City Council - September 8, 2025

Council preserves four positions in modified budget package

The Palo Alto City Council unanimously approved modified fiscal year 2026 budget amendments after retaining a police reserve officer, a JMZ program assistant, a JMZ access coordinator and a senior management analyst responsible for wellness and belonging work. The final motion passed 7-0.

Staff had presented its original package as producing approximately $6.2 million in fiscal year 2026 savings, including about $3.4 million in ongoing savings and $2.8 million in one-time savings. The meeting record does not give a revised total after the Council's changes. It lists $176,000 to retain the analyst and a combined $182,000 for the police reserve officer, program assistant and access coordinator, including $42,000 for the coordinator. The access-coordinator amendment passed 5-2, while the analyst amendment passed unanimously.

The Council also directed that $2.5 million in Measure B funding be used for Churchill Avenue bicycle and pedestrian improvements, retained $50,000 for Balin levy permitting and left the $692,000 Foothills Nature Preserve construction budget in place pending further review. The Parks and Recreation Commission is scheduled to examine the preserve project's scope in October 2025, with funding to be reconsidered during the fiscal year 2026 midyear review.

The Council also requested a staff report on funding and appropriate uses for the Palo Alto Avenue grade-separation project. The budget discussion came amid a projected $8 million fiscal year 2027 deficit, and staff plans to return with midyear financial updates in February.

Council adopts energy rules for remodels and AC replacements

The Council voted 7-0 to adopt emergency ordinances adding local amendments to the 2025 California Energy Code. Qualifying remodels exceeding 1,000 square feet will have to earn 12 FlexPath points through selected energy-efficiency measures.

Beginning in 2027, an air conditioner replacement will require installation of a heat pump or additional efficiency work such as attic insulation and air sealing. The rule does not require an existing gas furnace to be replaced.

The ordinances also include administrative changes concerning certificates of occupancy and residential floor-area calculations. Staff said the city needed to file the amendments with state agencies before Sept. 30, 2025, although the timing of state review remained uncertain. The work carries approximately $248,000 in professional-services costs across fiscal years 2025 and 2026 and requires about half of one full-time-equivalent staff position.

In related unanimous consent actions, the Council established a subsidized $328 permit fee for stand-alone residential gas water- and space-heating equipment, compared with a full-cost-recovery range of $633 to $806. The city expects to forgo approximately $50,000 in annual cost recovery. The Council also extended the CAEATFA GoGreen Home Energy Financing agreement from two years to five years. The record identifies up to $300,000 in existing agreement funding and a $160,000 loan-loss reserve, with anticipated support for $2 million in loans.

New modeling shows 25% less creek capacity

Updated modeling for the San Francisquito Creek Reach 2 project indicates that the channel has approximately 25% less capacity than previously understood, the creek's Joint Powers Authority told the Council. The project is intended to contain the approximately 7,200-cubic-feet-per-second flow recorded during the 1998 flood.

All alternatives under study require flood walls because no single measure would provide enough protection. A potential first phase involving channel widening and replacement of a temporary flood wall near University Avenue carries a preliminary cost of $20 million to $25 million. Later work, including additional walls and the Pope-Chaucer Bridge project, was estimated at roughly $100 million. A bypass tunnel remains under preliminary review but would not eliminate the need for flood walls.

Council members generally encouraged the authority to advance fundable, lower-risk segments while continuing to evaluate funding, flood-risk transfer, habitat, trees and neighborhood impacts. The Council did not select an alternative or take formal action. The authority expects to complete an alternatives report by the end of 2025, after which its board would choose a preferred approach.

If design, funding and permits proceed, construction could begin in June 2027. Creek construction is limited to June through October, and an ideal schedule would require two construction seasons. Public comments generally supported faster flood protection, but speakers differed over whether project design should deter encampments or avoid treating unhoused people primarily as a project-design and public-safety concern.

Downtown Streets Team plans to end operations within 60 days

Staff reported that Downtown Streets Team plans to end operations within 60 days. A councilmember referred to Oct. 31, 2025, as the anticipated closure date, but the Council took no action on the announcement.

Staff said the city was working with Downtown Streets Team and other organizations to maintain food-closet services and reduce other service impacts. Staff also reported that the Opportunity Center was temporarily closed because of water damage and that alternative arrangements were being pursued.

California Avenue housing prescreening moves to Sept. 15

The Council prescreening for a proposed mixed-use development at 414 California Avenue was removed from the Sept. 8 agenda and rescheduled for Sept. 15, 2025. No discussion or action on the proposal occurred at the meeting.

The applicant is seeking to rezone the 16,231-square-foot, or 0.37-acre, property from Community Commercial (2) to Planned Community/Planned Home zoning. The proposal calls for 37 homes in a six-story mixed-use building. The prescreening is intended to produce informal Council comments that would not bind either the city or the applicant.

Council advances lower Deer Creek Road speed limit

As part of its unanimous consent vote, the Council approved the 2024 Engineering and Traffic Survey and advanced the first reading of an ordinance that would lower the speed limit on a portion of Deer Creek Road from 40 mph to 35 mph. The ordinance would also re-establish speed limits for 22 street segments.

The item lists a $35,000 consultant cost for the traffic survey and an estimated $1,000 for signage.

Council approves $412,940 Mitchell Park restroom contract

The Council unanimously approved a contract of up to $412,940 with Public Restroom Company to provide and install a modular restroom building at Mitchell Park. The consent action also authorized up to $41,294 in change orders.

Primary sources

Watch the meeting on YouTube · Read the official meeting packet