City Council - September 15, 2025

Council approves $161.7 million battery-storage agreement

The Palo Alto City Council voted 7-0 to authorize a $161.7 million, 20-year agreement for a 50-megawatt share of the Trolley Pass battery-storage project in San Bernardino County. Palo Alto’s share is part of a 400-megawatt project scheduled to begin service in 2029 through the Northern California Power Agency.

The contract price is $12.71 per kilowatt-month, which staff estimated would cost approximately $7.6 million annually. Staff projected a net financial benefit of approximately $4.5 million a year, or about $4 million if the agreement’s permitted price increase of up to 6% occurs. That increase could take effect within the next year under specified tariff or tax-incentive-related conditions.

Staff described the agreement as Palo Alto’s first utility-scale battery-storage contract and said it would help address load growth, expiring power-purchase agreements and the possible loss of approximately 50 megawatts of capacity from another resource. Council members questioned whether storage costs could fall over the contract term and whether electricity-market changes could reduce the value of solar-energy arbitrage. Staff said the 50-megawatt commitment limits exposure while matching the potential loss of capacity elsewhere in the city’s portfolio.

Council flags design and access issues in 37-unit housing concept

The council took no formal action on a conceptual redevelopment of 414 California Avenue, completing a nonbinding prescreening and offering informal feedback before any formal application is filed. Council members generally supported adding housing and active ground-floor uses at the transit-adjacent site while pressing for substantial revisions and additional analysis.

The concept calls for a six-story, 83-foot building with 37 homes, including 14 rental units and 23 condominiums. It also includes approximately 16,000 square feet of ground-floor restaurant and retail space and below-grade parking, and would require rezoning from the property’s current Community Commercial designation.

Staff identified multiple departures from existing standards. The proposed height is 83 feet, compared with the 60-foot maximum staff cited under the Housing Incentive Program, while the proposed floor-area ratio is 3.57-to-1, compared with a cited 2.6-to-1 maximum. The concept also provides 44 square feet of usable open space per unit, compared with a 150-square-foot base zoning requirement, and proposes no setback from Mimosa Lane where five feet would otherwise be required.

Council members urged the applicant to provide 20% below-market-rate housing rather than the 18.9% discussed, avoid concentrating affordable units on one floor and create shared rooftop open space instead of private roof decks. They also sought further analysis of Mimosa Lane, loading, refuse collection, fire access, bicycle parking, traffic and public-right-of-way encroachments. If a formal application is filed, it will undergo detailed review, including environmental review under the California Environmental Quality Act.

Council upholds zoning ruling and orders a narrow code amendment

The council voted 6-0-1 to uphold the planning director’s interpretation that Palo Alto’s current code does not permit relocation of noncomplying residential floor area within a structure. At the same time, it directed staff to prepare a code amendment within six months that would establish administrative de minimis exceptions for residential properties.

The interpretation arose from a proposed Barron Park remodel that would relocate noncomplying floor area while reducing the home’s total floor area by 11 square feet. The appellant argued that the project would improve safety and support aging in place. Some council members considered the code ambiguous and favored allowing the remodel, while others said the existing provisions barred it and warned about setting a citywide precedent.

An initial motion to reject the director’s interpretation failed 3-4. The council then upheld the interpretation while directing staff to pursue the narrower legislative change, which staff said would typically require about six months, including Planning and Transportation Commission review.

Public Safety Building budget increases by $3.2 million

The council voted 7-0 as part of its consent calendar to increase the New Public Safety Building’s fiscal year 2026 appropriation by $3.2 million, bringing the revised project budget to $122,632,064. The action decreases the Infrastructure Plan Reserve by $1.2 million and the Capital Fund Infrastructure Reserve by $2 million.

The council also authorized a $208,528 amendment to the Cumming Management Group contract, raising its not-to-exceed amount to $10,683,771, and approved a $150,579 Inspector of Record contract with 4Leaf.

In a separate consent item, the council increased a legal-services agreement with Diepenbrock Elkin Dauer McCandless by $1,086,000 for Public Safety Building claim-defense services. The amended agreement has a new cap of $1,171,000.

Council sets optional electric rates and orders gas-rate revisions

A 7-0 consent vote established a voluntary time-of-use electric rate for eligible, separately metered single-family residential customers beginning Jan. 1, 2026.

The schedule sets summer electricity prices at $0.33309 per kilowatt-hour during peak periods and $0.16645 during super off-peak periods. Winter prices will be $0.26660 during peak periods and $0.17790 during super off-peak periods. The monthly customer charge is $5.15.

The council separately directed staff to work with the Utilities Advisory Commission on revised gas-rate schedules intended to take effect in January 2026. Staff must follow Proposition 26 reasonable-cost analysis requirements and five principles included in the recommendation. The action begins development of the schedules but does not establish specific new gas prices.

Stormwater and wastewater code changes clear first reading

The council unanimously approved the first reading of four ordinances reorganizing and amending Palo Alto’s stormwater and wastewater management requirements. The package covers sewer use, stormwater pollution prevention, two new municipal-code chapters, implementing regulations and revised administrative and civil penalty schedules.

The proposal estimates that required secondary containment would create a one-time cost of approximately $1,500 per food facility. It also provides for a $1,000 administrative penalty for violations of the affected stormwater and wastewater chapters.

Primary sources

Watch the meeting on YouTube · Read the official meeting packet