contract cap to $232,500 and extending services through July 31, 2025.

Cubberley review moves forward as committee structure remains unsettled

Council unanimously approved a one-year, $202,322 contract with Rincon Consultants for environmental review of a revised Cubberley master plan, along with related budget amendments.

During a separate study session, Council received reports from seven 2024 ad hoc committees but took no formal action on their future structure. A Policy and Services Committee recommendation called for waiting until the Jan. 25 annual retreat before appointing members to 2025 ad hoc committees, with a full Council discussion anticipated Jan. 13.

Pat Burt warned that waiting to establish a successor Cubberley committee could delay strategic planning and a potential ballot-measure timeline. Staff said work under the approved Cubberley scope could continue while the City arranged a Concordia contract and staff support.

Audited statements show City net position rose $98.1 million

Council voted 7-0 to accept Palo Alto’s audited fiscal year 2024 financial statements and approve the annual comprehensive financial report and related budget amendments. The statements reported total City net position of $1.5 billion, an increase of $98.1 million.

The General Fund ended with a $106.7 million balance, including $53.7 million classified as unassigned. The Budget Stabilization Reserve stood at $65.9 million, or $8.9 million above its target.

South Palo Alto bikeway project gets $888,000 federal grant

Council unanimously approved a four-year Federal Highway Administration grant agreement providing $888,000 for the South Palo Alto Bikeways Demonstration Project. The City must contribute $222,000, bringing the total eligible project cost to $1.11 million.

Staff also reported that the draft Safe Streets Action Plan was open for community comment and would proceed to commission and Council review in the spring. Work at the Churchill and Alma crossing was scheduled to resume Jan. 6 after a holiday pause and was expected to conclude by March.

Fiber agreement passes 6-1 amid wider consent-calendar objections

Council approved a fiber-licensing agreement amendment with Equinix in a 6-1 vote, with Greg Tanaka opposed. The $1.25 million amendment extends the agreement through June 30, 2029, and brings the total contract cap to $1.95 million. Tanaka said he supported the dark-fiber component but opposed the fiber-to-the-premises portion.

Other consent-calendar approvals included seven four-year development-services contracts with a combined $4 million cap, an extension of the CLEAResult efficiency and electrification contract through Nov. 14, 2026, with its $2.57 million cap unchanged, and a three-year, $206,310 records-management software purchase from Origami Risk. Council also raised the Management Specialist maximum limited-hourly rate from $135.20 to $200.

Tanaka stated objections to those actions, citing insufficient comparative and performance information for the development-services contracts, concerns about the electrification program’s cost-effectiveness, the lack of competitive bidding for the software and the size of the hourly-rate increase. All were approved, but conflicting transcript evidence prevents a reliable item-specific vote tally for those four actions.

Wireless and housing ordinances are pulled from consent

A proposed temporary ordinance governing wireless facilities was removed from the consent calendar at the request of Greg Tanaka, Julie Lythcott-Haims and Vicki Veenker. The proposal would require Architectural Review Board review for Tier 2 and Tier 3 wireless facilities in public rights-of-way while repealing existing objective aesthetic, noise and related standards.

Two Verizon Wireless representatives urged the Council to retain or collaboratively revise the objective standards rather than repeal them. They argued that a more subjective process could lead to appeals, additional staff work and missed application deadlines.

Ed Lauing and Veenker separately pulled an ordinance intended to clarify City regulations and implement state housing laws adopted in 2023 and earlier, including Council-directed parking requirements related to AB 2097. The available meeting record does not establish any subsequent motion, vote or final disposition for either pulled item.

Primary sources

Watch the meeting on YouTube · Read the official meeting packet