INITIAL WORKING DRAFT of FINAL IBRC REPORT for MEETING OF SEPTEMBER 22, 2011

Table of Contents

Page 1. Executive Summary 2 2. IBRC Charge ..2

4. Background .5 5. Infrastructure Management System ...10 6. Public Safety: Police, Fire, Medical Response, and Emergencies ..15 7. Municipal Services Center/Embarcadero Corridor ..26

9. Futures Working Group ...67 10. Next Steps ...107 11. Appendices .107

8. Finance ...46

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3. Vision for Palo Altos Infrastructure ...5

INITIAL WORKING DRAFT of FINAL IBRC REPORT for MEETING OF SEPTEMBER 22, 2011
This is a first look at the bulk of the report. It should be considered tentative in all respects. Significant issues remain to be resolved; some sections are not yet drafted; and no careful editorial look has yet been taken to uncover gaps, inconsistencies, redundancies, needed connections and crossreferences, etc. Possible Titles for the Report: Infrastructure for an Active Community Foundations for an Active Community Preserving Our Legacy Sustaining Our Legacy Building for the Future Stewardship of our Civic Infrastructure Others?

Report of the City of Palo Alto Infrastructure Blue Ribbon Commission December, 2011

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Note: Authors of individual sections are noted at the beginning of each section.

Executive Summary

[Last section to be written.] a. Capsule description of task. b. Findings c. Recommendations

2. IBRC Charge [Ray and Le] Background. Infrastructure has been of concern for Palo Alto since before 1996-97 when the City hired Adamson Associates to perform an infrastructure management study. That study produced stepped up capital spending and creation of an Infrastructure Reserve to ensure future funding. By the middle of the last decade, however, the Infrastructure Reserve had begun to decline. In 2008, a report by

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Kitchell Corporation and one in 2009 by the International City Managers Association were commissioned to address infrastructure issues. Also in 2008, the Palo Alto City Auditor issued a comprehensive Infrastructure Report Card for Palo Alto. These reports emphasized that aging infrastructure and an inadequate plan for dealing with it were major concerns for the City. Some actions were taken in response to these studies that abated some aspects of the problem but failed to produce a long-term plan to address it comprehensively. In the City Council election of 2009, infrastructure deterioration was an issue of major concern. Charge. In May, 2010, as a result of these concerns, the Council authorized formation of the Infrastructure Blue Ribbon Commission, and appointed eighteen residents to serve. The Commission began its work in November 2010, charged to provide a recommendation to the City Council on infrastructure needs, priorities, projects and associated funding mechanisms to address the infrastructure backlog and future needs. Seven guiding questions accompanied this charge (see appendix 1). As a Commission, our process has included XX public Commission meetings, two study sessions with the Council, a session with the Planning and Transportation Commission and one with the Council Finance Committee, and well over 100 other meetings of our committees and working groups, as well as meetings with other cities, between commissioners and staff, and with individuals who provided assistance.

Interpreting the charge. For a city of its size, Palo Alto has a significant amount of infrastructure ranging from parks of many hundreds of acres in the baylands and foothills, to libraries throughout the community, to performing- and fine-arts centers, etc. To get our arms around quantity challenges that sprawled before us, we initially created three committees to gather data and frame the issues and options regarding finance, surface (streets, sidewalks, parks, etc.), and buildings. These committees did the basic research into the scope and detail of these three domains. Later we redeployed ourselves into five working groups to study specific aspects requiring deeper analysis. These were a Working Group on an Infrastructure Management System and

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the needs it would document, a Public Safety Working Group, a Municipal Services Center/Embarcadero Corridor Working Group, a Finance Working Group, and a Futures Working Group. All along the way, staff was responding to our questions and providing the extensive basic information on which our understanding and consideration of options depended. Early in our process, we elected not to include the Utilities Department, except insofar as its work overlapped with other city departments involved in infrastructure, such as Public Works for street maintenance. Because Utilities focuses sharply on the infrastructure for which it is responsible and has rigorous protocols for maintenance, along with oversight by the Utilities Commission, it was not part of the problem that led to the formation of IBRC. We also elected not to include the Airport because of its status as an enterprise that is able to pay its way. After some study, we also elected to leave with the Joint Powers Agreement and the Army Corps of Engineers most of the matters associated with Bay water levels and San Francisquito Creek, including bridges, dams, and levees. What we did examine was the range of financial liability Palo Alto has as a partner in those undertakings. This Commission has been acutely sensitive to the knowledge that Palo Altos attractiveness as a community is importantly related to the quantity and quality of its infrastructure. We recognize that maintaining Palo Altos level of infrastructure requires careful evaluation of the economics. This report, reflects considered judgment as to what are the major infrastructure needs facing the city during the next ten years, and how to finance them. Further, it presents a context for keeping abreast of catch-up, keep-up and replacement requirements now and into the future.

Acknowledgements and Appreciation From the beginning, we have had the full cooperation and responsive support of many staff members from the Department of Public Works, the Administrative Services Department, and the Office of the City Manager. We are deeply appreciative of the following people for assisting us with whatever it was that we needed: [List of individuals and titles.]

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3. 4.

Vision for Palo Altos Infrastructure Background

[Le]

[TBD]

That Must Be Maintained When we allow the elements to deteriorate, the fabric of the city is weakened, and it becomes less attractive for its residents; not quickly at first, but definitely over time.

Much As With Our Homes Its safe to say that most Palo Altans view their community as an extension of their homes. Just as we must regularly maintain and upgrade our personal residence, so the City must keep-up its infrastructure. For both the individual and the city the consequences of failing to maintain assets are the same: deteriorating serviceability and greater expense overall. EXTENT OF OUR INFRASTRUCTURE Our Civic Assets are Substantial For reasons connected with both its location and the civic vision of its residents, Palo Alto has developed a significant amount of infrastructure in its 117 years of existence; more than most surrounding communities (Exhibit 1). As the

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Of Many Parts The excellence of a community is more than the sum of its parts. But each element must function well for a city to be successful.

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INTRODUCTION: Infrastructure Priorities for a Dynamic City 5. A Dynamic City Palo Alto is a wonderful community because each generation of Palo Altans has enhanced our public realm with significant civic investments. Although most have been developed with public funds, significant private benefactors such as Lucie and Ruth Stern (Lucie Stern Community Center), and Morris Frost (Junior Museum) have also contributed. From our 900 acres of foothill and baylands open space, to the Arts Center, to the childrens theatre, Palo Alto has been a visionary community whose residents value cultural, intellectual, and physical pursuits.

infrastructure has aged, maintenance needs have become more pronounced. At the same time, the citys fund-raising flexibility has diminished. In 2010, because of its concern about infrastructure deterioration, the City Council appointed an Infrastructure Blue Ribbon Commission (IBRC) charged with appraising the infrastructure and making recommendations for its proper maintenance and rehabilitation. The Citys Infrastructure has many components which can be categorized as follows: 1. Enterprise Funds Gas Electric Water Refuse and Storm Drains Wastewater Collection and Treatment Airport (Currently operated by S.C. County)

The mandate of IBRC has excluded these not-for-profit enterprises which are essentially self-funding and self-financing. They do not absorb City funds. Their charter is to provide service comparable to private enterprises at equal or lower rates while maintaining and modernizing there own infrastructure to current standards of service and safety. The citys enterprise funds have historically generated cash in excess of their needs providing supplemental funding to the Citys General Fund. In recent years this has approximated $ 17,000,000 (?) or about 14% (?) of the Citys General Fund. These moneys are used for general city operations and not dedicated to specific uses. 2. Basic Services City Hall (built 1970): 90,000 sq. ft; (260,000 sq. ft. of public underground parking) Public Safety Building (1970): 23,000 square feet Municipal Services Center (1985?) ___square feet on 16 acres Fire and Medical Response: Station #1 Alma Street (1965) Station #2 Hanover (Stanford) (1965)

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Station #3 Rinconada Park (1948) Station #4 Meadow/Middlefield (1953) Station #5 Arastradero (1962) Station #6 Serra (Stanford) (1968) Station #7 Sand Hill Rd. (1968) Station #8 Foothills Park (1986) 2,700 Fire Hydrants 3. Surface Facilities Streets: 40,000,000 square feet of pavement Sidewalks: 10,000,000 square feet Street Trees: _____trees; ____species Bridges: 74 bridges for which Palo Alto has full or partial responsibility. Levees: ___ miles for which Palo Alto has partial responsibility.

4. Recreation & Culture 34 Parks- 4,158 Acres Golf course- 176 Acres Swimming facility 4 Community Centers 5 Libraries Junior Museum and Zoo Art Center 2 Little League baseball parks 2 Interpretive Centers Lawn Bowling Green & Clubhouse Community Theatre Childrens Theatre Community Gardens (___A.)

5. Properties, Leased to Non-Profits Gamble House & Gardens (Gamble Garden Center) Bryant Street Police & Fire House (Avenidas) Williams House (Museum of American Heritage) Roth Building (Palo Alto History Association) Winter Lodge (Winter Club)

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Sea Scout Building Girl Scout Building (The above facilities are leased for $1/per year. Annual maintenance is the responsibility of lessees.) Camp Fremont Hostess House (MacArthur Park Restaurant) Portion of the former Cubberley School (8 Acres) 6. Residential Housing _____ Below-Market Residences Although on-going maintenance of these properties is the responsibility of the lessees, responsibility for rehabilitation and end-of-lease events is still a subject of ambiguity. This report focuses on categories 2, 3 and 4. STEWARDSHIP PREMISES

Comprehensively Manage To accomplish the above, we recommend establishing a comprehensive asset management system and designating a clear line of responsibility for its on-going implementation. Catch-Up As a Commission, working with Staff, we have identified over $40,000,000 in significantly deferred maintenance (catch-up). We recommend initiation of a ten-year program to eliminate this backlog.

Keep-Up Deferred maintenance has accrued because current maintenance has been underfunded. We recommend a modest increase to properly fund ongoing maintenance so we do not fall behind in the future.

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Set Standards As the first priority, Palo Alto must maintain the civic assets already in place to a proper standard of quality and utility to prevent long-term deterioration or loss of assets. The standards themselves, and related cost estimates, must be reviewed and updated on a periodic basis.

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Additionally, our city must make sure that on-going funding will be available whenever new assets are added or old ones renovated.

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5. Infrastructure IMS WG]

Management System [Ralph Britton and

Needs Assessment The Public Works Department staff was key to the process of assessing the infrastructure needs and identifying funding sources and policies. While the current condition of the citys infrastructure is the result of decisions integrated for as much as 50 years, the current evaluation is a snapshot taken today. Staff provided the committee with a very detailed Excel Spreadsheet showing the required spending for each element for a period of 25 years. Accurate engineering evaluations comprise the data for the next five years. Beyond that, estimates have been made which involve more judgement and are thus less certain.

Right at the outset we must recognize the enormous effort made by city staff to develop the initial database. The analysis made was extremely finegrained and detailed. It would have been impossible for the committee to come to sensible conclusions had we not been presented with such a thorough analysis of the current state of things and some guidance as to the timing of important repairs and replacement.

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In order to gain visibility for the state of our infrastructure in the future, a system for updating the data on a regular basis will be needed. That will allow for easy visibility of whether we are falling behind on maintenance and building a costly backlog.

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Overview Recognizing the need for on going visibility of the state of the citys infrastructure, the IBRC form a committee to investigate a system for managing it. The problem was first to develop an understanding of the current state of the infrastructure and what routine, and deferred maintenance was involved as well as possible pieces in need of total replacement. Previous to the organization of the IMS Committee two groups had been formed, one to look at surface features such as roads and parks and another to look and building needs such as a Public Safety building and a new Municipal Services Center. The initial challenge was to integrate the disparate data into a single, comprehensive database to clearly show where we stand today.

These spreadsheets carry a detailed assessment of myriad individual elements. Carrying the effort to this detail results in a high probability of good overall accuracy. Furthermore, with so many elements, there is good reason to believe that any errors in one direction for a given element will likely be offset by opposite errors for another. Appendix ?? contains the Public Works Master Spread Sheet. The Sheet comprises some 600 maintenance items, not including streets, which are handled separately. The preparation of this list was accomplished by a heroic staff effort. While staff has had means to manage the maintenance, this is a completely new comprehensive evaluation. This sheet was thoroughly read and discussed with staff by committee members Steve Levy and James Melton, and extensively reviewed by other committee members. Changes were made as a result where duplications and errors were noted. At this point the committee stands behind the number presented therein. Cubberly has been included in order to show what the cost of continued operation will be as matters stand at the moment. The committee understands that whatever decision is made with respect the disposition of the property will greatly affect these numbers. The intention is to give an accurate picture of the costs of its continued operation. Because the Master Spreadsheet is so detailed, we prepared a summary sheet derived from it to focus on the major buildings and other discrete and identifiable elements. The intention is to provide for better understanding of the essence of the Master Sheet without having the detail effectively obscure the main points. The information on this sheet is electronically derived from the Master Sheet so any changes in the Master Sheet propagate to it. It can be found in Appendix ?? Gap Analysis Various descriptive names had been used for categories for expenditures, leading to confusion. To make things clear, the gap summary uses just three descriptive categories: Catch Up, Keep Up and New and Replacement. The Catch Up category includes those items where maintenance has been deferred for a period and the assets usefulness for its intended purpose has been impaired. Accordingly, expenditures to restore its function and integrity are required. Keep Up is the regular and ordinary expense associated with maintaining an asset in a satisfactory condition so that it will not fall into the Catch Up category. New and Replacement is used when a

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new facility is needed or and old one has reached the end of its useful life and needs to be completely replaced. Major remodeling or upgrading can fall within this category as well.

A Gap (Infrastructure Unfunded Needs) Summary Sheet (GSS) which derives directly (and electronically) from the Master Sheet for expenditures has been prepared. It is shown as Figure ###. Keep Up funding is accounted for by the city as split into two funds: Operating Maintenance and Capital Improvement Projects. This is reflected on the GSS as two separate triple column sets showing needs, sources and gap. A third column set shows totals. The New and Replacement column shows the expenditures required to replace the Municipal Services Center, build a new Public Safety Building, and build a new Animal Services Complex. The current facilities to be replaced have been visited and reviewed by IBRC members and found to be extremely unsatisfactory, in poor condition and/or totally unsatisfactory for the use for which they are intended. They need replacement. The committee identified additional New and Replacement items which are seen to be longer term, and for which a funding source is not clear at the moment. When, or if, these things are done is flexible and could depend on such things as a new source of funds, for example a grant or private/public partnership. Catch Up funding has been spread over 10 years because the work is of such magnitude that it cannot be managed in a shorter time with current City staff resources. Funding it this way also reduces the annual amount to a more manageable level. Your attention is called to the notes on the Gap Summary Sheet, which succinctly describes the sources of funds and other details relating to the figures. As stated earlier, near term figures (first five years) are felt to be quite accurate, longer term numbers are based on estimates which are less certain. Inflation factors have (have not) been included. (If we include inflation, we need a paragraph or more discussing how factors have been derived, which factors are used for various items and much more).

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Cubberly H. S. Property As this report is prepared, the disposition of the Cubberly property is in the subject of serious deliberation. The City and School District are in discussion regarding its future. Funding requirements for upkeep and repair and replacement are included under the assumption that the City will continue to operate as it has in the past. That way, this report shows the cost of continuation and provides a basis for evaluating that alternative. There are other non-maintenance costs including various agreements between the City and the School District which have major cost implications, and these are dealt with in Section(###) of the report. Reserves Place Holder for a discussion of a maintenance reserve, if it should go in this part of the report. I have ideas on this, but dont feel I can write this section without more input from the IBRC as a whole. This may be the place for a discussion of Pop Up issues, but this is beyond my pay grade at the moment. Recommendation--The future of the IMS We are now fortunate to have an up to date database in the form of the Master Spreadsheet. A system must be implemented for managing this database which allows it to be kept current. It should become a tool that shows a running indication of the state of the Citys infrastructure and the level of funding needed at any given time. Commercial software exists for continuing infrastructure management. Affected City Departments should evaluate such systems and if one meets the requirements, it should be implemented. This action has to be assigned a high priority or the data we have will become stale before it can be used. (How this administratively organized will await further discussion with the City Manager and staff). Procedures and policies should be established to ensure that the database is kept current. Comprehensive update and review should occur annually at a minimum. The IMS should be integrated with the annual budgeting process so that there will be a clear and accurate understanding of the needs. The committee strongly recommends that a regular source of funding be allocated to Keep Up expenditures sufficient meet the needs and that there will be no Catch Up due to an annual shortfall. One of the charges to the committee was that we should look to ways that will avoid the current

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situation with a large Catch Up backlog. Regular annual funding for regular expenses is essential so this can be avoided.

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Public Safety: Police, Fire, Medical Response and Emergencies [Ray & Mark and the Public Safety WG]
6. Introduction Public safety encompasses police, fire, medical response, rescue, utilities, intra-city collaboration, and intercity mutual aid agreements, shared services, and more. Central to the delivery of public safety services are the buildings that house their providers. In contrast to generic office buildings, facilities used by public safety agencies must be configured and equipped to be integral parts of the work their occupants do. That involves evidence storage, shops for repairing specialized equipment, holding cells and prisoner processing, separated decontamination areas and equipment, communications and technical tools, secure space for specialized vehicles, ammunition storage, sleeping quarters, emergency operations capacity, and a large number of other special aspects. Moreover, these buildings must be built to essential services building codes designed to keep them secure and functional in natural and man-made disasters. When these buildings decline into substandard and unsafe condition, both those who use them and the community that depends on them are in significant jeopardy. With these factors in mind the Commission focused its efforts on the current Police Department portion of City Hall and Fire Houses 2, 3, 4 and 5.

Problem Statement

The Public Safety Building at 275 Forest was inadequate from the moment it opened in 1970. The shortcomings began as annoyances when overcrowding required segmenting the building, creating two cramped locker rooms instead of one (there were no female officers when the building was originally designed) and eventually five to accommodate all who needed lockers, and in other ways squeezing functions into spaces not designed for them. As legal requirements grew, building code requirements changed, community services needs (special events, visiting dignitaries, etc.) increased, and information technology burdens on the building leap-frogged ahead, what were previously annoyances became serious handicaps. Three needs assessments of the department and building were completed between 1985 and 1998. The most recent of those (1998) was in response to a

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Council directive to initiate the formal process needed for site selection and construction of a new public safety building. Meanwhile conditions have incrementally and steadily deteriorated relative to potential threats in the form of terrorism, earthquake, pandemics, etc. The city grew, as did different kinds of crime (e.g., computer fraud, identity theft). Criminal codes and law enforcement techniques expanded, along with demands on the Police Department for communications, technology, special equipment, and other crime-fighting and emergency response capabilities. In reaction, the Council sought a fourth needs assessment and formed a Blue Ribbon Task Force that delivered its report in 2006. The opening sentence of the Executive Summary read, The Task Force recommends in the strongest possible terms that the City proceed expeditiously to build a new Public Safety Building. The economic collapse of 2008 caused cancelation of City action recommended by the 2006 Blue Ribbon Commission to acquire a purchase option on a new site, and no other action was taken. In 2011 the City is five years closer to an inevitable major earthquake and vulnerable to the other man-made and natural dangers that have grown more probable. When, rather than whether, an earthquake will strike is the appropriate way to pose the earthquake issue. Because it is so often put that way, we cannot let familiarity anesthetize us to its stark truth. Moreover, we need at the same time to acknowledge that emergency response will likely be sharply reduced because of the probable collapse of the current facility and the recovery of responsive and dependable public safety will be uneven and slow. Of the Citys 8 fire houses, two are in especially hazardous condition. They are earthquake vulnerable, have insufficient space for emergency supplies, lack safe separation of living quarters from engine and hazardous materials fumes, and can barely hold the two engines located at each as those vital pieces of equipment have enlarged over the past 50 or more years. We focused our attention on police, fire, communications, and emergency management. As we learned over several months of visits, interviews, conversations, and review of past studies, Palo Altos public safety facilities cannot be relied upon to deliver the level of services the community has come to expect: protection from unusual hazards, quick emergency response, and reliable recovery from disaster.

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Findings The Public Safety WG based its findings on: Careful study of six previous reports.* Detailed discussions with Dennis Burns, Interim Director of Public Safety and Chief of Police; Catherine Capriles, Acting Deputy Fire Chief; Ken Dueker, Acting Director, Office of Emergency Services; and Sgt. Patty Lum, Palo Alto Police Department; Examination with principals of Hohbach-Lewin (structural engineers) and Stoecker-Northway (architects) of their 2010 feasibility study of rebuilding the PSB at its current site; Tours of current PSB, Fire Houses 3 and 4, San Mateo Police Department, and Mt. View Fire Houses 1 and 5. Principal findings were:

*1.20032004SantaClaraCountyGrandJuryInquiryintoPoliceEvidenceRoomsin SantaClaraCounty,August2004;2.FireStationsNo.3and4ReplacementNeeds AssessmentStudy,April2005;3.BlueRibbonTaskForceReportonthePublic SafetyBuildingProject,June,2006;4.FeasibilityStudy,PaloAltoPublicSafety Building275ForestAvenue,PaloAlto,CA,May2010;5.FireServicesUtilization andResourcesStudy,January2011;6.TowardaResilientFuture:AReviewofPalo AltosEmergencyPreparedness,March2011;

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The current PSB is not designed to facilitate the efficient flow of police activities, is overcrowded, lacks the capacity to accommodate increased use of technology or future service demands and falls short of OSHA and other legal specifications.

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Evidence Storage for the Palo Alto Police Dept. (left) versus the San Mateo Police Dept. (right).

Palo Alto Fire Station # 3 remains relatively unchanged in 2011 (left) from its original condition in 1956 (right).

Dispatch center for the Palo Alto Police Dept. (left) versus the San Mateo Police Dept. (right). Notice how the Palo Alto dispatch center has no natural lighting and is vulnerable to the structure above it caving down into it and rendering it inoperable versus the San Mateo dispatch center which is on the top floor.

Fire houses 3 and 4 were built near the mid-point of the last century and are too small for their current uses.

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 The current PSB and fire houses 3 and 4 are vulnerable to damage in a severe earthquake that could render them inoperable for an extended period. The current PSB lacks blast protection from outside and below.

The PSB and fire houses were built for the last centurys public safety and community service needs, not for current and projected emergency response services.

Recommendations We recommend these three actions:

Estimated costs as of 2011 are Public Safety Building: $63 million; Fire House #3: $6.7 million; Fire House #4: $7.5 million. [Note: These estimates are several years old and would need to be redone with specific designs in mind. In the case of the contemplated Public Safety Building, its contents would include elements not included in the previously estimated structure, namely, an Office of Emergency Services and the administrative component of the Fire Department.]

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Garage for the Palo Alto Police Dept. (left) versus the San Mateo Police Dept. (right). Notice how the Palo Alto garage is open at both ends and is vulnerable to penetration from the outside versus the San Mateo garage which has one secured entry point away from the vehicle fleet.

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3. That the City seriously study consolidation of Fire Houses 2 (Hanover St.) and 5 (Arastradero Road) into a single relocated fire house at a site to be determined. The January 2011 TriData/ICMA Fire Services Utilization and Resources Study recommended this move to maintain current coverage and improve it in some areas. Such a move is estimated in the study to produce operating savings of $1.35 million annually. The Working Group finds this recommendation to be soundly predicated and worthy of consideration. Options Not Recommended for Further Consideration

2. Along with a new Public Safety Building, Fire Houses 3 (Newell and Embarcadero) and 4 (Middlefield and East Meadow) should be rebuilt and significantly upgraded at their present sites as soon as possible. [Cross-reference to Finance section??] These two stations are 63 and 58 years old respectively, do not meet current earthquake codes, and have become increasingly inadequate as engines have grown in size, demands for hazardous materials processing, equipment storage, and safer conditions for the personnel housed there have also grown, and the role of these stations in emergency preparation and response has been established.

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1. That a new Public Safety Building (PSB) be built as soon as possible on a new site, incorporating the Police Department, the Fire Department administration, the Communications Center, the Emergency Operations Center, and the Office of Emergency Services. [Cross-reference to Finance section??] The current building is unsafe and vulnerable. Its inadequacies in terms of capacity, operational efficiency, technology, and flexibility were well documented in the 2006 Blue Ribbon Task Force study and have not improved with time. Public safety should be a top priority for any city butin terms of proper facilitiesthat priority has for many years been deferred dangerously in Palo Alto. An imperative initial action should be site acquisition, preferably the Park Avenue (or equivalent) site previously identified by the 2006 Task Force. It is unlikely that a new facility will be less expensive or cheaper to finance in the future. The City should proceed with one of the suggested finance options as soon as possible.

 Rebuild a Public Safety Building at present site. This would require two years of dislocation: moving departments to alternate site(s) and returning them at great cost with no residual value from the $2 4 million spent on temporary relocation. Municipal parking would lose approximately 100 public parking spaces and several City functions would have to be relocated. Ingress and egress to and from the municipal parking garage to accommodate public and police parking would be clumsy and hazardous. The resulting building would still lack blast protection, allow no room for flexibility and expansion, require re-location of existing city hall functions, fail to achieve the level of structural integrity of a new building, and will save very little or no money. Split locations for public safety functions. It has been argued that separating functions to take advantage of different levels of stringency in building code requirements would reduce construction costs, since not all elements would need to be built to essential services codes, which are the most stringent. That course is not recommended because it would require duplicated featuresat separate sites, reduce face-to-face communication, increase travel time for those with business at more than one site, and have many of the same defects of the present site if that site were retained as part of a multi-site set of public safety buildings. Some aspects of storage of aging evidence might be outsourced if and when there is a county facility, but evidence that is in use for current and developing criminal cases should be near at hand to avoid daily or weekly trips by the officers actively working on such cases. Participate in an inter-city facility: Interagency collaborations are in place (e.g., mutual-aid agreements, joint use of emergency communications and fire fighting with Stanford, and a virtual communications network to facilitate backup in allied municipalities) and more conceivably could be established. Major inter-city mergers of functions are, however, problematic, have a mixed record of success, oblige careful study, take a long time to assess, and may reduce response times and increase the potential for disagreements over deployments when demand is high. Possible Scenarios If No Action Is Taken

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[Note: The City has at the ready a mobile emergency operations center (MEOC) that can be deployed in the short run and for particular events but is not a substitute for a permanent facility.] No matter what the emergency, sustaining operations is the key to public safety. Intact facilities are, in turn, key to sustainability. Serious earthquake. City Hall deck and the second floor of the PSB could pancake, causing loss of life and rendering useless the Emergency Operations Center, the Communications (911) Center, both the police and public garages, and the rest of the current PSB. Impaired would be emergency assessment, response, and recovery, both immediate and long term. Even if there were no collapse, building systems (electricity, plumbing, safe ingress and egress) could be compromised and facilities rendered unsafe or unusable. Though an earthquake of 7.0-7.5 or worse would do damage far beyond the scope of public safety, a functioning PSB is critical to reliable emergency communications inside and outside the city (including Utilities Department), to emergency management over the longer term (which could be many months), to maintenance of order and stability on streets and in commercial and residential districts, to suppression of criminality triggered by post-earthquake disorder, and similar factors. Loss of fire stations 3 and 4 would cause probable loss of life and injuries among fire-fighters living there, inaccessibility to engines and equipment, loss of the neighborhood Incident Command function that fire houses serve for community emergency response, and severe overtaxing of the other fire houses and equipment that remain in operation. The more severe the earthquake, the more severe and protracted the consequences. Without civil order (Katrina), clean-up and rebuilding could be slow, residents could leave the city, commercial establishments could close, employers could relocate, tax revenues could plummet, city staff could quit the city and relocate, crime could increase, breakdowns in utilities could be difficult if not impossible to repair. In such circumstances, a fully functioning public safety building (and the ability to deliver

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police/fire/utility services) would be critical in mitigating the consequences of citywide damage and shortening the recovery period. Terrorist attack. Such attacks can take many forms. They could be attacks on the current PSB itself, which is poorly protected from any kind of blast or incendiary assault. The building could be rendered inoperable, killing and injuring many officers and staff and blocking all vehicles in police and public garages other than those in use on the streets at the time of attack. If chemical, radioactive, or biological weapons were involved in such an attack, the damage would be multiplied many times if response capability were compromised. If a PSB were free-standing and not closely connected to other public or high density buildings, it could better withstand chemical or biological terrorism. Such protection would not be perfect, but such a building could be sealed until the event subsided and staff could operate key communications and emergency operating functions over electronic networks until it was safer to have officers circulate in the community. Civil unrest. The current PSB, by virtue of its structure and location, would be difficult to defend and to keep fully operational if marches, riots, and other disruptions of the sort affecting Stanford in the 1960s and 70s and European cities today were to happen. A building in another location, away from co-located targets like City Hall, and protected by a perimeter that was readily defensible, would enhance the Citys capacity to respond. Pandemics, floods, airplane crashes, pipeline explosions, and other natural or man-made emergencies and disasters will place heavy demands on a public safety function that may require housing officers, communications staff, stockpiling food or medical supplies 24/7 and other responses that the current PSB is inadequate to deal with. In general. Disruption of normal functions in a city of our size and complexity has many dimensions, most of which have public safety implications. Disruption itself has several dimensions, including

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immediate responses and the management of protracted disarray in services, commerce, transportation, and other aspects we expect to be there when needed. Examples include:

The challenge of complacency.

Palo Alto appears to be and is a relatively safe, peaceful, and well ordered city. Many residents and visitors see patrol cars circulating around town. Few have reason to call on police, firefighters, or paramedics or to have public safety personnel call on them. Response times following 911 calls are short; police, fire, and medical staff are well trained, competent, courteous, and firm; and the many aspects of public safety in a complex and active city are normally handled quietly and efficiently. Because so much of what keeps the police, fire and related public safety functions naturally out of sight is also what minimizes public awareness of their importance. The community takes for granted responses that depend upon many other conditions. Chief among those conditions are facilities that are safe, functional, adequate in their capacity to enable performance over a wide range of public safety situations, and, most importantly, will be standing and operational in and after a disaster.

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Reuniting school children and parents in an orderly and expedited manner. Providing access to prescription drugs. Assisting people dependent on medical devices, care, and treatments. Assuring access to and security of Stanford Hospital Securing access to fuel for public and private vehicles. Assisting city staff in critical positions who do not live in Palo Alt to get to their jobs. Maintaining communication within the community and with surrounding jurisdictions and other emergency responders. Continuity of city government and emergency response and recovery. Crime suppression. Responses to events brought about by stress of post-disaster conditions, such as domestic disruption, competition for resources, mental breakdowns, etc.

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Possible photos and graphics Side by side photos 1. Catherines photo of the two engines at Fire House #3, with their doors open/photo of new Mt. View fire house under construction 2. Photos of San Mateo and our evidence storage. 3. Photos of San Mateo and our locker rooms 4. Photos of San Mateo and our 911 centers Single photos Would depend on text and what we want to illustrate. Graphics, charts, tables, etc.

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7. Municipal Services Center/Embarcadero [Mark Michael and the MSC/Embarcadero Corridor WG]

Corridor

A.

Problem statement

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The City of Palo Alto (City) owns 16.1 acres of land on East Bayshore Road where it currently operates a variety of critically important municipal services. These services include operations of the following City departments: public works, utilities, community services, stores and warehouse, and animal services (see site map of MSC below):

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The IBRC studied issues related to the Municipal Services Center (MSC) and the Animal Services Center (ASC), which are located on the southwestern edge of the Baylands. The aging Municipal Services Center has been in need of upgrade or replacement for many years. That situation has not changed. What has changed, however, is that a new set of possibilities has emerges that offers to transform the problem into an opportunity for Palo Alto. This section of the report explores multiple scenarios for upgrading the MSC facilities and creating room for economic development along the East Embarcadero corridor in a fiscally responsible and exciting way.

The MSC is located in a flood zone on the east side of the Bayshore Freeway. This location creates risks and exposures related to resiliency and disaster recovery in the event of a flood, earthquake or other event that might prevent or impede the movement of emergency response vehicles into the City or potentially disrupt the emergency operations center of the utilities and public works departments. In addition to disaster or emergency response risks associated with the MSCs location, the City anticipates there may be economic risks arising from a failure to achieve beneficial business development projects. The potential economic development initiatives would be intended to protect the Citys sources of sales tax revenue, a critical component of the Citys budget. The Infrastructure Future Needs - Backlog in the Citys Capital Budget FY 2012 (see Appendix __) estimates the total cost of major infrastructure projects to be approximately $208 million, of which $93 million is earmarked for MSC Building Replacement and another $6.9 million relates to constructing a new ASC. Thus, approximately 48% of the Citys total estimated backlog of infrastructure future needs relates just to the MSC and the ASC, as shown in the chart below:

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After extensive review and discussion, the IBRC has concluded that the cost estimates to replace the MSC and the ASC may be out of date and are not based upon actual bids from contractors. Moreover, a threshold question has not been addressed or answered by the City Council -- should the MSC and/or the ASC facilities remain at the Baylands site, or is there an opportunity to move some of these operations to other locations (the SplitSite option). The Split-Site option might create the opportunity for commercial development at the current East Bayshore Road location as well as acquisition by the City of parcels of land along the Embarcadero Road corridor east of the Bayshore Freeway. This approach creates the potential to mitigate risks not only of disaster recovery and emergency response, but supports economic development and alleviates risk of declining sales tax revenue without adverse impact on the Baylands Master Plan.

B.

Based on input from the Citys staff, together with our review, the IBRC believes that timely action is needed to make the necessary repairs to the MSC and the ASC. Indeed, because the operational consequences for

Executive summary

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The Citys staff has created a Capital Improvement Project (CIP) for a Municipal Services Center Facilities Study (PE-12204) at an estimated cost of $100,000. Such study is intended to analyze options for locating City functions, personnel and equipment currently located at the MSC and the ASC.

important City functions are coupled with emergency response and disaster recovery responsibilities, such projects have some degree of urgency. However, as we have listened to the staff and consulted with experts, we have come to realize there are two distinct options for moving forward:

A dynamic option is far more complex and would create many more opportunities. This would begin with splitting the functions now at the MSC and relocating each to a place that would enhance the delivery of services. For example, because both utilities and public works bear significant responsibility for emergency response, there would be a benefit to identifying a site or sites west of the Bayshore Freeway for such operations. The ASC and the parks and golf maintenance operations might relocate to the Los Altos Water Treatment Plant (LATP) site. The City could then negotiate with auto dealers for the development of a freeway-visible auto dealer cluster on East Bayshore Road, perhaps giving the City ownership of parcels along the Embarcadero Road corridor where two auto dealers are currently located. Because the Embarcadero Road corridor is now home to numerous office buildings, restaurants and a potential hotel development, the seven-acre parcel available to the City in a land swap with auto dealers might be considered for office space that could alleviate the Citys current dependence and costs of renting office space in the downtown area. While there are many variables and challenges associated with the dynamic option, we note a recommendation from the IBRC that the police station at the Civic Center should be vacated, with a move into a new Public Safety Building, most likely in the California Avenue/Park Boulevard area.

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The static option would involve renovating the MSC and/or the ASC at their current locations. There would be no need to review policies set forth in the Baylands Master Plan and no additional land would need to be acquired. However, the static option would not be without risk. Sales tax revenues from auto dealers (see further discussion below) have declined and may be further reduced if one or more dealers leave the City. There may be economic resiliency and disaster response risks associated with the current MSC location. In addition, the Citys need for very expensive office space in the downtown area (see further discussion below) has resulted in increased City spending on office space, which would not be mitigated by this option.

Bringing additional new office space on-line for City employees along the Embarcadero Corridor and repurposing a vacant police station (or replacing it altogether) could lead to revitalizing the Civic Center complex, particularly if some municipal employees shift to a new Embarcadero Corridor building. We recommend that the CIP for a consultant study of options for MSC and ASC replacement be expanded to include both the static and dynamic options. Please note that both options exist in the current developmental footprint and there will be no encroachment into the Baylands. The consultant should be asked to identify potential costs or benefits, including identification of any significant risks, associated with either option. Due to the expanded scope, the CIP amount should be increased as needed.

C. Situation analysis

The MSC and the ASC facilities are located alongside the Bayshore Freeway in the southwestern edge of the Baylands area (see map below), which is classified by FEMA as a flood plain and is therefore subject to more stringent building code restrictions. In the long term, global climate trends may continue to produce warming conditions and thereby raise the level of water in the San Francisco Bay. All of Palo Alto falls within an active seismic zone and the United States Geologic Survey has published estimates of the probability of a large earthquake on the nearby San Andreas Fault in the next 30 years at about 21%.

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Scenarios for projected sea level rise in the San Francisco Bay have been published by the San Francisco Bay Conservation and Development Commission (BCDC). By the middle of this century, BCDC projects the likelihood that the sea level will rise 16 inches. This will continue and by the end of the century a 55-inch sea level rise is anticipated. While there are broader implications of such a trend, sea level rise is a significant consideration for the feasibility and viability of the MSC and the ASC sites. The MSC site also presents an opportunity to increase revenue generation for the City. Sales tax is an important component of the Citys financial stability and, since 2000, there has been a decline in sales tax

The Association of Bay Area Governments (ABAG) has conducted analyses regarding the possible effect on infrastructure systems in various disaster scenarios. ABAG notes that infrastructure is critical to a safe and resilient economy and disruptions can lead to disproportionate economic impact. An example of what can happen in an extremely severe earthquake may be observed in the troubles experienced by Japan in the March 11, 2011 earthquake and tsunami. Disaster response was hindered when emergency and utility repair vehicles were reportedly caught in gridlock and blocked from the communities in crisis.

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revenues from auto dealers located on the Embarcadero Corridor. In 2000, there were seven auto dealers generating approximately $3.1 million in sales tax revenues. This declined by 2006 to five dealers generating approximately $1.9 million. By 2010, sales tax revenues from auto dealers had declined to less than $1.3 million. In 2011, there are two dealers remaining on Embarcadero Road, who own and operate dealerships on Parcels PC-4847 and PC-4846. The City recognizes a need to pursue economic development strategies that enhance the benefits for businesses to locate in Palo Alto and, for that reason, has already begun to consider the creation of an auto dealer cluster along East Bayshore Road.

D.

Background and History

The Citys original MSC was built in 1914 on land leased from Stanford University on El Camino Real to house facilities for public works, utilities, purchasing and stores, maintenance and equipment, and animal services. Beginning in 1964, the City began to relocate these facilities to the current site across the freeway and, by 1967, public works, utilities, purchasing and stores, and maintenance equipment had moved. In 1972, the ASC had also relocated to this new site. Also located at the MSC are certain parks and golf course maintenance operations. A detailed discussion of these actions is set forth in the Baylands Master Plan at pages 195 - 205. Over the years, there have been efficiencies from co-locating various facilities in one City yard. However, there continue to be issues arising from: (i) FEMA flood zone compliance; (ii) the need for seismic bracing and structural upgrades; (iii) facilities rehabilitation (e.g., HVAC, ADS, restrooms); and (iv) requirements that the Emergency Response Facility can never be closed or inoperable. By 2003 the condition of the buildings at the MSC and the ASC had deteriorated from a combination of normal wear and tear, seismic vulnerabilities and functional obsolescence. The City retained Leach Mounce Architects, an architectural design firm, to prepare an estimate of costs for demolition, site work, structural repairs, new specialized structures, and non- construction costs. Without factoring in removal of the ASC, the total estimated costs in 2003 dollars were $79,770,832. The City made an estimate of adjusting for inflation from 2004-2008 and has used the amount of $93,044,698 for the cost of needed work at the MSC.

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Similar challenges face the ASC and the Citys staff has evaluated the cost of moving the ASC to a nearby site at the LATP. The Citys Capital Budget for FY 2012 estimates the cost for such a move would be $6,930,000. In 2006 the City Council conducted a study session regarding the MSC and discussions between the Mayors Retail Attraction Committee and various auto dealers that had expressed interest in the possibility of locating an auto dealer cluster along the Bayshore Freeway corridor. From 2000 to 2006, the City had suffered a decline in sales tax revenues from auto dealers from $2.9 million in 2000 to $1.9 million in 2006. The auto dealers indicated that car sales might increase substantially if it were possible to create a freeway-visible site and noted the potential marketing synergies from several dealers in a cluster. The City invested substantial time and expense in further analysis of a possible land swap with auto dealers; however, the feasibility of such a project was jeopardized by the recession of 2008-2009 and these plans were put on the shelf. With the economic recovery, both the City and the auto dealers reengaged in discussions. When the IBRC was formed in 2010 and subsequently created a working group to study the MSC, representatives from the City staff met with the IBRC working group, along with the owners of two auto dealers (Anderson Honda and Carlson Audi) to tour the MSC and the ASC and discuss various options moving forward. Most of the issues set forth in the MSC/Auto Dealer Study Session from 2006 remain relevant. The lack of any immediately available 15-17 acre site to move some of the operations conducted at the MSC site raises a threshold question regarding the pros and cons of pursuing the Split-Site option. Possible sites may include the seven-acre site comprising the Honda and Audi dealerships on Embarcadero Road or the LATP site with 6.5 usable acres. Because it would not be possible to shut down City operations during a move, this project would entail a multi-year implementation plan with complicated staging issues. Concluding that this would be an incredible project, the 2006 study session identified key questions:

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Are split sites acceptable? Is there sufficient economic benefit to the City? Can we accommodate staging and efficiency challenges? Are we willing to make required land use changes?

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E.

How We Studied The Issues

The IBRC appreciates the support regarding the MSC and ASC issues we have received from the City staff, in particular: Steve Emslie, the Deputy City Manager; Matt Raschke, Public Works Senior Engineer; and Thomas Fehrenbach, Economic Development Manager. In June, our working group met with Messrs. Emslie, Raschke and Fehrenbach at the MSC for a tour of the entire facility, including a tour of the ASC conducted by Sandy Stadler, who is Animal Services Director. We were then introduced to John Anderson, owner of Anderson Honda, and Charley Burton, owner of Carlson Audi, who gave us a tour of their respective auto dealerships on Embarcadero Road. Both the City staff and the auto dealers explained to us the potential issues regarding and possible benefits of revisiting the land swap proposal that was studied by the City Council in 2006. Our working group includes commissioners who are liaisons with or serve as commissioners on other City commissions: Greg Tanaka, a member of the Planning & Transportation Commission (P&TC), advised us about an ongoing P&TC study of the East Meadow Circle/Fabian Way Concept Plan area; John Melton, a member of the Utilities Advisory Commission, consulted with management of the utilities department regarding their facilities needs and priorities for locating West of the Bayshore Freeway; and Pat Markevitch, a member of the Parks Commission, investigated the requirements of parks and golf operations for the their personnel and equipment currently at the MSC. Gary Wetzel brings his professional background in facilities management to our group and has provided some analysis of the project management and facilities utilization issues associated with the MSC project. Messrs. Berman and Michael are attorneys who have considered various legal, land use and regulatory issues that may be relevant. Mr. Michael has served as chair of the working group. We have reviewed the Baylands Master Plan and the policies enumerated therein with respect to the MSC and the ASC. We have also noted the work previously done by the City staff and City Council on the MSC/Auto Dealer Study Session. Finally, we have been apprised of the detailed cost estimates for replacement of the MSC and the ASC, which have been incorporated into the Citys Infrastructure Future Needs Backlog. Our working group made an oral report to the full IBRC on August 25, 2011 and issues pertaining to the MSC were specifically

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addressed in a joint study session with the P&TC on August 31, 2011.

F.

Financial impacts

G.

1. The present condition of the Municipal Services Center necessitates either extensive repairs or rebuilding in order to maintain essential City services and comply with applicable codes and regulations. 2. The current layout of the MSC is not space efficient -- the operations currently located there could be based on less acreage. 3. The present condition of the Animal Services Center requires extensive repairs. 4. There are numerous options for relocating the City operations now based at the MSC site in other areas of the City that might be more

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One important financial consideration arises because the utilities department is a primary tenant at the MSC. As a regulated utility, the Palo Alto utilities department may finance the reasonable and necessary cost of facilities required for its operations through issuance of revenue bonds. Thus, a significant portion of the costs associated with the Split-Site option namely, costs attributed to the utilities needs would not be subject to ballot approval. As discussed in the IBRCs analysis of financing options, the remaining costs could be financed with a smaller general obligation bond issuance, for example.

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The IBRC feels there is a lack of data needed to evaluate the overall financial impact resulting from different plans to deal with future operation and maintenance of the MSC and the ASC. Such data would ideally encompass both the expense and the revenue sides of the equation. Given many different paths the City might consider, it would be helpful for the City Council to provide a preliminary direction to focus the financial impact analysis. By narrowing the universe of choices into a short list, it would then be feasible to direct the consultant to deliver up-to-date estimates of project costs and associated revenue impacts in order to reach a final recommendation. The minutes of the MSC/Auto Dealer Study Session in 2006 address many of these issues, although it is necessary to update the assumptions and relevant facts to present conditions in 2011.

advantageous for those operations and create an opportunity for revenue generation at the current site. 5. The Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2010 shows that sales tax revenues provided approximately 15% of the Citys general fund; however, the Citys sales tax revenue from auto dealers has declined from over $3.1 million in 2000 to less than $1.3 million in 2011, as show in the following graph:

6. The number of auto dealers on Embarcadero Road declined from seven in 2000 to two in 2011. 7. The City has been renting 6361 square feet of office space in the downtown area (the Development Center, at 225 Hamilton) at an approximate annual cost of $400,000 in the most recent complete year. 8. If the Police Station becomes available for rental upon completion of a new Public Safety Building, the Citys staff is projecting that possible rental of the Police Station may generate ~$5.50 per square foot per month on a possible rental of 20,000 square feet. 9. Caltrans has announced plans to open bids on November 1, 2011 for a Highway 101 Auxiliary Lane project (Project No. 04-4A3304). Construction of such auxiliary lane will entail removal of the landscape strip area between the East Bayshore frontage road and replace it with a new concrete barrier with mounted chain link fence

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that will separate the freeway and the frontage road in front of the MSC.

H.

Potential Scenarios

There is a wide range of potential scenarios for the City to address future needs that are met by the services currently based at the MSC: utilities, public works, stores and warehouse, parks and golf course maintenance, and animal services. Each of these involves different costs, risks and benefits. We have noted the following: 1. Minimal -- this option assumes that all City operations now at the MSC and the ASC will remain in the same location and that bids will be sought for any necessary repairs or improvements needed to comply with regulations applicable to the flood zone, seismic conditions and emergency operation responsibilities. No impact on the Baylands Master Plan is contemplated, nor would there be any City acquisition of land on the Embarcadero Corridor. The LATP site would remain vacant. Efficiencies of functions co-located on the single site would be retained. Resiliency and disaster response concerns would not be mitigated. 2. Rebuild MSC -- this option would involve a project to demolish and replace all of the MSC and the ASC structures in their current location. While out of date and therefore inaccurate, the cost estimates from the 2003 study might provide a rough estimate of the potential cost. While the cost of completely rebuilding the MSC might be higher than the first option, all other factors would be similar. 3. Utilize LATP for ASC and Golf/Parks Maintenance -- because the LATP site might be favored as a new location for the ASC and certain of the golf course and parks maintenance operations, either of the first two options (i.e., minimal or rebuild) could be modified by selective relocation of some City functions that may not provide essential synergies with the utilities and public works activities. By moving certain City functions out of the MSC, the concept of a freewayvisible auto dealership on East Bayshore may become feasible. In this scenario, the utilities and public works buildings might be rebuilt in

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the back portion of the 16-acre MSC site, leaving the front portion open for other uses.

4. Embarcadero Corridor Land Swap -- if the City negotiates a transaction with auto dealers that results in swapping approximately seven acres of freeway-visible property on East Bayshore Road for the current auto dealer parcels on Embarcadero Road, this leads to the Split-Site option for MSC operations noted in the 2006 City Council study session. Presumably, there would be a plan to accommodate all of the current MSC operations at a combination of the Embarcadero Road parcels PC-4847 and PC-4846, the back portion of the MSC site and the LATP site. Both the City and the auto dealers would expect the freeway-visible auto dealer cluster to result in increased sales and tax revenues. It should be noted that there may be other possibilities for improvements along the Embarcadero Corridor, consistent with City policies and the Baylands Master Plan. For example, upon assuming direct control of the airport, it may be desirable to plan a restaurant/conference center between the golf course and airport.

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Autodealer parcels: PC4846& PC4847

5. Land Swap + Resiliency -- the City is mindful of its exposure to the risks that result from having the MSC operations on the edge of the Baylands: in particular, those that relate to flood zone, seismic and disaster response scenarios. If this concern becomes a priority, acquisition of land west of Bayshore Freeway for utilities and public works would mitigate such risks, although such property acquisition may be difficult and expensive. A possible location might be found in the East Meadow Circle/Fabian Way area. In this scenario, the Embarcadero Corridor parcels offered to the City by the auto dealers need not be used for fleet maintenance, warehouse and utilities/public works operations. Instead, consistent with adjacent properties, the City-owned seven-acre parcel could be developed as attractive office space. Currently, the lack of sufficient office space at City Hall requires the City to rent additional space in the expensive downtown area and this cost might be lowered if City employees were located in a new building on the Embarcadero Corridor. 6. Infrastructure Interdependencies -- what might the future bring? How should we plan for interdependencies in the allocation of the Citys infrastructure investments? Based on other needs and priorities, the City may face important decisions about the disposition of the police station at the Civic Center. If one assumes the City Council and the

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I.

Recommendations

1. Expand the scope of the consultant study regarding repair or replacement of the MSC and the ASC to include the possibility of establishing an auto dealer cluster on East Bayshore Road and consider the highest and best use of any parcels of land the City may acquire on the Embarcadero Corridor. 2. Obtain a current appraisal of the market value of the MSC site on East Bayshore Road and the auto dealer parcels on Embarcadero Road. 3. Update the Citys disaster response and resiliency planning, with specific attention to the location of emergency operations facilities and response equipment. 4. Review and update relevant policies in the Baylands Master Plan concerning the MSC site and the Embarcadero Corridor. 5. Perform an economic impact analysis of the different scenarios for repair or replacement of the MSC. 6. Review the plan for delivering animal services to the City, the contractual obligations of the ASC to provide services to adjacent

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voters will approve a new Public Safety Building, the opportunity would arise to consider the best future use of the existing police station or the land that it occupies. If the City has also taken steps to acquire City-owned office space on the Embarcadero Corridor land, there may be new public and private uses and activities on the Civic Center block. Indeed, the price per square foot of office space in the Civic Center may be the highest in Palo Alto and a long-term plan to capture this value and relocate some of the operations currently located at City Hall might yield an economic windfall to the community. Taken together, the expected redevelopment of Cubberley in the next 10 years by the re-opening of a new secondary school; the option for the City to develop community center facilities on its eight-acre parcel on Middlefield Road; a new public safety building in the California Avenue area; improvements along the Embarcadero Corridor; acquisition of land in the East Meadow Circle/Fabian Way area for utilities and public works; strengthened resiliency and disaster response; and other infrastructure investments all may create a roadmap for continuous improvement of the environment and services enjoyed by Palo Alto.

communities, and the possibility of a closer relationship with regional providers such as the Humane Society. 7. Request a study from the Citys staff and/or the appropriate commission regarding long-term alternatives for optimization of the Civic Center block. Appendices 1. City of Palo Alto Infrastructure Future Needs -- Backlog 2. San Francisco Bay Conservation and Development Commission Sea level rise estimates 3. Caltrans Auxiliary Lane Project Map 4. Elevation drawings of potential auto dealerships for East Bayshore Road (courtesy of Anderson Honda)

Sources/Bibliography

1. Palo Alto Baylands Master Plan, 4th. ed., 2008 2. City of Palo Alto, Adopted Capital Budget FY 2012 3. Minutes from MSC/Auto Dealer City Council Study Session, July 17, 2006 4. City of Palo Alto, Capital Budget FY 2012 5. ABAG Earthquake and Hazards Program: Local and Regional LongTerm Disaster Recovery Issue Paper, March 3, 2010 6. U.S.G.S. -- 2008 Bay Area Earthquake Probabilities

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Appendices 1. Infrastructure Future Needs Backlog (Capital Budget FY 2012): Project Cost

Project Baylands MSC ASC LATP Bxybee Park Police, Fire & Emergency Ops Public Safety Building Fire Station 3 Fire Station 4 Road Corridors Charleston Road Arastradero Road San Antonio Road

Sub-total

Percentage

$93,000,000 $6,930,000 $2,040,000 $3,625,000 $105,595,000

45% 3% 1% 2% 51% 29% 3% 10% 36% 50% 37% 13% 6% 8% 8% 0% 0% 0%

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Civic Center Civic Center Plaza Deck

Other Junior Museum Roth Building Restrooms Future Projects, e.g.: Intermodal Transit Center Caltrain grade separations

Source: Capital Budget FY 2012, p. 276 Note: list is in process of updating by staff

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$5,700,000 $4,300,000 $1,500,000 $16,000,000 $735,000 $250,000 ? ?

$60,000,000 $6,700,000 $7,500,000

$74,200,000

$11,500,000

$16,000,000

$985,000

$208,280,000

2. Sea level rise projection -- map of projected 55-inch sea level rise by end of century for west shore of San Francisco Bay that would impact Palo Alto (source San Francisco Bay Conservation and Development District report:

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3. Caltrans Figure 2: Project Vicinity U.S. 101 Auxiliary Lanes Project, Santa Clara County, California.

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4. Elevation drawings for potential freeway-visible auto dealership on East Embarcadero Road (source: Anderson Honda):

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8. Finance [Steve Levy, Jim Olstad, and the Finance WG]

Draft Finance Working Group Report This is a work in progress. The Finance Working Group has been focusing on developing recommendations for the Commission to discuss. While our findings and recommendations are discussed in this draft, our goal is to present and discuss them on Thursday based on the attached PowerPoint summary.

September 22, 2011

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As the Commission provides feedback and makes decisions this draft will be revised accordingly. In addition working group members will continue to flesh out our findings and recommendations.

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In the final report all of the alternatives presented on Thursday and others considered by the Commission will be presented with pros and cons and the reasons for the Commissions final recommendations.

The IBRC was asked by the City Council to identify infrastructure funding needs and funding sources and to make recommendations for funding the identified needs. This section summarizes the findings and recommendations related to total funding needs and financing alternatives.

Although the City is funding infrastructure needs more than most cities its size and population, it is not allocating sufficient funds to optimally maintain its existing General Fund related infrastructure nor to replace large facilities that are now obsolete. Given the General Funds current obligations and commitments, it cannot sufficiently provide the funding for infrastructure without an additional revenue source or severe cutbacks in service levels. An additional $6(?) million is needed annually (in 2011 dollars) to

Major Findings (Very Preliminary Listbut with agreement of the working group)

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As described in previous sections infrastructure needs were grouped into three major categories called catch up, keep up and new and replacement. Potential revenue sources and related funding recommendations were developed by the Commission separately for each category of infrastructure needs.

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Infrastructure needs were developed by reviewing previous reports, by input and a detailed update of previous forecasts by staff and by a series of working groups who reviewed and modified these forecasts. Infrastructure revenue sources were provided by staff based on continuation of recent funding levels.

properly catch-up (eliminate the backlog), keep up maintenance and provide for unanticipated needs. The Commission has identified over $200 million worth of major replacement projects over the next 25 years. The current Cubberley Lease Agreement has served its intended purpose. It is outdated and should be significantly modified or allowed to expire on December 31, 2014. The modification or termination of the agreement would provide the City the potential to fund a significant portion of infrastructure needs as well as reducing the financial liability presented by its continuing upkeep. The current financial climate provides a rare window of opportunity to construct major facilities. Public financing costs are at an historically low level and construction costs are currently extremely competitive compared to previous eras. Additionally, the City is viewed favorably by the financial community and has the capacity to successfully issue bonds to raise the capital needed to finance major infrastructure projects. Cities that have been most successful in continuously providing for infrastructure financing generally have dedicated revenue sources. Funding Needs and SourcesAn Overview Catch Up

As described in section x, Palo Alto has $41.5 million in catch up infrastructure needs reflecting repairs that would have been done already if funds had been available. There are no current revenue sources to fund these catch up projects so funding alternatives for the entire $41.5 million were identified, and are being proposed, by the Commission. New and Replacement The working groups identified approximately $200 million in replacement and new needs as described in section xx. These infrastructure projects were grouped into three categories for consideration of funding alternatives.

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 The public safety building and firehouses 3 and 4 are grouped together as public safety facilities with an approximate cost of $77 million. The municipal service center and animal service center are grouped together. An earlier and now out-of-date set of cost estimates total approximately $100 million. The Commission is recommending a set of innovative approaches to these upgrades where the specifics and cost estimates will be fleshed out by a consultant team hired by the City. Moreover, it is possible that the final alternative for these projects will produce revenues to the City that can partially offset the funding costs. Finally, there is a set of smaller projects identified by the Commission that total $42 million. None of these projects have a current funding source and the Commission is recommending alternative funding strategies for these projects. Keep Up

The City spends approximately $30 million per year on General Fund budget maintenance expenses and the CIP. These costs are funded by --a $10.5 million transfer from the General Fund to infrastructure -- $4.2 million from gas tax revenues, a transfer of interest income to infrastructure and one-time fund sources --approximately $15 million in General Fund maintenance funding

The Commission identified two sets of keep up infrastructure maintenance needsone related to the maintenance done regularly within the General Fund budget and one related to the larger but ongoing maintenance and repair projects in the Citys Capital Improvement Program (CIP). The background for these needs forecasts is included in section xxx.

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This funding level comes close to forecasted keep up infrastructure needs with three important modifications. First, based on consultation with staff, the Commission added $1.5 million per year to General Fund maintenance in order to avoid a repeat of the past underfunding that led to the current $42 million in catch up infrastructure needs. This addition reflects staffs best estimate of an optimal level of annual General Fund maintenance to avoid future catch up. In addition the Commission noted that not all of the nearly $15 million in annual CIP funding gets spent on keep up projects. A small portion of the CIP each year gets devoted to unbudgeted projects that come up in the process of discussing and adopting the annual CIP. Based on an analysis of past CIPs, the Commission added $1.5 million per year to CIP infrastructure keep up needs to insure that there was enough funding to do planned CIP keep up maintenance. The final Commission assessment of the keep up funding gap is that the City needs approximately $2 million per year in addition to current funding. While the Commission is planning for the existing level of funding to be maintained, staff has told the Commission that this is not a certainty with regard to the annual $10.5 million transfer to infrastructure from the General Fund. To the extent that the $10.5 million is reduced, the Commissions forecast of funding needs would need to be raised. The infrastructure funding needs are summarized on the chart below. Funding Needs

New and Replacement Public safety and firehouses 3&4 $77 million Municipal Services Complex $100 million less rental income Smaller projects after 2020 $42 million Catch Up $42 million

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Keep Up $2 million per year if existing funding remains available A more detailed list of infrastructure needs and sources is shown on Table x. The estimates for the public safety buildings and the municipal services complex are derived from prior reports and will be revised as the projects are designed. The City is in the process of hiring a consultant to develop alternatives for the municipal services complex. As discussed in detail in section x, the Commission anticipates that the municipal services complex can be designed in a way to include revenue producing land uses that would reduce the cost of replacing the existing facilities. In the case of the public safety building, if the existing space is vacated, there will be different annual maintenance costs for public safety as well as potential revenue from reuse of the existing facility. For purposes of simplifying the funding analyses the Commission grouped the funding needs as follows: The catch up, keep up and smaller new and replacement projects were considered as one group for financing purposes. -- The catch up backlog will be funded and completed over a ten-year period or approximately $4 million per year. This is based on timings conversations with staff about the reasonable schedule for completing all of these projects in addition to the new and replacement projects.

-- The remaining new and replacement projects (approximately $4 million per year) will be scheduled in the ten years following 2021. --Keep up additional funding needs were identified as $2 million per year. --As a result catch up, keep up and the other new and replacement projects require an annual funding of approximately $ 6 million per year.

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 The public safety facilities and municipal services complex were kept as separate funding needs in the analysis. The two major replacement and new complexes will also be funded and completed in the next ten years. A very preliminary borrowing analysis concludes that each $50 million in borrowing costs between $2.9 and $3.3 million per year depending on interest rates. So if the combined costs of the two major projects was $150 million (after deducting rental income and cost savings), then the annual cash repayment costs from borrowing would be $9-10 million per year. Funding Strategies and Criteria The Commission has identified one-time projects (catch up and replacementand-new) and annual funding needs (keep up). The Commission recommends long-term borrowing for the long-term capital projects, and annual funding for the annual keep up maintenance needs. As described below, the Commission identified many approaches to financings of long-term funding needs and many alternatives for additional annual funding. The Commission is recommending that the City terminate the Cubberley lease and is including an estimate of $6 million in annual savings as one of the funding source alternatives for the Council and community to evaluate. The rationale for this recommendation is included as Appendix x. A summary is shown below. Financial and Infrastructure Opportunities Related to the Cubberley Site The Commission has researched the 1989 Lease Agreement and Covenant Not To Develop Agreement (The Cubberley Lease) between the City and the Palo Unified School District. (See Exhibit __ in the report appendix.) The mutual goals for each Agency have been successfully achieved in the past 22

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years, and the Agreement is scheduled to terminate on December 31, 2014 unless renegotiated or mutually agreed to continue by both parties. The conditions that created the need for the Agreement are no longer pertinent today or for the foreseeable future. The School Districts student population has increase to a level where it is reopening previously closed sites and formally expressed its intention to reopen the Cubberley site as an educational facility in the near future. Covenant sites are either being fully used as school sites or will be opened or redeveloped shortly for educational purposes. If the City lets the Cubberley lease expire or negotiates an earlier termination, it provides several opportunities to financially mitigate the infrastructure shortfall. From an infrastructure liability perspective, the Commission has identified $7.0 million in catch up needs and approximately $11.9 million (in current dollars) of ongoing maintenance needs through 2036. Given the School Districts intent to raze the facility and develop a new campus, much of these expenditures can be avoided. Secondly, during the current fiscal year, the City will pay the School District nearly $6.4 million for Cubberley lease and the covenant not to develop at other sites. The City nets approximately $0.3 annually million from rental payments and other facility uses. Thus, by terminating the lease and returning the management of the property back to the School District, the City will have an additional $6.1 million (in current dollars) available to meet City financial demands including infrastructure. Finally, in terminating the lease, the City can and should develop a plan for optimizing the benefits from the 8 acres in now owns. This plan can range from selling the site to the School District or another party to meeting some of its own infrastructure service needs at the site. Thus, the Commission recommends that the City enter into discussions with the School District to terminate the Cubberley Agreement at the earliest possible date or let it lapse by the terms of the Agreement on December 31, 2014.

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Long-Term Funding Alternatives The Commission reviewed a number of alternatives to fund the large and long-term projects such as the public safety facilities and municipal services complex. Three long-term funding alternatives are noted in the Commissions alternative funding scenarios. These alternatives and the other alternatives reviewed by the Commission are discussed below. General Obligation Bonds The most common form of long-term capital project financing for cities and school districts is the use of General Obligation (G.O.) bonds. In Palo Alto both the recent library and school infrastructure improvements were funded by G. O. bonds. General Obligation bonds for City facilities require a 2/3 vote approval. The bonds are funded by an additional property tax added to the property tax bills of property owners in the City. While G.O. bonds can be for different lengths of time, the most common G.O. bonds have a 30 year time period. Certificates of Participation

The major differences between G.O. bonds and COPs are that COPs do not require a vote of the electorate, but the interest rate on COPs is higher..so annual debt service costs are greater for COPs than G.O. bonds. As noted above, the other major difference is that COPs need an identified repayment source as opposed to G.O. bonds which, if approved, provide their own added-taxes repayment source. Utility Revenue Bonds

Certificates of participation (COPs) are debt (borrowing) instruments issued by a jurisdiction and funded (paid off) by an identified revenue stream from within the issuing jurisdictions budget.

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With regards to the Municipal Service Center (MSC) project, a substantial portion of these facilities supports the operations of the Enterprise Funds. Depending on the final configuration and physical locations of the various MSC facilities, the financing of a majority of the capital cost can be provided through Utility Revenue Bonds. Through this mechanism, the revenues from the utilities served by the new MSC facilities are pledged to secure payment on the debt. As an order of magnitude calculation, if the Utilities portion of new MSC facilities costs $50 million, then Utility rates would have to be raised between 1 and 2% to cover the additional annual debt service. Other Alternatives Reviewed by the Commission

The phrase public-private partnership with regard to infrastructure funding has a common technical meaning, but that phrasing is also used more loosely in other contexts. The common meaning for public-private partnerships for infrastructure is when private sector financing is provided and repaid with fee income. A common example is a toll road. Some regions are experimenting with private airport ownership. These are legitimate options where they are relevant, but for the public safety and municipal services facilities the option for fee-based financing does not seem appropriate. Many communities fund infrastructure improvements with a combination of City (public) funding and funding raised by friends people in the community who want to make a gift to support these facilities. Common examples are arts facilities and libraries. Friends funding is common in Palo Alto (give examples).

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Public-Private Partnerships

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The Commission reviewed a number of other long-term financing alternatives and incorporated some aspects of these alternatives in our recommendations, while finding other options to be interesting but either not appropriate for Palo Altos main funding needs or beyond the scope of the Commission to develop.

There may well be projects in the catch up or future new and replacement categories that could attract friends co-funding. However, for the public safety and municipal services complexes, the Commission did not find reasonable evidence to include friends funding as part of our recommendations. Another kind of public-private partnership is when an individual or business donates funds for a public facility. The Bay Area has many examples of public infrastructure donated by David Packard and many others. However, this kind of funding is not traditionally offered for facilities like the public safety improvements or municipal service complex and, in any event, the Commission members are not able to secure such funding. Redevelopment Agencies

Asset Sales and Leases

The Commission anticipates that there will be options for revenue generating activities with regard to both the public safety building improvement and the municipal services complex project. If a new public safety building is developed in an alternative site as the Commission recommends, the existing facility and land can provide options to the City for revenue generation. The analysis by the Commission of the municipal services complex improvements provides examples of where infrastructure improvements can be combined with the sale or lease of publicly owned space. In neither case are the plans far enough along for the Commission to make specific sale or lease recommendations.

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Some cities are able to fund infrastructure improvements through their redevelopment agencies. Palo Alto does not have a redevelopment agency and, in any event, state legislation has passed to greatly restrict future redevelopment agency activities.

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However, the Commission does recommend that the City include sale or lease considerations as final plans are developed for these facilities and the facilities they replace. Other (other ideas for inclusion such as the Stanford money?) After we get a sense of what the Futures WG write up will look like, we should make some specific recommendations with regards to this probably in Infrastructure Reserve 2.

Annual Funding Alternatives The Commission reviewed a number of alternatives for additional annual funding. Three alternatives are included in the funding scenarios developed by the Commission. A description of these alternatives and others reviewed by the Commission is summarized below. Sales Tax Increase

At the present time Palo Alto has an 8.25% sales tax rate, which is the minimum level required for cities in San Mateo and Santa Clara counties. A 3/8 percent sales tax rate increase would yield an additional $7.5 million in annual revenue. A1/4 cent rate increase would yield $5 million per year. Business License Tax A recent analysis by City staff prepared for the November 2009 election estimated that the proposed business license tax would raise $3.3 million per

In the past three years 50 cities in California have adopted sales tax increases ranging from 1/8 percent to 1 percent. Most of the sales tax increases were for general purposes, which require a majority (50%) vote approval. Some increases were for specific purposes, which requires a 2/3 vote majority. An additional number of sales tax proposals were defeated.

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year. (http://www.Cityofpaloalto.org/depts/asd/business_license_tax/default.asp). Fifteen cities (check number) in San Mateo and Santa Clara counties have business license taxes while Palo Alto does not. A business license tax requires a majority (50%) vote approval. Parcel Taxes Parcel taxes were first introduced as a way to increase local school funding. Recently cities have proposed parcel taxes for local government services. More than xx cities including xxx in San Mateo and Santa Clara counties have recently adopted parcel taxes for use in funding City services and infrastructure as shown in Appendix X. A parcel tax requires a 2/3 vote approval.

Cubberley Savings

As described in section xxxx on the Cubberley lease, termination of the lease would save the City at least $6 million per year. I need help here. Other Annual Funding Sources The Commission reviewed other major City taxes including the utility users tax, the transient occupancy (hotel) tax and the tax on property transactions. In each case (see appendix xxxxx) Palo Alto has an existing tax rate that is at or near the top level for all cities in the state and immediate vicinity. As a result these taxes were not considered further as annual infrastructure funding sources. Funding Infrastructure needs within the existing General Fund Financial Structure

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A $200 per parcel tax would yield approximately $4 million in additional annual revenue.

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As indicated previously, to fund catch up and keep up needs for infrastructure will require $16.5 million annually compared to the $ 10.5 million current target allocation from the General Fund. With the exception of reviewing the lease and covenant not to develop agreement (the Cubberley agreement) with the Palo Alto Unified School District, the Commission felt that such an evaluation was not within the scope of our core mission nor did we have the time and resources to take on that additional element. From the information we have received from staff, we understand there is currently a structural deficit within the City's General Fund that the Council has been addressing prior to the formation of the IBRC. The IBRC supports the Council's aggressive efforts to reduce future General Fund deficits through operating efficiencies and enhanced revenue recovery from user fees that better reflect the cost of service at every opportunity. Progress within the existing General Fund structure will ultimately provide additional funding opportunities for infrastructure needs and/or reduce the additional tax burden on residents and business to fund these needs.

The Finance Working Group reviewed four major alternatives for funding the identified infrastructure needs in Palo Alto. The four alternatives were: An alternative with no Cubberley savings and funded with new taxes and borrowing Two alternatives that included Cubberley savings but had different approaches to funding the public safety facilities An alternative that included no new taxes but did allow for use of the Cubberley savings.

Four Funding Alternatives (Written from the perspective of the working group)

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Fully funding all of the infrastructure needs identified by the Commission will cost an additional $15-16 million per year. Sales Tax Recommended Over Combination of Parcel Tax and BLT If the City Council plans to meet the $6 million in annual infrastructure needs identified by the Commission, we recommend the use of a 3/8 percent sales tax increase that would produce annual revenue of approximately $7.5 million. The alternative identified by the Commission was a combination of a $200 per year parcel tax and a business license tax of the same magnitude as the recently defeated proposal or $3.3 million per year. The reasons for this choice are:

The business license tax had strong opposition in the last election. A parcel tax requires a 2/3 vote as opposed to a general sales tax increase, which requires a majority (50%) approval. A parcel tax is usually for a set period much shorter than the 20-30 years of infrastructure funding needed. The 3/8 percent increase ($7.5 million per year) is recommended instead of the 1/4 percent ($5 million per year) increase as the $5 million is less than the $6+ million of identified needs and the existing infrastructure funding from the General Fund is not certain. Alternative 1 (No Cubberley Savings Available) Public safety facilities funded by G.O. bond MSC complex funded by utility revenue bond and an additional source such as rental income Catch Up, Keep Up and Other New and Replacement funded by 3/8 percent sales tax increase

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A single new tax is preferred to two new taxes

Rationalelong-term projects are funded by long-term borrowing; annual needs are funded by a single additional annual revenue stream. Without the Cubberley savings, two major borrowings will be needed for the major projects. Alternative 2-A (With Cubberley Expense Savings) Public safety facilities funded by G.O. bond MSC complex funded by utility revenue bond and an additional source such as rental income Catch Up, Keep Up and Other New and Replacement funded by Cubberley savings Rationalelong-term projects are best funded by long-term borrowings; added annual needs are best funded by additional added revenue streams. Since Cubberley savings are a potential annual funding stream, it makes sense to match them with annual funding needs. There is a counter argument, which led to the development of Alternative 2-B. The counter argument, favored by one member of the working group, is that getting a 2/3 vote for the public safety facilities will be hard, and an alternate funding approach for these facilities should be recommended by the Commission.

Alternative 2-B (With Cubberley Expense Savings) Public safety complex funded by COP paid off with Cubberley expense savings MSC complex funded by utility revenue bond & an additional source such as rental revenues Catch-up, Keep-up and Future New and Replacement funded by a 3/8 percent sales tax Alternative 3 (No New Taxes)

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 There is a minimum of $15-16M per year in additional infrastructure funding needs. Cubberley savings could provide $6M per year Either infrastructure projects would be cancelled or long delayed or at least $9-10M per year would be needed from somewhere The working group voted 4-0 to reject this alternative. The reasons for this decision are: The mandate of the Commission is to identify funding needs and sources.

Whatever the voting preferences of local residents might be in 2012, the Commissions mandate is to develop a plan for the next 25 years. At this point the Finance Working Group considers that a proposal for no new taxes will result in the identified infrastructure needs not being addressed at all, or not being addressed in a timely manner, which is contrary to the Commissions findings that such infrastructure investments are in the best interests of residents.

Making Sure the Money is There Policies or Rules Infrastructure Reserve Funds and Dedicated Source of Revenue for Infrastructure CIP To avoid future deferred maintenance of the Citys infrastructure once facilities are improved to satisfactory current standards, the City needs to adopt certain policies to prevent a reoccurrence.

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While consideration of voting patterns in a 2012 local election could be within the scope of the Commission, such research will be conducted professionally for the City Council prior to any election.

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The Commission did not have the resources or the mission to evaluate General Fund spending for cost reductions.

As indicated previously in this report, to adequately finance infrastructure catch up, keep up and the historical average of unanticipated needs will require at least an addition $6 million dollars a year (in 2011 dollars) over the time horizon designated for the Commissions review. The current General Fund targeted commitment is approximately $ 11.5 million ($10.5 million allocated from General Fund revenue and another $1.0 million in interest income) and would have to increase to at least $17.5 million annually. The need for additional transfers has clearly been demonstrated over the past 5 (?) years. The current funding-level commitment has been inadequate as the Infrastructure Reserve has been reduced from approximately $38 million in 2005-6 to approximately $3 million in 2011-12. The Commission proposes that the CIP Infrastructure Fund for existing infrastructure be funded with a dedicated source of revenue the annual Utility Equity Transfer, for example and that it be operated using the same financial policies and procedures as an Enterprise Fund. The Fund would have a reserve account, just as the Enterprise Funds have, which would increase or decrease annually depending on annual CIP expenditures vs. the dedicated income for that year. This would insure that the dedicated revenue is always used for existing infrastructure CIPs, if not in the current year, then in future years. The reserve would be subject to Council approved minimum and maximum guidelines, just as with the Enterprise Fund reserve accounts. If in the future, the balance fell below the minimum guideline, then the Council would budget an additional transfer sufficient to meet minimum requirements. If the balance in this reserve exceeds the maximum guideline at the end of a fiscal year, the surplus could then be reallocated to the General Fund, if the Council so chose. The Commission recommends that proposed fund sources to be directly dedicated to Infrastructure, that would otherwise be received by the General Fund, be offset by eliminating the current discretionary allocation practice of transferring funds from the General Fund to infrastructure, and by the aforementioned Cubberley expense savings and/or by the proposed sales tax

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increase. The proposed policy change of dedication of specific fund sources to infrastructure is not intended to reduce funds available for other General Fund purposes. If the Council elected to dedicate the Enterprise Equity Dividend (infrastructure transfers for infrastructure needs), this would generate approximately $18.5M annually (in 2011 dollars), which should be adequate to meet anticipated infrastructure needs into foreseeable future. In terms of establishing minimum and maximum guidelines, the current 5 year Capital Improvement Program plans for approximately $75 million (exclusive of the new Library projects) and the Commission has determined that an additional $20M (or is it $30 million?) is needed for catch up and keep up; a total of $95M. The Commission recommends that 10% of that figure or $ 9.5M (in 2011 dollars) be established as the minimum, and that 20% or $19.0 million be the maximum.

The Commission proposes a second Infrastructure Reserve for the following purposes: Funding for new projects or projects too large for inclusion in the operating budget but too small for bonding. Funding the replacement of a "minor" facilities or seed money for a major replacement - feasibility and design phases - where the project itself would likely be financed through bonding. As a source of leveraging funds on projects that appear desirable but cannot be funded fully on their own or only serve a small segment of the Community. A unique opportunity (such as land acquisition) that would require immediate action.

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The Commission recommends that the Council establish these reserve guidelines, and dedicate the Enterprise Equity Dividend as a means to finance it.

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Participation in public/private partnerships.

The second reserve would be funded as follows: Any asset sale. The proceeds should go to this reserve unless the sale had been previously identified to help pay for a specific project. Some portion of the Stanford Project Infrastructure payments. (What amount do we recommend?) Replenished as legally allowed after the sale of bonds for the project the funds helped establish. One-time windfalls if the Council deems it appropriate. Interest earnings on the reserve.

- It could have paid for all the initial design work for the new libraries and community center prior to its General Obligation Fund financing.

- It could have funded the MSC Study that is in the current years Capital Improvement Program. To use this reserve, the Commission recommends application of the following criteria: With the exception of the "unique opportunity", the ultimate new or replacement project should go through the normal CIP budget cycle. The project must be subjected to life cycle costing so that the annual ongoing operating and maintenance costs for the new or major replacement project are determined and a means to fund it is established prior to project

- It could have paid for the Los Altos Treatment Plant site.

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Had this reserve been in effect, here are a few examples to how it would have used:

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approval. In reviewing cities that are designated as models for Infrastructure Planning, subjecting projects to this type of scrutiny is a commonly emphasized theme.

We have to discuss further Rays question about rules versus process and how our recommendations are integrated with what the IMS will say about accountability. Do we need a section on best practices and if so where in the report?

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Futures Working Group Report Draft

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Table of Contents I. Futures Working Group Summary ..................................................................... II. Introduction............................................................................................................ III. IV. Goals and objectives of the Futures Working Group......................................... Demographics.....................................................................................................

V. Municipal Best Practices.................................................................................... A. Portland, Oregon................................................................................................. B. Shreveport, Louisiana......................................................................................... D. Einhoven, Netherlands ....................................................................................... VI. Obsolescence ...................................................................................................... VII. Technologies....................................................................................................... A. Wireless Infrastructure: ...................................................................................... B. Smartgrid ............................................................................................................ C. Alternative energies (CleanTech) .................................................................... D. Technologies for Aging Demographics ............................................................. E. Advanced Healthcare.......................................................................................... VIII. Leasing of Assets vs. Essential Services [this section to be completed] ........... IX. Scenarios............................................................................................................. A. Community Services Center............................................................................... B. Leveraging the Embarcadero Corridor projects ................................................. C. Conference center ............................................................................................... D. Start-up incubator ............................................................................................... E. CPA Wireless Network ...................................................................................... X. Timeline ................................................................................................................. XI.

Project Costing ...................................................................................................

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C. Dublin, Ohio .......................................................................................................

XII. Policy Changes to Consider................................................................................ XIII. Processes............................................................................................................. XIV. Idea Bank ............................................................................................................ XV. Observations ....................................................................................................... XVI. Recommendations .............................................................................................. XVII. References ......................................................................................................... XVIII. Appendices ...................................................................................................... A. List of Recommendations................................................................................... B. City Services and related infrastructure .............................................................

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I.

Futures Working Group Summary

Whereas many of the ideas and concepts described herein are rudimentary and need further thought and investigation prior to action, it should be apparent to the City Council that the IBRC believes that renewing our infrastructure is long overdue and sorely needed. By initiating a thought process on the future infrastructure for the city, by suggesting some processes that the City Council and City staff may incorporate and adopt, we are taking the first step in reinvigorating the city towards more visionary, yet practical infrastructure and services into the future. It is difficult to predict what the next 25 years may hold. However, we on the IBRC believe that by requiring that the city report on the future beyond its current Comprehensive Plan, by engaging the city with other forward thinking municipalities and by inviting the community, private citizens and business entities alike, into the thought process, that our chances for long term sustainability are improved. The IBRC recommends that joint action with the CPA Planning

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The Futures Working Group (FWG) was assembled within the IBRC to consider what the City of Palo Alto (CPA) needs to do over the next 25-years in order to assure that Palo Alto remain a desirable place to live, work and visit well into the future. We believe that one of the keys to sustaining and enhancing the municipal environment and services is continual attention to the needs of our community and our constituency through a forward-looking process. The CPA Comprehensive Plan (Comp Plan) provides a vision for CPA and provides a framework under which future projects may be evaluated. This vision should be the guidepost for decisions relating to future infrastructure for the city, as many other progressive cities do. The 2007 revision of the Comp Plan integrates the aspirations of the Citys residents, businesses, neighborhoods, and officials into a bold strategy for managing change. In this context, our futures infrastructure recommendations continue this bold forward thinking towards an infrastructure for CPA that preserves our heritage while continuing to serve our constituents well.

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department, citizen groups and discussions with other progressive cities as methods of extending the forward view many years ahead. Specific recommendations appear below. A part of this section of the IBRC report looks at other cities to see if there are lessons to be learned or better practices that may be emulated. It is remarkable to see how some progressive municipalities focus attention well into the future. Perhaps there are some valuable ideas in interacting and collaborating with a select group of cities. In a recent, joint IBRC meeting with the Planning and Transportation Commission (PTC), we asked the question of whether the PTC might be a home for 25-year forward thinking and for continuing the preliminary work and thinking of the FWG. Although the PTCs answer was not definitive, it is clear that their plate is already full and to accept such an expanded charter may not be practical. One question that we address here is how the city might engage forward thinking individuals in the discussion of our citys future and how the city might bring such thinking to action. As such, the main contribution of the FWG is a set of ideas for further exploitation and specific recommendations on policies and processes for the CPA to adopt. II. Introduction

The CPA is uniquely located in a most advantageous region of the world. We not only benefit from a near-ideal climate in a geographically diverse region as part of our physical attributes, but we are situated near one of the great educational institutions of the globe, one that has sparked innovation and economic growth to the envy of the world. The ecosystem that is the Silicon Valley hosts a business growth environment because of its vast access to technology professionals, educational facilities, financing institutions and business leaders. Consequently, the CPA has a unique opportunity via its access and availability of all the building blocks of a vibrant and innovative community. The CPA has a great legacy. It houses a mature community, with significant wealth, with highly educated and motivated residential population and a great

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school system for raising families. The health care facilities are first class and the regions surrounding our great city, the San Francisco Bay Area, is a destination for visitors from all corners of the globe. The CPA offers a broad spectrum of city services, from Public Safety to entertainment, from open space preservers to local parks and schools. Yet in the past 30 years, little has been done to significantly upgrade the buildings and infrastructure of the City of Palo Alto (CPA). Although we have introduced many programs within the city that are innovative (e.g. green energy initiatives, the library bonds, the renovation of the Art Center, Arastradero preserve, etc.), there have been no significant changes in recent years in the major buildings that house our city services. With the exception of parking structures, and the recent and ongoing upgrades and replacement to Palo Alto libraries, the civic infrastructure was last extended in the early 1970s. Looking to the future and the next 25 years, it is difficult to imagine that the City can continue with status quo. It is almost certain that new infrastructure needs to be considered to:

Where the CPA has in the past been a leader in municipal services, through the city-owned utilities, green utility incentives and programs, telecommunications services, recycling and other innovative and appropriate services, we now witness CPA falling behind: neighboring cities have taken advantage of redevelopment agencies to rebuild their infrastructure, attract major businesses and manage their infrastructure without falling behind, as we have, in the upkeep and maintenance of our buildings. Mountain View, as an example, funds all their keep up projects out of their annual budget and protects their form of infrastructure reserve from non-infrastructure uses. Santa Clara, San Jose, Sunnyvale, and to a large extent Redwood City, have rebuilt their downtown centers and City Halls within the last decade. Mountain View offers a Performing Arts Center and Shoreline amphitheater for cultural, music and dance events. Stanford is constructing the Bing Center and offers its on-campus residents very high speed internet access by

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Replace the aging buildings that contribute to costly maintenance each year (catch up and keep up); Offer improved and innovative services to fulfill the vision that the city may hold for itself; Optimize the land and structures for the best delivery of key city services.

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virtue of a relationship with Google. Where is Palo Alto in relation to its neighbors? Cities such as Mountain View were able to create redevelopment districts within city limits that substantially enabled the financing of city rebuilding projects. CPA historically has not been able to benefit from such redistricting. Consequently, CPA needs to find other sources of financing to fund its projects. III. Goals and objectives of the Futures Working Group

The Futures Working Group of the IBRC has attempted to start the thought process that will deliver the right set of buildings, facilities and asset use that will keep Palo Alto as a thriving and progressive environment for its private citizens and business residents.

Demographic changes Technology changes Best practices of municipal governments

We believe that the city needs to introduce planning cycles that look at: New construction, to supplement or replace existing, aging structures Land use: how to optimize the acreage we have in the provision of services that are wanted, needed and useful Divestiture/repurposing of assets the CPA has building and land assets that are underutilized. By repurposing such assets or selling them, the city gains. We believe that the CPA would be well served with a business friendly environment, including incentives for locating business activities and headquarters within the city. We recommend a number of initiatives for consideration by the CPA for creating such an environment.

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The range of opportunities for the CPA is limitless. We have focused our efforts in thinking of innovations that relate to:

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We have undertaken the beginning of what we hope will become an ongoing thought to-action process that leverages the community, our business partners and our city government to keep CPA at the forefront of desirable places to live, work and play.

IV.

Demographics The Planning Department at the CPA provided some useful information regarding the demographics within the city. We note that there are some discrepancies within the CPA projections (e.g. the CPA forecast for population in 2020 is 70,015, whereas the age group forecasts sum up to Studies considered show the number of households increasing over the period of interest and significant trends towards: Increasing number of school aged children Reduced percentage of productivity aged residents (18 to 64 year bracket) Increasing household size projections: 2.43 (2010) to 2.53 per household in 2020 10% increase in the 65 years and older age group

This data supports the Palo Alto Unified School District (PAUSD) district planning for increasing schooling capacity. The CPA projections are consistent with the PAUSD projections for the same period.

CPA Population by Age Group 1970-2020 (projected) 1970 1980 1990 2000 Under 5 years 3,205 2,192 2,764 2,970 5 to 17 years* 14,310 10,262 6,999 9,436 18 to 64 years* 32,662 35,393 37,390 37,052 65 years and over 5,789 7,378 8,747 9,140 55,966 55,225 55,900 58,598

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The Association of Bay Area Governments (ABAG) projections are higher, citing 3210 additional households, which at the rate of 2.53 persons per unit represents 72,524 residents by 2020. The CPA needs to determine what level of additional housing it is able to absorb in the future. Implicit in this assessment are zoning regulations and requirements.

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2010 3,506 11,573 38,318 11,006 64,403

2020 3,954 14,135 39,550 12,376 70,015

CPA % by Age Group of total Population 1970-2020 (projected) 1970 1980 1990 2000 2010 Under 5 years 5.73% 3.97% 4.94% 5.07% 5.44% 25.57 18.58 12.52 16.10 17.97 5 to 17 years* % % % % % 58.36 64.09 66.89 63.23 59.50 18 to 64 years* % % % % % 10.34 13.36 15.65 15.60 17.09 65 years and over % % % % % Growth by Age Group between 2010 and 2020 2010/2020 Under 5 years 5 to 17 years* 18 to 64 years* 65 years and over 10.58% 19.76% 1.21%

2020 5.65% 20.19 % 56.49 % 17.68 %

Whereas the school aged population is projected to grow at 20%, the productivity age group barely increases over the same 10-year period. The sharp increase in the under 5-year old category suggests increasing need for school age services beyond 2020. This demographic data indicates that services for the 5 to 17 year age group will need to be expanded or increased. See recommendations below for a Teen Center within the Community Services Center. V. Municipal Best Practices In the interest of learning from other cities and considering adopting relevant processes that they may be using we have selected a handful of cities that are progressive, doing well and focused on the future.

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A. Portland, Oregon Portland has been referred to as one of the most environmentally friendly or "green" cities in the world. [Source: Kate Sheppard (July 19, 2007). "15 Green Cities". Environmental News and Commentary]. In 2009, the Portland Sustainability Institute, in partnership with the City of Portland, launched EcoDistricts as part of the Portland region's broadening commitment to sustainability. An EcoDistrict is a neighborhood or district with a broad commitment to accelerate neighborhood-scale sustainability. EcoDistricts commit to achieving ambitious sustainability performance goals, guiding district investments and community action, and tracking the results over time. [Source: http://www.pdxinstitute.org/index.php/ecodistricts]. An EcoDistrict roadmap taken from the website of the Portland Sustainability Institute is show below. The roadmap calls for building and infrastructure strategies that hold sustainability has a goal. It contains similarities with the CPA in terms of utilities management, focus on clean energy and focus on transportation. The engagement process also calls for community involvement, which is part of the IBRC recommendation for helping the CPA analyze needs and manage the ongoing development of our infrastructure.

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B. Shreveport, Louisiana

The city of Shreveport boasts a 1329 page master plan that looks ahead to 2030. Shreveports plan is characterized by a forward looking vision statement that sets the stage for future decisions well beyond the purview of the current administration: GREATER SHREVEPORTS VISION FOR THE 21ST CENTURY In 2030, greater Shreveport is the dynamic, creative and flourishing powerhouse of the ArkLaTex region. It combines the economic opportunity, diversity and cultural excitement of a growing city with the friendliness of a small town. Our neighborhoodssafe, clean and welcomingare connected by shared civic spirit

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and by a network of inviting public spaces and transportation choices. Downtown and nearby neighborhoods in the city core are vibrantly alive with residents and businesses in historic and new buildings. A revitalized waterfront district links Cross Bayou and the city center to Shreveports origins on the banks of the Red River. Underutilized properties throughout the city have been restored to community use with housing, shops, offices, or parks and other public spaces. Downtown and our diverse neighborhoods offer attractive and affordable choices for young singles and couples, families with children, empty-nesters, and retirees. Because of its culture of excellent education and access to lifelong learning from the cradle to the senior years, the Shreveport-Caddo area has the qualified workforce to support an expanding 21stcenturyeconomy. Established and emerging industriesnatural gas, manufacturing, education, biomedicine, cyber security, green building and energy, health care, tourism, film production, and digital mediarely on local talent, and entrepreneurial start-ups nurture new industries. As a transportation crossroads of rail lines and highways, including an extended I49, and with a successful river port, we reach out to the nation and the world. Shreveport is the greenest and healthiest city in the South, committed to resource and energy sustainability and enhancing access to healthy lifestyles. Our landscape is enriched by a natural network of greenways and bayous offering recreation in nature. Shreveports youth and college graduates, as well as newcomers, are proud of their beautiful city, cohesive community, and culture of opportunity. All citizens choose to be part of an innovative city on the move. WHY WE DEVELOPED THIS PLAN Our last comprehensive master plan was in 1957and it shaped our road system and development for many years. The Great Expectations Plan is designed to put Shreveport-Caddo on a new strategic path for the 21st century toward more jobs, more households, smarter growth patterns, and a better quality of life for all. Shreveport is the biggest center of employment, retail, media, and health care for a region of a million people. We are the center of a growing natural gas energy economy. The Plan gives us a framework for seizing the opportunities before us to make our community better, while preserving all the things we love about Shreveport and Caddo Parish.

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HOW WE DEVELOPED THIS PLAN The Great Expectations Plan was developed by the Shreveport Caddo community in a process with broad public participation of citizens from all over the city and nearby parts of Caddo Parish. The planning process touched thousands of people, whether through the public opinion survey, the visioning events, neighborhood workshops and open houses, topical workshops, or the scenario open houses. Residents from all walks of life gave many hours of their time to serve on the Community Advisory Group and the six Working Groups that helped shape the plan. HOW WELL PUT THE PLAN TO WORK The purpose of a plan is to prepare for action. The Great Expectations plan includes a detailed implementation plan setting out the What, How, Who, and When for specific actions to achieve the goals of the plan. A Master Plan Advisory Committee made up of citizens will serve as the stewards of the plan, advising government and other partners and monitoring progress. Annual public hearings will give citizens a report on implementation and the plan will be used in capital improvement planning, work plans, and to guide land use decision making. Partnerships with residents, businesses, medical and educational institutions, and nonprofits will be critical to success. [Source: http://www.shreveportcaddomasterplan.com/] C. Dublin, Ohio

Dublin is recognized as a progressive city. It has a number of initiatives, including a strong interest and programs towards sustainability. Many of their programs are directly related to infrastructure as evidenced by the set of design ideas that the city espouses:

Regional Open space connections Alternative Transportation Methods Pedestrian Connectivity Walkable environments Increased housing options Economic viability

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Focus on design D. Einhoven, Netherlands Einhoven declares itself the smartest city in the world. They are part of a technology region that is called Brainport (not dissimilar to our Silicon Valley), which they consider a breeding ground for knowledge and innovation. They are the 2011 recipient of the Intelligent Community Forum award. They have a vision and set of objectives to achieve certain benchmarks and goals by 2020, far exceeding our future view of the city. They are hosting a city planning conference entitled, Intelligent cities innovate Europe, in October of this year. Recommendation: Review and update the CPA vision statement to assure that it clearly states principles that will help drive activities and decisions moving forward. Proposed vision statement:

Recommendation: Create a Future Advisory Board/Commission. Include Palo Alto residents with interests and background in the following areas: Technology, Environment, Infrastructure, Sustainability, the Arts and Recreation. It may be useful to include representatives from existing commissions as delegates to the Future Advisory Commission. VI. Obsolescence We have asked ourselves the following questions: How should the CPA go about determining when a building, park, bridge or other asset has served its useful life and is worthy of replacement or simply retirement from service?

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Prepare Palo Alto and its residents for the future by enhancing our already considerable resources and environment so that Palo Alto remain a great place to live, work, play and raise a family. Engage the community in proactive planning for evolution and change in the areas of technology, community, the arts, the environment and recreation.

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To what extent should the CPA be a landlord, i.e. a leasor of space, for noncity services? Does the CPA currently own assets that should be sold or repurposed? It is clear from the backlog of catch up work associated with our existing infrastructure, that the CPA has aging buildings and structures that require increasing levels of maintenance and repair. As of this time, the backlog of catch up projects totals more than $62M. The question that emerges is whether the city should continue to maintain the older buildings, or should there be some buildings that are disposed of, e.g. rebuilt or sold, to the benefit of the city. It is also apparent that the city has no methodology for analyzing end-of-useful-life for its assets. The Above Ground Committee developed a framework for analysis and decision which is described below. Other municipalities, such as Menlo Park, prioritize their assets. We recommend such a process as well. When there is not enough money to go around, where should the funds be allocated? We recommend a cost benefit analysis based upon criteria such as presented below. Our initial view is to rate assets on 10 factors, 5 of which are cost related, 5 of which are benefit related. Cost Factors Benefit Factors Impact on Health/Life/Safety Community Interest Usage Sustainability City Council Priority

Initial Capital or CIP Cost Annual Maintenance Cost Deferred Maintenance Code Compliance Needs Funding Sources or Opportunity to Outsource

For each asset, a rating of 1-10 is given for each factor. The sum of the factors for each asset represents its rating. For five factors, the highest value is 50.

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For each asset the 25-year cost associated with that asset is calculated, using the methods described by the IMS Working Group. For five factors, the highest value is 50. A graphical representation of the assets is made using the rating and the asset cost as the two axes of the graph. A representative graph is shown below, using fictitious data. The actual data collection of current CPA assets was not able to be completed, hence the representations only. We believe that this model is more appropriate than a strict ranking or prioritizing of city assets, since it weighs costs against benefits. Were the data to be available, another useful cost factor would be the revenue generated by the assets. For example, the golf course charges green fees, which generate revenue to the General Fund. Were the golf course accounted for on a cost/revenue basis, we could determine the net gain or loss to the city for its operation.

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The graph is then divided into four quadrants, each quadrant representing a decision region for disposition of the asset. This is shown diagrammatically below: Each asset falls in one quadrant: Quadrant I II III IV Rating Value Low Cost, High Benefit High Cost, High Benefit Low Cost, Low Benefit High Cost, Low Benefit Possible disposition? Fully fund Public/Private Partnership Regionalize Downsize

As one of the downsizing options, the CPA might consider asset sale. In many of the historic buildings, the asset value may be high, and the services provided by that building might very well be relocated successfully. See some of the scenarios noted below for a Community Services Center.

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This analysis is proposed as a decision making tool. The actual rating factors to be used may be changed; the disposition decisions may be revisited when other factors are considered.

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Recommendation: Institute an end-of-life process. Consider asset sale as a source of funding for other infrastructure projects. The CPA has historically not disposed of its assets: land, buildings, etc. Is it time to revisit this policy? See also the discussion surrounding the CPA as a landlord. VII. Technologies

It is the viewpoint of the FWG that the CPA must actively pursue alternative that leverage emerging trends and technologies. We have started small, noting several current technologies that, if deployed in a sensible manner, could bring enormous value to the CPA. The IBRC also suggests that several of these technology investigations be coordinated with the CPAU organization. Wireless

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SmartGrid Alternative energies Technologies for Aging demographics Advanced Medical

A. Wireless Infrastructure: Through the use of wireless technologies, it would be possible to implement a wireless canopy for Palo Alto and its immediate surrounding area. The canopy is simply a wireless network, to be operated by the city, which offers access to the internet wirelessly. There has been a problem with municipal networks in the past because the business model wasn't appropriate. For example, there would be insufficient use of the network by the city to justify the infrastructure costs. Typically, cities lack the capability to offer network access for a fee to private users. In Silicon Valley, there was an early attempt to put together this type of arrangement (e.g., Smart Valley II). This was before more recent 4G wireless was available and 4G appears to overcome some of the key limitations. It offers higher speed and greater coverage. It provides for voice, video and data. The proliferation of additional categories of connected devices that will make use of a 4G wireless network (e.g., IPad3, IPhone6) might give rise to a robust ecosystem of users. Also, there are now or shortly will be many reliable, low cost semiconductor components available as needed for lowering the cost to users for their equipment. As wireless technologies continue to evolve, there will be even higher speeds and greater coverage available, which will enable even more uses of the network. The CPA can profit from the app model, in which the city, by providing the network, allows and encourages other service providers to offer value to customers within the city. One example of this might take the form of an "app" that supports a mobile payment zone within the 4G wireless canopy. All of the merchants in the city could be enrolled. The features of the app would enable customers (i.e., residents or visitors) to search for what they might want in the form of goods or services, store or restaurants, etc. A map feature could generate instructions for how to find the location of something they were looking for. Purchases could be made online. Discount coupons or marketing programs might allow merchants to provide incentives in the form of discounts or advertisements for sales. Also, when

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considering the uses of a public/private partnership, a useful, high demand 4G canopy with a mobile payment zone might be the kind of system that Palo Alto could negotiate a partnership with a service provider such as Verizon and an equipment vendor for smartphones. The existence and availability of high-speed infrastructure is likely to allow knowledge workers greater flexibility in collaborating without traveling and in remote access to services needed for work environments. There are increasing numbers of technology solutions such as video collaboration that require high bandwidth to operate. Making such bandwidth available can reduce the need for access to physical offices and allow the city to profit from the resulting fewer cars on the road, parking needs, etc.

B. Smartgrid

Given that Palo Alto has a municipal utilities department, the introduction of the so-called Smartgrid may become an important element of civic infrastructure. This will involve smart meters and a control network that allows for load balancing. There are issues associated with right-of-way for the necessary equipment and the city controls the issuance of permits for things like base stations, antennas or trenches. Excessive cost or delays associated with fees and permits may discourage deployments. However, the evolution towards a smartgrid system is coming and this will enable many other potential benefits, including alternative energies (see below). C. Alternative energies (CleanTech) Is it possible for a city like Palo Alto to implement a solar photovoltaic infrastructure? When clean energy is sufficiently cost-effective, it may be feasible to cross over to sustainable energy sources of different types. High efficiency solar PV is rapidly becoming available. Whereas it has been proven successful to install

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Recommendation: As part of technology catch up, CPA should immediately investigate how wireless technologies can be used for residential, business and public safety services. NB: CPA can take advantage of its expertise in Fiber Networks and can also leverage local business in this technology sector.

solar arrays in hot desert areas with lower efficiency thin film solar arrays, such technology may only convert ~18% of the solar energy into electricity. Now, however, higher efficiency systems are being developed and are coming into production that will be optimal for the Palo Alto climate zone and weather conditions that operate with efficiency in the mid-20 percent range. This improvement is significant and makes it viable to introduce solar PV more broadly here on the Peninsula. The question for a city might be how to accelerate the deployment of such alternative energy resources. Smart meters will be needed in order to allow the flow of energy in both directions from the grid, and from the solar PV installations back into the grid. There are issues with how the energy supplies may be distributed. Another question for a city might relate to roof tops and building walls. If higher buildings are allowed which have roof tops and wall areas above the tree shadow, this would enable the use of solar collecting technologies on roof tops and windows. Taller buildings will often have flat roofs, which are easier to solarize. Technologies for solar windows are now going into production with embedded photovoltaic cells in network-managed PV blinds. As a general proposition, higher buildings can be more energy efficient. D. Technologies for Aging Demographics

If Palo Alto will experience an increase to its aging population, this will bring planning challenges. In observing the anecdotal patterns of older people moving about Palo Alto, it does not appear that we have made the city particularly supportive or friendly for the unique needs of senior citizens. A number of studies have found that urban high density areas can support a higher quality of life, particularly as people age. There is more to do in a more compact area, with lots of mental, intellectual and emotional stimulation. In the Silicon Valley there are current projects under way for "intelligent urbanization." There are conferences for city mayors and other experts on ways to engage an entire city into the urban renewal planning process. This is intended to ensure that the city may evolve in a direction aligned with the desires and needs of its inhabitants. CPA should get involved in such activities.

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Other municipalities have also invested in digital inclusion, by making access to internet and internet services widely available for those who may not otherwise have access. The internet points in our libraries is an example of this. E. Advanced Healthcare In a city that already boasts leading health care facilities: clinics and hospitals, it would be easy to assume that Palo Alto offers sufficient services for the well-being of its residents. However, with the escalation of health care costs and the everpresent need of accurate, up-to-date medical information for treatment, and given the high percentage of senior citizens in our city, improvements and advances in any of these areas would be welcomed. With the shortage of health care professionals, the ability to treat patients remotely, monitor the ill on a full-time basis and provide on line access to medical records, medical research, etc. would all contribute to increased productivity, reduced costs and better overall services. The CPA has already engaged the local hospitals in support of their expansion iwthin city limits, to improve our access to world class medical facilities. Notwithstanding these impressive programs and decision, improving access in other ways will continue to be a priority. Many other municipalities have initiatives, programs and networks towards this goal. Recommendation: In parallel, institute consulting studies on technologies of interest (examples provided above). Create a citizen group or advisory board, of technology executives to work with the consultants to derive strategies and plans for the city. Involve Stanford personnel in this advisory board. VIII. Leasing of Assets vs. Essential Services [this section to be completed] Should the city be a landlord? Should infrastructure be the conduit for City Services? IX. Scenarios In this section we provide examples of possible projects.

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A. Community Services Center Should the city invest in a services building or campus that could house many of the organizations that currently occupy older structures? For example, Avenidas, in 450 Bryant Street may situated in a shared services building that houses a teen center, pre-school day care, office space for other city tenants. The present city-owned portion of the Cubberley site could be the location for such a collection of services. The IBRC has already recommended that CPA not renew its current lease with the PAUSD. [RB - Is this part of our report?} We imagine here a services center that replaces the multiple classroom style buildings that provide approximately 180,000 square feet of space at present the present site on eight acres of land. The building would be a combination/mixed use structure, in which office space, workshops for classes, recreation facilities, such as for a yoga center, teen center, and senior center could be housed. Many of the small non-profits that CPA chooses to support can have space in such a Community Services Center. The model we are using for the CSC is the Mitchell Park Community Center/ Library. We see a two-story structure serving the south Palo Alto residents. The cost estimate is between $40-60M in current dollars. B. Leveraging the Embarcadero Corridor projects The MSC team has developed a rational plan for reconsidering the location of municipal services in light of their functions and their needs. There is an opportunity to relocate some of the current services that are housed in the MSC to the Embarcadero East Corridor. By thinking ahead to the future use of Embarcadero land, by considering how the golf course could be used differently, by planning a multi-year redevelopment of that area in conjunction with commercial interests for hotels, restaurants, convention center, etc. this part of the city, ideally positioned near BayLand recreational resources, could become another attractive region of CPA. Such a plan opens the door to exciting opportunities for the city. The East Embarcadero Corridor could become another center of city activity and services.

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For example, we see the possibility of repurposing the auto dealership properties to accommodate services such as vehicle maintenance while the current acreage affords adequate space for a multi-story building for office space that could be the future home of many CPA staff functions that now reside at 250 Hamilton. With the gradual migration of city staff to the new location the current City Hall could itself be converted into a Municipal/Commercial Center, given its close proximity to the city center and transportation services. In the event police services are moved out of the 250 Hamilton block, as recommended elsewhere in this report, then the redevelopment of the entire City Hall plaza becomes an intriguing possibility. [See the discussion of the MSC/Baylands possibilities for the germ of this idea.] Should action be taken to examine those alternatives, the CPA might also consider re-purposing the Golf Course and relocating other city services in the area adjacent to the Baylands and East of the Bayshore Freeway. Mountain View has successfully developed shoreline areas into a mixed use recreational, entertainment and business district. The possibilities are mitigated by the problematic topology due to the flood zone. However, sufficient zoning and construction regulations may open the door to a new and revitalized area of the city. The City of Portland, OR is one progressive city that has created Eco-Districts, that combine green buildings, access to transportation, walkable sidewalks and enhanced services in specific sections of the city. The IBRC recommends that these concepts be considered for all of the development projects that are contemplated in this report. C. Conference center

In the interest of attracting business entities and business executives to our highly attractive city, we feel that enhanced business services are a critical element of the city offerings. A conference center, for example, adjacent to the Golf Course and in conjunction with high speed communications facilities would add glamour and refinement to our city.

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D. Start-up incubator Given the physical limitations that define our geography, we ask ourselves the question: what types of companies do we wish to see in Palo Alto? We suffer from the Facebook effect, whereby Facebook employees enjoy living in the CPA, yet the company moves beyond our borders. Given our physical and geographical constraints, hosting large campuses such as those preferred by companies such as Google and Facebook, what are our other options for business development and growth. With the proximity to Stanford University, the accessibility to technologists, capital, and management resources creates a unique eco-system for creating and building companies. Should the CPA build the context for attracting such incubators?

The recent deployment by ATT of a University Avenue Hot Spot (WiFi access) is a step in the right direction, but limited to only ATT customers. How can the city get involved in such a project? X. Timeline The 25-year view of the city correlates with the internal city processes according to the timeline shown below. The current fiscal year, with the approval of the annual budget, commits funds to projects. For each annual budgeting cycle, a five-year view of future spending is performed and presented.

Another consideration is that if the wireless network were to be set up to encourage economic development, then the regulations surrounding the system may be less rigorous as a City utility.

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We envisage a wireless network that initially covers the commercial retail areas of the city and eventually migrates to provide general coverage and services to the high density regions of CPA. In our technology section of this report we review the many services that can be supported by ubiquitous, always on wireless networks. For example, a retail payment system for downtown merchants could be supported wirelessly, whereby the city collects a percentage of all payments made by customers. This payment system would offer a new revenue stream to CPA.

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E. CPA Wireless Network

The Comprehensive Plan within the city is typically a 10-12 year view of what might be needed to implement policy and projects, e.g. expanding the number of bike paths by a percentage, by a date. At present, there is no budgetary commitment, or budgetary analysis required with the Comp plan. It has been suggested that a financial impact assessment accompany future versions of the comp plan. There is currently no mechanism in the city for looking beyond the Comprehensive Planning cycle. We believe that there needs to be a home within city staff, to study, report on and recommend actions based on trends in population, technology and government.
2 0 1 2 20131016 Projected 20172026 20272036

ComprehensivePlan

Committed

The Futures Working Group recommendations include a timeline of actions and activities consistent with the recommendations noted in this section of the report: 2012 Create Futures Task Force/Commission Create Executive Technology Task Forces Create Staff Committee on Futures Planning Create Vision Statement for CPA Hold Smart Cities conference in Palo Alto Decide on future use of Cubberley e.g. Community Services Center Extend range of Planning Department to 25 years Develop city plans to accommodate projected demographic changes over

2013

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Years25 Years510 Years1125

Unknown

Currentbudgetyear

next 5 years Conduct first City Council reviews of Futures Commission, City Futures Team and Technology Task Force Sales/repurposing of aging assets. 2014 First review of long range planning in view of future infrastructure (25year plan from City Staff) Review city assets in light of obsolescence criteria Review city infrastructure plans in light of anticipated demographic changes Second annual Smart Cities conference, with Palo Alto reporting on changes as a result of the first conference. Launch first phase of City Wireless Network 2015 Make commitments to infrastructure for /against the development of: East Embarcadero Corridor (East CPA) Cubberley redevelopment (South CPA) Consolidate funding plans (long term debt) as financing instrument Implement selected recommendations of the citizens groups / idea bank Report /recommendations to City Council on sustainability from citizens groups Plans for smartgrid/green energy/ environmental programs First comprehensive plan with 20-year forward view 2016 Phase II of the East Embarcadero Corridor Office Building Complex Plan for Golf Course Long term plan for relocation of CPA staff functions to new space Long term plan for redevelopment of Hamilton block First stage of incubator companies deployed 2017 Cubberley (South City) deployment Community Services Center (CSC) Phase II of the Wireless Network Phase III of the East Embarcadero Corridor project Phase I of Transportation hub 2018 Continuation of the phases that have been started to expand infrastructure. 2019- Continuation and renewal of processes that have been used in prior years. 2036

XI.

Project Costing

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This section estimates the cost of future projects. Such projects include refurbishment of existing structures and land not currently in the IMS spreadsheets. The calculations are based on square footage and cost of refurbishment or new construction. The timing estimates are those of the IBRC. Projects beyond 2022 have been estimated at approximately $20M per year, based on the average of estimates for the years 2013-2021.

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Project Name 2013 2014 2015 2016 2017 2018 2019

sq ft

Project cost/sf Cost

2020

2021

180,000 $12.0M $1.9M

$223 $40.1M $12.0M $103 223 $22.3M $103 $223 $26.8M $3.1M $3.1M $1.9M

$20.1M $20.1M

18,000

D
$13.4M $0.5M $4.0M $13.4M

100,000

$22.3M

30,000

95
500 $5,000 $2.5M $0.5M $0.5M $12.0M $4.0M $4.0M $103 $2.1M $2.0M $58 $14.5M $20.0M $2.0M $223 $2.5M $5.0M

120,000

R A FT
$7.3M $2.5M

$0.5M $2.1M $2.0M $7.3M $10.0M $10.0M $2.0M $1.2M $2.5M $1.2M

$0.5M

20,000

250,000

Cubberley replacement Roth refurbishment Senior Center refurbishment Civic Center relocation Repurposing Police Station East Embarcadero Office space Electric charging stations Wireless Network Lucie Stern upgrades Park refurbishment Parking Garage expansion Transportation Hub Golf Course refurbishment Fire Station refurbishment Storm Drain

11,000

improvements WasteWater Treatment $5.0M $5.0M $2.5M

Future Projects (unknown)*

Totals

*unknown projects calculated at the project rate of $20M per year

D FT

$6.4M $35.1M $26.6M $38.5M $26.0M $13.2M $22.8M

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Policy Changes to Consider Smart Cities conference engage with other forward thinking cities in a discussion that leads to eventual action. Regular meetings with other progressive municipalities Incentives to locating headquarters of emerging companies Citizens committee/commission on future infrastructure

II.

Processes

III.

Idea Bank

Depositing ideas into the bank will be done by any Palo Alto resident. A name and address will be required. To place an idea into the Bank, residents should forward the idea by e-mail to the City of Palo Alto Idea Bank designee. Once deposited into the bank, an idea may not be modified. The Bank is intended to be a collection of the "raw idea" thinking of resdients. The idea may be expressed by a few words or by a few short descriptive sentences. Brevity is a key element. The Bank will be maintained as a PDF by the city designee of the City Managers Office. Any resident may view the entire contents of the Bank at any time by electronic means. On an annual basis, the Idea Bank will be distributed to the City Council for review and action.

The Futures Idea Bank will serve as a repository for futures ideas generated by the Commissioners, related to City infrastructure services.

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Annual report from staff to the City Council on infrastructure Asset obsolescence criteria and retirement process defined Decision on leasing assets Idea Bank repository of ideas that are provided by citizens to the city Citys vision for the future:

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We believe that the city needs add a number of processes into its annual cycle that do not currently appear to be adequately covered.

IV.

Observations While the Enterprise Funds were deemed outside of the scope of the IBRC, the Enterprise Fund model is one that should be considered for existing and new infrastructure projects. The city brings in revenues from activities that are housed in city infrastructure. For example, the Art Center offers classes that generate tuition payments. These payments are made to the General Fund (GF). Similarly, costs associated with such a service are paid for out of the General Fund. Additionally, the costs of administration of the Art Center the costs of maintaining the buildings and grounds are all paid for out of the GF. With the current accounting system, and because the Art Center is not an Enterprise Fund, it is difficult, if not impossible, to ascertain the true costs of the services that are offered at the Art Center. Establishing new enterprise funds has significant staff resource impacts as well as policy ramifications that the CPA will need consider for any new Enterprise funds. With this consideration, alternate ways to ensure that fees cover City costs may be an option. On the contrary, the accounting requirements of an Enterprise Fund are such that all costs and all revenues are clearly noted and understood. The city may want to consider sub-accounts on the books of the General Fund to better understand the costs/benefits of infrastructure and associated services.

V.

Recommendations

Recommendations to the city for the Futures Work Group relate to how the city might incorporate some of the thinking reflected in this document into its annual cycles. Whereas we believe that some of the ideas examined in this Report have merit on their own, we also believe that the city should examine a range of possibilities that would lead to achieving some of the goals that reflect the vision of the city. [The specific recommendations that are included in this section of the report will be summarized in the table below and included in the Appendix.]

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VI.

References District-wide Enrollment Forecasts, Palo Alto Unified School District, December 8, 2010, Lapkoff & Gobalet Demographic Research, Inc. Age_HHSize_2020Estimates.pdf, Curtis Williams, CPA Planning Director IBRC_ Futures_Planning_08.12.11.pdf, Curtis Williams, CPA Planning Director

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VII.

Appendices A. List of Recommendations

Recommendation

Reference in Report

B. City Services and related infrastructure

Category

Service

Community Community Community

Community

Junior Museum & Zoo Palo Alto Art Center Childrens Theater West Bay Opera, Theaterworks , PA Theater, other renters

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The table below summarizes the many services provided by the city. It also shows the current home for each services and a view of a possible new location for the service. Specia Year of New Location l Use? Transitio n Yes

FT
Yes Yes Yes

100

Community

Community

FT
No 2017 No No No No

Community

Artists, Dance Groups, Childrens' Centers, PAUSD Adult Education, Foothill College, Non-profit groups Avenidas Senior Center Ventura PACCC Other community centers, e.g., Rinconada, Lucie Stern, Mitchell, Ventura History museum Ice rink Public Garden Historical society scouting groups

Cubberley Community Center

No

2017

Relocate to CSC

450 Bryant St. 3990 Ventura Court

No

2017

Relocate to CSC Relocate to CSC

Community

Community

Community Community Community

Community

R A
Williams House Winter Lodge Gamble Garden Roth Building Sea Scout Building

101

Open space

open space

Open space

open space

Recreation

D
PAUSD athletic facilities golf course Administrati ve Services Human Resources City

Open space

parks

Recreation Adminstrati ve Adminstrati ve Adminstrati

3,744 acres of urban & open space (Foothills Park, Baylands Nature Preserve, Byxbee Park, Pearson Arastradero Preserve, Esther Clark Nature Preserve) 2,200 acres of Montebello Open Space Preserve and 200 acres of Los Trancos Open Space Preserve 30 parks comprising 157 acres of Urban & Neighborhoo d Parks School Athletic Facilities Golf Course City Hall City Hall

Yes

R A
City Hall

FT
Yes Yes Yes Yes No No No 2020 2020 2020 Repurposing City Hall Repurposing City Hall Repurposing

102

ve Adminstrati ve Adminstrati ve Adminstrati ve Adminstrati ve Public Safety Public Safety Public Safety Public Safety Public Safety Public Safety Emergency Medical Emergency Medical Emergency Medical Emergency Medical Emergency Medical

Manager City Attorney City Clerk City Auditor City Council Fire services Fire services Fire services Fire services Fire services Fire services Emergency Medical Emergency Medical Emergency Medical Emergency Medical Emergency Medical

City Hall City Hall City Hall City Hall Fire Station 1 Fire Station 2 Fire Station 3 Fire Station 4 Fire Station 5 Fire Station 8 Fire Station 1 Fire Station 2 Fire Station 3 Fire Station 4 Fire Station 5

No No No No Yes Yes Yes Yes Yes Yes No

2020 2020 2020 2020 2016 2016 2016 2016 2016 2016 2018

City Hall Repurposing City Hall Repurposing City Hall Repurposing City Hall Repurposing City Hall New/renovated FS? New/renovated FS? New/renovated FS? New/renovated FS? New/renovated FS? New/renovated FS? Re-evaluation of Emergency Response? Re-evaluation of Emergency Response? Re-evaluation of Emergency Response? Re-evaluation of Emergency Response? Re-evaluation of Emergency

R A
103

FT
No 2018 No 2018 No 2018 No 2018

Response? Emergency Medical Library Library Library Library Library Public Safety Public Safety Public Safety Public Safety Public Safety Public Safety Public Safety Emergency Medical Library Library Library Library Library Police Field Services Police Traffic Fire Station 8 Main Mitchell Park Downtown Children's Library College Terrace Police Station No 2018 Re-evaluation of Emergency Response? No need forseen No need forseen No need forseen No need forseen No need forseen IBRC recommendati on on PSB IBRC recommendati on on PSB IBRC recommendati on on PSB IBRC recommendati on on PSB IBRC recommendati on on PSB IBRC recommendati on on PSB IBRC recommendati on on ASC

Yes Yes Yes Yes Yes

Police Technical Services Crime Prevention Parking

D
Personnel Animal services

R A
City Hall City Hall City Hall City Hall City Hall Animal Shelter

FT
Yes No No No No No Yes

104

Public Works

Streets

Streets

Yes

Public Works

Trees

Trees

Yes

IBRC recommendati on on surface assets IBRC recommendati on on surface assets IBRC recommendati on on surface assets IBRC recommendati on on surface assets IBRC recommendati on on surface assets 2024 2020? Upgrades? New facility needed?

Public Works

Sidewalks

Sidewalks

Yes

Public Works

Bridges

Bridges

Public Works

Tunnels

Public Works Public Works Public Works Public Works

Storm Drains Storm Drains Wastewater Wastewater Treatment Treatment plant Refuse outsourced City Fleet MSC

D
Electricity Gas

R A
Tunnels MSC MSC

FT
Yes Yes Yes Yes Yes Yes Yes Yes

Utilities

IBRC recommendati on on MSC IBRC recommendati on on MSC IBRC

Utilities

105

recommendati on on MSC Utilities Water MSC Yes IBRC recommendati on on MSC IBRC recommendati on on MSC

Utilities

Fiber utility

City Hall

No

R A
106

FT

10. 11.

Next Steps Appendices

D
107

R A

FT