City Council - June 15, 2026

Utility rates rise to fund infrastructure work

The Palo Alto City Council approved fiscal 2027 financial forecasts and rates for water, wastewater collection, refuse, electricity, gas, fiber and stormwater management. Staff estimated that the full package would raise the average residential utility bill by about 8%, or $35.20 a month.

The changes included an 8% water-distribution increase, a 16% wastewater increase, a 3% refuse increase, a 4.5% electric increase, a 9% overall gas increase and 3% increases for fiber and stormwater fees. The water-rate resolution passed 7-0. Following a Proposition 218 hearing, the council found that water, wastewater and refuse customers had not submitted enough written protests to block consideration of the rates. The water proposal received seven protests, compared with the 9,769 needed for a majority among 19,538 affected customers.

Staff tied the increases to aging infrastructure, reserve needs and major capital projects. Those include an estimated $397 million to $400 million reinvestment in the wastewater treatment plant and an anticipated $85 million electric-system bond issuance later in 2026. Income-qualified customers can receive electric-bill discounts of up to 35%, while the city is continuing its 25% gas discount.

Council adopts $1 billion budget and speeds museum repairs

The council unanimously adopted a fiscal 2027 citywide budget of about $1 billion, including a roughly $312 million General Fund and a $316.8 million capital budget. The five-year capital improvement plan totals approximately $1.2 billion. Staff projected a $53.7 million General Fund reserve, equal to 17.2% of expenses, before a possible favorable $2 million prior-year sales-tax adjustment.

The budget action included supplemental direction to expedite drainage and waterproofing repairs associated with the Roth Building and Heritage Park, with the goal of completing the work before the next rainy season. The problems have delayed the Palo Alto Museum’s opening.

The city will absorb permit and inspection fees, determine whether to provide cash-flow support and cover park repairs to the extent the city is principally responsible. The city manager will negotiate cost sharing with museum leadership for building repairs. Staff identified about $325,000 in available appropriations and said spending beyond that amount would require further council authority. Work can continue during the council recess, with staff returning if additional action is needed.

Council declines interim SB 79 ordinance

The council voted 5-0 not to proceed with an interim urgency ordinance that would have reduced SB 79 standards by 50%. Members separately approved related direction to staff on future housing-production and zoning work by a 4-1 vote.

The urgency ordinance was proposed to address the period from July 1, when the state transit-oriented housing law takes effect, through July 15. Palo Alto’s previously approved temporary ordinances are scheduled to take effect July 16. Council members debated whether the required urgency findings could be supported and whether housing applications could be filed during that interval.

During deliberations, members also discussed focusing longer-term zoning work on California Avenue and adjacent portions of El Camino Real. Some favored allowing SB 79 to operate in selected areas while retaining protections for R1 neighborhoods.

California Avenue bike access drives transportation-plan debate

Council members considered the final 2026 Bicycle and Pedestrian Transportation Plan, a 10-year framework developed since 2023 with more than 1,000 community comments. The plan identifies 19 miles of near-term network improvements, 25 priority bicycle projects and 24 targeted intersection and pedestrian-crossing projects.

Staff recommended adopting the plan as written, which assumes continued bicycle access on California Avenue. An alternative would move toward a bicycle-free design there while improving the Cambridge Avenue route, potentially requiring additional funding. Most public commenters opposed a bicycle ban and favored enforcement, education, speed management and safer street design instead.

Council discussion explored targeted or time-based restrictions, traffic calming and signage as possible ways to address conflicts involving pedestrians, school travel and e-bikes. Members also proposed prioritizing protected or buffered bikeways, evaluating safety at New and Embaradero, clarifying that traffic filtering is not a street closure and linking the plan more directly to the city’s Complete Streets Policy. Staff said major projects would receive further public engagement and that a separate e-bike and e-cycle strategy would return to the council.

City attorney authorized to join brief in ICE case

Following a closed session, the council authorized the city attorney to join an amicus brief supporting the plaintiff in County of Santa Clara v. U.S. Immigration and Customs Enforcement, case No. 26CV5604.

Primary sources

Watch the meeting on YouTube · Read the official meeting agenda