CITY OF PALO ALTO
COUNCIL MINUTES
Regular Meeting 
August 5, 1996 1. Conference with City Attorney--Significant Exposure to Litigation. 
. . . . . . . . . . . . . . . . . . . . . . 80-4 2. Conference with City Attorney--Existing 
Litigation. . . 80-4 3. Conference with City Attorney--Existing Litigation. . 
. 80-4 ORAL COMMUNICATIONS. . . . . . . . . . . . . . . . . . . . . 80-5 APPROVAL 
OF MINUTES OF MAY 28, 1996, AND JUNE 10, 1996 . . . 80-5 1. Contract between the 
City of Palo Alto and Underground Construction Company, Inc. for Series Street 
Light Conversion80-5 2. Contract between the City of Palo Alto and Hastings Landscape 
Conservation Services for Byxbee Park Vegetation Management80-5 3. Exchange of 
Ingress and Egress Easements Between the City of Palo Alto and Neal and Bernard 
Hoffacker on Parking Lot O and 171 University Avenue . . . . . . . . . . . . . 
. . . . 80-6 4. Resolution 7610 entitled "Resolution of the Council of the City 
of Palo Alto Authorizing the Submittal of an Application to the Bay Area Air Quality 
Management District for Funds From the Transportation Fund for Clean Air Pursuant 
to Health and Safety Code Sections 44225 and 44241 for the Calstart Electric Vehicle 
Purchase Program" . . . . . . . . . . . . . . . 80-6 5. Resolution 7611 entitled 
"Resolution of the Council of the City of Palo Alto Amending Section 1601 of the 
Merit System Rules and Regulations Regarding the Memorandum of Agreement between 
the City of Palo Alto and the Palo Alto Peace Officers' Association". . . . . 
. . . . . . . . . . . . 80-6 6. Ordinance 4361 entitled "Ordinance of the Council 
of the City of Palo Alto Amending the Budget for the Fiscal Year 1996-97 to Provide 
an Additional Appropriation for the Community Services Department to Receive Matching 
Grant Funds from the Arts Council of Santa Clara". . . . . . . . . . . . . . 80-6 
7. Finance Committee recommends Approval of the City Auditor's 1996-97 Audit Plan. 
. . . . . . . . . . . . . . . . . . 80-6 8. Proposed League of California Cities 
Resolution Relating to Electric Industry Restructuring . . . . . . . . . . . . 
80-6 9. Proposed League of California Cities Resolution Relating to Business Confidentiality 
and Customer Privacy for Municipal Utilities . . . . . . . . . . . . . . . . . 
. . . . . . 80-6 10. Ordinance 4362 entitled "Ordinance of the Council of the 
City of Palo Alto Adding Chapter 8.10 to Title 8 of the Palo Alto Municipal Code 
Regarding Tree Preservation and Management Requirements. . . . . . . . . . . . 
. . . . . . . . . . 80-7 10A. Conference with Labor Negotiator. . . . . . . . 
. . . . 80-7 11. PUBLIC HEARING: Weed Abatement Charges . . . . . . . . 80-7 12. 
PUBLIC HEARING: Proposed Amendment to the Cubberley Master Plan to Provide Flexibility 
of Potential Uses in Four Building Wings . . . . . . . . . . . . . . . . . . . 
. . . . . . 80-8 13. Utilities Advisory Commission re Telecommunications Strategy 
Study . . . . . . . . . . . . . . . . . . . . . . . . .80-10 15. Ordinance of 
the Council of the City of Palo Alto Amending the Budget for the Fiscal Year 1996-97 
to Provide an Additional Appropriation for Seasonal Jobs for the Homeless Pilot 
Program80-33 16. Ordinance of the Council of the City of Palo Alto Amending Chapters 
22.04 and 22.08 of Title 22 of the Palo Alto Municipal Code Regulating Parks . 
. . . . . . . . . . .80-33 18. Embarcadero Pedestrian/Bike Bridge and Bike Path 
Project - Rejection of Bids . . . . . . . . . . . . . . . . . . .80-33 19. Alma 
Street Bike Bridge and Path Project. . . . . . . .80-33 20. Council Members Andersen, 
Fazzino, and Kniss re Proposed Direction to Staff to Develop a Comprehensive Approach 
to Downtown Needs. . . . . . . . . . . . . . . . . . . . .80-33 21. Council Members 
Andersen and Fazzino re Change in the Composition of the Human Relations Commission's 
Membership to Include One Nonresident Member. . . . . . . . . . . . .80-34 14. 
Friends of the Children's Theatre Improvement Project - Phase II. . . . . . . 
. . . . . . . . . . . . . . . . . . . .80-41 17. Council Chambers Refurbishing 
Project . . . . . . . . .80-43 22. Council Comments, Questions, and Announcements. 
. . . .80-44 ADJOURNMENT: The meeting adjourned at 11:20 p.m. . . . . . .80-44 
The City Council of the City of Palo Alto met in a Special Meeting on this date 
in the Council Chambers at 6:10 p.m. PRESENT: Andersen, Fazzino (arrived at 6:11 
p.m.), Huber, Kniss (arrived at 6:20 p.m.), McCown, Rosenbaum, Simitian (arrived 
at 6:11 p.m.), Wheeler ABSENT: Schneider ORAL COMMUNICATIONS None. CLOSED SESSIONS 
1. Conference with City Attorney--Significant Exposure to Litigation Subject: 
Significant Exposure to Litigation Authority: Government Code section 54956.9(b) 
2. Conference with City Attorney--Existing Litigation Subject: Glenbrook Court, 
LLC v. Luo, et al., SCSC No. CV- 758834 Authority: Government Code section 54956.9(a) 
3. Conference with City Attorney--Existing Litigation Subject: Nettie Williams 
v. City of Palo Alto, Santa Clara Muni. Ct. No. DC 95 303199 Authority: Government 
Code section 54956.9(a) The City Council met in Closed Session to discuss matters 
involving significant exposure to litigation and existing litigation as described 
in Agenda Item Nos. 1, 2, and 3. Mayor Wheeler announced that no reportable action 
was taken on Agenda Item Nos. 1, 2, and 3. ADJOURNMENT: The meeting adjourned 
at 7:05 p.m.The City Council of the City of Palo Alto met on this date in the 
Council Chambers at 7:10 p.m. PRESENT: Andersen, Fazzino, Huber, Kniss, McCown, 
Rosenbaum, Simitian, Wheeler ABSENT: Schneider ORAL COMMUNICATIONS Ben Bailey, 
343 Byron Street, spoke regarding another big beer can caper. Edmund Power, 2254 
Dartmouth Street, spoke regarding the shackled press. Will Beckett, 4189 Baker, 
spoke regarding an article in the San Jose Mercury News on Saturday, August 3, 
1996, on electric vehicles. Joe Baldwin, 280 Waverley Street, spoke regarding 
Red Letter Day. APPROVAL OF MINUTES OF MAY 28, 1996, AND JUNE 10, 1996 MOTION: 
Council Member Simitian moved, seconded by Fazzino, to approve the Minutes of 
May 28, 1996, as submitted. MOTION PASSED 8-0, Schneider absent. MOTION: Council 
Member Simitian moved, seconded by Fazzino, to approve the Minutes of June 10, 
1996, as corrected. MOTION PASSED 8-0, Schneider absent. CONSENT CALENDAR MOTION: 
Council Member McCown moved, seconded by Huber, to approve Consent Calendar Item 
Nos. 1 - 10. 1. Contract between the City of Palo Alto and Underground Construction 
Company, Inc. for Series Street Light Conversion; change orders not to exceed 
$75,000. 2. Contract between the City of Palo Alto and Hastings Landscape Conservation 
Services for Byxbee Park Vegetation Management 3. Exchange of Ingress and Egress 
Easements Between the City of Palo Alto and Neal and Bernard Hoffacker on Parking 
Lot O and 171 University Avenue 4. Resolution 7610 entitled "Resolution of the 
Council of the City of Palo Alto Authorizing the Submittal of an Application to 
the Bay Area Air Quality Management District for Funds From the Transportation 
Fund for Clean Air Pursuant to Health and Safety Code Sections 44225 and 44241 
for the Calstart Electric Vehicle Purchase Program" 5. Resolution 7611 entitled 
"Resolution of the Council of the City of Palo Alto Amending Section 1601 of the 
Merit System Rules and Regulations Regarding the Memorandum of Agreement between 
the City of Palo Alto and the Palo Alto Peace Officers' Association" Resolution 
7612 entitled "Resolution of the Council of the City of Palo Alto Adopting a Compensation 
Plan for Police Non-Management Personnel and Rescinding Resolution No. 7361" Ordinance 
4360 entitled "Ordinance of the Council of the City of Palo Alto Amending the 
Budget for the Fiscal Year 1996-97 to Provide an Additional Appropriation for 
Salary and Benefit Increases Associated with the Memorandum of Agreement Beginning 
July 1, 1996 with the Palo Alto Peace Officers' Association" 6. Ordinance 4361 
entitled "Ordinance of the Council of the City of Palo Alto Amending the Budget 
for the Fiscal Year 1996-97 to Provide an Additional Appropriation for the Community 
Services Department to Receive Matching Grant Funds from the Arts Council of Santa 
Clara" 7. Finance Committee recommends Approval of the City Auditor's 1996-97 
Audit Plan 8. Proposed League of California Cities Resolution Relating to Electric 
Industry Restructuring 9. Proposed League of California Cities Resolution Relating 
to Business Confidentiality and Customer Privacy for Municipal Utilities 10. Ordinance 
4362 entitled "Ordinance of the Council of the City of Palo Alto Adding Chapter 
8.10 to Title 8 of the Palo Alto Municipal Code Regarding Tree Preservation and 
Management Requirements" (1st Reading 7/15/96, PASSED 8-1, Rosenbaum "no.") MOTION 
PASSED 8-0 for Item Nos. 1 - 9, Schneider absent. MOTION PASSED 7-1 for Item No. 
10, Rosenbaum "no," Schneider absent. CLOSED SESSION The item might occur during 
the recess or after the Regular Meeting. 10A. Conference with Labor Negotiator 
Agency Negotiator: City Council Ad Hoc Personnel Committee (Lanie Wheeler, Joe 
Huber, Dick Rosenbaum) and City Attorney Ariel Calonne Unrepresented Employee: 
City Manager June Fleming Authority: Government Code section 54957.6 Public Comments 
None. PUBLIC HEARINGS 11. PUBLIC HEARING: Weed Abatement Charges Mayor Wheeler 
said there was a correction to the assessment roll at places that evening. She 
announced that it was the time and place set for a Public Hearing on Resolution 
No. 7558 ordering weed nuisance abated. The record should show that notice of 
the hearing had been given in the time, manner, and form provided for in Chapter 
8.08 of the Palo Alto Municipal Code. She asked the City Clerk whether any written 
objections had been received. City Clerk Gloria Young replied that no written 
objections had been received. Mayor Wheeler declared the Public Hearing open. 
Receiving no requests from the public to speak, she declared the Public Hearing 
closed. She said the record should show that no individuals appeared or filed 
written objections against the weed abatement assessments and that any resolution 
passed by the Council on the matter would reflect that finding. MOTION: Council 
Member Simitian moved, seconded by McCown, to adopt the Resolution. Resolution 
7613 entitled "Resolution of the Council of the City of Palo Alto Confirming Weed 
Abatement Report and Ordering Cost of Abatement to be a Special Assessment of 
the Respective Properties Herein Described" MOTION PASSED 7-0, Kniss, Schneider 
absent. 12. PUBLIC HEARING: Proposed Amendment to the Cubberley Master Plan to 
Provide Flexibility of Potential Uses in Four Building Wings Real Property Manager 
William Fellman said staff was requesting an increase in the flexibility of the 
lease base at Cubberley Community Center to allow for additional uses in 4 of 
the 20 wings. Staff was not proposing to construct new space at Cubberley. The 
proposal would allow for additional uses in the four wings that currently had 
limited use, e.g., the L wing was solely designated for dance. Under the proposal, 
usage of the entire wing would be expanded to allow for dance, theatre, art, and 
music. The usages in L1 and L2 would additionally be maximized to allow not only 
for dance, theatre, art, and music but also for education, nonprofit, and community 
organizations. All the proposed uses were currently already at Cubberley. L1 in 
the dance wing was currently vacant and was the only space that would be immediately 
affected by the proposal. If the proposed modification of the Master Plan to maximize 
the usage were approved by the Council, staff would return to the Council with 
a Request for Proposal (RFP) for the lease of the L1 space. Council Member Fazzino 
referred to a letter from the public with regard to traffic and asked what the 
impact of the change in uses or expansion of uses would have on traffic and parking 
at Cubberley. City Manager June Fleming said staff did not feel the proposal would 
have a negative impact on traffic and parking. There was an issue about traffic 
and parking in the area that was separate from the item that was before the Council 
that evening which she had pursued with Assistant Police Chief Lynne Johnson and 
would be dealt with as a separate matter. Council Member Fazzino clarified the 
proposal before the Council that evening would not impact traffic and the parking 
issue. Ms. Fleming replied that was correct. Mayor Wheeler declared the Public 
Hearing open. Corrine Goldstick, 3999 Middlefield Road, said she lived directly 
across the street from the Cubberley Community Center, and her concern was traffic. 
She felt if the lease base were maximized, it would mean more traffic and congestion. 
The traffic situation was already bad, and there were frequent accidents. She 
had recently received a letter from City Traffic Engineer Ashok Aggarwal stating 
that 25 miles per hour (mph) speed limit signs would be placed on the block between 
San Antonio Road or Montrose Avenue and Charleston Road. She did not know if that 
would be more helpful than the other signs currently in place, but it was a step 
in the right direction. She appreciated that the problems in the area would be 
considered in the future, and she hoped the City would consider her block which 
was residential on one side and a shopping center and community center on the 
other side. She wanted parking pointers that directed parking toward the rear 
of the Community Center which would encourage parking on the east side of the 
street. She wanted more attention given to that area regarding traffic. Mayor 
Wheeler declared the Public Hearing closed. MOTION: Council Member Andersen moved, 
seconded by McCown, to authorize staff to amend the Cubberley Master Plan in order 
to provide for additional uses in four wings at the site and apply for an amended 
conditional use permit to allow the additional uses identified. Council Member 
McCown said the proposal would add flexibility as recommended in the staff report 
(CMR:333:96), but the traffic and parking problems needed to continue to be considered 
in connection with all the uses at the Cubberley Community Center. The City was 
concerned with those issues, and she expected the Council to address those issues 
regardless of the uses at Cubberley. Mayor Wheeler was present at the Cubberley 
Advisory Committee meeting when the item had been discussed. There was no intent 
to increase the intensification of the uses at Cubberley. The original concept 
was that only dance would be in the L wing, and the proposal would allow the uses 
already permitted at Cubberley to be more flexibly located. It would not add any 
new uses but would allow more flexibility for current uses. It would mean a little 
more revenue but not significantly more traffic. She was also a neighbor to Cubberley 
and was well aware of the problems Ms. Goldstick raised that evening. She agreed 
with Ms. Goldstick and was glad that the City would take steps to slow things 
down on that portion of Middlefield Road. She encouraged Ms. Goldstick to get 
involved in what went on at Cubberley and said Facility Manager Del Thorpe would 
welcome her active participation with the Cubberley Advisory Committee, which 
was largely made up of neighbors who were from the back side of Cubberley and 
were users of the facility. Council Member Rosenbaum received a packet of information 
from the Children's International School which referred to the rezoning of Cubberley. 
He asked if the school would be favorably affected by the action being proposed 
that evening. Mr. Fellman said it would open the door for the school to respond 
to the RFP for the L wing. Council Member Rosenbaum clarified that it would potentially 
provide them with some space for expansion. Mr. Fellman replied that was correct. 
MOTION PASSED 8-0, Schneider absent. REPORTS OF COMMITTEES AND COMMISSIONS 13. 
Utilities Advisory Commission re Telecommunications Strategy Study Assistant City 
Manager Bernie Strojny said staff had provided the Council with the results of 
the Phase 4 of a five-phase study to identify the best role the City could play 
to accelerate the deployment of a broad range of low-cost, high-quality telecommunications 
services throughout Palo Alto. Based on those results, staff recommended that 
the Electric Utility implement a positioning strategy involving the development 
of a 15-mile fiber optic ring around Palo Alto to be co-located in conduits and 
on poles with existing utilities communications lines. The strategy would situate 
the Electric Utility in a flexible position of strength from which the maximum 
benefit could be delivered to the Palo Alto community. Two major findings of Phase 
4 contributed strongly to the development of the recommendation: 1) Extra space 
and existing conduits containing the Electric Utility's existing coaxial cable 
and twisted pair communications lines enabled the Electric Utility to install 
a complete fiber optic ring around Palo Alto without the need for boring underground 
and installing new conduits thereby avoiding a cost estimated to be $100,000 per 
mile which was the City's most significant competitive advantage; and 2) telecommunications 
providers and network developers had expressed an interest in leasing dark fiber 
installed by the Electric Utility which afforded them a low-cost opportunity to 
rapidly gain direct access to Palo Alto customers. Those factors combined with 
the others extensively analyzed and presented in the report attached to the staff 
report (CMR:361:96) led staff to conclude that the Electric Utility should take 
advantage of existing conduits and poles and develop fiber infrastructure in Palo 
Alto as quickly as possible. If the City wished to develop additional infrastructure, 
the Electric Utility would be well positioned to do so at a later date but would 
not need to make that decision currently. The recommended highly focused project 
would quickly reduce the barrier to market entry associated with the high cost 
of installing new infrastructure in underground areas and contribute to formation 
of a competitive telecommunications marketplace in Palo Alto to the benefit of 
the entire Palo Alto community including businesses, residences, schools, and 
City departments, especially the Utilities Department. Palo Alto was not alone, 
and several other California cities with municipal utilities had initiated similar 
strategies. The Los Angeles Department of Water and Power had been leasing surplus 
dark fiber for about 18 months. The Alameda Bureau of Electricity was in the process 
of installing five miles of dark fiber in existing conduits and poles to form 
a series of three fiber rings. Alameda was in the process of negotiating a lease 
agreement involving less than 10 percent of the fibers that would enable complete 
capital cost recovery within six years. As indicated previously, the municipal 
utilities in Anaheim, Burbank, and Santa Clara were also aggressively moving forward 
with activities involving surplus fiber installed for commercial telecommunications 
activities. With the construction cost estimated at less than $2 million and a 
resale value that was likely to be significantly higher due to the value added 
by the use of existing conduits, the risk associated with staff's recommended 
strategy was very low. The upside potential, however, was substantial. Based on 
reasonable fiber lease assumptions, staff expected to be able to recover costs 
completely within three to five years after construction with mature net cash 
flows in excess of $1 million per year projected thereafter. With the strategy, 
staff believed that the optimal balance had been struck between risk and reward. 
By leveraging existing Electric Utility infrastructure as other cities had done, 
the Electric Utility would strengthen its financial position by diversifying its 
revenue strains into a growth market while the Palo Alto community would benefit 
from accelerated deployment of a broad range of low- cost, high-quality telecommunications 
services throughout Palo Alto. Staff's next steps following approval would be 
to pursue the following three parallel activities: 1) design and construction 
of the fiber ring which would involve completing an Environmental Assessment of 
the proposed project, completing a final design, and ordering the fiber cable, 
issuing a Request for Bids (RFB) to install the fiber, and returning to Council 
for public review of the environmental assessment and approval of the construction 
agreement; 2) implementation of a fiber lease program including identifying parties 
interested in leasing fiber and/or pursuing additional fiber development using 
Electric Utility infrastructure, negotiating fiber lease agreements, and returning 
to Council for approval of fiber lease agreements, some of which might involve 
additional infrastructure development; and 3) obtaining outside legal counsel. 
Barring unforseen delays, staff intended to complete construction by the first 
quarter of Calendar Year 1997 with fiber leases commencing shortly thereafter. 
Utilities Advisory Commission Chairperson Paul Johnston said the Utilities Advisory 
Commission (UAC) had reviewed the matter and had given unanimous support to the 
staff recommendation. After looking at a wide range of options, the proposal offered 
the best use of the City's resources. The issue of advanced telecommunications 
involved both infrastructure and other services. The UAC felt the City was probably 
in the best position to decide what services to offer, and for that reason UAC 
felt it was appropriate to provide dark fiber. The City and Utilities Department 
were already heavily involved in infrastructure and had the expertise to manage. 
The proposal was a modest investment of $2 million. He saw it as the start of 
a series of decisions that would likely become more complicated as time went on 
in terms of what types of contracts and the City's role in trying to promote competition 
to provide advanced telecommunications in the City of Palo Alto. Council Member 
Fazzino applauded the staff and the UAC for an outstanding set of reports. It 
was a complicated issue, but the way the reports were structured made it easy 
for the Council to understand what the policy options were. He asked what the 
possibility was of the City's investing in a technology that could conceivably 
be usurped by another technology, such as wireless communications in the next 
10 to 20 years. Resource Planner Van Hiemke said wireless communications would 
play a significant role in the near and distant future. It was more likely to 
be a complementary technology as opposed to a replacement technology. The wire 
line infrastructure that would largely consist of fiber optics would be used to 
communicate at high rates of speed between ground base locations such as telephone 
company central offices and the premises of both businesses and residences. Wire 
line technology would continue to be a strong force for communicating back and 
forth between customer premises and service providers. Council Member Fazzino 
clarified that staff's assessment was the fiber optic ring would serve the Palo 
Alto well for the next 20 plus years based on various issues that wireless needed 
to overcome. Mr. Hiemke said the primary limitation with wireless would be the 
sending of information back upstream from the customer premise, and that limitation 
would not disappear. There was a clear advantage for fiber in that application. 
Council Member Fazzino asked whether there was also an issue of spectrum associated 
with wireless and whether that would be an obstacle to increase a piece of wireless. 
Mr. Hiemke said spectrum was definitely the key limitation with wireless. Council 
Member Simitian believed the issue was not whether or not it was an appropriate 
technology for 15 or 20 years but whether or not it would be an appropriate technology 
long enough for the City to recuperate the $2 million invested in the infrastructure. 
He was asking the same question as Council Member Fazzino was but in terms of 
the dollar expenditure rather than the time frame. David Rozzelle, Consultant, 
Media Connections Group, said the answer was twofold: 1) there was a spectrum 
limitation on the use over the air to carry large amounts of information; and 
2) there were environmental concerns whenever radio frequency (RF) was used to 
put through large amounts of information because it was susceptible to many things 
that fiber was not, e.g., weather, disruptions, interference from other users, 
security. It was not an easy two-way medium, particularly with high volumes of 
information. Data, voice, and particularly video were much easier to move and 
more securely moved with fiber or any broadband technology, but fiber was currently 
the medium of choice. He believed there should be no issue or concern over the 
appropriate use of fiber being taken over or preempted by over-the-air transmissions 
for quite some time. Council Member Fazzino clarified the City would easily recoup 
the proposed investment in fiber optics long before there should be any worry 
about wireless usurping or preempting fiber optics. Mr. Rozzelle did not consider 
the advent of RF transmissions of the type of information being discussed as a 
significant factor in whether the City recouped its investment. Council Member 
Fazzino asked how Mr. Rozzelle saw the telecommunications world in 20 to 25 years 
with regard to the coexistence of wireless and fiber optics. Mr. Rozzelle believed 
in looking at the various ways that communications were used, there was a great 
possibility that there would be significant migration of voice to wireless for 
the last mile. With Personal Communications Service (PCS) and cellular, the prices 
would drop significantly as the two technologies competed and became less expensive. 
Everyone might use cellular phones in place of land line phones. The backhaul 
of that information was going to happen on wires and continue to happen on copper 
for a long time. In video, even though Direct Broadcast Satellite (DBS) was a 
wonderful medium, as choices became more sophisticated and the need to do it on 
an interactive basis became more important, there would be continued migration 
of those types of items to wire line, particularly to fiber because huge volumes 
of information could be carried. For data, there was an upcoming breakthrough 
in broadband modems which would result in modems capable of handling information 
at about 1,000 times faster than the modems presently used on telephone lines, 
known as the public switch network. That would encourage the migration of large 
amounts of data, particularly Internet uses that required video or detailed land 
set pictures; i.e., calling up the United States Geological Survey (USGS) site 
and downloading a land set picture were currently very time consuming, but that 
would not be the case in the future. Council Member Fazzino said even if the City 
built the fiber optic ring, it did not make sense, financially or otherwise, for 
other companies to build their own fiber optic ring in the Stanford Research Park 
or other large commercial areas. He knew of one company that had already built 
its own system. He asked for comment on that concern. Mr. Strojny said the costs 
involved in building the fiber throughout the City was prohibitive unless there 
was a need as seen by market demands for the kind of capacity that a system of 
that type would bring to their company. Staff learned that if service providers 
had the ability to lease from the City fibers installed into existing conduits, 
that the cost would be more attractive than the cost to build their own infrastructure. 
The indication staff had was that while not all service providers would proceed 
that way, a significant number of them would avoid that capital cost of installing 
their own infrastructure and instead lease fibers from the City. Council Member 
Fazzino asked if that were true even with a smaller infrastructure. Mr. Strojny 
envisioned service providers' linking onto the City's fiber optic ring and providing 
direct connections between that ring and the premises of customers and those types 
of point-to-point connections. It would not be the construction of an entire ring 
as was being suggested that evening. It would be splicing from the ring the City 
was building instead. Council Member Fazzino referred to comments in the staff 
report (CMR:361:96) regarding interest from a large number of companies in leasing 
fiber from the City, and he asked staff to comment regarding evidence to that. 
Mr. Strojny said one of the components of Phase 4 was for staff to send out a 
request for information to the service providers to learn how they felt about 
the City's proceeding in that direction. The responses were positive, and most 
of the six or seven firms that responded indicated they would want to partner 
with the City and lease fiber. Council Member Fazzino said with respect to eventually 
moving to link the system to individual homes, staff commented about the possibility 
of creating a citywide network. He asked staff what options the City had to build 
that kind of network over the next few years. Mr. Hiemke said there was a variety 
of technological possibilities for doing that; however, it was important to consider 
that there was existing infrastructure that currently went to the homes, namely 
Cable Co-op and Pacific Bell. In addition to interconnecting with existing infrastructure, 
there was the option for the City, independently or with a partner, to overlay 
new infrastructure which would be at a cost. The staff report outlined four specific 
means of getting to the home: 1) hybrid fiber coax which took a coaxial cable 
system and incorporated fiber into it to increase the amount of information that 
could be transmitted into and out of homes; 2) fiber to the curb which was defined 
as taking fiber closer to homes but with twisted phone lines going from nodes 
to a much smaller number of homes; 3) switch digital video which took fiber into 
a neighborhood and had coaxial cable and twisted pair going from the node to the 
individual home; and 4) fiber all the way to the home. The cost varied with each 
and with applications that would support them. Council Member Fazzino asked, given 
the four options, what staff's best guess was regarding what option the Council 
might take to proceed to the next step of connecting the ring to individual homes. 
Mr. Hiemke said in terms of managing the risk in light of the rapid technological 
change that was currently happening, staff recommended the first step and wait 
to see how things evolved as discussions with service providers moved forward, 
specifically with Cable Co-op which had an interest in leasing fiber. There were 
certain issues associated with that, namely financial issues that Cable Co-op 
needed to resolve before it could be in a position to do that. That was one route 
that was possible in the very near term, and Pacific Bell might also have an interest. 
Another possibility was that other companies had expressed an interest in migrating 
a network from the business market first to residential areas. Council Member 
Kniss said it was a business that had become extremely competitive, and she asked 
how staff viewed the City's ability to stay competitive in a deregulated industry. 
Director of Utilities Edward Mrizek said the State of California regulated the 
Electric Utility. Besides cost or rates, the main issue was service and new services 
the City would provide its customers. Unbundling rates would be a new service. 
Staff believed it should be brought to the customers to continue to be competitive 
and to provide a wide variety of options. Communications in Palo Alto would continue 
to move forward quickly, and staff believed it was a good service that could be 
brought to the industrial and commercial customers first and to the residential 
customers in the future. The key was to provide new service to the City's customers. 
Council Member Kniss said staff indicated the new service could be brought to 
the customers at a much lower figure. She understood it meant that staff would 
take what was the most predictably competitive area, which was dark fiber, and 
allow someone else to take the next step, which was essentially splitting the 
difference between the two. Mr. Mrizek said staff wanted to be conservative in 
its spending in the new service area and to bring on partners who could provide 
service to the City's customers. Council Member Kniss asked how it would be assessed 
as to who the service providers would be. It was an extremely competitive area 
and had received the most discussion. In fact, $2 million was inexpensive in utility 
terms including the $250,000 per year for maintenance. The tricky part was how 
it was used. Mr. Mrizek said staff wanted to concentrate on marketing the dark 
fibers and where the emphasis would be. An additional position would be recommended 
on who would manage the dark fiber and how partners would be found. Council Member 
Kniss said the City would be moving in a very different direction because it would 
be leaving what was previously a monopoly and entering into competition. She asked 
how the City as a utility planned to step into the private sector. Mr. Mrizek 
said the City was already in the private sector with the electric and gas utilities 
deregulation. The City had already inadvertently entered into marketing and would 
continue to strengthen that marketing aspect in the utilities. Council Member 
Kniss clarified that staff saw the Utilities developing a whole marketing unit. 
Mr. Mrizek said that step had already been taken. Council Member Kniss clarified 
that as the City entered into the fiber optic business, a marketing group would 
be in place and ready to move head-to-head with those that were in the provision 
business, which meant the City had taken the easiest and most predictable step 
and left the other steps that were not quite as easy or predictable to those who 
would be competing to have the privilege of providing the service. Mr. Mrizek 
said that was correct. City Manager June Fleming encouraged the Council, as it 
followed the Utilities Organizational Review, to pay attention to the issue Council 
Member Kniss had just raised with respect to marketing. With the increased deregulation 
being experienced with gas, the City would be experiencing deregulation with electricity 
which was exactly where the City was going to be. The Council would see in the 
Organizational Review recommendations that the right initial steps had been taken 
to reorganize staff so that more could be done in marketing. More might be done 
so the City would be in a more competitive mode, to which the City was not accustomed, 
but staff was learning to adjust to. Mr. Hiemke said the undeniable competitive 
advantage that the Utilities Department had was its underground conduit which 
enabled a greatly reduced cost of providing the infrastructure. Additionally, 
the City was in a position in which decisions had been made previously when the 
City was not a service provider so there was no interest in providing the end-to-end 
service. Instead, the City was in the middle where costs could be spread out among 
a number of different companies which had the interest in competing and providing 
those services competitively. The City could hand over the floor to those companies 
who would be competing and developing the leading edge technologies that were 
necessary to compete in the highly competitive world that Council Member Kniss 
had described. Council Member Kniss clarified that advertising for dark fiber 
would not come from the City but would come from the providers. Mr. Hiemke said 
that was correct. Those providers had major marketing in other cities as well 
as in Palo Alto. Vice Mayor Huber asked why there was a need for an environmental 
assessment in order to pull fiber through an existing conduit. City Attorney Ariel 
Calonne said it was not the fiber, but what would happen when the service providers 
came in. What the facilities aboveground would look like was not known. Environmental 
assessment did not necessarily mean something big and expensive, but it meant 
looking at the issue. Vice Mayor Huber asked, if the City proceeded as recommended, 
whether those people who leased from the City would be competing out of necessity 
with people who had already laid fiber within the City. Mr. Strojny replied yes. 
There were several companies that had already installed fiber optic rings or systems 
in Palo Alto, and the fiber the City would be providing would compete with those 
companies. Vice Mayor Huber asked how much fiber had already been laid by other 
providers. Mr. Strojny said the largest fiber optic ring staff was aware of was 
put in by Metropolitan Fiber Systems (MFS) just one year prior, and MCI and Sprint 
had some limited fiber optic infrastructure. Vice Mayor Huber understood the City 
would pull as much fiber as physically possible within existing conduits, and 
he asked whether staff had any sense of when the City would run out of room or 
lease space. Mr. Strojny said as much fiber as possible would be pulled, and staff 
believed that to be approximately 288 fibers which would allow substantial capacity 
and enable the City to work with an array of service providers wanting to lease 
fiber. With fiber, the capacity could be increased by the use of electronics. 
A single strand of fiber could have an immense capacity if sufficient electronics 
were added to the fiber and could operate as a system. Staff believed the capacity 
would be tremendous and would provide service providers with what they needed 
for a significant amount of time. Vice Mayor Huber asked whether that meant 10 
or 20 years. Mr. Strojny said staff had found that the service providers were 
doing market demand studies to determine what the market was in the area, and 
they would then approach the City with requests for certain amounts of fibers 
to meet their demands. Staff would then see how that related to the amount of 
fibers the City had. Vice Mayor Huber clarified the City would lease and the lessee 
would be responsible for all the electronics. Mr. Strojny said yes. The lessee 
would be responsible for the electronics, and the City would be responsible for 
the dark fiber backbone to be installed. In the second year, staff recommended 
the addition of a staff person for that purpose and to make sure the dark fiber 
was reliable and provided the service providers with their needs. Staff would 
have to work closely with the service providers to make sure the entire system 
worked the way it should between the service providers and the City. Vice Mayor 
Huber asked how far away the lessees were from doing that with residential usage. 
Mr. Strojny said the question had more to do with the service providers and how 
soon they wanted to move into that market. As Mr. Hiemke mentioned earlier, there 
were possible combinations that could exist between existing infrastructure that 
Cable Co-op had and the City's dark fiber ring, as well as Pacific Bell's infrastructure 
which included every business and residence in the City. There were other service 
providers who had talked to staff about extending that system to residential areas. 
It was hard to know how long that would take, but one service provider had estimated 
it might be feasible in three to four years. Vice Mayor Huber asked whether there 
was a model anywhere else in the country for residential. Mr. Hiemke said there 
were several models, but one was in Cedar Falls, Iowa. Recently, a model of a 
hybrid fiber coax network had been completed in February, and originally the main 
intent was to provide entertainment related video services. The construction time 
was approximately one and one-half to two years, and currently there were about 
4,000 on-line. Glasgow, Kentucky, had done similar things. The City of Anaheim 
was currently in the process of negotiating an agreement for an all fiber infrastructure 
that would initially start out with businesses and over a period of three to five 
years would be extended to the residents if the economics were attractive at that 
time. Vice Mayor Huber was concerned about a municipality providing the connection. 
He asked whether there was a model of private enterprise having done that. Mr. 
Hiemke asked whether it related to developing a network from scratch or leasing 
from a municipality. Vice Mayor Huber replied it did not matter as long as it 
connected to the residences. Mr. Hiemke believed the question related to overbuilding 
in a region. Vice Mayor Huber referred to Cedar Falls, etc., which he understood 
was a municipality that had taken it upon itself to expend the funds to connect. 
That was not currently being proposed for Palo Alto. He queried whether somebody 
else had done it in the same fashion being proposed for Palo Alto which was private 
providers going from of a ring and connecting to individual residences. Mr. Hiemke 
said Blacksburg, Virginia, had encouraged the development of high speed data transport 
throughout the community. Blacksburg had a limited involvement in the actual development 
of infrastructure which was somewhat different, but it currently had a system 
in place that allowed rapid data transmission for all of the residents in the 
community. Vice Mayor Huber clarified the residents were connected. It could be 
encouraged, but that did not mean the residents would do it. Mr. Hiemke said Blacksburg 
had private investment test out technologies. It was a university in town, and 
it was a demonstration that Bell Atlantic and other companies participated in. 
Ms. Fleming referred to the staffing issue mentioned by Mr. Strojny. There was 
no request in the package before the Council that evening to address staffing, 
but staff was trying to indicate that there was a need for the equivalent of one 
full-time person. Staff had not as yet resolved how to meet that need, and the 
item would be brought back to the Council separately. Council Member Andersen 
thanked the staff and the UAC for an excellent report and analysis. He referred 
to the UAC minutes with respect to a routing suggestion from Utilities Advisory 
Commissioner Richard Gruen regarding Middlefield Road, and he asked whether any 
cost benefit analysis had been done in terms of the final analysis which might 
possibly be a part of the package or whether staff would return to Council at 
a later date. Mr. Hiemke said in staff's discussions with service providers and 
other companies in Palo Alto, the same routes as Mr. Gruen had were also suggested. 
The benefit was perceived by others and those who would actually be using the 
fibers. Staff had looked at the costs and had cautioned in the staff report (CMR:361:96) 
that it was a proposed routing that would be available, but it was preliminary. 
Additional design work would be done to finalize the routing. As part of the design 
work, staff was looking at the cost of adding both the Middlefield Road routing 
and an Alma Street routing which would be an express routing from one end of town 
to the other along Alma Street. An informal quote on fiber cable led staff to 
believe that there might be funding available if costs were lower than projected. 
If so, when the final design returned to Council, it would be anticipated that 
staff would try to incorporate those routes. If not during Phase 4, it would be 
likely that subsequent work could add those routings at a later date. Council 
Member Andersen asked whether staff had communicated with Stanford University 
about the potential for the University to connect with the system. Mr. Strojny 
said Stanford University Director of Communications Jan Thompson served on the 
Telecommunications Advisory Panel (TAP), and there had been some preliminary discussions 
with her about Stanford's involvement with the system. Currently, those discussions 
were very brief, and staff was looking forward in the next phase to working directly 
with Stanford to see what potential there was for linkage between Stanford's needs 
and what the City would be installing as a dark fiber ring. Staff anticipated 
that Stanford would be an important focus during the next couple of months. Council 
Member Andersen asked whether the tentatively proposed route met Stanford's needs 
with regard to connecting with it, aside from the obvious connection within the 
Stanford Research Park. Mr. Strojny said there was an opportunity with the current 
design to link into Stanford at several locations. As mentioned by Mr. Hiemke, 
the route was really preliminary, and as discussions continued at Stanford, staff 
would have the ability to modify the design to accommodate Stanford's needs as 
they were identified. Council Member Andersen had a different focus on the question 
of competition. Currently, there were already companies doing that within Palo 
Alto. Given the reality of a very competitive environment which the City was attempting 
to establish, he asked whether the City would have a sufficient differential,, 
between the cost for the company and the cost of leasing from the City to make 
it attractive for additional service providers to want to enter into that kind 
of a competitive environment as opposed to taking their own territory and running 
other providers away. He asked whether staff thought there was enough of a differential 
to make it profitable for them. Mr. Strojny said one of the things staff looked 
at in Phase 4 was pricing sensitivity and how that type of approach would be attractive 
to various service providers. Mr. Hiemke had done an extensive analysis. Mr. Hiemke 
said the actual value to a service provider had been identified based on different 
lease rates and the number of fibers leased. The first fiber installed would be 
the most expensive because the conduit needed to be installed. As a service provider 
installed additional fibers, the high initial cost would be spread out over a 
much greater number of fibers. A service provider interested in providing a large 
amount of fibers would see only a marginal benefit in leasing fiber from the City; 
however, staff recognized that service providers did not need that many fibers 
initially, especially when trying to develop and enter a market in which there 
was competition. The lowest cost with less risk was to work with someone like 
the City and lease fiber rather than build it up-front. It was a more managed 
way of entering a market, and staff had observed strong interest from the service 
providers. Council Member Rosenbaum asked, if the City built the system, how it 
would know service providers would lease the fiber. Utilities Advisory Commissioner 
James Sahagian had asked at the UAC meeting whether there had been any definite 
commitments; staff's response was that after going through the Council, staff 
would pursue it more actively. He asked whether it would be reasonable to expect 
staff, when returning to the Council with a contract, to have something firm at 
that time. Mr. Strojny said since the discussion at the UAC meeting, staff had 
had some substantive discussions with service providers. Some were at the Council 
meeting that evening who were very serious about partnering with the City in that 
type of arrangement. He expected that once the Council approved the kind of approach 
the City would take, the City would be given greater visibility, and those service 
providers whom staff had preliminary discussions with would want to discuss how 
fiber could be leased from the City directly and how that would come together. 
Some interest had already been generated. During the next three to four months, 
staff expected to talk to service providers about lease agreements and return 
to the Council with agreements that would provide for joint partnerships with 
those firms. Council Member Rosenbaum asked whether that could be done before 
the Council agreed to a contract to actually build the system. Mr. Strojny said 
it would probably not happen that quickly, although during the next three to four 
months, staff anticipated the process of negotiating those kinds of agreements. 
It was difficult for staff to say there would be a significant number of agreements 
in place prior to beginning construction. Staff anticipated continuing the marketing 
activity after the initial period and the construction completion. The ability 
to lease a significant amount of fibers during the first year was predicted. It 
was unlikely that agreements would be locked in place prior to the start of construction. 
Ms. Fleming said she would be very reluctant to bring agreements to the Council 
before the infrastructure was in place. Staff could bring the Council strong indications 
of providers interested, but staff would probably not be able to obtain agreements 
prior to putting system being in place. Council Member Rosenbaum was speaking 
of letters of intent. When staff returned to the Council for approval of a contract, 
it would be prudent to have at least one service provider committed in writing 
to lease fiber if the City were to build the system. That would be similar to 
building a speculative office building. The bank was more likely to make a loan 
if a property owner could obtain leases for the building prior to being built. 
Ms. Fleming said staff could provide letters of intent or expressions of interest. 
Mayor Wheeler said there had been much discussion with regard to the attractiveness 
of a constructed ring for service providers, and if the City did build the system, 
it would be more than hopeful that they would lease from the City. However, she 
understood that even if the City constructed the ring, there was nothing that 
would preclude a service provider like MFS from going in and bypassing the City's 
ring in order to do its own infrastructure work. She clarified that aside from 
the incentive that encouraged them to use the City's system, there was nothing 
that could force a service provider to use the City's ring. Mr. Strojny said that 
was correct. Mayor Wheeler believed the Council would agree that servicing the 
residents, educational institutions from preschool to graduate school and Palo 
Alto's small businesses was important. If the service providers came forward to 
express interest in leasing fibers on the ring, she asked whether there was anything 
that could be done to influence or speed up the decision of the service providers 
to service the residential, educational institutions, and small businesses. Mr. 
Strojny said it depended on what type of partnerships the City was willing to 
enter into, how those partnerships came together, and what involvement the City 
would have. There might be some partnerships that had limited financial risk to 
the City. There was at least one service provider who was approaching service 
to residential neighborhoods and was negotiating with other cities. There was 
also the question of whether the City wanted to go beyond the financial involvement 
it had. Staff wanted to take a conservative position, experience the first step 
being taken, work with the service providers, see how the market developed over 
the next couple of years, and then see how it could lead to more widespread telecommunications 
services, especially the residents and other small businesses. Mayor Wheeler said 
she recently saw a disturbing picture which made the City's famous green boxes 
look minuscule. Padmount transformers were being overshadowed by the appurtenance, 
and she saw in the picture a community that entered into a venture similar to 
what the City was embarking upon. Aesthetic considerations had not been previously 
discussed, and she believed that the Council should know what some of the potential 
impacts might be. She was not sure when it was appropriate to discuss the issue, 
but she knew that Palo Altans would not be understanding or accepting if the pictures 
she had seen came to pass in Palo Alto, particularly in residential neighborhoods. 
She asked when the Council would know something about the aesthetics and when 
and how the Council might have some control over it. Mr. Strojny said it was a 
problem that had developed in some of the test areas that had engaged in initial 
telecommunications service programs, including the City of San Jose. The Council 
would have to look at how the residential component was developed. Staff anticipated 
that the technology in those areas would change significantly over the next couple 
of years to address the problem. The deployment of residential areas would not 
occur for several years, and staff believed a lot would happen that would minimize 
the size of any kind of devices that would have to be located in neighborhoods. 
With the initial installation in the commercial areas, staff did not expect it 
would be a problem because virtually all of the systems in commercial areas used 
underground approaches rather than aboveground approaches. The problem would occur 
when the system was extended to residential areas because it was a very sensitive 
issue. Mayor Wheeler hoped staff was right with regard to the housing getting 
smaller which had not been Palo Alto's experience with its own Utilities infrastructure 
which had grown over the years. Mr. Strojny said when the City had contracts for 
those kinds of systems, staff would do an environmental assessment and bring the 
issue to the community to have it fully discussed in terms of the trade-offs between 
services to be provided and the aesthetics of the kinds of systems that would 
have to be located to accommodate services. That would be an important part of 
the environmental work. Mr. Hiemke said there were other technological solutions 
that were not as intrusive as what was currently in place in the City of San Jose. 
He understood that in San Jose a system was being developed that was not being 
developed anywhere else in the United States. Other solutions were less intrusive, 
and staff would want to explore those as residential options were considered. 
Mayor Wheeler asked whether the City would be laying the cable with internal staff 
or whether it would be contracted out. Mr. Mrizek replied it would be contracted 
out. Mayor Wheeler referred to Stanford University in terms of being a potential 
user. In Blacksburg, Virginia, and other communities that were ahead of Palo Alto, 
the service seemed to be driven by the proximity to a university. The university 
had not waited to be a user of the system, had taken an active role in the design 
of the system, and had actually helped the community get the system in place. 
She asked whether that perception was correct. Mr. Hiemke said yes. That had been 
the case in other communities. Stanford was active in encouraging MFS to come 
to Palo Alto, and one of the purposes was to serve Stanford. Mayor Wheeler asked 
whether Stanford might want to take a more active role in helping with the proposed 
venture. Ms. Fleming said that Council Member Kniss and she remembered the way 
Blacksburg had taken on an unusually proactive role with its city in the beginning 
in promoting a number of things, and Palo Alto had not had that type of beginning 
relationship with Stanford. Much of what happened in that city was similar to 
when Palo Alto first started talking about Internet. Blacksburg continued to be 
in the forefront as a university and was among one of the more active, if not 
the most active, university which had always been held up as a model. Not many 
followed in those footsteps. Council Member Kniss commented that Blacksburg was 
mentioned in the Readers' Digest the previous month. Mayor Wheeler asked whether 
the City risked isolating itself if it constructed its own ring, or whether the 
City would have to hook up to someone else somewhere; and, if so, she asked how 
that would happen. Mr. Hiemke said the City had to be connected to the outside 
world. There were service providers who were currently interconnected to the outside 
world, such as Pacific Bell who had connections to central offices in Palo Alto, 
MCI, Sprint, AT&T, long-distance carriers, and Internet providers. The fiber ring 
would need to be interconnected with those companies who would then make that 
connection to the outside world around Palo Alto. The staff spoke with service 
providers who had networks in the South Bay, East Bay, and San Francisco. One 
service provider had a ring around the Bay. All of those service providers were 
interconnected to the outside world, and the City would work with companies to 
make that connection. Mr. Calonne said it was another significant set of transactions 
that would have to be done. He did not have any information stating it would be 
insurmountable, but it was another fairly formidable set of transactions. There 
was money available for outside legal consultation. Vice Mayor Huber asked, assuming 
the fiber was in place, how much control the City had as the lessor over: 1) the 
type of lessees and 2) what the City could make the service providers do with 
regard to the famous green boxes. He asked whether there would be any problems 
with public access, First Amendment issues, etc. Senior Assistant City Attorney 
Grant Kolling said as a landlord, the City would have a "rights of landlords" 
bill to control how and what a lessee could or could not do within the confines 
of where the law would allow the City to do that. The City was supposed to provide 
access on an equitable and nondiscriminatory basis which was a fairly broad principle. 
The City could require security for access, bonding, engaging in construction, 
insurance, and standard lessor/lessee types of provisions in any type of leasing 
arrangement. Vice Mayor Huber asked with regard to content what would happen if 
the Council did not like a proposal. Mr. Calonne replied that if the City had 
a utility franchise such as an obligation to provide nondiscriminatory and equitable 
access, he did not believe the City would be able to regulate content. If it were 
more of a proprietary interest rather than a utility franchise interest, the City 
might have some content control. He assumed there would not be any content control 
and that the City would be able to control the nature of the aboveground facilities. 
Council Member Kniss said staff had listed a number of other cities that had embarked 
on or accomplished the fiber ring, and she asked whether in those particular cities 
they had accomplished any of the questions the Council had been asking that evening 
such as what had been done about the service providers, the competitive piece, 
aesthetics, etc. Staff had stated that the City of Anaheim was in the process 
of negotiations with SpectraNet International, one of the service providers. Mr. 
Hiemke said the City of Anaheim issued a Request for Proposal approximately one 
year prior and, after a competitive selection process, selected SpectraNet International. 
Anaheim was well on its way through negotiations with Spectranet and had completed 
or was nearing completion of a due diligent study that was conducted by a private 
consulting firm. Anaheim had indicated that later in the month, its Telecommunications 
Policy Advisory Committee would consider a memorandum of understanding (MOU) that 
would list specific deal points. Assuming that happened and the Advisory Committee 
agreed, the plan would go before Anaheim's City Council with a final agreement 
for consideration in October 1996. Council Member Kniss asked whether staff could 
keep others from connecting to the ring. Staff had indicated that the City of 
Anaheim went into competition to choose the service provider. Mr. Hiemke said 
Anaheim's approach was different in that it decided to choose a single service 
provider due to having only a limited amount of fibers installed. Staff was proposing 
a situation in which the City would have a much greater number of fibers in place 
that could be used by a number of service providers without the need to select 
a single service provider. Council Member Kniss clarified staff felt that was 
better. Mr. Hiemke believed that the competition was a valuable aspect, and one 
of the objectives approved at the Council meeting in February was not to force 
staff to select the "best race horse to bet on." Staff wanted to let everyone 
compete and let the customers decide. Council Member Kniss supported the City's 
staying competitive. Mr. Hiemke said one of the goals of the service providers 
was to bundle services so they could provide a single bill to customers as opposed 
to paying many bills separately. Whether or not that was the best solution for 
every consumer would be the consumer's choice. In such a situation, the service 
providers would be competing against one another to drive each other's prices 
down. One benefit was lower rates, and rates did drop dramatically following the 
1984 breakup of AT&T. Council Member Simitian said the Council had discussed the 
who, what, why, where, and how, but he was interested in the when. He understood 
the recommendation to the City should get underway now. He used Geographic Information 
Systems (GIS) as an analogy which he had brought up repeatedly in the past. The 
reason he had raised the issue in the past was not because he did not feel it 
was a technology the City should not have, but he thought the City got into the 
system too early. The best analogy he could provide that cut across all of the 
issues was those people who bought compact disc players too early and five years 
later wondered why they had paid so much for only a one-disc player of poor quality 
when they could get a five-disc player of much better quality for one-third of 
the price. GIS got started early, and he believed the City had paid the price 
for being on the cutting edge of that technology. He asked why it needed to be 
done at present and what it would cost to wait two years and let things sort themselves 
out in such a rapidly changing technology. He had no presupposed notions, but 
he was curious why staff felt the present was the time to move and what the ramifications 
would be in waiting a year or two. Mr. Strojny said the sense staff was getting 
from service providers and from telecommunications in general was that the market 
was currently there. The market analysis done one year prior by the consultants 
indicated that telecommunications was growing tremendously and would continue 
to grow during the next five to six years. Staff found with the Telecommunications 
Act of 1996 that the emphasis on competition was already stimulating a number 
of companies to want to move quickly into that arena. Staff believed that if the 
City installed the infrastructure and invited that competition when it could be 
used when the market demand studies showed the demand was there and before a lot 
of infrastructure was built by various service providers, the City would capture 
the market at the right time. If the City waited several years, he believed the 
service providers would individually attempt to install infrastructure on their 
own. The City would have to experience what that meant, and the fact that those 
service providers would incur much higher costs. The resultant impact would be 
that the price for telecommunications in Palo Alto would probably be higher than 
it would have been if the City were involved in the manner suggested by staff. 
Staff and the UAC felt the City had a window of opportunity and that it would 
not be there in a year or so. With the competition growing, the present would 
be the time to take advantage of it, build the system, and have the service providers 
use the system that they would otherwise have to build. Council Member Simitian 
clarified that five years before there would not have been a market, and five 
years in the future, someone else would have captured the market. Mr. Strojny 
said it was a market that was developing rapidly. For example, in the past couple 
of years, the Internet had grown tremendously, and the demands for bandwidth had 
grown with it. It was a matter of timing, and the market was not there five years 
before. The market was currently there, and the projections were that it would 
continue to grow. If the City installed the infrastructure, the market could be 
captured, and the City could have service providers who wanted to use the City's 
system instead of building their own. Something was going to happen during the 
next year in Palo Alto to meet the demands that were there, and it was the best 
way for the City to provide the best for the community. Mr. Johnston said Council 
Member Simitian's question implied that the technology was rapidly changing and 
the City was possibly coming in too early. What the proposal specifically addressed 
was installing dark fiber which was a very mature technology; therefore, from 
a technological standpoint, the City had gone beyond the risk curve. The types 
of services that might be added to dark fiber were still changing and developing, 
but that was not part of what was being proposed. Council Member Simitian said 
there had been a reference to inviting MFS to participate, and he clarified the 
Council had a concern because MFS had been the group that put the City's telephone 
service out for three days. Bill Yundt, representative, Web TV Networks, Inc., 
275 Alma Court, said that Web TV Networks, Inc. had developed a consumer Internet 
product and was dependent upon high speed communications to deliver its product 
and service to the world. The partners, Sony Electronics and Phillips Magnavox, 
expected to deliver service to over 200,000 residents by the end of the calendar 
year and 2 million in 1 years. He felt the project was very farsighted for the 
City to undertake. It was not a project that delivered a product to the residents. 
It might be the basis in infrastructure for delivery of some services to residents 
at present and in the future, but it was more from the standpoint of its ability 
to serve the information industry providers who created services to be delivered 
to residents, making it preferential for the Palo Alto community to receive those 
services. From his standpoint, the investment the City was proposing to make would 
be paid off. To address Council Member Fazzino's point, he would be happy to pay 
$3 million for the system on the day of completion. In collaboration with Digital 
Equipment Corporation, which also had a substantial presence in Downtown Palo 
Alto and provided services to the Internet, Web TV Networks, Inc. would propose 
an interloop within the Downtown area which would be connected to the larger loop, 
and he hoped the City would find it appropriate to speed up such a project. Digital 
had already contributed fiber to the City that comprised a portion of such a loop 
and would be willing to support the completion of that loop down High Street and 
Lytton Avenue so that the interportion of Downtown Palo Alto could be serviced 
by a high speed fiber loop that would benefit the business community. He strongly 
endorsed the project, and as a technician who had built networks for over 20 years, 
he felt it was a wise move. Charles Kelly, 97 Juniper Drive, Atherton, was a telecommunications 
engineer and had recently done a telecommunications study for the City of Longmont, 
Colorado, which was very similar to the City's proposal. He recommended that before 
committing any money to the project, the City should find out what the service 
plan for residents would be and get letters of intent or preferably contracts 
in hand from the service providers. Otherwise, the City would probably end up 
in a zero cash flow position. From a rational perspective, it would not bring 
any benefits to the people in the community. The City needed to formulate a service 
plan with regard to contracts for potential users of the loop because the only 
thing the loop could do for people not on the loop would be to bypass long-distance 
telephone service. With regard to providing the advance services mentioned in 
the staff report (CMR:361:96), the loop could accomplish that, but the City would 
have to find particular clients who were located on the loop before those services 
could be sold. From a regulatory perspective, the recommendations in the report 
might or might not be the strategic position since the Telecommunications Act 
was passed. The previous Thursday, the Federal Communications Commission (FCC) 
had enacted 75-96 which codified what was in Section 251(c-g) of the Telecommunications 
Act, in particular defining a new costing formula to be implemented by the California 
Public Utilities Commission (CPUC) called long-term incremental costing. The impact 
for the City would be that if a network were built and the ninth provider came 
in and asked to use it, that the ninth provider could in effect, make the City 
prove that its costing formula complied with the docket. Thus, instead of being 
a value-based provider where the City might anticipate earning $1 million in net 
cash flow as suggested in the report, most likely it would put the City into a 
break-even position. Richard Brand, President, Multi-Media Communications Forum, 
281 Addison Avenue, said the City needed to consider the kind of applications 
people wanted. Dark fiber by itself did not generate revenue and could become 
very additive with respect to equipment. Most of the Palo Alto community wanted 
information, and for it to go directly to the home was a key issue. Whether it 
was on copper or fiber and how that worked would have to be studied. He felt a 
big discrepancy in the staff report (CMR:361:96) was a marketing plan which was 
needed to justify the expenditure. Letters of intent were critical. The City needed 
to look at the competition because there were competitive suppliers in the business 
who would bring in services from the long-distance carriers which was big business. 
The marketing work really needed to be done for Phase 4. Janet Lukas, Marketing 
Representative, Brooks Fiber Communications, 464 Oakmead, Sunnyvale, supported 
the telecommunications project. She said in three years Brooks Fiber Communications 
had built an 80-mile fiber network which was very feasible for the City to accomplish. 
She explained some of the services Brooks company provided to commercial businesses 
such as a fiber dial tone providing Centrex service, analog and digital private 
branch exchange (PBX) lines, Integrated Services Digital Network (ISDN), both 
Basic Rate Interface (BRI) and Primary Rate Interface (PRI), and fax and mail 
message servicing. Ed Koops, Director of Operations, Brooks Fiber Communications, 
464 Oakmead, Sunnyvale, said the issue that evening was whether the City could 
build an infrastructure for service providers to use. The main component of any 
system that competitive access or telephone companies provided was the network, 
but at the present time, the services being provided were the true competitive 
items that everyone was interested in profiting from. Brooks was very interested 
in the network as a ring, and it would work off that ring to provide services 
to its potential customers and citizens of Palo Alto. Council Member Rosenbaum 
asked whether Brooks might be a customer of the City's system. Mr. Koops said 
Brooks was very interested and would execute a letter of interest to that effect. 
John Kelley, President of the Board of Directors, Cable Co-op, 1864 Mark Twain 
Street, read the Board of Directors' statement adopted July 30, 1996, which unanimously 
supported the staff recommendation regarding telecommunications strategy (letter 
on file in the City Clerk's Office). Mayor Wheeler said it was apparent that the 
Council would not complete its agenda that evening, but certain items were time 
sensitive. She asked how the items should be handled. Ms. Fleming asked the Council 
to deal with Item No. 14, because the Friends of the Children's Theatre wanted 
to begin the project as soon as possible, and also Item No. 17 that evening. She 
suggested that Item Nos. 15, 16, 18, and 19 be continued to a date to be determined 
by staff. MOTION TO CONTINUE: Council Member Fazzino moved, seconded by Andersen, 
to continue Item Nos. 15, 16, 18, 19, 20, and 21 to a date to be determined by 
staff. 15. Ordinance of the Council of the City of Palo Alto Amending the Budget 
for the Fiscal Year 1996-97 to Provide an Additional Appropriation for Seasonal 
Jobs for the Homeless Pilot Program 16. Ordinance of the Council of the City of 
Palo Alto Amending Chapters 22.04 and 22.08 of Title 22 of the Palo Alto Municipal 
Code Regulating Parks 18. Embarcadero Pedestrian/Bike Bridge and Bike Path Project 
- Rejection of Bids 19. Alma Street Bike Bridge and Path Project 20. Council Members 
Andersen, Fazzino, and Kniss re Proposed Direction to Staff to Develop a Comprehensive 
Approach to Downtown Needs 21. Council Members Andersen and Fazzino re Change 
in the Composition of the Human Relations Commission's Membership to Include One 
Nonresident Member MOTION TO CONTINUE PASSED 8-0, Schneider absent. RECESS TO 
CLOSED SESSION: 9:33 P.M. - 9:55 P.M. The City Council met in Closed Session to 
discuss matters involving labor negotiation as described in Agenda Item No. 10A. 
Mayor Wheeler announced that no reportable action was taken on Agenda Item No. 
10A. CONTINUED DISCUSSION OF ITEM NO. 13 Tom Passell, 3825 Louis Road, read a 
proposed motion in response to the UAC's recommendation signed by several people 
who unanimously supported the construction of a 15-mile fiber optic loop for use 
by any service provider willing to lease one or more fibers (letter on file in 
the City Clerk's Office). He also demonstrated the power of fiber. He said 288 
fibers would have a tremendous amount of broad Information Superhighway. Bob Moss, 
4010 Orme Street, said there would be a market for residences if the City built 
the system. When the system was being built for Cable Co-op, fiber was almost 
economical. The difference was in the electronics, and the costs for electronics 
had changed dramatically. Fiber was being put in because it was cheaper and more 
effective. The Council was being asked to build the basic highway, and other people 
would do the marketing. Palo Alto would have a large capacity with 288 fibers. 
During the previous two years, the number of users on the Internet had doubled 
about every six to eight months. The uses that had arisen could not be imagined 
previously. In the near future, people would be able to communicate by computers 
over the networks. It was time for Palo Alto to move forward. Herb Borock, 2731 
Byron Street, encouraged the Council to consider the financing details of the 
proposed project and whether the cash flows in the future would be treated similarly 
to the other utility enterprise funds where there was a return to the General 
Fund or whether most of the money would be used for further investment in building 
more extended fiber networks with others providing the electronics. He asked how 
the Council could help all the residents rather than segments that wanted to use 
the system at the present time. The Council had the power to bargain for rates 
for all the residents in the City. Steven Jones, Vice President and General Manager 
of the Teleport Communications Group, said the City had picked an intriguing way 
to accomplish some public policy goals. The Teleport Communications Group (TCG) 
was a certificated local exchange carrier in the State of California, and it was 
very interested in the developments before the Council that evening. TCG was interested 
in working with the City to provide access to high quality, high bandwidth telecommunications 
for the businesses in Palo Alto. It was important for the City to realize the 
primary competition was with other municipalities to create an infrastructure 
that fostered support of businesses and quality of life for the residents. The 
City would not compete with service providers for the services of telecommunications 
to businesses in Palo Alto. TCG wanted to work with the City and provide those 
services to businesses and residents, and the proposal was an important first 
step in order to do that. TCG had approximately 450 miles of fiber optics that 
had been placed in service around San Francisco Bay. The strength of the ring 
and the infrastructure was the interconnection of that ring to service providers. 
It would not provide the things that the City wanted to provide to Palo Alto without 
that interconnection of service providers. The City would be in a position to 
be able to make that interconnection and provide those services that were desired. 
The market and the demand for those services would bring the service providers 
to Palo Alto. The infrastructure would enable that to happen in a somewhat organized 
fashion and also allow the City to participate. TCG desired to participate with 
anybody within the City or the area who would make it easier to provide those 
services to its end users. The infrastructure would allow many different providers 
and competitors to compete for those services of end users on the basis of their 
service, not on the basis of who dug up the streets faster and who dug up which 
streets. TCG would not compete but would cooperate with the City to bring high 
bandwidth, high value communications to users. TCG supported the City's efforts. 
Keith Cooley, 1330 Harker, spoke on behalf of Palo Alto Community Network (PA-Comnet), 
a grassroots community group whose goal was to promote the use of computer networking 
for community purposes. PA-Comnet fully supported the staff's recommendations, 
and it believed the creation of the ring would be the first step toward bringing 
affordable two-way computer communication to all the residents of the City. The 
fiber optic technology would provide two-way communication which was very important. 
It was also important that all the residents in the City had access to the technology. 
PA-Comnet believed providing the ring would help break the monopoly that MFS and 
Pacific Bell had that kept prices of access to telecommunications high in the 
City. Claudio Martinez, P.O. Box 273, Palo Alto, asked whether someone could connect 
onto the loop if he/she were a few blocks away from loop. The route of the loop 
omitted South Palo Alto and large parts of the City. Mr. Hiemke explained the 
loop would be a first step, and the City or service provider network developers 
could take subsequent steps to reach the residences throughout the City. The loop 
would be the backbone upon which a number of extensions would be connected that 
would reach out to individual residences to provide that level of connectivity. 
Stephen Stuart, 2571 Park Boulevard, researcher, Digital Equipment Corporation, 
said he had been involved in creating the initial web server presence of the City 
of Palo Alto which had brought Internet connectivity to City Hall. Digital Equipment 
Corporation (DEC) supported the project which was a crucial next step in making 
Palo Alto a formidable center of the Internet. DEC's goal was to make Palo Alto 
a point where many Internet service providers came together to provide their wares 
which needed a strong, diverse telecommunications base to be used for Internet, 
voice, and other kinds of traffic. The ability of the ring to adapt to future 
needs was formidable, and it was an excellent first step for almost any direction 
the City wanted to go to provide both business-to-business communications within 
the City, business to business communications from Palo Alto to the outside world, 
and services for the residents of Palo Alto. Council Member Kniss recalled that 
DEC had been instrumental in the active involvement on the Internet of one of 
the elementary schools and Jordan Middle School. Mr. Stuart said DEC, in conjunction 
with Bar Net, provided Internet connectivity to the Palo Alto schools. DEC had 
direct connections out of its facility to Jordan Middle School and Gunn High School. 
In partnership with Com 21 and Cable Co-op, other schools were connected by modems 
to each other and then got Internet connectivity through DEC's facility. He had 
spoken with staff about how the Palo Alto ring infrastructure could best benefit 
Palo Alto Unified School District's (PAUSD) plans to build a backbone fiber network. 
Council Member Kniss clarified some of the teachers and students had been interns 
or summer employees at DEC. Mr. Stuart said that was correct. Three teachers from 
PAUSD were employed the previous summer as interns in the laboratory to develop 
course materials to help teachers understand how the Internet could be used in 
the classroom. The connection of Jordan Middle School to the Internet was part 
of a project that was done to show the power of Internet in the schools. The teachers 
who were interns the previous summer were currently running a series of one-week 
classes at Jordan to disseminate the information to other teachers. David Harris, 
455 Margarita Avenue, wanted to start a nonprofit corporation to deliver certain 
kinds of health information worldwide through the Internet. The City's proposal 
would make that faster communication possible. He had previously been troubled 
about the City's participation given all the competition and the variety of alternatives 
available, but the City had a chance to seize a unique opportunity to have some 
control over the rates and availability to its citizens. If there were a lock 
on low-cost fiber, it could be traded for lower prices, higher revenues to the 
City, residential access, etc. Corrine Goldstick, 3999 Middlefield Road, asked 
about the "black box" that was being developed that would allow citizens to access 
the Internet through their television sets and how that would affect the residential 
use of an expensive outlay of City funds. She also asked about the potential routing 
for the fiber ring to Montrose Avenue. Mr. Hiemke explained that staff was investigating 
another route. The routing could be taken from the corner of Fabian and Charleston 
Road over to San Antonio Road, down San Antonio Road to Middlefield Road, and 
down Middlefield Road back to Charleston Road. The dip down to Montrose Avenue 
would no longer be part of the routing. He said while the access to Web TV technology 
would be via the television, there would need to be computer equipment at the 
television operator's interconnecting to the Internet. The computer equipment 
would need high-speed access to a location where the connection would be made. 
Also, the connections from the neighborhood back to the head end would require 
a high-speed connection. There would be a need for a significant amount of infrastructure 
in the Downtown area to support the flow of content from the Web TV service provider. 
He explained that funds from the Electric Rate Stabilization Reserve would be 
used to finance the initial step which would be a fiber ring. The report indicated 
there was a large business and residential market. The fibers would be split between 
the two markets. The Electric Utility not taxpayer dollars would take the risk 
for the venture. MOTION: Council Member Simitian moved, seconded by Kniss, to: 
1) Adopt the Ordinance requesting the use of $2,061,600 from the Electric Rate 
Stabilization Reserve to fund a positioning strategy involving Electric Utility 
development of a dark fiber ring to be co-located in conduits and on poles with 
existing Utilities' communication lines; 2) Approve keeping the commercial telecommunications 
assets separate from the Electric Fund rate based upon which General Fund transfers 
are calculated; and 3) Convert Phase 5 of the Telecommunications Strategy Study 
from business plan development to strategy implementation. Ordinance 4363 entitled 
"Ordinance of the Council of the City of Palo Alto Amending the Budget for the 
Fiscal Year 1996-97 to Create and Fund a Telecommunications Program Including 
the Creation of a Capital Improvement Project, and Extending a Loan from the Electric 
Fund for the Program" Council Member Simitian supported staff's proposal of infrastructure 
rather than services as the right place for the City to be. When the issue of 
telecommunications previously came to the Council, one of the concerns from by 
the Council and some members of the community was about the City's ability, given 
the nature of democratic institutions and governmental processes, to move quickly 
enough to be in a very rapidly changing marketplace in terms of the kinds of services 
the City would provide. Staff had returned with the right distinction between 
the service place market, which was not a place the City should be given the limits 
of its ability to move quickly in the marketplace, and its ability to provide 
infrastructure, which the City had done and would continue to do very well. He 
was not particularly interested in technology per se but was interested in the 
applications. He was convinced that more often than not, the applications were 
derived from the technology rather than the reverse, i.e., if the technology were 
created, the applications would follow. As Council Member Rosenbaum suggested, 
the City was well advised for the short term to identify the people who wanted 
to use the system before moving forward. For the long term, he believed if the 
technology and infrastructure were there, the marketplace would create the applications. 
The discussions about the issue had been very enthusiastic, but he felt the discussions 
overstated the proposal which was simple and straightforward. According to staff, 
the City was in a unique position to provide an affordable and strategically located 
toll road on the Information Superhighway, and it would be great if the City could 
be in charge of the toll road. Council Member Kniss said real competition was 
how to stay competitive, not only as a city but as a competitor within the Silicon 
Valley and the country. The children in the schools and students in the colleges 
needed to have a good deal of expertise. It would allow them to stay competitive 
within the United States and the world and find jobs easily in the future. The 
City was doing something that was more worldly in many ways. The next phase of 
communication was so important and would allow communication freely with each 
other. She was delighted with the proposal. Technology was moving very fast, and 
where the City would be in five years was unpredictable. Council Member Andersen 
said his participation on the TAP was an interesting experience. He heard skepticism 
and enthusiasm in certain cases from the participants, but the way the staff moved 
forward was exceptional. He commended the staff for its excellent work, and he 
wanted to recognize a point made by Mr. Mrizek that it provided an additional 
opportunity within the Electric Utility to diversify. He believed that was an 
important component of keeping the City's Electric Utility a competitive utility 
for the business community, and it was a low risk. He was excited the smaller, 
newly emerging entrepreneurial efforts that were so much a part of Silicon valley 
would be able to connect to the system. As a result, there would be a tremendous 
amount of competition in the entire arena. He was concerned about the marketing 
challenges the City would face, but he was convinced the City had the skills to 
handle those challenges. He believed it would be one of the most significant decisions 
the Council would make. Council Member Fazzino said the Council's decision that 
evening was somewhat similar to the revolutionary decision that was made in 1905 
by the Town Council to move ahead with a utility system for the City. The right 
decision was made in 1905 to move ahead with a municipal utility system, and the 
Council made the right decision in 1980 when it decided not to move ahead with 
municipal cable. He was delighted that staff, the TAP, and the UAC had positioned 
the City perfectly on the issue. He believed it was appropriate for the City to 
build the communications infrastructure. If the City did not build it, someone 
else would, so the City had to move as quickly as possible. He was convinced the 
proposal was sound, both technologically and financially, and he agreed that there 
seemed to be a fair amount of interests on the part of prospective lessees, which 
encouraged him to move forward. The most important reason to move forward was 
the fact that a city-funded infrastructure would assure the eventual access by 
all residents to the Information Superhighway better than a business or privately 
built system would. He was also excited about the prospect of the creation of 
citywide networks, and he looked forward to moving forward to steps 2, 3, and 
4. He was willing to discuss with Cable Co-op and other prospective partners about 
that possibility. He believed it would be a tremendous benefit to all citizens. 
Council Member McCown referred to the letter from Brian Reid, one of the best 
known computer scientists in the country, dated August 1, 1996, which stated "I 
believe the dark fiber is exactly the right way for the city to be investing in 
the information age. It is not very expensive, it will not pollute anything, make 
any noise, increase traffic, or sit on sidewalks. Its existence will make Palo 
Alto a much more attractive location for information businesses and will pilot 
what could be an important city revenue stream for the 21st century." Dr. Reid 
captured the core of why it was such an exciting opportunity for the Council to 
make that evening and for the future of the community. Vice Mayor Huber was concerned 
as the City ventured into that area that it might be asked to provide more money 
in a utility of that type. He believed it was the City's responsibility to ensure 
that those kinds of facilities existed, but he did not believe it was the City's 
responsibility to provide it. The City would provide the initial step to ensure 
that others might hopefully provide service not only to the businesses but also 
to the residents who desired it. Mayor Wheeler hoped that history treated the 
present Council as well as it had its predecessors; however, she did not believe 
the Council's decision that evening was of the same magnitude as the decision 
that was previously made in 1905. The economic and technological climate was different 
at that time. The approach suggested by staff emphasized the strengths and avoided 
the weaknesses that government had in that area. The City could not respond with 
lightning speed to the advances in technology so it was wise for the Council to 
endorse the recommendation. She felt strongly as representatives of all the citizens 
of Palo Alto that Council Members were in a unique position to represent the interests 
of all the residents, educational institutions, and small and large businesses. 
Each one was a valued customer of the Palo Alto. She heartily endorsed the recommendation 
before the Council that evening which would set the City on the path of being 
able to best serve all of those constituencies. She joined her colleagues in commending 
the staff for the work that had gone into the product before the Council that 
evening. MOTION PASSED 8-0, Schneider absent. ORDINANCES 14. Friends of the Children's 
Theatre Improvement Project - Phase II Warren Kallenbach, 1248 Harriet Street, 
read a letter from the families who lived adjacent to the Children's Theatre regarding 
the safety at the Children's Theatre, the future of the Secret Garden, and the 
appearance of what was once a pleasant lane behind the Children's Theatre (letter 
on file in the City Clerk's Office). K. R. Raman, 734 Melville Avenue, said he 
shared a common wall within the fire circle and the Children's Theatre. He played 
an audiotape of the noise produced by the air conditioning unit that disturbed 
him all night. He suggested an anti-quiet chamber surrounding the air conditioner 
and a power-off unit so the unit would turn off at 9:30 p.m. When the construction 
of the storage shed was proposed, he was told by City staff that a courtesy announcement 
had been made in December 1995, no notification had to be given to the people 
directly affected by the construction since it was a minor project of less than 
500 square feet, and no variance was required from the neighborhood. He asked 
whether those requirements were applicable for residents who planned future construction 
of less than 500 square feet on their property. Council Member McCown clarified 
the air conditioning unit was an existing unit and did not have anything to do 
with the project. City Manager June Fleming said that was correct. Council Member 
McCown clarified none of the modifications in the project would change the air 
conditioning unit. Ms. Fleming said that was correct. Mayor Wheeler asked about 
the noticing requirements. Ms. Fleming said the application did not require noticing. 
City staff had indicated to Mr. Raman that it was a courtesy announcement, not 
a requirement. Most of the issues addressed did not relate to the project before 
the Council that evening. However, staff would follow through on the issues addressed. 
Mayor Wheeler asked about Mr. Kallenbach's suggestion in his letter dated August 
5, 1996, in relation to the clearance for firefighters, the landscaping of the 
Secret Garden, and the area behind it. Ms. Fleming said the project had been reviewed 
by all the appropriate bodies, and all the clearances required had been left. 
There might be more materials in the alley than usual when staging was being done. 
Actual construction of the shed, which was not the project before the Council 
that evening, would remedy some of the materials in the alley. The shed referenced 
was reviewed by the Architectural Review Board. Director of Community Services 
Paul Thiltgen said staff recognized the issues regarding the landscaping, and 
the Secret Garden was being considered as part of the Library project. The landscaping 
was very aged, and staff needed to determine how it could be brought back to its 
previous condition. Staff wanted to maintain the same concept for the Secret Garden. 
MOTION: Council Member Simitian moved, seconded by McCown, to: 1) Release the 
$100,000 Capital Improvement funds (Project No. 19703) challenge grant to the 
Friends of the Children's Theatre (the Friends) upon satisfying the City Manager 
or Deputy City Manager, Administrative Services, that they have raised the $400,000 
upon which the challenge grant is predicated, so that the Friends may commence 
with Phase II of the project; 2) Suspend any normal or use fees under the Municipal 
Fee Schedule as a part of the City's contribution to Phase II of the public/private 
partnership; and 3) Adopt the Ordinance to increase the 1996-97 CIP budget (Project 
No. 19309) by $20,000 and authorize the City Manager to reimburse the Friends 
for previously scheduled Americans with Disabilities Act (ADA) improvements to 
accommodate the Friends' building construction schedule. Ordinance 4364 entitled 
"Ordinance of the Council of the City of Palo Alto Amending the Budget for the 
Fiscal Year 1996-97 to Provide an Additional Appropriation for Capital Improvement 
Project 19309, Americans with Disabilities Act Compliance" Council Member Simitian 
said the Friends of the Children's Theatre had achieved tremendous accomplishments. 
He appreciated the City Manager's willingness to explore with staff some of the 
issues that the neighbors raised. Theatre productions always had 10 percent more 
stuff than there was space to put it in. The concern of the neighbors was legitimate, 
and the Secret Garden had previously been in better shape. Anything staff could 
do to alleviate the noise concerns would be appreciated. He was pleased with the 
proposal. Originally, when the proposal was discussed, the notion was whether 
the City would have a $500,000 asset that gave value to the community in perpetuity 
for the expenditure of $100,000 which was where the City had ended up. Council 
Member McCown said the neighbors' concerns needed to be addressed by staff. She 
recalled that when the project was approved in 1991, there were extensive concerns 
about how the Secret Garden would be treated. She hoped the commitment made to 
preserve the Secret Garden and enhance it after the project was completed would 
be kept. Council Member Andersen suggested the City explore with the Children's 
Theatre and the neighbors the possibility of providing artwork on the wall that 
would be compatible with the neighborhood. MOTION PASSED 8-0, Schneider absent. 
17. Council Chambers Refurbishing Project Council Member Fazzino said the proposal 
suggested the possibility of moving the cable booth, and he hoped that Cable personnel 
would be kept within close proximity to the Council Chambers. MOTION: Council 
Member Fazzino moved, seconded by Kniss, to: 1) Adopt the Ordinance for $58,000 
to fund the Council Chambers Refurbishing Project, CIP 19625; 2) Amend the consultant 
agreement with CSS Associates, Architects, to include an additional $52,000 for 
consulting services for Council Chambers Refurbishing Project, CIP 19625; and 
3) Authorize the City Manager or her designee to negotiate and execute one or 
more change orders to the consultant agreement with CSS Associates, Architects, 
the total amount of change orders which shall not exceed $6,000. Ordinance 4365 
entitled "Ordinance of the Council of the City of Palo Alto Amending the Budget 
for the Fiscal Year 1996-97 to Provide an Additional Appropriation for the City 
Council Chambers Refurbishing Capital Improvement Project 19625" Amendment No. 
3 to Agreement No. C5074407 between the City of Palo Alto and CSS Associates, 
Architects MOTION PASSED 7-0, Schneider, Simitian absent. COUNCIL MATTERS 22. 
Council Comments, Questions, and Announcements Mayor Wheeler noted that the August 
6, August 20, and September 3, 1996, Finance Committee meetings had been canceled. 
She referred to a memo from the City Attorney regarding the prescreening of 525 
University Avenue. ADJOURNMENT: The meeting adjourned at 11:20 p.m. ATTEST: APPROVED: 
City Clerk Mayor NOTE: Sense minutes (synopsis) are prepared in accordance with 
Palo Alto Municipal Code Sections 2.04.200 (a) and (b). The City Council and Standing 
Committee meeting tapes are made solely for the purpose of facilitating the preparation 
of the minutes of the meetings. City Council and Standing Committee meeting tapes 
are recycled 90 days from the date of the meeting. The tapes are available for 
members of the public to listen to during regular office hours.